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, 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 / /
<PAGE>
Part I
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - September 30, 1996 and December 31, 1995.
Statements of Operations for the Nine and Three Months Ended September 30,
1996 and 1995.
Statements of Changes in Partners' Equity for the Nine and Three Months
Ended September 30, 1996 and 1995.
Statements of Cash Flows for the Nine Months Ended September 30, 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 September 30, 1996,
the General Partners have distributed to the Limited Partners
$1,662,480. Such cash distributions are equivalent to 18.00% of
original total Limited Partner capital contributions.
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 estimated future net revenues (S.E.C.
case) associated with such reserves, discounted at 10%, as of December
31, 1995 was approximately $689,000 as compared to $514,000 from
December 31, 1994. The increase in undiscounted future net cash flows
for the Partnership properties was caused by higher year end prices
in effect at December 31, 1995 compared to lower year end prices as of
December 31, 1994. There were no significant 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.
<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 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 $187,522 in 1995 to $176,337
in 1996. The partnership's overall gas production was increased
because of the partnership participation in workovers on several of
its wells 1995. These wells were chosen because it was determined
production could be increased or maintained for a longer period of
time. Some of the other partnership wells experienced lower
production which could be attributed to a main line in the gathering
system experiencing a shut in due to maintenance by the gathering
system's operator to the line. This resulted in no production for
approximately twenty one days in August of 1996 on the wells that feed
into this main line. All repairs have been completed and the line is
no longer shut in. The partnership's oil production also experienced a
decline. The combination of these three elements resulted in lower
overall revenue even though they were partially offset by higher
average gas and oil prices in 1996 compared to 1995. The partnership
was paid average spot market prices for its gas production during
1995. For a twelve month period, beginning at the end of 1995, the
partnership has been selling a majority of its gas under a fixed price
contract. Spot prices tend to vary significantly between the peak
usage and slow usage periods.
Production expenses in 1996, of $89,807, were lower than 1995's
expenses of $ 91,949. Production expenses may be variable in nature,
vary with production volumes, or more typically the expenses are for
the general upkeep and maintenance of the wells and well sites for
both years.
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 1995 are substantially less than the amounts
allocable to the Registrant under the Partnership Agreement. The
lower amounts reflect management's effort to limit costs, both
incurred and allocated to the Registrant. General and administrative
expenses remained stable and showed no significant change from 1995 to
1996.
<PAGE>
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. No additional depreciation, depletion or amortization was
needed in 1995 or in the three quarters of 1996. Although the 1996
expense is lower than 1995, the expense recorded is consistent with
the current basis of the partnership's properties.
PART II
Items 1 through 5 have been omitted in that each item is either
inapplicable or the answer is negative.Item . 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 1984-1
November 8, 1996 BY: /S/Charles E. Drimal, Jr.
(DATE) ------------------------------
Charles E. Drimal, Jr.
