##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
    Form 10-K (Mark One) [X]
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2003OR [   ]
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934
 For the transition period from            to Commission File No. 2-78441 Sterling Gas Drilling Fund 1982  New York
(State or other jurisdiction of
incorporation or organization)
    
    13-3147901
(I.R.S. Employer
Identification No.)
 One Landmark Square
Stamford, Connecticut
(Address of principal executive offices)
    
    06901
(Zip Code)
 Registrants telephone number, including area code: (203) 358-5700 Securities registered pursuant to Section 12(b) of the Act:None Securities registered pursuant to Section 12(g) of the Act:Units of Limited Partnership Interests
(Title of Class) Indicate by check mark whether 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
[   ] Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [   ] Indicate by check mark whether Registrant is an accelerated filer as
defined in Exchange Act Rule 12-b-2 YES [   ] NO
[X] The Registrant has no voting stock. There is no market for the Units and
therefore no market value of the Units is reported. The number of Units of the Registrant outstanding as of March 15, 2004,
was: 14,370. DOCUMENTS INCORPORATED BY REFERENCE
NONE




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STERLING GAS DRILLING FUND 1982 FORM 10-K ANNUAL REPORT
For the Fiscal Year Ended
December 31, 2003 
 PART I 
 Item 1. BUSINESS Sterling Gas Drilling Fund 1982 (the Registrant or the Partnership) is
a limited partnership formed under the laws of the State of New York on July
28, 1982. The sole business of the Partnership was the drilling of the
formation extension wells principally for natural gas in various locations in
the state of West Virginia. No exploratory drilling was undertaken. The principal place of business of the Partnership is at One Landmark
Square, Stamford, Connecticut 06901, and telephone (203) 358-5700. The
Managing General Partner of the Partnership is Management
Corporation, (a New York corporation), which is a wholly owned subsidiary of
PrimeEnergy Corporation, (a publicly held Delaware corporation). Messrs.
Charles E. Drimal, Jr., Oliver J. Sterling and Samuel R. Campbell also are
General Partners. Mr. Drimal is a Director, President and Chief Executive
Officer of PrimeEnergy Management Corporation and PrimeEnergy Corporation, and
Mr. Campbell is a Director of PrimeEnergy Corporation. The aggregate contributions to the Partnership were $14,370,000, all of
which, net of the organization expenses of the Partnership were expended in the
drilling of such formation extension wells. Such properties are located in
Clay, Roane, Calhoun, Wirt, Kanawha, Lincoln and Putnam Counties, West
Virginia. The Partnership does not operate any of the properties in which it
has an interest, but generally such properties are operated and serviced by
Prime Operating Company, a Texas corporation, and Eastern Oil Well Service
Company, a West Virginia corporation, both wholly-owned subsidiaries of
PrimeEnergy Corporation. During 2003, the Partnership did not engage in any development drilling
activities or the acquisition of any significant additional properties, but
engaged in the production of oil and gas from its producing properties in the
usual and customary course. Since January 1, 2004, and to the date of this
Report, the Partnership has not engaged in any drilling activities nor
participated in the acquisition of any material producing oil and gas
properties. 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.
Acreage 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. 2




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During early 2001, PrimeEnergy Management negotiated a Farmout Agreement
with Eastern American Energy (EAE) covering leasehold interests in
approximately 5,000 acres in Clay County, West Virginia. Acreage held by
Sterling Gas Drilling Fund 1982, Limited Partnership has been included in the
Farmout Agreement. This agreement provided for a small cash bonus paid at
closing and gives EAE 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. This agreement closed in May 2001 and
will be in effect till May 1, 2003. EAE drilled a successful well in 2003 and
pursuant to the agreements the Partnership received $5,681 attributable to the
overriding royalty interest in 2003. Competition and Markets Competitors of the Partnership in the marketing of its oil and gas
production include oil and gas companies, independent concerns, and individual
producers and operators, many of which have financial resources, staffs and
facilities substantially greater than those available to the Partnership.
Furthermore, domestic producers of oil and gas must not only compete with each
other in marketing their output, but must also compete with producers of
imported oil and gas and alternative energy sources such as coal, nuclear power
and hydro-electric power. The availability of a ready market for any oil and gas produced by the
Partnership at acceptable prices per unit of production will depend upon
numerous factors beyond the control of the Partnership, including the extent of
domestic production and importation of oil and gas, the proximity of the
Partnerships producing properties to gas pipelines and the availability and
capacity of such pipelines, the marketing of other competitive fuels,
fluctuation in demand, governmental regulation of production, refining,
transportation and sales, general national and worldwide economic conditions,
and pricing, use and allocation of oil and gas and their substitute fuels. The Partnership does not currently own or lease any bulk storage
facilities or pipelines, other than adjacent to and used in connection with
producing wells. The Partnership deals with a number of major and independent
companies for the purchase of its oil and gas production, in the areas of
production. Sales are made under short-term contractual arrangements or
monthly spot prices. In 2003, the Partnerships gas production was purchased by
Dominion Field Services (formerly named Phoenix Diversified), Cabot Oil & Gas
Company and Eastern Pipeline Corporation, $263,720 or 68.69%, $46,719 or 12.17%
and $52,149 or 13.58%, respectively. The Partnerships oil production was
purchased by the Clearfield Appalachian Holdings (formerly named the American
Refining Group), $26,118 or 100%. None of these purchasers has any
relationship or is otherwise affiliated with the Partnership. The Partnership
believes that its current purchasers will continue to purchase oil and gas
products and, if not, could be replaced by other purchasers. 3




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Environmental Matters The Petroleum industry is subject to numerous federal and state
environmental statutes, regulations and other pollution controls. In general,
the Partnership is, and will be subject to, present and future environmental
statutes and regulations, and in the future the cost of its activities may
materially increase as a result thereof. The Partnerships expenses relating
to preserving the environment during 2003 as they relate to its oil and gas
operations were not significant in relation to operating costs and the
Partnership expects no material change in the near future. The Partnership
believes that environmental regulations should not, in the future, result in a
curtailment of production or otherwise have a materially adverse effect on the
Partnerships operations or financial condition. Regulation The Partnerships oil and gas operations are subject to a wide variety of
federal, state and local regulations. Administrative agencies in such
jurisdictions may promulgate and enforce rules and regulations relating to,
among other things, drilling and spacing of oil and gas wells, production
rates, prevention of waste, conservation of natural gas and oil, pollution
control, and various other matters, all of which may affect the Partnerships
future operations and production of oil and gas. The Partnerships natural gas
production and prices received for natural gas are regulated by the Federal
Energy Regulatory Commission (FERC) and the Natural Gas Policy Act of 1978
and various state regulations. The Partnership is also subject to state
drilling and proration regulations affecting its drilling operations and
production rates. The FERC continues to regulate interstate natural gas pipeline
transportation rates and service conditions pursuant to the NGA and NGPA.
Federal regulation of interstate transporters affects the marketing of natural
gas produced by the Partnership as well as the revenues received by the
Partnership for sales of such natural gas. Since the latter part of 1985,
through its Order Nos. 436, 500 and 636 rulemakings, the FERC has endeavored to
make natural gas transportation accessible to gas buyers and sellers on an open
and non-discriminatory basis. The FERCs efforts have significantly altered
the marketing and pricing of natural gas. No prediction can be made as to what
additional legislation may be proposed, if any, affecting the competitive
status of a gas producer, restricting the prices at which a producer may sell
its gas or the market demand for gas, nor can it be predicted which proposals,
including those presently under consideration, if enacted, might be effective. Additional proposals and proceedings that might affect the natural gas
industry are considered from time to time by Congress, the FERC, state
regulatory bodies and the courts. The Partnership cannot predict when or if
any such proposals might become effective, or their effect, if any, on the
Partnerships operations. The Partnership believes that it will comply with
all orders and regulation changes applicable to its operations. However, in
view of the many uncertainties with respect to the current controls, including
their duration and possible modification together with any new proposals that
may be enacted, the Partnership cannot predict the overall effect, if any, of
such controls on its operations. 4




