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, 1998            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 Identification No.)
 Incorporation or organization)



        1919 S. Shiloh Road, Suite 600 - LB 48, Garland, Texas 75042-8234
               (Address of principal executive offices) (Zip Code)


       Registrant's telephone number, including area code: (972) 864-8610


                                      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, 1998, 10,744,380 Depositary Receipts for Units of Limited
Partnership Interest were outstanding.


<PAGE>
                            DORCHESTER HUGOTON, LTD.
                          (A Texas Limited Partnership)

                          QUARTERLY REPORT ON FORM 10-Q

                               September 30, 1998


                                      INDEX


PART I.   FINANCIAL INFORMATION

  Item 1. Financial Statements:

          Condensed Balance Sheets as of September 30, 1998 and
          December 31, 1997 (Unaudited)

          Condensed Statements of Earnings for the Three and Nine
          Months Ended September 30, 1998 and 1997 (Unaudited)

          Condensed Statements of Cash Flows for the Nine Months Ended
          September 30, 1998 and 1997 (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>
                            DORCHESTER HUGOTON, LTD.
                          (A Texas Limited Partnership)
PART I
Item 1
                            CONDENSED BALANCE SHEETS
                                   (Unaudited)

                    September 30, 1998 and December 31, 1997
                            (In Thousands of Dollars)

                                                           Sept. 30,  Dec. 31,
                                                             1998       1997
                                                           --------   --------
                                     ASSETS
Current assets:
    Cash and cash equivalents .......................      $  3,968    $ 3,344
    Restricted cash ..................................          375        -0-
    Investments - available for sale .................        4,520      3,304
    Accounts receivable, net .........................        1,290      2,086
    Prepaid expenses and other current assets ........          154        136
                                                            -------    -------
      Total current assets ...........................       10,307      8,870

Property and Equipment - at cost .....................       28,672     27,875
    Less depreciation, depletion and amortization ....      (12,940)   (11,530)
                                                            -------   --------
      Net property and equipment .....................       15,732     16,345
                                                            -------   --------

Total Assets .........................................      $26,039    $25,215
                                                            =======    =======

                       LIABILITIES AND PARTNERSHIP CAPITAL

Current liabilities:
    Accounts payable and other current liabilities ...      $   460    $   411
    Production and property taxes payable or accrued .          708        820
    Royalties and production payment payable .........          614      1,063
    Distributions payable to Unitholders .............        1,958      1,958
                                                            -------    -------
      Total current liabilities ......................        3,740      4,252
Long-term debt .......................................          100        122
                                                            -------    -------
      Total liabilities ..............................        3,840      4,374

Commitments and contingencies (Note 2)

Partnership capital
    General partners .................................          145        131
    Unitholders ......................................       22,054     20,710
                                                            -------    -------
      Total partnership capital ......................       22,199     20,841
                                                            -------    -------

Total liabilities and partnership capital ............      $26,039    $25,215
                                                            =======    =======

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

<PAGE>
                            DORCHESTER HUGOTON, LTD.
                          (A Texas Limited Partnership)


                        CONDENSED STATEMENTS OF EARNINGS
                                   (Unaudited)

         For the Three and Nine Months Ended September 30, 1998 and 1997
                            (In Thousands of Dollars)




                                       Three Months Ended     Nine Months Ended
                                          September 30,          September 30,
                                       ------------------     ------------------
                                         1998       1997        1998     1997
                                       --------   -------      -------  -------

Net operating revenues:
     Natural gas sales ..............  $ 3,685    $ 4,202      $12,064  $14,065
     Other ..........................       44         41          148      133
     Production payment (ORRI) ......     (164)      (221)        (559)    (752)
                                       -------    -------      -------  -------
Total net operating revenues .......     3,565      4,022       11,653   13,446
                                       -------    -------      -------  -------
Costs and expenses
    Operating, including prod. taxes       940        773        2,758    2,613
    Depletion, depreciation & amort.       506        448        1,506    1,391
    General and administrative .....       116        137          390      412
    Management fees ................       120         99          369      312
    Interest .......................        10         18           30       96
    Other income, net ..............       (77)       (33)        (175)    (100)
                                       -------    -------      -------  -------
Total costs and expenses ...........     1,615      1,442        4,878    4,724
                                       -------    -------      -------  -------
Net earnings .......................   $ 1,950    $ 2,580      $ 6,775  $ 8,722
                                       =======    =======      =======  =======
Net earnings per Unit (in dollars) .   $  0.18    $  0.24      $  0.63  $  0.80
                                       =======    =======      =======  =======





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


<PAGE>
                            DORCHESTER HUGOTON, LTD.
                          (A Texas Limited Partnership)


                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

              For the Nine Months Ended September 30, 1998 and 1997
                            (In Thousands of Dollars)




