<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, 2002

                                       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-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Indicate by check mark whether the Registrant is an accelerated filer as defined
in Exchange Act Rule 12-b-2.                                      Yes [ ] No [X]

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, 2003, was $8,642,432.

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, 3,695,311.


                       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, 2003, are
incorporated by reference in Part III hereof.




<PAGE>
                             PRIMEENERGY CORPORATION

                             FORM 10-K ANNUAL REPORT
                            FOR THE FISCAL YEAR ENDED
                                DECEMBER 31, 2002

                                     PART I

ITEM 1. 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 38 oil
and gas limited partnerships (the "Partnerships") of which three 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, as well as 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.

       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 5,000. 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 for, 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, 434 through the Houston office, 162 through the Midland
office, 458 through the Oklahoma City office and 496 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

       During 2002, the Company continued the development of existing properties
in Oklahoma and Texas, and participated in exploratory drilling in Texas.
Drilling activity in 2002 on the East Wakita and DSR prospects in Oklahoma
resulted in nine producers. Two additional wells were drilled in 2003 and are
waiting on pipeline connections. Drilling activity in Gaines County, Texas
resulted in production from two wells and additional potential for development
in 2003.

       The Company's exploration program continues to identify prospects to be
evaluated. During 2002, four prospects were drilled resulting in two producers
and two dry holes. Drilling in 2003 has resulted in one successful well and one
dry hole. The Company expects to continue testing prospects in various counties
in Texas during the balance of 2003.

       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 2002, the
Company purchased such interests in an amount totaling $1,203,500.

       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



                                       3
<PAGE>
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., "Properties," 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., "Properties - 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 Company'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.


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.



                                       4
<PAGE>
        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.

        Texon Distributing L.P.             18.6%
        Unimark LLC                         20.1%
        Plains All American, Inc.           10.1%

        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.

        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.



                                       5
<PAGE>
         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, 2003, the Company had 196 full-time and 5 part-time
employees, 17 of whom were employed by the Company at its principal offices in
Stamford, Connecticut, 22 in Houston, Texas, at the offices of Prime Operating
Company, Eastern Oil Well Service Company and EOWS Midland Company and 162
employees who were primarily involved in the district operations of the Company
in Houston and Midland, Texas, Oklahoma City, Oklahoma and Charleston, West
Virginia.


ITEM 2. PROPERTIES.

         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.



                                       6
<PAGE>
         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, 2002.

<Table>
<Caption>
                     2002             2001               2000              1999              1998
               ---------------   ---------------   ---------------   ---------------   ---------------
                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        1    1.000       --       --        1     .300        1     .468
    Gas             1      .25        1     .602        3    1.279        1     .683        2     .387
    Dry             4     2.50       --       --        2     .276        2     .510        2     .686
Development:
    Oil             2     1.25        1     .500       --       --       --       --        1     .145
    Gas            10     7.59        7    4.926        7    4.134        2     .015        5     .316
    Dry             6     5.30        2    1.585       --       --        2     .745       --       --
Total:
    Oil             3     2.25        2    1.500       --       --        1     .300        2     .613
    Gas            11     7.84        8    5.528       10    5.413        3     .698        7     .703
    Dry            10     7.80        2    1.585        2     .276        4    1.255        2     .686
               ------   ------   ------   ------   ------   ------   ------   ------   ------   ------
                   24    17.89       12    8.613       12    5.689        8    2.253       11    2.002
               ======   ======   ======   ======   ======   ======   ======   ======   ======   ======
</Table>

OIL AND GAS PRODUCTION

       As of December 31, 2002, 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              891            244.85
                         Gas Wells            1,156            297.64
             Producing Acres                269,298            68,657
</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, 2002. "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.


<Table>
<Caption>
                                    2002              2001            2000           1999           1998
                                  ---------         ---------       ---------      ---------      ---------
<S>                               <C>               <C>             <C>            <C>            <C>
Oil (barrels) ................      321,000           306,000         298,000        264,000        277,000
Gas (Mcf) ....................    3,540,000         3,764,000       3,930,000      3,289,000      3,621,000
</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, 2002.