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Taxation The Partnership received an opinion of its counsel that the Partnership
would be classified as a partnership and the holders of Partnership Units would
be treated as limited partners for federal income tax purposes. The
Partnership itself, to the extent that it is treated for federal income tax
purposes as a partnership, is not subject to any federal income taxation, but
it is required to file annual partnership returns. Each holder of Partnership
Units will be allocated his or her distributive shares of the Partnerships
income, gain, profit, loss, deductions, credits, tax preference items and
distributions for any taxable year of the Partnership ending within or with his
taxable year without regard as to whether such holder has received or will
receive any cash distributions from the Partnership. Item 2. PROPERTIES The Partnership has no interest in any properties other than its oil and
gas properties. The information set forth below summarizes the Partnerships
oil and gas wells, production and reserves, for the periods indicated. Producing Wells and Operating Information The Partnership, following its formation, and in December, 1982,
contracted for the drilling of 51 development wells, which resulted in 50
producing wells and one dry hole. As of December 31, 2003, the Partnership had ownership interests in the
following gross and net producing oil and gas wells and gross and net producing
acres.(1) The Partnership has no material undeveloped leasehold, mineral or
royalty acreage. Producing wells: Gross
    
    NetOil Wells
    
    
    0
    
    
    
    0.00Gas Wells
    
    
    59
    
    
    
    48.05Producing acres
    
    
    3,014
    
    
    
    2,455
  (1)
    
    A gross well is a well in which an interest is owned; a net
well is the sum of the interests owned in gross wells. Wells are
classified by their primary product. Some wells produce both oil
and gas. The following table sets forth the Partnerships oil & gas production, average
sales price and average production costs as of and for the periods indicated: year ended December 312003
    
    2002
    
    2001
    
    2000
    
    1999Production:Oil and Condensate (bbl)
    
    
    962
    
    
    
    1,309
    
    
    
    1,091
    
    
    
    1,174
    
    
    
    1,226Gas (Mcf)
    
    
    76,802
    
    
    
    78,796
    
    
    
    78,744
    
    
    
    85,689
    
    
    
    88,511Average Price of Sales:Oil and Condensate ($  per bbl)
    
    $
    27.14
    
    
    $
    21.53
    
    
    $
    22.82
    
    
    $
    27.32
    
    
    $
    14.81Gas ($  per Mcf)
    
    $
    5.00
    
    
    $
    3.59
    
    
    $
    5.13
    
    
    $
    3.53
    
    
    $
    2.53Production Expense per Dollar
Of Operating Revenue
    
    $
    0.54
    
    
    $
    0.50
    
    
    $
    0.53
    
    
    $
    0.44
    
    
    $
    0.51
 5




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Oil and Gas Reserves The Ryder Scott Company, L.P. has evaluated the Partnerships interests in
proved developed oil and gas properties for the periods indicated below. All
of the Partnerships reserves are located in the continental United States.
The following table summarizes the Partnerships oil and gas reserves at the
dates shown (figures rounded): Proved DevelopedOil (bbls)
    
    Gas (Mcf)1999
    
    
    12,800
    
    
    
    1,506,8502000
    
    
    15,800
    
    
    
    1,645,8502001
    
    
    13,700
    
    
    
    1,354,1002002
    
    
    14,000
    
    
    
    1,429,6002003
    
    
    10,500
    
    
    
    1,438,100
 The estimated future net revenue using current prices and costs as of the
dates indicated, exclusive of income taxes (at a 10% discount for estimated
timing of cash flow) for the Partnerships proved developed oil and gas
reserves for the periods indicated are summarized as follows (figures rounded): Proved DevelopedPresent ValueFuture Net
    
    of Future NetAs of 12-31
    
    Revenue
    
    Revenue1999
    
    
    2,256,800
    
    
    
    936,7002000
    
    
    11,363,600
    
    
    
    4,363,7002001
    
    
    1,930,100
    
    
    
    788,0002002
    
    
    3,292,100
    
    
    
    1,347,7002003
    
    
    5,142,400
    
    
    
    2,161,400
 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, 2003 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, 2003 and 2002 were not considered.
The spot price for gas at December 31, 2003 was $5.97 per MMBTU. The range of
spot prices during the year 2003 was a low of $3.96 and a high of $12.20 and
the average was $5.48. The spot price for gas at December 31, 2002 was $4.58
per MMBTU. The range of spot prices during the year 2002 was a low of $1.98 and
a high of $5.05 and the average was $3.38. The range during the first quarter
of 2004 has been from $5.08 to $7.01 with an average of $5.65. The recent
futures market prices have been in the $5.62 range. 6




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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. Since January 1, 2004, the Partnership has not filed any estimates of its
oil and gas reserves with, nor were any such estimates included in any reports,
to any federal authority or agency, other than the Securities and Exchange
Commission. Item 3. LEGAL PROCEEDINGS The Partnership is not a party to, nor is any of its property the subject
of, any legal proceedings actual or threatened, which would have a material
adverse effect on the business and affairs of the Partnership. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted during 2003 for vote by the holders of
Partnership Units. PART II  Item 5. MARKET FOR
THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
 There is no market for the Limited Partnership Units (the Units) of the
Partnership. As of March 15, 2004, there were 748 holders of record of the
Units. The Units are not regarded, as stock and payments or distributions to
holders of Units are not made in the form of dividends. Cash distributions to
the holders of Units for 2003 aggregated $35,925. Aggregate cash distributions
to the holders of the Units as of December 31, 2003, was $1,438,437. The Managing General Partner may purchase Units directly from the unit
holders if presented to the Managing General Partner, subject to conditions,
including limitations on numbers of Units, and at a price to be fixed by the
Managing General Partner in accordance with certain procedures, all as provided
for in the Limited Partnership Agreement of the Partnership. Item 6. SELECTED FINANCIAL DATA The information required hereunder is set forth under Selected Financial
Data in the Financial Information section included in this Report. The index
to the Financial Information section is at page F-1. 7




