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, 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 / /
<PAGE>
PART I
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - September 30, 1996 and December 31, 1995.
Statements of Operations for the Nine and Three Months Ended September
30, 1996 and 1995.
Statements of Changes in Partners' Equity for the Nine and Three Months
Ended September 30, 1996 and 1995.
Statements of Cash Flows for the Nine Months Ended September 30, 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 September 30, 1996, the General Partners have
distributed $1,671,731 or 10.65% 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%, as of December
31, 1995 was approximately $947,600 as compared to $678,000 from
December 31, 1994. The increase in undiscounted future net cash flows
for the Partnership properties was caused by higher year end prices
in effect at December 31, 1995 compared to lower year end prices as of
December 31, 1994. There were no significant changes in the estimated
future production from the properties. 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.
<PAGE>
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 increased from $242,475 in 1995 to $253,658
in 1996. The gas production decline, from 100,882 MCF in 1995 to
98,912 MCF in 1996, was offset by an increase in average price per MCF
from $2.02 in 1995 to $2.43 in 1996. The partnership's production
decline was due in part to a main line in the gathering system
experiencing a shut in due to maintenance on the line. This resulted
in no production for approximately twenty one days in August of 1996
on the wells that feed into this main line. All repairs have been
completed and the line is no longer shut in.
Production expenses increased from $ 110,732 in 1995 to $116,012 in
1996. The higher production expenses, in 1996, are attributable to
some severe storms during the late spring and summer of 1996. These
storms resulted in additional costs incurred, which may include
additional maintenance, location, access road work and other repairs.
Most of the production expenses, in 1995, were to maintain the general
upkeep of the wells and well site.
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. General and administrative charges between 1996 and
1995 were stable and showed only minor changes from year to year.
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 1995 or in the three quarters of 1996. Although the 1996
expense is lower than 1995, the expense recorded is consistent with
the current basis of the partnership's properties.
<PAGE>
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>
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
November 8, 1996
(Date)
<PAGE>
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Balance Sheets
September 30, December 31,
1996 1995
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 15,031 $ 8,410
Due from others 18,185 26,555
----------- ------------
Total current assets 33,216 34,965
----------- -----------
Oil and gas properties -
successful efforts method:
Leasehold costs 497,639 497,639
Well and related facilities 12,929,171 12,916,422
less accumulated depreciation,
depletion and amortization (12,128,865) (12,078,506)
----------- ------------
1,297,945 1,335,555
----------- ------------
Total assets $ 1,331,161 $ 1,370,520
=========== ============
Partners' equity
Limited partners 1,330,232 1,367,959
General partners 929 2,561
----------- ------------
Total partners' equity $ 1,331,161 $ 1,370,520
=========== ============
See accompanying note to financial statements.
<PAGE>
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Nine Months Ended
September 30, 1996
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 194,048 $ 59,610 $ 253,658
Interest income 635 59 694
-------- -------- -------
Total Revenue 194,683 59,669 254,352
-------- -------- -------
Costs and Expenses:
Production expense 88,749 27,263 116,012
General and administrative 43,031 13,219 56,250
to a related party
General and administrative 15,310 4,703 20,013
Depreciation, depletion
and amortization 46,078 4,281 50,359
-------- -------- -------
Total Costs and Expenses 193,168 49,466 242,634
-------- -------- -------
Net Income(loss) $ 1,515 $ 10,203 $ 11,718
======== ======== =======
Net Income(loss)
per equity unit $ .10
======
See accompanying note to financial statements.
<PAGE>
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Nine Months Ended
September 30, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 185,493 $ 56,982 $ 242,475
Interest income 400 37 437
-------- -------- -------
Total Revenue 185,893 57,019 242,912
-------- -------- -------
Costs and Expenses:
Production expense 84,710 26,022 110,732
General and administrative
to a related party 43,031 13,219 56,250
General and administrative 15,705 4,824 20,529
Depreciation, depletion
and amortization 66,744 6,200 72,944
-------- -------- -------
Total Costs and Expenses 210,190 50,265 260,455
-------- -------- -------
Net Income(loss) $ (24,297) $ 6,754 $ (17,543)
======== ======== =======
Net Income(loss)
per equity unit $ (1.55)
======
See accompanying note to financial statements.
