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 SECURITIES EXCHANGE
        ACT OF 1934

                   For the Fiscal Year Ended December 31, 1997

    [ ] TRANSITION  REPORT  PURSUANT TO SECTION 13 or 15(d) OF THE  SECURITIES
        EXCHANGE  ACT OF 1934

                         Commission File Number 0-11313


                         MAY DRILLING PARTNERSHIP 1983-3
                         MAY LIMITED PARTNERSHIP 1983-3
             (Exact name of registrant as specified in its charter)


                                                                    75-1915681
                  Texas                                             75-1915685
     (State or other jurisdiction of                          (I.R.S. Employer
     incorporation or organization)                     Identification Number)

   4582 South Ulster Street Parkway
              Suite 1700
         Denver, Colorado                                                  80237
(Address of principal executive offices)                              (Zip Code)

       Registrant's telephone number, including area code: (303) 850-7373

           Securities Registered Pursuant to Section 12(b) of the Act:

                                                           Name of each exchange
Title of each class                                          on which registered
        None                                                         None

           Securities Registered Pursuant to Section 12(g) of the Act:

                     Units of Participation, $1,000 Per Unit
                                (Title of Class)

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 [ ]

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. [x]

                                                   Page 1 of 24


<PAGE>






                                       DOCUMENTS INCORPORATED BY REFERENCE:


                                                          Part of Form 10-K into
Document                                                which it is incorporated


The General Partnership Agreement and the Limited Partnership Agreement
filed as an Exhibit to Registration Statement No. 0-11313               Part IV


<PAGE>


                                                      - 12 -


                                                      PART I


ITEM 1 - BUSINESS

May Drilling Partnership 1983-3 (the "Drilling or General  Partnership") and May
Limited  Partnership  1983-3 (the "Limited  Partnership")  were organized by May
Petroleum Inc. ("May") to explore for and develop oil and gas reserves primarily
in Texas, Oklahoma and Louisiana. Funds received from the sale and production of
oil and gas reserves are used to pay the obligations of the Limited Partnership.
Funds not required by the Limited Partnership as working capital are distributed
to the participants in the Drilling Partnership and the general partner.

The general partner of the Limited Partnership is EDP Operating,  Ltd., which is
one of the operating  partnerships for Hallwood Energy Partners,  L. P. ("HEP").
The Drilling Partnership is the sole limited partner of the Limited Partnership.
The Limited  Partnership does not have any  subsidiaries,  nor does it engage in
any other kind of business.  The Limited  Partnership  has no  employees  and is
operated by Hallwood  Petroleum,  Inc. ("HPI"), a subsidiary of HEP. In February
1998, HPI employed 123 full-time employees.

Pursuant  to the terms of the  general  partnership  agreement  and the  limited
partnership  agreement,  HEP is  obligated,  from  time to time,  to  contribute
certain  amounts,  in property,  cash or unreimbursed  services,  to the Limited
Partnership.  As of December 31, 1997, all such required  contributions had been
made.

Participation in Expenses and Revenues

The principal expenses and revenues of the Limited Partnership are shared by the
general  partner  and the  Drilling  Partnership  as set forth in the  following
table.  The charges and credits to participants in the Drilling  Partnership are
shared  among the  participants  in  proportion  to their  ownership of units of
participation.

<TABLE>
<CAPTION>

                                                             Drilling              General
                                                           Partnership             Partner



<S>                                                             <C>                     <C>
Abandonment expenses (1)                                        99%                     1%

Noncapital expenses                                             99%                     1%

Direct expenses                                                 99%                     1%

Lease acquisition expenses                                                            100%

Capital expenses                                                                      100%

Oil and gas revenues                                            (2)                    (2)

Operating expenses                                              (2)                    (2)

Special projects                                                (2)                    (2)

General and administrative overhead                             (2)                    (2)
</TABLE>

     (1) Includes   expenses   that  would   otherwise  be  allocated  as  lease
         acquisition  expenses  and/or  capital  expenses  but  that  relate  to
         abandoned properties.

     (2) Such items were shared 70% by the Drilling  Partnership  and 30% by the
         general partner until December 31, 1984. As of December 31, 1984 and as
         of  December 31 of each year  thereafter,  the sharing of such items is
         adjusted so the general partner's  allocation will equal the percentage
         that the  amount  of  Limited  Partnership  expenses  allocated  to the
         general  partner bears to the aggregate  amount of Limited  Partnership
         expenses allocated to the general partner and the Drilling Partnership,
         plus 15 percentage  points,  but in no event will the general partner's
         allocation  exceed 50%.  The  sharing  ratio for each of the last three
         years was:


<PAGE>






                             1997              1996             1995
                        -    -----       -     -----       -    ----


                            
Limited Partner               57.5%           57.7%             57.9%
General Partner               42.5%           42.3%             42.1%
                             
In 1998, the sharing ratio will be 57.5% to the limited partner and 42.5% to the
general partner.

To  the  extent  that  the  characterization  of  any  expense  of  the  Limited
Partnership  depends on its deductibility  for federal income tax purposes,  the
proper  characterization  is determined by the general partner (according to its
intended  characterization  on the  Limited  Partnership's  federal  income  tax
return) in good faith at the time the expense is to be charged or credited. Such
characterization  will  control  related  charges  and  credits to the  partners
regardless of any subsequent  determination by the Internal Revenue Service or a
court of law that the reported  expenses should be otherwise  characterized  for
tax purposes.

Competition

Oil and gas must  compete with coal,  atomic  energy,  hydro-electric  power and
other  forms of energy.  See also  "Marketing"  for a  discussion  of the market
structure for oil and gas sales.

