<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC. 20549

                                   FORM 10-Q

                  QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934




For Quarter Ended SEPTEMBER 30, 1995             Commission file number 0-10697



                            DORCHESTER HUGOTON, LTD.
             (Exact name of registrant as specified in its charter)




           Texas                                              75-1829064
(State or other jurisdiction of                            (I.R.S. Employer
Incorporation or organization)                            Identification No.)



       9696 Skillman Street, Suite 320-LB 42, Dallas, Texas 75243-8200
           (Address of principal executive offices)         (Zip Code)


      Registrant's telephone number, including area code:  (214) 340-3443


                                      None
                 Former name, former address and former fiscal
                       year, if changed since last report


    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes  X       No 
                                               ---         ---
                                               
    As of October 31, 1995, 10,744,380 Depositary Receipts for Units of Limited
Partnership Interest were outstanding.





                                  Page 1 of 11
<PAGE>   2



                            DORCHESTER HUGOTON, LTD.
                         (A Texas Limited Partnership)

                         QUARTERLY REPORT ON FORM 10-Q

                               SEPTEMBER 30, 1995


                                     INDEX


PART I.        FINANCIAL INFORMATION

     Item 1.   Financial Statements:

               Condensed Balance Sheets as of September 30, 1995 and December 
               31, 1994 (Unaudited)

               Condensed Statements of Earnings for the Three and Nine Months 
               Ended September 30, 1995 and 1994 (Unaudited)

               Condensed Statements of Cash Flows for the Nine Months Ended
               September 30, 1995 and 1994 (Unaudited)

               Notes to Condensed Financial Statements (Unaudited)


     Item 2.   Management's Discussion and Analysis of Financial Condition and
               Results of Operations


PART II.       OTHER INFORMATION

     Item 1.   Legal Proceedings.

     Item 5.   Other Information.

     Item 6.   Exhibits and Reports on Form 8-K.


SIGNATURES


                                Page 2 of 11
<PAGE>   3



                            DORCHESTER HUGOTON, LTD.
                         (A Texas Limited Partnership)
PART I
ITEM 1
                            CONDENSED BALANCE SHEETS
                                  (Unaudited)

                    SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
                           (In Thousands of Dollars)


<TABLE>
<CAPTION>
                                                                                   SEPTEMBER 30, 1995     DECEMBER 31, 1994
                                                                                   ------------------     -----------------
<S>                                                                                    <C>                  <C>
                                                               ASSETS
  CURRENT ASSETS:
       Cash and temporary cash investments                                             $     148            $      -0-
       Investments - available for sale                                                    1,951                 1,640
       Accounts receivable                                                                 2,350                 3,128
       Prepaid expenses and other current assets                                             157                    88
                                                                                       ---------            ----------
          TOTAL CURRENT ASSETS                                                             4,606                 4,856

  NET PROPERTY AND EQUIPMENT                                                              13,592                13,993
                                                                                       ---------            ----------

  TOTAL ASSETS                                                                         $  18,198            $   18,849
                                                                                       =========            ==========

                                           LIABILITIES AND PARTNERSHIP CAPITAL
  CURRENT LIABILITIES:
       Accounts payable and other current liabilities                                  $     727            $      839
       Production and property taxes payable                                                 267                   254
       Royalties payable                                                                     209                   272
       Distributions payable to Unitholders                                                1,847                 1,865
                                                                                       ---------            ----------
          TOTAL CURRENT LIABILITIES                                                        3,050                 3,230


  Long term debt                                                                           1,525                 1,850
                                                                                       ---------            ----------
  TOTAL LIABILITIES                                                                        4,575                 5,080

  PARTNERSHIP CAPITAL                                                                     13,623                13,769
                                                                                       ---------            ----------

  TOTAL LIABILITIES AND PARTNERSHIP CAPITAL                                            $  18,198            $   18,849
                                                                                       =========            ==========
</TABLE>

                    The accompanying condensed notes are an
                  integral part of these financial statements.


