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<page> 1
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, 2000
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> 2
PART I
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - June 30, 2000 and December 31, 1999.
Statements of Operations for the Six and Three Months Ended June 30, 2000 and 1999 .
Statements of Changes in Partners' Equity for the Six and Three Months Ended June 30, 2000 and 1999.
Statements of Cash Flows for the Six Months Ended June 30, 2000 and 1999.
Note to Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
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, 2000, the General Partners have distributed $1,828,700.50 or 11.65% 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 future net revenues (S.E.C. case) associated with such reserves, discounted at 10% as of December 31, 1999, was approximately $1,368,563 as compared to the discounted reserves as of December 31, 1998, which were approximately $1,009,000. 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
<page> 3
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.
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.
Overall operating revenues increased from $123,112 in 1999 to $274,387 in 2000. The Partnership experienced a change in gas production, from 53,412 MCF 1999 to 75,864 MCF in 2000. The average price per MCF in 1999 was $2.04 and $3.24 in 2000.The increase in gas production can be partially attributed to workovers performed on various wells. The operator will expend funds on capital repairs if it has been determined that such a repair will help sustain, increase or halt serious production declines. These repairs may include artifical lift equipment, labor costs, tubing and location costs. Another reason for the dramatic increase in production was due to a substantial portion of the Partnership's production shut-in for the month of June 1999. The required maintenance and shut-in of the gas transporter's pipeline resulted in the Partnership production to be lower than normal in 1999. Production expenses increased from $59,493 in 1999 to $120,577 in 2000. Production expenses can be variable in nature relating to the volumes produced. Variable costs were reasonable based upon current production volumes in both years. Production expenses also include other direct costs which include, but are not limited to , labor, chemicals, and repairs to access the well sites. The funds expended, in both years, were reasonable.
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 1999 and 2000 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 1999 or during the first half of 2000. The current depreciation was reasonable based upon the remaining basis in the Partnership properties.
<page> 4
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> 5
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, 2000 |
|
(Date) |
<page> 6
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Balance Sheets
|
June 30, 2000 |
December 31, 1999 |
|||
|
(unaudited) |
(audited) |
|||
|
Assets |
||||
|
Current assets: |
||||
|
Cash and cash equivalents |
$ |
53,797 |
$ |
75,872 |
|
Due from affiliates |
55,341 |
39,003 |
||
|
Due from others |
0 |
0 |
||
|
------------ |
------------ |
|||
|
Total current assets |
109,138 |
114,875 |
||
|
------------ |
------------ |
|||
|
Oil and gas properties - successful efforts method |
||||
|
Leasehold costs |
497,639 |
497,639 |
||
|
Well and related facilities |
12,988,705 |
12,946,528 |
||
|
less accumulated depreciation, depletion and |
||||
|
amortization |
(12,367,933) |
(12,335,303) |
||
|
----------------- |
----------------- |
|||
|
1,118,411 |
1,108,864 |
|||
|
----------------- |
----------------- |
|||
|
Total assets |
$ |
1,227,549 |
$ |
1,223,739 |
|
========== |
========== |
|||
|
Partners' equity |
||||
|
Limited partners |
1,214,961 |
1,216,998 |
||
|
General partners |
12,588 |
6,741 |
||
|
----------------- |
----------------- |
|||
|
Total partners' equity |
$ |
1,227,549 |
$ |
1,223,739 |
|
========== |
========== |
|||
See accompanying note to financial statements.
<page> 7
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
|
Six Months Ending June 30, 2000 |
|
Limited Partners |
General Partners |
Total |
||||
|
Revenue: |
||||||
|
Operating revenue |
$ |
209,906 |
64,481 |
$ |
274,387 |
|
|
Other Income |
0 |
0 |
0 |
|||
|
Interest income |
2,389 |
222 |
2,611 |
|||
|
----------- |
----------- |
----------- |
||||
|
Total Revenue |
212,295 |
64,703 |
276,998 |
|||
|
----------- |
----------- |
----------- |
||||
|
Costs and Expenses: |
||||||
|
Production expense |
92,241 |
28,336 |
120,577 |
|||
|
General and administrative to a related party |
38,248 |
11,750 |
49,998 |
|||
|
General and administrative |
14,745 |
4,530 |
19,275 |
|||
|
Depreciation, depletion and amortization |
29,856 |
2,774 |
32,630 |
|||
|
----------- |
----------- |
----------- |
||||
|
Total Costs and Expenses |
175,090 |
47,390 |
222,480 |
|||
|
----------- |
----------- |
----------- |
||||
|
Net Income |
$ |
37,205 |
17,313 |
$ |
54,518 |
|
|
======= |
======= |
======= |
||||
|
Net Income per equity unit |
$ |
2.37 |
||||
|
======= |
||||||
See accompanying note to financial statements.
