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, 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 - June 30, 1996 and December 31, 1995.
Statements of Operations for the Six and Three Months Ended June 30,
1996 and 1995.
Statements of Changes in Partners' Equity for the Six and Three Months
Ended June 30, 1996 and 1995.
Statements of Cash Flows for the Six Months Ended June 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 June 30, 1996, the General Partners have distributed
$570,648 or 8.85% 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 $62,157 in 1995 to
$53,598 in 1996. The partnership gas and oil production included
1,038 Bbls and 17,729 MCF's in 1995 to 762 Bbls and 16,181 MCF's
in 1996. The benefit received from a increase in average oil
price per barrel and in average price per MCF , from $15.95 and
$2.29 in 1995 to $17.93 and $2.42 in 1996(respectively), was
minimized by the oil and gas production declines. The majority of
the partnership's gas purchased for the six months of 1996 was
under a fixed price sales contract. The price received for the
partnership's gas in 1995 was based upon average spot market
prices. The average spot price fluctuates based upon peak or non-
peak usage periods. Production expenses decreased from $30,291 in
1995 to $18,980 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, discounts 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, 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
expense in 1995 or during the first half of 1996. 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.
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)
August 8, 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)
June 30, December 31,
1996 1995
Assets
Current Assets:
Cash and cash equivalents $ 2,820 $ 5,405
----------- ------------
Total current assets 2,820 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 (5,437,022) (5,431,779)
----------- ------------
184,397 189,640
----------- ------------
Total assets $ 187,217 $ 195,045
============ ============
Liabilities and Partners'
Equity
Current liabilities:
Due to affiliates $ 98,926 $ 93,584
----------- ------------
Total current liabilities 98,926 93,584
----------- -----------
Partners' Equity
Limited partners 144,448 (54,187)
General partners (56,157) 155,648
----------- ------------
Total partners' equity 88,291 101,461
----------- ------------
Total liabilities and
partners' equity $ 187,217 $ 195,045
=========== ============
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Six Months Ending
June 30, 1996
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 42,342 $ 11,256 $ 53,598
Interest income 173 11 184
-------- -------- --------
Total Revenue 42,515 11,267 53,782
-------- -------- --------
Costs and Expenses:
Production expense 14,994 3,986 18,980
General and administrative
to a related party 9,873 2,625 12,498
General and administrative 7,800 2,073 9,873
Depreciation, depletion
and amortization 4,928 315 5,243
-------- -------- --------
Total Costs and Expenses 37,595 8,999 46,594
-------- -------- --------
Net Income $ 4,920 $ 2,268 $ 7,188
======== ======== ========
Net Income per equity unit $ .76
=========
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Six Months Ending
June 30, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 49,104 $ 13,053 $ 62,157
Interest income 180 12 192
-------- -------- --------
Total Revenue 49,284 13,065 62,349
-------- -------- --------
Costs and Expenses:
Production expense 23,930 6,361 30,291
General and administrative
to a related party 9,873 2,625 12,498
General and administrative 8,638 2,296 10,934
Depreciation, depletion
and amortization 9,086 580 9,666
-------- -------- --------
Total Costs and Expenses 51,527 11,862 63,389
-------- -------- --------
Net Income(loss) $ (2,243) $ 1,203 $ (1,040)
======== ======== ========
Net Income(loss)
per equity unit $ (0.35)
========
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ending
June 30, 1996
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 20,757 $ 5,518 $ 26,275
Interest income 71 5 76
-------- -------- ---------
Total Revenue 20,828 5,523 26,351
-------- -------- ---------
Costs and Expenses:
Production expense 2,762 734 3,496
General and administrative
to a related party 4,936 1,313 6,249
General and administrative 5,082 1,351 6,433
Depreciation, depletion
and amortization 2,463 158 2,621
-------- -------- ---------
Total Costs and Expenses 15,243 3,556 18,799
-------- -------- ---------
Net Income $ 5,585 $ 1,967 $ 7,552
======== ======== =========
Net Income per equity unit $ .87
========
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ending
June 30, 1995
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 19,635 $ 5,220 $ 24,855
Interest income 64 5 69
-------- -------- ---------
Total Revenue 19,699 5,225 24,924
-------- -------- ---------
Costs and Expenses:
Production expense 12,230 3,251 15,481
General and administrative
to a related party 4,936 1,313 6,249
General and administrative 5,694 1,513 7,207
Depreciation, depletion
and amortization 4,543 290 4,833
-------- -------- ---------
Total Costs and Expenses 27,403 6,367 33,770
-------- -------- ---------
Net Income(loss) $ (7,704) $ (1,142) $ (8,846)
======== ======== =========
Net Income(loss)
per equity unit $ (1.19)
========
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Six Months Ended
June 30, 1996
Limited General
Partners Partners Total
Balance at beginning of
period $ 155,648 $ (54,187) $ 101,461
Cash Distributions (16,120) (4,238) (20,358)
Net Income 4,920 2,268 7,188
-------- -------- --------
Balance at end of period $ 144,448 $ (56,157) $ 88,291
======== ======== ========
Six Months Ended
June 30, 1995
Limited General
Partners Partners Total
Balance at beginning of
period $ 180,616 $ (50,519) $ 130,097
Cash Distributions (16,120) (4,239) (20,359)
Net Income(Loss) (2,243) (1,203) (1,040)
-------- -------- --------
Balance at end of period $ 162,253 $ (53,555) $ 108,698
======== ======== ========
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Three Months Ended
June 30, 1996
Limited General
Partners Partners Total
Balance at beginning of
period $ 154,983 $ (53,886) $ 101,097
Cash Distributions (16,120) (4,238) (20,358)
Net Income 5,585 1,967 7,552
-------- -------- ---------
Balance at end of period $ 144,448 $ (56,157) $ 88,291
======== ======== =========
Three Months Ended
June 30, 1995
Limited General
Partners Partners Total
Balance at beginning of
period $ 186,077 $ (48,174) $ 137,903
Cash Distributions (16,120) (4,239) (20,359)
Net Income(Loss) (7,704) (1,142) (8,846)
-------- -------- ---------
Balance at end of period $ 162,253 $ (53,555) $ 108,698
======== ======== =========
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
Six months Six months
ended ended
June 30, June 30,
1996 1995
Net cash provided by operating
activities $ 17,773 $ 19,107
------------ ------------
Cash flows from financing
activities:
Distribution to partners (20,358) (20,359)
------------ ------------
Net cash used in financing
activities (20,358) (20,359)
------------ ------------
Net increase(decrease) in cash and
cash equivalents (2,825) (1,252)
Cash and cash equivalents at
beginning of period 5,405 3,306
------------ ------------
Cash and cash equivalents at end of
period $ 2,820 $ 2,054
============ ============
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-2
(a New York limited partnership)
Note to Financial Statements
June 30, 1996
1. The accompanying statements for the period ending June 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 1984-2's second quarter 1996 10Q and is
qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,820
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,820
<PP&E> 5,621,419
<DEPRECIATION> (5,437,022)
<TOTAL-ASSETS> 187,217
<CURRENT-LIABILITIES> 98,926
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 88,291<F1>
<TOTAL-LIABILITY-AND-EQUITY> 187217
<SALES> 53,782<F2>
<TOTAL-REVENUES> 53,782
<CGS> 46,594
<TOTAL-COSTS> 46,594
<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> 7,188
<EPS-PRIMARY> 0.76<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other se includes total partners' equity.
<F2>Sales includes $184.00 of interest income.
<F3>The limited partnership income was divided by total number of
limited partnership units of 6,448.
</FN>
</TABLE>