                                  Page 3 of 11
<PAGE>   4



                            DORCHESTER HUGOTON, LTD.
                         (A Texas Limited Partnership)

                        CONDENSED STATEMENTS OF EARNINGS
                                  (Unaudited)

        FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
                           (In Thousands of Dollars)


<TABLE>
<CAPTION>
                                                     Three Months Ended             Nine Months Ended
                                                        September 30                   September 30
                                                 ------------------------       ------------------------
                                                    1995           1994           1995            1994
                                                 ---------      ---------       ---------       --------
<S>                                               <C>            <C>             <C>            <C>
NET OPERATING REVENUES                            $ 2,909        $ 2,168         $ 9,194        $ 8,434
                                                  -------        -------         -------        -------

COSTS AND EXPENSES:
    Operating, including production taxes             706            560           2,303          1,822
    Depletion, depreciation and amortization          326            135           1,021            469
    General and administrative                        167            103             443            350
    Management fees                                    89             59             277            197
    Interest                                           35              6             105              7
    Other income, net                                 (22)           (32)            (66)          (121)
                                                  -------        -------         -------        -------
TOTAL COSTS AND EXPENSES                            1,301            831           4,083          2,724
                                                  -------        -------         -------        -------

NET EARNINGS                                      $ 1,608        $ 1,337         $ 5,111        $ 5,710
                                                  =======        =======         =======        =======
NET EARNINGS PER UNIT (IN DOLLARS)                $  0.15        $  0.12         $  0.47        $  0.53
                                                  =======        =======         =======        =======
</TABLE>


                    The accompanying condensed notes are an
                  integral part of these financial statements.


                                 Page 4 of 11
<PAGE>   5



                            DORCHESTER HUGOTON, LTD.
                         (A Texas Limited Partnership)

                       CONDENSED STATEMENTS OF CASH FLOWS
                                  (Unaudited)

             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
                           (In Thousands of Dollars)


<TABLE>
<CAPTION>
                                                                                      1995                  1994
                                                                                  ------------           -----------
    <S>                                                                           <C>                    <C>
    CASH FLOWS PROVIDED BY OPERATING ACTIVITIES                                   $      6,777           $     8,565
                                                                                  ------------           -----------

    CASH FLOWS USED IN INVESTING ACTIVITIES:
        Purchase of marketable securities                                                  -0-                    (3)
        Purchases of property and equipment, net of retirements                           (646)               (5,192)
        Cash received on sale of other property and equipment                               18                   -0-
                                                                                  ------------           -----------
    CASH FLOWS USED IN INVESTING ACTIVITIES                                               (628)               (5,195)

    CASH FLOWS USED IN FINANCING ACTIVITIES:
        Distributions paid to Unitholders                                               (5,553)               (5,547)
        Additions to long term debt                                                      5,775                   100
        Reductions of long term debt                                                    (6,100)                  (25)
        Other                                                                             (123)                  -0-
                                                                                  ------------           -----------
    CASH FLOWS USED IN FINANCING ACTIVITIES                                             (6,001)               (5,472)
                                                                                  ------------           -----------

    INCREASE IN CASH AND TEMPORARY CASH INVESTMENTS                                        148                (2,102)

    CASH AND TEMPORARY CASH INVESTMENTS AT JANUARY 1,                                      -0-                 2,966
                                                                                  ------------           -----------

    CASH AND TEMPORARY CASH INVESTMENTS AT SEPTEMBER 30,                          $        148           $       864
                                                                                  ============           ===========

</TABLE>


                    The accompanying condensed notes are an
                  integral part of these financial statements.


                                 Page 5 of 11
<PAGE>   6




                            DORCHESTER HUGOTON, LTD.
                         (A Texas Limited Partnership)

                    NOTES TO CONDENSED FINANCIAL STATEMENTS
                                  (Unaudited)


1.   The condensed financial statements reflect all adjustments (consisting
     only of normal and recurring adjustments) which are, in the opinion of
     management, necessary for a fair presentation of Dorchester Hugoton,
     Ltd.'s (the "Partnership's") financial position and operating results for
     the interim periods.  Interim period results are not necessarily
     indicative of the results for the calendar year.  Please refer to
     Management's Discussion and Analysis of Financial Condition and Results of
     Operations for additional information.  The weighted average number of
     Units outstanding for each of the periods was 10,744,380.