                                       7
<PAGE>
<Table>
<Caption>
                                            2002              2001            2000            1999            1998
                                        ------------     ------------     ------------     -----------     ----------
<S>                                     <C>              <C>              <C>              <C>             <C>
Average sales price per barrel ......   $      23.37            24.92            28.34           15.71          12.39
Average sales price Per Mcf .........   $       3.06             4.08             3.76            2.32           2.19
Average production costs per net
  equivalent barrel(1) ..............   $      11.80            11.88             9.57            7.76           7.60
</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, 2002. "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              6,462          3,228            320              1             --             --
Texas                 8,411          5,472            680             16             --             --
Wyoming               1,000            125           5043             35            140             35
                 ----------     ----------     ----------     ----------     ----------     ----------
TOTAL                15,873          8,825         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, 1998, 1999, 2000, 2001 and 2002. 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>
 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
 2002           2,319,000     29,917,000             --             --      2,319,000     29,917,000
</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, 2002, 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>
 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
 2002     $ 97,600,000       56,855,000               --               --       97,600,000       56,855,000
</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 prices for gas at December 31, 2002 and 2001 were $4.75 and
$2.63 per MMBTU, respectively. The range of spot prices during the year 2002 was
a low of $1.98 and a high of $5.05 and the average was $3.38. The range during
the first quarter of 2003 has been from $4.88 to $9.50 with an average of $6.62.
The recent futures market prices have been around $5.00.

         The NYMEX price for oil at December 31, 2002 and 2001 was $31.23 and
$19.84 per barrel, respectively. The range of NYMEX prices during the year 2002
was a low of $17.97 and a high of $32.49 and the average was $26.15. The range
during the first quarter of 2003 has been from $30.56 to $37.83 with an average
of $33.89. The recent futures market prices have fluctuated around $30.

         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, 2003, 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, 2002, 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, 2002, were as follows:

<Table>
<Caption>
              2002                         High            Low                       2001                 High           Low
--------------------------------        ----------     ----------           ------------------------    ---------     ---------
<S>                                     <C>            <C>                  <C>                         <C>           <C>
First Quarter ..................        $     8.53     $     7.90           First Quarter ..........    $    6.56     $    6.49
Second Quarter .................              9.07           8.00           Second Quarter .........         8.11          7.75
Third Quarter ..................              9.01           8.00           Third Quarter ..........         8.47          8.30
Fourth Quarter .................              8.25           8.00           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, 2003 was 1,025.

         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>
                                       2002            2001            2000            1999             1998
                                    -----------     -----------     -----------     -----------      -----------
<S>                                 <C>              <C>             <C>             <C>              <C>
Revenues                            $35,934,000      42,408,000      39,182,000      25,520,000       24,795,000
Income (loss) from operations       $ 2,168,000       6,968,000       6,148,000      (2,116,000)      (2,061,000)
Net Income (loss)                   $ 1,757,000       5,413,000       5,365,000      (2,138,000)      (1,692,000)
Income (loss) per common share      $      0.47            1.39            1.26           (0.48)           (0.38)
Net Cash provided by operations     $ 9,644,000      12,313,000      11,498,000       7,677,000        6,846,000
Total Assets                        $44,887,000      35,816,000      35,094,000      30,475,000       28,611,000
Long-term obligations               $23,734,000      16,958,000      18,213,000      19,217,000       16,505,000
Cash Dividends                      None             None            None            None             None
</Table>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

         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 $9,644,000 in 2002, $12,313,000 in
2001, and $11,498,000 in 2000.

         As of December, 2002, the Company entered in to a credit agreement with
a new primary lender. The Company and the lender agreed to amend and restate in
its entirety the credit agreement dated April 26, 1995 between the Company and
its predecessor lender. This agreement will continue to provide 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. The current borrowing base
is $25 million and includes a Term Loan of $4 million. The Term Loan will be
paid back in monthly installments of $66,667 beginning January 2003 and
continuing until December 19, 2004, when such Term Loan shall be paid in full.
The credit agreement provides for interest on outstanding borrowings at the
bank's base rate, as defined, payable monthly, or at rates 2% over the London
Inter-Bank Offered Rate (LIBO rate) payable at the end of the applicable
interest period.

