<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, 1997
                                       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                             
          STAMFORD, CONNECTICUT                            
 (Address of principal executive offices)                           06901
                                                                 (Zip Code)
                                                           

       Registrant's telephone number, including area code: (203) 358-5700

          Securities registered pursuant to Section 12(b) of the Act:
                                      NONE

          Securities registered pursuant to Section 12(g) of the Act:
                     UNITS OF LIMITED PARTNERSHIP INTERESTS
                                (Title of Class)

         Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                                                    YES X  NO
                                                                       ---   ---
         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [ ]

         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 16,
1998, 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, 1997

                                     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 1997, 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, 1998, 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.





                                     -1-
<PAGE>   3
         The availability of a ready market for any oil and gas produced by the
Partnership at acceptable prices per unit of production will depend upon
numerous factors beyond the control of the Partnership, including the extent of
domestic production and importation of oil and gas, the proximity of the
Partnership's producing properties to gas pipelines and the availability and
capacity of such pipelines, the marketing of other competitive fuels,
fluctuation in demand, governmental regulation of production, refining,
transportation and sales, general national and worldwide economic conditions,
and pricing, use and allocation of oil and gas and their substitute fuels.

         The Partnership does not currently own or lease any bulk storage
facilities or pipelines, other than adjacent to and used in connection with
producing wells.  The Partnership deals with a number of major and independent
companies for the purchase of its oil and gas production, in the areas of
production.  Sales are made under short-term contractual arrangements or
monthly spot prices. In 1997, approximately $264,700, or 85.99%, of the
Partnership's gas production was purchased by Phoenix Diversified, and about
$38,700, or 100%, of the Partnership's oil production was purchased by American
River Terminals. Neither purchaser 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. Beginning in January, 1998, American Rivers
Terminal sold its business to Ohio River Gathering. Ohio River Gathering has
assured the operating company that it will continue to purchase the
Partnership's oil production.

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 1997 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 was subject to the Crude Oil
Windfall Profit Tax Act of 1980, which imposed an excise tax on producers of
crude oil at various rates for prices received in excess of certain historical
base prices.  That Act was repealed in August, 1988.  The Partnership is also
subject to state drilling and proration regulations affecting its drilling
operations and production rates.





                                     -2-
<PAGE>   4
         The FERC continues to regulate interstate natural gas pipeline
transportation rates and service conditions pursuant to the NGA and NGPA.
Federal regulation of interstate transporters 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 efforts have significantly altered the
marketing and pricing of natural gas.  No prediction can be made as to what
additional legislation may be proposed, if any, affecting the competitive
status of a gas producer, restricting the prices at which a producer may sell
its gas, or the market demand for gas, nor can it be predicted which proposals,
including those presently under consideration, if enacted, might be effective.

         A number of legislative proposals have been introduced in Congress and
the state legislatures of various states, that, if enacted, would significantly
affect the petroleum industry.  Such proposals involve, among other things, the
imposition of land and use controls and certain measures designed to prevent
petroleum companies from acquiring assets in other energy areas.  In addition,
there is always the possibility that if market conditions change dramatically
in favor of oil and gas producers that some new form of "windfall profit" or
severance tax may be proposed for and imposed upon either oil or gas.  At the
present time it is impossible to predict which proposals, if any, will actually
be enacted by Congress or the various state legislatures.  The Partnership
believes that it will comply with all orders and regulations 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.





                                     -3-
<PAGE>   5
         As of December 31, 1997, 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.

