<page> 1
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, 2002
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 2-784441 |
|
STERLING GAS DRILLING FUND 1982 |
|
(Exact name of registrant as specified in charter) |
|
New York |
|
(State or other jurisdiction of incorporation or organization) |
|
13-3147901 |
|
(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> 2
PART I
|
Item 1. Financial Statements |
|
The following Financial Statements are filed herewith: |
|
Balance Sheets September 30, 2002 and December 31, 2001. |
|
Statements of Operations for the Nine and the Three Months Ended September 30, 2002 and 2001. |
|
Statements of Changes in Partners' Equity for the Nine and the Three Months Ended September 30, 2002 and 2001. |
|
Statements of Cash Flows for the Nine Months Ended September 30, 2002 and 2001. |
|
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 among this industry and other industries in supplying energy and fuel requirements of industrial and individual 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, 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 any contingent debts, liabilities or expenses or for the conduct of the Partnership's business. As of September 30, 2002, the General partners have distributed to the Limited partners $1,402,512 or 9.76%of the total 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. Reservoir engineering is a subjective process of estimating underground accumulations of gas and oil that cannot be measured in an exact manner. The estimated reserve quantities and future income quantities are related to hydrocarbon prices. Therefore, volumes of reserves actually recovered and amounts of income actually received may differ significantly from the estimated quantities presented in this report.
In accordance with FASB Statement No. 69, December 31 market prices were determined using the daily oil price or daily gas sales price ("spot price") adjusted for oilfield or gas gathering hub and wellhead price differentials (e.g. grade, transportation, gravity, sulfur, and BS&W) as appropriate. Also, in accordance with SEC and FASB specifications, changes in market prices subsequent to December 31, 2001 and December 31, 2000 were not considered. The spot price for gas at December 31, 2000 was $9.23 per MMBTU. The range of spot prices
<page> 3
during the year 2000 was a low of $2.14 and a high of $10.50 and the average was $4.28. The spot price for gas at December 31, 2001 was $2.63 per MMBTU. The range of spot prices during the year 2001 was a low of $1.77 and a high of $10.29 and the average was $3.94. The Partnership actually received an average price for gas sold of $3.36 during the first nine months of 2002. The range during the first three quartersof 2002 has been from $1.98 to $4.10 with an average of $3.18. The recent futures market prices have been in the $3.94 range.
The present value of unescalated future net revenue (S.E.C. case) associated with such reserves, discounted at 10% as of December 31, 2001 was approximately $788,035 as compared to December 31, 2000, of about $4,363,671. While it may reasonably be anticipated that the prices received by Sterling Gas Drilling Fund 1982 for the sale of its production may be higher or lower than the prices used in this evaluation, as described above, and the operating costs relating to such production may also increase or decrease from existing levels, such possible changes in prices and costs were, in accordance with rules adopted by the SEC, omitted from consideration in making this evaluation for the SEC case. Actual volumes produced, prices received and costs incurred by the partnership may vary significantly from the SEC case
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 1982 for $11,400,000. Pursuant to the terms of this contract, fifty-one wells have been drilled resulting in fifty producing wells and one dry hole. The Registrant has had a reserve report prepared which details reserve value information, and such information is available to the Limited Partners pursuant to the buy-out provisions of the Prospectus as previously filed.
During 2002, PrimeEnergy Management negotiated a Farmout Agreement with Ardent Resources Inc. covering leasehold interests in acres located in Calhoun County, West Virginia. Pursuant to this agreement, Ardent has the right but not the obligation to select acreage and drill a deep well on the selected acreage, subject to an overriding royalty interest due to the leasehold owners. If a test well is not spudded by February 13, 2005 this agreement terminates. Acerage held by Sterling Drilling Fund 1982 was included in the Farmout Agreement, PrimeEnergy Management may discuss the possibility of farming out additional deep rights held the Partnership under the same terms with other parties, however, there is no guarantee that any agreement will be entered into.
