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, 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 2-91966-01
STERLING DRILLING FUND 1984-1
(Exact name of registrant as specified in charter)
New York
(State or other jurisdiction of incorporation)
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 - June 30, 1996 and December 31, 1995.
Statements of Operations for the Six and Three Months Ended June 30,
1996 and 1995.
Statements of Changes in Partners' Equity for the Six and Three Months
Ended June 30, 1996 and 1995.
Statements of Cash Flows for the Six Months Ended June 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 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, 1996, the General
Partners have distributed $1,662,480 or 18.00% of original
Limited Partner capital contributions to the Limited Partners.
The possible shut-in of the Registrant's wells due to normal
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 estimated future net
revenues (S.E.C. case) associated with such reserves, discounted
at 10% as of December 31, 1995 was approximately $639,000 and was
$514,000 as of December 31, 1994.
The increase in total estimated discounted future net revenue
was due in part to higher year end gas prices as of December 31,
1995 when compared to the low gas price in effect as of December
31, 1994. 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 -
Total operating revenues decreased slightly from $129,776 in 1995
to $123,645 in 1996. The partnership experienced immaterial
declines in both oil and gas production. The average prices
received for both oil and gas were slightly higher than the
prices received during 1995. The increased prices partially
offset the lower production. 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
is now 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. The Partnership may participate in
workovers on specifically evaluated wells. If the operator feels
that additional work or equipment is needed to maintain or
increase production on a well then the appropriate funds are
expended from operating cash flows and these costs may be
capitalized or expensed depending the appropriate criteria.
Production expenses showed very little change from $64,131 in
1995 to $60,004 in 1996. The partnership's regular operating
expenses will vary based upon the needs of the particular wells
and well sites. the current expenditures were consistent with
production volumes and typical repair expenses.
General and administrative expenses have been segregated on the
financial statements to show expenses attributable to the affairs
and operations of the Registrant payable to PrimeEnergy
Management Corporation, a general partner. These expenses are
charged in accordance with guidelines set forth in the
Registrant's Management Agreement and shall not exceed an annual
amount of 5% of limited partners capital contributed. 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 1995 or during the first half of
1996. The current depreciation was reasonable based upon the
current remaining basis in the Partnership properties.
PART II
Items 1 to 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
during the period covered by this report.
Exhibit 27 - Financial data schedule is attached to the current
filling 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
(Registrant)
August 8, 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)
June 30, December 31,
1996 1995
Assets
Current Assets:
Cash and cash equivalents $ 11,714 $ 1,401
Due from affiliates 1,466 23,295
----------- ------------
Total current assets 13,180 24,696
----------- ------------
Oil and Gas properties -
successful efforts method:
Leasehold costs 323,260 323,260
Well and related facilities 7,575,818 7,566,712
less accumulated
depreciation, depletion and
amortization (6,879,443) (6,854,585)
----------- ------------
1,019,635 1,035,387
----------- ------------
Total assets $ 1,032,815 $ 1,060,083
============ ============
Partners' Equity
Limited partners $ 1,054,810 $ 1,080,167
General partners (21,995) (20,084)
----------- ------------
Total partners' equity $ 1,032,815 $ 1,060,083
=========== ============
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Six Months Ending
June 30, 1996
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 97,680 $ 25,965 $ 123,645
Interest income 117 7 124
-------- -------- --------
Total Revenue 97797 25,972 123,769
-------- -------- --------
Costs and Expenses:
Production expense 47,435 12,609 60,004
General and administrative
to a related party 19,752 5,250 25,002
General and administrative 9,510 2,528 12,038
Depreciation, depletion
and amortization 23,367 1,491 24,858
-------- -------- --------
Total Costs and Expenses 100,064 21,878 121,942
-------- -------- --------
Net Income(loss) $ (2,267) $ 4,094 $ 1,827
======== ======== ========
Net Income(loss)
per equity unit $ (.25)
=========
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Six Months Ending
June 30, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 102,523 $ 27,523 $ 129,776
Interest income 936 60 996
-------- -------- --------
Total Revenue 103,459 27,313 130,772
-------- -------- --------
Costs and Expenses:
Production expense 50,663 13,468 64,131