                                                            1998         1997
                                                           -------      -------

Cash flows provided by operating activities .............  $ 8,135      $10,997
                                                           -------      -------
Cash flows used in investing activities:
    Purchases of property & equipment ...................     (917)      (1,215)
    Purchase of securities - available for sale .........     (741)         -0-
    Cash received on sale of other property & equipment..       30           45
                                                           -------      -------
Cash flows used in investing activities .................   (1,628)      (1,170)
                                                           -------      -------
Cash flows used in financing activities:
    Distributions paid to Unitholders ...................   (5,861)      (5,755)
    Additions to long-term debt .........................      -0-        7,200
    Reductions of long-term debt ........................      (22)     (10,222)
                                                           -------      -------
Cash flows used in financing activities .................   (5,883)      (8,777)
                                                           -------      -------

Increase in cash and cash equivalents ...................      624        1,050
Cash and cash equivalents at January 1, .................    3,344          115
                                                           -------      -------
Cash and cash equivalents at September 30, ..............  $ 3,968      $ 1,165
                                                           =======      =======











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

<PAGE>
                            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,  recurring adjustments and certain adjustments discussed in Note
     2)  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  period.  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.  Per-Unit
     information is calculated by dividing the 99% interest owned by Unitholders
     by the 10,744,380 Units outstanding.

2.   Through December 31, 1997 the Partnership recorded $500,000 (which included
     related  interest)  towards  a request  from  Panhandle  Eastern  Pipe Line
     Company  ("PEPL") for refund of Kansas tax  reimbursements  received by the
     Partnership  during the years 1983 to 1987.  These charges  resulted from a
     ruling by the United  States  Court of Appeals for the District of Columbia
     which  overruled  a  previous  order  by  the  Federal  Energy   Regulatory
     Commission.  The Partnership and PEPL reached agreement on a portion of the
     disputed  amounts  and on March 9, 1998  $151,756.92  was paid to PEPL.  An
     additional    $366,633.13,     which    is    still    awaiting    possible
     regulatory/judicial/legislative  action, was placed into an escrow account.
     At September  30, the value of the escrow is  approximately  $375,000.  The
     escrowed funds include amounts  possibly  waived,  recovered or recoverable
     from  others.  A reduction  to  operating  expense of $51,000  offset by an
     allowance  of $36,000  for the  uncollectible  portion  not waived has been
     booked during the first nine months of 1998.

     The  Partnership  is involved in a few other  legal  and/or  administrative
     proceedings  arising in the ordinary  course of its gas  business,  none of
     which have predictable  outcomes and none of which are believed to have any
     significant effect on financial position or operating results.

3.   Since 1994 the  Partnership  has maintained an unsecured  revolving  credit
     facility for $15,000,000 (the  "Agreement")  with Bank One, Texas, N.A. The
     Agreement  has a  current  borrowing  base  of  $6,000,000,  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, the  Partnership is required to repay the excess.
     This credit  facility  covers both cash  advances and any letters of credit
     that the Partnership may need, with interest being charged at the base rate
     for Bank One,  which was 8.5% on September 30, 1998 and 8.0% on October 31,
     1998. All amounts  borrowed under this facility will become due and payable
     on July 31,  2001.  As of October  31,  1998,  letters  of credit  totaling
     $25,000 were issued under the credit  facility and the amount  borrowed was
     $100,000.  The weighted  average amount  borrowed under the credit facility
     remained  $100,000  during  the third  quarter of 1998.
  <PAGE>
             DORCHESTER HUGOTON, LTD. (A Texas Limited Partnership)

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)
                                   (Continued)


4.   Comprehensive  income,  as defined in  Statement  of  Financial  Accounting
     Standards No. 130, includes holding gains on investments available for sale
     and is calculated below (in thousands of dollars):

                                        Three Months Ended    Nine Months Ended
                                        ------------------    -----------------
                                           September 30,        September 30,
                                        ------------------    -----------------
                                         1998       1997       1998      1997
                                        -------    -------    -------   -------
      Net earnings..................... $ 1,950    $ 2,580    $ 6,775   $ 8,722
      Unrealized holding gain (loss) on
        available for sale securities..     (48)       472        475     1,133
                                        -------    -------    -------   -------
      Comprehensive income............. $ 1,902    $ 3,052    $ 7,250   $ 9,855
                                        =======    =======    =======   =======
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, 1998 were  $2,751,000  and  $8,135,000  compared to $3,114,000 and
$10,997,000  for the same periods of 1997. Net cash flows from  operations  were
lower during the 1998 third  quarter and the 1998 nine month period  compared to
the same 1997  periods  primarily  as a result of  decreased  natural gas market
prices  coupled with  essentially  unchanged  overall  sales  volumes (see table
below).  Also during March,  1998 the Partnership paid to Panhandle Eastern Pipe
Line Company or into an escrow account approximately $500,000 (See Note 2 to the
Financial  Statements).  On May 15,  1998  the  Partnership  paid  approximately
$847,000 in Oklahoma  production  payments for the year ended February 28, 1998;
an additional $393,000 has been accrued through September 30, 1998. During July,
1998 the  Partnership  acquired  in Kansas for  $220,000 a royalty  interest  of
approximately  3% that included two wells  operated by the  Partnership  and two
non-Hugoton wells operated by others.

