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, 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 1984-2
(Exact name of registrant as specified in charter)
New York
(State or other jurisdiction of incorporation)
13-3234372
(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, 1996 and December 31, 1995.
Statements of Operations for the Nine and Three Months Ended September
30, 1996 and 1995.
Statements of Changes in Partners' Equity for the Nine and Three
Months Ended September 30, 1996 and 1995.
Statements of Cash Flows for the Nine Months Ended September 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 September 30, 1996, the General
Partners have distributed $570,648 or 8.85% 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 primary 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
$236,162 as compared to $143,571 from December 31, 1994. The
increase in undiscounted future net cash flows for the
Partnership properties was caused by higher year end prices in
effect at December 31, 1995 compared to lower year end prices as
of December 31, 1994. There were no significant changes in the
estimated future production from the properties. 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.
<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 December 1984 for $5,400,000.
Pursuant to the terms of this contract, twenty wells have been
drilled, resulting in twenty producing wells.
3. Results of Operations -
Total operating revenues decreased from $87,408 in 1995 to
$77,382 in 1996. The partnership produced 26,617 MCF and 1,388
BBls in 1995 and 24,643 MCF and 1,277 BBls in 1996. The average
price for gas remained relatively unchanged from 1995 to 1996.
The average oil price received increased slightly from
to $15.93 per BBls in 1995 to $17.86 in 1996. The lower oil and
gas production resulted in lower overall gas and oil revenue.
Some of lower production can be attributed to a main line in the
gathering system experiencing a shut in due to maintenance by the
gathering system's operator to the line. This resulted in no
production for approximately twenty one days in August of 1996 on
the wells that feed into this main line. All repairs have been
completed and the line is no longer shut in.
Production expenses decreased from $45,023 in 1995 to $27,482 in
1996. 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
general partner, as operator of the Partnership's wells, may
discount fees charged to the Partnership to minimize lifting
costs.
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(PEMC), 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 to
limit costs, both incurred and allocated to the Registrant. There
were no significant changes in general and administrative costs
from 1995 to 1996.
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 1995 or in the three quarters of
1996. Although the 1996 expense is lower than 1995, the expense
recorded is consistent with the current basis of the
partnership's properties.
<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 1984-2
(Registrant)
November 8,1996 By: /s/ Charles E. Drimal, Jr.
(Date) ------------------------------
Charles E. Drimal, Jr.
General Partner
<PAGE>
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Balance Sheets
September 30, December 31,
1996 1995
(unaudited) (audited)
Assets
Current Assets:
Cash and cash equivalents $ 2,149 $ 5,405
----------- ------------
Total current assets 2,149 5,405
----------- ------------
Oil and Gas properties -
successful efforts method:
Leasehold costs 225,680 225,680
Well and related facilities 5,401,170 5,395,739
less accumulated
depreciation, depletion and
amortization (5,439,870) (5,431,779)
----------- ------------
186,980 189,640
----------- ------------
Total assets $ 189,129 $ 195,045
============ ============
Liabilities and Partners'
Equity
Current liabilities:
Due to affiliates $ 97,913 $ 93,584
----------- ------------
Total current liabilities 97,913 93,584
----------- -----------
Partners' Equity
Limited partners 146,253 155,648
General partners (55,037) (54,187)
----------- ------------
Total partners' equity 91,216 101,461
----------- ------------
Total liabilities and
partners' equity $ 189,129 $ 195,045
=========== ============
See accompanying note to financial statements
<PAGE>
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Nine Months Ended
September 30, 1996
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 61,132 16,250 $ 77,382
Interest income 245 16 261
-------- -------- ---------
Total Revenue 61,377 16,266 77,643
-------- -------- ---------
Costs and Expenses:
Production expense 21,711 5,771 27,482
General and administrative
to a related party 14,810 3,937 18,747
General and administrative 10,525 2,798 13,323
Depreciation, depletion
and amortization 7,606 485 8,091
-------- -------- ---------
Total Costs and Expenses 54,652 12,991 67,643
-------- -------- ---------
Net Income(loss) $ 6,725 3,275 $ 10,000
======== ======== =========
Net Income(loss)
per equity unit $ 1.04
=========
See accompanying note to financial statements.
<PAGE>
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Nine Months Ended
September 30, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 68,768 18,280 $ 87,048
Interest income 209 13 222
-------- -------- ---------
Total Revenue 68,977 18,293 87,270
-------- -------- ---------
Costs and Expenses:
Production expense 35,568 9,455 45,023
General and administrative
to a related party 14,810 3,937 18,747
General and administrative 10,947 2,910 13,857
Depreciation, depletion
and amortization 13,628 870 14,498
-------- -------- ---------
Total Costs and Expenses 74,953 17,172 92,125
-------- -------- ---------
Net Income(loss) $ (5,976) 1,121 $ (4,855)
======== ======== =========
Net Income(loss)
per equity unit $ (0.93)
========
See accompanying note to financial statements.