General and administrative
to a related party 19,752 5,250 25,002
General and administrative 10,548 2,804 13,352
Depreciation, depletion
and amortization 31,933 2,038 33,971
-------- -------- --------
Total Costs and Expenses 112,896 23,560 136,456
-------- -------- --------
Net Income(loss) $ (9,437) $ 3,753 $ (5,684)
======== ======== ========
Net Income(loss)
per equity unit $ (1.02)
========
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ending
June 30, 1996
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 48,412 $ 12,869 $ 61,281
Interest income 95 6 101
-------- -------- -------
Total Revenue 48,507 12,875 61,382
-------- -------- -------
Costs and Expenses:
Production expense 25,244 6,710 31,954
General and administrative
to a related party 9,876 2,625 12,501
General and administrative 5,957 1,583 7,540
Depreciation, depletion
and amortization 11,761 750 12,511
-------- -------- -------
Total Costs and Expenses 52,838 11,668 64,506
-------- -------- -------
Net Income(loss) $ (4,331) $ 1,207 $ (3,124)
======== ======== =======
Net Income(loss)
per equity unit $ (.47)
========
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ending
June 30, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 37,991 $ 10,099 $ 48,090
Interest income 444 29 473
-------- -------- ---------
Total Revenue 38,435 10,128 48,563
-------- -------- ---------
Costs and Expenses:
Production expense 25,088 6,670 31,758
General and administrative
to a related party 9,876 2,625 12,501
General and administrative 6,777 1,801 8,578
Depreciation, depletion
and amortization 15,967 1,019 16,986
-------- -------- ---------
Total Costs and Expenses 57,708 12,115 69,823
-------- -------- ---------
Net Income(loss) $ (19,273) $ (1,987) $ (21,260)
======== ======== =========
Net Income(loss)
per equity unit $ (2.09)
========
see accompanying note to financial statements.
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Six Months Ended
June 30, 1996
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,080,167 $ (20,084) $ 1,060,083
Cash Distributions (23,090) (6,005) (29,095)
Net Income(Loss) (2,267) 4,094 1,827
-------- -------- ---------
Balance at end of period $ 1,054,810 $ (21,995) $ 1,032,815
======== ======== =========
Six Months Ended
June 30, 1995
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,062,782 $ (37,434) $ 1,025,348
Cash Distributions (23,090) (5,888) (28,978)
Net Income(Loss) (9,437) 3,753 (5,684)
-------- -------- ---------
Balance at end of period $ 1,030,255 $ (39,569) $ 990,686
======== ======== =========
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Three Months Ended
June 30, 1996
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,082,231 $ (17,197) $ 1,065,034
Cash Distributions (23,090) (6,005) (29,095)
Net Income(Loss) (4,331) 1,207 (3,124)
-------- -------- ----------
Balance at end of period $ 1,054,810 $ (21,995) $ 1,032,815
======== ======== ==========
Three Months Ended
June 30, 1995
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,072,618 $ (31,694) $ 1,040,924
Cash Distributions (23,090) (5,888) (28,978)
Net Income(Loss) (19,273) (1,987) (21,260)
-------- -------- ----------
Balance at end of period $ 1,030,255 $ (39,569) $ 990,686
======== ======== ==========
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Six months Six months
ended ended
June 30, June 30,
1996 1995
Net cash provided by operating
activities $ 48,514 $ 3,947
------------ ------------
Cash flows from financing
activities:
Partners' contributions
Distribution to partners (29,095) (28,978)
------------ ------------
Net cash used in financing
activities (29,095) (28,978)
------------ ------------
Cash flows from investing
activities:
Investments in wells and well
related facilities (9,106) 0
------------ ------------
Net cash used by investing
activities (9,106) 0
Net increase(decrease) in cash and
cash equivalents 10,313 (25,031)
Cash and cash equivalents at
beginning of period 1,401 38,524
------------ ------------
Cash and cash equivalents at end of
period $ 11,714 $ 13,493
============ ============
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-1
(a New York limited partnership)
Note to Financial Statements
June 30, 1996
1. The accompanying statements for the period ending June 30,
1996 are unaudited but reflect all adjustments necessary to
present fairly the results of operations.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Sterling Drilling Fund 1984-1's second quarter 10Q and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 11,714
<SECURITIES> 0
<RECEIVABLES> 1,466
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 13,180
<PP&E> 7,899,078
<DEPRECIATION> (6,879,443)
<TOTAL-ASSETS> 1,032,815
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,032,815<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,032,815
<SALES> 123,769<F2>
<TOTAL-REVENUES> 123,769
<CGS> 121,942
<TOTAL-COSTS> 121,942
<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> 1,827
<EPS-PRIMARY> (0.25)<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other se includes total partners' equity.
<F2>Sales includes $124.00 of interest income.
<F3>the limited partnership income was divided by total number of limited
partnerhsip units of 9,236.
</FN>
</TABLE>
