<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 June 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> 2
PART I
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - June 30, 1998 and December 31, 1997.
Statements of Operations for the Six and the Three Months Ended June
30, 1998 and 1997.
Statements of Changes in Partners' Equity for the Six and the Three
Months Ended June 30, 1998 and 1997.
Statements of Cash Flows for the Six Months Ended June 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 June
30, 1998, the General partners have distributed to the Limited partners
$1,402,512 or 9.76% of the total Limited Partner 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>3
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 -
The Partnership's operating revenues decreased from $183,708 in 1997 to
$156,437 in 1998. The majority of the Partnership's revenue is derived from
gas production sales. Both increased average gas prices and lower
production impacted the gas revenue. The average price per MCF in 1997 and
1998 was $3.07 and $3.11. Also gas production went from 50,149 MCF's in
1997 to 48,305 MCF's in 1998. The net result was lower gas revenue. The
Parntership does receive a portion of its revenue from sales related to
oil production. During 1997 the partnership sold 1,236 barells at an
average price per barrel of $18.36 as compared to 503 barrels and an
average price per barrel of $12.31 in 1998. Overall oil revenue was very
low in 1998 because of price received and production sold. Production
declines can be of a normal nature, a result of minor shut-in's due to
repairs or even as a result of variations between the well's gas line and
the main transport line. The pressure differnce may hinder or slow down the
flow of the partnership's gas to the main transport line.
<PAGE> 4
Production expenses decreased from $90,778 in 1997 to $70,872 in 1998. The
1997 production expenses were higher as a result of a combination of items,
including variable costs associated with volume changes, repairs and labor
costs associated with the wells and well sites. Current, 1998 production
expenses include the normal maintence and upkeep of the wells and well
sites.
Overall general and administrative expenses showed no significant change
from 1997 to 1998. All related party 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 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 undercounted future net
cash flows attributable to the Partnership properties. The Partnership was
not required to revise the property basis in either 1997 or first half
1998. Depletion, depreciation and amortization expense was consistent with
the current property basis and the rates applied.
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>5
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
August 12, 1998
(Date)
<PAGE> 6
STERLING DRILLING FUND 1982
(A New York Limited Partnership)
Balance Sheets
June 30, December 31,
1998 1997
(unaudited) (audited)
Assets
Current Assets:
Cash and cash equivalents $ 7 $ 7
Due from others 2,607 0
----------- -------------
Total current assets 2,614 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,
depletion and amortization (11,729,347) (11,710,869)
----------- -------------
707,548 726,026
----------- -------------
Total assets $ 710,162 $ 726,033
=========== =============
Liabilities and Partners' Equity
Current liabilities:
Due to affiliates $ 292,351 $ 322,146
----------- -------------
Total current liabilities 292,351 322,146
----------- -------------
Partners' Equity
Limited partners 694,309 685,336
General partners (276,498) (281,449)
----------- -------------
Total partners' equity 417,811 403,887
----------- -------------
Total liabilities and
partners' equity $ 710,162 $ 726,033
=========== =============
See accompanying footnote to the financial statements
<PAGE> 7
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Six Months Ending
June 30, 1998
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 131,645 24,796 $ 156,441
-------- -------- -------
Total Revenue 131,645 24,796 156,441
-------- -------- -------
Costs and Expenses:
Production expense 59,639 11,233 70,872
General and administrative
to a related party 35,765 6,767 42,502
General and administrative 8,975 1,690 10,665
Depreciation, depletion
and amortization 18,293 185 18,478
-------- -------- -------
Total Costs and Expenses 122,672 19,845 142,517
-------- -------- -------
Net Income $ 8,973 4,951 $ 13,924
======== ======== =======
Net Income per equity unit $ .62
======
See accompanying footnote to the financial statements
<PAGE> 7
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Six Months Ending
June 30, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 154,590 29,118 $ 183,708
-------- -------- -------
Total Revenue 154,590 29,118 183,708
-------- -------- -------
Costs and Expenses:
Production expense 76,390 14,388 90,778