<TABLE>
<CAPTION>
         Producing wells:
                                                                    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 and gas
production, average sales prices and average production costs as of and for the
periods indicated:

<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31,
                                                                       -----------------------
                                                      1997           1996      1995       1994        1993
                                                      ----           ----      ----       ----        ----
<S>                                               <C>              <C>        <C>           <C>       <C>
Production:
   Oil and Condensate (bbl) . . . . . . . . .           2,089        1,783      1,723        2,186      1,817
   Gas (Mcf)  . . . . . . . . . . . . . . . .         100,271      100,564    104,553       96,605    118,334
Average Price of Sales:
   Oil and Condensate ($ per bbl) . . . . . .     $     18.73        19.52      16.28        12.61      17.44
   Gas ($ per Mcf)  . . . . . . . . . . . . .     $      3.17         2.47       2.21         2.89       2.67
Production Expense per Dollar
   of Operating Revenue . . . . . . . . . . .     $      0.54         0.43       0.45         0.60       0.46
</TABLE>

OIL AND GAS RESERVES

         The Partnership's interests in proved developed oil and gas properties
have been evaluated by Ryder Scott Company 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
                  As of                                     ----------------
                  12-31                         Oil (bbls)                    Gas (Mcf)
                  -----                         ----------                    ---------
                   <S>                            <C>                            <C>
                   1993                           27,000                         2,181,000
                   1994                           12,000                         1,150,000
                   1995                           19,000                         1,909,000
                   1996                           15,700                         1,868,000
                   1997                           17,600                         1,869,700
</TABLE>





                                     -4-
<PAGE>   6
         The estimated future net revenue (using current prices and costs as of
the dates indicated, exclusive of income taxes (at a 10% discount for estimated
timing of cash flow) for the Partnership's proved developed oil and gas
reserves for the periods indicated are summarized as follows (figures rounded):

<TABLE>
<CAPTION>
                                                            Proved Developed
                                                            ----------------
                  As of                         Future Net                Present Value of
                  12-31                           Revenue                Future Net Revenue
                  -----                           -------                ------------------
                 <S>                             <C>                            <C>
                 1993                            $3,439,000                     $1,532,000
                 1994                               834,000                        415,000
                 1995                             1,727,000                        664,000
                 1996                             2,438,900                        928,400
                 1997                             2,447,600                        904,800
</TABLE>

         Since January 1, 1997, 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 1997 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 16, 1998, there were 1,076 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 1997 or 1996.  Aggregate cash
distributions to the holders of the Units as of December 31, 1997, 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 16, 1998, 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,





                                     -6-
<PAGE>   8
Prime Operating Company and Eastern Oil Well Service Company, maintain their
principal offices in Houston, Texas, with district offices in Midland, Texas,
Oklahoma City, Oklahoma, and Charleston, West Virginia.  PrimeEnergy and its
subsidiaries have about 164 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 who are involved with the conduct of the
business and operations of the Partnership.

         Charles E. Drimal, Jr., age 49, 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 44, 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.

         Bennie H. Wallace, Jr., age 45, is a Director and Vice President of
Management and has held such positions since May, 1989.  He is Acquisitions
Manager for Management, a Vice President of PrimeEnergy since March, 1989, as a
Director of PrimeEnergy since June, 1993, and is a Vice President and Director
of the operating subsidiaries.  He graduated from Louisiana State University in
1975 with a Bachelor of Science degree in petroleum engineering and is a
registered professional engineer in the States of Texas and Louisiana and was
an independent petroleum engineer engaged in the evaluation and operation of
oil and gas properties from 1983 to 1987.

         Lynne G. Pizor, age 38, 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 65, 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





                                     -7-
<PAGE>   9
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
1997 and 1996, the allocation of general and administrative expenses to the
Partnership was $85,000 and $75,000, respectively.

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 the General Partners as a group
(including affiliates) that beneficially owns more than five percent of the
Partnership Units.  The following table shows as of March 16, 1998, 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

         General Partners as a Group
           One Landmark Square
           Stamford, CT 06901   . . . . . . . . . . . . . . . . . .    1,871             13.02
</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 1997 was paid well operating
fees ranging from about $425 to $767 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 1997 and 1996, the Partnership paid an
aggregate of $128,342 and $81,117, 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.)

                          (24)    Consent of Ryder Scott Company (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 23rd day of
March, 1998.


                             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 23rd day of March, 1998.



