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, 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> 1
Part I
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - September 30, 1998 and December 31, 1997.
Statements of Operations for the Nine and Three Months Ended September 30,
1998 and 1997.
Statements of Changes in Partners' Equity for the Nine and Three Months
Ended September 30, 1998 and 1997.
Statements of Cash Flows for the Nine Months Ended September 30, 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 September 30, 1998,
the General Partner's have distributed $1,708,660 or 18.50 % 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 managing General Partner's computer
systems. Both , the operating 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
<PAGE> 2
issue has been implemented by both the operating company and the
managing general partner. During the remainder of this year both companies
will continue to monitor, test and verify data in detail to avoid any
potential reporting concerns or delays.
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 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 $986,500 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 -
The Partnership's gas and oil production decreased, from 66,189 MCF
and 2,026 BBLS in 1997 to 59,376 MCF and 1,552 BBLS in 1998.The
Partnership's average price per MCF and per barrel declined from 1997
to 1998 about twenty cents per MCF and over six dollars per barrel.
The combination of both price and production declines resulted in an
overall operating revenue decrease from $252,579 in 1997 to $215,630
in 1998. Some production declines could be directly attributed to
compressor down times accompanied by high pressure in the main
transport lines. The increased main line pressure reduces the ease
at which the Partnership's gas can flow from the wells to the
transport lines. These situations directly impact volumes therefore
lowering revenue but do not impact costs unless significant repairs
are needed to specific wells or Partnership owned transport lines.
Overall production expenses in 1997, of $120,744 were higher than
1998's expenses of $102,950. The partnership expended funds on the
overall normal maintenance of well and well sites in both 1997 and
1998.
<PAGE> 3
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 1998 and 1997 are substantially less than the amounts
allocable to the Registrant under the Partnership Agreement. The
lower amounts allocated and spent 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 1997 or in the three-quarters of 1998. The expense
recorded, in both years, 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> 4
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
By: /s /Charles E. Drimal Jr.
-----------------------------
Charles E. Drimal, Jr.
General Partner
November 12, 1998
<PAGE>5
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Balance Sheets
September 30, December
1998 31, 1997
(unaudited) (audited)
Assets
Current Assets:
Cash and cash equivalents $ 36,610 $ 26.270
Due From Affiliates 8,497 0
----------- -----------
Total current assets 45,107 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 (6,995,755) (6,958,043)
----------- -----------
986,389 1,023,571
----------- -----------
Total assets $ 1,031,496 $ 1,049,841
========== ===========
Liabilities & Partners' Equity
Current Liabilities:
Due to affiliates $ 0 $ 7,441
----------- -----------
Total liabilities 0 7,441
----------- -----------
Partners' Equity
Limited partners 1,032,849 1,049,271
General partners (1,353) (6,871)
----------- -----------
Total partners' equity $ 1,031,496 $ 1,042,400
----------- -----------
Total Liabilities &
Partner's Equity $ 1,031,496 $ 1,049,841
========== ===========
See accompanying note to the financial statements
<PAGE> 6
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Nine Months Ended
September 30, 1998
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 170,348 45,282 $ 215,630
Interest income 849 54 903
-------- -------- -------
Total Revenue 171,197 45,336 216,533
-------- -------- -------
Costs and Expenses:
Production expense 81,331 21,619 102,950
General and administrative
to a related party 35,550 9,450 45,000
General and administrative 12,199 3,243 15,442
Depreciation, depletion
and amortization 35,449 2,263 37,712
-------- -------- -------
Total Costs and Expenses 164,529 36,575 201,104
-------- -------- -------
Net Income $ 6,668 8,761 $ 15,429
======== ======== =======
Net Income per equity unit $ .72
======
See accompanying note to the financial statements
<PAGE> 7
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 the financial statements
<PAGE> 8
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
September 30, 1998
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 54,974 14,613 $ 69,587
Interest income 202 13 215
-------- -------- --------
Total Revenue 55,176 14,626 69,802
-------- -------- --------
Costs and Expenses:
Production expense 25,234 6,707 31,941
General and administrative
To a related party 11,850 3,150 15,000
General and administrative 4,963 1,319 6,282
Depreciation, depletion
And amortization 11,816 754 12,570
-------- -------- --------
Total Costs and Expenses 53,863 11,930 65,793
-------- -------- --------
Net Income $ 1,313 2,696 $ 4,009
======== ======== ========
Net Income per equity unit $ .14
========
See accompanying note to the financial statements
<PAGE> 9
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 the financial statements
<PAGE> 10
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Nine Months Ended
September 30, 1998
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,049,271 (6,871) $ 1,042,400
Partners' Contribution 0 2,586 2,586
Cash Distributions (23,090) (5,829) (28,919)
Net Income 6,668 8,761 15,429
--------- -------- ----------
Balance at end of period $ 1,032,849 (1,353) $ 1,031,496
========= ======== ==========
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
========= ======== ==========
See accompanying note to the financial statements
<PAGE> 11
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Three Months Ended
September 30, 1998
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,031,536 (5,093) $ 1,026,443
Partners' Contribution 0 1,044 1,044
Cash Distributions 0 0 0
Net Income 1,313 2,696 4,009
--------- -------- ---------
Balance at end of period $ 1,032,849 (1,353) $ 1,031,496
========= ======== =========
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(Loss) 1,431 2,804 4,235
--------- -------- ---------
Balance at end of period $ 1,041,660 (11,492) $ 1,030,168
========= ======== =========
See accompanying note to the financial statements
<PAGE> 12
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Nine months Nine months
Ended ended
September September
30, 1998 30, 1997
Net cash provided by operating
activities $ 37,203 $ 105,646
---------- ----------
Cash flows from financing activities:
Partners' contributions 2,586 1,741
Distribution to partners (28,919) (29,079)
----------- -----------
Net cash (used in)financing activities (26,333) (27,338)
----------- -----------
Cash flows from investing activities:
Investment in wells and related
facilities (530) (77,615)
---------- ----------
Net cash (used in)investing activities (530) (77,615)
----------- -----------
Net increase in cash and cash
equivalents 10,340 693
Cash and cash equivalents at
beginning of period 26,270 20,620
----------- -----------
Cash and cash equivalents at end of
period $ 36,610 $ 21,313
=========== ===========
see accompanying note to the financial statements
<PAGE> 13
STERLING DRILLING FUND 1984-1
(a New York limited partnership)
Note to Financial Statements
September 30, 1998
1. The accompanying statements for the period ending
September 30, 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 third quarter 1998 10Q and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 36,610
<SECURITIES> 0
<RECEIVABLES> 8,497
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 45,107
<PP&E> 7,982,144
<DEPRECIATION> (6,995,755)
<TOTAL-ASSETS> 1,031,496
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,031,496<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,031,496
<SALES> 215,630<F2>
<TOTAL-REVENUES> 215,630
<CGS> 201,104
<TOTAL-COSTS> 201,104
<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> 14,526
<EPS-PRIMARY> 0.72<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other-se includes total partners' equity.
<F2>Sales includes $903 of interest income.
<F3>The limited partnership income was sperated by class of partner. The
limited partner class income was divided by the total number of
limited partnership units of 9,236.
</FN>
</TABLE>