Regulation

Production and sale of oil and gas is subject to federal and state  governmental
regulations in a variety of ways including environmental regulations, labor law,
interstate  sales,  excise  taxes and federal,  state and Indian  lands  royalty
payments.  Failure  to  comply  with  these  regulations  may  result  in fines,
cancellation of licenses to do business and  cancellation  of federal,  state or
Indian leases.

The  production of oil and gas is subject to regulation by the state  regulatory
agencies in the states in which the Limited  Partnership  does  business.  These
agencies  make and enforce  regulations  to prevent  waste of oil and gas and to
protect the rights of owners to produce oil and gas from a common reservoir. The
regulatory  agencies  regulate  the amount of oil and gas  produced by assigning
allowable production rates to wells capable of producing oil and gas.

Federal Income Tax Considerations

The Limited Partnership and the General Partnership are partnerships for federal
income tax purposes.  Consequently,  they are not taxable entities;  rather, all
income, gains, losses,  deductions and credits are passed through and taken into
account by the  partners on their  individual  federal  income tax  returns.  In
general,  distributions are not subject to tax so long as such  distributions do
not exceed the partner's  adjusted tax basis. Any distributions in excess of the
partner's adjusted tax basis are taxed generally as capital gains.

Marketing

The oil and gas produced from the  properties  owned by the Limited  Partnership
has typically been marketed  through normal channels for such products.  Oil has
generally  been sold to  purchasers  at field  prices  posted  by the  principal
purchasers of crude oil in the areas where the producing properties are located.
The majority of the Limited  Partnership's  gas  production  is sold on the spot
market and is transported in intrastate and interstate  pipelines.  Both oil and
natural gas are purchased by refineries,  major oil companies,  public utilities
and other users and processors of petroleum products.


<PAGE>


Factors  which,  if they were to  occur,  might  adversely  affect  the  Limited
Partnership  include  decreases  in oil and gas prices,  the  availability  of a
market  for  production,  rising  operational  costs of  producing  oil and gas,
compliance  with and changes in  environmental  control  statutes and increasing
costs and difficulties of transportation.

Significant Customers

For the years ended December 31, 1997, 1996 and 1995, purchases by the following
companies  exceeded  10% of the  total  oil  and  gas  revenues  of the  Limited
Partnership:


                                   1997              1996             1995
                                   -----             -----            ----
                                   
Conoco Inc.                         77%              88%               94%
Marathon Petroleum Company          12%       
                                            
Although the Limited  Partnership  sells the majority of its  production  to two
purchasers,  there are numerous  other  purchasers in the area, so the loss of a
significant  customer  would not  adversely  affect  the  Limited  Partnership's
operations.

Environmental Considerations

The  exploration  for, and  development  of, oil and gas involve the extraction,
production and transportation of materials which, under certain conditions,  can
be  hazardous or can cause  environmental  pollution  problems.  In light of the
present general interest in environmental  problems,  the general partner cannot
predict what effect  possible  future  public or private  action may have on the
business  of the  Limited  Partnership.  The  Limited  Partnership's  historical
environmental  expenditures  have not been  material  and are not expected to be
material in the future.  The general partner is continually taking all action it
believes  necessary  in its  operations  to ensure  conformity  with  applicable
federal,  state  and  local  environmental  regulations  and does not  presently
anticipate  that the  compliance  with  federal,  state and local  environmental
regulations  will have a material  adverse  effect  upon  capital  expenditures,
earnings or the competitive  position of the Limited  Partnership in the oil and
gas industry.

Insurance Coverage

The Limited  Partnership is subject to all the risks inherent in the exploration
for,  and  development  of,  oil and gas,  including  blowouts,  fires and other
casualties. The Limited Partnership maintains insurance coverage as is customary
for  entities of a similar  size  engaged in  operations  similar to the Limited
Partnership's,  but  losses can occur  from  uninsurable  risks or in amounts in
excess of existing insurance  coverage.  The occurrence of an event which is not
insured  or not fully  insured  could have an adverse  impact  upon the  Limited
Partnership's earnings and financial position.

Issues Related to the Year 2000

As the year 2000 approaches, there are uncertainties concerning whether computer
systems will properly recognize date-sensitive information when the year changes
to 2000.  Systems that do not properly recognize such information could generate
erroneous data or fail.

Because  of the nature of the oil and gas  industry  and the  necessity  for the
Limited  Partnership  to make reserve  estimates and other plans well beyond the
year 2000, the Limited Partnership's  computer systems and software were already
configured to accommodate  dates beyond the year 2000.  The Limited  Partnership
believes that the year 2000 will not pose significant  operational  problems for
the Limited Partnership's  computer systems. The Limited Partnership has not yet
completed its assessment of all of its systems, or the computer systems of third
parties  with which it deals,  and it is not possible at this time to assess the
effect of a third party's  inability to  adequately  address year 2000 issues on
the operations of the Limited Partnership.
ITEM 2 - PROPERTIES

The Limited Partnership's oil and gas reserves are concentrated in properties in
south Louisiana.  The Limited  Partnership's  reserves are predominantly natural
gas,  which  accounts for 88% of estimated  future gross revenues in the Limited
Partnership's reserve report as of December 31, 1997.

Significant Properties

At December 31, 1997, the following  properties  accounted for approximately 93%
of the Limited  Partnership's  proved oil and gas reserves.  Reserve  quantities
were  obtained  from the  December  31, 1997  reserve  report  prepared by HPI's
petroleum engineers.

