SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/Quarterly Report Pursuant to Section 13 or 15(d)of the
Securities Exchange Act of 1934
For the Quarterly Period Ended June 30, 1995
or
/ /Transition Report Pursuant to Section 13 or 15(d)of the
Securities Exchange Act of 1934
For the Transition Period Ended ______________________
Commission File Number 0-10501
STERLING GAS DRILLING FUND 1981
(Exact name of registrant as specified in charter)
New York
(State or other jurisdiction of incorporation or
organization)
13-3098770
(IRS employer identification number)
One Landmark Square, Stamford, Connecticut 06901
(Address and Zip Code of principal executive offices)
(203) 358-5700
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15 (d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes /X/ No / /
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - June 30, 1995 and December 31, 1994.
Statements of Operations for the Six and Three Months Ended June 30, 1995
and 1994.
Statements of Changes in Partners' Equity for the Six and Three Months
Ended June 30, 1995 and 1994.
Statements of Cash Flows for the Six Months Ended June 30, 1995 and 1994.
Note to Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
1. Liquidity -
The oil and gas industry is intensely competitive in all its phases.
There is also competition among this industry and other industries in
supplying energy and fuel requirements of industrial and residential
consumers. It is not possible for the Registrant to calculate its
position in the industry as Registrant competes with many other
companies having substantially greater financial and other resources.
In accordance with the terms of the Prospectus, the General Partners
of the Registrant will make cash distributions of as much of the
Partnership cash credited to the capital accounts of the Partners as
the General Partners have determined is not necessary or desirable for
the payment of any contingent debts, liabilities or expenses or for
the conduct of the Partnership's business. As of June 30, 1995, the
General Partners have distributed to the Limited Partners $3,955,500.
Such cash distributions are equivalent to 45 % of original total
limited Partner capital contributions.
Columbia Gas Transmission Corp., a contract purchaser of the
Registrant's gas, filed a Chapter 11 petition in U.S. Bankruptcy Court
in Wilmington Delaware on July 31, 1991. At that time, the Bankruptcy
Court released Columbia from any current contracts. The Registrant
has filed a claim with the Bankruptcy Court to recover revenue
suspended at the time bankruptcy occurred. Such amounts were not
recorded as revenue during the applicable period, therefore, no loss
contingency exists. The Registrant has reviewed and accepted a
tentative settlement offer made by Columbia. The Registrant is
hopeful that Columbia will make a final settlement within the next
twelve months.
The net proved oil and gas reserves of the Partnership are considered
to be a primary indicator of financial strength and future liquidity.
The present value of unescalated future net revenues (SEC case)
associated with such reserves, discounted at 10% as of December 31,
1994 was approximately $703,000.
2. Capital Resources -
The Registrant was formed for the sole purpose of drilling oil and gas
wells. The Registrant entered into a drilling contract with an
independent contractor in December 1981 for $6,900,000. Pursuant to
the terms of this contract, wells have been drilled resulting in
thirty-seven producing wells, three non commercial wells and one
plugged well. The Registrant has had a reserve report prepared which
details reserve value information, and such information is available
to the Limited Partners pursuant to the buy-out provisions of the
Prospectus as previously filed.
3. Results of Operations -
Operating Revenues increased from $122,147 in 1995 to $130,526 in
1995. The gas production increase, from 45,194 MCF in 1995 to 47,265
MCF in 1995, was partially offset by lower average price per MCF from
$2.83 in 1995 to $2.55 in 1995. Changes in purchaser's main line
pressures contributed to easier gas flow and increased production. Oil
production combined with higher prices per barrel in 1995 resulted in
increased oil revenue. Production expenses decreased from $57,878 in
1994 to $46,378 in 1995. In 1994 additional location and road repairs
were needed due to freezing and flooding which occurred throughout the
winter production periods.
General and administrative expenses have been segregated on the
financial statements to show expenses paid to PrimeEnergy Management
Corporation, a general partner. These expenses are charged in
accordance with guidelines set forth in the Registrant's Management
Agreement. The expenses attributable to the affairs and operations of
the Partnership, reimbursed to PEMC, shall not exceed an annual amount
equal to 5% of the limited partners capital contributions. Amounts
related to both 1995 and 1994 are substantially less than the amounts
allocable to the Registrant under the Partnership Agreement. The
lower amounts reflect management's effort's to limit costs, both
incurred and allocated to the Registrant. Management continues to
reduce third party costs and use in-house resources to provide
efficient and timely services to the partnership.
