<PAGE>   1
--------------------------------------------------------------------------------
                       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, 1999
                                       OR

[ ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934
                FOR THE TRANSITION PERIOD FROM      TO

                         COMMISSION FILE NO. 2-78441

                       STERLING GAS DRILLING FUND 1982
            (Exact name of registrant as specified in its charter)


        NEW YORK                                       13-3147901
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                     Identification No.)

       ONE LANDMARK SQUARE                                06901
       STAMFORD, CONNECTICUT                            (Zip Code)
(Address of principal executive offices)

       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.

     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, 2000,
was: 14,370.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      NONE
--------------------------------------------------------------------------------
<PAGE>   2

                         STERLING GAS DRILLING FUND 1982

                             FORM 10-K ANNUAL REPORT
                            FOR THE FISCAL YEAR ENDED
                                DECEMBER 31, 1999

                                     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 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, telephone (203) 358-5700. The Managing
General Partner of the Partnership is PrimeEnergy 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, was 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 1999, 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, 2000, 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.

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
<PAGE>   3
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 1999, approximately $186,712, or 83.36% of the Partnership's gas production
was purchased by Phoenix Diversified, and about $18,157, or 100%, of the
Partnership's oil production was purchased by the American Refining Group. 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.

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 1999 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,


                                       -2-
<PAGE>   4
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.


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 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, 1999, 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.




                                       -3-
<PAGE>   5

     Producing wells:

<TABLE>
<CAPTION>
                          Gross             Net
                          -----             ---
<S>                       <C>             <C>
Oil Wells .......             0            0.00
Gas Wells .......            59           48.05
Producing acres..         3,014           2,455
</TABLE>

         (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:

<TABLE>
<CAPTION>

                                                                 YEAR ENDED DECEMBER 31,
                                             ------------------------------------------------------------------
                                             1999           1998          1997            1996             1995
                                             ----           ----          ----            ----             ----
<S>                                        <C>            <C>          <C>             <C>              <C>
    Production
    Oil and Condensate (bbl)                1,226            982         2,089           1,783            1,723
    Gas (Mcf)                              88,511         99,089       100,271         100,564          104,553
    Average Price of Sales:
    Oil and Condensate ($ per bbl)         $14.81         $11.69        $18.73          $19.52           $16.28
    Gas ($ per Mcf)                         $2.53          $3.14         $3.17           $2.47            $2.21
    Production Expense per Dollar
    Of Operating Revenue                    $0.51          $0.48         $0.54           $0.38            $0.45
</TABLE>

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):

<TABLE>
<CAPTION>
                      Proved Developed
                      ----------------
                  Oil (bbls)     Gas (Mcf)
                  ----------     ---------
<S>                 <C>          <C>
      1995          19,000       1,909,000
      1996          15,700       1,868,000
      1997          17,600       1,869,700
      1998          14,900       1,846,400
      1999          12,800       1,506,850
</TABLE>

     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


                                      -4-
<PAGE>   6
Partnership's proved developed oil and gas reserves for the periods indicated
are summarized as follows (figures rounded):

<TABLE>
<CAPTION>
                                            Proved Developed
                                            ----------------
                                    Future Net           Present Value of Future
        As of 12-31                  Revenue                   Net Revenue
        -----------                 ----------           -----------------------
<S>                                 <C>                         <C>
            1995                    $1,727,000                  $664,000
            1996                    $2,438,900                  $928,400
            1997                    $2,447,600                  $904,800
            1998                    $2,215,200                  $768,500
            1999                    $2,256,800                  $936,700
</TABLE>

     Since January 1, 1999, 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 1999 for vote by the holders of
Partnership Units.


                                     PART II

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

     There is no market for the Limited Partnership Units (the "Units") of the
Partnership. As of March 15, 2000, there were 947 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. There were no
distributions to the holders of Units in 1999 or 1998. Aggregate cash
distributions to the holders of the Units as of December 31, 1999, was
$1,402,512.

     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.


