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, 1995
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 0-13457
Sterling Drilling Fund 1984-1
(Exact name of registrant as specified in charter)
New York
(State or other jurisdiction of incorporation or
organization)
13-3234373
(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 - September 30, 1995 and December 31, 1994.
Statements of Operations for the Nine and Three Months Ended September 30,
1995 and 1994.
Statements of Changes in Partners' Equity for the Nine and Three Months
Ended September 30, 1995 and 1994.
Statements of Cash Flows for the Nine Months Ended September 30, 1995 and
1994.
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 among 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, 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 any contingent debts, liabilities or expenses or for
the conduct of the Partnership's business. As of September 30, 1995,
the General Partners have distributed to the Limited Partners
$1,639,390. Such cash distributions are equivalent to 17.75% of
original total Limited Partner capital contributions.
Columbia Gas Transmission Corp., a contract purchaser of the
Registrant's gas, filed a Chapter 11 petition in U.S. Bankruptcy Court
in Wilmington Delaware on July 31, 1991. At that time, the Bankruptcy
Court released Columbia from any current contracts. The Registrant
has filed a claim with the Bankruptcy Court to recover revenue
suspended at the time bankruptcy occurred. Such amounts were not
recorded as revenue during the applicable period, therefore, no loss
contingency exists. The Registrant has reviewed and accepted a
tentative settlement offer made by Columbia. The Registrant is
hopeful that Columbia will make a final settlement within the next
three months.
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 (SEC case)
associated with such reserves, discounted at 10%, as of December 31,
1994 was approximately $514,000 as compared to the December 31, 1993
amount of $1,042,000.
The decline in undiscounted future net cash flows for the Partnership
properties at December 31, 1994 when compared to December 31, 1993,
was caused by a significant decline in prices between these two dates,
rather than 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, 1994 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.
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 October 1984 for $7,750,000. Pursuant to
the terms of this contract thirty-two wells have been drilled,
resulting in thirty-two producing wells.
3. Results of Operations -
Overall operating revenues decreased from $236,464 in 1994 to
$187,522 in 1995. Revenue received from oil production included a
minor decline due to lower production offset by higher average price,
from 2,655 BBls in 1994 to 2,416 Bbls in 1995, and the average price
per barrel increased, from $14.99 in 1994 to $ 15.74 in 1995. The
majority of the revenue decrease is directly attributable to the gas
production decline, from 66,540 MCF in 1994 to 64,405 in 1995,
combined with the average price per MCF decline, from $2.91 in 1994 to
$ 2.21 in 1995. The partnership is participating in workovers on
several of its wells. These wells were chosen because it was
determined production could be increased or maintained for a longer
period of time. The work performed on these wells commenced in the
last month of the third quarter and will continue into the fourth
quarter. Therefore, any results from the workover's performed will not
be readily apparent until the end of this year or possibly the
beginning of next year.
Production expenses in 1994, $119,587, were higher than 1995's
expenses of $ 91,949 because of the severe weather conditions which
occurred throughout the winter and spring of last year. These
conditions created additional location, line outages, roadway
maintenance and electrical repairs. With the exception of the
additional work performed on specific wells, the production expenses
for 1995 were of a normal nature to maintain the general upkeep of the
wells and well-sites.
General and administrative expenses have been segregated on the
financial statements to reflect expenses paid to PrimeEnergy
Management Corporation(PEMC), 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 1995 and 1994 are substantially less than the amounts
allocable to the Registrant under the Partnership Agreement. The
lower amounts reflect management's effort's to limit costs, both
incurred and allocated to the Registrant. Management continues to
reduce third party costs and use in-house resources to provide
efficient and timely services to the partnership.
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. A downward revision in reserve estimates due to lower year-
end gas prices in 1994 resulted in an additional charge of $450,000.
The lower cost basis of the properties resulted in lower depreciation
during 1995.
4. Other-
In, March, the Financial Accounting Standards Board issued Statement
of Financial Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of," (SFAS No.