Boudreaux  Prospect.  The  Boudreaux  prospect is located in  Lafayette  Parish,
Louisiana.  The Limited Partnership's interest in the prospect has remaining net
proved  reserves of 26,300 bbls of oil and  1,257,000  mcf of gas as of December
31, 1997,  all of which are developed  and  producing at December 31, 1997.  The
Limited Partnership's working interest in this prospect ranges up to 3.4%.

Meaux Prospect.  The Meaux prospect is located in Lafayette  Parish,  Louisiana.
The Limited  Partnership's  interest in the  prospect has  remaining  net proved
reserves of 100 bbls of oil and 52,900 mcf of gas as of December 31,  1997,  all
of which  are  developed  and  producing  at  December  31,  1997.  The  Limited
Partnership's working interest in this prospect is 19.8%.


ITEM 3  -  LEGAL PROCEEDINGS

For a description of legal proceedings affecting the Limited Partnership, please
refer to Item 8 - Note 4.


ITEM 4  -  SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS

No matter was submitted to a vote of  participants  during the fourth quarter of
1997.



                                                      PART II


ITEM 5  -  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
           MATTERS

     a)  The registrant's  securities consist of partnership interests which are
         not traded on any exchange and for which no established  public trading
         market exists.

     b)  As of December 31, 1997, there were approximately 770 holders of record
         of partnership interests in the Drilling Partnership.


<PAGE>


c) Distributions paid by the Limited Partnership were as follows (in thousands):


                      General      Limited
                      Partner      Partner


       1997              $205         $278
       1996               305          419
       1995               144          144


ITEM 6  -  SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>


                                                                   For the Limited Partnership
                                                              As of or for the Year Ended December 31,
                                    1997              1996             1995              1994             1993
                               -    -----       -     -----       -    -----       -     -----       -    ----
                                                                (In thousands)

<S>                                <C>              <C>              <C>               <C>                <C>   
Total revenues                     $   818          $   960          $   628           $   661            $1,183
Oil and gas revenues                   809              951              619               648             1,170
Net income                             530              625              255               282               339
Working capital                        413              297              316               258               779
Total assets                         1,052            1,010            1,110             1,150             2,117
Partners' capital                    1,032              985            1,084             1,117             1,763
</TABLE>
                                  

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Liquidity and Capital Resources

Material changes in the Limited  Partnership's cash position for the years ended
December 31, 1997 and 1996 are summarized as follows:


                                                    1997              1996
                                              -     -----       -     ----

                                                        (In thousands)

Cash provided by operating activities              $ 580              $ 766
Distributions to partners                           (483)              (724)
Additions to oil and gas properties                  (35)               (38)
                                                    ------             -----
Increase in cash                                  $   62             $    4
                                                   ======              =====

Cash provided by operating  activities in 1997 was used for distributions to the
partners and additions to oil and gas  properties.  The Limited  Partnership has
net working capital of $413,000 as of December 31, 1997.  This working  capital,
together with future net cash flows  generated  from  operations  may be used to
fund future  distributions.  Future distributions depend on, among other things,
continuation of current or higher oil and gas prices, markets for production and
future development costs.


<PAGE>


The Limited  Partnership's ability to generate funds adequate to meet its future
needs will be largely  dependent upon its ability to continue to further develop
its existing reserves. Proved reserves and discounted future net revenues valued
at year-end  prices  (discounted  at 10% and before  general and  administrative
expenses)  from proved  reserves were estimated at 28,000 bbls and 1,418,000 mcf
valued  at  $3,115,000  in 1997 and  32,000  bbls and  1,644,000  mcf  valued at
$5,430,000  in 1996.  The  decrease in  discounted  future net  revenues and the
fluctuation in the  quantities  resulted from a decrease in year end oil and gas
prices, as well as current year production and changes in the estimated rates of
future production on certain wells.

Results of Operations

1997 Compared to 1996

Oil Revenue

Oil revenue decreased $16,000 during 1997 as compared with 1996. The decrease is
comprised  of a decrease in the average oil price from $21.70 per barrel in 1996
to $19.99 per barrel in 1997, combined with a 7% decrease in production as shown
in the table  below.  The  decrease in  production  is  primarily  due to normal
production declines.

Gas Revenue

Gas revenue  decreased  $126,000 during 1997 as compared with 1996. The decrease
is due to a decrease  in the average gas price from $2.93 per mcf during 1996 to
$2.81 per mcf during 1997,  combined with an 11% decrease in production as shown
below.  The  decrease  in  production  is  primarily  due to  normal  production
declines.

The following  table  summarizes the Limited  Partnership's  share of production
from the Limited Partnership's significant properties for 1997 and 1996.

<TABLE>
<CAPTION>

                                                                                           Net Production

                                                                1997                                1996
                                                                ----                                ----

                                                Oil               Gas              Oil               Gas
Parish, State and Well                         (Bbls)            (Mcf)            (Bbls)            (Mcf)



     Lafayette, Louisiana
<S>                  <C>                           <C>           <C>                 <C>             <C>   
         Hutchinson #1                             81            25,303              105             32,513
         Meaux Prospect                                                  
         Richard #1                               496            38,904              481             33,837
         Boudreaux Prospect                                              
         A. L. Boudreaux #1                     3,851           181,371            4,222            208,938
         G. S. Boudreaux Estate #1                 66             3,243               70              3,578
         Hallwood Fontenot #1                      26             1,927               20              2,126
         Other properties                         283             3,358              267              4,782
                                                -----           -------              ---             ------
         Total Net Production                   4,803           254,106            5,165            285,774
                                                =====           =======            =====            =======
</TABLE>

Lease Operating

Lease  operating  expense  decreased  $34,000  during 1997 as compared with 1996
primarily due to lower salt water  disposal  costs  resulting  from the workover
procedures  performed on the A.L.  Boudreaux #1 and the G.S. Boudreaux Estate #1
during 1997 which lowered the production of salt water.