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Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information required hereunder is set forth under Managements
Discussion and Analysis of Financial Condition and Results of Operations in
the Financial Information section included in this Report. The index to the
Financial Information section is at page F-1. Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Registrant is a small business issuer as defined in the Securities and
Exchange Act Rule 12b-2 and no information is required to be provided by this
Item 7A. Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required hereunder is set forth under Report of
Independent Public Accountants, Balance Sheets, Statements of Operations,
Statements of Changes in Partners Equity, Statements of Cash Flows and
Notes to Financial Statements in the Financial Information section included
in this Report. The index to the Financial Information section is at page F-1. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There was no disagreement between the Partnership and its certified public
accountants on any matter of accounting principles or practices or financial
statement disclosure. Item 9A. CONTROLS AND PROCEDURES PrimeEnergy Management Corporation (PEMC), the Managing General Partner
of the Partnership, maintains a system of controls and procedures designed to
provide reasonable assurance as to the reliability of the financial statements
and other disclosures included in this report, as well as to safeguard assets
from unauthorized use or disposition. Within 90 days prior to the filing of
this report, PEMCs Chief Executive Officer and Chief Financial Officer have
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures with the assistance and participation of other members
of management. Based upon that evaluation, PEMCs Chief Executive Officer and
Chief Financial Officer concluded that our disclosure controls and procedures
are effective for gathering, analyzing and disclosing the information the
Partnership is required to disclose in the reports it files under the
Securities Exchange Act of 1934 within the time periods specified in the SECs
rules and forms. There have been no significant changes in PEMCs internal
controls or in other factors, which could significantly affect internal
controls subsequent to the date PEMC carried out its evaluation. 8




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PART III Item 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The Managing General Partner of the Partnership is PrimeEnergy Management
Corporation, a New York corporation (Management). The principal business of
Management is the management of the Partnership and other publicly and
privately held exploration and development limited partnerships and joint
ventures and publicly held asset and income fund limited partnerships. As of
March 15, 2004, Management acts as the Managing General Partner in a total of
18 limited partnerships and joint ventures, of which 2 are publicly held, and
is the Managing Trustee of 2 Delaware Business Trusts. The primary activity of
such Partnerships, joint ventures and trusts is the production of oil and gas
and Management, as the Managing General Partner of the Partnership, will devote
such of its time as it believes necessary in the conduct and management of the
business and affairs of the Partnership. Management, and other of the General
Partners of the Partnership, are engaged in and intend to continue to engage in
the oil and gas business for their own accounts and for the accounts of others. Management, which provides all of the executive, management and
administrative functions of the Partnership, is a wholly owned subsidiary of
PrimeEnergy Corporation (PrimeEnergy), a publicly held Delaware corporation.
The principal offices of PrimeEnergy and Management are in Stamford,
Connecticut. The operating subsidiaries of PrimeEnergy, Prime Operating
Company and Eastern Oil Well Service Company maintain their principal offices
in Houston, Texas, with district offices in Midland, Texas, Oklahoma City,
Oklahoma, and Charleston, West Virginia. PrimeEnergy and its subsidiaries have
approximately 207 employees, including their principal officers, providing
management and administrative services, accounting, engineers, geologists,
production engineers, land department personnel and field employees. Set forth below is information concerning the directors and executive
officers of Management and PrimeEnergy that are involved with the conduct of
the business and operations of the Partnership. Charles E. Drimal, Jr., age 56, is a Director and President of Management
and has held those positions since May 1983. He is also a Director and
President of Prime Energy and the operating subsidiaries. He graduated from
the University of Maryland in 1970 and from Samford University School of Law in
1973 and is a member of the New York State Bar. Beverly A. Cummings, age 50, has been a Director and Vice President,
Finance, of Management since August 1985. She is also a Director and Vice
President, Finance, and Treasurer of PrimeEnergy and the operating
subsidiaries. Ms. Cummings is a Certified Public Accountant and holds a
Bachelor of Science degree from the State University of New York and a Master
in Business Administration from Rutgers University. Lynne G. Pizor, age 44, has been Controller of Prime Operating Company
since January 1992, and Eastern Oil Well Service Company since September 1990.
She also held that position with Management from January 1986, through August
1994 and Prime Energy from May 1990, through August 1994. She joined
Management in October 1984, as Manager of Partnership Accounting. She is a
graduate of Wagner College with a Bachelor of Science degree in Economics and
Business Administration and is a Certified Public Accountant. 9




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Joan Podlovits, age 38, has been Controller of PrimeEnergy Management
Corporation since September 2002. She joined Management in July 1989 as a staff
accountant. She held the position of Accounting Manager for Management from
April 1994 to August 2002. She is a graduate of Pace University with a
Bachelor of Business Administration degree in Public Accounting. James F. Gilbert, age 71, has been Secretary of Management since June
1990, and has been Secretary of PrimeEnergy since March 1973, and was a
Director of PrimeEnergy from that date to October 1987. He also serves as
Secretary of the operating subsidiaries. He is an attorney in Dallas, Texas. Item 11. EXECUTIVE COMPENSATION The Partnership has no officers, directors or employees. The officers and
employees of the Managing General Partner and PrimeEnergy perform all
management and operational functions of the Partnership. The Partnership does
not pay any direct salaries or other remuneration to the officers, directors or
employees of the Managing General Partner or PrimeEnergy. The Managing General
Partner is reimbursed for the general and administrative expenses of the
Partnership, which are allocated to the Partnership for expenses incurred on
behalf of the Partnership, together with administrative work by third parties
limited annually to 5% of the aggregate capital contribution of the holders of
the Partnership Units. During 2003 and 2002, the allocation of general and
administrative expenses to the Partnership was $100,800 per year.  Item 12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
 The Partnership does not know of any person, entity or group, other than
the Managing General Partner and PrimeEnergy Corporation that beneficially owns
more than five percent of the Partnership Units. The following table shows as
of March 15, 2004, the name and address of such beneficial owners, and the
number and percent of Partnership Units beneficially owned by them, all of
which are owned directly. NumberName and Address of Beneficial Owner
    
    Of Units
    
    PercentPrimeEnergy Management Corporation
One Landmark Square
Stamford, CT 06901
    
    
    1,249
    
    
    
    8.70
    %PrimeEnergy Corporation
One Landmark Square
Stamford, CT 06901
    
    
    4,577
    
    
    
    31.84
    %
 10




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Item 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Prime Operating Company acts as the operator for most of the producing oil
and gas wells of the Partnership pursuant to operating agreements with the
Partnership and other working interest owners, including other partnerships
managed by the Managing General Partner, and in 2003 was paid well operating
fees ranging from about $273 to $ 925 per month per well. Together with well
operating supplies and equipment and related servicing operations are generally
provided by Eastern Oil Well Service Company. The Partnership pays its
proportionate part of such operating fees and expenses. Such fees and expenses
vary depending on such matters as the location of the well, the complexity of
the producing equipment, whether wells produce oil or gas or both and similar
factors. The Partnership believes that such services are as favorable to the
Partnership as they would be if the Partnership entered into such transactions
with unaffiliated third parties. In 2003 and 2002, the Partnership paid an
aggregate of $153,055 and $111,934, respectively, in such fees and expenses. Item 14.PRINCIPAL
ACCOUNTANT FEES AND SERVICES The Partnership has been charged for audit fees the amounts of $9,500 in
2003 and $9,500 in 2002 for services rendered in connection with the audit of
the Partnerships Financial Statement by Pustorino, Puglisi & Co. LLP. No audit
related fees, tax related fees, and any other fees were incurred by the
Partnership. The Audit Committee of PrimeEnergy Management Corporation, as the
Managing General Partner, approved the fees and independent audit services
provide by Pustorino, Puglisi & Co. LLP. 11




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PART IV Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K  (a)
    
    The following documents are filed as a part of this Report:  1.
    
