<PAGE> 1
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 March 31, 2000
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 / /
<PAGE> 2
PART I
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - March 31, 2000 and December 31, 1999.
Statements of Operations for the Three Months Ended March 31, 2000 and
1999.
Statements of Changes in Partners' Equity for the year ended December 31,
1999 and for the Three Months Ended March 31, 2000.
Statements of Cash Flows for the Three Months Ended March 31, 2000 and
1999.
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 the 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 March 31, 2000, 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.
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 revenue (S.E.C. case) associated with such
reserves, discounted at 10% as of December 31, 1999 was approximately
$686,493 as compared to December 31, 1998, of about $807,750. Overall
reservoir engineering is a subjective process of estimating underground
accumulations of gas and oil that can not be measured in an exact manner.
The accuracy of any reserve estimate is a function of the quality of
available data and of the engineering and geological interpretation and
judgment. Accordingly, reserve estimates are generally different from the
quantities of gas and oil that are ultimately recovered and such
differences may have a material impact on the Partnership's financial
results and future liquidity.
<page 3>
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 -
The Partnership's operating revenues increased from $53,337 in 1999 to
$79,785 in 2000. This increase can be directly attributed to increased gas
production from 21,324 MCF's in 1999 to 22,399 MCF's in 2000 combined with
a higher average price per MCF from $2.57 in 1999 to $3.08 in 2000.
Although the Partnerhsip produces very little oil, 425 BBL in 2000, it did
benefit from the current average price received of $25.54 per barrel.
Production expenses decreased slightly from $33,554 in 1999 to $31,400 in
2000. Most expenditures for repairs, locations and labor in 1999 and 2000
were used to maintain the general upkeep of the wells and well sites.
Overall general and administrative expenses, both related and third party
costs, changed very little between 1999 and 2000. The amounts charged
reflect management's efforts to limit costs, both incurred and allocated to
the Registrant. Management continues to use in-house resources to provide
efficient and timely services to the Partnership. The related party
expenses attributable to the affairs and operations of the Partnership,
reimbursed to PrimeEnergy Management Corporation, are limited to an annual
amount not to exceed 5% of the Limited Partners capital contributions.
Amounts related to both years are substantially less than the amounts
allocable to the Registrant under the Partnership Agreement.
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. The partnership was
not required to revise downward the properties basis in either 1999 or
first quarter 2000. Overall depletion expense is consistent for each year
based upon the property basis and the rates used.
PART II
Items 1 through 5 have been omitted in that each item is either
inapplicable or the answer is negative.Item 6 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.<PAGE> 4
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
BY: /S/ Charles E.Drimal Jr.
Charles E. Drimal, Jr
General Partner
May 12, 2000
(DATE)
<PAGE> 5
STERLING DRILLING FUND 1981
(a New York Limited Partnership)
Balance Sheets
(unaudited)
March 31, December 31,
2000 1999
Assets
Current Assets:
Cash and cash equivalents $ 8 $ 7
Due from others 30,874 0
---------- --------------
----- -
Total current assets 30,882 7
Oil and Gas properties -
successful efforts method:
Leasehold costs 236,502 236,502
Well and related facilities 7,056,395 7,036,647
less accumulated depreciation
depletion (6,199,558 (6,180,734)
and amortization )
---------- --------------
----- -
1,093,339 1,092,415
---------- --------------
----- -
Total assets $ 1,124,221 $ 1,092,422
========== ==========
Liabilities and Partners' Equity
Current liabilities:
Due to affiliates $ 191,063 $ 159,309
---------- --------------
----- -
Total current liabilities 191,063 159,309
---------- --------------
----- -
Partners' Equity
Limited partners 1,029,167 1,031,925
General partners (96,009) (98,812)
---------- --------------
----- -
Total partners' equity 933,158 933,113
---------- --------------
----- -
Total liabilities and $ 1,124,221 $ 1,092,422
partners' equity
========= =========
See accompanying note to the financial statements.
<PAGE> 6
STERLING DRILLING FUND 1981
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
March 31, 2000
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 67,139 12,646 $ 79,785
-------- -------- -------
Total Revenue 67,139 12,646 79,785
-------- -------- -------
Costs and Expenses:
Production expense 26,423 4,977 31,400
General and administrative
to a related party 21,037 3,962 24,999
General and administrative 3,802 716 4,518
Depreciation, depletion
and amortization 18,635 188 18,823
-------- -------- -------
Total Costs and Expenses 69,897 9,843 79,740
-------- -------- -------
--
Net Income/(Loss) $ (2,758) 2,803 45
===== ===== =====
Net Income/(Loss) per $ (.31)
equity unit
======
See accompanying note to the financial statements.
<PAGE> 7
STERLING DRILLING FUND 1981
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
March 31, 1999
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 44,883 8,454 $ 53,337
-------- -------- -------
Total Revenue 44,883 8,454 53,337
-------- -------- -------
Costs and Expenses:
Production expense 28,236 5,318 33,554
General and administrative
to a related party 21,040 3,963 25,003
General and administrative 3,069 578 3,647
Depreciation, depletion
and amortization 18,781 190 18,971
-------- -------- -------
Total Costs and Expenses 71,126 10,049 81,175
-------- -------- -------
Net Income(loss) $ (26,243) (1,595) $ (27,838)
======== ======== =======
Net Income(loss) per equity $ (3.00)
unit
======
See accompanying note to the financial statements.
<PAGE> 8
STERLING DRILLING FUND 1981
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Limited General
Partners Partners Total
Balance at December 31, 1998 $ 1,107,736 (98,537) $ 1,009,199
Net Income(Loss) (75,811) (275) (76,086)
--------- --------- ---------
Balance at December 31, 1999 1,031,925 (98,812) $ 933,113
Net Income/(Loss) (2,758) 2,803 45
--------- --------- ---------
Balance at March 31, 2000 $ 1,029,167 (96,009) $ 933,158
========= ========= =========
See accompanying note to the financial statements.
<PAGE> 9
STERLING DRILLING FUND 1981
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Three months Three months
ended March ended March
31,2000 31,1999
Net cash provided by operating
activities $ 19,748 $ 232
---------- ----------
Cash provided by/(used in)
investment activities:
Investment in wells and related
facilities (19,747) (243)
---------- ----------
Net cash provided by/(used in)
investment activities (19,747) (243)
---------- ----------
Net increase(decrease) in cash and
cash equivalents 1 (11)
Cash and cash equivalents at
beginning of period 7 19
---------- ----------
Cash and cash equivalents at end of
period $ 8 $ 8
======= ======
See accompanying note to the financial statements.
<PAGE> 10
STERLING GAS DRILLING FUND 1981 (a New York limited partnership)Note to
Financial StatementsMarch 31, 2000
1. The accompanying statements for the period ending March 31, 2000 are
unaudited but reflect all the adjustments necessary to present fairly the
results of operations
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Sterling Drilling Fund 1981 first quarter 2000 10Q and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 8
<SECURITIES> 0
<RECEIVABLES> 30,874
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 30,882
<PP&E> 7,292,897
<DEPRECIATION> (6,199,558)
<TOTAL-ASSETS> 1,124,221
<CURRENT-LIABILITIES> 191,063
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 981,361<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,172,424
<SALES> 79,785
<TOTAL-REVENUES> 79,785
<CGS> 79,740
<TOTAL-COSTS> 79,740
<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> 45
<EPS-BASIC> (0.31)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Other se includes total partners equity.
<F2>The amount of net income allocated to the limited partner class
was divided by the total number of limited partner units of 8,790.
</FN>
</TABLE>
