<PAGE>


                       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, 2001

                                       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 NUMBER 0-7406

                             PRIMEENERGY CORPORATION
             (Exact name of registrant as specified in its charter)

                 DELAWARE                                 84-0637348
      (state or other jurisdiction of                  (I.R.S. Employer
      incorporation or organization)                  Identification No.)

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

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

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

           Securities registered pursuant to Section 12(g) of the Act:
                     COMMON STOCK, PAR VALUE $.10 PER SHARE
                                (Title of Class)

     Indicate 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 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-B 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's revenues for its most recent fiscal year were $42,408,000.

     The aggregate market value of the voting stock of the Registrant held by
non-affiliates, computed on the average bid and asked prices of such stock in
the over-the-counter market, as of March 25, 2002, was $6,816,007.

     The number of shares outstanding of each class of the Registrant's Common
Stock as of March 25, 2002 was: Common Stock, $0.10 par value, 3,763,151.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Registrant's proxy statement to be furnished to
stockholders in connection with its Annual Meeting of Stockholders to be held in
June, 2002, are incorporated by reference in Part III hereof.

     Transitional Small business Disclosure Format (check one)   Yes     No  X
                                                                     ---    ---


<PAGE>



                             PRIMEENERGY CORPORATION

                             FORM 10-K ANNUAL REPORT
                            FOR THE FISCAL YEAR ENDED
                                DECEMBER 31, 2001

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

GENERAL

         This report contains forward-looking statements that are based on
management's current expectations, estimates and projections. Words such as
"expects," "anticipates," "intends," "plans," "believes," "projects" and
"estimates," and variations of such words and similar expressions are intended
to identify such forward-looking statements. These statements constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, and are subject to the safe harbors created thereby. These
statements are not guarantees of future performance and involve risks and
uncertainties and are based on a number of assumptions that could ultimately
prove inaccurate and, therefore, there can be no assurance that they will prove
to be accurate. Actual results and outcomes may vary materially from what is
expressed or forecast in such statements due to various risks and uncertainties.
These risks and uncertainties include, among other things, volatility of oil and
gas prices, competition, risks inherent in the Company's oil and gas operations,
the inexact nature of interpretation of seismic and other geological and
geophysical data, imprecision of reserve estimates, the Company's ability to
replace and expand oil and gas reserves, and such other risks and uncertainties
described from time to time in the Company's periodic reports and filings with
the Securities and Exchange Commission. Accordingly, stockholders and potential
investors are cautioned that certain events or circumstances could cause actual
results to differ materially from those projected.

         PrimeEnergy Corporation (the "Company") was organized in March, 1973,
under the laws of the State of Delaware.

         The Company is engaged generally in the oil and gas business through
the acquisition, exploration, development, and production of crude oil and
natural gas. The Company's properties are located primarily in Texas, Oklahoma,
West Virginia and Louisiana. The Company's wholly-owned subsidiary, PrimeEnergy
Management Corporation ("PEMC"), acts as the managing general partner in 45 oil
and gas limited partnerships (the "Partnerships") of which four are publicly
held, and acts as the managing trustee of two asset and income business trusts
("the Trusts"). The Company, through its wholly-owned subsidiaries Prime
Operating Company, Southwest Oilfield Construction Company, Eastern Oil Well
Service Company and EOWS Midland Company, acts as operator and provides well
servicing support operations for many of the oil and gas wells in which the
Partnerships, the Trusts and the Company have an interest, and also for third
parties, primarily in Texas, Oklahoma and West Virginia. The Company is also
active in the acquisition of producing oil and gas properties through joint
ventures with industry partners and private investors.

THE PARTNERSHIPS AND TRUSTS

         A substantial portion of the assets and revenues of PEMC are derived
from the interest of PEMC in the oil and gas properties acquired by the
Partnerships and Trusts. As the managing general partner in each of the
Partnerships and managing trustee of the Trusts, PEMC receives approximately
from 5% to 15% of the net revenues of each Partnership and Trust as a carried
interest in the Partnership's and Trust's properties. The Company has also
repurchased substantial limited partner interests in these entities.

         Since 1975, PEMC has sponsored a total of 59 limited partnerships, 22
of which were offered publicly and 37 of which were offered in private
placements and two Delaware business trusts, both of which were offered
publicly. The aggregate number of limited partners in the Partnerships and
beneficial owners of the Trusts now administered by PEMC is approximately 4,800.
The Partnership and Trust interests were sold by broker-dealers which are
members of the National Association of Securities Dealers, Inc. through a
managing dealer. The total funds contributed to the Partnerships and Trusts was
about $157,550,000.

         A significant portion of the Company's business is conducted through
the Partnerships and Trusts, either through its ownership of interests in
various properties derived through the Partnerships and Trusts, or as operator
of, and a provider of oilfield services to, oil and gas wells in which the
Partnerships and Trusts have interests.


                                       2
<PAGE>


         PEMC, as managing general partner of the Partnerships and managing
trustee of the Trusts, is responsible for all Partnership and Trust activities,
including the review and analysis of oil and gas properties for acquisition, the
drilling of development wells and the production and sale of oil and gas from
productive wells. PEMC also provides administration, accounting and tax
preparation for the Partnerships and Trusts. PEMC is liable for all debts and
liabilities of the Partnerships and Trusts, to the extent that the assets of a
given limited partnership or trust are not sufficient to satisfy its
obligations.

JOINT VENTURES

         PEMC organizes and the Company participates in various joint ventures
formed for the purpose of acquiring and developing oil and gas assets. The
Company receives varying interests in the net revenues of each joint venture as
a carried interest in the joint venture properties. The Company's participation
in the joint ventures varies from none to approximately 78%. The Company's
carried interest is generally 10% of funds contributed by outside investors.
Since 1987, our joint venture partners have invested $27.6 million with the
Company.

WELL OPERATIONS

         The Company's operations are conducted through a central office in
Houston, Texas, and district offices in Houston and Midland, Texas, Oklahoma
City, Oklahoma, and Charleston, West Virginia. The Company currently operates
1,550 oil and gas wells, 411 through the Houston office, 181 through the Midland
office, 463 through the Oklahoma City office and 495 through the Charleston,
West Virginia office. Substantially all of the wells operated by the Company are
wells in which the Company, the Partnerships, the Trusts or our joint venture
partners have an interest.

         The Company operates wells pursuant to operating agreements which
govern the relationship between the Company as operator and the other owners of
working interests in the properties, including the Partnerships, Trusts and
joint venture participants. For each operated well, the Company receives monthly
fees that are competitive in the areas of operations and also is reimbursed for
expenses incurred in connection with well operations.

EXPLORATION, DEVELOPMENT AND ACQUISITION ACTIVITIES; OTHER MATTERS

         The Company continues to explore opportunities for the acquisition and
development of producing oil and gas properties, and will continue to engage in
exploratory operations and development drilling of properties in which it has an
interest. The Company attempts to assume the position of operator in all
acquisitions of producing properties.

RECENT ACTIVITIES

         The Company participated in, and was operator of, four wells drilled on
the East Wakita prospect in Oklahoma during 2001. Three of these wells were
successfully completed, while 1 was a dry hole. Two additional wells were
successfully completed on the prospect in the first quarter of 2002.

         The Company participated in, and was the operator of, two wells drilled
on the DSR prospect in Oklahoma during 2001. One of these wells was successfully
completed and one has been temporarily abandoned pending further evaluation.

         The Company participated in, and was the operator of, two wells that
were successfully completed in the Weatherby field in Reagan County, Texas.

         The Company successfully completed eleven wells in Upton County, Texas
during 2001.

         The Company participated in, and was the operator of, a successfully
completed well on the Cadiz prospect in Bee County, Texas in March of 2001.

         In March of 2001, the Company successfully reentered and recompleted a
well in the Tuleta East field in Bee County, Texas.

         The Company is committed to offer to repurchase the interests of the
limited partners and trust unitholders in certain of the Partnerships, as
described more fully in Note 7 of the Financial Statements. During 2001, the
Company purchased such interests in an amount totaling $545,000.


                                       3
<PAGE>


         The Company will continue to evaluate prospects for leasehold
acquisitions and for exploration and development operations in areas in which it
owns interests and is actively pursuing the acquisition of producing properties.

         In order to diversify and broaden its asset base, the Company will
consider acquiring the assets or stock in other entities and companies in the
oil and gas business. The main objective of the Company in making any such
acquisitions will be to acquire income producing assets so as to increase the
Company's net worth and increase the Company's oil and gas reserve base.

         The Company presently owns producing and non-producing properties
located primarily in Texas, Oklahoma, West Virginia and Louisiana, and owns a
substantial amount of well servicing equipment. The Company does not own any
refinery or marketing facilities, and does not currently own or lease any bulk
storage facilities or pipelines other than adjacent to and used in connection
with producing wells and the interests in certain gas gathering systems. All of
the Company's oil and gas properties and interests are located in the
continental United States.

         In the past, the supply of gas has exceeded demand on a cyclical basis,
and the Company is subject to a combination of shut-in and/or reduced takes of
gas production during summer months. Prolonged shut-ins could result in reduced
field operating income from properties in which the Company acts as operator.

         Exploration for oil and gas requires substantial expenditures
particularly in exploratory drilling in undeveloped areas, or "wildcat
drilling." As is customary in the oil and gas industry, substantially all of the
Company's exploration and development activities are conducted through joint
drilling and operating agreements with others engaged in the oil and gas
business.

         Summaries of the Company's oil and gas drilling activities, oil and gas
production, and undeveloped leasehold, mineral and royalty interests are set
forth under Item 2., "Description of Property," below. Summaries of the
Company's oil and gas reserves, future net revenue and present value of future
net revenue are also set forth under Item 2., "Description of Property -
Reserves" below.

REGULATION

         The Company'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 Company's future operations
and production of oil and gas. The Company's natural gas production and prices
received for natural gas are regulated by the Federal Energy Regulatory
Commission ("FERC"), the Natural Gas Act of 1938 ("NGA") and the Natural Gas
Policy Act of 1978 ("NGPA") and various state regulations. The Company is also
subject to state drilling and proration regulations affecting its drilling
operations and production rates.

         Additional proposals and proceedings that might affect the natural gas
industry are considered from time to time by Congress, the FERC, state
regulatory bodies and the courts. The Company cannot predict when or if any such
proposals might become effective, or their effect, if any, on the Company's
operations. The natural gas industry historically has been very heavily
regulated; therefore, there is no assurance that the less stringent regulatory
approach recently pursued by the FERC and Congress will continue indefinitely
into the future.

         In the event the Company conducts operations on federal, state or
Indian oil and gas leases, such operations must comply with numerous regulatory
restrictions, including various nondiscrimination statutes, and certain of such
operations must be conducted pursuant to certain on-site security regulations
and other appropriate permits issued by the Bureau of Land Management ("BLM") or
Minerals Management Service ("MMS") or other appropriate federal or state
agencies.

         The Mineral Leasing Act of 1930 ("Mineral Act") prohibits direct or
indirect ownership of any interest in federal onshore oil and gas leases by a
foreign citizen of a country that denies "similar or like privileges' to
citizens of the United States. Such restrictions on citizens of a
"non-reciprocal" country include ownership or holding or controlling stock in a
corporation that holds a federal onshore oil and gas lease. If this restriction
is violated, the corporation's lease can be canceled in a proceeding instituted
by the United States Attorney General. Although the regulations of the BLM
(which administers the Mineral Act) provide for agency designations of
non-reciprocal countries, there are presently no such designations in effect.
The Company owns interests in federal onshore oil and gas leases. It is possible
that Common Stock could be acquired by citizens of foreign countries, which at
some time in the future might be determined to be non-reciprocal under the
Mineral Act.


                                       4
<PAGE>


TAXATION

         The Company's oil and gas operations are affected by federal income tax
laws applicable to the petroleum industry. The Company is permitted to deduct
currently, rather than capitalize, intangible drilling and development costs
incurred or borne by it. As an independent producer, the Company is also
entitled to a deduction for percentage depletion with respect to the first 1,000
barrels per day of domestic crude oil (and/or equivalent units of domestic
natural gas) produced by it, if such percentage depletion exceeds cost
depletion. Generally, this deduction is computed based upon the lesser of 100%
of the net income, or 15% of the gross income from a property, without reference
to the basis in the property. The amount of the percentage depletion deduction
so computed which may be deducted in any given year is limited to 65% of taxable
income. Any percentage depletion deduction disallowed due to the 65% of taxable
income test may be carried forward indefinitely.

         The Company is entitled to credits for producing fuel from a
non-conventional source under Section 29 of the Internal Revenue Code, primarily
from certain of the Company's operations in West Virginia.

         See Notes 1 and 9 to the consolidated financial statements included in
this Report for a discussion of accounting for income taxes and availability of
federal tax net operating loss carryforwards and alternative minimum tax credit
carryforwards.

COMPETITION AND MARKETS

         The business of acquiring producing properties and non-producing leases
suitable for exploration and development is highly competitive. Competitors of
the Company in its efforts to acquire both producing and non-producing
properties include oil and gas companies, independent concerns, income programs
and individual producers and operators, many of which have financial resources,
staffs and facilities substantially greater than those available to the Company.
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 hydroelectric power. Competition among petroleum companies for favorable oil
and gas properties and leases can be expected to increase.

         The availability of a ready market for any oil and gas produced by the
Company at acceptable prices per unit of production will depend upon numerous
factors beyond the control of the Company, including the extent of domestic
production and importation of oil and gas, the proximity of the Company'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 use and allocation of
oil and gas and their substitute fuels. There is no assurance that the Company
will be able to market all of the oil or gas produced by it or that favorable
prices can be obtained for the oil and gas production.

         Listed below are the percent of the Company's total oil and gas sales
made to each of the customers whose purchases represented more than 10% of the
Company's oil and gas sales.

<Table>

<S>                                    <C>
      Texon Distributing L.P.          19.70%
      Unimark LLC                      13.79%
</Table>

         Although there are no long-term purchasing agreements with these
purchasers, the Company believes that they will continue to purchase its oil and
gas products and, if not, could be replaced by other purchasers.

ENVIRONMENTAL MATTERS

         Over the past 30 years, the petroleum industry has been affected by a
wide variety of environmental issues. Throughout the 1970's and 1980's federal
and state environmental regulations have been enacted that affect all aspects of
the Company's operations. These regulations have primarily focused on correcting
existing environmental concerns and implementing preventive controls to reduce
future pollution.

         The Company's activities are subject to existing federal, state and
local laws and regulations governing environmental quality and pollution
control. It is anticipated that, absent the occurrence of an extraordinary
event, compliance with existing federal, state and local laws, rules and
regulations regulating the release of materials in the environment or otherwise
relating to the protection of the environment will not have a material effect
upon the operations, capital expenditures, earnings or the competitive position
of the Company. The Company cannot predict what effect additional regulation or
legislation, enforcement policies thereunder, and claims for damages to
property, employees, other persons and the environment resulting from the
Company's operations or ownership of its property could have on its activities.


