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, 1998
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> 1
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - September 30, 1998 and December 31, 1997.
Statements of Operations for the Nine and Three Months Ended September
30, 1998 and 1997.
Statements of Changes in Partners' Equity for the Nine and Three Months
Ended September 30, 1998 and 1997.
Statements of Cash Flows for the Nine Months Ended September 30,1998 and
1997.
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, 1998, the General Partner's
have distributed $ 2,340,016 or 21.125% of original Limited Partner capital
contributions to the Limited Partners.
All aspects of the Partnership's operations and administration are handled
through the use of the managing general partner's computer systems. Both,
the operating company and the managing general partner are taking steps to
minimize any potential computer issues with regard to any necessary changes
for the year 2000. A complete system upgrade, which includes but is not
limited to, the year 2000 issue has been implemented by both the operating
company and the managing general partner. During the remainder of this year
both companies will continue to monitor, test and verify data in detail to
avoid any potential reporting concerns or delays.
<PAGE> 2
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, 1997 was approximately
$1,200,900 as compared to the discounted reserves as of December 31, 1996
which were approximately $1,313,750. 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.
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 $282,836 in 1997 to $245,853
in 1998. The Partnership experienced declines in both gas and oil
production, from 85,731 MCF and 921 BBLS in 1997 to 75,204 MCF and 719
BBLS in 1998. This decline was slightly offset by increased average price
per MCF, from $2.98 in 1997 to $3.16 in 1998. The lower gas production can
be attributed to shut-ins and higher main transport line pressures. The
high main line pressure can inhibit the free movement of the
Partnership's gas from the wells to the purchaser's transport line.
Production expenses decreased from $127,301 in 1997 to $105,186 in 1998.
During 1997, the Partnership expended funds associated with additional
costs at the well locations, road repairs and line outages due to
weather related conditions. During 1998 the costs incurred on the wells
were for normal and recurring maintenance.
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 1998 and 1997 are substantially less
than the amounts allocable to the Registrant under the Partnership
Agreement. The lower amounts reflect management's efforts to limit costs,
<PAGE> 3
both incurred and allocated to the Registrant. Third-party general and
administrative expenses remained unchanged although management will
continue to use in house resources if it will be more efficient to do so.
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 1997 or in the three-
quarters of 1998. The expense recorded is consistent with the current basis
of the Partnership's 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> 4
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)
BY: /s/ Charles E. Drimal Jr.
-----------------------------
Charles E. Drimal, Jr.,
General Partner
November 12, 1998
(date)
<PAGE> 5
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Balance Sheets
September 30, December
1998 31, 1997
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 176,472 $ 145,635
Due from others 17,182 45,126
----------- -----------
Total current assets 193,654 190,761
----------- -----------
Oil and gas properties -
successful efforts method:
Leasehold costs 321,314 321,314
Well and related facilities 9,152,087 9,151,700
less accumulated
depreciation, depletion and
amortization (8,029,275) (7,970,786)
----------- -----------
1,444,126 1,502,228
----------- -----------
Total assets $ 1,637,780 $ 1,692,989
=========== ===========
Partners' equity
Limited partners $ 1,584,224 $ 1,635,538
General partners 53,556 57,451
---------- -----------
Total partners' equity $ 1,637,780 $ 1,692,989
=========== ===========
See accompanying note to the financial statements.
<PAGE> 6
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Nine Months Ended
September 30, 1998
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 188,078 $ 57,775 $ 245,853
Interest income 5,964 554 6,518
Gain on sale of equipment 0 0 0
-------- -------- -------
Total Revenue 194,042 58,329 252,371
-------- -------- -------
Costs and Expenses:
Production expense 80,467 24,719 105,186
General and administrative
to a related party 57,379 17,626 75,005
General and administrative 12,454 3,826 16,280
Depreciation, depletion
and amortization 53,517 4,972 58,489
-------- -------- -------
Total Costs and Expenses 203,817 51,143 254,960
-------- -------- -------
Net Income (Loss) $ (9,775) $ 7,186 $ (2,589)
======== ======== =======
Net Income(loss)
per equity unit $ (.88)
======
See accompanying note to the financial statements.
<PAGE> 7
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Nine Months Ended
September 30, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 216,370 $ 66,466 $ 282,836
Interest income 4,914 457 5,371
Gain on sale of equipment 686 64 750
-------- -------- -------
Total Revenue 221,970 66,987 288,957
-------- -------- -------
Costs and Expenses:
Production expense 97,385 29,916 127,301
General and administrative
to a related party 57,373 17,624 74,997
General and administrative 13,427 4,125 17,552
Depreciation, depletion
and amortization 52,496 4,877 57,373
-------- -------- -------
Total Costs and Expenses 220,681 56,542 277,223
-------- -------- -------
Net Income $ 1,289 $ 10,445 $ 11,734
======== ======== =======
Net Income per equity unit $ .12
======
See accompanying note to the financial statements.