<TABLE>
<S>                                           <C>
/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




/s/ BENNIE H. WALLACE, JR.                    Director, PrimeEnergy Management
-----------------------------------------                                     
Bennie H. Wallace, Jr.                        Corporation
</TABLE>





                                     -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, 1997 and 1996                                                    F-6

      Statements of Operations for the Years Ended December 31,
      1997, 1996 and 1995                                                                           F-7

      Statements of Changes in Partners' Equity for the Years
      Ended December 31, 1997, 1996 and 1995                                                        F-8

      Statements of Cash Flows for the Years Ended December 31,
      1997, 1996 and 1995                                                                           F-9

      Notes to Financial Statements                                                                 F-10


Schedules:

     V     -  Property and Equipment - Oil and Gas Properties for
              the Years Ended December 31, 1997, 1996 and 1995                                      F-18

     VI    -  Accumulated Depreciation, Depletion, and Amortization -
              Oil and Gas Properties for the Years Ended December 31,
              1997, 1996 and 1995                                                                   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)
                                                     --------------------------------------------------
                                                     1997       1996       1995       1994         1993
                                                     ----       ----       ----       ----         ----
                  <S>                                <C>       <C>        <C>       <C>          <C>
                  Revenues  . . . . . . . . . . .    $359      $ 283      $ 367      $ 302       $ 356
                  Net income (loss):
                     Limited Partners . . . . . .      13         15         77       (89)          10
                     General Partners . . . . . .       9         10         22        (2)          10
                     Per equity unit  . . . . . .    0.91       1.06       5.32     (6.18)        0.68
                  Total assets  . . . . . . . . .     726        754        783        826         906
                  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, 1997, the General Partners have
distributed to the Limited Partners $1,402,512 or 9.76% of the total Limited
Partner capital contributions.

         All aspects of the Partnership's operations and administration are
handled through the use of the operating and Managing General Partner's
computer systems. Both, the operations company and the Managing General Partner
are taking steps to minimize any potential computer issues with regard to any
necessary changes for the year 2000. A complete systems upgrade, which includes
but is not limited to, the year 2000 issue will be implemented within the next
year by both the operating company and the Managing General Partner. Both
companies' upgrades and year 2000 changes are part of their normal course of
business and no material costs should be allocated to the Partnership for the
implementation necessary by either company.

         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, 1997 was approximately
$904,800, as compared to December 31, 1996, of about $928,400.





                                     F-2
<PAGE>   14
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 are generally different from the quantities of gas and oil
that are ultimately recovered and such differences may have a material impact
on the Partnership's financial results and future liquidity.

         2.  Capital resources:  The 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:

         1997 compared to 1996

         Operating revenue increased from $283,908 in 1996 to $359,296 in 1997.
The partnerships gas production showed very little change from 1996 to 1997,
100,564 mcf to 100,271 mcf's, respectively. The Partnership does not receive
the bulk of its revenue from oil production but the oil produced in 1997, 2,089
barrels, was higher than oil produced in 1996, 1,783 barrels. The Partnership
generally renews its gas contracts as they come due for twelve month periods.
The Partnership was in a locked fixed price contract for all of 1997 and has
renewed its fixed price contract through November 30, 1998. The overall average
price per mcf was very favorable to the Partnership, $3.17 for 1997 as compared
to $2.47 in 1996. Overall oil and gas revenue was up significantly due to the
price increases and the very stable production.

         Production expenses showed an increase from $122,477 in 1996 to
$192,073 in 1997. The Partnership may expend funds on additional equipment, for
example lift equipment, or repairs if the operator has determined that the
equipment and related repairs expenses will have a beneficial effect on
production. The effect looked for by the operator is to increase production,
halt any further significant declines or to maintain overall production on a
particular well. These additional costs may include, but are not limited to,
additional maintenance, labor, location, access road work and other repairs to
the individual wells or the well sites. The Partnership also expended funds, in
both years, for general upkeep and maintenance at all the partnership's well
and well sites. General and administrative costs experienced a moderate
increase from $95,478 in 1996 to $105,832 in 1997. Management continues to
monitor any third party costs and use in-house resources if it will provide
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 exceeds the
undiscounted future net cash flows attributable to the Partnership. No
additional depletion was needed in 1997 or 1996. The overall depreciation,
depletion and amortization was consistent with the rates used and the existing
property basis.





