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, 1997
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, 1997 and December 31, 1996.
Statements of Operations for the Nine and Three Months Ended September 30,
1997 and 1996.
Statements of Changes in Partners' Equity for the Nine and Three Months
Ended September 30, 1997 and 1996.
Statements of Cash Flows for the Nine Months Ended September 30, 1997 and
1996.
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, 1997,
the General Partners have distributed $1,685,570 or 18.25 % 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 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,
1996 was approximately $986,500 as compared to $689,100 as of
December 31, 1995. The increase in total estimated discounted future
net revenue was primarily due to higher year end gas prices as of
December 31, 1996 compared to the gas price in effect as of December
31, 1995. 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 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
<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 increased from $176,337 in 1996 to $252,579
in 1997 . The Partnership's gas production increased, from 65,136 MCF
in 1996 to 66,189 MCF in 1997, while its oil production remained
relatively unchanged, from 1,939 BBls in 1996 to 2,026 BBLS in 1997.
The Partnership's overall revenue increase was helped substantially by
the production increases and positive price changes in both the
average price per MCF, increase of $0.75 per MCF, and an increase of
$0.84 in the average price received per barrel of oil.
Production expenses in 1996, of $89,807, were lower than 1997's
expenses of $ 120,744. 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. The
Partnership experienced increases in both the variable expenses as
well in the overall normal maintenance of well and well sites in 1997.
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 1997 and 1996 are substantially less than the amounts
allocable to the Registrant under the Partnership Agreement. The
lower allocable amounts reflect management's effort to limit costs,
both incurred and allocated to the Registrant.
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 1996 or in the three quarters of 1997. Although the 1997
expense is slightly higher than 1996 amount, the expense recorded is
consistent with the current basis of the Partnership's properties,
including additional capital cost associated with workovers performed
in late 1995, 1996 and early 1997.
<PAGE>
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 12, 1997 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
1997 31, 1996
(unaudited) (audited)
Assets
Current Assets:
Cash and cash equivalents $ 21,313 $ 20,620
Due From Affiliates 0 4,382
----------- -----------
Total current assets 21,313 25,002
Oil and Gas properties -
successful efforts method:
Leasehold costs 323,260 323,260
Well and related facilities 7,658,354 7,580,739
less accumulated depreciation,
depletion and amortization (6,944,081) (6,905,167)
----------- -----------
1,037,533 998,832
----------- -----------
Total assets $ 1,058,846 $ 1,023,834
========== ===========
Liabilities & Partners' Equity
Current Liabilities:
Due to affiliates $ 28,678 $ 0
----------- -----------
Total liabilities 28,678 0
----------- -----------
Partners' Equity
Limited partners 1,041,660 1,043,772
General partners (11,492) (19,938)
----------- -----------
Total partners' equity $ 1,030,168 $ 1,023,834
----------- -----------
Total Liabilities &
Partner's Equity $ 1,058,846 $ 1,023,834
========== ===========
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, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 199,537 53,042 $ 252,579
Interest income 1,346 86 1,432
-------- -------- -------
Total Revenue 200,883 53,128 254,011
-------- -------- -------
Costs and Expenses:
Production expense 95,388 25,356 120,744
General and administrative
to a related party 35,550 9,450 45,000
General and administrative 12,388 3,293 15,681
Depreciation, depletion
and amortization 36,579 2,335 38,914
-------- -------- -------
Total Costs and Expenses 179,905 40,434 220,339
-------- -------- -------
Net Income $ 20,978 12,694 $ 33,672
======== ======== =======
Net Income per equity unit $ 2.27
======
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)
Three Months Ended
September 30, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 59,762 15,886 $ 75,648
Interest income 372 24 396
-------- -------- --------
Total Revenue 60,134 15,910 76,044
-------- -------- --------
Costs and Expenses:
Production expense 31,385 8,342 39,727
General and administrative
to a related party 11,850 3,150 15,000
General and administrative 3,103 825 3,928
Depreciation, depletion
and amortization 12,365 789 13,154
-------- -------- --------
Total Costs and Expenses 58,703 13,106 71,809
-------- -------- --------
Net Income $ 1,431 2,804 $ 4,235
======== ======== ========
Net Income per equity unit $ .15
========
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 Changes in Partners' Equity
(unaudited)
Nine Months Ended
September 30, 1997
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,043,772 (19,938) $ 1,023,834
Partners' Contribution 0 1,741 1,741
Cash Distributions (23,090) (5,989) (29,079)
Net Income 20,978 12,694 33,672
--------- -------- ----------
Balance at end of period $ 1,041,660 (11,492) $ 1,030,168
========= ======== ==========
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
========= ======== ==========
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, 1997
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,040,229 (15,833) $ 1,024,396
Partners' Contribution 0 1,537 1,537
Cash Distributions 0 0 0
Net Income 1,431 2,804 4,235
--------- -------- ---------
Balance at end of period $ 1,041,660 (11,492) $ 1,030,168
========= ======== =========
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
========= ======== =========
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, 1997 30, 1996
Net cash provided by operating
activities $ 105,646 $ 54,063
---------- ----------
Cash flows from financing activities:
Partners' contributions 1,741 162
Distribution to partners (29,079) (29,095)
----------- -----------
Net cash (used in)financing activities (27,338) (28,933)
----------- -----------
Cash flows from investing activities:
Investment in wells and related
facilities (77,615) (11,838)
---------- ----------
Net cash (used in)investing activities (77,615) (11,838)
----------- -----------
Net increase in cash and cash
equivalents 693 13,292
Cash and cash equivalents at
beginning of period 20,620 1,401
----------- -----------
Cash and cash equivalents at end of
period $ 21,313 $ 14,693
=========== ===========
see accompanying note to financial statements
<PAGE>
STERLING DRILLING FUND 1984-1
(a New York limited partnership)
Note to Financial Statements
September 30, 1997
1. The accompanying statements for the period ending
September 30, 1997, 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 third quarter 1997 10Q and it is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 21,313
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 21,313
<PP&E> 7,981,614
<DEPRECIATION> (6,944,081)
<TOTAL-ASSETS> 1,058,846
<CURRENT-LIABILITIES> 28,678
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,030,168<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,058,846
<SALES> 254,011<F2>
<TOTAL-REVENUES> 254,011
<CGS> 220,339
<TOTAL-COSTS> 220,339
<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> 33,672
<EPS-PRIMARY> 2.27<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other- se includes total partners' equity.
<F2>Sales includes $1,432 of interest income.
<F3>The limited partnership income was divided by the total number
of limited partnership units of 9,236.
</FN>
</TABLE>