The Partnership has available a $15,000,000  unsecured revolving credit facility
with a current borrowing base of $6,000,000.  Please see Note 3 to the financial
statements for additional information. As of October 31, 1998, letters of credit
totaling  $25,000 were issued under the credit  facility and the amount borrowed
was $100,000. The weighted average amount borrowed under the credit facility was
$100,000 during the first nine months of 1998. Cash and cash equivalents totaled
$3,968,000  at September  30, 1998  compared to $3,344,000 on December 31, 1997.
During the quarter  ended June 30, 1998,  the  Partnership  increased its common
stock holdings in Exxon Corp. by 10,000 shares to 64,000 shares.
<PAGE>
                           DORCHESTER HUGOTON, LTD.
                          (A Texas Limited Partnership)

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (Continued)


The  Partnership's  portion  of gas sales  volumes  (not  reduced  for  Oklahoma
production payments) and weighted average sales prices were:

                                    Three Months Ended         Nine Months Ended
                               ----------------------------    -----------------
                                 September 30,                   September 30,
                               ----------------     June 30,   -----------------
                                1998       1997       1998      1998       1997
Sales Volumes - MMCF:          -----      -----      -----     -----      -----
   Oklahoma ...............    1,432      1,374      1,410     4,281      4,251
   Kansas .................      413        448        435     1,314      1,440
                               -----      -----      -----     -----      -----
Total MMCF ................    1,845      1,822      1,845     5,595      5,691
                               =====      =====      =====     =====      =====
Weighted Average Sales Prices - $/MCF:
   Oklahoma ...............    $1.97      $2.30      $2.22     $2.13      $2.47
   Kansas .................     2.10       2.34       2.30      2.24       2.48
Overall Weighted Avg - $/MCF   $2.00      $2.31      $2.24      2.16       2.47

Oklahoma 1998 gas sales volumes were essentially  unchanged compared to previous
and prior year periods.  Kansas 1998 gas sales volumes  during the third quarter
were  slightly  less than the  second  quarter  of 1998.  Kansas  1998 gas sales
volumes  were  lower  than the  comparable  1997  periods.  Such  decreases  are
primarily a result of natural reservoir declines  experienced by the Partnership
and other producers in the Kansas area.

As discussed in the 1997 Annual Report on Form 10-K, the Partnership's Matter 2A
Well,  which  now  produces  about  412  MCF  per  day,  was inconclusive  as to
Guymon-Hugoton  Field Fort Riley zone  productivity.  The second  Oklahoma  Fort
Riley test  (reported  in both first and  second  Quarter  Reports on Form 10-Q)
continues to produce  approximately 86 MCF per day of new production solely from
the Fort Riley zone, while pumping 30 BBLS of water per day. During the next few
months,  the  Partnership  expects  to  recomplete  this  second  well  into the
Winfield/Krider Zones and cease Fort Riley production.  During August, 1998, the
Partnership  drilled  and  completed  a third Fort  Riley  test  which  recently
produced  approximately  130 MCF per day of new production  solely from the Fort
Riley zone.  Because present state  regulations do not allow gas production from
two  Guymon-Hugoton  field wells on the same 640 acres,  the original well (last
producing 85 MCF per day) was plugged.  The Partnership believes the current 130
MCF per day from the third Fort Riley  well could  likely  change as a result of
current well  stimulation  work. The Partnership  anticipates evaluating several
months results before  considering  another Fort Riley well. IT IS NOT KNOWN HOW
MANY WELLS  SHOULD BE  ATTEMPTED  TO EVALUATE  THE  POTENTIAL  OF THE FORT RILEY
FORMATION. THE OUTCOME OF SUCH EXPLORATION IS UNPREDICTABLE.
<PAGE>
                            DORCHESTER HUGOTON, LTD.
                          (A Texas Limited Partnership)

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (Continued)


As discussed in the 1998 Second Quarter Report on Form 10-Q, the  Partnership is
continuing  to monitor  the  activity  on nearby  acreage in the  Council  Grove
formation. At present seven wells have been drilled by others. The Partnership's
ownership  includes the Council Grove formation  underlying most of its Oklahoma
acreage.  It is not  known if such  monitoring  will  result in any plans by the
Partnership  to  attempt a Council  Grove  well;  previous  preliminary  reviews
yielded  unfavorable  forecasts.  However,  recent results by others have varied
from 108 MCF per day with water  production  to over 1,000 MCF per day initially
with significant volume declines in subsequent months.