                                       5
<PAGE>


         Activities of the Company with respect to oil and gas facilities,
including the operation and construction of pipelines, plants and other
facilities for transporting, processing, treating or storing oil and gas and
other products, are subject to stringent environmental regulation by state and
federal authorities including the Environmental Protection Agency ("EPA"). Such
regulation can increase the cost of planning, designing, installing and
operating such facilities. In most instances, the regulatory requirements relate
to water and air pollution control measures. Although the Company believes that
compliance with environmental regulations will not have a material adverse
effect on it, risks of substantial costs and liabilities are inherent in oil and
gas facility operations, and there can be no assurance that significant costs
and liabilities will not be incurred. Moreover, it is possible that other
developments, such as stricter environmental laws and regulations, and claims
for damages to property or persons resulting from operation of oil and gas
facilities, would result in substantial costs and liabilities to the Company.

         The Company currently owns or leases, and has in the past owned or
leased, numerous properties that have been used for production of oil and gas
for many years. Although the Company has utilized operating and disposal
practices that were standard in the industry at the time, hydrocarbons or other
wastes may have been disposed of or released on or under the properties owned or
leased by the Company. In addition, many of these properties have been operated
by third parties over whom the Company had no control as to such entities'
treatment of hydrocarbons or other wastes and the manner in which such
substances may have been disposed of or released. State and federal laws
applicable to oil and gas wastes and properties have gradually become stricter.
Under these new laws, the Company could be required to remove or remediate
previously disposed wastes (including wastes disposed of or released by prior
owners or operators) or property contamination (including groundwater
contamination) or to perform remedial plugging operations to prevent future
contamination.

         The Company may generate wastes, including hazardous wastes, that are
subject to the Federal Resource Conservation and Recovery Act and comparable
state statutes. The EPA has limited the disposal options for certain hazardous
wastes and is considering the adoption of stricter disposal standards for
non-hazardous wastes. Furthermore, certain wastes generated by the Company's oil
and gas operations that are currently exempt from treatment as "hazardous
wastes" may in the future be designated as "hazardous wastes," and therefore be
subject to more rigorous and costly operating and disposal requirements.

         In addition, legislation has been proposed in Congress from time to
time that would reclassify certain oil and gas exploration and production wastes
as "hazardous wastes," which would make the reclassified wastes subject to much
more stringent handling, disposal and clean-up requirements. If such legislation
were to be enacted, it could have a significant impact on the operating costs of
the Company, as well as the oil and gas industry in general. Initiatives to
further regulate the disposal of oil and gas wastes are also pending in certain
states, and these various initiatives could have a similar impact on the
Company.

         The Federal Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), also known as the "Superfund" law, imposes joint and
several liability, without regard to fault or the legality of the original
conduct, on certain classes of persons with respect to the release of a
"hazardous substance" into the environment. These persons include the current
owner and operator of a site and persons that disposed of or arranged for the
disposal of the hazardous substances found at a site. CERCLA also authorizes the
EPA and, in some cases, third parties to take actions in response to threats to
the public health or the environment and to seek to recover from the responsible
classes of persons the costs of such action. In the course of its operations,
the Company may have generated and may generate wastes that fall within CERCLA'S
definition of "hazardous substances." The Company may also be an owner of sites
on which "hazardous substances" have been released by previous owners or
operators. The Company may be responsible under CERCLA for all or part of the
costs to clean up sites at which such wastes have been released. Neither the
Company nor, to its knowledge, its predecessors has been named a potentially
responsible person under CERCLA, nor does the Company know of any prior owners
or operators of its properties that are named as potentially responsible parties
related to their ownership or operation of such property.

         The Company has a proactive environmental policy that management feels
benefits the Company through increased operating profits, improved landowner
relations and an overall enhanced Company image. To this end, the Company has
also adopted a stringent environmental evaluation prior to purchasing a
property. This pre-acquisition assessment, usually referred to as an
Environmental Site Assessment, typically consists of a historical review of the
property combined with a site inspection and limited testing, when necessary.
The objective of this pre-acquisition assessment is to document conditions at
the time of acquisition and to assign liability to the seller for past
operations.

EMPLOYEES

         At March 25, 2002, the Company had 196 full-time and 11 part-time
employees, 19 of whom were employed by the Company at its principal offices in
Stamford, Connecticut, 23 in Houston, Texas, at the offices of Prime Operating
Company, Eastern Oil Well Service Company and EOWS Midland Company and 165
employees who were


                                       6
<PAGE>


primarily involved in the district operations of the Company in Houston and
Midland, Texas, Oklahoma City, Oklahoma and Charleston, West Virginia.

ITEM 2. DESCRIPTION OF PROPERTY.

         The Company's executive offices and those of PEMC, are located at One
Landmark Square, Stamford, Connecticut, in leased premises of about 8,860 square
feet. The executive offices of Prime Operating Company, Eastern Oil Well Service
Company and EOWS Midland Company are located in leased premises in Houston,
Texas, and the offices of Southwest Oilfield Construction Company are in
Oklahoma City, Oklahoma.

         The Company maintains district offices in Houston and Midland, Texas,
Oklahoma City, Oklahoma and Charleston, West Virginia, and has field offices in
Carrizo Springs and Midland, Texas, Kingfisher and Garvin, Oklahoma and Orma,
West Virginia.

         The Company owns several parcels of land in Oklahoma, on which oil and
gas wells it owns and operates are located. These properties were purchased
primarily to simplify operations of these properties.

         Substantially all of the Company's oil and gas properties are subject
to a mortgage given to collateralize indebtedness of the Company, or are subject
to being mortgaged upon request by the Company's lender for additional
collateral.

         The information set forth below concerning the Company's properties,
activities, and oil and gas reserves include the Company's interests in the
Partnerships, Trusts and joint ventures.

         The following table sets forth the exploratory and development drilling
experience with respect to wells in which the Company participated during the
five years ended December 31, 2001.

<Table>
<Caption>


                       2001                2000                1999                1998                1997
                       ----                ----                ----                ----                ----
                 Gross      Net      Gross      Net      Gross      Net      Gross      Net      Gross      Net
                 -----     -----     -----     -----     -----     -----     -----     -----     -----     -----
<S>              <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
Exploratory:
    Oil              1     1.000        --        --         1      .300         1      .468        --        --
    Gas              1      .602         3     1.279         1      .683         2      .387         2        .8
    Dry             --        --         2      .276         2      .510         2      .686         2      .509
Development:
    Oil              1      .500        --        --        --        --         1      .145         5      .796
    Gas              7     4.926         7     4.134         2      .015         5      .316         5     2.037
    Dry              2     1.585        --        --         2      .745        --        --         3     1.030
Total:
    Oil              2     1.500        --        --         1      .300         2      .613         5      .796
    Gas              8     5.528        10     5.413         3      .698         7      .703         7     2.837
    Dry              2     1.585         2      .276         4     1.255         2      .686         5     1.539
                   ---     -----       ---     -----       ---     -----       ---     -----       ---     -----
                    12     8.613        12     5.689         8     2.253        11     2.002        17     5.172
                   ===     =====       ===     =====       ===     =====       ===     =====       ===     =====
</Table>

OIL AND GAS PRODUCTION

         As of December 31, 2001, the Company had ownership interests in the
following numbers of gross and net producing oil and gas wells and gross and net
producing acres (1).

<Table>
<Caption>
                                                     Gross           Net
                                                    -------        ------
<S>                                                 <C>            <C>
         Producing wells(1):
              Oil Wells .....................           893        212.43
              Gas Wells .....................         1,139        249.28
         Producing Acres ....................       252,292        61,009
</Table>

(1)      A gross well or gross acre is a well or an acre in which a working
         interest is owned. A net well or net is the sum of the fractional
         revenue interests owned in gross wells or gross acres. Wells are
         classified by their primary product. Some wells produce both oil and
         gas.

         The following table shows the Company's net production of crude oil and
natural gas for each of the five years ended December 31, 2001. "Net" production
is net after royalty interests of others are deducted and is determined by
multiplying the gross production volume of properties in which the Company has
an interest by percentage of the leasehold, mineral or royalty interest owned by
the Company.


                                       7
<PAGE>

<Table>
<Caption>

                            2001         2000           1999         1998          1997
                         ---------     ---------      --------     ---------     ---------
<S>                      <C>           <C>            <C>          <C>           <C>
Oil (barrels) ......       306,000       298,000       264,000       277,000       277,000
Gas (Mcf) ..........     3,764,000     3,930,000      3289,000     3,621,000     3,901,000
</Table>

         The following table sets forth the Company's average sales price per
barrel of crude oil and average sales prices per one thousand cubic feet ("Mcf")
of gas, together with the Company's average production costs per unit of
production for the five years ended December 31, 2001.

<Table>
<Caption>

                                               2001       2000       1999       1998       1997
                                              ------      -----      -----      -----      -----
<S>                                           <C>         <C>        <C>        <C>        <C>
Average sales price
   per barrel ...........................     $24.92      28.34      15.71      12.39      19.35
Average sales price
   Per Mcf ..............................     $ 4.08       3.76       2.32       2.19       2.57
Average production
  costs per net equivalent
  barrel(1) .............................     $11.88       9.57       7.76       7.60       7.59
</Table>

----------

(1) Net equivalent barrels are computed at a rate of 6 Mcf per barrel.

UNDEVELOPED ACREAGE

         The following table sets forth the approximate gross and net
undeveloped acreage in which the Company has leasehold, mineral and royalty
interests as of December 31, 2001. "Undeveloped acreage" is that acreage on
which wells have not been drilled or completed to a point that would permit the
production of commercial quantities of oil and gas, regardless of whether or not
such acreage contains proved reserves.

<Table>
<Caption>


                                Leasehold                   Mineral                    Royalty
                                Interests                  Interests                  Interests
                        ------------------------     ----------------------     ----------------------
                         Gross             Net        Gross           Net        Gross           Net
      State              Acres            Acres       Acres          Acres       Acres          Acres
      -----             -------          -------     -------        -------     -------        -------
<S>                     <C>              <C>         <C>            <C>         <C>            <C>
Colorado                     --               --         799             23          --             --
Montana                      --               --      13,984             59         786              5
Nebraska                     --               --       2,553            331          --             --
North Dakota                 --               --         640              1          --             --
Oklahoma                 22,935            6,477         320              1          --             --
Texas                    15,014            4,925         680             16          --             --
Wyoming                   1,000              125        5043             35         140             35
                        -------          -------     -------        -------     -------        -------
TOTAL                    38,949           11,527      24,019            466         926             40
                        =======          =======     =======        =======     =======        =======
</Table>

RESERVES

         The Company's interests in proved developed and undeveloped oil and gas
properties have been evaluated by Ryder Scott & Company L.P. for the years ended
December 31, 1997, 1998, 1999, 2000 and 2001. All of the Company's reserves are
located within the continental United States. The following table summarizes the
Company's oil and gas reserves at each of the respective dates (figures
rounded):

<Table>
<Caption>


                                Reserve Category
            -------------------------------------------------------
                 Proved Developed             Proved Undeveloped                  Total
            -------------------------     -------------------------     -------------------------
 As of          Oil           Gas           Oil             Gas           Oil              Gas
 12-31         (bbls)        (Mcf)         (bbls)          (Mcf)         (bbls)           (Mcf)
-------     ----------     ----------     ----------     ----------     ----------     ----------
<S>         <C>            <C>            <C>            <C>            <C>            <C>
 1997       1,364,000      16,661,000        77,000            --       1,441,000      16,661,000
 1998       1,122,000      17,341,000        78,000            --       1,200,000      17,341,000
 1999       2,110,000      22,046,000            --       156,000       2,110,000      22,202,000
 2000       2,362,000      27,029,000            --            --       2,362,000      27,029,000
 2001       1,996,000      24,266,000            --       453,000       1,996,000      24,719,000
</Table>

         The estimated future net revenue (using current prices and costs as of
those dates, exclusive of income taxes) and the present value of future net
revenue (at a 10% discount for estimated timing of cash flow) for the Company's
proved developed and proved undeveloped oil and gas reserves at the end of each
of the five years ended December 31, 2001, are summarized as follows (figures
rounded):


                                       8
<PAGE>

<Table>
<Caption>


                   Proved Developed                 Proved Undeveloped                      Total
            ------------------------------      ---------------------------      -----------------------------
                             Present Value                    Present Value                      Present Value
 As of        Future Net       Of Future        Future Net       Of Future       Future Net        Of Future
 12-31         Revenue        Net Revenue        Revenue        Net Revenue       Revenue         Net Revenue
-------     ------------     -------------      ----------    -------------      -----------     -------------
<S>         <C>              <C>                <C>           <C>                <C>             <C>
 1997       $ 30,056,000       21,306,000          833,000          531,000       30,889,000       21,837,000
 1998       $ 20,839,000       13,444,000          359,000          212,000       21,198,000       13,656,000
 1999       $ 41,103,000       26,057,000          258,000          151,000       41,361,000       26,208,000
 2000       $199,376,000      113,137,000               --               --      199,376,000      113,137,000
 2001       $ 41,086,000       24,653,000          957,000          629,000       42,043,000       25,282,000
</Table>

         "Proved developed" oil and gas reserves are reserves that can be
expected to be recovered from existing wells with existing equipment and
operating methods. "Proved undeveloped" oil and gas reserves are reserves that
are expected to be recovered from new wells on undrilled acreage, or from
existing wells where a relatively major expenditure is required for
recompletion.

         In accordance with FASB Statement No. 69, December 31 market prices are
determined using the daily oil price or daily gas sales price ("spot price")
adjusted for oilfield or gas gathering hub and wellhead price differentials
(e.g. grade, transportation, gravity, sulfur, and BS&W) as appropriate. Also in
accordance with SEC and FASB specifications, changes in market prices subsequent
to December 31 are not considered. The spot price for gas at December 31, 2001
and 2000 were $2.63 and $9.23 per MMBTU, respectively. The range of spot prices
during the year 2001 was a low of $1.77 and a high of $10.29 and the average was
$3.94. The range during the first quarter of 2002 has been from $2.01 to $3.58
with an average of $2.50. The recent futures market prices have been in the
$3.00 to $3.50 range. While it may reasonably be anticipated that the prices
received by the Company for the sale of its production may be higher or lower
than the prices used in this evaluation, as described above, and the operating
costs relating to such production may also increase or decrease from existing
levels, such possible changes in prices and costs were, in accordance with rules
adopted by the SEC, omitted from consideration in making this evaluation for the
SEC case. Actual volumes produced, prices received and costs incurred by the
Company may vary significantly from the SEC case.

         Since January 1, 2002, the Company 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, except Form EIA-23, Annual Survey of Domestic Oil and Gas Reserves,
filed with The Energy Information Administration of the U.S. Department of
Energy.

ITEM 3. LEGAL PROCEEDINGS.

         From time to time, the Company is party to certain legal actions and
claims arising in the ordinary course of business. While the outcome of these
events cannot be predicted with certainty, management does not expect these
matters to have a materially adverse effect on the financial position or results
of operations of the Company.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.