    Financial Statements (Index to the Financial
Information at page F-1)2.
    
    Financial Statement Schedules:
Schedule V Property and Equipment  Oil and Gas Properties
Schedule VI Accumulated Depreciation, Depletion and
Amortization  Oil and Gas Properties3.
    
    Exhibits:  (3)
    
    Form of Agreement of Limited
Partnership of Sterling Gas Drilling Fund 1981
(Incorporated by reference to Exhibit (3) of Sterling
Gas Drilling Fund 1981 Form 10-K for the year ended
December 31, 1994.)23
    
    Consent of Ryder Scott Company, L.P. (filed herewith)31.1
    
    302 Certification of Chief Executive Officer (filed herewith)31.2
    
    302 Certification of Chief Financial Officer (filed herewith)32.1
    
    Certification of Chief Executive
Officer pursuant to 18. U.S.C. Section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of
2002. (filed herewith)32.2
    
    Certification of Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of
2002 Consent of Ryder Scott Company, L.P. (filed
herewith)  (b)
    
    Reports on Form 8-K:
No reports on Form 8-K have been filed during the last quarter of
the year covered by this Report. 12




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SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, there unto duly authorized, on the
29th day
of March 2004. Sterling Gas Drilling Fund 1982By:
    
    PrimeEnergy Management CorporationManaging General PartnerBy:
    
    /S/ Charles E. Drimal Jr.Charles E. Drimal, Jr.President
 Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated and on the 29th day of March 2003. /S/ Charles E. Drimal Jr
Charles E. Drimal, Jr.
The Principal Executive Officer
    
    Director and President,
PrimeEnergy Management Corporation/S/ Beverly A. Cummings
Beverly A. Cummings
The  Principal Financial
and Accounting Officer
    
    Director and Vice President and Treasurer,
PrimeEnergy Management Corporation;
 13




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##### 



Sterling Gas Drilling Fund 1982
(a New York Limited Partnership) Index to Financial Statements and Schedules Page No.Selected Financial Data
    
    
    F-2Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    F-2Report of Independent Public Accountants
    
    
    F-5Financial Statements:Balance Sheets, December 31, 2003 and 2002
    
    
    F-6Statements of Operations for the Years Ended December 31,
2003, 2002 and 2001
    
    
    F-7Statements of Changes in Partners Equity for the Years
Ended December 31, 2003, 2002 and 2001
    
    
    F-8Statements of Cash Flows for the Years Ended December 31,
2003, 2002 and 2001
    
    
    F-9Notes to Financial Statements
    
    
    F-10Schedules:V  -
Property and Equipment - Oil and Gas Properties for
the Years Ended December 31, 2003, 2002 and 2001
    
    
    F-18VI  -  Accumulated Depreciation, Depletion, and Amortization -
Oil and Gas Properties for the Years Ended December 31,
2003, 2002 and 2001
    
    
    F-19
 All other schedules have been omitted, as the information required is either
included in the financial statements, related notes, or is not applicable. F-1




---



##### 



Item 6. SELECTED FINANCIAL DATA The following table summarizes certain selected financial data to
highlight significant trends in the Registrants financial condition and
results of operations for the periods indicated. The selected financial data
should be read in conjunction with the financial statements and related notes
included elsewhere in this report. YEAR ENDED DECEMBER 31, (000's omitted)2003
    
    2002
    
    2001
    
    2000
    
    1999Revenues
    
    $
    412
    
    
    $
    389
    
    
    $
    517
    
    
    $
    373
    
    
    $
    246Net income (loss):Limited Partners
    
    
    33
    
    
    
    67
    
    
    
    114
    
    
    
    69
    
    
    
    (24
    )General Partners
    
    
    11
    
    
    
    17
    
    
    
    27
    
    
    
    19
    
    
    
    2Per equity unit
    
    
    2.27
    
    
    
    4.66
    
    
    
    7.91
    
    
    
    4.84
    
    
    
    (1.63
    )Total assets
    
    
    721
    
    
    
    720
    
    
    
    635
    
    
    
    619
    
    
    
    651Cash distributions:Limited Partners
    
    
    36
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    General Partners
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Limited partners as
a % of original
contribution
    
    
    .25
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Item 7. MANAGEMENTS DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS 1. Liquidity: The oil and gas industry is 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 the Registrant competes with many other companies having
substantially greater financial and other resources. In accordance with the
terms of the Agreement of Limited Partnership of the Partnership, 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 for the conduct of the
Partnership business. As of December 31, 2003, the General Partners have
distributed to the Limited Partners, $1,438,437 or 10.01% of the total Limited
Partner capital contributions. 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 revenue (S.E.C. case) associated with such
reserves, discounted at 10% as of December 31, 2002 was approximately
$1,347,682 as compared to December 31, 2003 of about $2,161,436. Overall
reservoir engineering is a subjective process of estimating underground
accumulations of gas and oil that cannot be measure 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. F-2




---



##### 



In accordance with FASB Statement No. 69, December 31, 2002 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, 2003 were not considered. The spot
price for gas at December 31, 2003 was $5.97 per MMBTU. The range of spot
prices during the year 2003 was a low of $3.96 and a high of $12.20 and the
average was $5.48. The range during the first quarter of 2004 has been from
$5.08 to $7.01 with an average of $5.65. The recent futures market prices have
been in the $5.62 range. 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 Partnership was formed for the sole intention of drilling oil and gas
wells. The Partnership entered into a drilling contract with an independent
drilling 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 Partnership 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 provision of the Agreement of
Limited Partnership of the Partnership. 3. Results of operations: 2003 compared to 2002 The Partnerships overall operating revenue, excluding other income,
increased from $311,109 in 2002 to $410,026 in 2003. The Partnership received
the majority of its revenue from gas production combined with some oil
production. During 2003, the Partnerships oil and gas production declined from
1,309 barrels and 78,796 MCF in 2002 to 962 barrels and 76,802 barrels in 2003.
The average price per barrel and MCF increase when compared to 2002, from
$21.52 and $3.59 in 2002 to $27.14 and $5.00 in 2003. In December 2002 a
higher contract price for majority of the Partnerships gas was agreed upon. A
portion of the Partnerships wells were shut-in during November and December
2003 due to a fire at a compressor plant on one of the Purchasers
transportation lines servicing the Partnership wells. All wells were back on
line as of December 31, 2003 due to the main transport lines being re-routed
around the compressor plant. The Partnership did experience declines in its
gas production that can be directly attributed to this shut-in. The
Partnerships overall revenue increased due to the higher prices received per
MCF. F-3




