<PAGE> 1
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, 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 too
such filing requirements for the past 90 days. Yes/X/ No / /
<PAGE> 2
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - June 30, 1998 and December 31, 1997.
Statements of Operations for the Six and Three Months Ended June 30,
1998 and 1997.
Statements of Changes in Partners' Equity for the Six and Three Months
Ended June 30, 1998 and 1997.
Statements of Cash Flows for the Six Months Ended June 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 June 30, 1998, the General Partners' 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> 3
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 $199,303 in 1997 to $166,554 in
1998. The partnership experienced an decrease in gas production from
58,188 MCF's in 1997 to 50,744 MCF's in 1998. Although the main source of
the Partnership's income is derived from its sale of gas production, the
Partnership does receive some revenue from its oil sales. The average price
per barrel received was $19.38 in 1997 and $12.04 in 1998. The combination
of lower average price per barrel and lower oil production did result in
lower revenue received from the sale of its oil production. The Partnership
may experience declines in gas production due to pressure variances in the
main transport lines. These variances may hinder or occasionally restrict
the normal flow of the partnership's gas to the main purchaser. The
Partnership's decline in gas production sold was partially offset by the
increase in average price per MCF of $2.92 in 1997 to $3.13 in 1998. In
1997, 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 higher production expenses in
1997,$88,397, as compared with $74,441 in 1998. The majority of the
expenses incurred in 1998 were for normal and routine maintenance of the
well and well-site.
<PAGE> 4
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 1997 and
1998 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 property basis in either 1997 or first half of
1998. There were no additional capitalized well-related expenditures during
the first quarter of 1998. The lower depletion expense in 1998 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> 5
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 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
June 30, December
1998 31, 1997
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 137,941 $ 145,635
Due from others 36,769 45,126
----------- -----------
Total current assets 174,710 190,761
---------- -----------
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 (8,009,779) (7,970,786)
------------ -----------
1,463,622 1,502,228
----------- -----------
Total assets $ 1,638,332 $ 1,692,989
=========== ===========
Partners' equity
Limited partners $ 1,587,406 $ 1,635,538
General partners 50,926 57,451
----------- -----------
Total partners' equity $ 1,638,332 $ 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)
Six Months Ending
June 30, 1998
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 127,417 39,141 $ 166,558
Interest income 4,145 385 4,530
-------- -------- --------
Total Revenue 131,562 39,526 171,088
-------- -------- -------
Costs and Expenses:
Production expense 56,947 17,494 74,441
General and administrative
to a related party 38,255 11,751 50,006
General and administrative 7,274 2,235 9,509
Depreciation, depletion
and amortization 35,679 3,314 38,993
-------- -------- -------
Total Costs and Expenses 138,155 34,794 172,949
-------- -------- -------
Net Income $ (6,593) 4,732 $ (1,861)
======== ======== =======
Net Income per equity unit $ (.60)
======
See accompanying note to the financial statements.
<PAGE>8
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> 9
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ending
June 30, 1998
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 67,413 20,709 $ 88,122
Interest income 2,179 202 2,381
-------- -------- ---------
Total Revenue 69,592 20,911 90,503
-------- -------- ---------
Costs and Expenses:
Production expense 32,821 10,083 42,904
General and administrative
to a related party 19,125 5,874 24,999
General and administrative 3,640 1,119 4,759
Depreciation, depletion
and amortization 17,840 1,657 19,497
-------- -------- ---------
Total Costs and Expenses 73,426 18,733 92,159
-------- -------- ---------
Net Income(loss) $ (3,834) 2,178 $ (1,656)
======== ======== =========
Net Income(loss)
per equity unit $ (.35)
========
See accompanying note to the financial statements.
<PAGE> 10
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> 11
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Six Months Ended
June 30, 1998
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,635,538 57,451 $ 1,692,989
Cash Distributions (41,539) (11,257) (52,796)
Net Income(Loss) (6,593) 4,732 (1,861)
-------- -------- ---------
Balance at end of period $ 1,587,406 50,926 $ 1,638,332
======== ======== =========
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
======== ======== =========
See accompanying note to the financial statements.
<PAGE> 12
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Three Months Ended
June 30, 1998
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,632,779 60,005 $ 1,692,784
Cash Distributions (41,539) (11,257) (52,796)
Net Income(Loss) (3,834) 2,178 (1,656)
--------- -------- ---------
Balance at end of period $ 1,587,406 50,926 $ 1,638,332
========= ======== =========
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
========= ======== =========
See accompanying note to the financial statements.
<PAGE> 13
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,
1998 1997
Net cash provided by operating
activities $ 45,489 $ 36,234
--------- ---------
Cash Flows from investing activities:
Investment in wells and related
facilities (387) 0
--------- ---------
Net Cash used in investing activities (387) 0
Cash flows from financing activities:
Distribution to partners (52,796) (52,982)
--------- ---------
Net cash used in financing activities (52,796) (52,982)
--------- ---------
Net increase(decrease) in cash and
cash equivalents (7,694) (16,748)
Cash and cash equivalents at
beginning of period 145,635 141,617
--------- ---------
Cash and cash equivalents at end of
period $ 137,941 $ 124,869
========= =========
See accompanying note to the financial statements.
<PAGE> 14
STERLING DRILLING FUND 1983-1
(a New York limited partnership)
Note to Financial Statements
June 30, 1998
1. The accompanying statements for the period ending June 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 second quarter 1998 10Q and is qualified in
its entirety by reference to such financial statement.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 137,941
<SECURITIES> 0
<RECEIVABLES> 36,769
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 174,710
<PP&E> 9,473,401
<DEPRECIATION> (8,009,779)
<TOTAL-ASSETS> 1,638,332
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,638,332<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,638,332
<SALES> 171,088<F2>
<TOTAL-REVENUES> 171,088
<CGS> 172,949
<TOTAL-COSTS> 172,949
<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> (1,861)
<EPS-PRIMARY> (0.60)<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other-se includes total partner's equity.
<F2>Sales includes $4,530 of interest income.
<F3>The limited partner's share of net income was divided by the total
number limited partnership units of 11,077.
</FN>
</TABLE>
