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, 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 / /
PART I
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - March 31, 1996 and December 31, 1995.
Statements of Operations for the Three Months Ended March 31, 1996 and
1995.
Statements of Changes in Partners' Equity for the Year Ended December
31, 1995 and for the Three Months Ended March 31, 1996.
Statements of Cash Flows for the Three Months Ended March 31, 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 March 31, 1996 the General Partners have distributed
$554,528 or 8.60% of original Limited Partner capital
contributions to the Limited Partners. The possible shut-in of
the Registrant's wells due to normal maintenance combined with
the current level of wellhead prices may have an adverse impact
on the cash available for distribution to the Limited Partners.
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 estimated future net
revenues (S.E.C. case) associated with such reserves, discounted
at 10% as of December 31, 1995 was approximately $236,000 a minor
increase from $144,000 in 1994.
The increase in total estimated discounted future net revenue
was due in part to higher year end gas prices as of December 31,
1995 when compared to the low gas price in effect as of December
31, 1994. 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.
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 $37,302 in 1995 to
$27,323 in 1996. The partnership produced 8,972 MCF in 1995 and
8,480 MCF in 1996. The average price for gas decreased from
$2.75 per MCF in 1995 to $2.44 per MCF in 1996. The lower gas
production combined with lower average gas prices resulted in
less overall revenue for 1996 when compared to 1995. During the
first quarter 1995 the partnership was paid based upon spot
market prices available during a peak usage period. These spot
prices were higher during peak usage times of the year but could
be significantly lower during off-peak usage times. During the
last quarter of 1995, the partnership entered into a twelve month
fixed price contract for the purchase of most of its production.
This contract price was in effect during the first quarter 1996
and was lower than the 1995 first quarter spot prices.
Production expenses showed a minor increase from $14,810 in 1995
to $15,484 in 1996. This can be attributed to some additional
weather related maintenance needed during the 1996 winter season.
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 efforts to
limit costs, both incurred and allocated to the Registrant.
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 did not need any
additional adjustment for depreciation, depletion and
amortization in 1995 or during the first quarter 1996. The lower
depletion expense in 1996 is due to overall lower depletable
cost basis in oil and gas properties.
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.
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)
March 13, 1996 By: /s/ Charles E. Drimal, Jr.
(Date) ------------------------------
Charles E. Drimal, Jr.
General Partner
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Balance Sheets
(unaudited)
March 31, December 31,
1996 1995
Assets
Current Assets:
Cash and cash equivalents $ 11,636 $ 5,405
----------- ------------
Total current assets 11,636 5,405
----------- ------------
Oil and Gas properties -
successful efforts method:
Leasehold costs 225,680 225,680
Well and related facilities 5,395,739 5,395,739
less accumulated
depreciation, depletion and
amortization (5,434,401) (5,431,779)
----------- ------------
187,018 189,640
----------- ------------
Total assets $ 198,654 $ 195,045
============ ============
Liabilities and Partners' Equity
Current liabilities:
Due to affiliates $ 97,557 $ 93,584
----------- ------------
Total current liabilities 97,557 93,584
----------- -----------
Partners' Equity
Limited partners (53,886) (54,187)
General partners 154,983 155,648
----------- ------------
Total partners' equity 101,097 101,461
----------- ------------
Total liabilities and
partners' equity $ 198,654 $ 195,045
=========== ============
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
March 31, 1996
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 21,585 5,738 $ 27,323
Interest income 102 6 108
-------- -------- ---------
Total Revenue 21,687 5,744 27,431
-------- -------- ---------
Costs and Expenses:
Production expense 12,232 3,252 15,484
General and administrative
to a related party 4,937 1,312 6,249
General and administrative 2,718 722 3,440
Depreciation, depletion
and amortization 2,465 157 2,622
-------- -------- ---------
Total Costs and Expenses 22,352 5,443 27,795
-------- -------- ---------
Net Income(loss) $ (665) 301 $ (364)
======== ======== =========
Net Income(loss)
per equity unit $ (0.10)
========
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ended
March 31, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 29,469 7,833 $ 37,302
Interest income 116 7 123
-------- -------- -----------
Total Revenue 29,585 7,840 37,425
-------- -------- -----------
Costs and Expenses:
Production expense 11,700 3,110 14,810
General and administrative
to a related party 4,937 1,312 6,249
General and administrative 2,944 783 3,727
Depreciation, depletion
and amortization 4,543 290 4,833
-------- -------- -----------
Total Costs and Expenses 24,124 5,495 29,619
-------- -------- -----------
Net Income(loss) $ 5,461 2,345 $ 7,806
======== ======== ===========
Net Income(loss)
per equity unit $ 0.85
=========
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Limited General
Partners Partners Total
Balance At December 31, 1994 $ 180,616 $ (50,519) $ 130,097
Partners' contributions 0 113 113
Cash Distributions (16,120) (4,239) (20,359)
Net Income(Loss) (8,848) 458 (8,390)
-------- -------- -------
Balance at December 31, 1995 $ 155,648 $ (54,187) $ 101,461
Net Income(Loss) (665) 301 (364)
-------- -------- -------
Balance at March 31, 1996 $ 154,983 $ (53,886) $ 101,097
======== ======== =======
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Three months Three months
ended March ended March
31, 1996 31, 1995
Net cash provided by operating
activities $ 6,231 $ (633)
------------ ------------
Net increase(decrease) in cash and
cash equivalents 6,231 (633)
Cash and cash equivalents at
beginning of period 5,405 3,306
------------ ------------
Cash and cash equivalents at end of
period $ 11,636 $ 2,673
============ ============
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-2
(a New York limited partnership)
Note to Financial Statements
March 31, 1996
1. The accompanying statements for the period ending March 31,
1996 are unaudited but reflect all adjustments necessary to
present fairly the results of operations. Certain
reclassifications were made to the prior periods' financial
statements to conform to the current period presentation.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information for
Sterling Drilling Fund 1984-2 10Q for March 31, 1996 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 11,636
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,636
<PP&E> 5,621,419
<DEPRECIATION> (5,434,401)
<TOTAL-ASSETS> 198,654
<CURRENT-LIABILITIES> 97,557
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 101,097<F1>
<TOTAL-LIABILITY-AND-EQUITY> 198,654
<SALES> 27,431<F2>
<TOTAL-REVENUES> 27,431
<CGS> 27,795
<TOTAL-COSTS> 27,795
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (364)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (364)
<EPS-PRIMARY> (0.10)<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other-Se represents total partner's equity.
<F2>Sales includes $108 of interest income.
<F3>Eps-Primary is based upon limited partner equity divided by total limited
partner units of 6,448.
</FN>
</TABLE>