<PAGE>
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
September 30, 1996
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 59,515 $ 18,283 $ 77,798
Interest income 114 11 125
-------- -------- --------
Total Revenue 59,629 18,294 77,923
-------- -------- --------
Costs and Expenses:
Production expense 29,416 9,037 38,453
General and administrative 14,343 4,407 18,750
to a related party
General and administrative 4,419 1,358 5,777
Depreciation, depletion
and amortization 15,316 1,423 16,739
-------- -------- --------
Total Costs and Expenses 63,494 16,225 79,719
-------- -------- --------
Net Income(loss) $ (3,865) $ 2,069 $ (1,796)
======== ======== ========
Net Income(loss)
per equity unit $ (.24)
========
See accompanying note to the financial statements.
<PAGE>
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
September 30, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 56,324 $ 17,303 $ 73,627
Interest income 80 7 87
-------- -------- --------
Total Revenue 56,404 17,310 73,714
-------- -------- --------
Costs and Expenses:
Production expense 28,548 8,770 37,318
General and administrative
to a related party 14,343 4,407 18,750
General and administrative 3,294 1,011 4,305
Depreciation, depletion
and amortization 22,292 2,071 24,363
-------- -------- --------
Total Costs and Expenses 68,477 16,259 84,736
-------- -------- --------
Net Income(loss) $ (12,073) $ 1,051 $ (11,022)
======== ======== =========
Net Income(loss)
per equity unit $ (0.77)
========
See accompanying note to the financial statements.
<PAGE>
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Nine Months Ended
September 30, 1996
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,367,959 2,561 $ 1,370,520
Partner's Contributions 0 114 114
Cash Distributions (39,242) (11,949) (51,191)
Net Income(Loss) 1,515 10,203 11,718
--------- -------- ---------
Balance at end of period $ 1,330,232 929 1,331,161
========= ======== =========
Nine Months Ended
September 30, 1995
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,380,721 (14,573) $ 1,366,148
Partner's Contributions 0 498 498
Cash Distributions (39,242) (11,967) (51,209)
Net Income(Loss) (24,297) 6,754 (17,543)
--------- -------- ---------
Balance at end of period $ 1,317,182 (19,288) $ 1,297,894
========= ======== =========
See accompanying note to the financial statements.
<PAGE>
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Three Months Ended
September 30, 1996
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,334,097 (1,254) $ 1,332,843
Partners' Contribution 0 114 114
Cash Distributions 0 0 0
Net Income(Loss) (3,865) 2,069 (1,796)
--------- -------- ---------
Balance at end of period $ 1,330,232 829 $ 1,331,161
========= ======== =========
Three Months Ended
September 30, 1995
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,329,255 (20,837) $ 1,308,418
Partner's Contributions 0 498 498
Cash Distributions 0 0 0
Net Income(Loss) (12,073) 1,051 (11,022)
--------- -------- ---------
Balance at end of period $ 1,317,182 (19,288) $ 1,297,894
========= ======== =========
See accompanying note to the financial statements.
<PAGE>
STERLING DRILLING FUND 1983-1
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Nine months Nine months
ended ended
September 30, September
1996 30, 1995
Net cash provided by operating activities $ 70,447 $ 46,021
---------- ----------
Cash flows from financing activities:
Partners contributions 114 498
Distribution to partners (51,191) (51,209)
---------- ----------
Net cash used in financing activities (51,077) (50,711)
---------- ----------
Cash flows from investing activities:
Investment in well and related
facilities (12,749) (1,393)
---------- ----------
Net Cash used in investing activities (12,749) (1,393)
---------- ----------
Net decrease in cash and cash equivalents 6,621 (6,083)
Cash and cash equivalents at
beginning of period 8,410 8,287
---------- ----------
Cash and cash equivalents at end of
period $ 15,031 $ 2,204
========== ==========
See accompanying note to the financial statements.
<PAGE>
STERLING DRILLING FUND 1983-2
(a New York limited partnership)
Note to Financial Statements
September 30, 1996
1. The accompanying statements for the period ending September 30, 1996,
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 1983-2 Third Quarter 1996 10Q and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 15,031
<SECURITIES> 0
<RECEIVABLES> 18,185
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 33,216
<PP&E> 13,426,810
<DEPRECIATION> (12,128,865)
<TOTAL-ASSETS> 1,331,161
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,331,161<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,331,161
<SALES> 254,352<F2>
<TOTAL-REVENUES> 254,352
<CGS> 242,634
<TOTAL-COSTS> 242,634
<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> 11,718
<EPS-PRIMARY> 0.10<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other-Se includes total partner's equity.
<F2>Sales includes $694 of interest income.
<F3>The limited partnership income was divided by the total number of
limited partnership units of 15,697.
</FN>
</TABLE>
