<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, 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 - March 31, 1999 and December 31, 1998.
Statements of Operations for the Three Months Ended March 31, 1999 and 1998.
Statements of Changes in Partners' Equity for the Year Ended
December 31,1998 and for the Three Months Ended March 31, 1999.
Statements of Cash Flows for the Three Months Ended March 31,1999 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 competitive in all its phases.
There is also competition between 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 Agreement of Limited Partnership of the Partnership, 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 for the conduct of
the Partnership business. As of March 31, 1999, the General Partners have
distributed to the Limited Partners $1,402,512 or 9.76% of the total
Limited Partner capital contributions.
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 the 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, to be
completed by mid-1999, 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, is
in the process of conducting an internal review of all systems and
contacting 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 expects to complete identification of critical
systems by June 1999 and to continue 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 this
contingency plan by the second quarter of 1999 but also expects to refine
this plan throughout 1999.
<PAGE> 4
Through 1998, 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 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 -
Overall operating revenues decreased from $73,678 in 1998 to $43,091 in
1999 The partnership receives most of its income from gas producing wells.
The gas production and average price per mcf declined,the production went
from 24,043 MCF in 1998 to 19,347 MCF in 1999. The average price per mcf
changed from $2.96 in 1998 to $2.68 in 1999. The Partnership also
experienced a decline in oil revenue due to decreases in both oil
production and average price per barrel. Production expenses increased
from $28,900 in 1998 to $30,877 in 1999. These costs include those
associated with repairs needed for access to the wells and well sites and
the related labor costs. The production expenses incurred in both 1998 and
1999 were typical and customary to the upkeep of the Partnership's wells.
<PAGE> 5
Overall general and administrative expenses remained stable in both 1998
and 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
1999 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 underdiscounted future
net cash flows attributable to the Partnership properties. The partnership
was not required to reduce the properties basis in either 1998 or first
quarter 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
May 14, 1999
(Date)
<PAGE> 7
STERLING GAS DRILLING FUND 1982
(a New York Limited Partnership)
Balance Sheets
(unaudited)
March 31, December 31,
1999 1998
Assets
Current Assets:
Cash and cash equivalents $ 12 $ 20
----------- -----------
Total current assets 12 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 (11,756,179) (11,747,491)
------------- -------------
680,716 689,404
----------- -----------
Total assets $ 680,728 $ 689,424
=========== ===========
Liabilities and Partners' Equity
Current liabilities:
Due to affiliates $ 275,625 $ 262,068
----------- -----------
Total current liabilities 275,625 262,068
----------- -----------
Partners' Equity
Limited partners 679,632 699,647
General partners (274,529) (272,291)
----------- -----------
Total partners' equity 405,103 427,356
----------- -----------
Total liabilities and
partners' equity $ 680,728 $ 689,424
=========== ===========
See accompanying note to the financial statements.
<PAGE> 8
STERLING GAS DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
March 31, 1999
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 36,261 6,829 $ 43,090
-------- -------- -------
Total Revenue 36,261 6,829 43,090
-------- -------- -------
Costs and Expenses:
Production expense 25,983 4,893 30,876
General and administrative
to a related party 17,884 3,369 21,253
General and administrative 3,809 718 4,527
Depreciation, depletion
and amortization 8,600 87 8,687
-------- -------- -------
Total Costs and Expenses 56,276 9,067 65,343
-------- -------- -------
Net Income/(Loss) $ (20,015 ) (2,238) $ (22,253)
======== ======== =======
Net Income/(Loss)
per equity unit $ (1.55)
======
See accompanying note to the financial statements.
<PAGE> 9
STERLING GAS DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
March 31, 1998
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 62,000 11,678 $ 73,678
-------- -------- -------
Total Revenue 62,000 11,678 73,678
-------- -------- -------
Costs and Expenses:
Production expense 24,319 4,581 28,900
General and administrative
to a related party 17,884 3,369 21,253
General and administrative 3,999 753 4,752
Depreciation, depletion
and amortization 9,146 92 9,238
-------- -------- -------
Total Costs and Expenses 55,348 8,795 64,143
-------- -------- -------
Net Income $ 6,652 2,883 $ 9,535
======== ======== =======
Net Income per equity unit $ 0.46
======
See accompanying note to the financial statements.
<page > 10
STERLING GAS DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Limited General
Partners Partners Total
Balance at December 31, 1997 $ 685,336 $ (281,449) $ 403,887
Net Income 14,311 9,158 23,469
-------- -------- --------
Balance at December 31, 1998 $ 699,647 $ (272,291) $ 427,356
Net Income/(loss) (20,015) (2,238) (22,253)
-------- -------- --------
Balance at March 31, 1999 $ 679,632 (274,529) 405,103
======== ======== ========
See accompanying note to the financial statements.
<PAGE> 11
STERLING GAS DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Three months Three months
ended March ended March
31,1999 31,1998
Net cash provided by/(used in)
operating activities $ 8 $ (3)
---------- ----------
Net increase(decrease) in cash and
cash equivalents 8 (3)
Cash and cash equivalents at
beginning of period 20 7
---------- ----------
Cash and cash equivalents at end of
period $ 12 $ 4
========== ==========
See accompanying note to the financial statements.
<PAGE> 12
STERLING GAS DRILLING FUND 1982
(a New York limited partnership)
Note to Financial Statements
March 31, 1999
1. The accompanying statements for the period ending March 31,
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 first quarter 1999 10Q and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 12
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12
<PP&E> 12,436,895
<DEPRECIATION> (11,756,179)
<TOTAL-ASSETS> 680,728
<CURRENT-LIABILITIES> 275,625
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 405,103<F1>
<TOTAL-LIABILITY-AND-EQUITY> 680,728
<SALES> 43,090
<TOTAL-REVENUES> 43,090
<CGS> 65,343
<TOTAL-COSTS> 65,343
<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> (22,253)
<EPS-PRIMARY> (1.39)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Other se includes total partners' equity.
<F2>The limited partner's share of net income was divided by total
number of limited partnership units of 14370.
</FN>
</TABLE>