                                     F-3
<PAGE>   15

         1996 compared to 1995

         Operating revenue increased from $259,107 in 1995 to $283,908 in 1996.
The Partnership experienced a mild decline in gas production from 104,553 mcf's
in 1995 to 100,564 mcf's in 1996. The decrease in mcf's for the Partnership was
offset by higher average price per mcf from $2.21 in 1995 to $2.47 in 1996.
Although the Partnership only receives a small amount of revenue from oil
production, the Partnership did benefit from higher oil prices and a consistent
amount of oil production. The Partnership generally renews is gas contracts as
they come due for twelve month periods.  The Partnership sold a majority of its
gas production through a locked fixed price contract for all of 1996 and has
renewed its fixed price contract for 1997.

         Production expenses showed a minor increase form $115,285 in 1995 to
$122,477 in 1996. Most of the production expenses incurred in 1995 and 1996
were to maintain the general upkeep of the wells and well sites.  The
Partnership did expend funds on additional capitalized well equipment. The
operator will determine if additional equipment, for example lift equipment,
will have a favorable effect on production. The beneficial effect looked for by
the operator is to increase, improve or sustain production on a particular
well. General and administrative costs experienced a minor decline from
$110,722 in 1995 to $95,478 in 1996. Management continues to monitor any third
party costs and use in-house resources if it will provide efficient and timely
services to the Partnership. Amounts in both years are substantially less then
the $718,500 allocable to the Partnership under the Partnership Agreement. The
lower amounts reflect management's effort 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 exceeds the
undiscounted future net cash flows attributable to the partnership. No
additional depletion was needed in 1995 or 1996. 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, 1997 and 1996, and the
related statements of operations, changes in partners' equity, and cash flows
for the years ended December 31, 1997, 1996 and 1995. 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, 1997 and 1996, and the results of its operations and cash
flows for the years ended December 31, 1997, 1996 and 1995 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
February 5, 1998




                                      F-5
<PAGE>   17


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

                                 BALANCE SHEETS

                           DECEMBER 31, 1997 AND 1996






<TABLE>
<CAPTION>
                                                 Assets
                                                                                              1997                   1996
                                                                                          ------------           ------------
<S>                                                                                       <C>                    <C>         
Current Assets:
  Cash and cash equivalents (Note 2)                                                      $          7           $         34
                                                                                          ------------           ------------
     Total Current Assets                                                                            7                     34
                                                                                          ------------           ------------

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             11,959,534
                                                                                          ------------           ------------
      Total                                                                                 12,436,895             12,426,338

  Less - Accumulated depreciation, depletion                                               (11,710,869)           (11,671,934)
          and amortization                                                                ------------           ------------
                                                                                               726,026                754,404
                                                                                          ------------           ------------

     Total Assets                                                                         $    726,033           $    754,438
                                                                                          ============           ============



                                   Liabilities and Partners' Equity

Current Liabilities:
  Due to affiliates (Note 6)                                                              $    322,146           $    373,007
                                                                                          ------------           ------------
     Total Current Liabilities                                                                 322,146                373,007
                                                                                          ------------           ------------

Partners' Equity:
  Limited partners                                                                             685,336                672,221
  General partners                                                                            (281,449)              (290,790)
                                                                                          ------------           ------------
     Total Partners' Equity                                                                    403,887                381,431
                                                                                          ------------           ------------

     Total Liabilities and Partners' Equity                                               $    726,033           $    754,438
                                                                                          ============           ============
</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, 1997, 1996 AND 1995





<TABLE>
<CAPTION>

                                                     1997                                           1996
                                   --------------------------------------------          --------------------------
                                   Limited           General                             Limited           General
                                   Partners          Partners           Total            Partners          Partners
                                   --------          --------          --------          --------          --------
<S>                                <C>               <C>               <C>               <C>               <C>     
Revenues:
  Operating revenues               $302,348          $ 56,948          $359,296          $238,909          $ 44,999
  Other Revenue                        
   (Note 10)                          --                --                --                --                --   
                                   --------          --------          --------          --------          --------
     Total Revenues                 302,348            56,948           359,296           238,909            44,999
                                   --------          --------          --------          --------          --------

