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 September 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 2-784441
STERLING GAS DRILLING FUND 1982
(Exact name of registrant as specified in charter)
New York
(State or other jurisdiction of incorporation or organization)
13-3147901
(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
PART I
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - September 30, 1995 and December 31, 1994.
Statements of Operations for the Nine and the Three Months Ended September 30,
1995 and 1994.
Statements of Changes in Partners' Equity for the Nine and the Three Months
Ended September 30, 1995.
Statements of Cash Flows for the Nine Months Ended September 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 individual 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
September 30, 1995, the General Partners have distributed to the Limited
Partners $1,402,512 or 9.76% of total limited partner capital
contributions to the Limited Partners.
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 three
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 estimated future net revenues (SEC case)
associated with such reserves, discounted at 10% as of December 31, 1994
was approximately $415,000 as compared to the December 31, 1993 amount of
$1,532,000.
The decline in undiscounted future net cash flows for the Partnership
properties at December 31, 1994 when compared to December 31, 1993, was
caused by a significant decline in prices between these two dates, rather
than changes in the estimated future production from the properties. It is
the opinion of management, and the general consensus in the industry, that
gas prices are unlikely to decline significantly below the December 31,
1994 price in the near future. However, there can be no assurances that
such price declines will not occur, and will not pose a threat to the
Partnership's continued viability.
2. Capital Resources -
The Registrant was formed for the sole intention of drilling oil and gas
wells. The Registrant entered into a drilling contract with an independent
contractor in December 1982 for $11,400,000. Pursuant to the terms of this
contract, fifty-one wells have been drilled resulting in fifty producing
wells and one dry-hole. 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 decreased from $250,599 in 1994 to $197,012 in 1995 .
The gas production declined from 84,070 MCF in 1994 to 79,010 MCF in 1995
combined with an average price decrease from $ 2.75 per MCF in 1994 to $
2.15 per MCF in 1995 contributed to lower revenues. Some volume declines
can be attributed to when the gathering system increases main line
pressure. An increase in pressure could reduce the ability of the
partnership's gas to flow freely. . The gathering system and the
partnership's operator have been discussing ways to adjust and minimize the
effect of the pressure differences. Production expenses decreased from
$145,409 in 1994 to $87,405 in 1995. Additional production expenses, for
example location, line outages, roadway maintenance and electrical repairs
where significantly higher in 1994 due to severe weather conditions which
occurred during the winter and spring of last year. The 1995 production
expenses incurred included costs for general upkeep and repairs to wells
and well-sites.
General and administrative expenses have been segregated on the financial
statements to show expenses paid to PrimeEnergy Management Corporation
(PEMC), a General Partner. The expenses charged are in accordance with the
guidelines set forth in the Registrant's Management Agreement. PEMC is
reimbursed expenses attributable to the affairs and operations of the
Partnership. These costs shall not exceed an annual amount equal to 5% of
limited partner capital contributions. Amounts related to both 1995 and
1994 are substantially less than the amounts allocable to the Registrant
under the Partnership Agreement. PEMC continues to perform these
functions as cost effectively as possible either through efficient use of
in-house resources or using third parties when applicable.
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. No additional
depreciation, depletion and amortization was made in 1994. The rate
applied in 1995 to the remaining partnership property basis to be
depreciated, depleted and amortized was higher than 1994. This resulted in
higher depreciation, depletion and amortization for this year.
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 Registrant 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 this 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 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.
S I G N A T U R E S
Pursuant to the requirements of Section 13 or 15 (d) of the Securities and
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 1982
(Registrant)
BY: /S/ Charles E. Drimal, Jr.
---------------------------
Charles E. Drimal, Jr.
General Partner
November 13, 1995
(Date)
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Balance Sheets
(unaudited)
September 30, December 31,
1995 1994
Assets
Current Assets:
Cash and cash equivalents $ 11 $ 43
----------- -------------
Total current assets 11 43
Oil and Gas properties -
successful efforts method:
Leasehold costs 466,804 466,804
Well and related facilities 11,947,691 11,947,691
less accumulated depreciation,
depletion and amortization (11,643,080) (11,588,436)
----------- -------------
771,415 826,059
----------- -------------
Total assets $ 771,426 $ 826,102
=========== =============
Liabilities and Partners' Equity
Current liabilities:
Due to affiliates $ 532,207 $ 568,490
----------- -------------
Total current liabilities 532,207 568,490
----------- -------------
Partners' Equity
Limited partners 556,833 580,425
General partners (317,614) (322,813)
----------- -------------
Total partners' equity 239,219 257,612
----------- -------------
Total liabilities and
partners' equity $ 771,426 $ 826,102
=========== =============
See accompanying note to the financial statements
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Nine Months Ended
September 30, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 165,786 $ 31,226 $ 197,012
-------- -------- -------
Total Revenue 165,786 31,226 197,012
-------- -------- -------
Costs and Expenses:
Production expense 73,551 13,854 87,405
General and administrative
to a related party 47,334 8,916 56,250
General and administrative 14,395 2,711 17,106
Depreciation, depletion
and amortization 54,098 546 54,644
-------- -------- -------
Total Costs and Expenses 189,378 26,027 215,405
-------- -------- -------
Net Income(loss) $ (23,592) 5,199 $ (18,393)
======== ======== =======
Net Income(loss)
per equity unit $ (1.64)
======
See accompanying note to the financial statements.
