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, 1994
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 2-84452-01
STERLING DRILLING FUND 1983-2
(Exact name of registrant as specified in charter)
New York
(State or other jurisdiction of corporation or organization)
13-3167551
(IRS employer identification number)
One 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 / /
PART I
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - June 30, 1995 and December 31, 1994.
Statements of Operations for the Six and Three Months Ended June 30, 1995
and 1994.
Statements of Changes in Partners' Equity for the Six and Three Months
Ended June 30, 1995 and 1994.
Statements of Cash Flows for the Six Months Ended June 30, 1995 and 1994.
Note to Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
1. 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, 1995, the General Partners have distributed
$1,632,488 or 10.40% of original Limited Partner capital contributions
to the Limited Partners.
Columbia Gas Transmission Corp., a contract purchaser of the
Registrant's gas, filed a Chapter 11 petition in U.S. Bankruptcy Court
in Wilmington Delaware on July 31, 1991. At that time, the Bankruptcy
Court released Columbia from any current contracts. The Registrant
has filed a claim with the Bankruptcy Court to recover revenue
suspended at the time bankruptcy occurred. Such amounts were not
recorded as revenue during the applicable period, therefore, no loss
contingency exists. The Registrant has reviewed and accepted a
tentative settlement offer made by Columbia. The Registrant is
hopeful that Columbia will make a final settlement within the next
twelve months.
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, 1994 was approximately $678,000.
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 December 1983 for $13,400,000. Pursuant to
terms of this contract, fifty-two wells have been drilled resulting in
fifty-one producing wells and one dry hole.
3. Results of Operations -
Overall operating revenues decreased from $208,992 in 1994 to $168,848
in 1995. Although gas production remained consistent, 66,971 MCF in
1994 compared to 66,620 in 1995, gas revenue declined due to lower
average price per MCF, from $2.85 in 1994 to $2.02 in 1995. Oil
revenue increased because of consistent production and higher average
price per barrel of $14.19 in 1994 to $15.71 in 1995. Production
expenses decreased from $101,872 in 1994 to $73,414 in 1995, which
can be attributed to additional maintenance, location work and
frequency of electrical outages experienced during the severe weather
conditions in 1994.
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 1995
and 1994 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. Management continues to reduce 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. A downward revision in reserve estimates due to lower year-
end gas prices in 1994 resulted in an additional charge of $400,000.
4. Other-
In, March, the Financial Accounting Standards Board issued Statement
of Financial Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of," (SFAS No.
121)which is effective for the fiscal years beginning after December
15, 1995. This statement establishes accounting standards for the
impairment of long-lived assets, requiring such assets to be reported
at the lower of carrying amount or fair value, less selling costs.
The statement amends SFAS No. 19,"Financial Accounting and Reporting
by Oil and Gas Producing Companies" by adding an impairment test for
proved properties in accordance with
SFAS No. 121.
The Registrant currently performs a "ceiling test" by comparing the
total carrying value of oil and gas properties to the total future net
cash flows from the estimated production of proved oil and gas
properties. The effect of SFAS No. 121, which would change the way the
test is performed, is not known at this time.
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.
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 1983-2
(Registrant)
By: /s/ Charles E. Drimal, Jr.
------------------------------
Charles E. Drimal, Jr.
General Partner
August 11, 1994
(Date)
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Balance Sheets
(unaudited)
June 30, December 31,
1995 1994
Assets
Current assets:
Cash and cash equivalents $ 2,921 $ 8,287
Due from others 3,423 --
----------- ------------
Total current assets 6,344 8,287
Oil and gas properties -
successful efforts method:
Leasehold costs 497,639 497,639
Well and related facilities 12,916,421 12,915,028
less accummulated depreciation,
depletion and amortization (12,057,164) (12,008,583)
----------- ------------
1,356,896 1,404,084
----------- ------------
Total assets $ 1,363,240 $ 1,412,371
=========== ============
Liabilities and partners' equity
Current liabilities:
Due to affiliates $ 54,822 $ 46,223
----------- ------------
Total current liabilities 54,822 46,223
----------- ------------
Partners' equity
Limited partners 1,329,255 1,380,721
General partners (20,837) (14,573)
----------- ------------
Total partners' equity 1,308,418 1,366,148
----------- ------------
Total liabilities and
partners' equity $ 1,363,240 $ 1,412,371
=========== ============
See accompanying note to financial statements.
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Six Months Ending
June 30, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 129,169 $ 39,679 $ 168,848
Interest income 320 30 350
-------- -------- -------
Total Revenue 129,489 39,709 169,198
-------- -------- -------
Costs and Expenses:
Production expense 56,162 17,252 73,414
General and administrative
to a related party 28,688 8,812 37,500
General and administrative 12,411 3,813 16,224
Depreciation, depletion
and amortization 44,452 4,129 48,581
-------- -------- -------
Total Costs and Expenses 141,713 34,006 175,719
-------- -------- -------
Net Income(loss) $ (12,224) $ 5,703 $ (6,521)
======== ======== =======
Net Income(loss)
per equity unit $ (.78)
======
See accompanying note to financial statements.