General Partner
<PAGE>
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Balance Sheets
September 30, December 31,
1996 1995
(unaudited) (audited)
Assets
Current Assets:
Cash and cash equivalents $ 14,693 $ 1,401
Due From Affiliates 1,800 23,295
----------- -----------
Total current assets 16,493 24,696
Oil and Gas properties -
successful efforts method:
Leasehold costs 323,260 323,260
Well and related facilities 7,578,550 7,566,712
less accumulated
depreciation,
depletion and amortization (6,892,027) (6,854,585)
----------- -----------
1,009,783 1,035,387
----------- -----------
Total assets $ 1,026,276 $ 1,060,083
========== ===========
Partners' Equity
Limited partners 1,047,651 1,080,167
General partners (21,375) (20,084)
----------- -----------
Total partners' equity $ 1,026,276 $ 1,060,083
========== ===========
See accompanying note to financial statements
<PAGE>
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Nine Months Ended
September 30, 1996
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 139,306 37,031 $ 176,337
Interest income 252 16 268
-------- -------- -------
Total Revenue 139,558 37,047 176,605
-------- -------- -------
Costs and Expenses:
Production expense 70,948 18,859 89,807
General and administrative 29,627 7,876 37,503
to a related party
General and administrative 13,214 3,513 16,727
Depreciation, depletion
and amortization 35,195 2,247 37,442
-------- -------- -------
Total Costs and Expenses 148,984 32,495 181,479
-------- -------- -------
Net Income(loss) $ (9,426) 4,552 $ (4,874)
======== ======== =======
Net Income(loss)
per equity unit $ (1.02)
======
See accompanying note to financial statements
<PAGE>
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
<PAGE>
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
September 30, 1996
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 41,626 11,066 $ 52,692
Interest income 135 9 144
-------- -------- --------
Total Revenue 41,761 11,075 52,836
-------- -------- --------
Costs and Expenses:
Production expense 23,513 6,250 29,763
General and administrative 9,875 2,626 12,501
to a related party
General and administrative 3,704 985 4,689
Depreciation, depletion
and amortization 11,828 756 12,584
-------- -------- --------
Total Costs and Expenses 48,920 10,617 59,537
-------- -------- --------
Net Income(loss) $ (7,159) 458 $ (6,701)
======== ======== ========
Net Income(loss)
per equity unit $ (.77)
========
See accompanying note to financial statements
<PAGE>
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 note to financial statements
<PAGE>
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Nine Months Ended
September 30, 1996
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,080,167 (20,084) $ 1,060,083
Partners' Contribution 0 162 162
Cash Distributions (23,090) (6,005) (29,095)
Net Income(Loss) (9,426) 4,552 (4,874)
--------- -------- ----------
Balance at end of period $ 1,047,651 (21,375) $ 1,026,276
========= ======== ==========
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
========= ======== ==========
See accompanying note to financial statements
<PAGE>
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Three Months Ended
September 30, 1996
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,054,810 (21,995) $ 1,032,815
Partners' Contribution 0 162 162
Cash Distributions 0 0 0
Net Income(Loss) (7,159) 458 (6,701)
--------- -------- ---------
Balance at end of period $ 1,047,651 (21,375) $ 1,026,276
========= ======== =========
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
========= ======== =========
See accompanying note to financial statements
<PAGE>
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Nine months Nine months
ended ended
September September
30, 1996 30, 1995
Net cash provided by operating
activities $ 54,063 $ 56,453
---------- ----------
Cash flows from financing activities:
Partners' contributions 162 161
Distribution to partners (29,095) (28,978)
----------- ----------
Net cash used in financing activities (28,933) (28,817)
----------- -----------
Cash flows from investing activities:
Investment in wells and related
facilities (11,838) (55,516)
---------- ----------
Net cash used in investing activities (11,838) (55,516)
----------- -----------
Net increase(decrease) in cash and
cash equivalents 13,292 (27,880)
Cash and cash equivalents at
beginning of period 1,401 38,524
----------- -----------
Cash and cash equivalents at end of
period $ 14,693 $ 10,644
=========== ===========
see accompanying note to financial statements
<PAGE>
STERLING DRILLING FUND 1984-1
(a New York limited partnership)
Note to Financial Statements
September 30, 1996
1. The accompanying statements for the period ending
September 30, 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 current
period presentation.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from Sterling Drilling Fund 1984-1 Third Quarter 1996 10-Q and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 14,693
<SECURITIES> 0
<RECEIVABLES> 1,800
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,493
<PP&E> 7,901,810
<DEPRECIATION> (6,892,027)
<TOTAL-ASSETS> 1,026,276
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,026,276<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,026,276
<SALES> 176,605<F2>
<TOTAL-REVENUES> 176,605
<CGS> 181,479
<TOTAL-COSTS> 181,479
<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> (4,874)
<EPS-PRIMARY> (1.02)<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other - se includes total partners' equity.
<F2>Sales includes $268 of interest income.
<F3>The limited partnership net income was divided by the total
number of limited partnership units od 9,236.
</FN>
</TABLE>