         The Company had been party to a series of credit agreements with its
former lender or its predecessors since 1983. The agreement, entered into in
April 1995, provided for borrowings under a Master Note. Advances under the
agreement, as amended, were limited to the borrowing base as defined in the
agreement and re-determined by the lender on a semi-annual basis. Since the
beginning of 2000, the borrowing base ranged from $20 million to $23.7 million.
The credit agreement provided 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. This credit agreement was assigned to the Company's
primary lender effective December 2002.

         The average interest rates paid on outstanding borrowings subject to
interest at the bank's base rate during 2002 and 2001 were 4.25% and 6.92%,
respectively. During the same periods, the average rates paid on outstanding
borrowings bearing interest based upon the LIBO rate were 3.59% and 5.98% As of
December 31,


                                       10
<PAGE>
2002 and 2001, the total outstanding borrowings were $24,500,000 and
$16,950,000, respectively, with an additional $500,000 and $6,050,000 available.
As of December 31, 2001 $14,950,000 of the amounts outstanding accrued 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 credit 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 $3,000,000 developing the East Wakita
field during 2002. Seven successful wells were drilled on this property in 2002,
and two more successful wells were drilled in the first quarter of 2003. Further
development of this prospect is planned for the future.

         The Company spent $2,200,000 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 2003.

         In total, the Company spent $13,186,000 on the acquisition and
development of oil and gas properties during 2002, including $1,203,500 spent to
repurchase partnership interests from investors in its oil and gas partnerships.

         The Company spent $1,310,000 on field service equipment during 2002,
and an additional $180,000 on computers, software and related equipment. The
Company spent $745,000 to repurchase shares of its treasury stock in 2002. As of
the date of this Report, the Company had spent an additional $27,000 on treasury
stock purchases in 2003.

         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:

         2002 AS COMPARED TO 2001

         The Company had net income of $1,757,000 in 2002 as compared to
$5,413,000 in 2001. The decrease in net income is primarily due to lower
commodity prices.

         Oil and gas sales were $18,330,000 in 2002 as compared to $22,998,000
in 2001 A chart summarizing oil and gas production and revenue, including the
Company's share of production and revenue from the Partnerships, follows.

<Table>
<Caption>
                               2002            2001       Increase (Decrease)
                            -----------     -----------   -------------------
<S>                         <C>             <C>           <C>
Barrels of Oil Produced         321,384         306,016             15,368
Average Price Received      $     23.37     $   24.9199        $   (1.5499)
                            -----------     -----------

Oil Revenue                 $ 7,510,000     $ 7,626,000        $  (117,000)
                            -----------     -----------

Mcf of Gas Produced           3,540,000       3,763,605           (259,605)
Average Price Received      $    3.0564     $    4.0843        $   (1.0279)
                            -----------     -----------

Gas Revenue                 $10,820,000     $15,372,000        $(4,552,000)
                            -----------     -----------

Total Oil & Gas Revenue     $18,330,000     $22,998,000        $(4,668,000)
                            ===========     ===========
</Table>

         District operating income decreased from $17,082,000 in 2001 to
$15,308,000 in 2002. This decrease is due to reduced utilization of equipment
combined with discounted rates in effect during the first half of 2002.



                                       11
<PAGE>
         Lease operating expenses decreased by 8% to $10,210,000 in 2002 as
compared to $11,083,000 in 2001. The difference is attributable to production
taxes related to lower prices combined with discounts on expenses due to the
weak price environment in the first half of 2002.

         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 4% to $1,473,000 in 2002 as
compared to $1,535,000 in 2001. 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 2002 and 2001, the Company's
total reimbursements for property acquisition costs were approximately $450,000
and $558,000, respectively.

         General and administrative expenses increased to $4,888,000 in 2002 as
compared to $4,310,000 in 2001. This increase reflects the change in cost
reimbursement combined with an increase in the Company's share of general and
administrative expenses incurred by the Partnerships.

         Depreciation and depletion of oil and gas properties decreased by 12%
to $3,988,000 in 2002 as compared to $4,522,000 in 2001 as a result of increases
in estimates of proved reserves.

         Exploration costs of $894,000 were incurred during 2002 drilling five
dry holes. Exploration costs of $509,000 in 2001 consist primarily of the cost
of three dry holes drilled in 2001.

