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 2-84452
STERLING DRILLING FUND 1983-1
(Exact name of registrant as specified in charter)
New York
(State or other jurisdiction of incorporation or organization)
13-3167549
(IRS employer identification number)
1 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 / /
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 Three Months Ended September 30,
1995 and 1994.
Statements of Changes in Partners' Equity for the Nine and Three Months Ended
September 30, 1995 and 1994.
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
Liquidity -
The oil and gas industry is intensely 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 Registrant competes with many other companies having
substantially greater financial and other resources. In accordance with
the terms of the Prospectus as filed by the Registrant, 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 contingent debts, liabilities or expenses for the conduct of the
Partnership's business. As of September 30, 1995, the General Partners
have distributed $2,215,400 or 20.00% of original 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 (S.E.C. case)
associated with such reserves, discounted at 10% as of December 31, 1994
was approximately $782,000 as compared to $1,863,000 as of December 31,
1993.
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 November 1983 for $9,400,000. Pursuant to terms of this
contract thirty-eight wells have been drilled resulting in thirty-seven
producing wells and one dry hole.
3. Results of Operations -
Overall operating revenues decreased from $ 295,604 in 1994 to $ 216,199
in 1995. The combination of lower gas production,from 94,676 MCF in 1994
to 88,386 MCF in 1995, and lower average price per MCF, from $ 2.87 in 1994
to $ 2.10 in 1995, contributed to lower gas revenues. A minor increase in
average price per barrel, from $ 14.64 in 1994 to $ 16.06 in 1995 resulted
in slightly higher oil revenue. Some of the lower gas production can be
attributed to the gathering system's main line pressure being increased.
The higher pressure can cause the partnership's gas to flow less 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 $ 137,852 in 1994 to $98,385 in 1995,
because 1994 included additional of costs associated with location, road
repairs and line outages due to severe weather conditions. Most of the
production expenses, in 1995, were to maintain the general upkeep of the
wells and well site.
General and administrative expenses have been segregated on the financial
statements to reflect expenses paid to PrimeEnergy Management Corporation,
a general partner. These expenses are charged in accordance with
guidelines set forth in the Registrant's Management Agreement and are
attributable to the affairs and operations of the Partnership and shall not
exceed an annual amount equal to 5% of the limited partners capital
contributions. Amounts related to both 1995 and 1994 are substantially less
than the amounts allocable to the Registrant under the Partnership
Agreement. The lower amounts reflect management's effort's to limit costs,
both incurred and allocated to the Registrant. Management continues to
reduce third party costs and use in-house resources to provide efficient
and timely services to the partnership.
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. A downward revision
in reserve estimates due to lower year-end gas prices in 1994 resulted in
an additional charge of $450,000. The lower depletion expense in 1995 is
due to lower depletable cost basis in oil and gas properties.
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 the 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
Exchange Act of 1934, Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
STERLING DRILLING FUND 1983-1
(Registrant)
November , 1995 BY: /S/ Charles E. Drimal Jr.
(Date) -----------------------------
Charles E. Drimal, Jr.,
General Partner
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Balance Sheets
(unaudited)
September 30, December
1995 31, 1994
Assets
Current assets:
Cash and cash equivalants $ 100,234 $ 150,718
Due from others 5,255 0
----------- -----------
Total current assets 105,489 150,718
Oil and gas properties -
successful efforts method:
Leasehold costs 321,314 321,314
Well and related facilities 9,146,306 9,127,910
less acummulated
depreciation,depletion and
amortization (7,805,467) (7,722,074)
----------- -----------
1,662,153 1,727,150
----------- -----------
Total assets $ 1,767,642 $ 1,877,868
=========== ===========
Liabilities and partners' equity
Current liabilities:
Due to affiliates $ 0 $ 40,557
----------- -----------
Total current liabilities 0 40,557
----------- -----------
Partners' equity
Limited partners 1,723,943 1,789,950
General partners 43,699 47,361
----------- -----------
Total partners' equity 1,767,642 1,837,311
----------- -----------
Total liabilities and
partners' equity $ 1,767,642 $ 1,877,868
=========== ===========
See accompaying note to the financial statements.
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Nine Months Ended
September 30, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 165,392 50,807 $ 216,199
Interest income 4,553 423 4,976
-------- -------- -------
Total Revenue 169,945 51,230 221,175
-------- -------- -------
Costs and Expenses:
Production expense 75,265 23,120 98,385
General and administrative
to a related party 43,031 13,219 56,250
General and administrative 13,659 4,196 17,855
Depreciation, depletion
and amortization 76,305 7,088 83,393
-------- -------- -------
Total Costs and Expenses 208,260 47,623 255,883
-------- -------- -------
Net Income(loss) $ (38,315) 3,607 $ (34,708)
======== ======== =======
Net Income(loss)
per equity unit $ (3.46)
======
See accompaying note to the financial statements.