2.   Prior to May 1, 1994, the Partnership's Oklahoma natural gas production
     was sold under the 1946 Gas Purchase Contract, as amended, (the
     "Contract") to Natural Gas Pipeline Company of America or its assigns
     (collectively referred to as "NGPL").  Such gas was also subject to a June
     16, 1982 Gas Processing Agreement (the "Agreement") between the
     Partnership and Parker & Parsley Petroleum Company entities (successor to
     Damson Oil Corporation and Dorchester Master Limited Partnership)
     (collectively referred to as "P&P").  As a result, the Partnership's
     Oklahoma gas production was processed in P&P's Hooker, Oklahoma gas
     processing plant where natural gas liquids were extracted and the
     remaining gas ("residue gas") was delivered and sold to NGPL at the plant
     outlet.  The extraction of natural gas liquids requires the consumption of
     some gas as fuel and the extraction itself shrinks the gas production in
     both volume and heating value (referred to as "fuel and shrinkage").  The
     Agreement provided, among other things, that P&P operate the Partnership's
     gas gathering pipelines, that P&P retain the natural gas liquids
     extracted, and that the Partnership would receive for fuel and shrinkage
     incurred the value of the gas produced at the wellhead (including
     severance taxes) less amounts received for residue gas sales to NGPL.  The
     Agreement terminated upon termination of the Partnership's Contract with
     NGPL on May 1, 1994.

     On May 1, 1990, the Partnership instituted legal action in Wharton County,
     Texas District Court against NGPL seeking cancellation of the Contract and
     damages.  In early December, 1992, the Partnership settled its litigation
     against NGPL and amended the Contract.  The amended Contract provided that
     NGPL would pay for the residue gas from the Partnership's Oklahoma
     properties at an indexed market price.  The Contract was subsequently
     terminated by NGPL effective May 1, 1994.  The processor of the
     Partnership's Oklahoma gas, P&P, previously intervened in the litigation
     in Wharton County, Texas claiming certain rights under the Contract, the
     Agreement and to the Partnership's gas gathering pipeline system in
     Oklahoma.

     In 1986, pursuant to a preferential right to purchase in an August 23,
     1982 Operating Agreement between the Partnership and a predecessor to P&P,
     the Partnership acquired additional interests in Texas County, Oklahoma
     (the "1986 Transaction").  On November 2, 1993, the Oklahoma Court of
     Appeals affirmed the decision of the Texas County, Oklahoma District Court
     granting the Partnership quiet title to all personal and real property
     interests acquired by the Partnership in the 1986 Transaction, including a
     20% interest in the Texas County, Oklahoma leases and all of the gas
     pipeline gathering system.  P&P continues to attempt to dispute the impact
     of that decision.  Additionally, on April 20, 1994 the Partnership was
     granted an injunction by the Texas County, Oklahoma District Court to
     enjoin P&P from interfering with the Partnership's May 1, 1994 operation
     of low pressure gas pipeline gathering facilities.  At present, P&P has
     filed an appeal seeking reversal of the District Court's injunction
     rulings.  Also on November 2, 1993, the Court of Appeals remanded, for a
     new trial, a 1990 jury finding of fraud which had awarded the Partnership
     $4,715,326 related to the 1986 Transaction.  The Oklahoma Supreme Court
     granted certiorari on March 21, 1994. On June 19, 1995, the Oklahoma
     Supreme Court withdrew and denied certiorari.  Consequently, the sole
     issue of fraud by P&P will be retried in Texas County, Oklahoma.  No
     retrial date has been set.  Additionally, on January 10, 1994 the Oklahoma
     Court of Appeals decision became final which had reversed a judgment
     awarding the Partnership $724,082 based on P&P's underpayment for fuel and
     shrinkage at the Hooker gas processing plant during the period of November
     1988 through March 1991.  Subsequently, P&P was awarded and received
     $91,402 in attorney's fees from the Partnership.  None of the Court of
     Appeals' decisions are expected to have any material adverse affect on the
     Partnership's financial position or operating results.  The Partnership
     has not recognized any of the prior judgment amounts in its favor in its
     financial statements.