         Interest expense declined to $766,000 in 2002 as compared to $895,000
in 2001 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 2002 and 2001 were 4.25% and
6.92%, respectively. During the same periods, the average rates paid on
outstanding borrowings bearing interest based upon the LIBO rate were 3.58% and
5.98%. As of December 31, 2002 and 2001, the total outstanding borrowings
were$24,500,000 and $16,950,000, respectively.

         Income tax expense of $443,000 in 2002 represents a 20% effective rate
as compared to the effective rate of 24% in 2001. Current tax expense in 2002
was $199,000, with the remainder being attributable to an increase in the
Company's deferred tax liability. The low current tax expense is primarily
attributable to federal tax credits for producing fuel from a nonconventional
source, percentage depletion deductions, larger depreciation deductions allowed
for tax purposes, and the utilization of federal net operating loss carry
forward.

         All of the Company's net operating loss carry forwards will have been
used or expired as of the end of 2002, and under current law the credit for
producing fuel from a nonconventional source will no longer be allowed after
2002. It is possible that the Company's current and overall tax rates may be
significantly higher in future years.



                                       12
<PAGE>
         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 drilled three successful wells on the East Wakita field
in 2001. 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.

         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 on
administrative overheads 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



                                       13
<PAGE>
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.


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,
2002, a hypothetical 2% increase in the applicable interest rates would increase
interest expense by approximately $375,500.

         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 2002, and had no open hedging transactions at
December 31, 2002. Declines in domestic oil and gas prices could have a material
adverse effect on the Company's revenues, operating results, 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.



                                       14
<PAGE>

                                    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,
2003, which will be filed with the Securities and Exchange Commission within 120
days of December 31, 2002, 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, 2003, which will be filed with the Securities
and Exchange Commission within 120 days of December 31, 2002, and which is
incorporated herein by reference.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS.

         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, 2003, which
will be filed with the Securities and Exchange Commission within 120 days of
December 31, 2002, 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,
2003, which will be filed with the Securities and Exchange Commission within 120
days of December 31, 2002, and which is incorporated herein by reference.


ITEM 14. INTERNAL CONTROLS AND PROCEDURES.

         Based upon an evaluation within the 90 days prior to the filing date of
this Report, our Chief Executive Officer and Chief Financial Officer have each
concluded that our disclosure controls and procedures as defined in Rules 13a-14
and 15d-14 of the Securities Exchange Act of 1934, as amended, are effective, as
of the evaluation date, in timely alerting them to material information relating
to our Company required to be included in our reports filed or submitted under
the Exchange Act. Since the date of the evaluation, there have been no
significant changes in our internal controls or in other factors that could
significantly affect such controls, including any corrective actions with regard
to significant deficiencies and material weaknesses.


                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

    (a)  The following documents are filed as a part of this Report:

         1.       Financial Statements (Index to Financial Statements at
                  page F-1 of this Report)

         2.       Financial Statement Schedules (Index to Financial Statements
                  -- Supplementary Information)

         3.       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)

         10.3     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)



                                       15
<PAGE>
      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
               10-KSB for the year ended December 31, 1997)(1)

      10.22    Credit Agreement dated as of December 19, 2002, between
               PrimeEnergy Corporation, PrimeEnergy Management Corporation,
               Eastern Oil Well Service Company, Southwest Oilfield
               Construction Company, EOWS Midland Company, and Guaranty Bank,
               FSB (filed herewith)

      10.23    Mortgage, Deed of Trust, Security Agreement, Financing Statement
               and Assignment of Production from PrimeEnergy Corporation and
               PrimeEnergy Management Corporation for the benefit of Guaranty
               Bank, FSB (filed herewith)

      10.24    Act of Mortgage and Security Agreement by PrimeEnergy Corporation
               and PrimeEnergy Management Corporation to Guaranty Bank, FSB
               (filed herewith)

      21       Subsidiaries. (filed herewith)

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

      99.1     Certification of Chief Executive Officer pursuant to 18 U.S.C.
               Section 1350, as adopted pursuant to section 906 of the
               Sarbanes-Oxley Act of 2002 (filed herewith).

