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, 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 - June 30, 1997 and December 31, 1996.
Statements of Operations for the Six and Three Months Ended June 30,
1997 and 1996 .
Statements of Changes in Partners' Equity for the Six and Three Months
Ended June 30, 1997 and 1996.
Statements of Cash Flows for the Six Months Ended June 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 June 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 $175,860 in 1996 to $213,582
in 1997. The Partnership experienced a minor decline in gas
production and a small change in oil production, from 62,907 MCF and
1,217 Bbls in 1996 to 61,014 MCF and 1,458 Bbls in 1997. The average
price per MCF in 1996 and 1997 was, respectively, $2.48 and $3.01.
The average oil price per barrel in 1996 was $18.21 and was $18.65 in
1997. The Partnership's oil and gas revenue was positively impacted
because of the increased prices received. The Partnership received
$7,820 from the sale of equipment, for example piping and tubing, that
was no longer necessary at a few of the well locations. Production
expenses showed an increase from 1996 to 1997, $77,559 and $95,553,
respectively. In 1997, some additional expenditures were made in
order to perform repairs associated with entry to the well sites and
the related labor costs. The production costs incurred in 1996 were
of normal and recurring manner to upkeep the wells.
The Partnership's third party costs remained unchanged from 1996 to
1997. 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 1996 or during the first half of 1997. The current
depreciation was reasonable based upon the current remaining basis in
the Partnership 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.
<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
August 13, 1997
(Date)
<PAGE>
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Balance Sheets
June 30, December 31,
1997 1996
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 25,253 22,018
Due from others 31,210 22,836
----------- ------------
Total current assets 56,463 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 (12,175,400) (12,144,168)
----------- ------------
1,251,410 1,282,642
----------- ------------
Total assets $ 1,307,873 1,327,496
=========== ============
Partners' equity
Limited partners 1,306,639 1,325,155
General partners 1,234 2,341
----------- ------------
Total partners' equity $ 1,307,873 1,327,496
=========== ============
See accompanying note to financial statements.
<PAGE>
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Six Months Ending
June 30, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 163,390 50,192 $ 213,582
Gain on sale of equipment 7,155 665 7,820
Interest income 972 90 1,062
-------- ------- -------
Total Revenue 171,517 50,947 222,464
-------- ------- -------
Costs and Expenses:
Production expense 73,098 22,455 95,553
General and administrative
to a related party 38,248 11,750 49,998
General and administrative 10,868 3,339 14,207
Depreciation, depletion
and amortization 28,577 2,655 31,232
-------- ------- -------
Total Costs and Expenses 150,791 40,199 190,990
-------- ------- -------
Net Income $ 20,726 10,748 $ 31,474
======== ======= =======
Net Income per equity unit $ 1.32
========
See accompanying note to financial statements.
<PAGE>
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Six Months Ending
June 30, 1996
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 134,533 41,327 $ 175,860
Interest income 521 48 569
-------- ------- -------
Total Revenue 135,054 41,375 176,429
-------- ------- -------
Costs and Expenses:
Production expense 59,333 18,226 77,559
General and administrative
to a related party 28,688 8,812 37,500
General and administrative 10,891 3,345 14,236
Depreciation, depletion
and amortization 30,762 2,858 33,620
-------- ------- -------
Total Costs and Expenses 129,674 33,241 162,915
-------- ------- -------
Net Income $ 5,380 8,134 $ 13,514
======== ======= =======
Net Income per equity unit $ .34
======
See accompanying note to financial statements.
<PAGE>
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ending
June 30, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 76,314 23,443 $ 99,757
Gain on sale of equipment 7,155 665 7,820
Interest income 601 55 656
-------- ------- -------
Total Revenue 84,070 24,163 108,233
-------- ------- -------
Costs and Expenses:
Production expense 34,663 10,648 45,311
General and administrative
to a related party 19,124 5,875 24,999
General and administrative 6,890 2,117 9,007
Depreciation, depletion
and amortization 14,288 1,328 15,616
-------- ------- -------
Total Costs and Expenses 74,965 19,968 94,933
-------- ------- -------
Net Income $ 9,105 4,195 $ 13,300
======== ======= =======
Net Income per equity unit
$ .58
======
See accompanying note to the financial statements.