                                  Page 6 of 11
<PAGE>   7




                            DORCHESTER HUGOTON, LTD.
                         (A Texas Limited Partnership)


                    NOTES TO CONDENSED FINANCIAL STATEMENTS
                                  (Unaudited)
                                  (Continued)

     On December 22, 1993 the Texas County, Oklahoma District Court issued a
     partial summary judgment with respect to disputed matters between the
     Partnership and P&P regarding gathering and processing the Partnership's
     Oklahoma gas and the Agreement.   The partial summary judgment ruled that
     (1) the Partnership owns the Oklahoma gas pipeline gathering system, (2)
     there are no processing rights other than the Agreement, whereby P&P
     gathers and processes the Partnership's Oklahoma gas, (3) the Agreement
     was still in effect, and (4) payments for fuel and shrinkage under the
     Agreement are to be based upon the same price per MMBTU as paid the
     Partnership for its Oklahoma gas sales plus applicable taxes.  On May 1,
     1994 the Agreement terminated concurrently with the termination of the
     Partnership's 1946 Gas Purchase Contract with NGPL.  On August 26, 1994,
     P&P and the Partnership stipulated by agreement that (among other issues)
     the amount of underpayment due the Partnership for fuel and shrinkage
     during the period January 1993 through April 1994 to be either $4,837,046
     or $6,558,036 depending upon the Court's determination of proper severance
     tax applicability.  A hearing including these issues was conducted October
     18, 1994.  On September 21, 1995 the Texas County, Oklahoma District Court
     issued its Final Judgment and Order favorably awarding the Partnership
     $6,588,036 plus interest for underpayment by P&P  for fuel and shrinkage.
     The Court's ruling also made final the previous decisions that the
     Partnership owns the Oklahoma gas pipeline gathering system and P&P had no
     rights to process the gas after the May 1, 1994 expiration of the
     Agreement.  On October 6, 1995 P&P filed a supersedeas bond.  On October
     13, 1995 P&P filed an appeal contesting all of the District Court's
     findings and P&P seeks to reduce or eliminate the supersedeas bond.  The
     Partnership has not recognized any of the prior judgment amounts in its
     favor in its financial statements.

     Through January 25, 1994, the Wharton County, Texas District Court ruled
     that (1) P&P is not liable to the Partnership for excess extraction of
     natural gas liquids prior to January 1, 1993 (2) the 1982 Gas Processing
     Agreement expired on January 1, 1993, and (3) P&P is not a party to the
     Partnership's contract covering Oklahoma gas sales.  Issues of ownership
     of the gas pipeline gathering system and any gas processing rights (other
     than the Agreement) in Oklahoma were dismissed for various reasons
     including lack of subject matter jurisdiction.  All other remaining issues
     were dismissed and attorney's fees in the amount of $208,000 were awarded
     to P&P.  Both the Partnership and P&P appealed portions of the Court's
     decisions and the Partnership has provided a supersedeas bond in the
     amount of $242,000 related to attorneys fees with prospective interest.
     On October 5, 1995 the Thirteenth Court of Appeals in Corpus Christi,
     Texas issued an opinion which remanded to the Wharton County District
     Court for further proceedings the issues of (1) ownership of the gas
     pipeline gathering system and (2) ownership of rights to process the gas
     produced by the Partnership's Oklahoma gas wells.  Additionally, the
     Appellate Court affirmed the Wharton District Court's decision terminating
     on January 1, 1993, the 1982 Gas Processing Agreement whereby the
     Partnership's Oklahoma gas was processed in the P&P Hooker Oklahoma Plant
     until May 1, 1994.  Also, the Court affirmed the Wharton County District
     Court's decision that Parker & Parsley was not liable to the Partnership
     for previous overextraction at the Hooker Oklahoma Plant.  The Court also
     affirmed, but slightly reduced, the trial court's award of attorney's fees
     of $200,000 to P&P.  Dorchester Hugoton has begun seeking further
     appellate court review.