                                      -5-
<PAGE>   7

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.

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 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.

                                    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, 2000,
Management acts as the Managing General Partner in a total of 51 limited
partnerships and joint ventures, of which 5 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



                                      -6-
<PAGE>   8
offices in Midland, Texas, Oklahoma City, Oklahoma, and Charleston, West
Virginia. PrimeEnergy and its subsidiaries have about 168 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 52, 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 47, 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 40, 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.

     James F. Gilbert, age 67, 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 1999 and 1998, the allocation of general and administrative
expenses to the Partnership was $85,000 for both years.



                                      -7-
<PAGE>   9


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     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, 2000, 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.

<TABLE>
<CAPTION>
                                                                         Number
         Name and Address of Beneficial Owner                           Of Units             Percent
         ------------------------------------                           --------             -------
<S>                                                                     <C>                  <C>
         PrimeEnergy Management Corporation
           One Landmark Square
           Stamford, CT 06901 ..........................................  1,249              8.69%

         PrimeEnergy Corporation
           One Landmark Square
           Stamford, CT 06901 ..........................................  2,285             15.90%
</TABLE>

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 1999 was paid well operating
fees ranging from about $495 to $895 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 1999 and 1998, the Partnership paid an
aggregate of $76,356 and $105,516, respectively, in such fees and expenses.



                                      -8-
<PAGE>   10

                                     PART IV

ITEM 14. 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.   Exhibits:

               (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)

               (27) Financial Data Schedule. (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.


                                      -9-
<PAGE>   11

                                   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, thereunto duly authorized, on the 28th day of
March, 2000.

                                    Sterling Gas Drilling Fund 1982
                                    By: PrimeEnergy Management Corporation
                                        Managing General Partner



                                    By: /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 28th day of March, 2000.



/s/ CHARLES E. DRIMAL, JR.
------------------------------------- Director and President,
Charles E. Drimal, Jr.                PrimeEnergy Management Corporation
The Principal Executive Officer




/s/ BEVERLY A. CUMMINGS
------------------------------------- Director and Vice President and Treasurer,
Beverly A. Cummings                   PrimeEnergy Management Corporation;
The Principal Financial
  and Accounting Officer



                                      -10-
<PAGE>   12


                         STERLING GAS DRILLING FUND 1982
                        (A NEW YORK LIMITED PARTNERSHIP)

                   Index to Financial Statements and Schedules


<TABLE>
<CAPTION>
                                                                                                      Page No.
                                                                                                      --------
<S>                                                                                                   <C>
Selected Financial Data                                                                                 F-2

Management's Discussion and Analysis of Financial Condition
and Results of Operations                                                                               F-2


Report of Independent Public Accountants                                                                F-5

Financial Statements:

       Balance Sheets, December 31, 1999 and 1998                                                       F-6

       Statements of Operations for the Years Ended December 31,
       1999, 1998 and 1997                                                                              F-7

       Statements of Changes in Partners' Equity for the Years
       Ended December 31, 1999, 1998 and 1997                                                           F-8

       Statements of Cash Flows for the Years Ended December 31,
       1999, 1998 and 1997                                                                              F-9

       Notes to Financial Statements                                                                    F-10


Schedules:

      V     -  Property and Equipment - Oil and Gas Properties for
               the Years Ended December 31, 1999, 1998 and 1997                                         F-18

      VI    -  Accumulated Depreciation, Depletion, and Amortization -
               Oil and Gas Properties for the Years Ended December 31,
               1999, 1998 and 1997                                                                      F-19
</TABLE>

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
<PAGE>   13

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.