---



##### 



Production expenses increased from $155,796 in 2002 to $220,087 in 2003.
During 2002 and 2003, the majority of production costs were for the normal
upkeep and maintenance of the wells and well sites. The variable costs
expended in both 2003 and 2002 were reasonable based upon each years production
and revenue received. General and administrative costs increased slightly from
$117,618 in 2002 to $118,426 in 2003. Management will use in-house resources
if it provides efficient and timely services to the partnership. Amounts in
both years are substantially less than the $718,500 allowed to be allocated to
the Partnership under the Partnership Agreement. The lower allocable amounts
reflect managements efforts to limit costs, both incurred and allocated to the
Partnership. The Partnership records additional depreciation, depletion and
amortization to the extent that the net capitalized costs exceed the
undiscounted future net cash flows attributable to the partnership. No
additional depletion deduction was needed in 2003 or 2002. The overall
depreciation, depletion and amortization were consistent with the rates used
and the existing property basis. 2002 compared to 2001 The Partnerships overall operating revenue, excluding other income,
decreased from $428,873 in 2001 to $311,109 in 2002. The Partnership receives
the majority of its revenue from gas production combined with some oil
production. During 2002, the Partnerships oil production increased slightly
from 1,091 barrels in 2001 to 1,309 barrels in 2002. The Partnerships gas
production was very stable and showed little change, from 78,744 MCF in 2001 to
78,796 MCFs in 2002. Both the average oil price per barrel and average price
per MCF decline when compared to 2001, from $22.82 and $5.13 in 2001 to $21.52
and $3.59 in 2002. For most of 2002 the Partnerships revenue was based upon
an average spot market price. In December 2002 a higher contract price for
majority of the Partnerships gas was agreed upon. The stable production
throughout 2002 reduced the effect of the price change on operating revenue. The Partnerships other income is a result of a cash bonus paid to the
partnership for an additional farmout agreement. The farmout agreement allows
a third party the right to drill a deep well on leasehold acreage owned by the
partnership for a period of two years. If the third party exercises their
rights within the two years the Partnership could receive an overriding royalty
interest Production expenses decreased from $226,542 in 2001 to $155,796 in 2002.
During 2002, the majority of production costs were for the normal upkeep and
maintenance of the wells and well sites. During 2001, the production expenses
included repairs and labor costs associated with the wells and well sites some
lease operating expenses vary with the amount of production sold and the
revenue received. The variable costs expended in both 2002 and 2001 were
reasonable based upon each years production and revenue received. General and
administrative costs increased slightly from $115,478 in 2001 to $117,618 in
2002. Management will use in-house resources if it provides efficient and
timely services to the partnership. Amounts in both years are substantially
less than the $718,500 allowed to be allocated to the Partnership under the
Partnership Agreement. The lower allocable amounts reflect managements efforts
to limit costs, both incurred and allocated to the Partnership. The Partnership records additional depreciation, depletion and
amortization to the extent that the net capitalized costs exceed the
undiscounted future net cash flows attributable to the partnership. No
additional depletion deduction was needed in 2001 or 2002. The overall
depreciation, depletion and amortization were consistent with the rates used
and the existing property basis. F-4




---



##### 



STERLING GAS DRILLING FUND 1982
(a New York limited partnership) REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Partners of
Sterling Gas Drilling Fund 1982: We have audited the accompanying balance sheets of Sterling Gas Drilling Fund
1982 (a New York limited partnership) as of December 31, 2003 and 2002, and the
related statements of operations, changes in partners equity, and cash flows
for the years ended December 31, 2003, 2002 and 2001. These financial
statements are the responsibility of the Partnerships management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Sterling Gas Drilling Fund
1982 as of December 31, 2003 and 2002, and the results of its operations and
cash flows for the years ended December 31, 2003, 2002 and 2001 in conformity
with accounting principles generally accepted in the United States of America. Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the index to
financial statements and schedules are presented for purposes of complying with
the Securities and Exchange Commissions rules and are not part of the basic
financial statements. These schedules have been subjected to the auditing
procedures applied in the examination of the basic financial statements and, in
our opinion, fairly state in all material respects the financial data required
to be set forth therein in relation to the basic financial statements taken as
a whole. PUSTORINO, PUGLISI & CO., LLP
New York, New York
March 29, 2004 F-5




---



##### 



STERLING GAS DRILLING FUND 1982
(a New York limited partnership) BALANCE SHEETS DECEMBER 31, 2003 AND 2002 2003
    
    2002AssetsCurrent Assets:Cash and cash equivalents (Note 2)
    
    $
    191,817
    
    
    $
    145,872Due from affiliates
    
    
    4,882
    
    
    
    20,358Total Current Assets
    
    
    196,699
    
    
    
    166,230Oil and Gas Properties  successful efforts methods
(Note 3) -
Leasehold costs
    
    
    466,804
    
    
    
    466,804Wells and related facilities
    
    
    11,970,091
    
    
    
    11,970,091Total
    
    
    12,436,895
    
    
    
    12,436,895Less  Accumulated depreciation, depletion
and amortization
    
    
    (11,912,211
    )
    
    
    (11,882,791
    )524,684
    
    
    
    554,104Total Assets
    
    $
    721,383
    
    
    $
    720,334Liabilities and Partners EquityPartners Equity:Limited partners
    
    $
    923,009
    
    
    $
    926,249General partners
    
    
    (201,626
    )
    
    
    (205,915
    )Total Partners Equity
    
    
    721,383
    
    
    
    720,334Total Liabilities and Partners Equity
    
    $
    721,383
    
    
    $
    720,334
 The Notes to Financial Statements are an integral part of these statements. F-6




---



##### 



STERLING GAS DRILLING FUND 1982
(a New York limited partnership) STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2003, 2002, 2001 2003
    
    2002
    
    2001Limited
    
    General
    
    Total
    
    Limited
    
    General
    
    Total
    
    Limited
    
    General
    
    TotalPartners
    
    Partners
    
    Partners
    
    Partners
    
    Partners
    
    Partners
    
    Partners
    
    Partners
    
    PartnersRevenue:Operating revenues
    
    $
    345,037
    
    
    $
    64,989
    
    
    $
    410,026
    
    
    $
    261,798
    
    
    $
    49,311
    
    
    $
    311,109
    
    
    $
    360,897
    
    
    $
    67,976
    
    
    $
    428,873Other revenue
(Note 10)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,804
    
    
    
    12,206
    
    
    
    77,010
    
    
    
    74,311
    
    
    
    13,997
    
    
    
    88,308Interest Income
    
    
    1,632
    
    
    
    16
    
    
    
    1,648
    
    
    
    968
    
    
    
    10
    
    
    
    978
    
    
    
    
    
    
    
    
    
    
    
    Total Revenue
    
    
    346,669
    
    
    