121)which is effective for the fiscal years beginning after December
15, 1995. This statement establishes accounting standards for the
impairment of long-lived assets, requiring such assets to be reported
at the lower of carrying amount or fair value, less selling costs.
The statement amends SFAS No. 19, "Financial Accounting and Reporting
by Oil and Gas Producing Companies" by adding an impairment test for
proved properties in accordance with
SFAS No. 121.
The Registrant currently performs a "ceiling test" by comparing the
total carrying value of oil and gas properties to the total future net
cash flows from the estimated production of proved oil and gas
properties. The effect of SFAS No. 121, which would change the way
this test is performed, is not known at this time.
PART II
Items 1 through 5 have been omitted in that each item is either
inapplicable or the answer is negative.
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 1984-1
November 13, 1995 BY: /S/Charles E. Drimal, Jr.
(DATE) --------------------------
Charles E. Drimal, Jr.
General Partner
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Balance Sheets
(unaudited)
September 30, December
1995 31, 1994
Assets
Current Assets:
Cash and cash equivalents $ 10,644 $ 38,524
----------- -----------
Total current assets 10,644 38,524
Oil and Gas properties -
successful efforts method:
Leasehold costs 323,260 323,260
Well and related facilities 7,558,325 7,502,809
less accumulated
depreciation,
depletion and amortization (6,859,653) (6,805,924)
----------- -----------
1,021,932 1,020,145
----------- -----------
Total assets $ 1,032,576 $ 1,058,669
Liabilities and Partners' Equity
Current liabilities:
Due to affiliates $ 47,670 $ 33,321
----------- -----------
Total current liabilities 47,670 33,321
----------- -----------
Partners' Equity
Limited partners 1,022,620 1,062,782
General partners (37,714) (37,434)
----------- -----------
Total partners' equity 984,906 1,025,348
----------- -----------
Total liabilities and
partners' equity $ 1,032,576 $ 1,058,669
========== ===========
See accompanying note to financial statements
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Nine Months Ended
September 30, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 148,142 39,380 $ 187,522
Interest income 1,069 68 1,137
-------- -------- -------
Total Revenue 149,211 39,448 188,659
-------- -------- -------
Costs and Expenses:
Production expense 72,640 19,309 91,949
General and administrative
to a related party 29,627 7,876 37,503
General and administrative 13,511 3,592 17,103
Depreciation, depletion
and amortization 50,505 3,224 53,729
-------- -------- -------
Total Costs and Expenses 166,283 34,001 200,284
-------- -------- -------
Net Income(loss) $ (17,072) 5,447 $ (11,625)
======== ======== =======
Net Income(loss)
per equity unit $ (1.85)
======
See accompanying note to financial statements
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Nine Months Ended
September 30, 1994
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 186,807 49,657 $ 236,464
Interest income 765 49 814
------- ------- ---------
Total Revenue 187,572 49,706 237,278
------- ------- ---------
Costs and Expenses:
Production expense 94,474 25,113 119,587
General and administrative
to a related party 59,724 15,876 75,600
General and administrative 13,449 2,373 15,822
Depreciation, depletion
and amortization 64,736 4,132 68,868
------- ------- --------
Total Costs and Expenses 232,383 47,494 279,877
------- ------- ---------
Net Income(loss) $ (44,811) 2,212 $ (42,599)
======== ======= =========
Net Income(loss)
per equity unit $ (4.85)
========
See accompanying not financial statements
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
September 30, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 45,619 12,127 $ 57,746
Interest income 133 8 141
-------- -------- --------
Total Revenue 45,752 12,135 57,887
-------- -------- --------
Costs and Expenses:
Production expense 21,977 5,841 27,818
General and administrative
to a related party 9,875 2,626 12,501
General and administrative 2,963 788 3,751
Depreciation, depletion
and amortization 18,572 1,186 19,758
-------- -------- --------
Total Costs and Expenses 53,387 10,441 63,828
-------- -------- --------
Net Income(loss) $ (7,635) 1,694 $ (5,941)
======== ======== ========
Net Income(loss)
per equity unit $ (0.83)
========
See accompanying not financial statements
