<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, 1999
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, 1999 and December 31, 1998.
Statements of Operations for the Six and the Three Months Ended June
30, 1999 and 1998.
Statements of Changes in Partners' Equity for the Six and the Three
Months Ended June 30, 1999 and 1998.
Statements of Cash Flows for the Six Months Ended June 30, 1999 and
1998.
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, 1999, 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.
The Year 2000 (Y2K) issue is the definition and resolution of potential
problems resulting from computer application programs or imbedded chip
instruction sets utilizing two-digits, as opposed to four digits, to define
a specific year. Such date sensitive systems may be unable to properly
interpret dates, which could cause a system failure or other computer
errors, leading to disruptions in operations. The Partnership relies on the
Managing General Partner for all management and administrative functions.
Consequently, the Partnership's exposure to the Y2K problems is determined
by what Year 2000 efforts have been undertaken by the Managing General
Partner.
<PAGE> 3
In 1997, the Managing General Partner developed a three-phase program for
the Y2K information systems compliance. Phase I is to identify those
systems with which the Partnership has exposure to Y2K issues. Phase II is
to remediate systems and replace equipment where required. Phase III is the
final testing of each major area of exposure to ensure compliance. The
Managing General Partner has identified four major areas determined to be
critical for successful Y2K compliance: (1) financial and informational
system applications, (2) communications applications, (3) oil and gas
producing operations, and (4) third-party relationships.
The Managing General Partner, in accordance with Phase I of the program,
conducted an internal review of all systems and contacted all software
suppliers to determine major areas of exposure to Y2K issues. The Managing
General Partner has completed the modifications to its core financial and
reporting systems and is continuing to test compliance in this area. These
modifications were made in conjunction with an upgrade of the financial
reporting applications provided by the Managing General Partner's software
vendor. Conversion to the new system was completed during 1998. Due to the
technology advances in the communications area the Managing General Partner
has upgraded such equipment regularly over the past three years. Y2K
compliance was a specification requirement of each installation.
Consequently, the Managing General Partner expects exposure in this area to
be limited to third party readiness. The Managing General Partner is in the
process of identifying areas of exposure resulting from equipment used in
its oil and gas producing operations. The Managing General Partner intends
to continue identification, remediation and testing throughout 1999. In the
third-party area, the Managing General Partner has received assurance from
its significant service suppliers that they intend to be Y2K compliant by
2000. The Managing General Partner has implemented a program to request
Year 2000 certification or other assurance from other third parties during
1999.
The Partnership recognizes that, notwithstanding the efforts described
above, the Partnership could experience disruptions to its operations or
administrative functions, including those resulting from non-compliant
systems utilized by unrelated third party governmental and business
entities. The Managing General Partner is in the process of developing a
contingency plan in order to mitigate potential disruption to business
operations. The Managing General Partner expects to complete and to
refine this plan throughout 1999.
The Managing General Partner has handled identifying, remediating and
testing systems for Year 2000 compliance within the scope of routine
upgrades and systems evaluations. The Managing General Partner expects to
complete the review of oil and gas operations exposure in the same manner,
without incurring substantial additional costs. However, information
<PAGE> 4
resulting from the oil and gas operations review may indicate required
expenditures not currently contemplated by the Partnership.
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, 1998 was
approximately $768,500, as compared to December 31, 1997, of about
$904,800. Overall reservoir engineering is a subjective process of
estimating underground accumulations of gas and oil that can not be measure
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 $156,437 in 1998 to
$88,407 in 1999. The average price per MCF in 1998 was $3.11 compared to
$2.10 in 1999. Also gas production went from 48,305 MCF's in 1998 to
38,031 MCF in 1999. A substantial portion of the Partnership's production
was shut-in for the month of June 1999 due to required maintenance of the
gas transporter's pipeline. All properties were returned to production in
July 1999. Production expenses decreased from $70,872 in 1998 to $53,748
in 1999. The production expenses were lower 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
production expenses include normal maintenance and upkeep of the wells and
well sites.