<TABLE>
<CAPTION>
                                                  YEAR ENDED DECEMBER 31, (000's omitted)
                                              ------------------------------------------------
                                              1999       1998     1997       1996         1995
                                              ----       ----     ----       ----         ----
<S>                                         <C>            <C>    <C>        <C>          <C>
Revenues..........................            $246         $323   $359      $ 283        $ 367
Net income (loss):
   Limited Partners...............             (24)          14     13         15           77
   General Partners...............               2            9      9         10           22
   Per equity unit................           (1.65)        1.00   0.91       1.06         5.32
Total assets......................             651          689    726        754          783
Cash distributions:
   Limited Partners...............              --           --     --         --           --
   General Partners...............              --           --     --         --           --
   Limited partners as a % of
   original contribution..........              --           --     --         --           --
</TABLE>


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, 1999, the General Partners have distributed to the Limited
Partners $1,402,512 or 9.76% 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, 1999 was approximately $936,729, as
compared to December 31, 1998, of about $768,500. Overall reservoir engineering
is a subjective process of estimating underground accumulations of gas and oil
that can not be measure in an exact manner. The accuracy of any reserve estimate
is a function of the quality of available data and of the engineering and
geological interpretation and judgment. Accordingly, reserve estimates

                                       F-2
<PAGE>   14

are generally different from the quantities of gas and oil that are ultimately
recovered and such differences may have a material impact on the Partnership's
financial results and future liquidity.

     The Year 2000 (Y2K) issue is the definition and resolution of potential
problems resulting from computer application programs or imbedded chip
instruction sets utilizing two-digits, as opposed to four digits, to define a
specific year. The Partnership did not experience any problems as a result of
the Year 2000 issue.


     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:

     1999 compared to 1998

     The Partnership's overall operating revenue declined from $322,770 in 1998
to $246,405 in 1999. The Partnership receives the majority of its revenue from
gas production combined with some oil production. During 1999 both the
Partnership's oil production and average price per barrel were higher than the
previous year, from 982 bbls and $11.69 in 1998 to 1,226 bbls and $14.81 in
1999. The main contributing factor to the overall revenue decline was lower gas
production, from 99,089 mcf in 1998 to 88,511 mcf in 1999 and a significantly
lower average price per mcf, $3.14 in 1998 to $2.53 in 1999. Production declines
can be of a normal nature, a result of minor shut-ins due to repairs or even as
a result of variations in pressure flows between the wells gas lines and the
main transport line.

     Production expenses showed a decrease from $156,536 in 1998 to $122,394 in
1999. During 1999 and 1998, the production related expenditures included
repairs, maintenance, labor, supplies and other normal upkeep expenses. Some
lease operating expenses vary with the amount of production sold. The variable
costs expended in both 1999 and 1998 were reasonable based upon each years
production. General and administrative costs remained relatively unchanged from
$106,143 in 1998 to $107,109 in 1999. 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 1999 or 1998. The overall depreciation, depletion and amortization
was consistent with the rates used and the existing property basis.

                                      F-3
<PAGE>   15

     1998 compared to 1997

     The Partnership's overall operating revenue declined from $359,296 in 1997
to $322,770 in 1998. The Partnership receives the majority of its revenue from
gas production combined with some oil production. During 1998 both the
Partnership's oil production and average price per barrel were substantially
lower than the previous year, from 2,089 bbls and $18.73 in 1997 to 982 bbls and
$11.69 in 1998. Also contributing to the overall revenue decline was lower gas
production, from 100,271 mcf in 1997 to 99,089 mcf in 1998 and a slightly lower
average price per mcf, from $3.17 in 1997 to $3.14 in 1998. Production declines
can be of a normal nature, a result of minor shut-ins due to repairs or even as
a result of variations in pressure flows between the wells gas lines and the
main transport line.

     Production expenses showed a decrease from $192,073 in 1997 to $156,536 in
1998. During 1998, the production related expenditures included repairs,
maintenance, labor, supplies and other normal upkeep expenses. The operator of
the Partnership wells during 1997 expended funds on supplemented maintenance,
labor, location, access road work and other repairs to the individual wells or
the well sites in order to maintain production or minimize future declines.
General and administrative costs remained relatively unchanged from $105,832 in
1997 to $106,143 in 1998. 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 allocable 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 was needed
in 1998 or 1997. The overall depreciation, depletion and amortization was
consistent with the rates used and the existing property basis.