<PAGE>


General and Administrative

General and  administrative  expenses  decreased  $8,000 during 1997 as compared
with 1996  primarily  due to a decrease in the  allocation  of overhead from the
general partner.

Depletion

Depletion  expense  decreased  $14,000  during 1997 as compared with 1996 due to
production declines and lower capitalized costs during 1997.

Litigation Settlement

Litigation  settlement  expense during 1997 and 1996 represents  amounts paid in
connection with the settlement of property related claims.

Professional Services and Other

Professional services and other expense increased $3,000 during 1997 as compared
with 1996 due to an increase in legal expense  incurred in  connection  with the
settlement of property related claims and an increase in numerous  miscellaneous
items, none of which is individually significant.

1996 Compared to 1995

Oil Revenue

Oil revenue  increased $ 15,000 during 1996 as compared with 1995.  The increase
is  comprised  of an increase in the average oil price from $17.68 per barrel in
1995 to  $21.70  per  barrel  in  1996  partially  offset  by a 5%  decrease  in
production as shown in the table below.  The decrease in production is primarily
due to normal production declines.

Gas Revenue

Gas revenue  increased  $317,000 during 1996 as compared with 1995. The increase
is due to an increase in the average gas price from $1.84 per mcf during 1995 to
$2.93 per mcf during 1996,  combined  with a 1% increase in  production as shown
below. The increase in production is due to increased state allowable production
limits, partially offset by normal production declines.

The following  table  summarizes the Limited  Partnership's  share of production
from the Limited Partnership's significant properties for 1996 and 1995.


<PAGE>



<TABLE>
<CAPTION>



                                                                  Net Production

                                                 1996                          1995
                                                 ----                          ----

                                                Oil              Gas               Oil              Gas
Parish, State and Well                        (Bbls)            (Mcf)            (Bbls)            (Mcf)
     Lafayette, Louisiana
<S>                                              <C>             <C>                <C>             <C>   
         Hutchinson #1                           105             32,513             142             25,750
         Meaux Prospect                                                 
         Richard #1                              481             33,837             410             36,876
         Boudreaux Prospect                                             
         A. L. Boudreaux #1                    4,222            208,938           4,419            209,316
         G. S. Boudreaux Estate #1                70              3,578              85              4,352
         Hallwood Fontenot #1                     20              2,126              11              1,368
     Other Properties                            267              4,782            398               5,245
                                                 ---              -----           ----              ------
                                               5,165            285,774           5,465            282,907     
         Total Net Production                  =====            =======           =====            =======  
</TABLE>
                                

Lease Operating

Lease  operating  expense  decreased  $13,000  during 1996 as compared with 1995
primarily due to the lower operating  expenses resulting from the implementation
of cost saving measures during 1996.

Production Taxes

Production  taxes increased $2,000 during 1996 as compared with 1995 as a result
of the increase in gas production as described above.

General and Administrative

General and  administrative  expenses  decreased  $5,000 during 1996 as compared
with 1995 due to a decrease  in the  allocation  of  overhead  from the  general
partner.

Depletion

Depletion  expense  decreased  $12,000  during 1996 as compared with 1995 due to
production declines and lower capitalized costs during 1996.

Litigation Settlement

Litigation  settlement expense during 1996 represents amounts paid in connection
with the settlement of a property related lawsuit.


<PAGE>


ITEM  8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>

                                           INDEX TO FINANCIAL STATEMENTS

                                                                                                               Page

FINANCIAL STATEMENTS:

<S>                                                                                                           <C>
Independent Auditors' Report                                                                                     12

Balance Sheets at December 31, 1997 and 1996 -
May Drilling Partnership 1983-3                                                                                  13

Balance Sheets at December 31, 1997 and 1996 -
May Limited Partnership 1983-3                                                                                   14

Statements of Operations for the Years Ended
December 31, 1997, 1996 and 1995 -
May Limited Partnership 1983-3                                                                                   15

Statements  of Changes in  Partners'  Capital for the Years Ended  December  31,
1997, 1996 and 1995 -
May Limited Partnership 1983-3                                                                                   16

Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995 -
May Limited Partnership 1983-3                                                                                   17

Notes to Financial Statements - May Drilling Partnership 1983-3
and May Limited Partnership 1983-3                                                                            18-21

SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION (UNAUDITED)                                                         22

</TABLE>


<PAGE>


                          INDEPENDENT AUDITORS' REPORT



To the Partners of May Drilling Partnership 1983-3 and
     May Limited Partnership 1983-3:

We have audited the  financial  statements  of May Drilling  Partnership  1983-3
("General   Partnership")   and  May  Limited   Partnership   1983-3   ("Limited
Partnership")  as of December  31, 1997 and 1996 and for each of the three years
in the period ended December 31, 1997, listed in the accompanying  index at Item
8.  These  financial  statements  are the  responsibility  of the  Partnerships'
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  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,  such  financial  statements  present  fairly,  in all material
respects,  the  financial  position of the General  Partnership  and the Limited
Partnership  at December 31, 1997 and 1996,  and the results of  operations  and
cash flows of the Limited  Partnership for each of the three years in the period
ended  December  31,  1997 in  conformity  with  generally  accepted  accounting
principles.