<PAGE>
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
September 30, 1996
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 18,790 4,994 $ 23,784
Interest income 72 5 77
-------- -------- ---------
Total Revenue 18,862 4,999 23,861
-------- -------- ---------
Costs and Expenses:
Production expense 6,717 1,785 8,502
General and administrative 4,937 1,312 6,249
to a related party
General and administrative 2,725 725 3,450
Depreciation, depletion
and amortization 2,678 170 2,848
-------- -------- ---------
Total Costs and Expenses 17,057 3,992 21,049
-------- -------- ---------
Net Income(loss) $ 1,805 1,007 $ 2,812
======== ======== =========
Net Income(loss)
per equity unit $ .28
========
See accompanying note to financial statements.
<PAGE>
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
September 30, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 19,664 5,227 $ 24,891
Interest income 29 1 30
-------- -------- ---------
Total Revenue 19,693 5,228 24,921
-------- -------- ---------
Costs and Expenses:
Production expense 11,638 3,094 14,732
General and administrative
to a related party 4,937 1,312 6,249
General and administrative 2,309 614 2,923
Depreciation, depletion
and amortization 4,542 290 4,832
-------- -------- ---------
Total Costs and Expenses 23,426 5,310 28,736
-------- -------- ---------
Net Income(loss) $ (3,733) (82) $ (3,815)
======== ======== =========
Net Income(loss)
per equity unit $ (0.58)
========
See accompanying note to financial statements
<PAGE>
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Nine Months Ended
September 30, 1996
Limited General
Partners Partners Total
Balance at beginning of
period $ 155,648 (54,187) $ 101,461
Partners' Contribution 0 113 113
Cash Distributions (6,725) (4,238) (20,358)
Net Income(Loss) 6,725 3,275 10,000
-------- -------- ---------
Balance at end of period $ 146,253 (55,037) $ 91,216
======== ======== =========
Nine Months Ended
September 30, 1995
Limited General
Partners Partners Total
Balance at beginning of
period $ 180,616 (50,519) $ 130,097
Partners' Contribution 0 113 113
Cash Distributions (16,120) (4,239) (20,359)
Net Income(Loss) (5,976) 1,121 (4,855)
-------- -------- ---------
Balance at end of period $ 158,520 (53,524) $ 104,996
======== ======== =========
See accompanying note to financial statements
<PAGE>
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Three Months Ended
September 30, 1996
Limited General
Partners Partners Total
Balance at beginning of
period $ 144,448 (56,157) $ 88,291
Partners' Contribution 0 113 113
Cash Distributions 0 0 0
Net Income(Loss) 1,805 1,007 2,812
-------- -------- ---------
Balance at end of period $ 146,253 (55,037) $ 91,216
======== ======== =========
Three Months Ended
June 30, 1995
Limited General
Partners Partners Total
Balance at beginning of
period $ 162,253 (53,555) $ 108,698
Partners' Contribution 0 113 113
Cash Distributions 0 0 0
Net Income(Loss) (3,733) (82) (3,815)
-------- -------- ---------
Balance at end of period $ 158,520 (53,524) $ 104,996
======== ======== =========
See accompanying note to financial statements
<PAGE>
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Nine months Nine months
ended ended
September 30, September 30,
1996 1995
Net cash provided by operating
activities $ 22,420 $ 29,670
------------ ------------
Cash flows from financing
activities:
Partners' contributions 113 113
Distribution to partners (20,358) (20,359)
------------ ------------
Net cash used in financing
activities (20,245) (20,246)
------------ ------------
Cash flows from investing
activities:
Investment in wells and related
facilities (5,431) 0
------------ -----------
Net cash used in investing
activities (5,431) 0
------------ -----------
Net increase(decrease) in cash and
cash equivalents (3,256) 9,424
Cash and cash equivalents at
beginning of period 5,405 3,306
------------ ------------
Cash and cash equivalents at end of
period $ 2,149 $ 12,730
============ ============
See accompanying note to financial statements
<PAGE>
STERLING DRILLING FUND 1984-2
(a New York limited partnership)
Note to Financial Statements
September 30, 1996
1. The accompanying statements for the period ending September
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 Third Quarter 1996 10-Q and its qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,149
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,149
<PP&E> 5,626,850
<DEPRECIATION> (5,439,870)
<TOTAL-ASSETS> 189,129
<CURRENT-LIABILITIES> 97,913
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 91,216<F1>
<TOTAL-LIABILITY-AND-EQUITY> 189,129
<SALES> 77,643<F2>
<TOTAL-REVENUES> 77,643
<CGS> 67,643
<TOTAL-COSTS> 67,643
<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> 10,000
<EPS-PRIMARY> 1.04<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other - se includes total partners' equity.
<F2>Sales includes $261 of interest income.
<F3>The limited partnership net income
was divided by the total number of limited partnership units
of 6,448.
</FN>
</TABLE>
