<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, 1996
                                       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                                06901
(Address of principal executive offices)                    (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 14, 1997,
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, 1996

                                     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 1996, 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, 1997, 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 1996, approximately $200,000, or 81.79%, of the Partnership's
gas production was purchased by Phoenix Diversified, and about $33,083, 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.

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 1996 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.

     The FERC continues to regulate interstate natural gas pipeline
transportation rates and service conditions pursuant to the NGA and NGPA.
Federal regulation of interstate



                                      -2-
<PAGE>   4
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, 1996, the Partnership had ownership interests in the
following gross and net producing oil and gas wells and gross and net producing
acres.(1) The Partnership has no material undeveloped leasehold, mineral or
royalty acreage.

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

<TABLE>
<CAPTION>
                                                       YEAR ENDED DECEMBER 31,
                                        ----------------------------------------------------
                                          1996       1995       1994       1993       1992
                                        --------   --------   --------   --------   --------
<S>                                      <C>        <C>         <C>       <C>        <C>
Production:
   Oil and Condensate (bbl) .........      1,783      1,723      2,186      1,817      3,226
   Gas (Mcf) ........................    100,564    104,553     96,605    118,334    129,196
Average Price of Sales:
   Oil and Condensate ($ per bbl) ...   $  19.52      16.28      12.61      17.44      18.72
   Gas ($ per Mcf) ..................   $   2.47       2.21       2.89       2.67       2.18
Production Expense per Dollar
   of Operating Revenue .............   $   0.43       0.45       0.60       0.46       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)
          -----                  ----------                       ---------
          <C>                      <C>                            <C>
          1992                     28,000                         1,863,000
          1993                     27,000                         2,181,000
          1994                     12,000                         1,150,000
          1995                     19,000                         1,909,000
          1996                     15,700                         1,868,000
</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
          -----                           ----------          ------------------
          <C>                             <C>                     <C>
          1992                            $1,909,000              $  878,000
          1993                             3,439,000               1,532,000
          1994                               834,000                 415,000
          1995                             1,727,000                 664,000
          1996                             2,438,900                 928,400
</TABLE>

     Since January 1, 1996, 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 1996 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 14, 1997, there were 1,122 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 1996. Aggregate cash distributions to
the holders of the Units as of December 31, 1996, is $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 14, 1997, Management acts as the Managing General Partner in a total of
51 limited partnerships and joint ventures, of which 6 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 155 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 48, 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 43, 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 44, 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 37, 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 64, 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
1996, the allocation of general and administrative expenses to the Partnership
was $75,000.

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 14, 1997, 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 ..............................      1,513   10.53
</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 1996 was paid well operating
fees ranging from about $416 to $752 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 1996, the Partnership paid an aggregate of
$81,117 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 20th day of
March, 1997.


                                        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 20th day of March, 1997.


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




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




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



                                      -10-
<PAGE>   12




                        STERLING GAS DRILLING FUND 1982

                              FINANCIAL STATEMENTS

                           DECEMBER 31, 1996 AND 1995

                            TOGETHER WITH REPORT OF
                         INDEPENDENT PUBLIC ACCOUNTANTS




<PAGE>   13
                        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, 1996 and 1995 .........................   F-6

     Statements of Operations for the Years Ended December 31,
     1996, 1995 and 1994 ................................................   F-7

     Statements of Changes in Partners' Equity for the Years
     Ended December 31, 1996, 1995 and 1994 .............................   F-8

     Statements of Cash Flows for the Years Ended December 31,
     1996, 1995 and 1994 ................................................   F-9

     Notes to Financial Statements ......................................   F-10


Schedules:

     V   - Property and Equipment - Oil and Gas Properties for
           the Years Ended December 31, 1996, 1995 and 1994 .............   F-18

     VI  - Accumulated Depreciation, Depletion, and Amortization -
           Oil and Gas Properties for the Years Ended December 31,
           1996, 1995 and 1994 ..........................................   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>   14
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)
                                         ---------------------------------------
                                          1996    1995    1994     1993    1992
                                         -----   -----   -----    -----   -----
<S>                                      <C>     <C>     <C>      <C>     <C>
Revenues .............................   $ 283   $ 367   $ 302    $ 356   $ 342
Net income (loss):
   Limited Partners ..................      15      77     (89)      10     (33)
   General Partners ..................      10      22      (2)      10       5
   Per equity unit ...................    1.06    5.32   (6.18)    0.68   (2.29)
Total assets .........................     754     783     826      906     955
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, 1996, 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, 1996 was approximately $928,400,
as compared to December 31, 1995, of about $664,000. The increase in total
estimated discounted future net revenue was due in part to higher year end gas
prices as of December 31, 1995 compared to the gas price in effect as of
December 31, 1995. 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.



