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, 1996
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 too
such filing requirements for the past 90 days. Yes/X/ No / /
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - June 30, 1996 and December 31, 1995.
Statements of Operations for the Six and Three Months Ended June 30, 1996 and
1995.
Statements of Changes in Partners' Equity for the Six and Three Months Ended
June 30, 1996 and 1995.
Statements of Cash Flows for the Six Months Ended June 30, 1996 and 1995.
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 June 30, 1996, the General Partners have
distributed $2,256,939 or 20.375% of original Limited Partner capital
contributions to the Limited Partners.
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, 1995
was approximately $893,700 as compared to $782,000 as of December 31, 1994.
The increase in total estimated discounted future net revenue was due
primarily to higher year end gas prices as of December 31, 1995, when
compared to the low gas price as of December 31, 1994. 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, 1995 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 $147,280 in 1995 to $139,802 in
1996. The partnership experienced declines in gas production from 59,635
MCF's in 1995 to 54,045 MCF's in 1996. Oil production remained unchanged
from 1995 to 1996. These declines in production were partially offset by
higher average gas price per MCF and higher average oil price per MCF, from
$2.12 per MCF and $15.88 per barrel in 1995 to $2.32 per MCF and $18.00 per
barrel in 1996. The partnership received average spot market price for its
gas sold in 1996. late in 1995 the partnership entered into a fixed price
contract to be in effect for the upcoming twelve month period. The spot
prices received in 1995 could vary wildly based upon high demand or low
demand period. Lower gas production can be attributed to a variety of
reasons that may include compressor down times, main line pressure
differences and occasional workovers performed on wells. A workover may be
completed on a well in order to halt further significant declines or to
increase current production. A workover may include costs for equipment or
costs for inexpensive repairs. These costs will be capitalized or expensed
based upon the appropriate criteria. Production expenses decreased from
to $61,077 in 1995, because 1994 included additional of costs associated
with location, road repairs and line outages due to severe weather
conditions.
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. The Partnership
was not required to revise the properties' basis in either 1995 or the
first half of 1996. The depletion expense charged is reasonable based upon
the overall current cost basis of the oil and gas 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.
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)
August 8 , 1996 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)
June 30, December
1996 31, 1995
Assets
Current assets:
Cash and cash equivalents $ 120,490 $ 87,201
Due from others 20,221 94,874
----------- -----------
Total current assets 140,711 182,075
Oil and gas properties -
successful efforts method:
Leasehold costs 321,314 321,314
Well and related facilities 9,141,157 9,127,910
less accumulated
depreciation, depletion and
amortization (7,849,770) (7,808,432)
----------- ----------
1,612,701 1,640,792
----------- ----------
Total assets $ 1,753,412 $ 1,822,867
=========== ==========
Partners' equity
Limited partners 1,699,627 1,759,361
General partners 53,785 63,506
----------- ----------
Total partners' equity $ 1,753,412 $ 1,822,867
=========== ===========
See accompanying note to the financial statements.
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Six Months Ending
June 30, 1996
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 106,949 $ 32,853 $ 139,802
Interest income 2,874 267 3,141
-------- -------- -------
Total Revenue 109,823 33,120 142,943
-------- -------- -------
Costs and Expenses:
Production expense 51,580 15,845 67,425
General and administrative
to a related party 28,688 8,812 37,500
General and administrative 9,926 3,049 12,975
Depreciation, depletion
and amortization 37,824 3,514 41,338
-------- -------- -------
Total Costs and Expenses 128,018 31,220 159,238
-------- -------- -------
Net Income(loss) $ (18,195) $ 1,900 $ (16,295)
======== ======== =======
Net Income(loss)
per equity unit $ (1.64)
======
See accompanying note to the financial statements.
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Six Months Ending
June 30, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 112,669 $ 34,611 $ 147,280
Interest income 3,303 307 3,610
-------- -------- -------
Total Revenue 115,972 34,918 150,890
-------- -------- -------
Costs and Expenses:
Production expense 46,724 14,353 61,077
General and administrative
to a related party 28,688 8,812 37,500
General and administrative 10,656 3,274 13,930
Depreciation, depletion
and amortization 50,334 4,676 55,010
-------- -------- -------
Total Costs and Expenses 136,402 31,115 167,517
-------- -------- -------
Net Income(loss) $ (20,430) $ 3,803 $ (16,627)
======== ======== =======
Net Income(loss)
per equity unit $ (1.84)
======
See accompanying note to the financial statements.