3. Results of Operations:
The Partnership experienced a minor decrease in gas produced and a slight increase in oil produced, from 58,294 MCF and 902 BBLS in 2001 to 57,384 MCF and 1,031 BBLS in 2002. The average prices changed from $5.49 per MCF and $23.72 per barrel in 2001 to $3.36 per MCF and $20.48 BBLS in 2002. Some of the Partnership's gas sold was sold under a new contract starting in December 2001. The Partnership was paid based upon monthly spot market prices through May 2002 production. The General Partners elected to sell a substaintial portion of the gas delivered under this contract from June 2002 through October 2002 at a fixed price of $3.57 per MMBTU subject to transportation costs. The lower prices received for gas production through most of the reported period significantly reduced operating revenues from $341,182 in 2001 to $214,155 in 2002.
<page 4>
The Partnership's other income is a result of a cash bonus paid to the partnership under a farmout agreement. The farmout agreement allow a third party the right to drill a deep well on leasehold acerage owned by the Partnership. If the third party exercises their rights the Partnership could receive an overriding royalty interest. The total of the cash bonus for the year 2002 paid to the Partnership is $77,827.
Production expenses decreased from from $177,093 in 2001 to $114,458 in 2002. The production expenses include variable costs associated with volume changes, repairs and labor costs associated with the wells and well sites. Production expenses, during both years were incurred for normal maintenance and upkeep of the wells and well sites .
General and administrative expenses have been segregated on the financial statements to reflect expenses paid to PrimeEnergy Management Corporation, a general partner. These expenses are charged in accordance with guidelines set forth in the Registrant's Management Agreement and are attributable to the affairs and operations of the Partnership and shall not exceed an annual amount equal to 5% of the Limited Partners capital contributions. Amounts related to both 2001 and 2002 are substantially less than the amounts allocable to the Registrant under the Partnership Agreement. Management continues to work on reducing 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 undercounted future net cash flows attributable to the Partnership properties. The Partnership was not required to revise the property basis in either 2001 or 2002. 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 6: Exhibits and Reports on Form 8-K
(a) Exhibit 99: Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act of 2002
(b)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.
<page>5
S I G N A T U R E S
Pursuant to the requirements of Section 13 or 15 (d) of the Securities and Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
STERLING GAS DRILLING FUND 1982 |
|
(Registrant) |
|
BY: /S/ Charles E. Drimal Jr. |
|
Charles E. Drimal, Jr. |
|
General Partner |
|
November 8, 2002 |
|
(Date) |
<page> 6
STERLING DRILLING FUND 1982
(A New York Limited Partnership)
Balance Sheets
|
September 30, 2002 |
December 31, 2001 |
|||
|
(unaudited) |
(audited) |
|||
|
Assets |
||||
|
Current Assets: |
||||
|
Cash and cash equivalents |
$ |
108,715 |
$ |
24,038 |
|
Due from others |
30,051 |
26,507 |
||
|
---------------- |
------------------- |
|||
|
Total current assets |
138,766 |
50,545 |
||
|
---------------- |
------------------- |
|||
|
Oil and Gas properties - successful efforts method: |
||||
|
Leasehold costs |
466,804 |
466,804 |
||
|
Well and related facilities |
11,970,091 |
11,970,091 |
||
|
less accumulated depreciation, depletion and |
||||
|
Amortization |
(11,876,105) |
(11,851,977) |
||
|
---------------- |
------------------- |
|||
|
Total Oil and Gas Properties |
560,790 |
584,918 |
||
|
---------------- |
------------------- |
|||
|
Total assets |
$ |
699,556 |
$ |
635,463 |
|
========== |
=========== |
|||
|
Liabilities and Partners' Equity |
||||
|
Current liabilities: |
||||
|
Due to affiliates |
$ |
0 |
$ |
0 |
|
----------------- |