DELOITTE & TOUCHE LLP

Denver, Colorado
February 27, 1998



<PAGE>

<TABLE>
<CAPTION>

                                          MAY DRILLING PARTNERSHIP 1983-3
                                                  BALANCE SHEETS
                                                  (In thousands)



                                                                               December 31,              December 31,
                                                                                      1997                      1996



ASSETS

<S>                                                                               <C>                        <C> 
Investment in May Limited Partnership 1983-3                                      $532                       $530
                                                                                   ====                       ===





PARTNERS' CAPITAL

Partners' Capital                                                                 $532                       $530
                                                                                   ====                       ===





<FN>


Note:    The  statements  of  operations,  changes in partners  capital and cash
         flows for May Drilling  Partnership  1983-3 are not  presented  because
         such  information  is  equal  to the  Limited  Partners'  share of such
         activity as presented in the May Limited  Partnership  1983-3 financial
         statements.  The May Drilling Partnership carries its investment in May
         Limited  Partnership  1983-3  on the  equity  method.  The May  Limited
         Partnership  1983-3 financial  statements should be read in conjunction
         with this balance sheet.
</FN>





















<FN>


                                    The    accompanying  notes  are an  integral
                                           part of the financial statements.
</FN>
</TABLE>


<PAGE>
<TABLE>
<CAPTION>


                                          MAY LIMITED PARTNERSHIP 1983-3
                                                  BALANCE SHEETS
                                                  (In thousands)



                                                                               December 31,              December 31,
                                                                                   1997                      1996

ASSETS

CURRENT ASSETS
<S>                                                                            <C>                        <C>      
     Cash and cash equivalents                                                 $     219                  $     157
     Accrued oil and gas revenues                                                    146                        165
     Due from affiliate                                                               68   
                                                                                    -----                       ----
              Total                                                                  433                        322
                                                                                           
OIL AND GAS PROPERTIES, using the                                                          
     full cost method of accounting                                               16,582                     16,547
         Less accumulated depletion                                              (15,963)                   (15,859)
                                                                                  -------                    -------
              Net oil and gas properties                                             619                        688
                                                                                  -------                    -------
                                                                                           
TOTAL ASSETS                                                                    $  1,052                   $  1,010
                                                                                 ========                   =======
                                                                                           
                                                                                           
                                                                                           
LIABILITIES AND PARTNERS' CAPITAL                                                          
                                                                                           
CURRENT LIABILITIES                                                                        
     Accounts payable and accrued liabilities                                 $       20                 $       21
     Due to affiliate                                                                                             4
                                                                                  -------                    -------         
              Total                                                                   20                         25
                                                                                  -------                    -------         
                                                                                           
PARTNERS' CAPITAL                                                                          
                                                                                           
     General partner                                                                 500                        455
     Limited partner                                                                 532                        530
                                                                                   -------                    -------        
              Total                                                                1,032                        985
                                                                                   -------                    -------        
                                                                                           
                                                                                           
TOTAL LIABILITIES AND PARTNERS' CAPITAL                                         $  1,052                    $  1,010
                                                                                  ========                   =======









<FN>

                                    The    accompanying  notes  are an  integral
                                           part of the financial statements.
</FN>
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                          MAY LIMITED PARTNERSHIP 1983-3
                                             STATEMENTS OF OPERATIONS
                               FOR THE YEARS ENDED  DECEMBER 31, 1997,  1996 AND 1995
                               (In  thousands,  except  for Unit and per Unit Information)

                                                              1997                 1996                 1995
                                                              -----                -----                ----

REVENUES
                                                           
<S>                                                       <C>                   <C>                   <C>      
     Oil revenue                                          $     96              $    112              $      97
     Gas revenue                                               713                   839                    522
     Interest income                                             9                     9                      9
                                                            --------             --------                   ----
              Total                                            818                   960                    628
                                                              ----                ------                    ---
COSTS AND EXPENSES                                                   
     Lease operating                                            44                    78                     91
     Production taxes                                           39                    39                     37
     General and administrative                                 80                    88                     93
     Depletion                                                 104                   118                    130
     Litigation settlement                                       9                     3                     13
     Professional services and other                            12                     9                      9
                                                             -----               -------                 ------
              Total                                            288                   335                    373
                                                            ------               -------                    ---
                                                                     
NET INCOME                                                $    530              $    625               $    255
                                                            =======              =======                =======
                                                                     
                                                                     
                                                                     
ALLOCATION OF NET INCOME:                                            
     General Partner                                      $    250              $    289               $    135
                                                            ======               =======                =======
     Limited Partner                                      $    280              $    336               $    120
                                                            ======               =======                =======
     Per initial $1,000 Limited Partner                                
                                                              
         investment                                        $ 24.07               $ 28.89                $ 10.32
                                                            ======                ======                 ======
                                                                     
     Weighted average initial $1,000 Limited                           
         Partner investment units outstanding               11,629                 11,629                 11,629
                                                            ======                 ======                 ======
                                                          















<FN>

                                    The    accompanying  notes  are an  integral
                                           part of the financial statements.
</FN>
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                          MAY LIMITED PARTNERSHIP 1983-3
                                    STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
                               FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                                                  (In thousands)



                                                                    General           Limited
                                                                    Partner           Partner           Total



<S>               <C> <C>                                           <C>             <C>                 <C>   
BALANCE, December 31, 1994                                          $   480         $   637             $1,117

     Net income                                                         135             120                255
     Distributions                                                     (144)            (144)              (288)
                                                                       ----             ----               ----
BALANCE, December 31, 1995                                              471             613              1,084