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ending
June 30, 1996
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 51,294 $ 15,756 $ 67,050
Interest income 1,649 153 1,802
-------- -------- ---------
Total Revenue 52,943 15,909 68,852
-------- -------- ---------
Costs and Expenses:
Production expense 28,962 8,897 37,859
General and administrative
to a related party 14,344 4,406 18,750
General and administrative 5,898 1,811 7,709
Depreciation, depletion
and amortization 19,002 1,765 20,767
-------- -------- ---------
Total Costs and Expenses 68,206 16,879 85,085
-------- -------- ---------
Net Income(loss) $ (15,263) $ (970) $ (16,233)
======== ======== =========
Net Income(loss)
per equity unit $ (1.38)
========
See accompanying note to the financial statements.
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ending
June 30, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 42,623 $ 13,093 $ 55,716
Interest income 1,719 160 1,879
-------- -------- ---------
Total Revenue 44,342 13,253 57,595
-------- -------- ---------
Costs and Expenses:
Production expense 24,824 7,625 32,449
General and administrative
to a related party 14,344 4,406 18,750
General and administrative 6,799 2,089 8,888
Depreciation, depletion
and amortization 25,167 2,338 27,505
-------- -------- ---------
Total Costs and Expenses 71,134 16,458 87,592
-------- -------- ---------
Net Income(loss) $ (26,792) $ (3,205) $ (29,997)
======== ======== =========
Net Income(loss)
per equity unit $ (2.42)
========
See accompanying note to the financial statements.
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Six Months Ended
June 30, 1996
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,759,361 $ 63,506 $ 1,822,867
Cash Distributions (41,539) (11,621) (53,160)
Net Income(Loss) (18,195) 1,900 (16,295)
-------- -------- ---------
Balance at end of period $ 1,699,627 $ 53,785 $ 1,753,412
======== ======== =========
Six Months Ended
June 30, 1995
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,789,950 $ 47,361 $ 1,837,311
Cash Distributions (27,692) (7,386) (35,078)
Net Income(Loss) (20,430) 3,803 (16,627)
-------- -------- ---------
Balance at end of period $ 1,741,828 $ 43,778 $ 1,785,606
======== ======== =========
See accompanying 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
June 30, 1996
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,756,429 $ 66,376 $ 1,822,805
Cash Distributions (41,539) (11,621) (53,160)
Net Income(Loss) (15,263) (970) (16,233)
-------- -------- ---------
Balance at end of period $ 1,699,627 $ 53,785 $ 1,753,412
========= ======== =========
Three Months Ended
June 30, 1995
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,796,312 $ 54,369 $ 1,850,681
Cash Distributions (27,692) (7,386) (35,078)
Net Income(Loss) (26,792) (3,205) (29,997)
-------- -------- ----------
Balance at end of period $ 1,741,828 $ 43,778 $ 1,785,606
========= ======== ==========
See accompanying note to the financial statements.
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Six Six
months months
ended ended
June 30, June 30,
1996 1995
Net cash provided by operating
activities $ 99,696 $ (10,252)
--------- ---------
Cash Flows from investing activities:
Credit on uncompleted wells and
related equipment 0 (3,496)
Investment in wells and related
facilities (13,247) 0
--------- ---------
Net Cash used in investing activities
(13,247) (3,496)
Cash flows from financing activities:
Distribution to partners (53,160) (35,078)
--------- ---------
Net cash used in financing activities (53,160) (35,078)
--------- ---------
Net increase(decrease) in cash and
cash equivalents 33,289 (48,826)
Cash and cash equivalents at
beginning of period 87,201 150,718
--------- ---------
Cash and cash equivalents at end of
period $ 120,490 $ 101,892
========= =========
See accompanying note to the financial statements.
STERLING DRILLING FUND 1983-1
(a New York limited partnership)
Note to Financial Statements
June 30, 1996
1. The accompanying statements for the period ending June 30,
1996, 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 Drilling Fund 1983-1's second quarter 1996 10Q and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 120,490
<SECURITIES> 0
<RECEIVABLES> 20,221
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 140,711
<PP&E> 9,462,471
<DEPRECIATION> (7,849,770)
<TOTAL-ASSETS> 1,753,412
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,753,412<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,753,412
<SALES> 142,943<F2>
<TOTAL-REVENUES> 142,943
<CGS> 159,238
<TOTAL-COSTS> 159,238
<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> (16,295)
<EPS-PRIMARY> (1.64)<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other se includes total partners' equity.
<F2>Sales includes $3,141 of interest income.
<F3>The limited partners' share of net incme was divided by the
total number of oustanding limited partner units of 11,077.
</FN>
</TABLE>
