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, 1997
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 - June 30, 1997 and December 31, 1996.
Statements of Operations for the Six and Three Months Ended June
30, 1997 and 1996.
Statements of Changes in Partners' Equity for the Six and Three
Months Ended June 30, 1997 and 1996.
Statements of Cash Flows for the Six Months Ended June 30, 1997
and 1996.
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, 1997, the General
Partners have distributed $586,768 or 9.10% 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 future net
revenues(S.E.C. case) associated with such reserves, discounted
at 10% as of December 31, 1996 was approximately $415,000 as
compared to $236,162 as of December 31, 1995. The increase in
total estimated discounted future net revenue was due in part to
higher year end gas prices as of December 31, 1996 compared to
the gas price in effect as of December 31, 1995. 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
<PAGE>
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 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 increased from $53,598 in 1996 to
$70,415 in 1997. The Partnership gas and oil production included
762 Bbls and 16,181 MCF's in 1996 and 1,069 Bbls and 16,067
MCF's in 1997. The Partnership was able to sell its oil and gas
at a higher average rate per barrel and rate per MCF , from
$17.93 and $2.42 in 1996 to $18.73 and $3.06 in 1997
(respectively). The combination of stable production and
increased prices for both gas and oil sold resulted in increases
in overall gas and oil revenue. Production expenses increased
from $18,980 in 1996 to $25,825 in 1997. 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. This year some of the wells or well
sites required additional repair and labor costs in order to
maintain the current production levels. Also, 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, 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 1997 and 1996 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 its efforts to lower third party costs and
use in-house resources to provide efficient and timely services
to the Partnership.
<PAGE>
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 1996 or during the first half of 1997.
The current depreciation expense was reasonable based upon the
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>
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 13, 1997 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
June 30, December 31,
1997 1996
(unaudited) (audited)
Assets
Current Assets:
Cash and cash equivalents $ 8,308 1,833
----------- ------------
Total current assets 8,308 1,833
----------- ------------
Oil and Gas properties -
successful efforts method:
Leasehold costs 225,680 225,680
Well and related facilities 5,402,537 5,401,170
less accumulated
depreciation, depletion and
amortization (5,448,095) (5,442,840)
----------- ------------
180,122 184,010
----------- ------------
Total assets $ 188,430 185,843
============ ============
Liabilities and Partners'
Equity
Current liabilities:
Due to affiliates $ 88,632 95,536
----------- ------------
Total current liabilities 88,632 95,536
----------- -----------
Partners' Equity
Limited partners 140,977 145,097
General partners (41,179) (54,790)
----------- ------------
Total partners' equity 99,798 90,307
----------- ------------
Total liabilities and
partners' equity $ 188,430 185,843
=========== ============
See accompanying note to financial statements.
<PAGE>
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Six Months Ending
June 30, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 55,628 14,787 70,415
Interest income 239 15 254
-------- -------- --------
Total Revenue 55,867 14,802 70,669
-------- -------- --------
Costs and Expenses:
Production expense 20,402 5,423 25,825
General and administrative
to a related party 9,873 2,625 12,498
General and administrative 8,652 2,300 10,952
Depreciation, depletion
and amortization 4,940 315 5,255
-------- -------- --------
Total Costs and Expenses 43,867 10,663 54,530
-------- -------- --------
Net Income $ 12,000 4,139 16,139
======== ======== ========
Net Income per equity unit $ 1.86
========
See accompanying note to financial statements.
<PAGE>
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.
<PAGE>
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Operations
(unaudited)
Three Months Ending
June 30, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 27,573 7,329 34,902
Interest income 146 9 155
-------- -------- ---------
Total Revenue 27,719 7,338 35,057
-------- -------- ---------
Costs and Expenses:
Production expense 9,458 2,514 11,972
General and administrative
to a related party 4,936 1,313 6,249
General and administrative 6,087 1,618 7,705
Depreciation, depletion
and amortization 2,470 157 2,627
-------- -------- ---------
Total Costs and Expenses 22,951 5,602 28,553
-------- -------- ---------
Net Income $ 4,768 1,736 6,504
======== ======== =========
Net Income per equity unit $ .74
========
See accompanying note to financial statements.
<PAGE>
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.
<PAGE>
STERLING DRILLING FUND 1984-2
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
Six Months Ended
June 30, 1997
Limited General
Partners Partners Total
Balance at beginning of
period $ 145,097 (54,790) $ 90,307
Partners' Contribution 0 13,701 13,701
Cash Distributions (16,120) (4,229) (20,349)
Net Income 12,000 4,139 16,139
-------- -------- --------
Balance at end of period $ 140,977 (41,179) $ 99,798
======== ======== ========
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
======== ======== ========
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
June 30, 1997
Limited General
Partners Partners Total
Balance at beginning of period $ 152,329 $ (39,991) $ 112,338
Partners' Contribution 0 1,305 1,305
Cash Distributions (16,120) (4,229) (20,349)
Net Income 4,768 1,736 6,504
-------- -------- ---------
Balance at end of period $ 140,977 (41,179) 99,798
======== ======== =========
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
======== ======== =========
See accompanying note to financial statements.
<PAGE>
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,
1997 1996
Net cash provided by operating
activities $ 14,490 $ 17,773
------------ ------------
Cash flows from financing
activities:
Partner's Contribution 13,701 0
Distribution to partners (20,349) (20,358)
------------ ------------
Net cash used in financing
activities (6,648) (20,358)
------------ ------------
Net increase(decrease) in cash and
cash equivalents 6,475 (2,825)
Cash and cash equivalents at
beginning of period 1,833 5,405
------------ ------------
Cash and cash equivalents at end of
period $ 8,308 $ 2,820
============ ============
See accompanying note to financial statements.
<PAGE>
STERLING DRILLING FUND 1984-2
(a New York limited partnership)
Note to Financial Statements
June 30, 1997
1. The accompanying statements for the period ending June 30,
1997 are unaudited but reflect all adjustments necessary to
present fairly the results of operations.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summarry financial information extracted from
Sterling Drilling Fund 1984-2's second quarter 1997 10Q and
is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 8,308
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,308
<PP&E> 5,628,217
<DEPRECIATION> (5,448,095)
<TOTAL-ASSETS> 188,430
<CURRENT-LIABILITIES> 88,632
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 99,798<F1>
<TOTAL-LIABILITY-AND-EQUITY> 188,430
<SALES> 70,669<F2>
<TOTAL-REVENUES> 70,669
<CGS> 54,530
<TOTAL-COSTS> 54,530
<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> 16,139
<EPS-PRIMARY> 1.86<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other-Se includes total partners' equity.
<F2>Sales includes $254 of interest income.
<F3>The limited partners share of net income was divided by the total
number of limited partner units of 6,448.
</FN>
</TABLE>