Costs and Expenses:
  Production expenses               161,629            30,444           192,073           103,064            19,413
  Depreciation,                                                                                                       
   depletion and
   amortization                      38,546               389            38,935            40,220               406
  General and                                                                                                       
   Administrative
   expenses (Note 7)                 89,058            16,774           105,832            80,345            15,133
                                   --------          --------          --------          --------          --------
    Total Expenses                  289,233            47,607           336,840           223,629            34,952
                                   --------          --------          --------          --------          --------

     Net Income (Loss)             $ 13,115          $  9,341          $ 22,456          $ 15,280          $ 10,047
                                   ========          ========          ========          ========          ========

  Net Income (Loss) Per                                                                           
   Equity Unit (Note 2)            $    .91                                              $   1.06
                                   ========                                              ========
</TABLE>

<TABLE>
<CAPTION>
                                     1996                                1995
                                   --------          --------------------------------------------
                                                     Limited           General
                                    Total            Partners          Partners            Total
                                   --------          --------          --------          --------
<S>                                <C>               <C>               <C>               <C>     
Revenues:
  Operating revenues               $283,908          $218,039          $ 41,068          $259,107
  Other Revenue                    
   (Note 10)                           --              91,296            17,196           108,492
                                   --------          --------          --------          --------
     Total Revenues                 283,908           309,335            58,264           367,599
                                   --------          --------          --------          --------

Costs and Expenses:
  Production expenses               122,477            97,012            18,273           115,285
  Depreciation,                      
   depletion and
   amortization                      40,626            42,443               429            42,872
  General and                                                                                        
   Administrative
   expenses (Note 7)                 95,478            93,364            17,586           110,950
                                   --------          --------          --------          --------
    Total Expenses                  258,581           232,819            36,288           269,107
                                   --------          --------          --------          --------

     Net Income (Loss)             $ 25,327          $ 76,516          $ 21,976          $ 98,492
                                   ========          ========          ========          ========

  Net Income (Loss) Per                                      
                                                             
   Equity Unit (Note 2)                              $   5.32
                                                     ========

</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, 1997, 1996 AND 1995



<TABLE>
<CAPTION>
                                           Limited             General
                                           Partners            Partners             Total
                                           ---------          ---------           ---------
<S>                                        <C>                <C>                 <C>      
Balance at December 31, 1994               $ 580,425          $(322,813)          $ 257,612

Net Income                                    76,516             21,976              98,492
                                           ---------          ---------           ---------

Balance at December 31, 1995                 656,941           (300,837)            356,104

Net Income                                    15,280             10,047              25,327
                                           ---------          ---------           ---------

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
                                           =========          =========           =========
</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, 1997, 1996 AND 1995








<TABLE>
<CAPTION>
                                                           1997                1996                 1995
                                                         ---------           ---------           ---------
<S>                                                      <C>                 <C>                 <C>      
Cash Flows From Operating Activities:
 Net income (loss)                                       $  22,456           $  25,327           $  98,492
                                                         ---------           ---------           ---------
 Adjustments to reconcile net income (loss) to
  net cash provided by operating activities:
   Depreciation, depletion and amortization                 38,935              40,626              42,872

   Changes in Assets and Liabilities:
    Due to affiliates                                      (50,862)            (54,100)           (141,383)
                                                         ---------           ---------           ---------


        Total Adjustments                                  (11,927)            (13,474)            (98,511)
                                                         ---------           ---------           ---------

      Net Cash Provided (Used) by                                                                          
       Operating Activities                                 10,529              11,853                 (19)

Cash Flows from Investing Activities:
 Equipment purchases                                       (10,556)            (11,843)               --
                                                         ---------           ---------           ---------

      Net Cash Provided by Investing Activities            (10,556)            (11,843)               --
                                                         ---------           ---------           ---------

Net increase (decrease) in cash and cash                           
 equivalents                                                   (27)                 10                 (19)

Cash and cash equivalents, beginning of year                    34                  24                  43
                                                         ---------           ---------           ---------

Cash and cash equivalents, end of year                   $       7           $      34           $      24
                                                         =========           =========           =========
</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, 1997, 1996 AND 1995


(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 and,
         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, 1997, 1996 AND 1995



(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 is recorded to the extent that 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.

