<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 June 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 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 / /
<PAGE> 2
PART I
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - June 30, 1998 and December 31, 1997.
Statements of Operations for the Six and Three Months Ended June
30, 1998 and 1997.
Statements of Changes in Partners' Equity for the Six and Three
Months Ended June 30, 1998 and 1997.
Statements of Cash Flows for the Six Months Ended June 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 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, 1998, the General
Partners 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 issue has
<PAGE> 3
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 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 $986,500 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 -
Total operating revenues decreased from $176,931 in 1997 to $
146,046 in 1998. The Partnership's production for both gas and
oil,decreased from 43,918 MCF and 1,698 Bbls in 1997 to 40,111
MCF and 968 Bbls in 1998. Although the main source of the
Parntership's income is derived from its sale of gas production,
the Partnership does receive a reasonable amount of revenue from
its gas sales. The average price per barrel received was $18.78
in 1997 and $12.59 in 1998. The combination of lower average
price per barrel and lower oil production did result in
significantly lower revenue received from the sale of its oil
production. The Partnership may experience declines in gas
production due to pressure variances in the main transport lines.
These variances may hinder the normal flow of the Partnership's
gas to the main purchaser. Also the Partnership was paid an
average price per mcf of $3.07 in 1997 and $ 3.34 in 1998. The
<PAGE> 4
increased average gas price did minimize the impact on overall
revenues. Production expenses decreased from $81,017 in 1997 to
$71,009 in 1998. The Partnership's regular operating expenses
can vary based upon the needs of the particular wells and well
sites. The current 1998 expenditures were consistent with lower
production volumes and additional expenditures for road repairs,
related labor costs and other repairs at the well site. The 1997
expenditures included various costs associated with reworks
performed on wells in 1997.
General and administrative expenses to a related party 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 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 1997 or during the first half of
1998. 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.
<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
(Registrant)
August 12, 1998 By: /S/ Charles E. Drimal Jr.
(Date) ---------------------------
Charles E. Drimal, Jr.
General Partner
<PAGE>5
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Balance Sheets
June 30, December 31,
1998 1997
(unaudited) (audited)
Assets
Current Assets:
Cash and cash equivalents $ 1,882 $ 26,270
Due from affiliates 25,602 0
----------- ------------
Total current assets 27,484 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 (6,983,185) (6,958,043)
----------- ------------
998,959 1,023,571
----------- ------------
Total assets $ 1,026,443 $ 1,049,841
============ ============
Liabilities and Partners' Equity
Current Liabilities:
Due to affiliates $ 0 $ 7,441
------------ ------------
Total current liabilities 0 7,441
------------ ------------
Partners' Equity
Limited partners 1,031,536 1,049,271
General partners (5,093) (6,871)
----------- ------------
Total partners' equity 1,026,443 1,042,400
----------- ------------
Total liabilities and
partners' equity $ 1,026,443 $ 1,049,841
=========== ============
See accompanying note to financial statements.
<PAGE>6
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Six Months Ending
June 30, 1998
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 115,374 30,669 $ 146,043
Interest income 647 41 688
-------- -------- --------
Total Revenue 116,021 30,710 146,731
-------- -------- --------
Costs and Expenses:
Production expense 56,097 14,912 71,009
General and administrative
to a related party 23,700 6,300 30,000
General and administrative 7,236 1,724 9,160
Depreciation, depletion
and amortization 23,633 1,509 25,142
-------- -------- --------
Total Costs and Expenses 110,666 24,645 135,311
-------- -------- --------
Net Income $ 5,355 6,065 $ 11,420
======== ======== ========
Net Income per equity unit $ .58
=========
See accompanying note to financial statements.
<PAGE> 7
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Six Months Ending
June 30, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 139,775 37,156 $ 176,931
Interest income 974 62 1,036
-------- -------- --------
Total Revenue 140,749 37,218 177,967
-------- -------- --------
Costs and Expenses:
Production expense 64,003 17,014 81,017
General and administrative
to a related party 23,700 6,300 30,000
General and administrative 9,285 2,468 11,753
Depreciation, depletion
and amortization 24,214 1,546 25,760
-------- -------- --------
Total Costs and Expenses 121,202 27,328 148,530
-------- -------- --------
Net Income $ 19,547 9,890 $ 29,437
======== ======== ========
Net Income per equity unit $ 2.12
=========
See accompanying note to financial statements.