The partnership records additional depreciation, depletion and
amortization to the extent that net capitalized costs exceed the
undiscounted future net cash flows attributable to the partnership
properties. A downward revision in reserve estimates due to lower year-
end gas prices in 1994 resulted in an additional charge of $250,000.
The lower depletion expense in 1995 is due to lower depletable cost
basis in oil and gas properties.
4. Other-
In, March, the Financial Accounting Standards Board issued Statement of
Financial Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of," (SFAS No. 121)
which is effective for the fiscal years beginning after December 15, 1995.
This statement establishes accounting standards for the impairment of long-
lived assets, requiring such assets to be reported at the lower of carrying
amount or fair value, less selling costs. The statement amends SFAS No. 19,
"Financial Accounting and Reporting by Oil and Gas Producing Companies"
by adding an impairment test for proved properties in accordance with
SFAS No. 121.
The Resistrant currently performs a "ceiling test" by comparing the total
carrying value of oil and gas properties to the total future net cash flows
from the estimated production of proved oil and gas properties. The effect
of SFAS No. 121, which would change the way the test is performed, is not
known at this time.
PART II
Items 1 through 5 have been omitted in that each item is either
inapplicable or the answer is negative.Item . Exhibits and Reports on
Form 8-K
The Partnership was not required to file any reports on Form 8-K and
no such form was filed during the period covered by this report.
Exhibit 27 - Financial Data Schedule is attached to the electronic
filing of this report.
S I G N A T U R E S
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
STERLING GAS DRILLING FUND 1981
August 10, 1995 BY: /S/Charles E. Drimal, Jr.
(DATE) Charles E.Drimal, Jr.
General Partner
STERLING DRILLING FUND 1981
(a New York Limited Partnership)
Balance Sheets
(unaudited)
June 30, December 31,
1995 1994
Assets
Current Assets:
Cash and cash equivalents $ 97 $ 43
Due from others 23,199 --
---------- -----------
Total current assets 23,296 43
Oil and Gas properties -
successful efforts method:
Leasehold costs 236,502 236,502
Well and related facilities 6,938,085 6,938,085
less accumulated
depreciation,depletion and
amortization (5,836,108) (5,785,763)
---------- ----------
1,338,479 1,388,824
---------- ----------
Total assets $ 1,361,775 $ 1,388,867
Liabilities and Partners' Equity
Current liabilities:
Due to affiliates $ 253,651 $ 252,719
---------- ----------
Total current liabilities 253,651 252,719
---------- ----------
Partners' Equity
Limited partners 1,230,913 1,261,971
General partners (122,789) (125,823)
---------- ----------
Total partners' equity 1,108,124 1,366,148
---------- ----------
Total liabilities and
partners' equity $ 1,361,775 $ 1,388,867
========== ==========
STERLING DRILLING FUND 1981
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Six Months Ending
June 30, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 109,838 $ 20,688 $ 130,526
-------- -------- -------
Total Revenue 109,838 20,688 130,526
-------- -------- -------
Costs and Expenses:
Production expense 39,027 7,351 46,378
General and administrative 42,073 7,925 49,998
to a related party
General and administrative 9,954 1,875 11,829
Depreciation, depletion
and amortization 49,842 503 50,345
-------- -------- -------
Total Costs and Expenses 140,896 17,654 158,550
-------- -------- -------
Net Income(loss) $ (31,058) $ 3,034 $ (28,024)
======== ======== =======
Net Income(loss)
per equity unit $ (3.53)
======
STERLING DRILLING FUND 1981
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Six Months Ending
June 30, 1994
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 102,787 $ 19,360 $ 122,147
--------- -------- ---------
Total Revenue 102,787 19,360 122,147
--------- -------- ---------
Costs and Expenses:
Production expense 48,704 9,174 57,878
General and administrative
to a related party 48,470 9,130 57,600
General and administrative 8,335 1,570 9,905
Depreciation, depletion
and amortization 54,401 550 54,951
------- ------- ---------
Total Costs and Expenses 159,911 20,423 180,334
------- ------- ---------
Net Income(loss) $ (57,125) $ (1,062) $ (58,187)