                                      F-4
<PAGE>   16
                         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, 1999 and 1998, and the
related statements of operations, changes in partners' equity, and cash flows
for the years ended December 31, 1999, 1998 and 1997. 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 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, 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, 1999 and 1998, and the results of its operations and cash
flows for the years ended December 31, 1999, 1998 and 1997 in conformity with
generally accepted accounting principles.

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 3, 2000

                                      F-5
<PAGE>   17

                         STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                                 BALANCE SHEETS

                           DECEMBER 31, 1999 AND 1998


<TABLE>
<CAPTION>
                                     Assets
                                                                                             1999                  1998
                                                                                        ------------           -----------
<S>                                                                                      <C>                   <C>
Current Assets:
  Cash and cash equivalents (Note 2)                                                    $          4          $         20
                                                                                        ------------          ------------
     Total Current Assets                                                                          4                    20
                                                                                        ------------          ------------
Oil and Gas Properties-successful efforts methods (Note 3)-(Schedules V and VI):
  Leasehold costs                                                                            466,804               466,804
  Wells and related facilities                                                            11,970,091            11,970,091
                                                                                        ------------          ------------
      Total                                                                               12,436,895            12,436,895
  Less-Accumulated depreciation, depletion
            and amortization                                                             (11,785,739)          (11,747,491)
                                                                                        ------------          ------------
                                                                                             651,156               689,404
                                                                                        ------------          ------------
     Total Assets                                                                       $    651,160          $    689,424
                                                                                        ============          ============
</TABLE>

<TABLE>
<CAPTION>
                        Liabilities and Partners' Equity
<S>                                                                                      <C>                   <C>
Current Liabilities:
  Due to affiliates (Note 6)                                                            $    245,150          $    262,068
                                                                                        ------------          ------------
     Total Current Liabilities                                                               245,150               262,068
                                                                                        ------------          ------------
Partners' Equity:
  Limited partners                                                                           676,005               699,647
  General partners                                                                          (269,995)             (272,291)
                                                                                        ------------          ------------
     Total Partners' Equity                                                                  406,010               427,356
                                                                                        ------------          ------------
     Total Liabilities and Partners' Equity                                             $    651,160          $    689,424
                                                                                        ============          ============
</TABLE>
   The Notes to Financial Statements are an integral part of these statements.

                                      F-6
<PAGE>   18

                         STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                            STATEMENTS OF OPERATIONS

              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>


                                          1999                                    1998
                         -------------------------------------    ------------------------------------
                          Limited        General                  Limited        General
                          Partners      Partners      Total       Partners      Partners       Total
                         ----------    ----------   ----------    ----------   ----------   ----------
<S>                      <C>           <C>          <C>           <C>          <C>          <C>
Revenues:
  Operating revenues     $  203,756    $   38,378   $  242,134    $  271,611   $   51,159   $  322,770
  Other revenue
   (Note 10)                  3,594           677        4,271            --           --           --
                         ----------    ----------   ----------    ----------   ----------   ----------

     Total Revenue          207,350        39,055      246,405       271,611       51,159      322,770
                         ----------    ----------   ----------    ----------   ----------   ----------

Costs and Expenses:
  Production expenses       102,995        19,399      122,394       131,725       24,811      156,536
  Depreciation,
   depletion and
   amortization              37,865           383       38,248        36,256          366       36,622
  General and
   administrative
   expenses (Note 7)         90,132        16,977      107,109        89,319       16,824      106,143
                         ----------    ----------   ----------    ----------   ----------   ----------
    Total Expenses          230,992        36,759      267,751       257,300       42,001      299,301
                         ----------    ----------   ----------    ----------   ----------   ----------

     Net Income (Loss)   $  (23,642)   $    2,296   $  (21,346)   $   14,311   $    9,158   $   23,469
                         ==========    ==========   ==========    ==========   ==========   ==========
  Net Income (Loss) Per  $    (1.65)                              $     1.00
                         ==========                               ==========
   Equity Unit (Note 2)