As previously  discussed in the  Partnership's  1997 Annual Report on Form 10-K,
the routine workover of wells in Kansas and Oklahoma  includes fracture treating
(the creation of cracks in the formation to assist gas flow toward the well bore
from the producing  zones).  While the results of one workover in Kansas was not
successful in improving production or increasing pressure,  seven well workovers
in  Oklahoma  are  producing  increased  volumes.  Six of the seven  wells  have
increased  in  pressure,   which  combined  with  increased  additional  volume,
generally  indicates  increased  reserves.  Such fracture  treatments  cost from
$25,000 to $75,000 per well.  THE  RESULTS OF SUCH  FRACTURE  TREATING  CAN VARY
WIDELY  FROM  WELL TO  WELL  AND MAY NOT BE  SUCCESSFUL.  However,  at  present,
Oklahoma per well volume increases have been  outstanding  ranging from 40% (175
to 250  MCF  per  day)  to 300%  (148  to 461  MCF  per  day).  The  Partnership
anticipates continuing additional fracture treating during 1998 and 1999.

As previously  discussed in the 1997 Annual Report on Form 10-K, on July 1, 1998
the Oklahoma Corporation Commission ("OCC"), which administers state oil and gas
conservation,  implemented (without announcement)  previously adopted rules that
essentially  remove  limits  on all gas well  production  volume  in the  Guymon
Hugoton  field  including  most  gas  from  the  Partnership's  wells.  The  OCC
specifically  provided  that the rule changes have no bearing on the question of
infill drilling which must be decided separately.  Infill drilling,  if adopted,
would likely allow one well for each 320 acres (as in the  Partnership's  Kansas
properties) versus the present one well for each 640 acres. Both infill drilling
and  elimination  of  the  field  rules  could  require   considerable   capital
expenditures.  THE OUTCOME AND COST OF SUCH  ACTIVITIES IS  UNPREDICTABLE.  Thus
far, the Partnership has not noticed any activity  resulting from elimination of
field rules that would  require  unusual or  accelerated  investment in more gas
compression  or other  facilities  needed to stay  competitive  with  offsetting
operators.

<PAGE>
                            DORCHESTER HUGOTON, LTD.
                          (A Texas Limited Partnership)

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (Continued)


The  Partnership's  field and  administrative  operations are being reviewed for
Year 2000 compliance.  The  Partnership's  previous normal upgrades  resulted in
most internal  operations  already  being Year 2000  compliant.  Some  remaining
operations,  such as non-essential personal computers and non-financial software
products,  can be  easily  upgraded  at  nominal  costs and  inconvenience.  The
Partnership  has  contacted  its gas  purchasers  and third party  software  and
service vendors  concerning Year 2000. Those third parties not already compliant
have  indicated  that they are  working  to be  compliant.  The  Partnership  is
preparing or has prepared  contingency  plans regarding those third parties that
do not  currently  meet Year 2000  compliance.  Costs  incurred to date,  future
costs,  implementation  of contingency  plans and completion of modifications or
replacements  have  not  been  and are not  expected  to be  material  or pose a
material risk.

As previously  discussed in the 1997 Annual Report on Form 10-K, the Partnership
is reviewing  its  strategic  alternatives  in light of the various  mergers and
other business  transactions  occurring in the natural gas and energy  industry.
Although no decision to sell or combine the  Partnership's  business with others
has been made,  the  Partnership  anticipates  possible  discussions  with third
parties which could result in such a decision.  The Partnership has no timetable
for any such  discussions,  and there is no assurance that any such  discussions
will lead to a  transaction.  During the first  quarter of 1998 the  Partnership
adopted a severance policy which would provide up to approximately  $2.8 million
of severance  payments if such obligations  occur. While the Partnership has not
repurchased and retired any of its publicly traded Units to date, the previously
announced program is still in place.
<PAGE>
                            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:
          a)   Effective   September  8,  1998,   the  transfer  agent  for  the
               Partnership's   depositary  units  changed  from  American  Stock
               Transfer & Trust Company to BankBoston,  N.A.,  %Boston EquiServe
               Limited Partnership, 150 Royall Street, Canton, MA 02021.
          b)   Mr.  W.  Randall  Blank  was  re-appointed  to the  Partnership's
               Advisory Committee for a two year term. Mr. Rawles Fulgham,  also
               on the Advisory Committee, will be eligible for re-appointment in
               1999.

     Item 6. Exhibits  and  Reports  on Form 8-K:
          a)   Exhibit  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 3, 1998                 /s/ Kathleen A. Rawlings
                                       Kathleen A. Rawlings
                                       Controller (Principal Accounting Officer)