                                      F-2
<PAGE>   15
     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:

     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.

     1995 compared to 1994

     Operating revenue declined from $302,383 in 1994 to $259,107 in 1995. The
Partnership experienced an increase in gas production from 96,605 mcfs in 1994
to 104,553 mcfs in 1995. The increase in mcfs for the Partnership was offset by
higher average price per mcf from $2.89 in 1994 to $2.21 in 1995.

     The Partnership generally renews contracts as they come due for twelve
month periods. The Partnership was in a fixed contract price for nine months of
1994. The negotiated renewal price offered late in 1994 for the 1994-1995
contracts was lower then was deemed favorable to



                                      F-3
<PAGE>   16
the Partnership. Therefore, the price remained at spot prices during the last
quarter of 1994 and all of 1995. The spot price fluctuated significantly during
peak and off peak usage periods. During the fourth quarter of 1995, the
Partnership locked into a twelve month fixed price contract.

     Columbia Gas Transmission Corp., a gas purchaser of the Partnership's gas,
filed a Chapter 11 petition in the U.S. Bankruptcy Court in Wilmington,
Delaware, on July 31, 1991. At that time, the Bankruptcy Court released
Columbia from any active contracts. The Partnership filed a claim with the
Bankruptcy Court to recover revenues suspended at the time the bankruptcy
occurred. Such amounts were not recorded during the applicable period since the
claim amount was undetermined and open-ended. The Court's settlement of the
Columbia bankruptcy proceedings were finalized in November of 1995. The
Partnership received $108,492, which was reported as other income for 1995.

     Production expenses decreased form $182,383 in 1994 to $115,285 in 1995.
This increase can be attributed to higher general labor, repairs and location
costs associated with the inclement to maintain the general upkeep of the wells
and well sites. General and administrative costs decreased from $131,576 in
1994 to $110,950 in 1995. 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 Agreement. Management continues to monitor any
third party costs and use in-house resources if it will provide efficient and
timely services to the partnership under 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 19946. Depreciation, depletion and
amortization rates were significantly higher in 1994 compared to 1995,
resulting in a higher depletion expense, $79,906 for 1994, as compared to
$42,872 in 1995.



                                      F-4
<PAGE>   17
                        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, 1996 and 1995, and the
related statements of operations, changes in partners' equity, and cash flows
for the years ended December 31, 1996, 1995 and 1994. 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, 1996 and 1995, and the results of its operations and
cash flows for the years ended December 31, 1996, 1995 and 1994 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
January 31, 1997



                                      F-5
<PAGE>   18
                        STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                                 BALANCE SHEETS

                           DECEMBER 31, 1996 AND 1995


                                     Assets
                                     ------

<TABLE>
<CAPTION>
                                                       1996            1995
                                                   ------------    ------------
<S>                                                <C>             <C>
Current Assets:
  Cash and cash equivalents (Note 2) ...........   $         34    $         24
    Total Current Assets .......................             34              24
                                                   ------------    ------------
Oil and Gas Properties - successful efforts
 methods (Note 3) - (Schedules V and VI):
   Leasehold costs .............................        466,804         466,804
   Wells and related facilities ................     11,959,534      11,947,691
                                                   ------------    ------------
     Total .....................................     12,426,338      12,414,495
Less - Accumulated depreciation, depletion
  and amortization .............................    (11,671,934)    (11,631,308)
                                                   ------------    ------------
                                                        754,404         783,189
                                                   ------------    ------------
    Total Assets ...............................   $    754,438    $    783,211
                                                   ============    ============

                       Liabilities and Partners' Equity
                       --------------------------------

Current Liabilities:
  Due to affiliates (Note 6) ...................   $    373,007    $    427,107
    Total Current Liabilities ..................        373,007         427,107
                                                   ------------    ------------
Partners' Equity:
  Limited partners .............................        672,221         656,941
  General partners .............................       (290,790)       (300,837)
                                                   ------------    ------------
    Total Partners' Equity .....................        381,431         356,104
                                                   ------------    ------------
    Total Liabilities and Partners' Equity .....   $    754,438    $    783,211
                                                   ============    ============
</TABLE>


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



                                      F-6
<PAGE>   19
                        STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                            STATEMENTS OF OPERATIONS