         No matters were submitted during the fourth quarter of the fiscal year
ended December 31, 2001, to a vote of the Company's security-holders through the
solicitation of proxies or otherwise.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         The Company's Common Stock is traded in the NASDAQ Stock Market,
trading symbol "PNRG". The high and low bid quotations for each quarterly period
during the two years ended December 31, 2001, were as follows:

<Table>
<Caption>

    2000               High         Low           2001                    High        Low
-------------         -------     -------     -------------             -------     -------
<S>                   <C>         <C>         <C>                       <C>         <C>
First Quarter         $  4.91     $  4.83     First Quarter             $  6.56     $  6.49
Second Quarter           4.56        4.40     Second Quarter               8.11        7.75
Third Quarter            5.84        5.78     Third Quarter                8.47        8.30
Fourth Quarter           7.38        7.23     Fourth Quarter               8.00        7.95
</Table>


                                       9
<PAGE>


The above quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commissions, and may not represent actual transactions.

         The approximate number of record holders of the Company's Common Stock
as of March 25, 2002 was 1,051.

         No dividends have been declared or paid during the past two years on
the Company's Common Stock. Provisions of the Company's line of credit agreement
restrict the Company's ability to pay dividends. Such dividends may be declared
out of funds legally available therefore, when and as declared by the Company's
Board of Directors.

ITEM 6. SELECTED FINANCIAL DATA

         The following table summarizes certain selected financial data to
highlight significant trends in the Company'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>

                                           2001             2000            1999             1998              1997
                                        -----------      ----------      ----------       ----------       ----------
<S>                                     <C>              <C>             <C>              <C>              <C>
Revenues                                $42,408,000      39,182,000      25,520,000       24,795,000       28,725,000
Income (loss) from operations           $ 6,968,000       6,148,000      (2,116,000)      (2,061,000)         842,000
Net Income (loss)                       $ 5,413,000       5,365,000      (2,138,000)      (1,692,000)       1,024,000
Income (loss) per common share          $      1.39            1.26           (0.48)           (0.38)            0.19
Net Cash provided by operations         $12,313,000      11,498,000       7,677,000        6,846,000        8,773,000
Total Assets                            $35,816,000      35,094,000      30,475,000       28,611,000       34,668,000
Long-term obligations                   $16,958,000      18,213,000      19,217,000       16,505,000       18,865,000
Cash Dividends                                 None            None            None             None             None
</Table>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

         This discussion should be read in conjunction with the financial
statements of the Company and notes thereto. The Company's subsidiaries are
defined in Note 1 of the financial statements. PEMC is the managing general
partner or managing trustee in several Limited Partnerships and Trusts
(collectively, the "Partnerships").

LIQUIDITY AND CAPITAL RESOURCES

         Net cash provided by operations was $12,313,000 in 2001, $11,498,000 in
2000, and $7,677,000 in 1999.

        The Company has been party to a series of credit agreements with its
primary lender or its predecessors since 1983. The current agreement, entered
into in April, 1995, provides for borrowings under a Master Note. Advances under
the agreement, as amended, are limited to the borrowing base as defined in the
agreement. The borrowing base is re-determined by the lender on a semi-annual
basis. Since the beginning of 1999, the borrowing base has ranged from $20
million to $23.7 million. The credit agreement provides for interest on
outstanding borrowings at the bank's base rate, as defined, payable monthly, or
at rates ranging from 1 1/2% to 2% over the London Inter-Bank Offered Rate (LIBO
rate) depending upon the Company's utilization of the available line of credit,
payable at the end of the applicable interest period.

         The average interest rates paid on outstanding borrowings subject to
interest at the bank's base rate during 2001 and 2000 were 6.92% and 9.46%,
respectively. During the same periods, the average rates paid on outstanding
borrowings bearing interest based upon the LIBO rate were 5.98% and 8.46%. As of
December 31, 2001 and 2000, the total outstanding borrowings were $16,950,000
and $17,200,000, respectively, with an additional $6,050,000 and $1,750,000
available, and $14,950,000 and $13,500,000 of the amounts outstanding accruing
interest at the LIBO rate option.

         The Company's oil and gas properties as well as certain receivables and
equipment are pledged as security under the loan agreement. The agreement
requires the Company to maintain, as defined, a minimum current ratio, tangible
net worth, debt coverage ratio and interest coverage ratio, and restrictions are
placed on the payment of dividends and the amount of treasury stock the Company
may purchase.

         The Company spent approximately $1,386,000 developing the East Wakita
field during 2001. Three successful wells were drilled on this property in 2001,
and two more successful wells were drilled in the first quarter of 2002. Further
development of this prospect is planned for the future.

         The Company spent $1,100,000 developing the DSR prospect in Garvin
County, Oklahoma. First sales from this field occurred in January, 2002.
Additional development of this field is planned for 2002.


                                       10
<PAGE>


         In total, the Company spent $6,650,000 on the acquisition and
development of oil and gas properties during 2001, including $545,000 spent to
repurchase limited partnership interests from investors in its oil and gas
partnerships.

         The Company spent $2,054,000 on field service equipment during 2001,
and an additional $108,000 on computers, software and related equipment. The
Company spent $3,156,000 to repurchase shares of its treasury stock in 2001. As
of the date of this report, the Company had spent an additional $182,000 on
treasury stock purchases in 2002.

         It is the goal of the Company to increase its oil and gas reserves and
production through the acquisition and development of oil and gas properties.
The Company also continues to explore and consider opportunities to further
expand its oilfield servicing revenues through additional investment in field
service equipment. However, the majority of the Company's capital spending is
discretionary, and the ultimate level of expenditures will be dependent on the
Company's assessment of the oil and gas business environment, the number and
quality of oil and gas prospects available, the market for oilfield services,
and oil and gas business opportunities in general.

RESULTS OF OPERATIONS:

         2001 AS COMPARED TO 2000

         The Company had net income of $5,413,000 in 2001, as compared to
$5,365,000 in 2000. Oil and gas production and revenue remained flat, and
district operating income increased by 26% to $17,082,000, contributing to an 8%
increase in overall revenues to $42,408,000.

         Oil and gas sales were $22,998,000 in 2001 as compared to $23,223,000
in 2000, a drop of less than 1%. A chart summarizing oil and gas production and
revenue, including the Company's share of production and revenue from the
Partnerships, follows.

<Table>
<Caption>

                                         2001           2000       Increase (Decrease)
                                     -----------     -----------   -------------------
<S>                                  <C>             <C>           <C>
         Barrels of Oil Produced         306,016         297,562           8,454
         Average Price Received      $   24.9199     $   28.3354     $   (3.4155)
                                     -----------     -----------

         Oil Revenue                 $ 7,626,000     $ 8,432,000     $  (806,000)
                                     -----------     -----------

         Mcf of Gas Produced           3,763,605       3,929,532        (165,927)
         Average Price Received      $    4.0843     $    3.7641     $    0.3202
                                     -----------     -----------

         Gas Revenue                 $15,372,000     $14,791,000     $   581,000
                                     -----------     -----------

         Total Oil & Gas Revenue     $22,998,000     $23,223,000     $  (225,000)
                                     ===========     ===========
</Table>

         The Company completed a successful well on its Cadiz field in Bee
County, Texas during 2001. Two successful wells had been completed on this
prospect in 2000. These three wells contributed 3,400 barrels of oil, 380,000
Mcf of gas and $1,624,000 in revenue in 2001, as compared to 1,200 barrels,
168,000 Mcf of gas and $853,000 in 2000. No further drilling is currently
planned for this prospect.

         The Company spent $1,386,000 developing the East Wakita field in
Oklahoma during 2001, including the drilling of three successful gas wells. Two
additional successful wells were drilled on this prospect in the first quarter
of 2002, and additional development is planned for the future. This prospect
contributed $915,000 to oil and gas revenues in 2001.

         The Francis Martin well experienced a natural decline in gas and oil
production and increase in water production as well as shut-ins for mechanical
work during 2001. This well contributed 2,000 barrels of oil, 115,000 Mcf of gas
and $654,000 in revenue in 2001, as compared to 6,000 barrels, 371,000 Mcf and
$1,654,000 in 2000.

         District operating income increased 26% to $17,082,000 in 2001 as
compared to $13,585,000 in 2000. This increase reflects the utilization of the
over $2,000,000 in field service equipment the Company purchased during the
year, and its focus on expanding the amount of work performed for third parties
on wells not operated by the Company. This increase also reflects full
administrative overhead charges on marginal properties where the Company had
previously discounted such fees.


                                       11
<PAGE>


         Lease operating expenses increased by 22% to $11,083,000 in 2001 as
compared to $9,114,000 in 2000. Approximately $874,000 of this amount is
attributable to properties purchased or developed during 2000 or 2001. The
remainder of the difference is primarily attributable to an increase in repair
and fix-up work performed, and a decrease in discounts received in
administrative overhead due to the strong price environment in 2001.

         Administrative revenue, which represents the reimbursement of general
and administrative overhead expended on behalf of the Partnerships and the
Company's joint venture partners decreased by 7% to $1,535,000 in 2001 as
compared to $1,655,000 in 2000. In both years, amounts received from certain of
the Partnerships were substantially less than the amounts allocable to these
Partnerships under the partnership agreements. The lower amounts reflect PEMC's
continuing efforts to reduce costs, both incurred and allocated to the
Partnerships.

         Reporting and management fees are earned from providing the accounting
and reporting functions for certain of the Partnerships.

         The Company receives reimbursement for costs incurred related to the
evaluation and acquisition of properties on behalf of the Partnerships and other
joint venture partners. To the extent that these property acquisition costs are
expended at the district level, the reimbursements are recorded as a reduction
of total district operating expenses. When expenses are incurred at the
corporate headquarters level, such reimbursements are recorded as a reduction of
total general and administrative expenses. During 2001 and 2000, the Company's
total reimbursements for property acquisition costs were approximately $558,000
and $1,100,000, respectively.

         General and administrative expenses increased 7% to $4,310,000 in 2001
as compared to $4,033,000 in 2000. This increase reflects the change in cost
reimbursement offset by savings related to overhead efficiencies.

         Depreciation and depletion of oil and gas properties decreased by 11%
to $4,522,000 in 2001 as compared to $5,060,000 in 2000, while impairments
increased to $753,000 in 2001 as compared to $295,000 in 2000. Total depletion
and impairment expense in 2001 was $5,275,000 in 2001 as compared to $5,355,000
in 2000, a decline of approximately 1%.

         Exploration costs of $509,000 in 2001 consist primarily of the cost of
three dry holes drilled in 2001. Exploration costs of $1,797,000 in 2000
consisted primarily of dry hole costs relating to the drilling of two offshore
wells in the fourth quarter of that year.

         Interest expense decreased by 40% to $895,000 in 2001 as compared to
$1,500,000 in 2000 due to a combination of lower interest rates and lower
average outstanding debt. The average interest rates paid on outstanding
borrowings subject to interest at the bank's base rate during 2001 and 2000 were
6.92% and 9.46%, respectively. During the same periods, the average rates paid
on outstanding borrowings bearing interest based upon the LIBO rate were 5.98%
and 8.46%. As of December 31, 2001 and 2000, the total outstanding borrowings
were $16,950,000 and $17,200,000, respectively, with an additional $6,050,000
and $1,750,000 available, and $14,950,000 and $13,500,000 of the amounts
outstanding accruing interest at the LIBO rate option.

         Income tax expense increased by 112% to $1,721,000 in 2001 as compared
to $811,000 in 2000. The effective rate was 24% in 2001 as compared to 13% in
2000. In both 1998 and 1999, the Company had large federal net operating losses.
The value of these loss carryforwards was fully reserved against due to the
uncertainty as to whether the Company would have future net income against which
these losses could be offset. The use of these previously reserved against
carryforwards were the primary reason for the low effective rate in 2000.

         Current tax expense in 2001 was $38,000, with the remainder of expense
being attributable to an increase in the Company's deferred tax liability. The
Company generates approximately $350,000 of federal tax credits under Internal
Revenue Code Section 29 for producing fuel from a non-conventional source. These
credits, which significantly lower current tax expense, are scheduled to expire
after 2002. Another contributing factor to the extremely low current expense is
that the Company is allowed to deduct currently for income tax purposes
intangible drilling costs which are capitalized for financial reporting
purposes. The Company had over $5,000,000 in such costs during 2001. The amount
of intangible drilling costs which will be incurred in future years will depend
on many factors and cannot be reliably predicted.

         2000 AS COMPARED TO 1999

         The Company had net income of $5,365,000 in 2000, as compared to a net
loss of $2,138,000 in 1999. The improved results in 2000 are due to a
combination of sharply higher prices received for the Company's oil and


                                       12
<PAGE>


gas production, increases in production volumes, and the expansion of the
Company's oilfield services operations. The 1999 loss was caused primarily by a
$2,703,000 impairment on the Ramrod Property, located in Matagorda County, Texas

         Oil and gas sales increased by 97%, to $23,223,000 in 2000 as compared
to $11,763,000 in 1999, due to a combination of higher prices and increased
production.. A chart summarizing oil and gas revenue in those two years,
including the Company's share of production and revenue from the partnerships,
follows.

<Table>
<Caption>
                                         2000           1999          Increase
                                     -----------     -----------     -----------
<S>                                  <C>             <C>             <C>
         Barrels of Oil Produced         297,562         263,980          33,582
         Average Price Received      $   28.3354     $   15.7111     $   12.6243
                                     -----------     -----------

         Oil Revenue                 $ 8,432,000     $ 4,147,000     $ 4,285,000
                                     -----------     -----------

         Mcf of Gas Produced           3,929,532       3,289,463         640,069
         Average Price Received      $    3.7641     $    2.3153     $    1.4488
                                     -----------     -----------

         Gas Revenue                 $14,791,000     $ 7,616,000     $ 7,175,000
                                     -----------     -----------

         Total Oil & Gas Revenue     $23,223,000     $11,763,000     $11,460,000
                                     ===========     ===========
</Table>

         On November 15, 1999, the Company purchased interests in approximately
131 oil and gas wells located in various counties in Oklahoma. These properties
contributed 433,000 Mcf of gas, 29,000 barrels of oil and $2,215,000 of revenue
in the year 2000, as compared to 72,000 Mcf of gas, 6,800 barrels of oil and
$337,000 of revenue during the 1 1/2 months the Company owned these properties
in 1999.

         In the second quarter of 2000 the Company completed the Brooks Trust #1
well in Bee County, Texas, and in the third quarter drilled the Brooks Trust #
2. These wells produced a combined 168,000 Mcf of gas, and contributed $853,000
in revenue net to the Company's interest in 2000.

         In August of 2000 the Company had first sales from a well drilled and
completed on the East Wakita Prospect in Oklahoma. This well produced 147,000
Mcf of gas and contributed $597,000 of revenue net to the Company's interest
through December 31, 2000.