     Net income                                                         289             336                625
     Distributions                                                     (305)            (419)              (724)
                                                                       ----             ----               ----
BALANCE, December 31, 1996                                              455             530                985

     Net income                                                         250             280                530
     Distributions                                                     (205)            (278)              (483)
                                                                       ----             ----               ----
BALANCE, December 31, 1997                                          $   500         $   532             $1,032
                                                                     ======          ======              =====



























<FN>

                                    The    accompanying  notes  are an  integral
                                           part of the financial statements.
</FN>
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                          MAY LIMITED PARTNERSHIP 1983-3
                                             STATEMENTS OF CASH FLOWS
                               FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                                                  (In thousands)



                                                                 1997                1996                1995
                                                                 -----               -----               ----

OPERATING ACTIVITIES:
<S>                                                           <C>                   <C>                 <C>    
     Net income                                               $   530               $   625             $   255
     Adjustment to  reconcile  net  income  to net cash                
       provided  by  operating activities:                             
              Depletion                                           104                   118                 130
     Changes in assets and liabilities provided (used) cash:           
         Accrued oil and gas revenues                              19                   (15)                (57)
         Due from affiliate                                        (68)                  39                 (28)
         Accounts payable and accrued                                   
              liabilities                                           (1)                  (5)                 (7)
         Due to affiliate                                           (4)                   4
                                                                   ----                 ----                ----
                  Net cash provided by                                  
                      operating activities                        580                   766                 293
                                                                  ----                 ----                ----
INVESTING ACTIVITIES -                                                 
     Additions to oil and gas properties                           (35)                 (38)                (39)
                                                                  ----                 ----                ---- 
FINANCING ACTIVITIES -                                                 
     Distributions to partners                                    (483)                (724)               (288)
                                                                  ----                 ----                ---- 
NET INCREASE (DECREASE) IN CASH                                         
     AND CASH EQUIVALENTS                                          62                     4                 (34)
                                                                       
CASH AND CASH EQUIVALENTS:                                             
     BEGINNING OF YEAR                                            157                   153                 187
                                                                  ----                 ----                ----
     END OF YEAR                                              $   219               $   157             $   153
                                                                 =====               ======              ======











<FN>

                                    The    accompanying  notes  are an  integral
                                           part of the financial statements.
</FN>
</TABLE>


<PAGE>


                                          MAY DRILLING PARTNERSHIP 1983-3
                                                        AND
                                          MAY LIMITED PARTNERSHIP 1983-3

                                           NOTES TO FINANCIAL STATEMENTS


(1)      ACCOUNTING POLICIES AND OTHER MATTERS

         General Partnership

         May Drilling  Partnership  1983-3,  a Texas  general  partnership  (the
         "General Partnership"), was organized by May Petroleum Inc. ("May") for
         the purpose of oil and gas exploration  through May Limited Partnership
         1983-3 (the "Limited Partnership").  The General Partnership was formed
         on November 7, 1983,  with  investors  ("Participants")  subscribing an
         aggregate  of  $11,629,000  in  assessable  $1,000  units.   After  the
         expenditure  of  the  initial   contributions   of  the   Participants,
         additional mandatory assessments from each Participant are provided for
         under the terms of the general partnership agreement in an amount up to
         25% of the  initial  contribution  of the  Participant.  No  additional
         assessments have been made.

         The general partnership  agreement requires that the manager,  Hallwood
         Energy  Partners,  L.  P.  ("HEP"),  offer  to  repurchase  partnership
         interests  from  Participants  for cash at amounts to be  determined by
         appraisal  (as set forth in the  partnership  agreement) of the Limited
         Partnership's  net assets no later than  December 31, 1988,  and during
         each succeeding year, if such net assets are positive.  The manager has
         made  repurchase  offers in all years  since 1989 and intends to make a
         repurchase offer in 1998.

         As the General  Partnership is the sole limited  partner of the Limited
         Partnership, and there are no other revenues or expenses of the General
         Partnership, its results of operations, changes in partners capital and
         cash  flows are equal to the  limited  partner's  share of the  Limited
         Partnership's  results of operations,  changes in partners  capital and
         cash  flows as set forth  herein.  Therefore,  separate  statements  of
         operations,  changes  in  partners  capital  and  cash  flows  are  not
         presented for the General Partnership.

         Limited Partnership

         The Limited Partnership, a Texas limited partnership,  was organized by
         May  and  the  General  Partnership,  for  the  purpose  of oil and gas
         exploration and the production of crude oil,  natural gas and petroleum
         products. The Limited Partnership's oil and gas reserves are located in
         prospects  in south  Louisiana.  Among other  things,  the terms of the
         Limited  Partnership  agreement  (the  "Agreement")  give  the  general
         partner the authority to borrow funds. The Agreement also requires that
         the  general  partner's  total  capital  contributions  to the  Limited
         Partnership as of each year end, including  unrecovered general partner
         acreage and  equipment  advances,  must be  compared  to total  Limited
         Partnership   expenditures   from   inception  to  date,  and  if  such
         contributions  are less than 15% of such  expenditures,  an  additional
         contribution  in the amount of the deficiency is required.  At December
         31, 1997, no  additional  contributions  were  necessary to comply with
         this requirement.

         On June 30, 1987,  May sold to HEP all of its economic  interest in the
         Limited  Partnership  and  account  receivable  balances  due  from the
         Limited  Partnership.  HEP became the  general  partner of the  Limited
         Partnership in 1988.