<PAGE> 8
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ending
June 30, 1998
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 58,578 15,571 74,149
Interest income 359 23 382
-------- -------- -------
Total Revenue 58,937 15,594 74,531
-------- -------- -------
Costs and Expenses:
Production expense 28,418 7,554 35,972
General and administrative
to a related party 11,850 3,150 15,000
General and administrative 3,944 1,049 4,993
Depreciation, depletion
and amortization 11,816 755 12,571
-------- -------- -------
Total Costs and Expenses 56,028 12,508 68,536
-------- -------- -------
Net Income $ 2,909 3,086 5,995
======== ======== =======
Net Income per equity unit $ .32
========
See accompanying note to financial statements.
<PAGE> 9
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ending
June 30, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 68,003 18,078 86,081
Interest income 606 39 645
-------- -------- -------
Total Revenue 68,609 18,117 86,726
-------- -------- -------
Costs and Expenses:
Production expense 30,513 8,111 38,624
General and administrative
to a related party 11,850 3,150 15,000
General and administrative 5,826 1,549 7,375
Depreciation, depletion
and amortization 12,900 824 13,724
-------- -------- -------
Total Costs and Expenses 61,089 13,634 74,723
-------- -------- -------
Net Income $ 7,520 4,483 12,003
======== ======== =======
Net Income per equity unit $ .82
========
See accompanying note to financial statements.
<PAGE> 10
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Six Months Ended
June 30, 1998
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,049,271 (6,871) 1,042,400
Partners' Contribution 0 1,542 1,542
Cash Distributions (23,090) (5,829) (28,919)
Net Income 5,355 6,065 11,420
-------- -------- ---------
Balance at end of period $ 1,031,536 (5,093) 1,026,443
======== ======== =========
Six Months Ended
June 30, 1997
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,043,772 (19,938) 1,023,834
Partners' Contribution 0 204 204
Cash Distributions (23,090) (5,989) (29,079)
Net Income 19,547 9,890 29,437
-------- -------- ---------
Balance at end of period $ 1,040,229 (15,833) 1,024,396
======== ======== =========
See accompanying note to financial statements.
<PAGE> 11
STERLING DRILLING FUND 1984-1
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Three Months Ended
June 30, 1998
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,051,717 (2,350) 1,049,367
Partners' Contribution 0 0 0
Cash Distributions (23,090 ) (5,529) (28,919)
Net Income 2,909 3,086 5,995
-------- -------- ----------
Balance at end of period $ 1,031,536 (5,093) 1,026,443
======== ======== ==========
Three Months Ended
June 30, 1997
Limited General
Partners Partners Total
Balance at beginning of
period $ 1,055,799 (14,531) 1,041,268
Partners' Contribution 0 204 204
Cash Distributions (23,090) (5,989) (29,079)
Net Income 7,520 4,483 12,003
-------- -------- ----------
Balance at end of period $ 1,040,229 (15,833) 1,024,396
======== ======== ==========
See accompanying note to financial statements.
<PAGE> 12
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,
1998 1997
Net cash provided by operating
activities $ 3,519 $ 117,078
------------ -----------
Cash flows from financing
activities:
Partners' contributions 1,542 204
Distribution to partners (28,919) (29,079)
------------ -----------
Net cash (used in) financing
activities (27,377) (28,875)
------------ -----------
Cash flows from investing
activities:
Investments in wells and well
related facilities (530) (70,060)
------------ -----------
Net cash (used by) investing
activities (530) (70,060)
----------- -----------
Net increase(decrease) in cash and
cash equivalents (24,388) 18,143
Cash and cash equivalents at
beginning of period 26,270 20,620
------------ -----------
Cash and cash equivalents at end of
period $ 1,882 $ 38,763
============= ===========
See accompanying note to financial statements.
<PAGE> 13
STERLING DRILLING FUND 1984-1
(a New York limited partnership)
Note to Financial Statements
June 30, 1998
1. The accompanying statements for the period ending June 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 1984-1 second quarter 1998 10Q and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,882
<SECURITIES> 0
<RECEIVABLES> 25,602
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 27,484
<PP&E> 7,982,144
<DEPRECIATION> (6,983,185)
<TOTAL-ASSETS> 1,026,443
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,026,443<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,026,443
<SALES> 146,731<F2>
<TOTAL-REVENUES> 146,731
<CGS> 135,311
<TOTAL-COSTS> 135,311
<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> 11,420
<EPS-PRIMARY> 0.58<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other -se includes total partner's equity.
<F2>Sales includes $688 of interest income.
<F3>The limited partner's share of net income
was divided by the total number of limited
partnership units of 9,236.
</FN>
</TABLE>