         Recently Issued Accounting Standards:

         The Partnership has implemented the provisions of FAS Statement No. 121
         "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
         Assets to be Disposed of." The implementation of this standard has had
         no material effect on the financial statements.



                                      F-11
<PAGE>   23



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

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1997, 1996 AND 1995


(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, 1997, 1996 and 1995:

<TABLE>
<CAPTION>
                                                      1997           1996              1995
                                                     ------         ------             -----
<S>                                               <C>             <C>             <C>      
Average sales price per MCF of gas                $    3.17       $    2.47       $    2.21
Average sales price per BBL of                        18.73           19.52           16.28
 oil and other liquids
Production expense per dollar of                        .54             .43            0.45
 operating revenue
</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, 1997. Petroleum engineers on the staff of PEC have reviewed the data
         presented below, as of December 31, 1997, 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, 1994           1,149,987               12,073
Revisions of previous estimates              863,677                8,919
Production                                  (104,553)              (1,723)
                                          ----------           ----------

Reserves as of December 31, 1995           1,909,111               19,269
Revisions of previous estimates               59,665               (1,815)
Production                                  (100,564)              (1,783)
                                          ----------           ----------

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
                                          ==========           ==========
</TABLE>


                                      F-12
<PAGE>   24




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

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1997, 1996 AND 1995







(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 current prices were to prevail
         into the future, 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 records additional
         depreciation, depletion and amortization to the extent that 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 1997, 1996 and 1995. 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 1997, 1996 and 1995.



                                      F-13
<PAGE>   25




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

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1997, 1996 AND 1995





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

         Under the terms of the Limited Partnership Agreement, all Partnership
         income and expenditures, including deductions attributable thereto, are
         to be allocated as follows:

         Drilling and completion costs (paid out of initial capital 
         contributions):
<TABLE>
<S>                                                  <C>   
Limited partners                                      99.00%
General partners                                       1.00%
                                                    -------
                                                     100.00%
                                                    =======
</TABLE>

         Syndication costs sales commission and cost acquiring leases:
<TABLE>
<S>                                                  <C>
Limited partners                                         --%
General partners                                     100.00%
                                                    -------
                                                     100.00%
                                                    =======
</TABLE>

         Offering costs up to $50,000 incurred by Dealer-Manager:
<TABLE>
<S>                                                  <C>   
Limited partners                                         --%
General partners                                     100.00%
                                                    -------
                                                     100.00%
                                                    =======
</TABLE>

         Offering costs other than $50,000 paid by the general partners (up to a
         maximum of $50,000):

<TABLE>
<S>                                                  <C>   
Limited partners                                      99.00%
General partners                                       1.00%
                                                    -------
                                                     100.00%
                                                    =======
</TABLE>

         Net Revenue from oil and gas operations, general and administrative
         expenses and production operating fees:

<TABLE>
<S>                                                  <C>   
Limited partners                                      84.15%
General partners                                      15.85%
                                                    -------
                                                     100.00%
                                                    =======
</TABLE>

         All other income, gains, losses, costs, expenses, deductions and
         credits:

<TABLE>
<S>                                                  <C>   
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, 1997, 1996 AND 1995




(6)      Transactions With Affiliates:

         (a)    The payable to affiliates at December 31, 1997 and 1996
                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
                $425 for each producing gas well and $767 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 1997, 1996 and
                1995, $120,616, $68,193 and $64,145 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 year
                ending December 31, 1997 for which it was billed $7,726.