         District operating income increased by 19% to $13,585,000 in 2000 as
compared to $11,407,000 in 1999. This increase reflects the utilization of field
service equipment purchased during the year, and the Company's continued focus
on expanding its field service operations, particularly the amount of work
performed on wells operated by third parties. The Company spent $1,582,000 to
purchase equipment used in its field service operations in 2000.

         Lease operating expenses increased by 45% in 2000 to $9,114,000 as
compared to $6,305,000 in 1999, primarily due to higher volumes produced and a
greater amount of repair and fix up work performed in 2000 than in 1999, when
prices were extremely depressed. The additional interests in Oklahoma properties
purchased in November 1999 accounted for $382,000 of this increase.

         Administrative revenue, which represents the reimbursement of general
and administrative overhead expended on behalf of the Partnerships and the
Company's joint venture partners decreased slightly to $1,655,000 in 2000 as
compared to $1,673,000 in 1999. In both years, amounts received from certain of
the Partnerships were substantially less than the amounts allocable to these
Partnerships under the partnership agreements. The lower amounts reflect PEMC's
continuing efforts to reduce costs, both incurred and allocated to the
Partnerships.

         Reporting and management fees are earned from providing the accounting
and reporting functions for certain of the Partnerships.

         The Company receives reimbursement for costs incurred related to the
evaluation and acquisition of properties on behalf of the Partnerships and other
joint venture partners. To the extent that these property acquisition costs are
expended at the district level, the reimbursements are recorded as a reduction
of total district operating expenses. When expenses are incurred at the
corporate headquarters level, such reimbursements are recorded as a reduction of
total general and administrative expenses. During 2000 and 1999, the Company's
total reimbursements for property acquisition costs were approximately
$1,100,000 and $1,450,000, respectively.


                                       13
<PAGE>


         General and administrative expenses increased 28% to $4,033,000 in 2000
as compared to $3,149,000 in 1999. The change in cost reimbursement, previously
discussed, and increased compensation costs contributed to this increase.
Compensation and benefit costs increased due to nonrecurring employee benefit
costs related to the resignation of a company employee and generally higher
compensation costs attributable to the expansion of the Company's operating
activities.

         Depreciation and depletion of oil and gas properties increased by 10%
to $5,060,000 in 2000 as compared to $4,581,000 in 1999 due to higher volumes
produced.

         Impairment of oil and gas properties of $295,000 in 2000 related to
several of the Company's less significant properties. The $2,703,000 impairment
in 1999 related entirely to the impairment of a single property, the Ramrod
field located in Matagorda County, Texas.

         Exploration costs of $1,797,000 in 2000 consisted primarily of dry hole
costs relating to the drilling of two offshore wells in the fourth quarter of
the year. 1999 costs of $869,000 consisted primarily of dry hole costs on wells
which were part of the Company's 1998 drilling program.

         1999 AS COMPARED TO 1998

         The Company incurred a loss of $2,138,000 in 1999 as compared to a loss
of $1,692,000 in 1998. The 1999 loss was caused by a $2,703,000 impairment on
the Ramrod Property, located in Matagorda County, Texas. The 1998 loss was
primarily caused by exploration costs of $1,706,000 combined with extremely low
oil and gas prices.

         The Company sold 50% of its interest in the Ramrod field and turned
over operations to the purchaser in November 1998. The new operator increased
flow rates on the most significant well on this property, the St. George # 1,
and soon afterwards the well began to experience mechanical problems. Despite
several expensive attempts to repair this well throughout 1999, production rates
at the end of 1999 were about an eighth of what they were before the mechanical
problems began, and the estimated future reserves at January 1, 2000 declined
drastically from the prior year estimates. Additionally, the Company incurred
$1,582,000 in drilling costs on the property in 1999, and while some reserves
were found, the future net revenue associated with these reserves is greatly
below the costs incurred.

         Oil and gas sales increased by $409,000, to $11,763,000 in 1999 as
compared to $11,354,000 in 1998, as increased prices more than offset production
declines.

         Oil production declined by 13,000 barrels, to 264,000 barrels in 1999
as compared to 277,000 barrels in 1998, due primarily to natural decline curves
on existing properties. Gas production declined by 332,000 Mcf to 3,289,000 Mcf
in 1999 from 3,621,000 Mcf in 1998, as a drop of 561,000 Mcf in production from
the Ramrod property and the natural decline curve of existing properties was
only partially offset by production from additional interests in properties
purchased during the year, and wells which came on line in 1999. The most
significant well to come on line in 1999 was the Francis Martin well, which
began production in January and produced 510,000 Mcf of gas during the year. The
Company's participation in this well was subject to a provision whereby the
Company's interest is reduced when it reaches payout and again upon reaching
200% of payout. These events occurred in August 1999 and February 2000. The
Company's original 13.44% net revenue interest has been reduced to 9.33%.

         The Oklahoma properties purchased in November of 1999 produced 72,000
Mcf of gas and 6,800 barrels of oil during the 1 1/2 months the Company owned
these properties in 1999.

         The average price received for a barrel of oil increased to $15.71 in
1999 as compared to $12.39 in 1998, and the average gas price received increased
to $2.32 in 1999, as compared to $2.19 in 1998.

         Lease operating expenses decreased by $306,000 to $6,305,000 in 1999 as
compared to $6,611,000 in 1998, due to lower volumes produced.

         District operating income increased by $462,000, to $11,407,000 in 1999
as compared to $10,945,000 in 1998, as the Company continued to expand its well
servicing operations.

         Administrative revenue, which represents the reimbursement of general
and administrative overhead expanded on behalf of the Partnerships and the
Company's joint venture partners decreased by $50,000 to $1,673,000 in 1999 as
compared to $1,723,000 in 1998. In both years, amounts received from certain of
the


                                       14
<PAGE>


Partnerships were substantially less than the amounts allocable to these
Partnerships under the partnership agreements. The lower amounts reflect PEMC's
continuing efforts to reduce costs, both incurred and allocated to the
Partnerships.

         Reporting and management fees are earned from providing the accounting
and reporting functions for certain of the Partnerships.

         The Company receives reimbursement for costs incurred related to the
evaluation and acquisition of properties on behalf of the Partnerships and other
joint venture partners. To the extent that these property acquisition costs are
expended at the district level, the reimbursements are recorded as a reduction
of total district operating expenses. When expenses are incurred at the
corporate headquarters level, such reimbursements are recorded as a reduction of
total general and administrative expenses. During 1999 and 1998 the Company's
total reimbursements for property acquisition costs were approximately
$1,450,000 and $1,690,000 respectively.

         Depreciation and depletion of oil and gas properties decreased by
$1,393,000 to $4,581,000 in 1999 as compared to $5,974,000 in 1998 due to lower
volumes produced, and lower depletion rates on many properties due to increased
reserve estimates at year-end. These increased reserve estimates were partly due
to an increase in prices.

         Exploration costs of $869,000 in 1999 consisted primarily of dry hole
costs on wells which were part of the Company's 1998 drilling program.


ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         The Company is exposed to interest rate risk on its line of credit,
which has variable rates based upon the lenders base rate, as defined, and the
London Inter-Bank Offered rate. Based on the balance outstanding at December 31,
2001, a hypothetical 2% increase in the applicable interest rates would increase
interest expense by approximately $339,000.

         Oil and gas prices have historically been extremely volatile, and have
been particularly so in recent years. The Company did not enter into significant
hedging transactions during 2001, and had no open hedging transactions at
December 31, 2001. Declines in domestic oil and gas prices could have a material
adverse effect on the Company's revenues, operating results and the estimates of
economically recoverable reserves and the net revenue therefrom.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         Included on pages F-1 through F-26 of this Report. The Index to
Financial Statements is at page F-1 of this Report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Information relating to the Company's Directors, nominees for Directors
and executive officers is included in the Company's definitive proxy statement
relating to the Company's Annual Meeting of Stockholders to be held in June,
2002, which will be filed with the Securities and Exchange Commission within 120
days of December 31, 2001, and which is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION.

         Information relating to executive compensation is included in the
Company's definitive proxy statement relating to the Company's Annual Meeting of
Stockholders to be held in June, 2002, which will be filed with the Securities
and Exchange Commission within 120 days of December 31, 2001, and which is
incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         Information relating to security ownership of certain beneficial owners
and management is included in the Company's definitive proxy statement relating
to the Company's Annual Meeting of Stockholders to be held in June, 2002, which
will be filed with the Securities and Exchange Commission within 120 days of
December 31, 2001, and which is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Information relating to certain transactions by Directors and executive
officers of the Company is included in the Company's definitive proxy statement
relating to the Company's Annual Meeting of Stockholders to be held in June,
2002, which will be filed with the Securities and Exchange Commission within 120
days of December 31, 2001, and which is incorporated herein by reference.


                                       15
<PAGE>


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

         (a)            Exhibits:

         No.
         ---
         3.1            Restated Certificate of Incorporation of PrimeEnergy
                        Corporation. (Incorporated herein by reference to
                        Exhibit 3.1 of PrimeEnergy Corporation Form 10-KSB for
                        the year ended December 31, 1999)

         3.2            Bylaws of PrimeEnergy Corporation. (Incorporated herein
                        by reference to Exhibit 3.2 of PrimeEnergy Corporation
                        Form 10-KSB for the year ended December 31, 1999)

         10.1           PrimeEnergy Corporation 1983 Incentive Stock Option Plan
                        (Incorporated herein by reference to Exhibit 10.1 of
                        PrimeEnergy Corporation Form 10-KSB for the year ended
                        December 31, 1994)(1)

         10.3           Massachusetts Mutual Flexinvest 401(k) Plan as amended
                        and restated. (Incorporated herein by reference to
                        Exhibit 10.3 of PrimeEnergy Corporation Form 10-KSB for
                        the year ended December 31, 1994)(1)

         10.7           Credit Agreement dated April 26, 1995, between
                        PrimeEnergy Corporation, PrimeEnergy Management
                        Corporation and Bank One, Texas, National Association.
                        (Incorporated herein by reference to Exhibit 10.7 to
                        PrimeEnergy Corporation Form 8-K dated April 26, 1995)

         10.7.1         First Amendment to Credit Agreement Among PrimeEnergy
                        Corporation and PrimeEnergy Management Corporation, as
                        Borrowers, Bank One, Texas, National Association, as
                        Agent, and the Lenders Signatory Hereto, effective as of
                        October 6, 1995. (Incorporated herein by reference to
                        Exhibit 10.7.1 to PrimeEnergy Corporation Form 10-KSB
                        for the year ended December 31, 1995)

         10.7.2         Second Amendment to Credit Agreement Among PrimeEnergy
                        Corporation and PrimeEnergy Management Corporation, as
                        Borrowers, Bank One, Texas, National Association, as
                        Agent, and the Lenders Signatory Hereto, effective as of
                        February 6, 1997. (Incorporated by reference to Exhibit
                        10.7.2 of PrimeEnergy Corporation Form 10-KSB for the
                        year ended December 31, 1996)

         10.7.3         Third Amendment to Credit Agreement Among PrimeEnergy
                        Corporation and PrimeEnergy Management Corporation, as
                        Borrowers, Bank One, Texas, National Association, as
                        Agent, and the Lenders Signatory Hereto, effective as of
                        January 2, 1998 (Incorporated by reference to Exhibit
                        10.7.3 of PrimeEnergy Corporation Form 10-KSB for the
                        year ended December 31, 1997)

         10.8           Mortgage, Deed or Trust, Indenture, Security Agreement,
                        Financing Statement and Assignment of Production dated
                        May 27, 1994, as ratified and amended April 26, 1995,
                        between PrimeEnergy Corporation, PrimeEnergy Management
                        Corporation and Bank One, Texas, National Association.
                        (Incorporated by reference to Exhibit 10.8 of
                        PrimeEnergy Corporation Form 8-K dated April 26, 1995)

         10.17          Amended Marketing Agreement between PrimeEnergy
                        Management Corporation and Charles E. Drimal, Jr.
                        (Incorporated herein by reference to Exhibit 10.17 of
                        PrimeEnergy Corporation Form 10-KSB for the year ended
                        December 31, 1994)(1)

         10.18          Composite copy of Non-Statutory Option Agreements
                        (Incorporated by reference to Exhibit 10.18 of
                        PrimeEnergy Corporation for 10KSB for the year ended
                        December 31, 1997)(1)

         10.21          Purchase and Sale Agreement dated November 16, 1999
                        between Southern Pacific Petroleum U.S.A. and
                        PrimeEnergy Corporation (Incorporated herein by
                        reference to Exhibit 10.21 to PrimeEnergy Corporation
                        Form 8-K dated November 24, 1999)


                                       16
<PAGE>


         21             Subsidiaries. (filed herewith)

         23             Consent of Ryder Scott & Company L.P. Company. (filed
                        herewith)

----------

(1)    Management contract or compensatory plan or arrangement required to be
       filed as an Exhibit to this Form 10-K.

       (a)  Reports on Form 8-K:

            None


                                       17
<PAGE>


                                   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 30th day of
March, 2002.

                                        PrimeEnergy Corporation

                                        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 30th day of March, 2002.

<Table>


<S>                                     <C>                                     <C>                             <C>
/s/ CHARLES E. DRIMAL, JR.              Director and President;
--------------------------              The Principal Executive Officer
Charles E. Drimal, Jr.


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


/s/ JAMES P. BOLDRICK                   Director                                /s/ CLINT HURT                  Director
--------------------------                                                      --------------------
James P. Boldrick                                                               Clint Hurt


/s/ SAMUEL R. CAMPBELL                  Director                                                                Director
--------------------------                                                      --------------------
Samuel R. Campbell                                                              Robert de Rothschild


                                        Director                                /s/ JARVIS K. SLADE             Director
--------------------------                                                      --------------------
James E. Clark                                                                  Jarvis Slade


/s/ MATTHIAS ECKENSTEIN                 Director                                /s/ JAN K. SMEETS               Director
--------------------------                                                      --------------------
Matthias Eckenstein                                                             Jan K. Smeets


/s/ H. GIFFORD FONG                     Director                                /s/ GAINES WEHRLE               Director
--------------------------                                                      --------------------
H. Gifford Fong                                                                 Gaines Wehrle

                                        Director                                                                Director
--------------------------                                                      --------------------
Thomas S.T. Gimbel                                                              Michael Wehrle
</Table>



                                       18
<PAGE>

                          INDEX TO FINANCIAL STATEMENTS

<Table>


<S>                                                                                     <C>
Financial Statements (Included herein at pages F-1 through F-23):

Report of Independent Public Accountants                                                F-2

Financial Statements

    Consolidated Balance Sheets -- December 31, 2001 and 2000                           F-3

    Consolidated Statements of Operations -- for the years ended December 31,
    2001, 2000 and 1999                                                                 F-5

    Consolidated Statements of Stockholders' Equity -- for the years ended
    December 31, 2001, 2000 and 1999                                                    F-6

    Consolidated Statements of Cash Flows -- for the years ended December 31,
    2001, 2000 and 1999                                                                 F-7

    Notes to Consolidated Financial Statements                                          F-8

    Supplementary Information:                                                          F-20

        Capitalized Costs Relating to Oil and Gas Producing Activities
        December 31, 2001, 2000 and 1999                                                F-21

        Costs Incurred in Oil and Gas Property Acquisition, Exploration and
        Development Activities, years ended December 31, 2001, 2000 and 1999            F-21

        Standardized Measure of Discounted Future Net Cash Flows Relating
        to Proved Oil and Gas Reserves, years ended December 31, 2001, 2000 and
        1999                                                                            F-22

        Standardized Measure of Discounted Future Net Cash Flows and Changes
        Therein Relating to Proved Oil and Gas Reserves, years ended December 31,
        2001, 2000 and 1999                                                             F-23

        Reserve Quantity Information, years ended December 31, 2001, 2000 and 1999      F-24

        Results of Operations from Oil and Gas Producing Activities, years ended
        December 31, 2001, 2000 and 1999                                                F-25

        Notes to Supplementary Information                                              F-26
</Table>


                                      F-1
<PAGE>


                         PUSTORINO, PUGLISI, & CO., LLP

                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Stockholders of
  PrimeEnergy Corporation:

We have audited the accompanying consolidated balance sheets of PrimeEnergy
Corporation and Subsidiaries as of December 31, 2001 and 2000, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on the
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 audits 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 consolidated financial position of PrimeEnergy
Corporation and Subsidiaries as of December 31, 2001 and 2000, and the
consolidated results of their operations and their cash flows for the years
ended December 31, 2001, 2000 and 1999 in conformity with accounting principles
generally accepted in the United States of America.