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Six Months Ending
June 30, 1994
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 159,141 $ 48,887 $ 208,028
Interest income 264 25 289
-------- ------- ---------
Total Revenue 159,406 48,911 208,317
-------- ------- ---------
Costs and Expenses:
Production expense 77,932 23,940 101,872
General and administrative
to a related party 38,556 11,844 50,400
General and administrative 10,093 3,101 13,194
Depreciation, depletion
and amortization 44,827 4,164 48,991
-------- ------- ---------
Total Costs and Expenses 171,409 43,048 214,457
-------- ------- ---------
Net Income(loss) $ (12,003) $ 5,863 $ (6,140)
======== ======= =========
Net Income(loss)
per equity unit $ (.78)
========
See accompanying note to financial statements.
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ending
June 30, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 51,552 $ 15,836 $ 67,388
Interest income 146 14 160
-------- -------- ---------
Total Revenue 51,698 15,850 67,548
-------- -------- ---------
Costs and Expenses:
Production expense 29,278 8,993 38,271
General and administrative
to a related party 14,344 4,406 18,750
General and administrative 8,005 2,460 10,465
Depreciation, depletion
and amortization 22,226 2,064 24,290
-------- -------- ---------
Total Costs and Expenses 73,853 17,923 91,776
-------- -------- ---------
Net Income(loss) $ (22,155) $ (2,073) $ (24,228)
======== ======== =========
Net Income(loss)
per equity unit $ (1.41)
========
See accompanying note to the financial statements.
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ending
June 30, 1994
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 81,231 $ 24,952 $ 106,185
Interest income 155 15 170
-------- -------- ---------
Total Revenue 81,385 24,968 106,355
-------- -------- ---------
Costs and Expenses:
Production expense 42,206 12,965 55,171
General and administrative
to a related party 19,278 5,922 25,200
General and administrative 5,877 1,806 7,683
Depreciation, depletion
and amortization 22,413 2,082 24,495
-------- -------- ---------
Total Costs and Expenses 89,774 22,775 112,549
-------- -------- ---------
Net Income(loss) $ (8,389) $ 2,193 $ (6,196)
======== ======== =========
Net Income(loss)
per equity unit $ (.53)
======
See accompanying note to the financial statements.
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Six Months Ended
June 30, 1995
Limited General
Partners Partners Total
Balance at beginning of period $ 1,380,721 $ (14,573) $ 1,366,148
Cash Distributions (39,242) (11,967) (51,209)
Net Income(Loss) (12,224) 5,703 (6,521)
---------- -------- ---------
Balance at end of period $ 1,329,255 $ (20,837) $ 1,308,418
========== ======== =========
Six Months Ended
June 30, 1994
Limited General
Partners Partners Total
Balance at beginning of period $ 1,875,449 $ 32,675 $ 1,908,124
Cash Distributions (39,242) (11,998) (51,240)
Net Income(Loss) (12,003) 5,863 (6,140)
-------- -------- ---------
Balance at end of period $ 1,824,204 $ 26,540 $ 1,850,744
======== ======== =========
See accompanying note to the financial statements.
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Three Months Ended
June 30, 1995
Limited General
Partners Partners Total
Balance at beginning of period $ 1,390,652 $ (6,797) $1,383,855
Partners' Contribution
Cash Distributions (39,242) (11,967) (51,209)
Net Income(Loss) (22,155) (2,073) (24,228)
--------- -------- ---------
Balance at end of period $ 1,329,255 $ (20,837) $1,308,418
========= ======== =========
Three Months Ended
June 30, 1994
Limited General
Partners Partners Total
Balance at beginning of period $ 1,871,834 $ 36,344 $ 1,908,178
Cash Distributions (39,242) (11,998) (51,240)
Net Income(Loss) (8,388) 2,194 (6,194)
----------- --------- ---------
Balance at end of period $ 1,824,204 $ 26,540 $ 1,850,744
=========== ========= =========
See accompanying note to the financial statements.
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Six months Six months
ended ended
June 30, June 30,
1995 1994
Net cash provided by operating activities $ 47,236 $ 41,679
---------- ----------
Cash flows from financing activities:
Distribution to partners (51,209) (51,240)
---------- ----------
Net cash used in financing activities (51,209) (51,240)
---------- ----------
Cash flows from investing activities:
Investment in well and related
facilities (1,393) --
---------- ---------
Net Cash used in investing activities (1,393) --
---------- ----------
Net decrease in cash and cash equivalents
(5,366) (9,561)
Cash and cash equivalents at
beginning of period 8,287 31,269
---------- ----------
Cash and cash equivalents at end of
period $ 2,921 $ 21,708
========== ==========
See accompanying note to financial statements.
STERLING DRILLING FUND 1983-2
(a New York limited partnership)
Note to Financial Statements
June 30, 1995
1. The accompanying statements for the period ending June 30, 1995, are
unaudited but reflect all adjustments necessary to present fairly the
results of operations. Certain reclassifications were made to the prior
periods' financial statements to confirm to the current period
presentation.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Sterling Drilling Fund 1983-2 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 2921
<SECURITIES> 0
<RECEIVABLES> 3423
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6344
<PP&E> 13414060
<DEPRECIATION> 12057164
<TOTAL-ASSETS> 1363240
<CURRENT-LIABILITIES> 54822
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1308418<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1363240
<SALES> 0
<TOTAL-REVENUES> 169198
<CGS> 0
<TOTAL-COSTS> 175719
<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> (6521)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Field Other-Se contains total partners' equity
</FN>
</TABLE>