<PAGE>


         Sharing of Costs and Revenues

         Capital costs, as defined by the Agreement, for commercially productive
         wells  and  the  costs  related  to the  organization  of  the  Limited
         Partnership  are borne by the  general  partner.  Noncapital  costs and
         direct  expenses,  as defined by the  Agreement,  are charged 1% to the
         general  partner  and 99% to the  limited  partner.  Oil and gas sales,
         operating expenses and general and  administrative  overhead are shared
         so that the general partner's allocation will equal the percentage that
         the amount of Limited Partnership  expenses,  as defined,  allocated to
         the  general   partner  bears  to  the  aggregate   amount  of  Limited
         Partnership  expenses  allocated to the general partner and the limited
         partner,  plus 15 percentage  points,  but in no event will the general
         partner's allocation exceed 50%. The sharing ratio for each of the last
         three years was as follows:


                              1997              1996             1995
                              -----       -     -----       -    ----


                              
Limited Partnership           57.5%            57.7%             57.9%
General Partner               42.5%            42.3%             42.1%
                              
         Significant Customers

         For the years ended December 31, 1997, 1996 and 1995,  purchases by the
         following  companies  exceeded 10% of the total oil and gas revenues of
         the Limited Partnership:


                                           1997              1996          1995
                                      -    -----       -     -----    -    ----

Conoco Inc.                                 77%           88%               94%
Marathon Petroleum Company                  12%

         Although the Limited  Partnership  sells the majority of its production
         to two purchasers,  there are numerous other purchasers in the area, so
         the loss of a  significant  customer  would not  adversely  affect  the
         Limited Partnership's operations.

         Income Taxes

         No  provision  for federal  income  taxes is included in the  financial
         statements  of  the  Limited  Partnership  or the  General  Partnership
         because,  as  partnerships,  they are not subject to federal income tax
         and the tax effects of their  activities  accrue to the  partners.  The
         partnerships' tax returns, the qualification of the General and Limited
         Partnerships as partnerships  for federal income tax purposes,  and the
         amount of taxable  income or loss are subject to examination by federal
         and state taxing authorities. If such examinations result in changes to
         the  partnerships'  taxable  income or loss,  the tax  liability of the
         partners could change accordingly.

         Oil and Gas Properties

         The Limited  Partnership follows the full cost method of accounting for
         oil  and  gas  properties  and,  accordingly,   capitalizes  all  costs
         associated  with  the  exploration  and  development  of  oil  and  gas
         reserves.

         The capitalized costs of evaluated properties,  including the estimated
         future costs to develop proved  reserves,  are amortized on the unit of
         production  basis.  Full cost  amortization per dollar of gross oil and
         gas revenues was $.13 in 1997, $.12 in 1996 and $.21 in 1995.

         Capitalized  costs are  limited to an amount not to exceed the  present
         value of estimated  future net cash flows. No valuation  adjustment was
         required  in 1997,  1996 or 1995.  Significant  price  declines  in the
         future  could  cause the Limited  Partnership  to  recognize  valuation
         adjustments  and could reduce the amount of future cash flow  available
         for distributions and operations.


<PAGE>


         Generally no gains or losses are  recognized on the sale or disposition
         of oil and gas properties.  Maintenance and repairs are charged against
         income when incurred.

         Gas Balancing

         The Limited  Partnership  uses the sales method of  accounting  for gas
         balancing.  Under  this  method,  the  Limited  Partnership  recognizes
         revenue on all of its sales of production,  and any over  production or
         under production is recovered at a future date.

         As of December 31, 1997,  the net imbalance to the Limited  Partnership
         interest is not considered material.  Current imbalances can be made up
         with production from existing wells or from wells which will be drilled
         as offsets to current producing wells.

         Use of Estimates

         The preparation of the financial statements for the Limited Partnership
         and  General   Partnership  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 revenues and expenses
         during the  reporting  period.  Actual  results could differ from these
         estimates.

         Related Party Transactions

         Hallwood Petroleum,  Inc. ("HPI"), a subsidiary of the general partner,
         pays all costs and  expenses of  operations  and  receives all revenues
         associated with the Limited Partnership's properties. At month end, HPI
         distributes revenues in excess of costs to the Limited Partnership.

         The amount due from HPI was $68,000 at December 31, 1997 and the amount
         due to HPI was $4,000 as of December 31, 1996. These balances represent
         net revenues less operating costs and expenses.

         Cash Flows

         All highly liquid  investments  purchased with an original  maturity of
         three months or less are considered to be cash equivalents.

         Reclassifications

         Certain  reclassifications  have been made to prior  years'  amounts to
         conform to the classifications used in the current year.


(2)  GENERAL AND ADMINISTRATIVE OVERHEAD

         HPI conducts the day to day operations of the Limited  Partnership  and
         other  affiliated  partnerships  of HEP.  The  costs of  operating  the
         entities are allocated to each entity based upon the time spent on that
         entity.  General and  administrative  overhead  allocated by HPI to the
         Limited  Partnership  totaled  $59,000  in  1997,  $65,000  in 1996 and
         $80,000 in 1995.




<PAGE>


(3)  INCOME TAXES

         As a result of the  differences in the accounting  treatment of certain
         items for  income  tax  purposes  as  opposed  to  financial  reporting
         purposes, primarily depreciation, depletion and amortization of oil and
         gas properties and the  recognition of intangible  drilling costs as an
         expense or capital item, the income tax basis of oil and gas properties
         differs  from the  basis  used for  financial  reporting  purposes.  At
         December  31,  1997 and  1996,  the  income  tax  bases of the  Limited
         Partnership's  oil and gas properties were  approximately  $242,000 and
         $264,000, respectively.