/s/ PUSTORINO, PUGLISI & CO., LLP
Pustorino, Puglisi & Co., LLP
New York, New York
March 29, 2002


                                      F-2
<PAGE>


                    PRIMEENERGY CORPORATION and SUBSIDIARIES

             CONSOLIDATED BALANCE SHEETS, December 31, 2001 and 2000

<Table>
<Caption>

                                                                2001              2000
                                                            ------------      ------------
<S>                                                         <C>               <C>
ASSETS:

Current assets:
  Cash and cash equivalents                                 $     85,000      $    684,000
  Restricted cash and cash equivalents (Note 12)               1,174,000         1,128,000
  Accounts receivable, net (Note 3)                            3,798,000         5,663,000
  Due from related parties (less allowance for doubtful
    accounts of $800,000 in 2001 and 2000) (Note 11)           4,924,000         4,346,000
  Prepaid expenses                                                64,000           112,000
  Other current assets (Notes 4 and 9)                         1,006,000           134,000
  Deferred income taxes (Notes 1 and 9)                          274,000           155,000
                                                            ------------      ------------
      Total current assets                                    11,325,000        12,222,000
                                                            ------------      ------------

Property and equipment, at cost (Notes 1 and 2):
  Oil and gas properties (successful efforts method):
      Proved                                                  63,418,000        57,439,000
      Unproved                                                   286,000           159,000
  Furniture, fixtures and equipment including leasehold
      improvements                                             8,622,000         7,433,000
                                                            ------------      ------------
                                                              72,326,000        65,031,000
  Accumulated depreciation, depletion and amortization       (48,039,000)      (42,361,000)
                                                            ------------      ------------
      Net property and equipment                              24,287,000        22,670,000
                                                            ------------      ------------

Other assets                                                     204,000           202,000
                                                            ------------      ------------

      Total assets                                          $ 35,816,000      $ 35,094,000
                                                            ============      ============
</Table>

               The accompanying notes are an integral part of the
                       consolidated financial statements.



                                      F-3
<PAGE>




                    PRIMEENERGY CORPORATION and SUBSIDIARIES

             CONSOLIDATED BALANCE SHEETS, December 31, 2001 and 2000

<Table>
<Caption>

                                                                        2001               2000
                                                                     ------------      ------------
<S>                                                                  <C>               <C>
LIABILITIES and STOCKHOLDERS' EQUITY:

Current liabilities:
  Accounts payable (Note 14)                                         $  5,788,000      $  6,828,000
  Current portion of other long-term obligations (Notes 6 and 7)          230,000           854,000
  Accrued liabilities:
    Payroll, Benefits, and Related Items                                1,157,000           934,000
    Taxes                                                                      --           455,000
    Interest and other                                                  1,023,000         1,058,000
  Due to related parties (Note 11)                                        983,000         1,265,000
                                                                     ------------      ------------
  Total current liabilities                                             9,181,000        11,394,000

Long-term bank debt (Note 5)                                           16,950,000        17,200,000
Other long-term obligations  (Note 6)                                       8,000         1,013,000
Deferred income taxes (Note 9)                                          2,314,000           511,000
                                                                     ------------      ------------

  Total liabilities                                                    28,453,000        30,118,000
                                                                     ------------      ------------

Stockholders' equity:
  Preferred stock, $.10 par value, authorized 5,000,000 shares;
    none issued                                                                --                --
  Common stock, $.10 par value, authorized 10,000,000 shares;
    issued  7,694,970 in 2001 and 7,607,970 in 2000                       769,000           761,000
  Paid in capital                                                      11,024,000        10,902,000
  Retained earnings                                                     7,919,000         2,506,000
                                                                     ------------      ------------
                                                                       19,712,000        14,169,000
  Treasury stock, at cost, 3,909,102 common shares in 2001
    and 3,488,942 in 2000                                             (12,349,000)       (9,193,000)
                                                                     ------------      ------------

  Total stockholders' equity                                            7,363,000         4,976,000
                                                                     ------------      ------------

  Total liabilities and equity                                       $ 35,816,000      $ 35,094,000
                                                                     ============      ============
</Table>


               The accompanying notes are an integral part of the
                       consolidated financial statements.



                                      F-4
<PAGE>




                    PRIMEENERGY CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS of OPERATIONS

              for the years ended December 31, 2001, 2000 and 1999

<Table>
<Caption>

                                                                    2001             2000             1999
                                                                ------------     ------------     ------------
<S>                                                             <C>              <C>              <C>
Revenue:
  Oil and gas sales                                             $ 22,998,000     $ 23,223,000     $ 11,763,000
  District operating income                                       17,082,000       13,585,000       11,407,000
  Administrative revenue (Note 11)                                 1,535,000        1,655,000        1,673,000
  Reporting and management fees (Note 11)                            297,000          321,000          319,000
  Interest income                                                    138,000          169,000          146,000
  Other income                                                       358,000          229,000          212,000
                                                                ------------     ------------     ------------
                                                                  42,408,000       39,182,000       25,520,000
                                                                ------------     ------------     ------------

Costs and expenses:
  Lease operating expense                                         11,083,000        9,114,000        6,305,000
  District operating expense                                      13,368,000       11,235,000        8,671,000
  Depreciation and depletion of
    oil and gas properties                                         4,522,000        5,060,000        4,581,000
  Impairment of oil and gas properties (Note 1)                      753,000          295,000        2,703,000
  General and administrative expense                               4,310,000        4,033,000        3,149,000
  Exploration costs                                                  509,000        1,797,000          869,000
  Interest expense (Note 5)                                          895,000        1,500,000        1,358,000
                                                                ------------     ------------     ------------
                                                                  35,440,000       33,034,000       27,636,000
                                                                ------------     ------------     ------------
  Income (loss) from operations                                    6,968,000        6,148,000       (2,116,000)

Other income:
Gain on sale and exchange of assets                                  166,000           28,000            8,000
                                                                ------------     ------------     ------------
  Income (loss) before provision for income taxes                  7,134,000        6,176,000       (2,108,000)

Provision for income taxes  (Notes 1 and 9)                        1,721,000          811,000           30,000
                                                                ------------     ------------     ------------
  Net income (loss)                                             $  5,413,000     $  5,365,000     $ (2,138,000)
                                                                ============     ============     ============

Basic net income (loss) per common share (Notes 1 and 15)       $       1.39     $       1.26     $      (0.48)
                                                                ============     ============     ============
Diluted net income (loss) per common share (Notes 1 and 15)     $       1.18     $       1.08     $      (0.48)
                                                                ============     ============     ============
</Table>


               The accompanying notes are an integral part of the
                       consolidated financial statements.



                                      F-5
<PAGE>




                    PRIMEENERGY CORPORATION and SUBSIDIARIES

                 CONSOLIDATED STATEMENT of STOCKHOLDERS' EQUITY

              for the years ended December 31, 2001, 2000 and 1999

<Table>
<Caption>

                                                                                Retained
                                                                Additional      Earnings
                                        Common Stock              Paid In     (Accumulated      Treasury
                                  Shares          Amount          Capital        Deficit)        Stock           Total
                               ------------    ------------    ------------   ------------    ------------    ------------
<S>                            <C>             <C>             <C>            <C>             <C>             <C>
Balance at December 31, 1998      7,607,970    $    761,000    $ 10,902,000   $   (721,000)   $ (7,323,000)   $  3,619,000

Purchased 107,687 shares of
 common stock                                                                                     (547,000)       (547,000)

Net loss                                                                        (2,138,000)                     (2,138,000)
                               ------------    ------------    ------------   ------------    ------------    ------------
Balance at December 31, 1999      7,607,970    $    761,000    $ 10,902,000   $ (2,859,000)   $ (7,870,000)   $    934,000

Purchased 222,879 shares of
 common stock                                                                                   (1,323,000)     (1,323,000)

Net income                                                                       5,365,000                       5,365,000
                               ------------    ------------    ------------   ------------    ------------    ------------
Balance at December 31, 2000      7,607,970    $    761,000    $ 10,902,000   $  2,506,000    $ (9,193,000)   $  4,976,000

Exercised stock options              87,000           8,000         122,000                                        130,000

Purchased 420,160 shares of
 common stock                                                                                   (3,156,000)     (3,156,000)

Net income                                                                       5,413,000                       5,413,000
                               ------------    ------------    ------------   ------------    ------------    ------------
Balance at December 31, 2001      7,694,970    $    769,000    $ 11,024,000   $  7,919,000    $(12,349,000)   $  7,363,000
                               ============    ============    ============   ============    ============    ============
</Table>


               The accompanying notes are an integral part of the
                       consolidated financial statements.



                                      F-6
<PAGE>

                    PRIMEENERGY CORPORATION and SUBSIDIARIES

                      CONSOLIDATED STATEMENTS of CASH FLOWS

              for the years ended December 31, 2001, 2000 and 1999

                                   ----------

<Table>
<Caption>

                                                                        2001             2000              1999
                                                                    ------------      ------------      ------------
<S>                                                                 <C>               <C>               <C>
Cash flows from operating activities:
    Net income (loss)                                               $  5,413,000      $  5,365,000      $ (2,138,000)
    Adjustments to reconcile net loss to net cash provided
      by operating activities:
        Depreciation, depletion and amortization                       5,599,000         6,000,000         5,529,000
        Impairment of oil and gas properties                             753,000           295,000         2,703,000
        Dry hole and abandonment costs                                   496,000         1,787,000           818,000
        Gain on sale of properties                                      (166,000)          (28,000)           (8,000)
        Provision (benefit) of deferred income taxes                   1,684,000           356,000           (39,000)
    Changes in assets and liabilities:
          (Increase) decrease in accounts receivable                   1,865,000        (2,028,000)         (745,000)
          (Increase) decrease in due from related parties               (578,000)       (1,177,000)          108,000
          (Increase) decrease in other assets                           (874,000)           36,000           120,000
          (Increase) decrease in prepaid expenses                         48,000           (28,000)           (5,000)
          Increase (decrease) in accounts payable                     (1,086,000)         (346,000)          811,000
          Increase (decrease) in accrued liabilities                    (559,000)          944,000           311,000
          Increase (decrease) in due to related parties                 (282,000)          322,000           212,000
                                                                    ------------      ------------      ------------
            Net cash provided by operating activities                 12,313,000        11,498,000         7,677,000
                                                                    ------------      ------------      ------------

Cash flows from investing activities:
    Proceeds from sale of properties and equipment                       520,000            71,000            59,000
    Additions to property and equipment                               (8,527,000)      (11,632,000)       (9,308,000)
    Proceeds from payment on notes receivable                                 --           453,000            28,000
                                                                    ------------      ------------      ------------
            Net cash used in investing activities                     (8,007,000)      (11,108,000)       (9,221,000)
                                                                    ------------      ------------      ------------

Cash flows from financing activities:
    Purchase of stock for treasury                                    (3,156,000)       (1,323,000)         (547,000)
    Repayment of long-term bank debt and other long-term
      obligations                                                    (40,619,000)      (27,844,000)      (25,770,000)
    Increase in long-term bank debt and other long-term
      obligations                                                     38,740,000        27,690,000        28,465,000
    Proceeds from exercised stock options                                130,000                --                --
                                                                    ------------      ------------      ------------
            Net cash provided by (used in) financing activities       (4,905,000)       (1,477,000)        2,148,000
                                                                    ------------      ------------      ------------
            Net increase (decrease) in cash                             (599,000)       (1,087,000)          604,000

Cash and cash equivalents, beginning of year                             684,000         1,771,000         1,167,000
                                                                    ------------      ------------      ------------
Cash and cash equivalents, end of year                              $     85,000      $    684,000      $  1,771,000
                                                                    ============      ============      ============

Supplemental disclosures:
    Income taxes paid during the year                               $  1,200,000      $     53,000      $         --
    Net income tax refunds received during the year                 $         --      $         --      $     84,000
    Interest paid during the year                                   $    901,000      $  1,462,000      $  1,367,000

Supplemental information of noncash investing and financing activities:
    In 1999, the Company recorded capital lease obligations in the amount of $22,000.
</Table>


               The accompanying notes are an integral part of the
                       consolidated financial statements.


                                      F-7
<PAGE>


                    PRIMEENERGY CORPORATION and SUBSIDIARIES

                   NOTES to CONSOLIDATED FINANCIAL STATEMENTS

                                   ----------

1.       DESCRIPTION OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

         Nature of Operations:

         PrimeEnergy Corporation ("PEC"), a Delaware corporation, was organized
         in March 1973. PrimeEnergy Management Corporation ("PEMC"), a
         wholly-owned subsidiary, acts as the managing general partner,
         providing administration, accounting and tax preparation services for
         45 private and publicly-held limited partnerships and 2 trusts
         (collectively, the "Partnerships"). PEC owns Eastern Oil Well Service
         Company ("EOWSC"), EOWS Midland Company and Southwest Oilfield
         Construction Company ("SOCC"), all of which perform oil and gas field
         servicing. PEC also owns Prime Operating Company ("POC"), which serves
         as operator for most of the producing oil and gas properties owned by
         the Company and affiliated entities. Field service revenues and the
         administrative overhead fees earned as operator are reported as
         'District operating income' on the consolidated statement of
         operations. PrimeEnergy Corporation and its wholly-owned subsidiaries
         are herein referred to as the "Company."

