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, 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 / /
PART I
Item 1. Financial Statements
The following Financial Statements are filed herewith:
Balance Sheets - March 31, 1997 and December 31, 1996.
Statements of Operations for the Three Months Ended March 31, 1997 and
1996.
Statements of Changes in Partners' Equity for the year ended December
31, 1996 and for the Three Months Ended March 31, 1997.
Statements of Cash Flows for the Three Months Ended March 31, 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 March 31, 1997 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 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
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 $27,323 in 1996 to
$35,513 in 1997. The partnership produced 8,480 MCF in 1996 and
7,222 MCF in 1997. The average price for gas increased
significantly from $2.44 per average MCF in 1996 to $2.85 per
average MCF in 1997. The overall revenue increase was also
helped by a higher average price per barrel in 1997 than in 1996,
from $16.21 to $21.50. Production expenses decreased slightly.
The costs were $15,484 in 1996 and $13,853 in 1997. The
partnership did not have any major repair costs occur in the
first quarter 1997. The majority of the costs in both years were
for the general upkeep of the well and well site. The general
partner, as operator of the partnership's wells, discounts fees
charged to the Partnership to minimize lifting costs.
All general and administrative costs remained stable with no
significant variances to report. The amount of general and
administrative expenses associated with a related party for 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 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 1996 or during the first quarter 1997. The
Partnership did expend additional funds on additional capitalized
costs. The operator will determine if additional equipment, for
example lift equipment, will have a favorable benefit on
production. The beneficial effect looked for by the operator
is to increase, improve or sustain production on a particular
well. Depletion, depreciation and amortization expense was
consistent with the current property basis and the rates applied.
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.
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)
May 14, 1997 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,
1997 1996
Assets
Current Assets:
Cash and cash equivalents $ 23,345 $ 1,833
----------- ------------
Total current assets 23,345 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 (5,445,468) (5,442,840)
----------- ------------
182,749 184,010
----------- ------------
Total assets $ 206,094 $ 185,843
============ ============
Liabilities and Partners'
Equity
Current liabilities:
Due to affiliates $ 93,756 $ 95,536
----------- ------------
Total current liabilities
93,756 95,536
----------- -----------
Partners' Equity
Limited partners 152,329 145,097
General partners (39,991) (54,790)
----------- ------------
Total partners'
equity 112,338 90,307
----------- ------------
Total liabilities and
partners' equity $ 206,094 $ 85,843
=========== ============
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, 1997
Limited General
Partners Partners Total
Revenue:
Operating revenue $ 28,055 7,458 $ 35,513
Interest income 93 6 99
-------- -------- ---------
Total Revenue 28,148 7,464 35,612
-------- -------- ---------
Costs and Expenses:
Production expense 10,944 2,909 13,853
General and administrative
to a related party 4,937 1,312 6,249
General and administrative 2,565 682 3,247
Depreciation, depletion
and amortization 2,470 158 2,628
-------- -------- ---------
Total Costs and Expenses 20,916 5,061 25,977
-------- -------- ---------
Net Income $ 7,232 2,403 $ 9,635
======== ======== =========
Net Income per equity unit $ 1.21
========
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 Changes in Partners' Equity
(unaudited)
Limited General
Partners Partners Total
Balance at December 31, 1995 $ 155,648 $ (54,187) $ 101,461
Partners' contributions 0 113 113
Cash Distributions (16,120) (4,238) (20,358)
Net Income 5,569 3,522 9,091
-------- -------- --------
Balance at December 31, 1996 $ 145,097 $ (54,790) $ 90,307
Partners' contributions 0 12,396 12,396
Net Income 7,232 2,403 9,635
-------- -------- --------
Balance at March 31, 1997 $ 152,329 $ (39,991) $ 112,338
======== ======== ========
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, 1997 31, 1996
Net cash provided by operating
activities $ 10,493 $ 6,231
----------- ------------
Cash Flows From Financing
Activities:
Partner's Contributions 12,396 0
----------- ------------
Net cash from financing activities 12,396 0
Cash Flows From Investing
Activities:
Equipment Purchase (1,367) 0
----------- ------------
Net cash from investing activities (1,367) 0
Net increase(decrease) in cash and
cash equivalents 21,512 6,231
Cash and cash equivalents at
beginning of period 1,833 5,405
----------- ------------
Cash and cash equivalents at end of
period $ 23,345 $ 11,636
=========== ============
See accompanying note to financial statements.
STERLING DRILLING FUND 1984-2
(a New York limited partnership)
Note to Financial Statements
March 31, 1997
1. The accompanying statements for the period ending March 31,
1997 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 10Q and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 23,345
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23,345
<PP&E> 5,628,217
<DEPRECIATION> (5,445,468)
<TOTAL-ASSETS> 206,094
<CURRENT-LIABILITIES> 93,756
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 112,338<F1>
<TOTAL-LIABILITY-AND-EQUITY> 206,094
<SALES> 35,612<F2>
<TOTAL-REVENUES> 35,612
<CGS> 25,977
<TOTAL-COSTS> 25,977
<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> 9,635
<EPS-PRIMARY> 1.21<F3>
<EPS-DILUTED> 0
<FN>
<F1>Other -se includes total partners' equity.
<F2>Sales included $99 of interest income.
<F3>the limited partnership income was divided by total number of limited
partnership units of 6,448.
</FN>
</TABLE>