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
September 30, 1994
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 65,513 17,414 $ 82,927
Interest income 214 14 228
-------- -------- -----------
Total Revenue 65,727 17,428 83,155
-------- -------- -----------
Costs and Expenses:
Production expense 27,631 7,346 34,977
General and administrative
to a related party 19,908 5,292 25,200
General and administrative 4,834 83 4,917
Depreciation, depletion
and amortization 21,579 1,377 22,956
-------- -------- -----------
Total Costs and Expenses 73,952 14,098 88,050
-------- -------- -----------
Net Income(loss) $ (8,225) 3,330 $ (4,895)
======== ======== ===========
Net Income(loss)
per equity unit $ (0.89)
======
See accompanying not financial statements
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Nine Months Ended
September 30, 1995
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,062,782 (37,434) $ 1,025,348
Partners' Contribution 0 161 161
Cash Distributions (23,090) (5,888) (28,978)
Net Income(Loss) (17,072) 5,447 (11,625)
-------- -------- -----------
Balance at end of period $ 1,022,620 (37,714) $ 984,906
======== ======== ===========
Nine Months Ended
September 30, 1994
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,609,179 2,325 $ 1,611,504
Partners' Contribution 0 162 162
Cash Distributions (23,090) (5,984) (29,074)
Net Income(Loss) (44,811) 2,212 (42,599)
-------- -------- -----------
Balance at end of period $ 1,541,278 (1,285) $ 1,539,993
======== ======== ===========
See accompanying not financial statements
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Three Months Ended
September 30, 1995
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,030,255 (39,569) $ 990,686
Partners' Contribution 0 161 161
Cash Distributions 0 0 0
Net Income(Loss) (7,635) 1,694 (5,941)
-------- -------- ---------
Balance at end of period $ 1,022,620 (37,714) $ 984,906
======== ======== =========
Three Months Ended
September 30, 1994
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,549,503 (4,777) $ 1,544,726
Partners' Contribution 0 162 162
Cash Distributions 0 0 0
Net Income(Loss) (8,225) 3,330 (4,895)
---------- -------- ---------
Balance at end of period $ 1,541,278 (1,285) $ 1,539,993
========== ======== =========
See accompanying not financial statements
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Nine months Nine months
ended ended
September September
30, 1995 30, 1994
Net cash provided by operating
activities $ 56,453 $ 13,841
---------- -----------
Cash flows from financing activities:
Partners' contributions 161 162
Distribution to partners (28,978) (29,074)
---------- -----------
Net cash used in financing activities (28,817) (28,912)
----------- -----------
Cash flows from investing activities:
Investment in wells and related
equipment (55,516) 0
---------- ----------
Net cash used in investing activities (55,516) 0
----------- -----------
Net increase(decrease) in cash and
cash equivalents (27,880) (15,071)
Cash and cash equivalents at
beginning of period 38,524 32,820
----------- -----------
Cash and cash equivalents at end of
period $ 10,644 $ 17,749
=========== ===========
see accompanying note to financials
STERLING DRILLING FUND 1984-1
(a New York limited partnership)
Note to Financial Statements
September 30, 1995
1. The accompanying statements for the period ending
September 30, 1995, 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 conform to current
period presentation.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Sterling Drilling Fund 1984-1 form 10-q and is qualified in its entirety by
reference to such financial statments.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 10,644
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,644
<PP&E> 7,881,585
<DEPRECIATION> (6,859,653)
<TOTAL-ASSETS> 1,032,576
<CURRENT-LIABILITIES> 47,670
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 984,906<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,032,576
<SALES> 187,522
<TOTAL-REVENUES> 188,659<F2>
<CGS> 200,284
<TOTAL-COSTS> 200,284
<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> (11,625)
<EPS-PRIMARY> (1.85)<F3>
<EPS-DILUTED> 0
<FN>
<F1> (other-se) contains total partner's equity.
<F2> (total-revenues) includes $1,137 of interest income.
<F3> (eps-primary) includes net income divided by the number of limited
partnership units of 9,236.
</FN>
</TABLE>