(4)  LITIGATION SETTLEMENT

         In June 1996,  the  Limited  Partnership  and the other  parties to the
         lawsuits  styled Lamson  Petroleum  Corporation v. Hallwood  Petroleum,
         Inc. et al.  settled  the  lawsuits.  The  plaintiffs  in the  lawsuits
         claimed they had valid leases  covering  streets and roads in the units
         of the A.L. Boudreaux #1 well, G.S. Boudreaux #1 well, Paul Castille #1
         well,  Evangeline  Shrine  Club  #1  well  and  Duhon  #1  well,  which
         represented approximately 3% to 4% of the Limited Partnerships interest
         in these  properties,  and  they  were  entitled  to a  portion  of the
         production from the wells dating from February 1990. In the settlement,
         the  Limited  Partnership  and the  plaintiffs  agreed to  cross-convey
         interests in certain leases to one another, and the Limited Partnership
         agreed to pay the plaintiffs  $75,000.  The Limited Partnership had not
         recognized  revenue  attributable to the contested leases since January
         1993.  These  revenues,  totaling  $72,000,  had been  placed in escrow
         pending the  resolution  of the  lawsuits.  The excess of the cash paid
         over the  escrowed  amounts,  is  reflected  as  litigation  settlement
         expense in the accompanying financial statements.  The cross-conveyance
         of the  interests  in the leases  resulted in a decrease in the Limited
         Partnerships reserves of $45,000 in future net revenues,  discounted at
         10% based on oil and gas prices in effect as of December 31, 1996.


<PAGE>


                  SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION
                                   (Unaudited)


The following  tables contain certain costs and reserve  information  related to
the Limited Partnership's oil and gas activities. The Limited Partnership has no
long-term  supply  agreements  and all  reserves  are located  within the United
States.

Costs Incurred -

<TABLE>
<CAPTION>

                                                              For the Years Ended December 31,

                                                1997              1996              1995
                                                ----              ----              ----
                                                             (In thousands)



<S>                                             <C>                <C>                <C> 
            Development costs                   $  35              $ 38               $ 39
                                                 ====               ===                ===
</TABLE>

Oil and Gas Reserves (valued at year-end prices discounted at 10%) -

<TABLE>
<CAPTION>

                                                     1997                          1996                             1995
                                                     ----                          ----                             ----

                                       Bbls          Mcf            Bbls            Mcf            Bbls             Mcf



Total Proved Reserves:
<S>                                  <C>          <C>                 <C>         <C>                <C>          <C>  
   Beginning of period               32           1,644               39          1,844              39           1,870
   Revisions to previous                                  
     estimates                        1              28               (2)            86               5             257
   Production                       (5)            (254)              (5)          (286)             (5)            (283)
                                    ---            ----               ---          ----              ---          ------
       End of Period                28            1,418               32          1,644              39           1,844
                                    ===           =====               ==          =====              ==           =====

Proved Developed Reserves:
     Beginning of period             32           1,644               39          1,844              39           1,870
                                     ==           =====               ==          =====              ===          =====
   End of period                     28           1,418               32          1,644              39           1,844
                                     ==           =====               ==          =====              ==           =====
</TABLE>
                                   
Certain reserve value  information is provided  directly to partners pursuant to
the Agreement. Accordingly, such information is not presented herein.


<PAGE>


ITEM 9 -   DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

           None.


                                    PART III


ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

           The  Drilling  Partnership  and  Limited  Partnership  are managed by
           affiliates of HEP and do not have directors or executive officers.


ITEM 11 - EXECUTIVE COMPENSATION

           The  partnerships  pay no salaries or other  direct  remuneration  to
           officers,  directors or key employees of the general  partner or HPI.
           The Limited  Partnership  reimburses the general  partner for general
           and administrative costs incurred on behalf of the partnerships.  See
           Note 2 to the Financial Statements.


ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

           To the knowledge of the general partner,  no person owns of record or
           beneficially more than 5% of the Drilling  Partnership's  outstanding
           units,  other than HEP, the address of which is 4582 S. Ulster Street
           Parkway,   Denver,   Colorado  80237,  and  which  beneficially  owns
           approximately  37.2% of the outstanding units. The general partner of
           HEP is HEPGP Ltd.


ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

           For  information  with  respect to the  Limited  Partnership  and its
           relationships and transactions with the general partner,  see Part I,
           Item 1 and Part II, Item 7.


                                     PART IV


ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

              a.  Financial Statements and Schedules:
                  See Index at Item 8.

              b.  Reports on Form 8-K - None.

              c.  Exhibits:

                     3.1 The  General  Partnership  Agreement  and  the  Limite
                         Partnership  Agreement  filed  as an Exhibit to 
                         Registration Statement No. 0-11313, are incorporated
                         herein by reference.


<PAGE>


                                                  - 24 -
SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  as amended,  the  Partnerships  have duly caused this report to be
signed on their behalf by the undersigned, thereunto duly authorized.


                         MAY DRILLING PARTNERSHIP 1983-3
                         MAY LIMITED PARTNERSHIP 1983-3

                            By:   EDP OPERATING, LTD.,
                                    General Partner

                            By:   HEPGP LTD.,
                                    General Partner

                            By:   HALLWOOD G.P., INC.,
                                    General Partner



                                By: /s/William L. Guzzetti
                                 William L. Guzzetti
                                 President, Chief Executive Officer and Director

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 and on the dates indicated.

<TABLE>
<CAPTION>

                Signature                                             Title                         Date



<S>                                                       <C>                               <C>
/s/Robert S. Pfeiffer                                     Vice President                     February 27, 1998
Robert S. Pfeiffer                                       (Principal Accounting Officer)
</TABLE>