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, 1998
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
<PAGE> 1
PART I
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - September 30, 1998 and December 31, 1997.
Statements of Operations for the Nine and the Three Months Ended September 30,
1998 and 1997.
Statements of Changes in Partners' Equity for the Nine and the Three Months
Ended September 30, 1998 and September 30, 1997.
Statements of Cash Flows for the Nine Months Ended September 30, 1998 and
1997.
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, 1998,the General Partners have distributed to the Limited
Partners $1,402,512 or 9.76% of total capital contributions to the Limited
Partners.
All aspects of the Partnership's operations and administration are handled
through the use of the managing general partner's computer systems. Both,
the operating company and the managing general partner are taking steps to
minimize any potential computer issues with regard to any necessary changes
for the year 2000. A complete system upgrade, which includes but is not
limited to, the year 2000 issue has been implemented by both the operating
company and the managing general partner. During the remainder of this year
both companies will continue to monitor, test and verify data in detail to
avoid any potential reporting concerns or delays.
<PAGE> 2
The net proved oil and gas reserves of the Partnership are considered
to be an 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, 1997 was approximately $
904,800 as compared to the December 31, 1996 value of approximately
$928,400. 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.
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 $268,797 in 1997 to $ 235,721 in 1998.
The Partnership experienced lower overall gas and oil production , from
76,311 MCF and 1,601 BBLS in 1997 to 72,645 MCF and 801BBLS in 1998. The
average prices changed from $3.06 per MCF and $18.33 per barrel in 1997 to
$3.12 per MCF and $ 11.74 per barrel in 1998. The Partnership's oil revenue
declined substantially due to lower average price combined with lower oil
production. The slightly higher average gas price did partially offset any
negative impact from lower gas production. The drop in gas production can
be attributed to shut-ins of the purchaser's transport line for repairs.
Production expenses decreased from $145,804 in 1997 to $110,700 in 1998.
During 1997, these expenses included related to weather conditions, which
necessitated additional maintenance, location, access road work and other
repairs. The expenses associated with 1998 production included normal,
recurring maintenance and repairs.
General and administrative expenses are 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
<PAGE> 3
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 1998 and
1997 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 flow attributable to the Partnership properties. No additional
depreciation, depletion or amortization was needed in 1997 or in the three-
quarters of 1998. The expense recorded is consistent with the current basis
of the Partnership's properties.
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 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 12, 1998
(Date)
<PAGE> 5
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Balance Sheets
September 30, December 31,
1998 1997
(unaudited) (audited)
Assets
Current Assets:
Cash and cash equivalents $ 6 $ 7
----------- -------------
Total current assets 6 7
Oil and Gas properties -
successful efforts method:
Leasehold costs 466,804 466,804
Well and related facilities 11,970,091 11,970,091
less accumulated depreciation, (11,738,585) (11,710,869)
depletion and amortization
----------- -------------
698,310 726,026
----------- -------------
Total assets $ 698,316 $ 726,033
=========== =============
Liabilities and Partners' Equity
Current liabilities:
Due to affiliates $ 278,324 $ 322,146
------------ -------------
Total current liabilities 278,324 322,146
----------- -------------
Partners' Equity
Limited partners 694,773 685,336
General partners (274,781) (281,449)
----------- -------------
Total partners' equity 419,992 403,887
----------- -------------
Total liabilities and
partners' equity $ 698,316 $ 726,033
=========== =============
See accompanying note to the financial statements
<PAGE> 6
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Nine Months Ended
September 30, 1998
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 198,359 $ 37,362 $ 235,721
Gain on Sale of equipment 0 0 0
-------- -------- --------
Total Revenue 198,359 37,362 235,721
-------- -------- --------
Costs and Expenses:
Production expense 93,154 17,546 110,700
General and administrative
to a related party 53,646 10,105 63,751
General and administrative 14,683 2,766 17,449
Depreciation, depletion
and amortization 27,439 277 27,716
-------- -------- --------
Total Costs and Expenses 188,922 30,694 219,616
-------- -------- --------
Net Income $ 9,437 6,668 $ 16,106
======== ======== ========
Net Income per equity unit $ .66
======
See accompanying note to the financial statements.
<PAGE> 7
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Nine Months Ended
September 30, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 226,193 $ 42,604 $ 268,797
Gain on sale of equipment 1,287 13 1,300
-------- -------- --------
Total Revenue 227,480 42,617 270,097
-------- -------- --------
Costs and Expenses:
Production expense 122,694 23,110 145,804
General and administrative
to a related party 47,334 8,916 56,250
General and administrative 14,262 2,686 16,948
Depreciation, depletion
and amortization 28,922 292 29,214
-------- -------- --------
Total Costs and Expenses 213,212 35,004 248,216
-------- -------- --------
Net Income $ 14,268 7,613 $ 21,881
======== ======== ========
Net Income per equity unit $ 0.99
======
See accompanying note to the financial statements.