</TABLE>

<TABLE>
<CAPTION>
                                        1997
                         ------------------------------------
                          Limited      General
                          Partners     Partners      Total
                         ----------   ----------   ----------
<S>                      <C>          <C>          <C>
Revenues:
  Operating revenues     $  302,348   $   56,948   $  359,296
  Other revenue
   (Note 10)                     --           --           --
                         ----------   ----------   ----------

     Total Revenue          302,348       56,948      359,296
                         ----------   ----------   ----------

Costs and Expenses:
  Production expenses       161,629       30,444      192,073
  Depreciation,
   depletion and
   amortization              38,546          389       38,935
  General and
   administrative
   expenses (Note 7)         89,058       16,774      105,832
                         ----------   ----------   ----------

    Total Expenses          289,233       47,607      336,840
                         ----------   ----------   ----------

     Net Income (Loss)   $   13,115   $    9,341   $   22,456
                         ==========   ==========   ==========
  Net Income (Loss) Per  $      .91
                         ==========
   Equity Unit (Note 2)
</TABLE>


   The Notes to Financial Statements are an integral part of these statements.

                                      F-7
<PAGE>   19




                         STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                    STATEMENTS OF CHANGES IN PARTNERS' EQUITY

              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<TABLE>
<CAPTION>

                                           Limited               General
                                           Partners              Partners                Total
                                           --------              ---------              --------
<S>                                         <C>                   <C>                    <C>
Balance at December 31, 1996                672,221               (290,790)              381,431

Net Income                                   13,115                  9,341                22,456
                                           --------              ---------              --------

Balance at December 31, 1997                685,336               (281,449)              403,887

Net Income                                   14,311                  9,158                23,469
                                           --------              ---------              --------

Balance at December 31, 1998                699,647               (272,291)              427,356

Net Income (Loss)                           (23,642)                 2,296               (21,346)
                                           --------              ---------              --------

Balance at December 31, 1999                676,005               (269,995)              406,010
                                           ========              =========              ========
</TABLE>
   The Notes to Financial Statements are an integral part of these statements.


                                      F-8
<PAGE>   20

                         STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                            STATEMENTS OF CASH FLOWS

              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
                                                              1999             1998               1997
                                                            --------        --------            --------
<S>                                                          <C>               <C>              <C>
Cash Flows From Operating Activities:
 Net income (loss)                                           $(21,346)         $ 23,469         $ 22,456
 Adjustments to reconcile net income (loss) to
  net cash provided by operating activities:
   Depreciation, depletion and amortization                    38,248            36,622           38,935
   Changes in Assets and Liabilities:
    Due to affiliates                                         (16,918)          (60,078)         (50,862)
                                                             --------          --------          -------
      Net Cash Provided (Used) by
       Operating Activities                                       (16)               13           10,529
                                                             --------          --------         --------
Cash Flows from Investing Activities:
 Equipment purchases                                             -                 -             (10,556)
                                                             --------          --------         --------
      Net Cash Used by Investing Activities                      -                 -             (10,556)
                                                             --------          --------         --------
Net increase (decrease) in cash and cash
 equivalents                                                      (16)               13              (27)
Cash and cash equivalents, beginning of year                       20                 7               34
                                                             --------          --------         --------
Cash and cash equivalents, end of year                       $      4          $     20         $      7
                                                             ========          ========         ========
</TABLE>

   The Notes to Financial Statements are an integral part of these statements.

                                      F-9
<PAGE>   21

                         STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 AND 1997


(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), formerly known as K.R.M. Petroleum Corporation (KRM), 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
<PAGE>   22

                         STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 AND 1997


(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 a 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.

                                      F-11
<PAGE>   23

                         STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 AND 1997


(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.