========= ======== =========
Net Income(loss)
per equity unit $ (6.50)
=========
STERLING DRILLING FUND 1981
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ending
June 30, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 48,179 $ 9,074 $ 57,253
-------- -------- ---------
Total Revenue 48,179 9,074 57,253
-------- -------- ---------
Costs and Expenses:
Production expense 22,302 4,201 26,503
General and administrative
to a related party 21,036 3,963 24,999
General and administrative 6,440 1,213 7,653
Depreciation, depletion
and amortization 24,992 251 25,173
-------- -------- ---------
Total Costs and Expenses 74,700 9,628 84,328
-------- -------- ---------
Net Income(loss) $ (26,521) $ (554) $ (27,075)
======== ======== =========
Net Income(loss)
per equity unit $ (3.02)
========
STERLING DRILLING FUND 1981
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ending
June 30, 1994
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 47,349 $ 8,918 $ 56,267
-------- -------- -----------
Total Revenue 47,349 8,918 56,267
-------- -------- -----------
Costs and Expenses:
Production expense 24,261 4,570 28,831
General and administrative 24,235 4,565 28,800
to a related party
General and administrative 5,157 971 6,128
Depreciation, depletion 27,200 275 27,475
and amortization
-------- -------- -----------
Total Costs and Expenses 80,853 10,381 91,234
-------- -------- -----------
Net Income(loss) $ (33,505) $ (1,462) $ (34,967)
======== ======== ===========
Net Income(loss)
per equity unit $ (3.81)
======
STERLING DRILLING FUND 1981
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Six Months Ended
June 30, 1995
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,261,971 $ (125,823) $ 1,136,148
Net Income(Loss) (31,058) 3,3034 (28,024)
--------- -------- -----------
Balance at end of period 1,230,913 (122,789) 1,108,124
========= ======== ===========
Six Months Ended
June 30, 1994
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,641,938 $ (120,979) $ 1,520,959
Net Income(Loss) (57,123) (1,064) (58,187)
--------- -------- ----------
Balance at end of period 1,584,815 (122,043) 1,462,772
========= ======== ==========
STERLING DRILLING FUND 1981
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Three Months Ended
June 30, 1995
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,257,434 $ (122,235) $ 1,135,199
Net Income(Loss) (26,521) (554) (27,075)
-------- -------- ----------
Balance at end of period 1,230,913 (122,789) 1,108,124
======== ======== ==========
Three Months Ended
June 30, 1994
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,618,319 $ (120,580) $ 1,497,739
Net Income(Loss) (33,504) (1,463) (34,967)
--------- -------- ----------
Balance at end of period 1,584,815 (122,043) 1,462,772
========= ========= ==========
STERLING DRILLING FUND 1981
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Six months Six months
ended ended
June 30, June 30,
1995 1994
Net cash provided by operating 54 43
activities
---------- ----------
Net increase(decrease) in cash and
cash equivalents 54 43
Cash and cash equivalents at
beginning of period 43 30
---------- ----------
Cash and cash equivalents at end of $ 97 $ 73
period
========== ==========
see accompanying note to financials
STERLING GAS DRILLING FUND 1981
(a New York limited partnership)
Note to Financial Statements
June 30, 1995
1. The accompanying statements for the period ending June 30, 1995
are unaudited but reflect all reflect the adjustments necessary to
present fairly the results of operations. Certain reclassifications
were made to the prior periods' financial statements to conform to the
current period presentation.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Sterling
Gas Drilling Fund 1981 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 97
<SECURITIES> 0
<RECEIVABLES> 23199
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23296
<PP&E> 7174587
<DEPRECIATION> 5836108
<TOTAL-ASSETS> 1361775
<CURRENT-LIABILITIES> 253651
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1108124<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1361775
<SALES> 0
<TOTAL-REVENUES> 130526
<CGS> 0
<TOTAL-COSTS> 158550
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (28024)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Field Other-Se includes total partner's equity.
</FN>
</TABLE>
