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, 1996
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 - March 31, 1996 and December 31, 1995.
Statements of Operations for the Three Months Ended March 31, 1996 and
1995.
Statements of Changes in Partners' Equity for the year ended December 31,
1995 and for the Three Months Ended March 31, 1996.
Statements of Cash Flows for the Three Months Ended March 31, 1996 and
1995.
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 March 31, 1996, 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.
The net proved oil and gas reserves of the Partnership are considered
to be a indicator of financial strength and future liquidity. The
present value of unescalated future net revenues (SEC case) associated
with such reserves, discounted at 10%, was approximately $689,000 as
of December 31, 1995 and was $514,000 as of December 31, 1994. The
increase in total estimated discounted future net revenue was due
primarily to higher year end gas prices as of December 31, 1995, when
compared to the low gas price as of December 31, 1994, 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, 1995 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 -
Operating revenues decreased $81,686 in 1995 to $62,364 in 1996.
During the first quarter 1995 the partnership was paid based upon
spot market prices available. These spot prices were higher during
peak usage times of the year but could be significantly lower during
off-peak usage times. During the last quarter of 1995, the partnership
entered into a twelve month fixed price contract for the production
from most of its wells. This contract price was in effect during the
first quarter 1996 and was lower than the 1995 first quarter spot
prices. Overall revenue decline resulted from the average price per
MCF was 12% less in 1996 then first quarter 1995 and the partnership
also experienced declines in both oil and gas production.
Production expenses in 1996 were $28,090 and were lower than 1995's
expenses of $32,373. The production expenses for the first quarter of
1996 and 1995 were expended 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 1996 and 1995 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. The partnership was not required to revise the properties
basis in either 1995 or first quarter 1996. The lower depletion
expense in 1996 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 8K
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
March 13, 1996 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)
March 31, December 31,
1996 1995
Assets
Current Assets:
Cash and cash equivalents $ 1,344 $ 1,401
Due from affiliates 40,650 23,295
----------- -----------
Total current assets 41,994 24,696
----------- ------------
Oil and Gas properties -
successful efforts method:
Leasehold costs 323,260 323,260
Well and related facilities 7,566,712 7,566,712
less accumulated
depreciation, depletion and
amortization (6,866,932) (6,854,585)
----------- ------------
1,023,040 1,035,387
----------- ------------
Total assets $ 1,065,034 $ 1,060,083
============ ============
Partners' Equity
Limited partners $ 1,082,231 $ 1,080,167
General partners (17,197) (20,084)
----------- ------------
Total partners' equity $ 1,065,034 $ 1,060,083
=========== ============
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
March 31, 1996
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 49,268 13,096 $ 62,364
Interest income 22 1 23
-------- -------- ---------
Total Revenue 49,290 13,097 62,387
-------- -------- ---------
Costs and Expenses:
Production expense 22,191 5,899 28,090
General and administrative
to a related party 9,876 2,625 12,501
General and administrative 3,553 945 4,498
Depreciation, depletion
and amortization 11,606 741 12,347
-------- -------- ---------
Total Costs and Expenses 47,226 10,210 57,436
-------- -------- ---------
Net Income(loss) $ 2,064 2,887 $ 4,951
======== ======== =========
Net Income(loss)
per equity unit $ 0.22
========
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
March 31, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 64,532 $ 17,154 $ 81,686
Interest income 492 31 523
-------- -------- ----------
Total Revenue 65,024 17,185 82,209
-------- -------- ----------
Costs and Expenses:
Production expense 25,575 6,798 32,373
General and administrative
to a related party 9,876 2,625 12,501
General and administrative 3,771 1,003 4,774
Depreciation, depletion
and amortization 15,966 1,019 16,985
-------- -------- ----------
Total Costs and Expenses 55,188 11,445 66,633
-------- -------- ----------
Net Income(loss) $ 9,836 $ 5,740 $ 15,576
======== ======== ==========
Net Income(loss)
per equity unit $ 1.06
=========
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Limited General
Partners Partners Total
Balance At December 31, 1994 $ 1,062,782 $ (37,434) $ 1,025,348
Partners' contributions 0 162 162
Cash Distributions (23,090) (5,888) (28,978)
Net Income(Loss) 40,475 23,076 63,551
-------- -------- --------
Balance at December 31, 1995 $ 1,080,167 $ (20,084) $ 1,060,083
Net Income(Loss) 2,064 2,887 4,951
-------- -------- --------
Balance at March 31, 1996 $ 1,082,231 $ (17,197) $ 1,065,034
======== ======== ========
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Three Three
months months
ended March ended March
31, 1996 31, 1995
Net cash provided by operating
activities $ (57) $ (17,180)
---------- -----------
Net increase(decrease) in cash and
cash equivalents (57) (17,180)
Cash and cash equivalents at
beginning of period 1,401 38,524
----------- -----------
Cash and cash equivalents at end of
period $ 1,344 $ 21,344
=========== ===========
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-1
(a New York limited partnership)
Note to Financial Statements
March 31, 1996
1. The accompanying statements for the period ending March
31, 1996 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 the current period presentation.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Sterling Drilling Fund 1984-1 10Q for the period ending March 31, 1996.
The information provided is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,344
<SECURITIES> 0
<RECEIVABLES> 40,650
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 41,994
<PP&E> 7,889,972
<DEPRECIATION> (6,866,932)
<TOTAL-ASSETS> 1,065,034
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,065,034<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,065,034
<SALES> 62,387<F2>
<TOTAL-REVENUES> 62,387
<CGS> 57,436
<TOTAL-COSTS> 57,436
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,951
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,951
<EPS-PRIMARY> 0.22<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other - Se represents total partner's equity for the partnership.
<F2>Sales includes interest income of $23 for the partnership.
<F3>Eps- primary is computed based upon total limited partner's share of
net income divided by the total units of the partnership (9,236 units).
</FN>
</TABLE>