     The following table sets forth certain revenue and expense data concerning
     the Partnership's oil and gas activities for the years ended December 31,
     1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                                1999           1998          1997
                                               ------         ------        ------
<S>                                            <C>            <C>           <C>
     Average sales price per MCF of gas        $ 2.53         $ 3.17        $ 3.17
     Average sales price per BBL of
       oil and other liquids                   $14.81         $11.72        $18.73
     Production expense per dollar of
       operating revenue                       $ 0.51         $ 0.48        $ 0.54
</TABLE>

(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, 2000.
     Petroleum engineers on the staff of PEC have reviewed the data presented
     below, as of December 31, 1999, for consistency with current year
     production and operating history. All of the Partnership's gas and oil
     reserves are located within the United States:

<TABLE>
<CAPTION>
                                                         (Unaudited)
                                                 ----------------------------
                                                 GAS (MCF)          OIL (BBL)
                                                 ---------          ---------
<S>                                              <C>                <C>
     Reserves as of December 31, 1996            1,868,212             15,671
     Revisions of previous estimates               101,804              4,018
     Production                                   (100,271)            (2,089)
                                                 ---------            -------
     Reserves as of December 31, 1997            1,869,745             17,600
     Revisions of previous estimates                74,716             (1,719)
     Production                                    (98,083)              (980)
                                                 ---------            -------
     Reserves as of December 31, 1998            1,846,378             14,901
     Revisions of previous estimates              (251,382)              (886)
     Production                                    (88,511)            (1,226)
                                                 ---------             ------
     Reserves as of December 31, 1999            1,506,852             12,789
                                                 =========            =======
</TABLE>

                                      F-12
<PAGE>   24

                         STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 AND 1997


(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 1999, 1998 and 1997. 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 1999, 1998 and 1997.

                                      F-13
<PAGE>   25

                         STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 AND 1997


(5)  Allocation of Partnership Revenues, Income, Costs and Expenses:

<TABLE>

<S>                                                                              <C>
     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%
                                                                                 =======
</TABLE>

                                      F-14
<PAGE>   26

                         STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 AND 1997


(6)  Transactions With Affiliates:

     (a)  The payable to affiliates at December 31, 1999 and 1998 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 advances
          to finance the Partnerships' loan payments net of 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 $495 for each
          producing gas well and $895 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 in which production began.
          During 1999, 1998 and 1997, $62,122, $104,060 and $120,616 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, 1999, 1998, and 1997 for which it was billed $14,234,
          $1,456, and $7,726 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 1999, 1998 and 1997, the Partnership recognized general and
     administrative expenses incurred on its behalf by a general partner of
     $85,000, for each year.

                                      F-15
<PAGE>   27

                         STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 AND 1997


(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:

<TABLE>
<CAPTION>
                                                       Year Ended December 31,
                                           ----------------------------------------------
                                             1999                1998              1997
                                           --------            --------          --------
<S>                                        <C>                 <C>               <C>
          Net income as
          reported on the
          Partnership's federal
          income tax return                $ 13,510            $ 54,460          $ 55,489
         Depreciation, depletion and
          amortization for financial
          reporting purposes
          greater than income
          tax amount                        (34,856)            (30,991)          (33,033)
                                           --------            --------          --------
         Net income (loss) per
          accompanying financial
          statements                       $(21,346)           $ 23,469          $ 22,456
                                           ========            ========          ========
</TABLE>

     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.

     The Tax Reform Act of 1976 provides that no part of any depletion deduction
     with respect to oil and gas wells is to be determined by the Partnership
     but must be computed separately by the partners. Thus, cost or percentage
     depletion, as applicable, must be computed by each partner so that a
     specific depletion computation can be made when each partner files his U.S.
     income tax return. Information is furnished to the partners to compute the
     depletion deduction.

                                      F-16
<PAGE>   28
                         STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1999, 1998 AND 1997


(9)  Major Customers:

     A schedule of the major purchases of the Partnership's production is as
     follows:

<TABLE>
<CAPTION>
     Purchaser                       1999               1998              1997
     ---------                     --------           --------          --------
<S>                                <C>                <C>               <C>
     American Refining Group       $ 18,157           $ 12,123          $ 38,702
     Phoenix Diversified           $186,712           $271,216          $264,743
</TABLE>

     The Partnership renewed its gas purchase contracts in December, 1999
     resulting in a fixed price for one year.