     On May 11, 1994 the Partnership instituted legal action in Texas County,
     Oklahoma District Court against P&P for breach of the preferential right
     to purchase clause in an August 23, 1982 Operating Agreement between the
     Partnership and a predecessor to P&P. A production payment and a right to
     participate in new wells were reserved by P&P predecessors in their June,
     1986 sale of interests in Texas County, Oklahoma properties to the
     Partnership.  The Partnership is contesting conveyances made between P&P's
     predecessors (Damson and Dorchester Master Limited Partnership) and P&P
     with respect to the production payment and participation right.  The
     Partnership is requesting such production payment and participation right
     be subject to specific performance enabling exercise of the Partnership's
     rights under the preferential right to purchase.  Generally the right to
     participate in new wells is limited to a maximum working interest of 5%.
     At present, the Partnership believes no wells have been drilled which
     would be subject to such participation.  A production payment may be owed
     to P&P if the Partnership is unsuccessful.  However, the exact amount of
     any such payment that might be due is not currently known.  As of March 1,
     1994, the amount that could be owed might range between $600,000 to
     $1,000,000.  Although not calculable, an estimated additional range of
     $800,000 to $1,000,000 could be owed for the period from March 1, 1994
     through October 31, 1995.  Future projections of any production payment
     amount utilize annual calculations through February





                                  Page 7 of 11
<PAGE>   8




                            DORCHESTER HUGOTON, LTD.
                         (A Texas Limited Partnership)

                    NOTES TO CONDENSED FINANCIAL STATEMENTS
                                  (Unaudited)
                                  (Continued)


     based on a table of declining volumes and the amount that unknown future
     gas prices exceed a table of rising prices.  P&P has asserted the
     production payment amount owed to be $1,394,505 through February 28, 1994.
     Should the Partnership successfully maintain the right to purchase, the
     determination of whether to purchase would depend on the purchase price
     which is unknown.

     On May 19, 1994 P&P instituted legal action in the 116th Judicial District
     of Dallas County, Texas asserting that Dorchester Hugoton owed and had not
     paid a production payment, had improperly failed to allow P&P to
     participate in the 1993 drilling of a replacement well in Texas County,
     Oklahoma and asserting other claims of tortious interference and unfair
     competition, apparently by virtue of the Partnership's operation of its
     low pressure gas pipeline.  On July 11, 1994 the Dallas County District
     Court denied the Partnership's motion to stay or abate due to identical
     claims in Oklahoma.  On March 28, 1995, a motion by P&P for partial
     summary judgment was denied by the Dallas court.  By agreement with P&P
     all litigation in the Dallas County, Texas suit has been deferred until
     completion of all identical litigation in Texas County, Oklahoma.  In
     Oklahoma, the trial regarding the Partnership's right to exercise the
     preferential right to purchase both the production payment and right to
     participate in new wells awaits rescheduling by the Court.  All other
     matters, such as the amount to be paid in exercising the preferential
     right or the amount of a production payment, if any, are delayed until
     issuance of a ruling following the pending Oklahoma trial.

     Pursuant to requirements of the Dallas, Texas District Court, the
     Partnership and P&P attempted settlement by mediation during August, 1995.
     On August 21, 1995 the independent mediator declared an impasse.