<page> 8
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
|
Six Months Ending June 30, 1999 |
|
Limited Partners |
General Partners |
Total |
||||
|
Revenue: |
||||||
|
Operating revenue |
$ |
94,181 |
28,931 |
$ |
123,112 |
|
|
Other Income |
1,854 |
570 |
2,424 |
|||
|
Interest income |
1,935 |
180 |
2,115 |
|||
|
----------- |
----------- |
----------- |
||||
|
Total Revenue |
97,970 |
29,681 |
127,651 |
|||
|
----------- |
----------- |
----------- |
||||
|
Costs and Expenses: |
||||||
|
Production expense |
45,512 |
13,981 |
59,493 |
|||
|
General and administrative to a related party |
38,252 |
11,750 |
50,002 |
|||
|
General and administrative |
9,678 |
2,973 |
12,651 |
|||
|
Depreciation, depletion and amortization |
26,777 |
2,487 |
29,264 |
|||
|
----------- |
----------- |
----------- |
||||
|
Total Costs and Expenses |
120,219 |
31,191 |
151,410 |
|||
|
----------- |
----------- |
----------- |
||||
|
Net Income |
$ |
(22,249) |
(1,510) |
$ |
(23,759) |
|
|
======= |
====== |
====== |
||||
|
Net Income per equity unit |
$ |
(1.42) |
||||
|
======= |
||||||
See accompanying note to financial statements.
<page> 9
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
|
Three Months Ending June 30, 2000 |
|
Limited Partners |
General Partners |
Total |
||||
|
Revenue: |
||||||
|
Operating revenue |
$ |
114,625 |
35,212 |
$ |
149,837 |
|
|
Other Income |
0 |
0 |
0 |
|||
|
Interest income |
1,105 |
103 |
1,208 |
|||
|
-------- |
------- |
------- |
||||
|
Total Revenue |
115,730 |
35,315 |
151,045 |
|||
|
-------- |
------- |
------- |
||||
|
Costs and Expenses: |
||||||
|
Production expense |
49,197 |
15,113 |
64,310 |
|||
|
General and administrative to a related party |
19,124 |
5,875 |
24,999 |
|||
|
General and administrative |
9,629 |
2,958 |
12,587 |
|||
|
Depreciation, depletion and amortization |
14,928 |
1,387 |
16,315 |
|||
|
-------- |
------- |
------- |
||||
|
Total Costs and Expenses |
92,878 |
25,333 |
118,211 |
|||
|
-------- |
------- |
------- |
||||
|
Net Income |
$ |
22,852 |
9,982 |
$ |
32,834 |
|
|
======== |
======= |
======= |
||||
|
Net Income per equity unit |
$ |
1.46 |
||||
|
====== |
||||||
See accompanying note to the financial statements.
<page> 10
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
|
Three Months Ending June 30, 1999 |
|
Limited Partners |
General Partners |
Total |
||||
|
Revenue: |
||||||
|
Operating revenue |
$ |
47,627 |
14,630 |
$ |
62,257 |
|
|
Other Income |
1,854 |
570 |
2,424 |
|||
|
Interest income |
715 |
67 |
782 |
|||
|
-------- |
------- |
------- |
||||
|
Total Revenue |
50,196 |
15,267 |
65,463 |
|||
|
-------- |
------- |
------- |
||||
|
Costs and Expenses: |
||||||
|
Production expense |
25,512 |
7,837 |
33,349 |
|||
|
General and administrative to a related party |
19,125 |
5,874 |
24,999 |
|||
|
General and administrative |
8,225 |
2,526 |
10,751 |
|||
|
Depreciation, depletion and amortization |
13,389 |
1,243 |
14,632 |
|||
|
-------- |
------- |
------- |
||||
|
Total Costs and Expenses |
66,251 |
17,480 |
83,731 |
|||
|
-------- |
------- |
------- |
||||
|
Net Income |
$ |
(16,055) |
(2,213) |
$ |
(18,268) |
|
|
======== |
======= |
======= |
||||
|
Net Income per equity unit |
$ |
(1.02) |
||||
|
====== |
||||||
See accompanying note to the financial statements.