         The Company is engaged in the development, acquisition and production
         of oil and natural gas properties. The Company owns leasehold, mineral
         and royalty interests in producing and non-producing oil and gas
         properties across the continental United States, including Colorado,
         Kansas, Louisiana, Mississippi, Montana, Nebraska, New Mexico, North
         Dakota, Oklahoma, Texas, Utah, West Virginia and Wyoming. The Company
         operates 1,550 wells and owns non-operating interests in over 800
         additional wells. Additionally, the Company provides well-servicing
         support operations, site-preparation and construction services for oil
         and gas drilling and re-working operations, both in connection with the
         Company's activities and providing contract services for third parties.
         The Company is publicly traded on the NASDAQ under the symbol "PNRG."

         The markets for the Company's products are highly competitive, as oil
         and gas are commodity products and prices depend upon numerous factors
         beyond the control of the Company, such as economic, political and
         regulatory developments and competition from alternative energy
         sources.

         Principles of Consolidation:

         The consolidated financial statements include the accounts of
         PrimeEnergy Corporation and its wholly-owned subsidiaries. All material
         inter-company accounts and transactions between these entities have
         been eliminated. Oil and gas properties include ownership interests in
         the Partnerships. The statement of operations includes the Company's
         proportionate share of revenue and expenses related to oil and gas
         interests owned by the Partnerships.

         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 revenues
         and expenses during the reporting period. Actual results could differ
         from those estimates.

         Estimates of oil and gas reserves, as determined by independent
         petroleum engineers, are continually subject to revision based on
         price, production history and other factors. Depletion expense, which
         is computed based on the units of production method, could be
         significantly impacted by changes in such estimates. Additionally, FAS
         121 requires that if the expected future cash flow from an asset is
         less than its carrying cost, that asset must be written down to its
         fair market value. As the fair market value of an oil and gas property
         will usually be significantly less than the total future net revenue
         expected from that property, small changes in the estimated future net
         revenue from an asset could lead to the necessity of recording a
         significant impairment of that asset.



                                      F-8
<PAGE>


                    PRIMEENERGY CORPORATION and SUBSIDIARIES

                   NOTES to CONSOLIDATED FINANCIAL STATEMENTS

                                   ----------

         Property and Equipment:

         The Company follows the "successful efforts" method of accounting for
         its oil and gas properties. Under the successful efforts method, costs
         of acquiring undeveloped oil and gas leasehold acreage, including lease
         bonuses, brokers' fees and other related costs are capitalized.
         Provisions for impairment of undeveloped oil and gas leases are based
         on periodic evaluations. Annual lease rentals and exploration expenses,
         including geological and geophysical expenses and exploratory dry hole
         costs, are charged against income as incurred. Costs of drilling and
         equipping productive wells, including development dry holes and related
         production facilities, are capitalized. Costs incurred by the Company
         related to the exploration, development and acquisition of oil and gas
         properties on behalf of the Partnerships or joint ventures are deferred
         and charged to the related entity upon the completion of the
         acquisition. To the extent that the Company acquires an interest in the
         property, an appropriate allocation of internal costs are capitalized
         as part of the depletable base of the property.

         All other property and equipment are carried at cost. Depreciation and
         depletion of oil and gas production equipment and properties are
         determined under the unit-of-production method based on estimated
         proved recoverable oil and gas reserves. Depreciation of all other
         equipment is determined under the straight-line method using various
         rates based on useful lives. The cost of assets and related accumulated
         depreciation is removed from the accounts when such assets are disposed
         of, and any related gains or losses are reflected in current earnings.

         Income Taxes:

         The Company records income taxes in accordance with Statement of
         Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
         Taxes." SFAS No. 109 is an asset and liability approach to accounting
         for income taxes, which requires the recognition of deferred tax assets
         and liabilities for the expected future tax consequences of events that
         have been recognized in the Company's financial statements or tax
         returns.

         Deferred tax liabilities or assets are established for temporary
         differences between financial and tax reporting bases and are
         subsequently adjusted to reflect changes in the rates expected to be in
         effect when the temporary differences reverse. A valuation allowance is
         established for any deferred tax asset for which realization is not
         likely.

         General and Administrative Expenses:

         General and administrative expenses represent costs and expenses
         associated with the operation of the Company. Certain of the
         Partnerships sponsored by the Company reimburse general and
         administrative expenses incurred on their behalf.

         Income Per Common Share:

         Income per share of common stock has been computed based on the
         weighted average number of common shares outstanding during the
         respective periods in accordance with SFAS No. 128, "Earnings per
         Share".

         Statements of cash flows:

         For purposes of the consolidated statements of cash flows, the Company
         considers short-term, highly liquid investments with original
         maturities of less than ninety days to be cash equivalents.

         Concentration of Credit Risk:

         The Company maintains significant banking relationships with financial
         institutions in the State of Texas. The Company limits its risk by
         periodically evaluating the relative credit standing of these financial
         institutions. The Company's oil and gas production purchasers consist
         primarily of independent marketers and major gas pipeline companies.


                                      F-9
<PAGE>


                    PRIMEENERGY CORPORATION and SUBSIDIARIES

                   NOTES to CONSOLIDATED FINANCIAL STATEMENTS

                                   ----------

         Hedging:

         From time to time, the Company may enter into futures contracts in
         order to reduce its exposure related to changes in oil and gas prices.
         In accordance with Statement of Financial Accounting Standards No. 133,
         any gain or loss on such contracts is treated as an adjustment to oil
         and gas revenue. Cash activity related to hedging transactions is
         treated as operating activity on the Statements of Cash Flows.

         Recently Issued Accounting Standards:

         In December 1999, the Securities and Exchange Commission issued Staff
         Accounting Bulletin No.101, Revenue Recognition in Financial Statements
         ("SAB No. 101"). SAB No. 101 provides guidance for revenue recognition
         under certain circumstances. The adoption of SAB 101 in 2000 did not
         have a significant impact on the Company's financial position, results
         of operations or cash flows.

         In July 2001, the Financial Accounting Standards Board ("FASB") issued
         SFAS No. 141, "Business Combinations." SFAS No. 141 is intended to
         improve the transparency of the accounting and reporting for business
         combinations by requiring that all business combinations be accounted
         for under a single method - the purchase method. SFAS 141 is effective
         for all transactions completed after June 30, 2001, except transactions
         using the pooling-of-interests method that were initiated prior to July
         1, 2001. The adoption of SFAS 141 did not have an impact on the
         Company's consolidated financial statements.

         In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other
         Intangible Assets." This statement applies to intangibles and goodwill
         acquired after June 30, 2001, as well as goodwill and intangibles
         previously acquired. Under this statement, goodwill as well as other
         intangibles determined to have an infinite life will no longer be
         amortized; however, these assets will be reviewed for impairment on a
         periodic basis. This statement is effective for the Company for the
         first quarter in the fiscal year ending December 31, 2002. Management
         does not believe that the adoption of this statement will have a
         material effect on the Company's financial statements.

         In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
         Retirement Obligations." SFAS No. 143 requires the fair value of a
         liability for an asset retirement obligation to be recognized in the
         period in which it is incurred if a reasonable estimate of fair value
         can be made. The associated asset retirement costs are capitalized as
         part of the carrying amount of the long-lived asset. SFAS No. 143 is
         effective for fiscal years beginning after June 15, 2002. Management
         has not yet determined the impact of the adoption of this statement.

         In October 2001, the FASB issued SFAS No. 144, "Accounting for the
         Impairment or Disposal of Long-Lived Assets." SFAS No. 144 requires
         that long-lived assets be measured at the lower of carrying amount or
         fair value less cost to sell, whether reported in continuing operations
         or in discontinued operations. Therefore, discontinued operations will
         no longer be measured at net realizable value or include amounts for
         operating losses that have not yet occurred. SFAS No. 144 is effective
         for financial statements issued for fiscal years beginning after
         December 15, 2001 and generally, is to be applied prospectively.
         Management does not believe that the adoption of this statement will
         have a material effect on the Company's financial statements.

2.       SIGNIFICANT ACQUISITIONS AND DISPOSITIONS

         2001

         As more fully described in Note 7, the Company is committed to offer to
         repurchase the interests of the limited partners and trust unitholders
         in certain of the Partnerships. During 2001, the Company purchased such
         interests in an amount totaling $545,000.


                                      F-10
<PAGE>


                    PRIMEENERGY CORPORATION and SUBSIDIARIES

                   NOTES to CONSOLIDATED FINANCIAL STATEMENTS

                                   ----------

         2000

         Effective January 1, 2000, the Company purchased additional interests
         in the San Pedro Ranch field of Dimmit and Maverick Counties, Texas for
         $150,000.

         Effective April 1, 2000, the Company purchased additional interest in
         the Eola Robberson field of Garvin County, Oklahoma for $400,000. These
         interests are related to certain contingency payments created at the
         time the Company made its original acquisition of the field in 1988,
         and are based on property performance.

         Effective July 1, 2000, the Company invested $265,000 in the purchase
         of various interests in five leases located in Garvin County, Oklahoma.
         These leases contain 26 producing wells and 5 salt-water injection
         wells. The Company assumed operation of the wells, which at the time of
         the acquisition were collectively producing 61 (26.63 net) barrels of
         oil per day.

         In September of 2000, the Company purchased nine wells in Upton Co.
         Texas. In October, the Company began a series of workovers to tap
         additional oil and gas behind pipe reserves in the wells. Through
         March, 2001 the Company has performed workovers on five of the nine
         wells, resulting in a three fold increase in oil production and over a
         six fold increase in gas production. Currently the acquisition is
         producing at a rate of 55 (39 net) barrels of oil per day and 250 (177
         net) Mcf of gas per day. The Company owns from 94% to 100% working
         interest and 69% to 73% net revenue interest in the properties.

         As more fully described in Note 7, the Company is committed to offer to
         repurchase the interests of the limited partners and trust unitholders
         in certain of the Partnerships. During 2000, the Company purchased such
         interests in an amount totaling $1,257,000.

         1999

         On November 15, 1999, the Company purchased interests in approximately
         131 oil and gas wells located in various counties in Oklahoma. The
         Company already owned, and was the operator of, the majority of the
         properties purchased.

         As more fully described in Note 7, the Company is committed to offer to
         repurchase the interests of the limited partners and trust unitholders
         in certain of the Partnerships. During 1999, the Company purchased such
         interests in an amount totaling $1,038,000.

3.       ACCOUNTS RECEIVABLE

         Accounts receivable at December 31, 2001 and 2000 consisted of the
         following:

<Table>
<Caption>

                                                                         December 31,
                                                                 ----------------------------
                                                                    2001             2000
                                                                 -----------      -----------
<S>                                                              <C>              <C>
               Joint interest billing                            $ 1,372,000      $ 1,352,000
               Trade receivables                                   1,151,000          967,000
               Oil and gas sales                                   1,460,000        3,310,000
               Other                                                 154,000          180,000
                                                                 -----------      -----------
                                                                   4,137,000        5,809,000
               Less, allowance for doubtful accounts                (339,000)        (146,000)
                                                                 -----------      -----------
               Total                                             $ 3,798,000      $ 5,663,000
                                                                 ===========      ===========
</Table>


                                      F-11
<PAGE>


                    PRIMEENERGY CORPORATION and SUBSIDIARIES

                   NOTES to CONSOLIDATED FINANCIAL STATEMENTS

                                   ----------

4.       OTHER CURRENT ASSETS

         Other current assets at December 31, 2001 and 2000 consisted of the
         following:

<Table>
<Caption>

                                                  December 31,
                                           -------------------------
                                              2001           2000
                                           ----------     ----------
<S>                                        <C>            <C>
               Tax overpayments            $  708,000     $       --
               Field service inventory        268,000        127,000
               Other                           30,000          7,000
                                           ----------     ----------
               Total                       $1,006,000     $  134,000
                                           ==========     ==========
</Table>

         During 2001 the Company estimated that its liability for the 2001 tax
         year would be approximately $1,000,000, and made estimated tax payments
         accordingly. Due primarily to a significant investment in tax
         deductible intangible drilling costs, along with a sharp drop in oil
         and gas prices, the current estimate is substantially less. The Company
         expects to receive approximately $500,000 in tax refunds during the
         second quarter of 2002, with the remainder of the overpaid amount being
         applied to estimated 2002 tax year liabilities. See Note 9 for a
         further discussion of the company's tax situation.

5.       LONG-TERM BANK DEBT

         The Company has been party to a series of credit agreements with its
         primary lender or its predecessors since 1983. The current agreement,
         entered into in April 1995, provides for borrowings under a Master
         Note. Advances under the agreement, as amended, are limited to the
         borrowing base as defined in the agreement. The borrowing base is
         re-determined by the lender on a semi-annual basis. Since the beginning
         of 1999, the borrowing base has ranged from $20 million to $23.7
         million. The credit agreement provides for interest on outstanding
         borrowings at the bank's base rate, as defined, payable monthly, or at
         rates ranging from 1 1/2% to 2% over the London Inter-Bank Offered Rate
         (LIBO rate) depending upon the Company's utilization of the available
         line of credit, payable at the end of the applicable interest period.

         The average interest rates paid on outstanding borrowings subject to
         interest at the bank's base rate during 2001 and 2000 were 6.92% and
         9.46%, respectively. During the same periods, the average rates paid on
         outstanding borrowings bearing interest based upon the LIBO rate were
         5.98% and 8.46%. As of December 31, 2001 and 2000, the total
         outstanding borrowings were $16,950,000 and $17,200,000, respectively,
         with an additional $6,050,000 and $1,750,000 available, and $14,950,000
         and $13,500,000 of the amounts outstanding accruing interest at the
         LIBO rate option.

         The Company's oil and gas properties as well as certain receivables and
         equipment are pledged as security under the loan agreement. The
         agreement requires the Company to maintain, as defined, a minimum
         current ratio, tangible net worth, debt coverage ratio and interest
         coverage ratio, and restrictions are placed on the payment of dividends
         and the amount of treasury stock the Company may purchase.

6.       COMMITMENTS

         Operating Leases:

         The Company has several noncancelable operating leases, primarily for
         rental of office space, that have a term of more than one year.

         Capital Leases:

         The Company has one capital lease for office equipment in other
         long-term obligations.


                                      F-12
<PAGE>


                    PRIMEENERGY CORPORATION and SUBSIDIARIES

                   NOTES to CONSOLIDATED FINANCIAL STATEMENTS

                                   ----------

         Future minimum lease payments under operating and capital leases are as
         follows:

<Table>
<Caption>

                                             Operating         Capital
                                               Leases          Leases
                                            -----------      -----------
<S>                                         <C>              <C>
               2002                         $   488,000      $     6,000
               2003                             434,000            6,000
               2004                              83,000            3,000
               2005                               5,000               --
               Thereafter                            --               --
                                            -----------      -----------
               Total minimum payments       $ 1,010,000           15,000
                                            ===========
               Less imputed interest                              (2,000)
                                                             -----------
               Present value of minimum
                     Lease payments                          $    13,000
                                                             ===========
</Table>

7.       CONTINGENT LIABILITIES

         The Company, as managing general partner of the affiliated
         Partnerships, is responsible for all Partnership activities, including
         the review and analysis of oil and gas properties for acquisition, the
         drilling of development wells and the production and sale of oil and
         gas from productive wells. The Company also provides the
         administration, accounting and tax preparation work for the
         Partnerships, and is liable for all debts and liabilities of the
         affiliated Partnerships, to the extent that the assets of a given
         limited Partnership are not sufficient to satisfy its obligations.