3.   As a result of publicity by others regarding recent acquisitions and
     proposed sales of Kansas and Oklahoma Hugoton gas reserves, during July
     1995 the Partnership requested Calhoun Engineering, Inc., its independent
     petroleum engineering consulting firm, to study the proved natural gas
     reserves in order to determine if the Partnership's reserves were being
     stated on a basis comparable to other producers in the Kansas/Oklahoma
     Hugoton fields.  The study yielded a January 1, 1995 increase from 83,989
     MMCF (millions of cubic feet) to 102,525 MMCF in the Partnership's proved
     developed natural gas reserves.  The increase is primarily the result of
     the use of a lower abandonment pressure.

     Proved natural gas reserves are estimated quantities which geological and
     engineering data demonstrate with reasonable certainty to be recoverable
     in future years from known reservoirs under existing economic and
     operating conditions.  Proved developed natural gas reserves are reserves
     that can be expected to be recovered through existing wells with existing
     equipment and operating methods.  In a gas reservoir, the pressure at each
     well declines as the well produces gas.  A lower abandonment pressure
     means the well is projected to produce gas over a longer period of time
     and thus not be abandoned until the lower pressure occurs.  As a result of
     the study, the Partnership's abandonment pressures are now believed to be
     similar to pressures used by other producers in the Kansas/Oklahoma
     Hugoton fields, and the revised reserves are therefore comparable to
     reserve statements of others in the same fields.

4.   On July 19, 1994 the Partnership entered into a $15,000,000 unsecured
     revolving credit facility  (the "Agreement") with Bank One, Texas, N.A.
     The Agreement currently has a borrowing base of $4,250,000, which will be
     re-evaluated by Bank One at least semi-annually.  If, on any such date,
     the aggregate amount of outstanding loans and letters of credit exceed the
     current borrowing base as most recently determined by Bank One, the
     Partnership is required to pay the excess.  This credit facility covers
     both cash advances and any letter of credit that the Partnership may need,
     with interest being charged at the base rate for Bank One, which was
     8-3/4% on November 9, 1995.  All amounts borrowed under this facility will
     become due and payable on July 31, 1997.  As of November 9, 1995, a letter
     of credit totaling $242,000 was issued under the credit facility and the
     amount borrowed was $1,700,000.





                                  Page 8 of 11
<PAGE>   9



                            DORCHESTER HUGOTON, LTD.
                         (A Texas Limited Partnership)
PART I
ITEM 2
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Net cash flows from operating activities during the three and nine months ended
September 30, 1995 were $1,237,000 and $6,777,000, respectively, compared to
$908,000 and $8,565,000 for the same periods of 1994.  Net cash flows for the
three months ended September 30, 1995 were higher than the same period of 1994
because of reductions in accounts payable during 1994 associated with the the
construction of the Oklahoma compression facility, which became operational in
late 1994.  The facility, which cost just under $6,000,000 was completed in
late 1994.  Most of the construction costs were funded out of cash flows, but
some bank borrowings have been utilized by the Partnership.

Remaining changes in three and nine month cash flows from operating activities
between 1994 and 1995 are a result of timeliness of accounts receivable.  The
Partnership has implemented improved payment terms under certain gas sales
agreements during the nine months ended September 30, 1995 compared to the same
period of 1994.  Additionally, cash flows are influenced by natural gas spot
market prices which are down compared to the same period last year and the
previous quarter of 1995.  Operating expenses continue to be adversely impacted
by costs of litigation.

The Partnership has available a $15,000,000 unsecured revolving credit facility
with a current borrowing base of $4,250,000.  Please see Note 4 to the
financial statements for additional information.  As of November 9, 1995, a
letter of credit totaling $242,000 was issued under the credit facility and the
amount borrowed was $1,700,000.  The Partnership's cash position was zero on
December 31, 1994 as a result of cash management practices which minimize
borrowings.