    65,005
    
    
    
    411,674
    
    
    
    327,570
    
    
    
    61,527
    
    
    
    389,097
    
    
    
    435,208
    
    
    
    81,973
    
    
    
    517,181Costs and Expenses:Production expenses
    
    
    185,203
    
    
    
    34,884
    
    
    
    220,087
    
    
    
    131,102
    
    
    
    24,694
    
    
    
    155,796
    
    
    
    190,635
    
    
    
    35,907
    
    
    
    226,542Depreciation,
depletion and
amortization
    
    
    29,126
    
    
    
    294
    
    
    
    29,420
    
    
    
    30,506
    
    
    
    308
    
    
    
    30,814
    
    
    
    33,674
    
    
    
    340
    
    
    
    34,014General and
administrative
expenses (Note 7)
    
    
    99,655
    
    
    
    18,771
    
    
    
    118,426
    
    
    
    98,974
    
    
    
    18,642
    
    
    
    117,616
    
    
    
    97,169
    
    
    
    18,309
    
    
    
    115,478Total Expenses
    
    
    313,984
    
    
    
    53,949
    
    
    
    367,933
    
    
    
    260,582
    
    
    
    43,644
    
    
    
    304,226
    
    
    
    321,478
    
    
    
    54,556
    
    
    
    376,034Net Income
    
    $
    32,685
    
    
    $
    11,056
    
    
    $
    43,741
    
    
    $
    66,988
    
    
    $
    17,883
    
    
    $
    84,871
    
    
    $
    113,730
    
    
    $
    27,417
    
    
    $
    141,147Net Income Per
Equity Unit (Note
2)
    
    $
    2.27
    
    
    
    
    
    
    
    
    
    
    $
    4.66
    
    
    
    
    
    
    
    
    
    
    $
    7.91
 The Notes to Financial Statements are integral part of these statements. F-7




---



##### 



STERLING GAS DRILLING FUND 1982
(a New York limited partnership) STATEMENTS OF CHANGES IN PARTNERS EQUITY FOR THE YEARS ENDED DECEMBER 31, 2003, 2002, 2001 Limited
    
    GeneralPartners
    
    Partners
    
    TotalBalance at December 31, 2000
    
    $
    745,531
    
    
    
    (251,215
    )
    
    
    494,316Net Income
    
    
    113,730
    
    
    
    27,417
    
    
    
    141,147Balance at December 31, 2001
    
    
    859,261
    
    
    
    (223,798
    )
    
    
    635,463Net Income
    
    
    66,988
    
    
    
    17,883
    
    
    
    84,871Balance at December 31, 2002
    
    
    926,249
    
    
    $
    (205,915
    )
    
    $
    720,334Distributions to partners
    
    
    (35,925
    )
    
    
    (6,767
    )
    
    
    (42,692
    )Net Income
    
    
    32,685
    
    
    
    11,056
    
    
    
    43,741Balance at December 31, 2003
    
    $
    923,009
    
    
    $
    (201,626
    )
    
    $
    721,383
 The Notes to Financial Statements are an integral part of these statements. F-8




---



##### 



STERLING GAS DRILLING FUND 1982
(a New York limited partnership) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2003, 2002, 2001 2003
    
    2002
    
    2001Cash Flows From Operating Activities:Net Income
    
    $
    43,741
    
    
    $
    84,871
    
    
    $
    141,147Adjustments to reconcile net income
to net cash provided by
operating activities:Depreciation, depletion and
Amortization
    
    
    29,420
    
    
    
    30,814
    
    
    
    34,014Changes in Assets and Liabilities:(Increase) decrease in due from
affiliates
    
    
    15,476
    
    
    
    6,149
    
    
    
    (26,507
    )Increase (Decrease) in due to
affiliates
    
    
    
    
    
    
    
    
    
    
    (124,619
    )Net Cash Provided by
Operating Activities
    
    
    88,637
    
    
    
    121,834
    
    
    
    24,035Cash Flows From Financing Activities:Distributions to partners
    
    
    (42,692
    )
    
    
    
    
    
    
    Net Cash Used in Financing Activities
    
    
    (42,692
    )
    
    
    
    
    
    
    Net Increase in cash and cash
Equivalents
    
    
    45,945
    
    
    
    121,834
    
    
    
    24,035Cash and cash equivalents, beginning of
Year
    
    
    145,872
    
    
    
    24,038
    
    
    
    3Cash and cash equivalents, end of year
    
    $
    191,817
    
    
    $
    145,872
    
    
    $
    24,038
 The Notes to Financial Statements are an integral part of these statements. F-9




---



##### 



STERLING GAS DRILLING FUND 1982
(a New York limited partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2003, 2002 AND 2001 (1) Organization and Capital Contributions: Sterling Gas Drilling Fund 1982, a New York limited partnership (the
Partnership), was formed on July 28, 1982 for the primary purpose of
acquiring, drilling, developing, operating and producing oil and gas in the
state of West Virginia. The general partners are: PrimeEnergy Management
Corporation (PEMC), a wholly owned subsidiary of PrimeEnergy Corporation (PEC),
Charles E. Drimal, Jr., Oliver J. Sterling and Samuel R. Campbell. Fourteen
thousand three hundred seventy limited partnership units, (14,370), were sold
at $1,000 per unit aggregating $14,370,000 in total limited partner capital
contributions. The general partners made no capital contributions.
Partnership operations commenced on December 22, 1982. (2)Summary of Significant Accounting Policies: Revenue Recognition: The Partnership recognizes operating revenues, consisting of sales of oil and
gas production, in the month of sale. Uncollected revenue is accrued based on
known facts and trends of the relevant oil and gas properties on a monthly
basis. Basis of Accounting: The accounts of the Partnership are maintained in accordance with accounting
practices permitted for federal income tax reporting purposes. Under this
method of accounting, (a) substantially all exploration and development costs
except leasehold and equipment costs are expensed as paid, (b) costs of
abandoned leases and equipment are expensed when abandoned, and (c)
depreciation (for equipment placed in service) is provided on an accelerated
basis. In order to present the accompanying financial statements in accordance
with generally accepted accounting principles, memorandum adjustments have been
made to account for oil and gas properties, as discussed below. Oil and Gas Producing Activities: The Partnership accounts for its oil and gas operations using the successful
efforts method of accounting on a property by property basis. The Partnership
only participates in developmental drilling. Accordingly, all costs of
drilling and equipping these wells, together with leasehold acquisition costs,
are capitalized. These capitalized costs are amortized on a property by
property basis F-10