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Nine Months Ended
September 30, 1994
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 226,137 $ 69,467 $ 295,604
Interest income 2,844 264 3.108
-------- ------- ---------
Total Revenue 228,981 69,731 298,712
-------- ------- ---------
Costs and Expenses:
Production expense 105,457 32,395 137,852
General and administrative
to a related party 86,062 26,438 112,500
General and administrative 13,598 4,177 17,775
Depreciation, depletion
and amortization 82,180 7,634 89,814
-------- ------- ---------
Total Costs and Expenses 287,297 70,644 357,941
-------- ------- ---------
Net Income(loss) $ (58,316) (913) $ (59,229)
======== ======= =========
Net Income(loss)
per equity unit $ (5.26)
========
See accompaying note to the financial statements.
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
September 30, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 52,723 16,196 $ 68,919
Interest income 1,250 116 1,366
-------- -------- ---------
Total Revenue 53,973 16,312 70,285
-------- -------- ---------
Costs and Expenses:
Production expense 28,541 8,767 37,308
General and administrative
to a related party 14,343 4,407 18,750
General and administrative 3,003 922 3,925
Depreciation, depletion
and amortization 25,971 2,412 28,383
-------- -------- ---------
Total Costs and Expenses 71,858 16,508 88,366
-------- -------- ---------
Net Income(loss) $ (17,885) (196) $ (18,081)
======== ======== =========
Net Income(loss)
per equity unit $ (1.61)
========
See accompaying note to the financial statements.
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
September 30, 1994
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 78,461 24,103 $ 102,564
Interest income 1,112 103 1,215
-------- -------- ----------
Total Revenue 79,573 24,206 103,779
-------- -------- ----------
Costs and Expenses:
Production expense 31,247 9,599 40,846
General and administrative
to a related party 28,687 8,813 37,500
General and administrative 4,883 1,500 6,383
Depreciation, depletion
and amortization 27,399 2,545 29,944
-------- -------- ----------
Total Costs and Expenses 92,216 22,457 114,673
-------- -------- ----------
Net Income(loss) $ (12,643) 1,749 $ (10,894)
======== ======== ==========
Net Income(loss)
per equity unit $ (1.14)
======
See accompaying note to the financial statements.
STERLING DRILLING FUND 1983-1
(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 $ 1,789,950 47,361 $ 1,837,311
Partner's contributions 0 117 117
Cash distributions (27,692) (7,386) (35,078)
Net income(loss) (38,315) 3,607 (34,708)
-------- -------- ------------
Balance at end of period $ 1,723,943 43,699 $ 1,767,642
======== ======== ============
Nine Months Ended
September 30, 1994
Limited General
Partners Partners Total
Balance at beginning of
period $ 2,374,227 109,492 $ 2,483,719
Partner's contributions 0 117 117
Cash distributions (27,692) (7,622) (35,314)
Net income(loss) (58,316) (913) (59,229)
-------- -------- -----------
Balance at end of period $ 2,288,219 101,074 $ 2,389,293
======== ======== ===========
See accompaying note to the financial statements.
STERLING DRILLING FUND 1983-1
(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 $ 1,741,828 43,778 $ 1,785,606
Partner's contributions 0 117 117
Cash distributions 0 0 0
Net income(loss) (17,885) (196) (18,081)
-------- -------- ----------
Balance at end of period $ 1,723,943 43,699 $ 1,767,642
========= ======== ==========
Three Months Ended
September 30, 1994
Limited General
Partners Partners Total
Balance at beginning of
period $ 2,300,962 99,208 $ 2,400,070
Partner's contributions 0 117 117
Cash distributions 0 0 0
Net income(loss) (12,643) 1,749 (10,894)
---------- --------- ----------
Balance at end of period $ 2,288,219 101,074 $ 2,389,293
========== ========= ==========
See accompaying note to the financial statements.
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Nine months Nine months
ended ended
September September
30, 1995 30, 1994
Net cash provided by operating
activities $ 2,873 $ 33,656
--------- ---------
Cash Flows from investing activities:
Credit on uncompleted wells and
related equipment 0 11,748
--------- ---------
Net Cash used in investing activities (18,396) 11,748
Cash flows from financing activities:
Distribution to partners (35,078) (35,314)
--------- ---------
Net cash used in financing activities (35,961) (35,197)
--------- ---------
Net increase(decrease) in cash and
cash equivalents (50,484) 10,207
Cash and cash equivalents at
beginning of period 150,718 104,952
--------- ---------
Cash and cash equivalents at end of
period $ 100,234 $ 115,159
========= =========
See accompaying note to the financial statements.
STERLING DRILLING FUND 1983-1
(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 periods' financial
statements to conform to the current period presentation.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Sterling Drilling Fund 1983-1 Form 10-Q 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> 100,234
<SECURITIES> 0
<RECEIVABLES> 5,255
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 105,489
<PP&E> 9,467,620
<DEPRECIATION> (7,805,467)
<TOTAL-ASSETS> 1,767,642
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,767,642<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,767,642
<SALES> 216,199
<TOTAL-REVENUES> 221,175<F2>
<CGS> 255,883
<TOTAL-COSTS> 255,883
<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> (34,708)
<EPS-PRIMARY> (3.46)<F3>
<EPS-DILUTED> 0
<FN>
<F1> (other-se) includes total partner's equity.
<F2> (total-revenue) includes $4,976 of interest income.
<F3> (eps-primary) includes net income divided by total limited
partnership units of 11,077.
</FN>
</TABLE>