------------------- |
|||
|
Total current liabilities |
0 |
0 |
||
|
----------------- |
------------------- |
|||
|
Partners' Equity |
||||
|
Limited partners |
909,734 |
859,261 |
||
|
General partners |
(210,178) |
(223,798) |
||
|
----------------- |
------------------- |
|||
|
Total partners' equity |
699,556 |
635,463 |
||
|
----------------- |
------------------- |
|||
|
Total liabilities and partners' equity |
$ |
699,556 |
$ |
635,463 |
|
========== |
=========== |
|||
See accompanying footnote to the financial statements
<page> 7
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Operations
(unaudited)
|
Nine Months Ending September 30, 2002 |
|
Limited Partners |
General Partners |
Total |
||||
|
Revenue: |
||||||
|
Operating revenue |
$ |
180,211 |
$ |
33,944 |
$ |
214,155 |
|
Other income |
64,804 |
12,206 |
77,010 |
|||
|
Interest income |
809 |
8 |
817 |
|||
|
------------- |
------------- |
------------- |
||||
|
Total Revenue |
245,824 |
46,158 |
291,982 |
|||
|
------------- |
------------- |
------------- |
||||
|
Costs and Expenses: |
||||||
|
Production expense |
96,316 |
18,142 |
114,458 |
|||
|
General and administrative to a related party |
63,617 |
11,983 |
75,600 |
|||
|
General and administrative |
11,531 |
2,172 |
13,703 |
|||
|
Depreciation, depletion and amortization |
23,887 |
241 |
24,128 |
|||
|
------------- |
------------- |
------------- |
||||
|
Total Costs and Expenses |
195,351 |
32,538 |
227,889 |
|||
|
------------- |
------------- |
------------- |
||||
|
Net Income |
$ |
50,473 |
$ |
13,620 |
$ |
64,093 |
|
======== |
======== |
======== |
||||
|
Net Income per Equity unit |
$ |
3.51 |
||||
|
======== |
See accompanying footnote to the financial statements
<page> 8
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Operations
(unaudited)
|
Nine Months Ending September 30, 2001 |
|
Limited Partners |
General Partners |
Total |
||||
|
Revenue: |
||||||
|
Operating revenue |
$ |
287,105 |
$ |
54,077 |
$ |
341,182 |
|
Other income |
55,322 |
559 |
55,881 |
|||
|
Interest income |
0 |
0 |
0 |
|||
|
------------- |
------------- |
------------- |
||||
|
Total Revenue |
342,427 |
54,636 |
397,063 |
|||
|
------------- |
------------- |
------------- |
||||
|
Costs and Expenses: |
||||||
|
Production expense |
149,192 |
28,101 |
177,293 |
|||
|
General and administrative to a related party |
63,617 |
11,983 |
75,600 |
|||
|
General and administrative |
10,776 |
2,030 |
12,806 |
|||
|
Depreciation, depletion and amortization |
22,748 |
230 |
22,978 |
|||
|
------------- |
------------- |
------------- |
||||
|
Total Costs and Expenses |
246,333 |
42,344 |
288,677 |
|||
|
------------- |
------------- |
------------- |
||||
|
Net Income |
$ |
96,094 |
$ |
12,292 |
$ |
108,386 |
|
======== |
======== |
======== |
||||
|
Net Income per equity unit |
$ |
6.69 |
||||
|
======== |
See accompanying footnote to the financial statements
<page> 9
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Operations
(unaudited)
|
Three Months Ending September 30, 2002 |
|
Limited Partners |
General Partners |
Total |
||||
|
Revenue: |
||||||
|
Operating revenue |
$ |
76,760 |
$ |
14,459 |
$ |
91,219 |
|
Other income |
12,875 |
2,425 |
15,300 |
|||
|
Interest income |
335 |
3 |
338 |
|||
|
------------ |
------------ |
------------ |
||||
|
Total Revenue |
89,970 |
16,887 |
106,857 |
|||
|
------------ |
------------ |
------------ |
||||
|
Costs and Expenses: |
||||||
|
Production expense |
48,462 |
9,129 |
57,591 |
|||
|
General and administrative to a related party |
21,205 |
3,995 |
25,200 |
|||
|
General and administrative |
2,318 |
437 |
2,755 |
|||
|
Depreciation, depletion and amortization |
7,963 |
80 |
8,043 |
|||
|
------------ |
------------ |
------------ |
||||
|
Total Costs and Expenses |
79,948 |
13,641 |
93,589 |
|||
|
------------ |
------------ |
------------ |
||||
|
Net Income |
$ |
10,022 |
$ |
3,246 |
$ |
13,268 |
|
======= |
======= |
======= |
||||
|
Net Income per equity unit |
$ |
0.70 |
||||
|
======= |
See accompanying footnote to the financial statements
<page> 10