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##### 



STERLING GAS DRILLING FUND 1982
(a New York limited partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2003, 2002 AND 2001 (2) Summary of Significant Accounting Policies  (Contd): (utilizing aggregations of common geological structures) by the
unit-of-production method based upon the ratio of production to proved
developed oil and gas reserves. Additional depreciation, depletion and
amortization may be recorded if net capitalized costs exceed the undiscounted
future net cash flows attributable to Partnership properties. (See Note 4) Federal Income Taxes: As federal income taxes are the liability of the individual partners, the
accompanying financial statements do not include any provision for federal
income taxes. (See Note 8) Limited Partners Income (Loss) Per Equity Unit: The limited partners income (loss) per equity unit is computed on the 14,370
limited partner equity units. Cash and Cash Equivalents: For purposes of the statements of cash flows the Partnership considers all
highly liquid debt instruments with maturity of three months or less to be cash
equivalents. Use of Estimates: The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates. (3)Oil and Gas Properties: The Partnership acquired leases or farmouts from PEMC at its cost. Cost is
defined as any amount paid for delay rentals, lease bonuses, if any, surveys
and other expenses including such portion of any of the general partners, or
their affiliates reasonable, necessary and actual expenses for geological,
geophysical, seismic, land, engineering, drafting, accounting, legal and other
services. During 1982, the Partnership, as reimbursement of costs for leases
it acquired from PEMC, paid PEMC $466,804. The Partnership currently pays
royalties of approximately 12.5% to 19.8% of the selling price of the gas and
oil extracted. F-11




---



##### 



STERLING GAS DRILLING FUND 1982
(a New York limited partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2003, 2002 AND 2001  (3)
    
    Oil and Gas Properties (continued):The following table sets forth certain revenue and expense data
concerning the Partnerships oil and gas activities for the years ended
December 31, 2003, 2002 and 2001: 2003
    
    2002
    
    2001Average sales price per MCF of gas
    
    $
    5.00
    
    
    $
    3.59
    
    
    $
    5.13Average sales price per BBL of
oil and other liquids
    
    $
    27.14
    
    
    $
    21.53
    
    
    $
    22.82Production expense per dollar of
operating revenue
    
    $
    0.54
    
    
    $
    0.50
    
    
    $
    0.53
  (4)
    
    Quantities of Oil and Gas Reserves:The amount of proved developed reserves presented below has been
estimated by an independent firm of petroleum engineers as of January 1,
2004. Petroleum engineers on the staff of PEC have reviewed the data
presented below, as of December 31, 2003, for consistency with current
year production and operating history. All of the Partnerships gas and
oil reserves are located within the United States: (Unaudited)GAS (MCF)
    
    OIL (BBL)Reserves as of December 31, 2000
    
    
    1,645,847
    
    
    
    15,806Revisions of previous estimates
    
    
    (212,979
    )
    
    
    (1,015
    )Production
    
    
    (78,744
    )
    
    
    (1,091
    )Reserves as of December 31, 2001
    
    
    1,354,124
    
    
    
    13,700Revisions of previous estimates
    
    
    154,234
    
    
    
    1,570Production
    
    
    (78,796
    )
    
    
    (1,309
    )Reserves as of December 31, 2002
    
    
    1,429,562
    
    
    
    13,961Revisions of previous estimates
    
    
    85,336
    
    
    
    (2,513
    )Production
    
    
    (76,802
    )
    
    
    (962
    )Reserves as of December 31, 2003
    
    
    1,438,096
    
    
    
    10,486
 F-12




---



##### 



STERLING GAS DRILLING FUND 1982
(a New York limited partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2003, 2002 AND 2001  (4)
    
    Quantities of Oil and Gas Reserves - (Contd):The revisions of previous estimates are primarily due to price changes
that have occurred during the years. If future prices were to decline,
operation of certain wells would become uneconomic, on a pretax basis, as
production levels decline with age. In accordance with the rules and
regulations of the Securities and Exchange Commission, proved reserves
exclude production which would be uneconomic. The partners are entitled
to certain tax benefits and credits, which, if available in the future,
may result in production continuing beyond that included above.Revisions arise from changes in current prices, as well as engineering
and geological data, which would alter the useful life, and therefore the
overall predicted production of each well. Future changes in these
estimates are common and would impact the reserve quantities used to
calculate depreciation, depletion, and amortization.As discussed in Note 2, the Partnership may record additional
depreciation, depletion and amortization if net capitalized costs exceed
the undiscounted future net cash flows attributable to Partnership
properties. Significant price declines affect estimated future net
revenues both directly and as a consequence of their impact on estimates
of future production. The Partnership has recorded no additional
provision in 2003, 2002 and 2001. If the additional provision had been
computed based on the limited partners interest in capitalized costs and
estimated future net revenues, rather than on the basis of total
Partnership interests, the limited partners income would not have been
reduced in 2003, 2002 and 2001. F-13




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##### 



STERLING GAS DRILLING FUND 1982
(a New York limited partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2003 2002 and 2001  (5)
    
    Allocation of Partnership Revenues, Income, Costs and Expenses:Under the terms of the Limited Partnership Agreement, all Partnership
income and expenditures, including deductions attributable thereto, are
to be allocated as follows:Drilling and completion costs (paid out of initial capital
contributions): Limited partners
    
    
    99.00
    %General partners
    
    
    1.00
    %100.00
    %
  Syndication costs sales commission and cost acquiring leases: Limited partners
    
    
    
    %General partners
    
    
    100.00
    %100.00
    %
  Offering costs up to $50,000 incurred by Dealer-Manager: Limited partners
    
    
    
    %General partners
    
    
    100.00
    %100.00
    %
  Offering costs other than $50,000 paid by the general partners
(up to a maximum of $50,000): Limited partners
    
    
    99.00
    %General partners
    
    
    1.00
    %100.00
    %
  Net Revenue from oil and gas operations, general and administrative
expenses and production operating fees: Limited partners
    
    
    84.15
    %General partners
    
    
    15.85
    %100.00
    %
  All other income, gains, losses, costs, expenses, deductions and credits: Limited partners
    
    
    99.00
    %General partners
    
    
    1.00
    %100.00
    %
 F-14




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##### 



STERLING GAS DRILLING FUND 1982
(a New York limited partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2003,2002 AND 2001  (6)
    
    Transactions With Affiliates:  (a)
    
    The payable or receivable to affiliates at December 31,
2003 and 2002 represents general and administrative and certain
other expenses incurred on behalf of the Partnership by PEC and its
subsidiaries, including amounts due for production operators fees
(Note 6(b)), and revenues collected on behalf of the Partnership.
PEMC intends to continue to make advances to the Partnership to fund
any working capital deficiencies in the future on an interest free
basis.(b)
    
    As operator of the Partnerships properties, Prime Operating
Company (POC), a subsidiary of PEC, receives, as compensation from
the Partnership, a monthly production operators fee of $273 for
each producing gas well and $925 for each producing oil or
combination gas and oil well, based on the Partnerships percentage
of working interest in the well. These fees are subject to annual
adjustments by the percentage increase in the Cost of Living Index
published by the U.S. Department of Labor over the year $ 137,115,
$92,916 and $149,542 of production operators fees were incurred,
respectively.(c)
    
    Eastern Oil Well Services Company (EOWSC), a subsidiary of
PEC, provided field services to the Partnership during the years
ending December 31, 2003, 2002 and 2001 for which it was billed
$15,940, $19,018, and $9,022, respectively.  (7)
    