General and administrative
to a related party 31,556 5,944 37,500
General and administrative 11,131 2,097 13,228
Depreciation, depletion
and amortization 19,225 194 19,419
-------- -------- -------
Total Costs and Expenses 138,302 22,623 160,925
-------- -------- -------
Net Income $ 16,288 6,495 $ 22,783
======== ======== =======
Net Income per equity unit $ 1.13
======
See accompanying footnote to the financial statements
<PAGE> 8
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ending
June 30, 1998
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 69,645 13,118 $ 82,763
-------- -------- ---------
Total Revenue 69,645 13,118 82,763
-------- -------- ---------
Costs and Expenses:
Production expense 35,320 6,652 41,972
General and administrative
to a related party 17,881 3,368 21,249
General and administrative 4,976 937 5,913
Depreciation, depletion
and amortization 9,147 93 9,240
-------- -------- ---------
Total Costs and Expenses 67,324 11,050 78,374
-------- -------- ---------
Net Income $ 2,321 2,068 $ 4,389
======== ======== =========
Net Income per equity unit $ .16
========
See accompanying footnote to the financial statements
<PAGE> 8
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ending
June 30, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 73,576 13,859 $ 87,435
-------- -------- ---------
Total Revenue 73,576 13,859 87,435
-------- -------- ---------
Costs and Expenses:
Production expense 35,619 6,709 42,328
General and administrative
to a related party 15,778 2,972 18,750
General and administrative 7,057 1,330 8,387
Depreciation, depletion
and amortization 9,648 97 9,745
-------- -------- ---------
Total Costs and Expenses 68,102 11,108 79,210
-------- -------- ---------
Net Income $ 5,474 2,751 $ 8,225
======== ======== =========
Net Income per equity unit $ .38
========
See accompanying footnote to the financial statements
<PAGE> 9
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Six Months Ended
June 30, 1998
Limited General
Partners Partners Total
Balance at beginning of
period $ 685,336 (281,449) 403,887
Net Income(Loss) 8,973 4,951 13,924
-------- -------- --------
Balance at end of period $ 694,309 (276,498) 417,811
======== ======== ========
Six Months Ended
June 30, 1997
Limited General
Partners Partners Total
Balance at beginning of
period $ 672,221 (290,790) 381,431
Net Income(Loss) 16,288 6,495 22,783
-------- -------- --------
Balance at end of period $ 688,509 (284,295) 404,214
======== ======== ========
See accompanying footnote to the financial statements
<PAGE> 10
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Three Months Ended
June 30, 1998
Limited General
Partners Partners Total
Balance at beginning of
period $ 691,988 (278,566) 413,422
Net Income(Loss) 2,321 2,068 4,389
-------- -------- --------
Balance at end of period $ 694,309 (276,498) 417,811
======== ======== ========
Three Months Ended
June 30, 1997
Limited General
Partners Partners Total
Balance at beginning of
period $ 683,035 (287,046) 395,989
Net Income(Loss) 5,474 2,751 8,225
-------- -------- --------
Balance at end of period $ 688,509 (284,295) 404,214
======== ======== ========
See accompanying footnote to the financial statements
<PAGE> 11
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Six months Six months
ended ended
June 30, June 30,
1998 1997
Net cash provided by operating
activities $ 0 $ 5,634
---------- ----------
Cash(used in)investment activities:
Investment in wells and related
facilities 0 (5,647)
----------- ----------
Net Cash used in investment
activities 0 (5,647)
Net increase(decrease) in cash and
cash equivalents 0 (13)
----------- ----------
Cash and cash equivalents at
beginning of period 7 34
----------- ----------
Cash and cash equivalents at end of
period $ 7 $ 21
=========== ==========
See accompanying footnote to the financial statements
<PAGE> 12
STERLING GAS DRILLING FUND 1982
(a New York limited partnership)
Note to Financial Statements
June 30, 1998
1. The accompanying statements for the period ending June 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 information extracted from
Sterling Gas Drilling Fund 1982 second quarter 1998 10Q and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 7
<SECURITIES> 0
<RECEIVABLES> 2,607
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,614
<PP&E> 12,436,895
<DEPRECIATION> (11,729,347)
<TOTAL-ASSETS> 710,162
<CURRENT-LIABILITIES> 292,351
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 417,811<F1>
<TOTAL-LIABILITY-AND-EQUITY> 710,162
<SALES> 156,441
<TOTAL-REVENUES> 156,441
<CGS> 142,517
<TOTAL-COSTS> 142,517
<OTHER-EXPENSES> 00
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,924
<EPS-PRIMARY> 0.62<F2>
<EPS-DILUTED> 0
<FN>
<F1>Other-se includes total partner's equity.
<F2>The limited partners' share of net income was divided by the total
number of limited partnership units of 14,370.
</FN>
</TABLE>