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Operations
(unaudited)
|
Three Months Ending September 30, 2001 |
|
Limited Partners |
General Partners |
Total |
||||
|
Revenue: |
||||||
|
Operating revenue |
$ |
87,559 |
$ |
16,492 |
$ |
104,051 |
|
Other income |
0 |
0 |
0 |
|||
|
Interest income |
0 |
0 |
0 |
|||
|
------------ |
------------ |
------------ |
||||
|
Total Revenue |
87,559 |
16,492 |
104,051 |
|||
|
------------ |
------------ |
------------ |
||||
|
Costs and Expenses: |
||||||
|
Production expense |
44,064 |
8,300 |
52,364 |
|||
|
General and administrative to a related party |
21,205 |
3,995 |
25,200 |
|||
|
General and administrative |
4,156 |
783 |
4,939 |
|||
|
Depreciation, depletion and amortization |
7,583 |
77 |
7,660 |
|||
|
------------ |
------------ |
------------ |
||||
|
Total Costs and Expenses |
77,008 |
13,155 |
90,163 |
|||
|
------------ |
------------ |
------------ |
||||
|
Net Income |
$ |
10,551 |
$ |
3,337 |
$ |
13,888 |
|
======= |
======= |
======= |
||||
|
Net Income per equity unit |
$ |
0.73 |
||||
|
======== |
See accompanying footnote to the financial statements
<page> 11
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
|
Nine Months Ending September 30, 2002 |
|
Limited Partners |
General Partners |
Total |
||||
|
Balance at beginning of period |
$ |
859,261 |
(223,798) |
$ |
635,463 |
|
|
Net income |
50,473 |
13,620 |
64,093 |
|||
|
------------ |
------------ |
------------ |
||||
|
Balance at end of period |
$ |
909,734 |
(210,178) |
$ |
699,556 |
|
|
======= |
======= |
======= |
||||
|
Nine Months Ending September 30, 2001 |
|
Limited Partners |
General Partners |
Total |
||||
|
Balance at beginning of period |
$ |
745,531 |
(251,215) |
$ |
494,316 |
|
|
Net income |
96,094 |
12,292 |
108,386 |
|||
|
------------ |
------------ |
------------ |
||||
|
Balance at end of period |
$ |
841,625 |
(238,923) |
$ |
602,702 |
|
|
======= |
======= |
======= |
See accompanying footnote to the financial statements
<page> 12
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Changes in Partners' Equity
(unaudited)
|
Three Months Ending September 30, 2002 |
|
Limited Partners |
General Partners |
Total |
||||
|
Balance at beginning of period |
$ |
899,712 |
$ |
(213,424) |
$ |
686,288 |
|
Net Income |
10,022 |
3,246 |
13,268 |
|||
|
----------- |
----------- |
----------- |
||||
|
Balance at end of period |
$ |
909,734 |
(210,178) |
$ |
699,556 |
|
|
======= |
======= |
======= |
|
Three Months Ending September 30, 2001 |
|
Limited Partners |
General Partners |
Total |
||||
|
Balance at beginning of period |
$ |
831,074 |
$ |
(242,260) |
$ |
588,814 |
|
Net Income(Loss) |
10,551 |
3,337 |
13,888 |
|||
|
----------- |
----------- |
----------- |
||||
|
Balance at end of period |
$ |
841,625 |
(238,923) |
$ |
602,702 |
|
|
======= |
======= |
======= |
See accompanying footnote to the financial statements
<page> 13
STERLING DRILLING FUND 1982
(a New York Limited Partnership)
Statement of Cash Flows
(unaudited)
|
Nine months Ended September 30, 2002 |
Nine months Ended September 30, 2001 |
|||
|
Net cash provided by operating activities |
$ |
84,677 |
$ |
198 |
|
--------------- |
--------------- |
|||
|
Cash Flows from investing activities: |
||||
|
Investment in wells and related facilities |
0 |
(200) |
||
|
--------------- |
--------------- |
|||
|
Net Cash used in investing activities |
0 |
(200) |
||
|
---------------- |
---------------- |
|||
|
Net increase(decrease) in cash and cash equivalents |
84,677 |
(2) |
||
|
Cash and cash equivalents at beginning of period |
24,038 |
3 |
||
|
--------------- |
--------------- |
|||
|
Cash and cash equivalents at end of period |
$ |
108,715 |
$ |
1 |
|
========= |
========= |
See accompanying footnote to the financial statements
<page> 14
STERLING GAS DRILLING FUND 1982
(a New York limited partnership)
Note to Financial Statements
September 30, 2002
1. The accompanying statements for the period ending September 30, 2002 are unaudited, but reflect all adjustments necessary to present fairly the results of operations.