    General and Administrative Expenses:In accordance with the Management Agreement, PEMC will be reimbursed for
the portion of PEMCs in-house overhead, including salaries and related
benefits, attributable to the affairs and operations of the Partnership.This amount combined with certain direct expenses for geology,
engineering, legal, accounting, auditing, insurance and other items shall
not exceed an annual amount equal to 5% of limited partner capital
contributions. Excess shall be borne by the general partners in their
individual capacity.During 2003, 2002 and 2001, the Partnership recognized general and
administrative expenses incurred on its behalf by a general partner of
$100,800 each year. F-15




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##### 



STERLING GAS DRILLING FUND 1982
(a New York limited partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2003, 2002 AND 2001  (8)
    
    Federal Income Taxes:The following is a reconciliation between the net income as reported on
the Partnerships federal income tax return and the net income (loss)
reported in the accompanying financial statements: Year Ended December 31,2003
    
    2002
    
    2001Net income as reported on the
Partnerships federal income tax return
    
    $
    73,161
    
    
    $
    115,685
    
    
    $
    175,161Depreciation, depletion and
amortization for financial reporting
purposes greater than income tax amount
    
    
    (29,420
    )
    
    
    (30,814
    )
    
    
    (34,014
    )Net income (loss) per accompanying
financial statements
    
    $
    43,741
    
    
    $
    84,871
    
    
    $
    141.147
  The tax returns of the Partnership, the qualifications of the Partnership
as such for tax purposes, and the amount of Partnership income or loss
are subject to examination by federal and state taxing authorities. If
such examinations result in changes with respect to Partnerships
qualifications or in changes to its income or loss, the tax liability of
the partners would be changed accordingly. F-16




---



##### 



STERLING GAS DRILLING FUND 1982
(a New York limited partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2003, 2002 AND 2001  (9)
    
    Major Customers:A schedule of the major purchases of the Partnerships production is as
follows: Purchaser
    
    2003
    
    2002
    
    2001Clearfield Appalachian
    
    $
    26,118
    
    
    $
    26,650
    
    
    $
    23,289Dominion Field Services
    
    $
    263,720
    
    
    $
    206,784
    
    
    $
    353,113Cabot Oil & Gas
    
    $
    46,719
    
    
    $
    31,889
    
    
    
    Eastern Pipeline Corp.
    
    $
    52,149
    
    
    $
    26,650
    
    
    
    
  In December 2002 the Partnership entered into a contract to sell a
percent of the amount of its gas sold under a fixed contract price
subject to transportation cost. The remaining gas sold by the Partnership
will be sold at current spot market prices(10)
    
    Other Revenue:The Partnerships other income for 2002 was a result of a cash bonus paid
to the partnership for a three-year farmout agreement. The farmout
agreement allows a third party the right to drill a deep well on
leasehold acreage owned by the partnership for a period of three years.
If the third party exercises their rights with in the three years the
Partnership could receive an overriding royalty interest.The Partnerships other income in 2001 is a result of a cash bonus paid
to the partnership for a two-year farmout agreement. The farmout
agreement allows a third party the right to drill a deep well on
leasehold acreage owned by the partnership for a period of two years. If
the third party exercises their rights with in the two years the
Partnership could receive an overriding royalty interest. F-17




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##### 



SCHEDULE V
STERLING GAS DRILLING FUND 1982
(a New York limited partnership) PROPERTY AND EQUIPMENT - OIL AND GAS PROPERTIES FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001 Balance at
    
    
    
    
    
    
    
    
    
    
    
    
    
    BalanceBeginning
    
    Additions
    
    
    
    
    
    Other
    
    At EndOf Year
    
    At cost
    
    Retirements
    
    Changes
    
    Of YearYear Ended December 31, 2003:Leasehold costs
    
    $
    466,804
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    466,804Wells and related equipment
    
    
    11,970,091
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,970,091$
    12,436,895
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    12,436,895Year Ended December 31, 2002:Leasehold costs
    
    $
    466,804
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    466,804Wells and related equipment
    
    
    11,970,091
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,970,091$
    12,436,895
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    12,436,895Year ended December 31, 2001:Leasehold costs
    
    $
    466,804
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    466,804Wells and related equipment
    
    
    11,970,091
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,970,091$
    12,436,895
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    12,436,895
 F-18




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##### 



SCHEDULE VI
STERLING GAS DRILLING FUND 1982
(a New York limited partnership) ACCUMULATED DEPRECIATION,
DEPLETION AND AMORTIZATION - OIL AND GAS PROPERTIES FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001 Balance at
    
    Charges to
    
    
    
    
    
    
    
    
    
    BalanceBeginning
    
    Costs and
    
    
    
    
    
    Other
    
    At EndOf Year
    
    Expenses
    
    Retirements
    
    Retirements
    
    Of YearYear Ended December 31, 2003:Leasehold costs
    
    $
    453,051
    
    
    $
    730
    
    
    $
    
    
    
    $
    
    
    
    $
    453,781Wells and related equipment
    
    
    11,429,740
    
    
    
    28,691
    
    
    
    
    
    
    
    
    
    
    
    11,458,431$
    11,882,791
    
    
    $
    29,421
    
    
    $
    
    
    
    $
    
    
    
    $
    11,912,212Year Ended December 31, 2002:Leasehold costs
    
    $
    452,285
    
    
    $
    766
    
    
    $
    
    
    
    $
    
    
    
    $
    453,051Wells and related equipment
    
    
    11,399,692
    
    
    
    30,048
    
    
    
    
    
    
    
    
    
    
    
    11,429,740$
    11,851,977
    
    
    $
    30,814
    
    
    $
    
    
    
    $
    
    
    
    $
    11,882,791Year ended December 31, 2001:Leasehold costs
    
    $
    451,441
    
    
    $
    844
    
    
    $
    
    
    
    $
    
    
    
    $
    452,285Wells and related equipment
    
    
    11,366,522
    
    
    
    33,170
    
    
    
    
    
    
    
    
    
    
    
    11,399,692$
    11,817,963
    
    
    $
    34,014
    
    
    $
    
    
    
    $
    
    
    
    $
    11,851,977
 F-19




---



##### 



EXHIBITS INDEX SequentiallyExhibit
    
    
    
    NumberedNumber
    
    Exhibit
    
    Page(3)
    
    Form of Agreement of Limited Partnership of Sterling Gas
Drilling Fund 1982 (incorporated by reference to Exhibit
(3) of Sterling Gas Drilling Fund 1982 Form 10-K for the
year ended December 31, 1994)(23)
    
    Consent of Ryder Scott Company, L.P. (filed herewith)(31.1)
    
    302 Certification of Chief
Executive Officer (filed herewith)(31.2)
    
    302 Certification of Chief
Financial Officer (filed herewith)(32.1)
    
    Certification of Chief Executive Officer pursuant to
18.U.S.C. Section 1350, as adopted pursuant to section 906
of the Sarbanes-Oxley Act of 2002. (filed herewith)(32.2)
    
    Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to section 906 of
the Sarbanes-Oxley Act of 2002 (filed herewith)