<PAGE>
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ending
June 30, 1996
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 71,583 21,989 $ 93,573
Interest income 308 28 336
-------- ------- -------
Total Revenue 71,891 22,017 93,908
-------- ------- -------
Costs and Expenses:
Production expense 31,528 9,684 41,212
General and administrative
to a related party 14,344 4,406 18,750
General and administrative 6,444 1,979 8,423
Depreciation, depletion
and amortization 15,491 1,439 16,930
-------- ------- -------
Total Costs and Expenses 67,807 17,508 85,315
-------- ------- -------
Net Income $ 4,084 4,509 $ 8,593
======== ======= =======
Net Income per equity unit
$ .26
======
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)
Six Months Ended
June 30, 1997
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,325,155 2,341 $ 1,327,496
Cash Distributions (39,242) (11,855) (51,097)
Net Income(Loss) 20,726 10,748 31,474
-------- -------- --------
Balance at end of period $ 1,306,639 1,234 $ 1,307,873
======== ======== =========
Six Months Ended
June 30, 1996
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,367,959 2,561 $ 1,370,520
Cash Distributions (39,242) (11,949) (51,191)
Net Income(Loss) 5,380 8,134 13,514
-------- -------- ---------
Balance at end of period $ 1,334,097 (1,254) $ 1,332,843
======== ======== =========
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
June 30, 1997
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,336,776 8,894 $ 1,345,670
Cash Distributions (39,242) (11,855) (51,097)
Net Income(Loss) 9,105 4,195 13,300
--------- -------- ---------
Balance at end of period $ 1,306,639 1,234 $ 1,307,873
========= ======== =========
Three Months Ended
June 30, 1996
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,369,255 6,186 $ 1,375,441
Cash Distributions (39,242) (11,949) (51,191)
Net Income(Loss) 4,084 4,509 8,593
--------- -------- ---------
Balance at end of period $ 1,334,097 (1,254) $ 1,332,843
========= ======== =========
See accompanying note to the financial statements.
<PAGE>
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Six months Six months
ended ended
June 30, June 30,
1997 1996
Net cash provided by operating activities $ 46,512 $ 73,648
---------- ----------
Cash flows from financing activities:
Distribution to partners (51,097) (51,191)
---------- ----------
Net cash used in financing activities (51,097) (51,191)
---------- ----------
Cash flows from investing activities:
Sale of equipment 7,820 0
Investment in well and related
facilities 0 (14,639)
---------- ----------
Net Cash used in investing activities 7,820 (14,639)
---------- ----------
Net increase in cash and cash equivalents 3,235 7,818
Cash and cash equivalents at
beginning of period 22,018 8,410
---------- ----------
Cash and cash equivalents at end of
period $ 25,253 $ 16,228
========== ==========
See accompanying note to financial statements.
<PAGE>
STERLING DRILLING FUND 1983-2
(a New York limited partnership)
Note to Financial Statements
June 30, 1997
1. The accompanying statements for the period ending June 30, 1997,
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's second quarter 1997 10Q and is
qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 25,253
<SECURITIES> 0
<RECEIVABLES> 31,210
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 56,463
<PP&E> 13,426,810
<DEPRECIATION> (12,175,400)
<TOTAL-ASSETS> 1,307,873
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,307,873<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,307,873
<SALES> 222,464<F2>
<TOTAL-REVENUES> 222,464
<CGS> 190,990
<TOTAL-COSTS> 190,990
<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> 31,474
<EPS-PRIMARY> 1.32<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other - se includes total partners' equity.
<F2>Sales includes the following items:
1)Interest income of $1,062
2)Proceeds from sale of equipment $7,820.
<F3>The limited partners' share of net income was divided by the total
number of limited partnership units of 15,697.
</FN>
</TABLE>