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Nine Months Ended
September 30, 1994
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 210,879 39,720 $ 250,599
-------- ------- ---------
Total Revenue 210,879 39,720 250,599
-------- ------- ---------
Costs and Expenses:
Production expense 122,362 23,047 145,409
General and administrative
to a related party 63,617 11,983 75,600
General and administrative 14,428 2,718 17,146
Depreciation, depletion
and amortization 34,643 350 34,993
-------- ------- ---------
Total Costs and Expenses 235,050 38,098 273,148
-------- ------- ---------
Net Income(loss) $ (24,171) 1,622 $ (22,549)
======== ======= =========
Net Income(loss)
per equity unit $ (1.68)
========
See accompanying note to the financial statements.
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
September 30, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 53,191 10,018 $ 63,209
-------- -------- ---------
Total Revenue 53,191 10,018 63,209
-------- -------- ---------
Costs and Expenses:
Production expense 19,778 3,726 23,504
General and administrative
to a related party 15,778 2,972 18,750
General and administrative 2,958 557 3,515
Depreciation, depletion
and amortization 18,032 182 18,214
-------- -------- ---------
Total Costs and Expenses 56,546 7,437 63,983
-------- -------- ---------
Net Income(loss) $ (3,355) 2,581 $ (774)
======== ======== =========
Net Income(loss)
per equity unit $ (.23)
========
See accompanying note to the financial statements.
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
September 30, 1994
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 68,330 12,870 $ 81,200
-------- -------- ----------
Total Revenue 68,330 12,870 81,200
-------- -------- ----------
Costs and Expenses:
Production expense 36,871 6,944 43,815
General and administrative
to a related party 21,205 3,995 25,200
General and administrative 5,102 962 6,064
Depreciation, depletion
and amortization 11,547 117 11,664
-------- -------- ----------
Total Costs and Expenses 74,725 12,018 86,743
-------- -------- ----------
Net Income(loss) $ (6,395) 852 $ (5,543)
======== ======== ==========
Net Income(loss)
per equity unit $ (.45)
======
See accompanying note to the financial statements.
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Nine Months Ended
September 30, 1995
Limited General
Partners Partners Total
Balance at beginning of
period $ 580,425 (322,813) $ 257,612
Net Income(Loss) (23,592) 5,199 (18,393)
-------- -------- ----------
Balance at end of period $ 556,833 (317,614) $ 239,219
======== ======== ==========
Nine Months Ended
September 30, 1994
Limited General
Partners Partners Total
Balance at beginning of
period $ 669,273 $ (320,179) $ 349,094
Net Income(Loss) (24,171) 1,622 (22,549)
-------- -------- ----------
Balance at end of period $ 645,102 (318,557) $ 326,545
======== ======== ==========
See accompanying note to the financial statements.
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Three Months Ended
September 30, 1995
Limited General
Partners Partners Total
Balance at beginning of
period $ 560,188 (320,195) $ 239,993
Net Income(Loss) (3,355) 2,581 (774)
-------- -------- ----------
Balance at end of period $ 556,833 (317,614) $ 239,219
======== ======== ==========
Three Months Ended
September 30, 1994
Limited General
Partners Partners Total
Balance at beginning of
period $ 651,497 (319,409) $ 332,088
Net Income(Loss) (6,395) 852 (5,543)
---------- --------- ----------
Balance at end of period $ 645,102 (318,557) $ 326,545
========== ========= ==========
See accompanying note to the financial statements.
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Nine months Nine months
ended ended
September 30, September 30,
1995 1994
Net cash (used in) operating
activities $ (32) $ (14)
---------- ----------
Net increase(decrease) in cash and
cash equivalents (32) (14)
Cash and cash equivalents at
beginning of period 43 46
---------- ----------
Cash and cash equivalents at end of
period $ 11 $ 32
========== ==========
See accompanying note to the financial statements.
STERLING GAS DRILLING FUND 1982
(a New York limited partnership)
Note to Financial Statements
September 30, 1995
1. The accompanying statements for the period ending September 30, 1995 are
unaudited, but reflect all adjustments necessary to present fairly the
results of operations. Certain reclassifications were made to the prior
period's financial statements to conform to the current period
presentation.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from
Sterling Gas Drilling Fund 1982 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 11
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11
<PP&E> 12,414,495
<DEPRECIATION> (11,643,080)
<TOTAL-ASSETS> 771,415
<CURRENT-LIABILITIES> 532,207
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 239,219<F1>
<TOTAL-LIABILITY-AND-EQUITY> 771,426
<SALES> 197,012
<TOTAL-REVENUES> 197,012
<CGS> 215,405
<TOTAL-COSTS> 215,405
<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> (18,393)
<EPS-PRIMARY> (1.64)<F2>
<EPS-DILUTED> 0
<FN>
<F1> (other-se) includes total partner's equity.
<F2> (eps-primary) includes net income divided by total limited
partner's units of 14,370.
</FN>
</TABLE>
