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 March 31,1996
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 - March 31, 1996 and December 31, 1995.
Statements of Operations for the Three Months Ended March 31, 1996 and
1995.
Statements of Changes in Partners' Equity for the year ended December 31,
1995 and for the Three Months Ended March 31, 1996.
Statements of Cash Flows for the Three Months Ended March 31, 1996 and
1995.
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 March 31, 1996 the General Partners have distributed
$1,632,488 or 10.40% of original Limited Partner capital contributions
to the Limited Partners.
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%,was
approximately $947,600 as of December 31, 1995 and was $678,000 as of
December 31, 1994. The increase in total estimated discounted future
net revenue was due primarily to higher year end gas prices as of
December 31, 1995, when compared to the low gas price as of December
31, 1994. It is the opinion of management, and the general consensus
in the industry, that gas prices are unlikely to decline significantly
below the December 31, 1995 price in the near future. However, there
can be no assurances that such price declines will not occur, and
will not pose a threat to the Partnership's continued viability.
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 -
Operating revenues decreased from $ 101,460 in 1995 to $82,288 in
1996. The partnership's gas and oil production declined from 34,094
MCF and 706 Bbls in 1995 to 32,211 MCF and 436 BBls. During the first
quarter of 1995 the partnership was paid based upon spot market
prices available. These spot prices were higher during peak usage
times of the year but could be significantly lower during off-peak
usage times. During the last quarter of 1995, the partnership entered
into a twelve month fixed price contract for the purchase of most of
its production. This contract price was in effect during the first
quarter 1996 and was lower than the 1995 first quarter spot prices.
The combination of the price and production declines resulted in
lower overall revenue.
Production expenses showed a slight increase from $35,143 in 1995 to
$ 36,347 in 1996. Both years, production costs were expended to
maintain the general upkeep of the wells and well-sites.
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 1996
and 1995 are substantially less than the amounts allocable to the
Registrant under the Partnership Agreement. The lower amounts reflect
management's efforts to limit costs, both incurred and allocated to
the Registrant. Management continues to minimize 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 1995 or first quarter 1996. The lower depletion
expense in 1996 is due to overall lower depletable 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.
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
March 13, 1996
(Date)
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Balance Sheets
(unaudited)
March 31, December 31,
1996 1995
Assets
Current assets:
Cash and cash equivalents $ 18,650 $ 8,410
Due from affiliates 32,919 26,555
----------- ------------
Total current assets 51,569 34,965
Oil and gas properties -
successful efforts method:
Leasehold costs 497,639 497,639
Well and related facilities 12,921,429 12,916,422
less accumulated depreciation,
depletion and amortization (12,095,196) (12,078,506)
----------- ------------
1,323,872 1,335,555
----------- ------------
Total assets $ 1,375,441 $ 1,370,520
=========== ============
Partners' equity
Limited partners 1,369,255 1,367,959
General partners 6,186 2,561
----------- ------------
Total partners' equity $ 1,375,441 $ 1,370,520
=========== ============
See accompanying note to financial statements.
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
March 31, 1996
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 62,950 19,338 $ 82,288
Interest income 213 20 233
-------- -------- -------
Total Revenue 63,163 19,358 82,521
-------- -------- -------
Costs and Expenses:
Production expense 27,805 8,542 36,347
General and administrative
to a related party 14,344 4,406 18,750
General and administrative 4,447 1,366 5,813
Depreciation, depletion
and amortization 15,271 1,419 16,690
-------- -------- -------
Total Costs and Expenses 61,867 15,733 77,600
-------- -------- -------
Net Income(loss) $ 1,296 3,625 $ 4,921
======== ======== =======
Net Income(loss)
per equity unit $ 0.08
======
See accompanying note to financial statements.
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
March 31, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 77,617 23,843 $ 101,460
Interest income 174 16 190
-------- ------- --------
Total Revenue 77,791 23,859 101,650
-------- ------- --------
Costs and Expenses:
Production expense 26,884 8,259 35,143
General and administrative
to a related party 14,344 4,406 18,750
General and administrative 4,406 1,353 5,759
Depreciation, depletion
and amortization 22,226 2,065 24,291
-------- ------- --------
Total Costs and Expenses 67,860 16,083 83,943
-------- ------- --------
Net Income(loss) $ 9,931 7,776 $ 17,707
======== ======= ========
Net Income(loss)
per equity unit $ 0.63
========
See accompanying note to financial statements.
STERLING DRILLING FUND 1983-2
Statement of Changes in Partners' Equity
(unaudited)
Limited General
Partners Partners Total
Balance At December 31, 1994 $ 1,380,721 $ (14,573) $ 1,366,148
Partners' contributions 0 499 499
Cash distributions (39,243) (11,967) (51,210)
Net Income(Loss) 26,481 28,602 55,083
-------- -------- --------
Balance at December 31, 1995 $ 1,367,959 $ 2,561 $ 1,370,520
Net Income(Loss) 1,296 3,625 4,921
-------- -------- --------
Balance at March 31, 1996 $ 1,369,255 $ 6,186 $ 1,375,441
======== ======== ========
See accompanying note to financial statements.
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Three months Three months
ended March ended March
31, 1996 31, 1995
Net cash provided by operating activities $ 15,247 $ (4,205)
-------- ---------
Cash flows from investing activities:
Investment in well and related
facilities (5,007) (1,323)
--------- ---------
Net Cash used in investing activities (5,007) (1,323)
---------- ----------
Net decrease in cash and cash equivalents 10,240 (5,528)
Cash and cash equivalents at
beginning of period 8,410 8,287
---------- ----------
Cash and cash equivalents at end of
period $ 18,650 $ 2,579
========= ==========
See accompanying note to financial statements.
STERLING DRILLING FUND 1983-2
(a New York limited partnership)
Note to Financial Statements
March 31, 1996
1. The accompanying statements for the period ending March 31, 1996
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 conform to the current period
presentation.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Sterling Drilling Fund 1983-2 10Q for the period ending March 31, 1996.
This information is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 18,650
<SECURITIES> 0
<RECEIVABLES> 32,919
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 51,569
<PP&E> 13,419,068
<DEPRECIATION> (12,095,196)
<TOTAL-ASSETS> 1,375,441
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,375,441<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,375,441
<SALES> 82,521<F2>
<TOTAL-REVENUES> 82,521
<CGS> 77,600
<TOTAL-COSTS> 77,600
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,921
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,921
<EPS-PRIMARY> 0.08<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other -se represents total partner's equity for the partnership.
<F2>Sales includes $233 of interest income for the partnership.
<F3>Eps-primary is computed based upon total limited partner's share
of net income divided by total limited partner units (15,697 units).
</FN>
</TABLE>
