<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 March 31, 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> 2
PART I
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - March 31, 1998 and December 31, 1997.
Statements of Operations for the Three Months Ended March 31, 1998 and 1997.
Statements of Changes in Partners' Equity for the year ended
December 31,1997 and for the Three Months Ended March 31, 1998.
Statements of Cash Flows for the Three Months Ended March 31, 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 March 31, 1998, the General Partners have
distributed $2,298,478 or 20.75% 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 operating and managing general partner's computer
systems. Both, the operations 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 will be implemented
with in the next year by both the operating company and the managing
general partner. Both companies' upgrades and year 2000 changes are part
of their normal course of business and no material costs should be
allocated to the partnership for the implementation necessary by either
company.
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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 $104,010 in 1997 to $78,436 in
1998. The Partnership showed an decreases in both oil and gas production,
from 32,827 MCF's and 570 BBL's in 1997 to 27,719 MCF's and 124 BBL's in
1998. The average price per MCF received for 1998 was $2.83 as compared to
the 1997 average price of $2.48 per MCF. The main contributor to the
partnership's lower overall revenue was the lower production. The drop in
gas production was partially offset by the higher gas price. Most of the
partnership's gas production is associated with a favorable year long
fixed price contract which was set in December 1997 when prices were a bit
higher then current market conditions. Production expenses decreased
from $44,154 in 1997 to $31,537 in 1998 . In 1997 some additional costs
for general maintenance were incurred. These costs include those associated
with repairs needed for access to the well and well sites and the related
labor costs. Also, variable expenses were higher but were reasonable based
upon production data. Variable costs include, but are not limited to, the
related well taxes which are based upon production volumes and price. The
production expenses incurred in the first quarter 1998 were of a normal and
recurring nature to upkeep the wells.
General and administrative costs from 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 years are
<PAGE> 4
substantially less than the amounts allocable to the Registrant under the
Partnership Agreement. Management continues to use all its in-house
resources as efficiently and timely as possible to minimize costs.
General and administrative expenses to a related party and to third
parties remained relatively unchanged from 1997 to 1998.
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 1997 or first quarter
1998 due to capitalized costs exceeding the undiscounted future net cash
flows attributable to the partnership properties. The additional
capitalized well related expenditures during the first quarter of 1998 were
very minimal and did not substantial change the overall partnership asset
base. Depletion expense in 1997 and 1998 was reasonable based upon the
asset basis and rates applied.
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.
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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)
May 12, 1998 BY: /S/ Charles E. Drimal Jr.
(Date) -----------------------------
Charles E. Drimal, Jr.,
General Partner
<PAGE> 6
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Balance Sheets
(unaudited)
March 31, December 31,
1998 1997
Assets
Current assets:
Cash and cash equivalents $ 188,362 $ 145,635
Due from others 21,303 45,126
----------- -----------
Total current assets 209,665 190,761
----------- -----------
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 (7,990,282) (7,970,786)
----------- -----------
1,483,119 1,502,228
----------- -----------
Total assets $ 1,692,784 $ 1,692,989
=========== ===========
Partners' equity
Limited partners 1,632,779 1,635,538
General partners 60,005 57,451
----------- -----------
Total partners' equity $ 1,692,784 $ 1,692,989
=========== ===========
See accompanying note to the financial statements.
<PAGE> 7
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
March 31, 1998
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 60,004 18,432 $ 78,436
Interest income 1,966 183 2,149
-------- -------- -------
Total Revenue 61,970 18,615 80,585
-------- -------- -------
Costs and Expenses:
Production expense 24,126 7,411 31,537
General and administrative
to a related party 19,130 5,877 25,007
General and administrative 3,634 1,116 4,750
Depreciation, depletion
and amortization 17,839 1,657 19,496
-------- -------- -------
Total Costs and Expenses 64,729 16,061 80,790
-------- -------- -------
Net Income (loss) $ (2,759) 2,554 $ (205)
======== ======== =======
Net Income (Loss)
per equity unit $ (0.25)
======
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
March 31, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 79,568 24,442 $ 104,010
Interest income 1,517 141 1,658
-------- -------- -------
Total Revenue 81,085 24,583 105,668
-------- -------- -------
Costs and Expenses:
Production expense 33,778 10,376 44,154
General and administrative
to a related party 19,124 5,875 24,999
General and administrative 3,554 1,092 4,646
Depreciation, depletion
and amortization 17,438 1,620 19,058
-------- -------- -------
Total Costs and Expenses 73,894 18,963 92,857
-------- -------- -------
Net Income $ 7,191 5,620 $ 12,811
======== ======== =======
Net Income per equity unit $ 0.65
======
See accompanying note to the financial statements.
<PAGE> 9
STERLING DRILLING FUND 1983-1
Statement of Changes in Partners' Equity
(unaudited)
Limited General
Partners Partners Total
Balance at December 31, 1996 $ 1,675,879 $ 53,627 $ 1,729,506
Partners' contributions 0 177 177
Cash distributions (41,539) (11,443) (52,982)
Net Income 1,198 15,090 16,288
-------- -------- --------
Balance at December 31, 1997 $ 1,635,538 $ 57,451 $ 1,692,989
Net Income (Loss) (2,759) 2,554 (205)
-------- -------- --------
Balance at March 31, 1998 $ 1,632,779 $ 60,005 $ 1,692,784
======== ======== ========
See accompanying note to the financial statements.
<PAGE> 10
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Three months Three months
ended March ended March
31, 1998 31, 1997
Net cash provided by operating
activities $ 43,114 $ 16,327
--------- ---------
Cash Flows from investing activities:
Investment in wells and related
facilities (387) 0
--------- ---------
Net Cash (used in)investing activities (387) 0
Net increase in cash and
cash equivalents 42,727 16,327
Cash and cash equivalents at
beginning of period 145,635 141,617
--------- ---------
Cash and cash equivalents at end of
period $ 188,362 $ 157,944
========= =========
See accompanying note to the financial statements.
<PAGE> 11
STERLING DRILLING FUND 1983-1
(a New York limited partnership)
Note to Financial Statements
March 31, 1998
1. The accompanying statements for the period ending March 31,
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 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 188,362
<SECURITIES> 0
<RECEIVABLES> 21,303
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 209,665
<PP&E> 9,473,401
<DEPRECIATION> (7,990,282)
<TOTAL-ASSETS> 1,692,784
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,692,784<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,692,784
<SALES> 80,585<F2>
<TOTAL-REVENUES> 80,585
<CGS> 70,790
<TOTAL-COSTS> 80,790
<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> (205)
<EPS-PRIMARY> (0.25)<F3>
<EPS-DILUTED> 0
<FN>
<F1>This schedule contains summary financial information extracted from
Sterling Drilling Fund 1983-1 first quarter 1998 10q and is qualified
in its entirety by reference to such financial statements.
<F2>Sales includes $2,149 of interest income.
<F3>The limited partners' share of net income was divided by the total
number of limited partners units of 11,077.
</FN>
</TABLE>