<page> 11
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
|
Six Months Ended June 30, 2000 |
|
Limited Partners |
General Partners |
Total |
|||||||
|
Balance at beginning of period |
$ |
1,216,998 |
6,741 |
$ |
1,223,739 |
||||
|
Cash Distributions |
(39,242) |
(11,466) |
(50,708) |
||||||
|
Net Income(Loss) |
37,205 |
17,313 |
54,518 |
||||||
|
------------- |
------------- |
------------- |
|||||||
|
Balance at end of period |
$ |
1,214,961 |
17,313 |
$ |
1,227,549 |
||||
|
======== |
======== |
========= |
|||||||
|
Six Months Ended June 30, 1999 |
|
Limited Partners |
General Partners |
Total |
||||||
|
Balance at beginning of period |
$ |
1,279,323 |
12,330 |
$ |
1,291,653 |
|||
|
Cash Distributions |
(39,242) |
(11,185) |
(50,427) |
|||||
|
Net Income(Loss) |
(22,249) |
(1,510) |
(23,759) |
|||||
|
------------- |
------------- |
------------- |
||||||
|
Balance at end of period |
$ |
1,217,832 |
(365) |
$ |
1,217,467 |
|||
|
======== |
======== |
========= |
||||||
See accompanying note to the financial statements.
<page> 12
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
|
Three Months Ended June 30, 2000 |
|
Limited Partners |
General Partners |
Total |
|||||||
|
Balance at beginning of period |
$ |
1,231,351 |
14,072 |
$ |
1,245,423 |
||||
|
Cash Distributions |
(39,242) |
(11,466) |
(50,708) |
||||||
|
Net Income(Loss) |
22,852 |
9,982 |
32,834 |
||||||
|
------------- |
------------- |
------------- |
|||||||
|
Balance at end of period |
$ |
1,214,961 |
12,588 |
$ |
1,227,549 |
||||
|
========= |
======== |
======== |
|||||||
|
Three Months Ended June 30, 1999 |
|
Limited Partners |
General Partners |
Total |
||||||
|
Balance at beginning of period |
$ |
1,273,129 |
13,033 |
$ |
1,286,162 |
|||
|
Cash Distributions |
(39,242) |
(11,185) |
(50,427) |
|||||
|
Net Income(Loss) |
(16,055) |
(2,213) |
(18,268) |
|||||
|
------------- |
------------- |
------------- |
||||||
|
Balance at end of period |
$ |
1,217,832 |
(365) |
$ |
1,217,467 |
|||
|
========= |
======== |
======== |
||||||
See accompanying note to the financial statements.
<page> 13
STERLING DRILLING FUND 1983-2
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
|
Six months ended June 30, 2000 |
Six months Ended June 30, 1999 |
|||
|
Net cash provided by(used in) operating activities |
$ |
70,810 |
$ |
(34,297) |
|
---------- |
---------- |
|||
|
Cash flows from financing activities: |
||||
|
Distribution to partners |
(50,708) |
(50,427) |
||
|
---------- |
---------- |
|||
|
Net cash used in financing activities |
(50,708) |
(50,427) |
||
|
---------- |
---------- |
|||
|
Cash flows from investing activities: |
||||
|
Investments in wells and well |
||||
|
Related facilities |
(42,177) |
0 |
||
|
---------- |
---------- |
|||
|
Net cash (used by) investing activities |
(42,177) |
0 |
||
|
---------- |
---------- |
|||
|
Net increase (decrease) in cash and cash equivalents |
(22,075) |
(84,724) |
||
|
Cash and cash equivalents at beginning of period |
75,872 |
88,554 |
||
|
---------- |
---------- |
|||
|
Cash and cash equivalents at end of period |
$ |
53,797 |
$ |
3,380 |
|
====== |
====== |
|||
See accompanying note to financial statements.
<page> 14
STERLING DRILLING FUND 1983-2
(a New York limited partnership)
Note to Financial Statements
June 30, 2000
1. The accompanying statements for the period ending June 30, 2000, are unaudited but reflect all adjustments necessary to present fairly the results of operations.
|
|