<PAGE> 8
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
September 30, 1998
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 60,661 $ 18,634 $ 79,295
Interest income 1,819 169 1,988
Gain on sale of equipment 0 0 0
-------- -------- ---------
Total Revenue 62,480 18,803 81,283
-------- -------- ---------
Costs and Expenses:
Production expense 23,520 7,225 30,745
General and administrative
to a related party 19,124 5,875 24,999
General and administrative 5,180 1,591 6,771
Depreciation, depletion
and amortization 17,838 1,658 19,496
-------- -------- ---------
Total Costs and Expenses 65,662 16,349 82,011
-------- -------- ---------
Net Income(loss) $ (3,182) $ 2,454 $ (728)
======== ======== =========
Net Income(loss)
per equity unit $ (.28)
========
See accompanying note to the financial statements.
<PAGE> 9
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
September 30, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 63,903 $ 19,630 $ 83,533
Interest income 1,555 145 1,700
Gain on sale of equipment 686 64 750
-------- -------- ---------
Total Revenue 66,144 19,839 85,983
-------- -------- ---------
Costs and Expenses:
Production expense 29,761 9,143 38,904
General and administrative
to a related party 19,125 5,874 24,999
General and administrative 3,106 954 4,060
Depreciation, depletion
and amortization 17,620 1,637 19,257
-------- -------- ---------
Total Costs and Expenses 69,612 17,608 87,220
-------- -------- ---------
Net Income(loss) $ (3,468) $ 2,231 $ (1,227)
======== ======== =========
Net Income(loss)
per equity unit $ (.31)
========
See accompanying note to the financial statements.
<PAGE>10
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Nine Months Ended
September 30, 1998
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,635,538 57,451 $ 1,692,989
Partner's contributions 0 176 176
Cash distributions (41,539) (11,257) (52,796)
Net income (9,775) 7,186 (2,589)
--------- -------- ------------
Balance at end of period $ 1,584,224 53,556 $ 1,637,780
========= ======== ============
Nine Months Ended
September 30, 1997
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,675,879 53,627 $ 1,729,506
Partner's contributions 0 177 177
Cash distributions (41,539) (11,443) (52,982)
Net income(loss) 1,289 10,445 11,734
--------- -------- ------------
Balance at end of period $ 1,635,629 52,806 $ 1,688,435
========= ======== ============
See accompanying note to the financial statements.
<PAGE> 11
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Three Months Ended
September 30, 1998
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,587,466 50,926 $ 1,638,332
Partner's contributions 0 176 176
Cash distributions 0 0 0
Net income(loss) (3,182) 2,454 (728)
--------- -------- ----------
Balance at end of period $ 1,584,224 53,556 $ 1,637,780
========= ======== ==========
Three Months Ended
September 30, 1997
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,639,097 50,398 $ 1,689,495
Partner's contributions 0 177 177
Cash distributions 0 0 0
Net income(loss) (3,468) 2,231 (1,237)
--------- -------- ----------
Balance at end of period $ 1,635,629 52,806 $ 1,688,435
========= ======== ==========
See accompanying note to the financial statements.
<PAGE> 12
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Nine months Nine months
ended Ended
September September
30, 1998 30, 1997
Net cash provided by operating
activities $ 83,844 $ 51,553
--------- ---------
Cash flows from investing activities:
Proceeds from sale of equipment 0 750
Investment in Well and
related facilities (387) (5,488)
--------- ---------
Net Cash(used in) investing activities (387) (4,738)
Cash flows from financing activities:
Distribution to partners (52,796) (52,982)
Partners contribution 176 177
--------- ---------
Net cash(used in) financing activities (52,620) (52,805)
--------- ---------
Net increase(decrease) in cash and
cash equivalents 30,837 (5,990)
Cash and cash equivalents at
Beginning of period 145,635 141,617
--------- ---------
Cash and cash equivalents at end of
period $ 176,472 $ 135,627
========= =========
See accompanying note to the financial statements.
<PAGE> 13
STERLING DRILLING FUND 1983-1
(a New York limited partnership)
Note to Financial Statements
September 30, 1998
1. The accompanying statements for the period ending September
30, 1998, 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 1998 10Q and
is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 176,472
<SECURITIES> 17,182
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 193,654
<PP&E> 9,473,401
<DEPRECIATION> (8,029,275)
<TOTAL-ASSETS> 1,637,780
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,637,780<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,637,780
<SALES> 252,371<F2>
<TOTAL-REVENUES> 252,371
<CGS> 254,960
<TOTAL-COSTS> 254,960
<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> (2,589)
<EPS-PRIMARY> (0.88)<F3>
<EPS-DILUTED> 0
<FN>
<F1>other se includes total partners' equity.
<F2>Sales includes $6,518 of interest income.
<F3>The limited partnerhsip income was divided by the total number
of limited partnerhsip units of 11,077.
</FN>
</TABLE>
