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 31,1997
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 / /
PART I
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - March 31, 1997 and December 31, 1996.
Statements of Operations for the Three Months Ended March 31, 1997 and
1996.
Statements of Changes in Partners' Equity for the year ended December 31,
1996 and for the Three Months Ended March 31, 1997.
Statements of Cash Flows for the Three Months Ended March 31, 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 March 31, 1997 the General partners have distributed
$1,671,730.50 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 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
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 $82,288 in 1996 to $113,825
in 1997. The partnership's gas declined from 32,211 MCF in 1996 to
28,664 MCF in 1997. The Partnership benefited from an increased
average price per MCF and Barrel of $2.28 and $16.37 in 1996 as
compared to $3.28 and $20.20 in 1997. This combination resulted in
both an increase to gas and oil revenue. Production expenses
increased from $36,347 in 1996 to $50,242 in 1997. In 1997 some
additional costs for general maintenance were incurred. These costs
include those associated with repairs needed for access to the well
and well sites and the related labor costs. The production expenses
incurred in 1996 were of a normal and recurring nature to upkeep the
wells.
General and administrative expenses to a related party increased from
$18,750 in 1996 to $24,999 in 1997. The Partnership's third party
costs showed a slight decline. Management continues to reduce third
party costs and use in-house resources to provide efficient and timely
services to the partnership. The related party general and
administrative 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 1997 are substantially
less than the amounts allocable to the Registrant under the
Partnership Agreement.
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 1996 or first quarter 1997. The lower depletion
expense in 1997 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
May 14, 1997
(Date)
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Balance Sheets
(unaudited)
March 31, December 31,
1997 1996
Assets
Current assets:
Cash and cash equivalents $ 52,597 $ 22,018
Due from affiliates 26,047 22,836
----------- ------------
Total current assets 78,644 44,854
Oil and gas properties -
successful efforts method:
Leasehold costs 497,639 497,639
Well and related facilities 12,929,171 12,929,171
less accumulated depreciation,
depletion and amortization (12,159,784) (12,144,168)
----------- ------------
1,267,026 1,282,642
----------- ------------
Total assets $ 1,345,670 $ 1,327,496
=========== ============
Partners' equity
Limited partners 1,336,776 1,325,155
General partners 8,894 2,341
----------- ------------
Total partners' equity $ 1,345,670 $ 1,327,496
=========== ============
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, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 87,076 26,749 $ 113,825
Interest income 371 35 406
------- ------- -------
Total Revenue 87,447 26,784 114,231
------- ------- -------
Costs and Expenses:
Production expense 38,435 11,807 50,242
General and administrative
to a related party 19,124 5,875 24,999
General and administrative 3,978 1,222 5,200
Depreciation, depletion
and amortization 14,289 1,327 15,616
------- ------- -------
Total Costs and Expenses 75,826 20,231 96,057
------- ------- -------
Net Income $ 11,621 6,553 $ 18,174
======= ======= =======
Net Income per equity unit $ 0.74
======
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 $ 1,296 3,625 $ 4,921
======== ======== =======
Net Income per equity unit $ 0.08
======
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, 1995 $ 1,367,959 $ 2,561 $ 1,370,520
Partners' contributions 0 114 114
Cash distributions (39,242) (11,949) (51,191)
Net Income(Loss) (3,562) 11,615 8,053
---------- -------- ---------
Balance at December 31, 1996 $ 1,325,155 $ 2,341 $ 1,327,496
Net Income 11,621 6,553 18,174
---------- -------- ---------
Balance at March 31, 1997 $ 1,336,776 $ 8,894 $ 1,345,670
========== ======== =========
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, 1997 31, 1996
Net cash provided by operating activities $ 30,579 $ 15,247
---------- ----------
Cash flows from investing activities:
Investment in well and related
facilities 0 (5,007)
---------- ----------
Net Cash used in investing activities 0 (5,007)
---------- ----------
Net increase in cash and cash equivalents 30,579 10,240
Cash and cash equivalents at
beginning of period 22,018 8,410
---------- ----------
Cash and cash equivalents at end of
period $ 52,597 $ 18,650
========== ==========
See accompanying note to financial statements.
STERLING DRILLING FUND 1983-2
(a New York limited partnership)
Note to Financial Statements
March 31, 1997
1. The accompanying statements for the period ending March 31, 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 first quarter 1997 10Q and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 52,597
<SECURITIES> 0
<RECEIVABLES> 26,047
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 78,644
<PP&E> 13,426,810
<DEPRECIATION> (12,159,784)
<TOTAL-ASSETS> 1,345,670
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,345,670<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,345,670
<SALES> 114,231<F2>
<TOTAL-REVENUES> 114,231
<CGS> 96,057
<TOTAL-COSTS> 96,057
<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> 18,174
<EPS-PRIMARY> 0.74<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other-se includes total partners' equity.
<F2>Sales includes $406 of interest income.
<F3>The limited partnership income was divided by the total number of
limited partnership units of 15,697.
</FN>
</TABLE>