(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 1997, 1996 and 1995, the Partnership recognized general and
         administrative expenses incurred on its behalf by a general partner of
         $85,000, $75,000, $90,000, respectively.


                                      F-15
<PAGE>   27




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

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1997, 1996 AND 1995






(8)      Federal Income Taxes:

         The following is a reconciliation between the net income (loss) 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,
                                                  -------------------------------------------------
                                                     1997                 1996               1995
                                                  -------------------------------------------------
<S>                                               <C>                 <C>                 <C>      
 Net income (loss) as                                                                               
 reported on the
 Partnership's federal
 income tax return                                $  55,489           $  63,584           $ 141,364

Depreciation, depletion and                                                                         
 amortization for financial
 reporting purposes
 greater than income
 tax amount                                         (33,033)            (38,257)            (42,872)
                                                  ---------           ---------           ---------
Net income (loss) per                                                                              
 accompanying financial                                                                            
 statements                                       $  22,456           $  25,327           $  98,492
                                                  =========           =========           =========
</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, 1997, 1996 AND 1995






 (9)     Major Customers:

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

<TABLE>
<CAPTION>
             Purchaser                                 1997               1996                1995
             ---------                                --------           --------            ------
           <S>                                        <C>                 <C>               <C>     
             CNG                                      $    -              $   -             $ 24,993
             American River Terminals                 $  38,702           $ 33,083          $ 25,862
             Phoenix Diversified                      $ 264,743           $200,452          $161,522
</TABLE>

         The Partnership renewed its gas purchase contract with Phoenix
         Diversified in December, 1997 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, 1997, 1996 AND 1995




<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, 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
                                     ===========          ===========          ===========          ===========          ===========


Year ended December 31, 1996:
  Leasehold costs                    $   466,804          $      --            $      --            $      --            $   466,804
  Wells and related equipment         11,947,691               11,843                 --                   --             11,959,534
                                     -----------          -----------          -----------          -----------          -----------
                                     $12,414,495          $    11,843          $      --            $      --            $12,426,338
                                     ===========          ===========          ===========          ===========          ===========



Year Ended December 31, 1995:
  Leasehold costs                    $   466,804          $      --            $      --            $      --            $   466,804
  Wells and related equipment         11,947,691                 --                   --                   --             11,947,691
                                     -----------          -----------          -----------          -----------          -----------
                                     $12,414,495          $      --            $      --            $      --            $12,414,495
                                     ===========          ===========          ===========          ===========          ===========
</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, 1997, 1996 AND 1995




<TABLE>
<CAPTION>
                                      Balance at           Charges to                                                     Balance
                                      Beginning            Costs and                                   Other              at End
                                       of Year              Expenses           Retirements            Changes             of Year
                                     -----------          -----------          -----------          -----------          -----------

<S>                                  <C>                  <C>                  <C>                  <C>                  <C>        
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
                                     ===========          ===========          ===========          ===========          ===========


Year ended December 31, 1996:
  Wells and related facilities       $11,184,513          $    39,604          $      --            $      --            $11,224,117
  Leasehold costs                        446,795                1,022                 --                   --                447,817
                                     -----------          -----------          -----------          -----------          -----------
                                     $11,631,308          $    40,626          $      --            $      --            $11,671,934
                                     ===========          ===========          ===========          ===========          ===========



Year Ended December 31, 1995:
  Wells and related facilities       $11,142,736          $    41,777          $      --            $      --            $11,184,513
  Leasehold costs                        445,700                1,095                 --                   --                446,795
                                     -----------          -----------          -----------          -----------          -----------
                                     $11,588,436          $    42,872          $      --            $      --            $11,631,308
                                     ===========          ===========          ===========          ===========          ===========
</TABLE>






                                      F-19


<PAGE>   31
<TABLE>
<CAPTION>
                                                                 
Exhibit                                                          
Number                        Exhibit                            
-------                       -------                            


<S>               <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)

    (24)            Consent of Ryder Scott Company (filed herewith)

    (27)            Financial Data Schedule. (filed herewith)

</TABLE>