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, 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 to
such filing requirements for the past 90 days. Yes/X/ No / /
<PAGE>
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - September 30, 1996 and December 31, 1995.
Statements of Operations for the Nine and Three Months Ended September 30,
1996 and 1995.
Statements of Changes in Partners' Equity for the Nine and Three Months Ended
September 30, 1996 and 1995.
Statements of Cash Flows for the Nine Months Ended September 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 September 30, 1995, 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 undiscounted future net cash flows for the Partnership
properties was caused by higher year end prices in effect at December 31,
1995 compared to lower year end prices as of December 31, 1994. There were
no significant 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, 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.
<PAGE>
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 $ 216,199 in 1995 to $210,455 in
1996. The revenue received from oil production remained consistent with
the prior year revenue. Revenue received from gas production was lower in
1996 than in 1995. Although a minor increase in average price per MCF
occurred, from $2.10 in 1995 to $2.30 in 1996, this was offset by a
production decline from 88,386 MCF in 1995 to 86,600 MCF in 1996. Some of
the partnership's wells experienced a shut in for about twenty-one days in
August of 1996. The main line these wells feed to was shut in by the
gathering system operator in order to complete necessary repairs and
maintenance. This shut-in contributed to lower overall production.
Production expenses increased from $98,385 in 1995 to $104,259 in 1996,
because 1996 included additional costs associated with location, road
repairs and line outages due to late spring and summer severe storms.
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 1996 and 1995 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. General and administrative
costs remained consistent with prior years costs. There was only minor
changes from 1995 to 1996.
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. No additional
depreciation, depletion or amortization was needed in 1995 or in the three
quarters of 1996. Although the 1996 expense is lower than 1995, the expense
recorded is consistent with the current basis of the partnership's
properties.
<PAGE>
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>
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 8, 1996 BY: /S/ Charles E. Drimal Jr.
(Date) -----------------------------
Charles E. Drimal, Jr.,
General Partner
<PAGE>
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Balance Sheets
September 30, December
1996 31, 1995
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 131,501 $ 87,201
Due from others 17,335 94,874
----------- -----------
Total current assets 148,836 182,075
----------- -----------
Oil and gas properties -
successful efforts method:
Leasehold costs 321,314 321,314
Well and related facilities 9,145,511 9,127,910
less accumulated
depreciation, depletion and
amortization (7,870,440) (7,808,432)
----------- -----------
1,596,385 1,640,792
----------- -----------
Total assets $ 1,745,221 $ 1,822,867
=========== ===========
Partners' equity
Limited partners 1,690,356 1,759,361
General partners 54,865 63,506
---------- -----------
Total partners' equity $ 1,745,221 $ 1,822,867
=========== ===========
See accompanying note to the financial statements.
<PAGE>
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Nine Months Ended
September 30, 1996
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 160,998 $ 49,457 $ 210,455
Interest income 4,282 398 4,680
-------- -------- -------
Total Revenue 165,280 49,855 215,135
-------- -------- -------
Costs and Expenses:
Production expense 79,758 24,501 104,259
General and administrative 43,031 13,219 56,250
to a related party
General and administrative 13,220 4,061 17,281
Depreciation, depletion
and amortization 56,737 5,271 62,008
-------- -------- -------
Total Costs and Expenses 192,746 47,052 239,798
-------- -------- -------
Net Income(loss) $ (27,466) $ 2,803 $ (24,663)
======== ======== =======
Net Income(loss)
per equity unit $ (2.48)
======
See accompanying note to the financial statements.
<PAGE>
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 accompanying note to the financial statements.
<PAGE>
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
September 30, 1996
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 54,049 $ 16,604 $ 70,653
Interest income 1,408 131 1,539
-------- -------- ---------
Total Revenue 55,457 16,735 72,192
-------- -------- ---------
Costs and Expenses:
Production expense 28,178 8,656 36,834
General and administrative 14,343 4,407 18,750
to a related party
General and administrative 3,294 1,012 4,306
Depreciation, depletion 18,913 1,757 20,670
and amortization
-------- -------- ---------
Total Costs and Expenses 64,728 15,832 80,560
-------- -------- ---------
Net Income(loss) $ (9,271) $ 903 $ (8,368)
======== ======== =========
Net Income(loss)
per equity unit $ (.84)
========
See accompanying note to the financial statements.
<PAGE>
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 accompanying note to the financial statements.
<PAGE>
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Nine Months Ended
September 30, 1996
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,759,361 63,506 $ 1,822,867
Partner's contributions 0 177 177
Cash distributions (41,539) (11,621) (53,160)
Net income(loss) (27,466) 2,803 (24,663)
--------- -------- ------------
Balance at end of period $ 1,690,356 54,865 1,745,221
========= ======== ============
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
========= ======== ===========
See accompanying note to the financial statements.
<PAGE>
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Three Months Ended
September 30, 1996
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,699,627 53,785 $ 1,753,412
Partner's contributions 0 177 177
Cash distributions 0 0 0
Net income(loss) (9,271) 903 (8,368)
--------- -------- ----------
Balance at end of period $ 1,690,356 54,865 $ 1,745,221
========= ======== ==========
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
========= ======== ==========
See accompanying note to the financial statements.
<PAGE>
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Nine months Nine months
ended ended
September September
30, 1996 30, 1995
Net cash provided by operating
activities $ 114,884 $ 2,873
--------- ---------
Cash Flows from investing activities:
Investment in Wells and
related facilities (17,601) (18,396)
--------- ---------
Net Cash used in investing activities (17,601) (18,396)
Cash flows from financing activities:
Distribution of partners (53,160) (35,078)
Partners contribution 177 117
--------- ---------
Net cash used in financing activities (52,983) (34,961)
--------- ---------
Net increase(decrease) in cash and
cash equivalents 44,300 (50,484)
Cash and cash equivalents at
beginning of period 87,201 150,718
--------- ---------
Cash and cash equivalents at end of
period $ 131,501 $ 100,234
========= =========
See accompanying note to the financial statements.
<PAGE>
STERLING DRILLING FUND 1983-1
(a New York limited partnership)
Note to Financial Statements
September 30, 1996
1. The accompanying statements for the period ending September
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 Third Quarter 1996 10Q and
it is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 131,501
<SECURITIES> 0
<RECEIVABLES> 17,335
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 148,836
<PP&E> 9,466,825
<DEPRECIATION> (7,870,440)
<TOTAL-ASSETS> 1,745,221
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,745,221<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,745,221
<SALES> 215,135<F2>
<TOTAL-REVENUES> 215,135
<CGS> 239,798
<TOTAL-COSTS> 239,798
<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> (24,663)
<EPS-PRIMARY> (2.48)<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other-se includes total partners' equity.
<F2>Sales includes $4,680 of interest income.
<F3>the limited partnership income was divided by total number of
limited partnership units of 11,077.
</FN>
</TABLE>