              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994


<TABLE>
<CAPTION>
                                           1996                               1995                              1994
                               ------------------------------    ------------------------------   --------------------------------
                               Limited    General                Limited    General               Limited     General
Revenues:                      Partners   Partners    Total      Partners   Partners    Total     Partners    Partners     Total
                               --------   --------   --------    --------   --------   --------   --------    --------    --------
<S>                            <C>        <C>        <C>         <C>        <C>        <C>        <C>         <C>         <C>
  Operating revenues .......   $238,909   $ 44,999   $283,908    $218,039   $ 41,068   $259,107   $254,455    $ 47,928    $302,383
  Other Revenue
  (Note 10) ................       --         --         --        91,296     17,196    108,492       --          --          --
                               --------   --------   --------    --------   --------   --------   --------    --------    --------
    Total Revenues .........    238,909     44,999    283,908     309,335     58,264    367,599    254,455      47,928     302,383
                               --------   --------   --------    --------   --------   --------   --------    --------    --------
Costs and Expenses:
  Production expenses ......    103,064     19,413    122,477      97,012     18,273    115,285    153,475      28,908     182,383
  Depreciation,
   depletion and
   amortization ............     40,220        406     40,626      42,443        429     42,872     79,106         799      79,905
  General and
   administrative
   expenses (Note 7) .......     80,345     15,133     95,478      93,364     17,586    110,950    110,722      20,855     131,577
                               --------   --------   --------    --------   --------   --------   --------    --------    --------
    Total Expenses .........    223,629     34,952    258,581     232,819     36,288    269,107    343,303      50,562     393,865
                               --------   --------   --------    --------   --------   --------   --------    --------    --------
    Net Income (Loss) ......   $ 15,280   $ 10,047   $ 25,327    $ 76,516   $ 21,976   $ 98,492   $(88,848)   $ (2,634)   $(91,482)
                               ========   ========   ========    ========   ========   ========   ========    ========    ========
Net Income (Loss) Per
 Equity Unit (Note 2) ......   $   1.06                          $   5.32                         $  (6.18)
                               ========                          ========                         ========
</TABLE>


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



                                      F-7
<PAGE>   20
                        STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                   STATEMENTS OF CHANGES IN PARTNERS' EQUITY

              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994




<TABLE>
<CAPTION>
                                          Limited       General
                                          Partners      Partners       Total
                                         ----------    ----------    ----------
<S>                                      <C>           <C>           <C>
Balance at December 31, 1993 .........   $  669,273    $ (320,179)   $  349,094

Net (Loss) ...........................      (88,848)       (2,634)      (91,482)
                                         ----------    ----------    ----------
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
                                         ==========    ==========    ==========
</TABLE>


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



                                      F-8
<PAGE>   21
                        STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                            STATEMENTS OF CASH FLOWS

              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994


<TABLE>
<CAPTION>
                                                       1996        1995        1994
                                                     --------    --------    --------
<S>                                                  <C>         <C>         <C>
Cash Flows From Operating Activities:
 Net income (loss) ...............................   $ 25,327    $ 98,492    $(91,482)
 Adjustments to reconcile net income (loss) to
  net cash provided by operating activities:
   Depreciation, depletion and amortization ......     40,626      42,872      79,906

   Changes in Assets and Liabilities:
    Due to affiliates ............................    (54,100)   (141,383)     11,573
                                                     --------    --------    --------

      Total Adjustments ..........................    (13,474)    (98,511)     91,479
                                                     --------    --------    --------

     Net Cash Provided (Used) by
      Operating Activities .......................     11,853         (19)         (3)

Cash Flows from Investing Activities:
 Equipment purchases .............................    (11,843)       --          --
                                                     --------    --------    --------
     Net Cash Provided (Used) by
      Investing Activities .......................    (11,843)       --          --
                                                     --------    --------    --------
Net increase (decrease) in cash and
 cash equivalents ................................         10         (19)         (3)

Cash and cash equivalents, beginning of year .....         24          43          46
                                                     --------    --------    --------

Cash and cash equivalents, end of year ...........   $     34    $     24    $     43
                                                     ========    ========    ========
</TABLE>


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



                                      F-9
<PAGE>   22
                        STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                         NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1996, 1995 AND 1994



(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.



                                      F-10
<PAGE>   23
                        STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                         NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1996, 1995 AND 1994


(2)  Summary of Significant Accounting Policies - (Cont'd):

     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 (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.



                                      F-11
<PAGE>   24
                        STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                         NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1996, 1995 AND 1994



(2)  Summary of Significant Accounting Policies - (Cont'd):

     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.

