<PAGE> 1
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, 1998
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>2
Part I
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - March 31, 1998 and December 31, 1997.
Statements of Operations for the Three Months Ended March 31, 1998 and
1997.
Statements of Changes in Partners' Equity for the year ended December 31,
1997 and for the Three Months Ended March 31, 1998.
Statements of Cash Flows for the Three Months Ended March 31, 1998 and
1997.
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 31,1998 the
General Partners have distributed $1,685,570 or 18.25% of original
Limited Partner capital contributions, to the Limited Partners.
All aspects of the Partnership's operations and administration
are handled through the use of the operating and managing general
partner's computer systems. Both , the operations company and the
managing general partner are taking steps to minimize any potential
computer issues with regard to any necessary changes for the year
2000. A complete system upgrade, which includes but is not limited
to, the year 2000 issue will be implemented with in the next nine
<PAGE> 3
months by both the operating company and the managing general partner.
Both companies' upgrades and year 2000 changes are part of their
normal course of business and no material costs should be allocated to
the partnership for the implementation necessary by either company.
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,
1997 was approximately $974,200 as compared to $986,600 as of
December 31, 1996. 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
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 from $90,850 in 1997 to $71,894 in 1998.
The partnership experienced a decline in both gas and oil production,
22,746 MCF and 795 BBL in 1997 to 20,188 MCF and 514 BBL in 1998. A
large amount of the gas produced by the Partnership is sold under a
locked twelve month fixed price contract that commenced in December
1997. Operating gas revenues decline was minimized by a better
average price from $2.90 in 1997 to $3.20 in 1998. Oil prices
significantly changed from $20.50 in 1997 to $12.33 in 1998. This
lower oil price combined with lower oil production also were factors
in the overall lower operating revenue.
Production expenses changed from $42,393 in 1997 to $35,037 in 1998.
In the first quarter 1997 the Partnership experienced a rise in
general upkeep costs associated with access to the wells and related
labor costs at the well site. Also, variable costs associated with
production increased, for example the related well taxes which are
based upon production data. The Partnership participated in normal
and recurring well and well site costs during the first quarter 1998.
<PAGE> 4
General and administrative expenses to a related party and to third
parties remained consistent from 1997 to 1998. The related party
administrative 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 1998 are substantially
less than the amounts allocable to the Registrant under the
Partnership Agreement. Management continues to 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 1997 or first quarter 1998 due to additional
depletion. The partnership expended a minimal amount of funds on
capitalized well equipment during the first quarter 1998. Depletion
expense is reasonable, in both years, based upon the rates and
property basis reported.
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 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> 5
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
May 12, 1998 BY: /S/ Charles E. Drimal, Jr.
(DATE) --------------------------
Charles E. Drimal, Jr.
General Partner
<PAGE> 6
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Balance Sheets
(unaudited)
March 31, December 31,
1998 1997
Assets
Current Assets:
Cash and cash equivalents $ 30,128 $ 26,270
Due from affiliates 7,709 0
----------- ------------
Total current assets 37,837 26,270
----------- ------------
Oil and Gas properties -
successful efforts method:
Leasehold costs 323,260 323,260
Well and related facilities 7,658,884 7,658,354
less accumulated
depreciation, depletion and
amortization (6,970,614) (6,958,043)
----------- ------------
1,011,530 1,023,571
----------- ------------
Total assets $ 1,049,367 $ 1,049,841
============ ============
Liabilities and Partner's Equity
Current Liabilities
Due to affiliates 0 7,441
----------- -----------
Total current liabilities 0 7,441
----------- -----------
Partners' Equity
Limited partners $ 1,051,717 $ 1,049,271
General partners 2,446 (6,871)
----------- ------------
Total partners' equity $ 1,049,367 $ 1,042,400
----------- -----------
Total Liabilities and
Partner's Equity $ 1,049,367 $ 1,049,841
============ ============
See accompanying note to financial statements.
<PAGE> 7
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
March 31, 1998
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 56,796 15,098 $ 71,894
Interest income 288 18 306
-------- -------- ---------
Total Revenue 57,084 15,116 72,200
-------- -------- ---------
Costs and Expenses:
Production expense 27,679 7,358 35,037
General and administrative
to a related party 11,850 3,150 15,000
General and administrative 3,292 875 4,167
Depreciation, depletion
and amortization 11,817 754 12,571
-------- -------- ---------
Total Costs and Expenses 54,638 12,137 66,775
-------- -------- ---------
Net Income $ 2,446 2,979 5,425
======== ======== =========
Net Income per equity unit $ 0.26
========
See accompanying note to financial statements.
<PAGE> 8
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
March 31, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 71,772 19,078 $ 90,850
Interest income 368 23 391
-------- -------- ---------
Total Revenue 72,140 19,101 91,241
-------- -------- ---------
Costs and Expenses:
Production expense 33,490 8,903 42,393
General and administrative
to a related party 11,850 3,150 15,000
General and administrative 3,459 919 4,378
Depreciation, depletion
and amortization 11,314 722 12,036
-------- -------- ---------
Total Costs and Expenses 60,113 13,694 73,807
-------- -------- ---------
Net Income $ 12,027 5,407 17,434
======== ======== =========
Net Income per equity unit $ 1.30
========
See accompanying note to financial statements.
<PAGE> 9
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, 1996 $ 1,043,772 $ (19,938) $ 1,023,834
Partners' contribution 0 1,742 1,742
Cash Distributions (23,090) (5,989) (29,079)
Net Income 28,589 17,314 45,903
-------- -------- --------
Balance at December 31, 1997 $ 1,049,271 $ (6,871) $ 1,042,400
Partners' contribution 0 1,542 1,542
Net Income 2,446 2,979 5,425
-------- -------- ---------
Balance at March 31, 1998 $ 1,051,717 $ (2,350) $ 1,049,367
======== ======== ========
See accompanying note to financial statements.
<PAGE> 10
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Three Three
months months
ended March ended March
31, 1998 31, 1997
Net cash provided by operating
activities $ 2,846 $ 32,145
---------- ----------
Cash flows from investing activities
Investment in wells and
related facilities (530) 0
---------- ----------
Net cash used in investing activities (530) 0
---------- ----------
Cash flows from financing activities
Partners' contribution 1,542 0
---------- ----------
Net cash provided by financing
activities 1,542 0
---------- ----------
Net increase(decrease) in cash and
cash equivalents 3,858 32,145
Cash and cash equivalents at
beginning of period 26,270 20,620
----------- -----------
Cash and cash equivalents at end of
period $ 30,128 $ 52,765
=========== ===========
See accompanying note to financial statements.
<PAGE> 11
STERLING DRILLING FUND 1984-1
(a New York limited partnership)
Note to Financial Statements
March 31, 1998
1. The accompanying statements for the period ending March
31, 1998 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 first quarter 1998 10Q and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 30,128
<SECURITIES> 0
<RECEIVABLES> 7,709
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 37,837
<PP&E> 7,982,144
<DEPRECIATION> (6,970,614)
<TOTAL-ASSETS> 1,049,367
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,049,367<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,049,367
<SALES> 72,200<F2>
<TOTAL-REVENUES> 72,200
<CGS> 66,775
<TOTAL-COSTS> 66,775
<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> 5,425
<EPS-PRIMARY> 0.26<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other-se includes total partners' equity.
<F2>Sales includes $306 of interest income.
<F3>The limited partners' net income was divided by the total
number of limited partners units of 9,236.
</FN>
</TABLE>
