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, 1997
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 / /
<PAGE>
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - June 30, 1997 and December 31, 1996.
Statements of Operations for the Six and Three Months Ended June 30,
1997 and 1996.
Statements of Changes in Partners' Equity for the Six and Three Months
Ended June 30, 1997 and 1996.
Statements of Cash Flows for the Six Months Ended June 30, 1997 and
1996.
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, 1997, the General Partners have
distributed $2,298,477 or 20.75% of original Limited Partner capital
contributions to the Limited Partners.
The net proved oil and gas reserves of the Partnership are considered to be
an 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, 1996 was approximately
$1,378,600 as compared to the discounted reserves as of December 31, 1995
which were approximately $891,700. The increase in total estimated
discounted future net revenue was due in part to higher year end gas prices
as of December 31, 1996 when compared to a lower gas price in effect as of
December 31, 1995. Reservoir engineering is a subjective process of
estimating underground accumulations of gas and oil that can not be
measured 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.
<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 increased from $139,802 in 1996 to $199,303 in
1997. The partnership experienced an increase in gas production from
54,045 MCF's in 1996 to 58,188 MCF's in 1997. Oil production showed very
little change from 1996 to 1997. These production gains were augmented by a
higher average gas price per MCF and higher average oil price per barrel,
from $2.32 per MCF and $18.00 per barrel in 1996 to $2.92 per MCF and
$19.38 per barrel in 1997. An increase in production volumes can lead to
increased variable costs. An example of variable costs are any and all
costs that would vary with the volumes sold, for example most production
taxes are variable. The Partnership was responsible for some additional
costs associated with repairs and labor in order to access the wells and
well sites. The combination of these items resulted in an increase in
production expenses from $67,425 in 1996 to $88,397 in 1997.
General and administrative expenses to a related party 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
1997 are substantially less than the amounts allocable to the Registrant
under the Partnership Agreement. Management continues to work on reducing
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 1996 or first quarter
1997. There were no additional capitalized well related expenditures during
the first quarter of 1997. The lower depletion expense in 1997 is due to
overall lower cost basis in 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.
<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)
August 14, 1997 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
June 30, December
1997 31, 1996
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 124,869 $ 141,617
Due from others 24,448 9,595
----------- ----------
Total current assets 149,317 151,212
Oil and gas properties -
successful efforts method:
Leasehold costs 321,314 321,314
Well and related facilities 9,145,511 9,145,511
less accumulated
depreciation, depletion and
amortization (7,926,647) (7,888,531)
------------ ----------
1,540,179 1,578,294
----------- ----------
Total assets $ 1,689,495 $ 1,729,506
=========== ==========
Partners' equity
Limited partners $ 1,639,097 $ 1,675,879
General partners 50,398 53,627
----------- ----------
Total partners' equity $ 1,689,495 $ 1,729,506
=========== ===========
See accompanying note to the financial statements.
<PAGE>
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Six Months Ending
June 30, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 152,467 46,836 $ 199,303
Interest income 3,359 312 3,671
-------- -------- -------
Total Revenue 155,826 47,148 202,974
-------- -------- -------
Costs and Expenses:
Production expense 67,624 20,773 88,397
General and administrative
to a related party 38,248 11,750 49,998
General and administrative 10,321 3,171 13,492
Depreciation, depletion
and amortization 34,876 3,240 38,116
-------- -------- -------
Total Costs and Expenses 151,069 38,934 190,003
-------- -------- -------
Net Income $ 4,757 8,214 $ 12,971
======== ======== =======
Net Income per equity unit $ .43
======
See accompanying note to the financial statements.
<PAGE>
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.
<PAGE>
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ending
June 30, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 72,899 22,394 $ 95,293
Interest income 1,842 171 2,013
-------- -------- ---------
Total Revenue 74,741 22,565 97,306
-------- -------- ---------
Costs and Expenses:
Production expense 33,846 10,397 44,243
General and administrative
to a related party 19,124 5,875 24,999
General and administrative 6,767 2,079 8,846
Depreciation, depletion
and amortization 17,438 1,620 19,058
-------- -------- ---------
Total Costs and Expenses 77,175 19,971 97,146
-------- -------- ---------
Net Income(loss) $ (2,434) 2,594 $ 160
======== ======== =========
Net Income(loss)
per equity unit $ (.22)
========
See accompanying note to the financial statements.
<PAGE>
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.
<PAGE>
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Six Months Ended
June 30, 1997
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,675,879 53,627 $ 1,729,506
Cash Distributions (41,539) (11,443) (52,982)
Net Income(Loss) 4,757 8,214 12,971
-------- -------- ---------
Balance at end of period $ 1,639,097 50,398 $ 1,689,495
======== ======== =========
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
======== ======== =========
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
June 30, 1997
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,683,070 59,247 $ 1,742,317
Cash Distributions (41,539) (11,443) (52,982)
Net Income(Loss) (2,434) 2,594 160
--------- -------- ---------
Balance at end of period $ 1,639,097 50,398 $ 1,689,495
========= ======== =========
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
========= ======== =========
See accompanying note to the financial statements.
<PAGE>
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,
1997 1996
Net cash provided by operating
activities $ 36,234 $ 99,696
--------- ---------
Cash Flows from investing activities:
Investment in wells and related
facilities 0 (13,247)
--------- ---------
Net Cash used in investing activities
0 (13,247)
Cash flows from financing activities:
Distribution to partners (52,982) (53,160)
--------- ---------
Net cash used in financing activities (52,982) (53,160)
--------- ---------
Net increase(decrease) in cash and
cash equivalents (16,748) 33,289
Cash and cash equivalents at
beginning of period 141,617 87,201
--------- ---------
Cash and cash equivalents at end of
period $ 124,869 $ 120,490
========= =========
See accompanying note to the financial statements.
<PAGE>
STERLING DRILLING FUND 1983-1
(a New York limited partnership)
Note to Financial Statements
June 30, 1997
1. The accompanying statements for the period ending June 30,
1997, 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 1997 10Q and it is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 124,869
<SECURITIES> 0
<RECEIVABLES> 24,448
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 149,317
<PP&E> 9,466,825
<DEPRECIATION> (7,926,647)
<TOTAL-ASSETS> 1,689,495
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,689,495<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,689,495
<SALES> 202,974<F2>
<TOTAL-REVENUES> 202,974
<CGS> 190,003
<TOTAL-COSTS> 190,003
<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> 12,971
<EPS-PRIMARY> 0.43<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other-se includes total partners' equity.
<F2>Sales includes $3,671 of interest income.
<F3>The limited partner's share of net income was divided by the total
number of outstanding limited partner units of 1,077.
</FN>
</TABLE>