         The Company is subject to environmental laws and regulations.
         Management believes that future expenses, before recoveries from third
         parties, if any, will not have a material effect on the Company's
         financial condition. This opinion is based on expenses incurred to date
         for remediation and compliance with laws and regulations which have not
         been material to the Company's results of operations.

         As a general partner, the Company is committed to offer to purchase the
         limited partners' interest in certain of its managed Partnerships at
         various annual intervals. Under the terms of a partnership agreement,
         the Company is not obligated to purchase an amount greater than 10% of
         the total partnership interest outstanding. In addition, the Company
         will be obligated to purchase interests tendered by the limited
         partners only to the extent of one hundred fifty percent of the
         revenues received by it from such partnership in the previous year.
         Purchase prices are based upon annual reserve reports of independent
         petroleum engineering firms discounted by a risk factor. Based upon
         historical production rates and prices, management estimates that if
         all such offers were to be accepted, the maximum annual future purchase
         commitment would be approximately $500,000.

         In connection with the purchase of oil and gas properties located in
         various counties in Oklahoma in November of 1999, the Company is
         committed to pay contingent consideration to the seller based upon the
         performance of the properties purchased. As of December 31, 2000, the
         total amount of contingent consideration estimated to be paid under the
         agreement was $1,850,000. $1,000,000 of this obligation was included in
         'Other long-term obligations' with the remaining $850,000 included in
         'Current portion of other long-term obligations'. In 2001 the total
         estimated amount of consideration to be paid was reduced by $862,000 to
         $988,000 of which $763,000 was paid during 2001, leaving a net
         estimated amount due of $225,000 as of December 31, 2001, all of which
         is included in 'Current portion of other long-term obligations'.


                                      F-13
<PAGE>


                    PRIMEENERGY CORPORATION and SUBSIDIARIES

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued

                                   ----------

8.       STOCK OPTIONS AND OTHER COMPENSATION

         In May 1989, non-statutory stock options were granted by the Company to
         four key executive officers for the purchase of shares of common stock.
         At December 31, 2001 and 2000, options on 767,500 shares were
         outstanding and exercisable at prices ranging from $1.00 to $1.25.

         On January 27, 1983, the Company adopted the 1983 Incentive Stock
         Option Plan. At December 31, 2000, options on 87,000 shares were
         exercisable at $1.50 per share. During July 2001, all outstanding
         options under this plan were exercised.

         PEMC has a marketing agreement with its current President to provide
         assistance and advice to PEMC in connection with the organization and
         marketing of oil and gas partnerships and joint ventures and other
         investment vehicles of which PEMC is to serve as general or managing
         partner. The Company had a similar agreement with its former Chairman.
         Although that agreement has expired, the former Chairman is still
         entitled to receive certain payments relating to partnerships formed
         during the time the agreement was in effect. The President is entitled
         to a percentage of the Company's carried interest depending on total
         capital raised and annual performance of the Partnerships and joint
         ventures.

9.       INCOME TAXES

         The components of the provision for income taxes for the years ended
         December 31, 2001, 2000 and 1999 are as follows:

<Table>
<Caption>

                                     2001           2000           1999
                                  ----------     ----------     ----------
<S>                               <C>            <C>            <C>
               Federal:
                     Current      $   25,000     $  201,000     $   32,000
                     Deferred      1,500,000        141,000             --
               State:
                     Current          13,000        254,000         37,000
                     Deferred        183,000        215,000        (39,000)
                                  ----------     ----------     ----------
               Total              $1,721,000     $  811,000     $   30,000
                                  ==========     ==========     ==========
</Table>



                                      F-14
<PAGE>



                    PRIMEENERGY CORPORATION and SUBSIDIARIES

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued

                                   ----------

The components of net deferred tax assets (liabilities) are as follows:

<Table>
<Caption>

                                                               December 31,     December 31,
                                                                   2001             2000
                                                               ------------     ------------
<S>                                                            <C>              <C>
     Current assets:
        Compensation and benefits                              $   185,000      $   147,000
        Allowance for doubtful accounts                             89,000            8,000
                                                               -----------      -----------
                                                                   274,000          155,000
                                                               -----------      -----------
     Noncurrent assets:
        Depreciation                                               387,000          346,000
        Due from related parties reserve                           312,000          312,000
        Federal net operating loss carryforwards                   124,000          249,000
        Percentage depletion carryforwards                         367,000          597,000
        Alternative minimum tax credits                            943,000          918,000
                                                               -----------      -----------
                                                                 2,133,000        2,422,000
                                                               -----------      -----------
     Noncurrent liabilities:
        Basis differences relating to limited partnerships      (1,798,000)      (1,751,000)
        Depletion                                               (2,649,000)      (1,182,000)
                                                               -----------      -----------
                                                                (4,447,000)      (2,933,000)
                                                               -----------      -----------

     Net deferred tax liabilities:                             $ 2,040,000      $   356,000
                                                               ===========      ===========
</Table>

The total provision for income taxes for the years ended December 31, 2001, 2000
and 1999 varies from the federal statutory tax rate as a result of the
following:

<Table>
<Caption>

                                                   December 31,     December 31,     December 31,
                                                       2001             2000             1999
                                                   ------------     ------------     ------------
<S>                                                <C>              <C>              <C>
Expected tax expense (benefit)                     $ 2,426,000      $ 2,100,000      $  (717,000)
State income tax, net of federal benefit               196,000          469,000           (2,000)
Overaccrual of prior year refunds receivable                --               --           32,000

Effect of valuation reserve against tax assets              --               --          717,000
Benefit from net operating losses and other
    carryforwards previously reserved against               --       (1,670,000)              --
Credit for producing fuel from a
    non-conventional source                           (299,000)         (88,000)              --
Percentage depletion                                  (602,000)              --               --
                                                   -----------      -----------      -----------
Tax expense                                        $ 1,721,000      $   811,000      $    30,000
                                                   ===========      ===========      ===========
</Table>

In both 1998 and 1999 the Company had large federal net operating losses. The
value of these loss carryforwards was fully reserved against due to the
uncertainty as to whether the Company would have


                                      F-15
<PAGE>


                    PRIMEENERGY CORPORATION and SUBSIDIARIES

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued

                                   ----------

         future net income against which these losses could be offset. The use
         of these previously reserved against carryforwards were the primary
         reason for the low federal rate in the 2000 tax year.

         Subject to certain limitations, the Company is allowed to deduct,
         rather than capitalize, intangible drilling costs incurred on
         successful wells. The Company incurred over $5,000,000 of intangible
         drilling costs in 2001, and these deductions are largely responsible
         for the extremely low current tax expense. However, the deduction of
         these items for tax, while they are capitalized for financial reporting
         purposes, create differences in the depletable basis of oil and gas
         properties which create deferred tax liability and expense.

         The Company has $366,000 of net operating loss carryforwards for both
         regular and alternate minimum tax purposes. These carryforwards expire
         in 2002.

         The Company currently generates approximately $350,000 per year in
         federal tax credits for producing fuel from a non-conventional source.
         These credits may be used to reduce the regular tax, but not the
         alternative minimum tax liability of the taxpayer. To the extent they
         cannot be utilized due to the alternative minimum tax, they become part
         of the Company's alternative minimum tax credit carryforward. This
         credit is scheduled to expire at the end of the 2002 tax year.

         The Company has percentage depletion carryforwards of approximately
         $942,000 for regular tax purposes and $168,000 for alternative minimum
         tax purposes. The Company has approximately $943,000 in alternative
         minimum tax credit carryforwards. Both the percentage depletion
         deductions and the alternative minimum tax credits may be carried
         forward indefinitely for tax purposes.

10.      SEGMENT INFORMATION AND MAJOR CUSTOMERS

         The Company operates in one industry - oil and gas exploration,
         development, operation and servicing. The Company's oil and gas
         activities are entirely in the continental United States.

         The Company sells its oil and gas production to a number of purchasers.
         Listed below are the percent of the Company's total oil and gas sales
         made to each of the customers whose purchases represented more than 10%
         of the Company's oil and gas sales in the year 2001.

<Table>

<S>                                               <C>
         Texon Distributing L.P.                  19.70%
         Unimark LLC                              13.79%
</Table>

         Although there are no long-term oil and gas purchasing agreements with
         these purchasers, the Company believes that they will continue to
         purchase its oil and gas products and, if not, could be replaced by
         other purchasers.

11.      RELATED PARTY TRANSACTIONS

         PEMC is a general partner in several oil and gas Partnerships in which
         certain directors have limited and general partnership interests. As
         the managing general partner in each of the Partnerships, PEMC receives
         approximately 5% to 15% of the net revenues of each Partnership as a
         carried interest in the Partnerships' properties.

         The Partnership agreements allow PEMC to receive management fees for
         various services to the Partnerships as well as a reimbursement for
         property acquisition and development costs incurred on behalf of the
         Partnerships and general and administrative overhead, which is reported
         in the statements of operations as administrative revenue.

         Due to related parties at December 31, 2001 and 2000 primarily
         represent receipts collected by the Company, as agent, from oil and gas
         sales net of expenses. The amount of such receipts due the


                                      F-16
<PAGE>


                    PRIMEENERGY CORPORATION and SUBSIDIARIES

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued

                                   ----------

         affiliated Partnerships was $983,000 and $1,265,000 at December 31,
         2001 and 2000, respectively. Receivables from related parties consist
         of reimbursable general and administrative costs, lease operating
         expenses and reimbursements for property acquisitions, development, and
         related costs.

         Treasury stock purchases in 2001 and 2000 included shares acquired from
         related parties. Purchases from related parties include a total of
         228,800 shares purchased for a total consideration of $1,676,000 in
         2001, and 40,700 shares purchased for a total consideration of $276,900
         in 2000.

12.      RESTRICTED CASH AND CASH EQUIVALENTS

         Restricted cash and cash equivalents includes $1,174,000 and $1,128,000
         at December 31, 2001 and 2000, respectively, of cash primarily
         pertaining to unclaimed royalty payments. There were corresponding
         accounts payable recorded at December 31, 2001 and 2000 for these
         liabilities.

13.      SALARY DEFERRAL PLAN

         The Company maintains a salary deferral plan (the "Plan") in accordance
         with Internal Revenue Code Section 401(k), as amended. The Plan
         provides for discretionary and matching contributions which
         approximated $255,000 and $226,000 in 2001 and 2000, respectively.

14.      ACCOUNTS PAYABLE

         A summary of accounts payable at December 31, 2001 and 2000 is as
         follows:

<Table>
<Caption>
                                                                   2001           2000
                                                                ----------     ----------
      <S>                                                       <C>            <C>
         Payables to unaffiliated interests                     $5,743,000     $6,783,000
         Other                                                      45,000         45,000
                                                                ----------     ----------
                                                                $5,788,000     $6,828,000
                                                                ==========     ==========
</Table>

15.      EARNINGS PER SHARE

         Basic earnings per share are computed by dividing earnings available to
         common stockholders by the weighted average number of common shares
         outstanding during the period. Diluted earnings per share reflect per
         share amounts that would have resulted if dilutive potential common
         stock had been converted to common stock. The following reconciles
         amounts reported in the financial statements:

<Table>
<Caption>

                                                       Year ended December 31, 2001
                                                 ----------------------------------------

                                                                 Number of     Per share
                                                 Net Income       Shares         Amount
                                                 ----------     ----------     ----------
<S>                                              <C>             <C>           <C>
         Net income per common share             $5,413,000      3,882,721     $     1.39
         Effect of dilutive securities:
            Options                                                709,384
                                                 ----------     ----------     ----------
         Diluted net income per common share     $5,413,000      4,592,105     $     1.18
                                                 ==========     ==========     ==========
</Table>



                                      F-17
<PAGE>


                    PRIMEENERGY CORPORATION and SUBSIDIARIES

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued

                                   ----------

<Table>
<Caption>

                                                         Year ended December 31, 2000
                                                   ----------------------------------------

                                                                   Number of     Per share
                                                   Net Income       Shares         Amount
                                                   ----------     ----------     ----------
<S>                                                <C>             <C>           <C>
           Net income per common share             $5,365,000      4,266,186     $     1.26
           Effect of dilutive securities:
              Options                                                686,057
                                                   ----------     ----------     ----------
           Diluted net income per common share     $5,365,000      4,952,243     $     1.08
                                                   ==========     ==========     ==========
</Table>

<Table>
<Caption>

                                                         Year ended December 31, 1999
                                                   ----------------------------------------

                                                                   Number of       Per share
                                                   Net Income       Shares          Amount
                                                   ----------     ----------     ------------
<S>                                                <C>             <C>           <C>
           Net loss per common share               $(2,138,000)    4,423,838     $      (0.48)
           Effect of dilutive securities:
              Options(1)                                                  --
                                                   -----------     ---------     ------------
           Diluted net loss per common share       $(2,138,000)    4,423,838     $      (0.48)
                                                   ===========     =========     ============
</Table>

       (1)   For the year ended December 31, 1999, the number of options
             excluded from diluted loss per common share calculations was
             706,604 as the conversion of these would have had an anti-dilutive
             effect on net loss per share.

16.      SUBSEQUENT EVENTS

         In February of 2002, the Company reached a settlement regarding a claim
         for additional drilling costs incurred by the Company as a result of a
         third party's negligence. The $350,000 received in regard to this claim
         will be recognized as income in the first quarter of 2002.