<PAGE> 8
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
September 30, 1998
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 66,714 12,566 $ 79,280
Gain on sale of equipment 0 0 0
-------- -------- ---------
Total Revenue 66,714 12,566 79,280
-------- -------- ---------
Costs and Expenses:
Production expense 33,515 6,313 39,828
General and administrative
to a related party 17,881 3,368 21,249
General and administrative 5,708 1,076 6,784
Depreciation, depletion
and amortization 9,146 92 9,238
-------- -------- ---------
Total Costs and Expenses 66,250 10,849 77,099
-------- -------- ---------
Net Income(loss) $ 464 1,717 $ 2,181
======== ======== =========
Net Income(loss)
per equity unit $ .04
========
See accompanying note to the financial statements.
<PAGE> 9
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
September 30, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 71,603 13,486 $ 85,089
Gain on sale of equipment 1,287 13 1,300
-------- -------- ---------
Total Revenue 72,890 13,499 86,389
-------- -------- ---------
Costs and Expenses:
Production expense 46,304 8,722 55,026
General and administrative
to a related party 15,778 2,972 18,750
General and administrative 3,131 589 3,720
Depreciation, depletion
and amortization 9,697 98 9,795
-------- -------- ---------
Total Costs and Expenses 74,910 12,381 87,291
-------- -------- ---------
Net Income(loss) $ (2,020) 1,118 $ (902)
======== ======== =========
Net Income(loss)
per equity unit $ (0.14)
========
See accompanying note to the financial statements.
<PAGE> 10
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Nine Months Ended
September 30, 1998
Limited General
Partners Partners Total
Balance at beginning of
period $ 685,336 (281,449) $ 403,887
Net Income 9,437 6,668 16,105
-------- --------- ---------
Balance at end of period $ 694,773 (274,781) $ 419,992
======== ========= =========
Nine Months Ended
September 30, 1997
Limited General
Partners Partners Total
Balance at beginning of
period $ 672,221 (290,790) $ 381,431
Net Income 14,268 7,613 21,881
-------- --------- ---------
Balance at end of period $ 686,489 (283,177) $ 403,312
======== ========= =========
See accompanying note to the financial statements.
<PAGE> 11
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Three Months Ended
September 30, 1998
Limited General
Partners Partners Total
Balance at beginning of
period $ 694,309 (276,498) $ 417,811
Net Income(Loss) 464 1,717 2,181
-------- --------- ----------
Balance at end of period $ 694,773 (274,781) $ 419,992
======== ========= ==========
Three Months Ended
September 30, 1997
Limited General
Partners Partners Total
Balance at beginning of
period $ 688,509 (284,295) $ 404,214
Net Income(Loss) (2,020) 1,118 (902)
-------- --------- ----------
Balance at end of period $ 686,489 (283,177) $ 403,312
======== ========= ==========
See accompanying note to the financial statements.
<PAGE> 12
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Nine Nine
months months
ended ended
September September
30, 1998 30, 1997
Net cash provided (used )by
operating activities $ (1) $ 9,233
---------- ----------
Cash flows from investing
activities:
Proceeds from sale of equipment 0 1,300
Investment in well and related
facilities 0 (10,556)
--------- ---------
Net Cash (used in) investing
activities 0 (9,256)
--------- ---------
Net increase(decrease) in cash and
cash equivalents (1) (23)
Cash and cash equivalents at
Beginning of period 7 34
---------- ----------
Cash and cash equivalents at end of
period $ 6 $ 11
========== ==========
See accompanying note to the financial statements.
<PAGE> 13
STERLING GAS DRILLING FUND 1982
(a New York limited partnership)
Note to Financial Statements
September 30, 1998
1. The accompanying statements for the period ending September
30, 1998 are unaudited, but reflect all adjustments necessary to
present fairly the results of operations.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial infomration extracted from
Sterling Gas Drilling Fund 1982 third quarter 10Q and is qualified in
its entirety by refernce to such fiancial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 6
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6
<PP&E> 12,436,895
<DEPRECIATION> (11,738,585)
<TOTAL-ASSETS> 698,316
<CURRENT-LIABILITIES> 278,324
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 419,992<F1>
<TOTAL-LIABILITY-AND-EQUITY> 698,316
<SALES> 235,721
<TOTAL-REVENUES> 235,721
<CGS> 219,616
<TOTAL-COSTS> 219,616
<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> 16,105
<EPS-PRIMARY> 0.66<F2>
<EPS-DILUTED> 0
<FN>
<F1>Other se includes total partners' equity.
<F2>The limited partnerhsip income was divided by
total limited partnerhip units of 14,370.
</FN>
</TABLE>