The Partnership's portion of gas sales volumes (in MMCF) and weighted average
BTU adjusted sales prices per MCF were as follows:

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED                        NINE MONTHS ENDED
                                                        ----------------------------------------         ----------------------
                                                           SEPTEMBER 30,                JUNE 30               SEPTEMBER 30,
                                                        ----------------------         ---------         ----------------------
                                                          1995          1994             1995             1995           1994
                                                        --------      --------         ---------         -------        -------
                <S>                                       <C>           <C>              <C>              <C>            <C>
                SALES VOLUMES:
                    Oklahoma                              1,594           785            1,397            4,719          3,384
                    Kansas                                  505           624              556            1,586          1,599
                                                        -------        ------         --------          -------        -------
                TOTAL                                     2,099         1,409            1,953            6,305          4,983
                                                        =======        ======         ========          =======        =======
                WEIGHTED AVERAGE BTU
                         ADJUSTED SALES PRICES:
                    Oklahoma                              $1.38         $1.47            $1.47            $1.46          $1.61
                    Kansas                                 1.32          1.60             1.40             1.40           1.84
                OVERALL WEIGHTED AVERAGE                  $1.36         $1.53            $1.45            $1.44          $1.69
</TABLE>

Oklahoma natural gas production volumes were higher during the third quarter
compared to the same quarter of 1994.  During May through October of 1994,
Oklahoma production was reduced while the new compression facility was being
constructed.  The facility became operational on November 1, 1994.  Oklahoma
natural gas production in the third quarter of 1995 was higher than the second
quarter of 1995 during which some wells were shut in for state tests.

Kansas volumes during the quarters ending June 30, 1995 and September 30, 1995
were less than the third quarter of 1994 as a result of the current need for
lower well delivery pressures.   During October, 1995, the Partnership began
installing equipment necessary to enable the existing Kansas compression
facility to handle greater gas volumes at lower pressures.  Additionally,
during November, 1995 the Partnership will install approximately 4 1/2 miles of
pipeline to receive gas from two of its wells that previously delivered gas
through pipelines of others.  The total anticipated cost to the Partnership is
$800,000.  The projects are scheduled for completion in early December, 1995.
Construction is being done in stages to minimize compression facility downtime.
The Partnership anticipates fourth quarter Kansas volumes to be approximately
470 MMCF as compared to the 1995 third quarter's 505 MMCF.  In June, 1995 the
Partnership drilled and completed one additional infill well in Kansas.  There
are no current plans to drill any additional infill wells.


                                 Page 9 of 11
<PAGE>   10



                            DORCHESTER HUGOTON, LTD.
                         (A Texas Limited Partnership)

PART I
ITEM 2
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                  (Continued)


Operating costs have increased compared to the third quarter of 1994 as a
result of additional costs related to the gathering and compressing of the
Oklahoma natural gas production.  Depreciation, depletion and amortization
costs (collectively, "DD&A") have increased significantly compared to the same
quarter last year primarily as a result of the addition of the Oklahoma
compression facility.  However, DD&A per unit of gas production is down this
quarter compared to the first quarter of 1995 as a result of increased natural
gas reserves.  As discussed in the Notes to Condensed Financial Statements, the
Partnership's natural gas reserves have been revised so as to be on a basis
comparable to other producers in Oklahoma/Kansas Hugoton fields.  The resulting
increase in recoverable reserves, from 84 BCF (billion cubic feet) to 103 BCF
is the first such revision of this type by the Partnership since 1982.  The
Partnership does not anticipate any further material revisions in the
foreseeable future.  Although not presently calculable, the Partnership
anticipates that generally the Unitholder's DD&A may decrease from 1994 which
might increase taxable income in 1995.

The Partnership anticipates delivery of gas from its Oklahoma compression
facilities to Williams Gas Processing - Mid Continent Region Co., a subsidiary
of the Williams Companies, Inc. beginning in the first quarter of 1996.
Williams Field Services Company will subsequently process the gas at its newly
constructed plant near Baker, Oklahoma and return the gas as directed by the
Partnership to the available transmission pipelines at the plant outlet which
include Williams Natural Gas Company, Panhandle Eastern Pipe Line Company, and
Natural Gas Pipeline Company of America.  The gas returned to the Partnership
will be of improved quality, including having the contaminant nitrogen removed.