<PAGE> 5
Overall general and administrative expenses showed no significant change
from 1998 to 1999. 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 1998 or first half
1999. 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>6
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 13, 1999
(Date)
<PAGE> 7
STERLING DRILLING FUND 1982
(A New York Limited Partnership)
Balance Sheets
June 30, December 31,
1999 1998
(unaudited) (audited)
Assets
Current Assets:
Cash and cash equivalents $ 27 $ 20
Due from others 4,585 0
----------- -------------
Total current assets 4,612 20
----------- -------------
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 (11,764,866) (11,747,491)
----------- -------------
672,029 689,404
----------- -------------
Total assets $ 676,641 $ 689,424
=========== =============
Liabilities and Partners' Equity
Current liabilities:
Due to affiliates $ 280,840 $ 262,068
----------- -------------
Total current liabilities 280,840 262,068
----------- -------------
Partners' Equity
Limited partners 670,514 699,647
General partners (274,713) (272,291)
----------- -------------
Total partners' equity 395,801 427,356
----------- -------------
Total liabilities and
partners' equity $ 676,641 $ 689,424
=========== =============
See accompanying footnote to the financial statements
<PAGE> 8
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Six Months Ending
June 30, 1999
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 74,394 $ 14,013 $ 88,407
Other revenue 3,594 677 4,271
-------- -------- -------
Total Revenue 77,988 14,690 92,678
-------- -------- -------
Costs and Expenses:
Production expense 45,229 8,519 53,748
General and administrative
to a related party 35,765 6,737 42,502
General and administrative 8,927 1,682 10,609
Depreciation, depletion
and amortization 17,200 174 17,374
-------- -------- -------
Total Costs and Expenses 107,121 17,112 124,233
-------- -------- -------
Net Income (Loss) $ (29,133)$ (2,422) $ (31,555)
======== ======== =======
Net Income (Loss) per
Equity unit $ (2.03)
======
See accompanying footnote to the financial statements
<PAGE> 9
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> 10
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ending
June 30, 1999
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 38,134 7,183 $ 45,317
Other revenue 3,594 677 4,271
-------- -------- ---------
Total Revenue 41,728 7,860 49,588
-------- -------- ---------
Costs and Expenses:
Production expense 19,247 3,625 22,872
General and administrative
to a related party 17,881 3,368 21,249
General and administrative 5,118 964 6,082
Depreciation, depletion
and amortization 7,310 1,377 8,687
-------- -------- ---------
Total Costs and Expenses 49,556 9,334 58,890
-------- -------- ---------
Net Income (Loss) $ (7,828) (1,474) $ (9,302)
======== ======== =========
Net Income (Loss) per equity
unit $ (.55)
========
See accompanying footnote to the financial statements
<PAGE> 11
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> 12
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Six Months Ended
June 30, 1999
Limited General
Partners Partners Total
Balance at beginning of
period $ 699,647 (272,294) 427,356
Net Income(Loss) (29,133) (2,422) (31,555)
-------- -------- --------
Balance at end of period $ 670,514 (274,713) 395,801
======== ======== ========
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
======== ======== ========
See accompanying footnote to the financial statements
<PAGE> 13
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Three Months Ended
June 30, 1999
Limited General
Partners Partners Total
Balance at beginning of
period $ 679,632 (274,529) $ 405,103
Net Income(Loss) (7,828) (1,474) (9,302)
-------- -------- --------
Balance at end of period $ 671,804 (276,003) $ 395,801
======== ======== ========
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
======== ======== ========
See accompanying footnote to the financial statements
<PAGE> 14
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Six months Six months
Ended Ended
June 30, June 30,
1999 1998
Net cash provided by operating
activities $ 6 $ 0
---------- ----------
Net increase(decrease) in cash and
cash equivalents 6 0
Cash and cash equivalents at
beginning of period 20 7
---------- ----------
Cash and cash equivalents at end of
period $ 26 $ 7
========== ==========
See accompanying footnote to the financial statements
<PAGE> 15
STERLING GAS DRILLING FUND 1982
(a New York limited partnership)
Note to Financial Statements
June 30, 1999
1. The accompanying statements for the period ending June 30,
1999 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 1999 10Q
and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 27
<SECURITIES> 0
<RECEIVABLES> 4,585
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,612
<PP&E> 12,436,895
<DEPRECIATION> (11,764,866)
<TOTAL-ASSETS> 676,641
<CURRENT-LIABILITIES> 280,840
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 395,801<F1>
<TOTAL-LIABILITY-AND-EQUITY> 676,641
<SALES> 92,678
<TOTAL-REVENUES> 92,678
<CGS> 124,233
<TOTAL-COSTS> 124,233
<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> (31,555)
<EPS-BASIC> (2.03)<F2>
<EPS-DILUTED> 0
<FN>
<F1>
Other-SE includes total partners' equity
<F2>The income from the limited partners' group was divided by the
total limited partners units.
</FN>
</TABLE>