(10) Other Revenue:

     Other revenue represents settled claims against Columbia Gas Transmission
     Corp. (Columbia) arising from amounts due from Columbia when they declared
     bankruptcy. No significant additional claims are expected concerning this
     matter.

                                      F-17
<PAGE>   29

                                   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, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
                                        Balance at                                                                   Balance
                                        Beginning               Additions                           Other            at End
                                         of Year                 at Cost        Retirements        Changes           of Year
                                        -----------             ---------       -----------        ---------        -----------
<S>                                     <C>                     <C>              <C>               <C>              <C>
Year Ended December 31, 1999:
  Leasehold costs                       $   466,804             $       -        $        -        $       -        $   466,804
  Wells and related equipment            11,970,091                     -                 -                -         14,970,091
                                        -----------             ---------        ----------        ---------        -----------
                                        $12,436,895             $       -        $        -        $       -        $12,436,895
                                        ===========             =========        ==========        =========        ===========
Year ended December 31, 1998:
  Leasehold costs                       $   466,804             $       -        $        -        $       -        $   466,804
  Wells and related equipment            11,970,091                     -                 -                -         11,970,091
                                        -----------             ---------        ----------        ---------        -----------
                                        $12,436,895             $       -        $        -        $       -        $12,436,895
                                        ===========             =========        ==========        =========        ===========
Year Ended December 31, 1997:
  Leasehold costs                       $   466,804             $       -        $        -        $       -        $   466,804
  Wells and related equipment           $11,959,534                10,556                 -                -         11,970,091
                                        -----------             ---------        ----------        ---------        -----------
                                        $12,426,338             $  10,556        $        -        $       -        $12,436,895
                                        ===========             =========        ==========        =========        ===========
</TABLE>

                                      F-18
<PAGE>   30

                                   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, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
                                          Balance at          Charges to                                             Balance
                                          Beginning           Costs and                               Other           at End
                                            of Year            Expenses         Retirements        Retirements       of Year
                                          -----------         ----------        -----------        -----------     -----------
<S>                                       <C>                 <C>                <C>                <C>            <C>
Year Ended December 31, 1999:
  Wells and related facilities            $11,297,799         $  37,298          $       -          $       -      $11,335,097
  Leasehold costs                             449,692               950                  -                  -          450,642
                                          -----------         ---------          ---------          ---------      -----------
                                          $11,747,491         $  38,248          $       -          $       -      $11,785,739
                                          ===========         =========          =========          =========      ===========
Year ended December 31, 1998:
  Wells and related facilities            $11,262,086         $  35,713          $       -          $       -      $11,297,799
  Leasehold costs                             448,783               909                  -                  -          449,692
                                          -----------         ---------          ---------          ---------      -----------
                                          $11,710,869         $  36,622          $       -          $       -      $11,747,491
                                          ===========         =========          =========          =========      ===========
Year Ended December 31, 1997:
  Wells and related facilities            $11,224,117         $  37,969          $       -          $       -      $11,262,086
  Leasehold costs                             447,817               966                  -                  -          448,783
                                          -----------         ---------          ---------          ---------      -----------
                                          $11,671,934         $  38,935          $       -          $       -      $11,710,869
                                          ===========         =========          =========          =========      ===========
</TABLE>

                                      F-19
<PAGE>   31


                                  EXHIBIT INDEX
<TABLE>
<CAPTION>
                                                                                       SEQUENTIALLY
EXHIBIT                                                                                  NUMBERED
NUMBER                           EXHIBIT                                                   PAGE
-------                          -------                                               ------------
<S>      <C>      <C>                                                                  <C>
         (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 (filed herewith)

        (27)      Financial Data Schedule. (filed herewith)
</TABLE>