As discussed in the Partnership's 1994 Form 10-K and in the Notes to Condensed
Financial Statements within this Form 10-Q, the litigation with various
entities of Parker & Parsley Petroleum Company is continuing.  During the
period January 1, 1993 through April 30, 1994, the Partnership's Oklahoma gas
was processed by a Parker & Parsley Petroleum Company entity in their Hooker,
Oklahoma plant.  Recent developments include a final decision by an Oklahoma
District Court that a 1982 Gas Processing Agreement with Parker & Parsley was
in effect through April 30, 1994 and covered such processing.  As a result, the
Partnership was favorably awarded $6,558,036 plus interest for underpayments by
P&P.  Recent developments also include a decision by the Corpus Christi Court
of Appeals that the same 1982 Processing Agreement terminated January 1, 1993.
Should the Texas decision be valid, there remains unresolved the amounts due
the Partnership during the period January 1, 1993 through April 30, 1994.
Further appellate proceedings are underway in both states.  The Partnership
believes the overall litigation issues must be resolved before the Partnership
can make decisions regarding significant capital expenditures for production
enhancement or material changes in its current distribution policy.


                                 Page 10 of 11
<PAGE>   11




                            DORCHESTER HUGOTON, LTD.
                         (A Texas Limited Partnership)

                              OTHER INFORMATION
PART II

ITEM 1.    LEGAL PROCEEDINGS:  See Notes to Condensed Financial Statements.
ITEM 5.    OTHER INFORMATION:  Effective August 1995, the Partnership
           established a new Advisory Committee consisting of two independent
           advisors to function as the audit committee for the Partnership and
           to review and approve any transactions between the Partnership and
           the General Partners, including any compensation and benefits paid
           to the General Partners by the Partnership.  The Partnership is
           pleased to announce that Mr. Rawles Fulgham of Dallas, Texas and Mr.
           W. Randall Blank of Houston, Texas have agreed to serve on the
           Advisory Committee.  Until his recent retirement, Mr. Fulgham served
           as Executive Director of Merrill Lynch Private Capital, Inc.  He
           currently serves as a director of Dresser Industries, Inc., NCH
           Corporation, INDRESCO, Inc., Banctec, Inc.  and Republic Financial
           Services, Inc.  Mr. Fulgham was until recently the Chairman of
           Children's Medical Center of Dallas and he is a former trustee of
           long-standing of the Virginia Military Institute Foundation.  Mr.
           Blank is currently Executive Vice President of Rockland Pipeline
           Company in Houston, Texas and on the Board of Directors of the Gas
           Processors' Association.  The formation of the Advisory Committee
           has been approved by the Nasdaq Listing Qualifications Committee and
           resolves the previous pending request by the Partnership for an
           exemption from the NASD limited partnership governance rules, as
           discussed in the Partnership's 1994 Annual Report on Form 10-K.

           Also, as previously announced, effective August 21, 1995 the transfer
           agent for the Partnership's depositary units changed from Society
           Bank to American Stock Transfer & Trust Company, 40 Wall Street, New
           York, New York 10005.  The Partnership amended both the Partnership
           Agreement and the Depositary Agreement to conform to each of the
           foregoing changes.  Additionally, the Partnership made certain other
           amendments to the Partnership Agreement which were necessary to
           conform to, or to provide desired flexibility permitted by, changes
           in Texas partnership law and federal tax law.  The amendments were
           filed with the June 30, 1995 Form 10-Q.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K:
           a)  Exhibits 

               27 -- Financial Data Schedule
        
           b)  Reports on Form 8-K - None.


                                   SIGNATURES

Pursuant to the requirements 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.


                                       DORCHESTER HUGOTON, LTD.
                                       ------------------------
                                       Registrant




Date:   November 13, 1995              /s/ Kathleen A. Rawlings
                                       -----------------------------------------
                                       Kathleen A. Rawlings
                                       Controller (Principal Accounting Officer)





                                 Page 11 of 11
<PAGE>   12
                              INDEX TO EXHIBITS



Exhibit
  No.                    Description
-------                  -----------
  27                Financial Data Schedule