17.      SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<Table>
<Caption>

                           Year Ended
                           December 31,      Fourth            Third          Second           First
                              2001           Quarter          Quarter         Quarter         Quarter
                           -----------     -----------      -----------     -----------     -----------
<S>                        <C>             <C>              <C>             <C>             <C>
Revenue                    $42,408,000     $ 8,880,000      $10,103,000     $11,113,000     $12,312,000

Operating income             6,968,000         (67,000)       1,002,000       2,277,000       3,756,000

Net income                   5,413,000         207,000          630,000       1,571,000       3,005,000

Net income per common
share                      $      1.39     $       .06      $       .16     $       .41     $       .76

Diluted net income per
common share               $      1.18     $       .06      $       .14     $       .34     $       .64
</Table>



                                      F-18
<PAGE>


                    PRIMEENERGY CORPORATION and SUBSIDIARIES

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued

                                   ----------


<Table>
<Caption>

                           Year Ended
                           December 31,      Fourth           Third           Second          First
                              2000           Quarter         Quarter          Quarter        Quarter
                           -----------     -----------     -----------     -----------     -----------
<S>                        <C>             <C>             <C>             <C>             <C>
Revenue                    $39,182,000     $11,548,000     $11,113,000     $ 8,809,000     $ 7,712,000

Operating income             6,148,000       1,451,000       2,605,000       1,501,000         591,000

Net income                   5,365,000       1,221,000       2,294,000       1,332,000         518,000

Net income per common
share                      $      1.26     $       .29     $       .54     $       .31     $       .12

Diluted net income per
common share               $      1.08     $       .24     $       .47     $       .27     $       .10
</Table>


                                      F-19
<PAGE>






                    PRIMEENERGY CORPORATION AND SUBSIDIARIES

                            SUPPLEMENTARY INFORMATION

                                   ----------

                                   (UNAUDITED)









                                      F-20
<PAGE>


                    PRIMEENERGY CORPORATION and SUBSIDIARIES

         CAPITALIZED COSTS RELATING to OIL and GAS PRODUCING ACTIVITIES

                        December 31, 2001, 2000 and 1999

                                   ----------

                                   (Unaudited)

<Table>
<Caption>

                                                                   2001            2000           1999
                                                                -----------     -----------    -----------
<S>                                                             <C>             <C>
Developed oil and gas properties                                $63,418,000     $57,439,000    $49,249,000
Undeveloped oil and gas properties                                  286,000         159,000        235,000
                                                                -----------     -----------    -----------

                                                                 63,704,000      57,598,000     49,484,000

Accumulated depreciation, depletion and valuation allowance      42,924,000      37,686,000     32,342,000
                                                                -----------     -----------    -----------

           Net capitalized costs                                $20,780,000     $19,912,000    $17,142,000
                                                                ===========     ===========    ===========
</Table>

               COSTS INCURRED in OIL and GAS PROPERTY ACQUISITION,
                     EXPLORATION and DEVELOPMENT ACTIVITIES

                  Years ended December 31, 2001, 2000 and 1999

                                   ----------

                                   (Unaudited)



<Table>
<Caption>

                                                          2001           2000           1999
                                                       ----------     ----------     -----------
<S>                                                    <C>            <C>
Acquisition of properties:
    Developed                                          $  316,000     $4,679,000     $ 3,042,000
    Undeveloped                                           164,000        106,000         189,000

Exploration costs                                         509,000      1,797,000         806,000

Development costs                                       5,661,000      3,351,000       4,473,000
</Table>

              See accompanying notes to supplementary information.


                                      F-21
<PAGE>



                    PRIMEENERGY CORPORATION and SUBSIDIARIES

                    STANDARDIZED MEASURE of DISCOUNTED FUTURE
             NET CASH FLOWS RELATING to PROVED OIL and GAS RESERVES

                  Years ended December 31, 2001, 2000 and 1999

                                   ----------

                                   (Unaudited)



<Table>
<Caption>

                                                              2001               2000              1999
                                                          -------------      -------------     ------------
<S>                                                       <C>                <C>
Future cash inflows                                       $ 102,916,000      $ 315,680,000     $100,177,000

Future production and development costs                     (60,841,000)      (116,417,000)     (58,807,000)

Future income tax expenses                                   (7,930,000)       (59,914,000)      (4,229,000)
                                                          -------------      -------------     ------------

    Future net cash flows                                    34,145,000        139,349,000       37,141,000

10% annual discount for estimated timing of cash flow       (13,179,000)       (59,339,000)     (13,281,000)
                                                          -------------      -------------     ------------
    Standardized measure of discounted
     future net cash flow                                 $  20,966,000      $  80,010,000      $23,860,000
                                                          =============      =============     ============
</Table>


              See accompanying notes to supplementary information.



                                      F-22
<PAGE>





                    PRIMEENERGY CORPORATION and SUBSIDIARIES

                    STANDARDIZED MEASURE of DISCOUNTED FUTURE
                   NET CASH FLOWS and CHANGES THEREIN RELATING
                         to PROVED OIL and GAS RESERVES


                  Years ended December 31, 2001, 2000 and 1999

                                   ----------

                                   (Unaudited)


The following are the principal sources of change in the standardized measure of
discounted future net cash flows during 2001, 2000 and 1999:

<Table>
<Caption>

                                                                 2001              2000              1999
                                                             ------------      ------------      ------------
<S>                                                          <C>               <C>               <C>
Sales of oil and gas produced, net of production costs       $(11,915,000)     $(14,109,000)      $(5,458,000)
Net changes in prices and production costs                    (92,118,000)       69,822,000         3,192,000
Extensions, discoveries and improved recovery,
    less recovery costs                                         3,335,000        13,705,000         6,188,000
Revisions of previous quantity estimates                          422,000         3,577,000         2,178,000
Reserves purchased, net of development costs                    1,082,000        11,698,000         4,818,000
Net change in development costs                                  (594,000)          (99,000)          150,000

Accretion of discount                                           8,001,000         2,386,000         1,328,000

Net change in income taxes                                     33,127,000       (30,779,000)       (1,973,000)
Other                                                            (384,000)          (51,000)          156,000
                                                             ------------      ------------      ------------

    Net change                                                (59,044,000)       56,150,000        10,579,000

Standardized measure of discounted future net cash flow:

    Beginning of year                                          80,010,000        23,860,000        13,281,000
                                                             ------------      ------------      ------------
    End of year                                              $ 20,966,000      $ 80,010,000       $23,860,000
                                                             ============      ============      ============
</Table>



               See accompanying notes to supplementary information



                                      F-23
<PAGE>


                    PRIMEENERGY CORPORATION and SUBSIDIARIES

                          RESERVE QUANTITY INFORMATION

                  Years ended December 31, 2001, 2000 and 1999

                                   ----------

                                   (Unaudited)


<Table>
<Caption>


                                                 2001                              2000                            1999
                                     ----------------------------      ----------------------------    ----------------------------
                                         Gas              Oil              Gas               Oil           Gas             Oil
                                        (Mcf)           (bbls.)           (Mcf)            (bbls.)        (Mcf)          (bbls.)
                                     -----------      -----------      -----------      -----------    -----------    -----------
<S>                                  <C>              <C>              <C>              <C>            <C>            <C>
Proved developed and undeveloped
  reserves:
      Beginning of year               27,029,000        2,362,000       22,202,000        2,110,000     17,341,000      1,200,000
      Extensions, discoveries
        and improved recovery          2,764,000          136,000        1,961,000           13,000      1,732,000        554,000
      Revisions of previous
        estimates                     (2,458,000)        (307,000)       3,763,000          162,000      1,853,000        346,000
      Purchases                        1,148,000          111,000        3,034,000          375,000      4,565,000        274,000
      Production                      (3,764,000)        (306,000)      (3,931,000)        (298,000)    (3,289,000)      (264,000)
                                     -----------      -----------      -----------      -----------    -----------    -----------

      End of year                     24,719,000        1,996,000       27,029,000        2,362,000     22,202,000      2,110,000
                                     ===========      ===========      ===========      ===========    ===========    ===========

Proved developed reserves             24,226,000        1,996,000       27,029,000        2,362,000     22,046,000      2,110,000
                                     ===========      ===========      ===========      ===========    ===========    ===========
</Table>

              See accompanying notes to supplementary information



                                      F-24
<PAGE>




                    PRIMEENERGY CORPORATION and SUBSIDIARIES

           RESULTS of OPERATIONS from OIL and GAS PRODUCING ACTIVITIES

                  Years ended December 31, 2001, 2000 and 1999

                                   ----------

                                   (Unaudited)


<Table>
<Caption>

                                                            2001            2000             1999
                                                        -----------     -----------      -----------
<S>   <C>                                               <C>             <C>              <C>
Revenue:
      Oil and gas sales                                 $22,998,000     $23,223,000      $11,763,000
                                                        -----------     -----------      -----------

Costs and expenses:
      Lease operating expense                            11,083,000       9,114,000        6,305,000
      Exploration costs                                     509,000       1,717,000          869,000
      Depreciation and depletion                          4,544,000       5,060,000        4,581,000
      Write down of oil and gas properties                  753,000         295,000        2,703,000
      Income tax expense                                  1,473,000         811,000           30,000
                                                        -----------     -----------      -----------
                                                         18,362,000      16,997,000      $14,488,000
                                                        -----------     -----------      -----------

Results of operations from producing activities
  (excluding corporate overhead and interest costs)     $ 4,636,000     $ 6,226,000      $(2,725,000)
                                                        ===========     ===========      ===========
</Table>


               See accompanying notes to supplementary information



                                      F-25
<PAGE>




                    PRIMEENERGY CORPORATION and SUBSIDIARIES

                       NOTES to SUPPLEMENTARY INFORMATION

                                   ----------

                                   (Unaudited)


1.       PRESENTATION OF RESERVE DISCLOSURE INFORMATION

         Reserve disclosure information is presented in accordance with the
         provisions of Statement of Financial Accounting Standards No. 69 ("SFAS
         69"), "Disclosures About Oil and Gas Producing Activities".

2.       DETERMINATION OF PROVED RESERVES

         The estimates of the Company's proved reserves were determined by an
         independent petroleum engineer in accordance with the provisions of
         SFAS 69. The estimates of proved reserves are inherently imprecise and
         are continually subject to revision based on production history,
         results of additional exploration and development and other factors.
         Estimated future net revenues were computed by reserves, less estimated
         future development and production costs based on current costs.

3.       RESULTS OF OPERATIONS FROM OIL AND GAS PRODUCING ACTIVITIES

         The results of operations from oil and gas producing activities were
         prepared in accordance with the provisions of SFAS 69. General and
         administrative expenses, interest costs and other unrelated costs are
         not deducted in computing results of operations from oil and gas
         activities.

4.       STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS AND CHANGES
         THEREIN RELATING TO PROVED OIL AND GAS RESERVES

         The standardized measure of discounted future net flows relating oil
         and gas reserves and the changes of standardized measure of discounted
         future net cash flows relating to proved oil and gas reserves were
         prepared in accordance with the provisions of SFAS 69.

         Future cash inflows are computed as described in Note 2 by applying
         current prices to year-end quantities of proved reserves.

         Future production and development costs are computed estimating the
         expenditures to be incurred in developing and producing the oil and gas
         reserves at year-end, based on year-end costs and assuming continuation
         of existing economic conditions.

         Future income tax expenses are calculated by applying the year-end U.S.
         tax rate to future pre-tax cash inflows relating to proved oil and gas
         reserves, less the tax basis of properties involved. Future income tax
         expenses give effect to permanent differences and tax credits and
         allowances relating to the proved oil and gas reserves.

         Future net cash flows are discounted at a rate of 10% annually
         (pursuant to SFAS 69) to derive the standardized measure of discounted
         future net cash flows. This calculation does not necessarily represent
         an estimate of fair market value or the present value of such cash
         flows since future prices and costs can vary substantially from
         year-end and the use of a 10% discount figure is arbitrary.



                                      F-26
<PAGE>

                                 EXHIBIT INDEX

<Table>
<Caption>
EXHIBIT
NUMBER            DESCRIPTION
-------           -----------
<S>               <C>
  3.1             Restated Certificate of Incorporation of PrimeEnergy
                  Corporation. (Incorporated herein by reference to Exhibit 3.1
                  of PrimeEnergy Corporation Form 10-KSB for the year ended
                  December 31, 1999)

  3.2             Bylaws of PrimeEnergy Corporation. (Incorporated herein by
                  reference to Exhibit 3.2 of PrimeEnergy Corporation Form
                  10-KSB for the year ended December 31, 1999)

  10.1            PrimeEnergy Corporation 1983 Incentive Stock Option Plan
                  (Incorporated herein by reference to Exhibit 10.1 of
                  PrimeEnergy Corporation Form 10-KSB for the year ended
                  December 31, 1994)(1)

  10.3            Massachusetts Mutual Flexinvest 401(k) Plan as amended and
                  restated. (Incorporated herein by reference to Exhibit 10.3 of
                  PrimeEnergy Corporation Form 10-KSB for the year ended
                  December 31, 1994)(1)

  10.7            Credit Agreement dated April 26, 1995, between PrimeEnergy
                  Corporation, PrimeEnergy Management Corporation and Bank One,
                  Texas, National Association. (Incorporated herein by reference
                  to Exhibit 10.7 to PrimeEnergy Corporation Form 8-K dated
                  April 26, 1995)

  10.7.1          First Amendment to Credit Agreement Among PrimeEnergy
                  Corporation and PrimeEnergy Management Corporation, as
                  Borrowers, Bank One, Texas, National Association, as Agent,
                  and the Lenders Signatory Hereto, effective as of October 6,
                  1995. (Incorporated herein by reference to Exhibit 10.7.1 to
                  PrimeEnergy Corporation Form 10-KSB for the year ended
                  December 31, 1995)

  10.7.2          Second Amendment to Credit Agreement Among PrimeEnergy
                  Corporation and PrimeEnergy Management Corporation, as
                  Borrowers, Bank One, Texas, National Association, as Agent,
                  and the Lenders Signatory Hereto, effective as of February 6,
                  1997. (Incorporated by reference to Exhibit 10.7.2 of
                  PrimeEnergy Corporation Form 10-KSB for the year ended
                  December 31, 1996)

  10.7.3          Third Amendment to Credit Agreement Among PrimeEnergy
                  Corporation and PrimeEnergy Management Corporation, as
                  Borrowers, Bank One, Texas, National Association, as Agent,
                  and the Lenders Signatory Hereto, effective as of January 2,
                  1998 (Incorporated by reference to Exhibit 10.7.3 of
                  PrimeEnergy Corporation Form 10-KSB for the year ended
                  December 31, 1997)

  10.8            Mortgage, Deed or Trust, Indenture, Security Agreement,
                  Financing Statement and Assignment of Production dated May 27,
                  1994, as ratified and amended April 26, 1995, between
                  PrimeEnergy Corporation, PrimeEnergy Management Corporation
                  and Bank One, Texas, National Association. (Incorporated by
                  reference to Exhibit 10.8 of PrimeEnergy Corporation Form 8-K
                  dated April 26, 1995)

  10.17           Amended Marketing Agreement between PrimeEnergy Management
                  Corporation and Charles E. Drimal, Jr. (Incorporated herein by
                  reference to Exhibit 10.17 of PrimeEnergy Corporation Form
                  10-KSB for the year ended December 31, 1994)(1)

  10.18           Composite copy of Non-Statutory Option Agreements
                  (Incorporated by reference to Exhibit 10.18 of PrimeEnergy
                  Corporation for 10KSB for the year ended December 31, 1997)(1)

  10.21           Purchase and Sale Agreement dated November 16, 1999 between
                  Southern Pacific Petroleum U.S.A. and PrimeEnergy Corporation
                  (Incorporated herein by reference to Exhibit 10.21 to
                  PrimeEnergy Corporation Form 8-K dated November 24, 1999)

  21              Subsidiaries. (filed herewith)

  23              Consent of Ryder Scott & Company L.P. Company. (filed
                  herewith)
</Table>

----------

(1)  Management contract or compensatory plan or arrangement required to be
filed as an Exhibit to this Form 10-K.