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, 1997
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, 1997 and December 31, 1996.
Statements of Operations for the Nine and Three Months Ended September
30, 1997 and 1996.
Statements of Changes in Partners' Equity for the Nine and Three Months
Ended September 30, 1997 and 1996.
Statements of Cash Flows for the Nine Months Ended September 30, 1997 and
1996.
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, 1997, the General Partners have
distributed $1,710,973 or 10.90% of original Limited Partner capital
contributions to the Limited Partners.
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, 1996 was approximately $1,578,300 as compared to $947,600
as of December 31, 1995. The increase in total estimated discounted
future net revenue was due to higher year end gas prices as of
December 31, 1996 compared the gas price in effect as of December 31,
1995. Overall 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.
<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 $253,658 in 1996 to $310,298
in 1997 . The gas production decline, 98,912 MCF in 1996 to 93,148 MCF
in 1997, was offset by an increase in average price per MCF from $2.43
in 1996 to $2.99 in 1997. The production decline can be partially
attributed to a minor shut-in of some of the wells due to repairs
performed on the main transport line by its operator. These repairs
were completed as quickly as possible and the wells involved were back
on line within ten days. Occasionally the well operator will
determine that some equipment at the well or well-site is no longer
necessary for a particular well. During 1997 the operator sold
tubing, pipes and rods no longer needed by the Partnership's wells.
Production expenses increased from $116,012 in 1996 to $146,250 in
1997. The higher production expenses, in 1997, is partially
attributable to weather conditions which resulted in additional costs
incurred. These costs may have included additional maintenance,
location, access road work and other repairs. The Partnership also
performed additional periodic maintenance on the well and well site in
order to halt declines, maintain or improve production.
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 1997
and 1996 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.
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 1996 or in the three quarters of 1997. Although the 1997
expense is lower than 1996, 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 12, 1997
(Date)
<PAGE>
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Balance Sheets
September 30, December 31,
1997 1996
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 49,445 $ 22,018
Due from others 26,550 22,836
----------- ------------
Total current assets 75,995 44,854
----------- -----------
Oil and gas properties -
successful efforts method:
Leasehold costs 497,639 497,639
Well and related facilities 12,931,476 12,929,171
less accumulated depreciation,
depletion and amortization (12,191,100) (12,144,168)
----------- ------------
1,238,015 1,282,642
----------- ------------
Total assets $ 1,314,010 $ 1,327,496
=========== ============
Partners' equity
Limited partners 1,309,675 1,325,155
General partners 4,335 2,341
----------- ------------
Total partners' equity $ 1,314,010 $ 1,327,496
=========== ============
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, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 237,378 $ 72,920 $ 310,298
Gain on sale of equipment 11,512 1,069 12,581
Interest income 1,392 129 1,521
-------- -------- -------
Total Revenue 250,282 74,118 324,400
-------- -------- -------
Costs and Expenses:
Production expense 111,881 34,369 146,250
General and administrative
to a related party 57,373 17,624 74,997
General and administrative 14,323 4,400 18,723
Depreciation, depletion
and amortization 42,943 3,989 46,932
-------- -------- -------
Total Costs and Expenses 226,520 60,382 286,902
-------- -------- -------
Net Income $ 23,762 $ 13,736 $ 37,498
======== ======== =======
Net Income per equity unit $ 1.51
======
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
to a related party 43,031 13,219 56,250
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 $ 1,515 $ 10,203 $ 11,718
======== ======== =======
Net Income 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)
Three Months Ended
September 30, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 73,988 $ 22,728 $ 96,716
Gain on sale of equipment 4,357 404 4,761
Interest income 420 39 459
-------- -------- --------
Total Revenue 78,765 23,171 101,936
-------- -------- --------
Costs and Expenses:
Production expense 38,783 11,914 50,697
General and administrative
to a related party 19,125 5,874 24,999
General and administrative 3,455 1,061 4,516
Depreciation, depletion
and amortization 14,366 1,334 15,700
-------- -------- --------
Total Costs and Expenses 75,729 20,183 95,912
-------- -------- --------
Net Income $ 3,036 $ 2,988 $ 6,024
======== ======== ========
Net Income per equity unit $ .19
========
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, 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 Changes in Partners' Equity
(unaudited)
Nine Months Ended
September 30, 1997
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,325,155 2,341 $ 1,327,496
Partner's Contributions 0 113 113
Cash Distributions (39,242) (11,855) (51,097)
Net Income 23,762 13,736 37,498
--------- -------- ---------
Balance at end of period $ 1,309,675 4,335 $ 1,314,010
========= ======== =========
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 1,515 10,203 11,718
--------- -------- ---------
Balance at end of period $ 1,330,232 929 $ 1,331,161
========= ======== =========
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)
Three Months Ended
September 30, 1997
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,306,639 1,234 $ 1,307,873
Partners' Contribution 0 113 113
Cash Distributions 0 0 0
Net Income 3,036 2,988 6,024
--------- -------- ---------
Balance at end of period $ 1,309,675 4,335 $ 1,314,010
========= ======== =========
Three Months Ended
September 30, 1996
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,334,097 (1,254) $ 1,332,843
Partner's Contributions 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
========= ======== =========
See accompanying note to the financial statements.
<PAGE>
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Nine months Nine months
ended ended
September September
30, 1997 30, 1996
Net cash provided by operating activities $ 68,135 $ 70,447
---------- ----------
Cash flows from financing activities:
Partners contributions 113 114
Distribution to partners (51,097) (51,191)
---------- ----------
Net cash used in financing activities (50,984) (51,077)
---------- ----------
Cash flows from investing activities:
Proceeds from sale of equipment 12,581 0
Investment in well and related
facilities (2,305) (12,749)
---------- ----------
Net Cash used in investing activities 10,276 (12,749)
---------- ----------
Net increase in cash and cash equivalents 27,427 6,621
Cash and cash equivalents at
beginning of period 22,018 8,410
---------- ----------
Cash and cash equivalents at end of
period $ 49,445 $ 15,031
========== ==========
See accompanying note to the financial statements.
<PAGE>
STERLING DRILLING FUND 1983-2
(a New York limited partnership)
Note to Financial Statements
September 30, 1997
1. The accompanying statements for the period ending September 30, 1997,
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 1997 10 Q and it is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 49,445
<SECURITIES> 0
<RECEIVABLES> 26,550
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 75,995
<PP&E> 13,429,115
<DEPRECIATION> (12,191,100)
<TOTAL-ASSETS> 1,314,010
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,314,010<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,314,010
<SALES> 324,400<F2>
<TOTAL-REVENUES> 324,400
<CGS> 286,902
<TOTAL-COSTS> 286,902
<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> 37,498
<EPS-PRIMARY> 1.51<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other se incluseds total partners' equity.
<F2>Sales includes:
1) $1,521 of interest income.
2)$12,581 of proceeds from sale of equipment.
<F3>The limited partnership income was divided byt the total number
of limited partnership units of 15,697.
</FN>
</TABLE>