(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,
     1996, 1995 and 1994:

<TABLE>
<CAPTION>
                                                       1996      1995      1994
                                                      ------    ------    ------
<S>                                                   <C>       <C>       <C>
     Average sales price per MCF of gas ..........    $ 2.47    $ 2.21    $ 2.89
     Average sales price per BBL of
       oil and other liquids .....................     19.52     16.28     12.61
     Production expense per dollar of
       operating revenue .........................      0.43      0.45      0.60
</TABLE>



                                      F-12
<PAGE>   25
                        STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                         NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1996, 1995 AND 1994


(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, 1996, 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, 1993 .........    2,180,948        27,085
     Revisions of previous estimates ..........     (934,356)      (12,826)
     Production ...............................      (96,605)       (2,186)
                                                  ----------    ----------
     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
                                                  ==========    ==========
</TABLE>

     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.



                                      F-13
<PAGE>   26
                        STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                         NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1996, 1995 AND 1994



(4)  Quantities of Oil and Gas Reserves - (Cont'd):

     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 1996, 1995 and 1994. 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 united partners income would not have been reduced in 1996,
     1995 and 1994.

(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:


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



                                      F-14
<PAGE>   27
                        STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                         NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1996, 1995 AND 1994


(5)  Allocation of Partnership Revenues, Income, Costs and Expenses - (Cont'd):


<TABLE>
<S>                                                                 <C>
     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>

(6)  Transactions With Affiliates:

     (a)  The payable to affiliates at December 31, 1996 and 1995 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 $416 for each
          producing gas well and $752 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 1996, 1995 and 1994, $68,193, $64,145 and $103,205 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, 1996 for which it was billed $12,924.



                                      F-15
<PAGE>   28
                        STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                         NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1996, 1995 AND 1994


(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 1996, 1995 and 1994, the Partnership recognized general and
     administrative expenses incurred on its behalf by a general partner of
     $75,000, $90,000, $110,800, respectively.

(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,
                                          --------------------------------
                                            1996        1995        1994
                                          --------    --------    --------
<S>                                       <C>         <C>         <C>
     Net income (loss) as reported on
       the Partnership's federal income
       tax return .....................   $ 63,584    $141,364    $(11,576)

     Depreciation, depletion and
       amortization for financial
       reporting purposes (greater)
       less than income tax amount ....    (38,257)    (42,872)    (79,906)
                                          --------    --------    --------
     Net income (loss) per
       accompanying financial
       statements .....................   $ 25,327    $ 98,492    $(91,482)
                                          ========    ========    ========

</TABLE>



                                      F-16
<PAGE>   29
                        STERLING GAS DRILLING FUND 1982
                        (a New York limited partnership)

                         NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 1996, 1995 AND 1994


(8)  Federal Income Taxes - (Cont'd):

     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.

(9)  Major Customers:

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

<TABLE>
<CAPTION>
     Purchaser                                 1996       1995       1994
     ---------                               --------   --------   --------
<S>                                          <C>        <C>        <C>
     CNG .................................   $   --     $ 24,993   $127,001
     American River Terminals ............   $ 33,083   $ 25,862   $   --
     Phoenix Diversified .................   $200,452   $161,522   $111,882
</TABLE>


     The Partnership renewed its gas purchase contract in December, 1996
     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>   30
                                                                     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, 1996, 1995 AND 1994



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

Year Ended December 31, 1994:
-----------------------------
  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>   31
                                                                    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, 1996, 1995 AND 1994




<TABLE>
<CAPTION>
                                      Balance at                                               Balance
                                      Beginning     Additions                     Other        at End
Year Ended December 31, 1996:          of Year       at Cost     Retirements     Changes       of Year
-----------------------------        -----------   -----------   -----------   -----------   -----------
<S>                                  <C>           <C>           <C>           <C>           <C>
  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
                                     ===========   ===========   ===========   ===========   ===========

Year Ended December 31, 1994:
-----------------------------
  Wells and related facilities ...   $11,064,872   $    77,864   $      --     $      --     $11,142,736
  Leasehold costs ................       443,659         2,041          --            --         445,700
                                     -----------   -----------   -----------   -----------   -----------
                                     $11,508,531   $    79,905   $      --     $      --     $11,588,436
                                     ===========   ===========   ===========   ===========   ===========
</TABLE>



                                      F-19
<PAGE>   32
                                 EXHIBIT INDEX



<TABLE>
<CAPTION>
                                                                             Sequentially
Exhibit                                                                        Numbered
Number                                 Exhibit                                   Page
------                                 -------                               ------------
<S>            <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)

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

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