      99.2     Certification of Chief Financial Officer pursuant to 18 U.S.C.
               Section 1350, as adopted pursuant to section 906 of the
               Sarbanes-Oxley Act of 2002 (filed herewith).


       (b)     Reports on Form 8-K:

               No reports on Form 8-K have been filed during the last quarter of
               the year covered by this Report.

-----------

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


                                       16
<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 31st day of
March, 2003.

                                        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 31st day of March, 2003.


<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, Executive 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


                                    Director                                                                    Director
--------------------------                                                      ------------------------
Samuel R. Campbell                                                              Robert de Rothschild


/s/ JAMES E. CLARK                  Director                                                                    Director
--------------------------                                                      ------------------------
James E. Clark                                                                  Jarvis K. Slade


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


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

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




                                      -17-
<PAGE>
                                 CERTIFICATION


I, Charles E. Drimal, Jr., certify that:


1. I have reviewed this annual report on Form 10-K of PrimeEnergy Corporation;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.



March 31, 2003                            /s/ Charles E. Drimal Jr.
                                          -------------------------------------
                                          Charles E. Drimal Jr
                                          Chief Executive Officer
                                          PrimeEnergy Management Corporation
                                          Managing General Partner



<PAGE>
                                 CERTIFICATION


I, Beverly A. Cummings, certify that:


1. I have reviewed this annual report on Form 10-K of PrimeEnergy Corporation;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.



March 31, 2003                                /s/ Beverly A. Cummings
                                              ----------------------------------
                                              Beverly A Cummings
                                              Chief Financial Officer
                                              PrimeEnergy Management Corporation
                                              Managing General Partner







<PAGE>
                          INDEX TO FINANCIAL STATEMENTS

<Table>
<S>                                                                                                                  <C>
Financial Statements (Included herein at pages F-1 through F-26):

Report of Independent Public Accountants                                                                             F-2

Financial Statements

         Consolidated Balance Sheets -- December 31, 2002 and 2001                                                   F-3

         Consolidated Statements of Operations -- for the years ended December 31,
         2002, 2001 and 2000                                                                                         F-5

         Consolidated Statements of Stockholders' Equity -- for the years ended
         December 31, 2002, 2001 and 2000                                                                            F-6

         Consolidated Statements of Cash Flows -- for the years ended December 31,
         2002, 2001 and 2000                                                                                         F-7

         Notes to Consolidated Financial Statements                                                                  F-8

         Supplementary Information:                                                                                  F-20

                Capitalized Costs Relating to Oil and Gas Producing Operations
                December 31, 2002, 2001 and 2000                                                                     F-21

                Costs Incurred in Oil and Gas Property Acquisition, Exploration and
                Development Activities, years ended December 31, 2002, 2001 and 2000                                 F-21

                Standardized Measure of Discounted Future Net Cash Flows Relating
                to Proved Oil and Gas reserves, years ended December 31, 2002,
                2001 and 2000                                                                                        F-22

                Standardized Measure of Discounted Future Net Cash Flows and Changes
                Therein Relating to Proved Oil an Gas Reserves, years ended December 31,
                2002, 2001 and 2000                                                                                  F-23

                Reserve Quantity Information, years ended December 31, 2002, 2001
                and 2000                                                                                             F-24

                Results of Operations from Oil and Gas Producing Activities, years ended
                December 31, 2002, 2001 and 2000                                                                     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 of
  PrimeEnergy Corporation and Subsidiaries:

We have audited the accompanying consolidated balance sheets of PrimeEnergy
Corporation and Subsidiaries as of December 31, 2002 and 2001, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years ended December 31, 2002, 2001, and 2000. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PrimeEnergy Corporation and
Subsidiaries as of December 31, 2002 and 2001, and the results of its operations
and their cash flows for the years ended December 31, 2002, 2001 and 2000 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 28, 2003




                                      F-2
<PAGE>
                    PRIMEENERGY CORPORATION and SUBSIDIARIES

             CONSOLIDATED BALANCE SHEETS, December 31, 2002 and 2001

<Table>
<Caption>
                                                                                2002              2001
                                                                            ------------      ------------
<S>                                                                         <C>               <C>
ASSETS:

Current assets:
      Cash and cash equivalents                                             $  1,886,000      $     85,000
      Restricted cash and cash equivalents (Note 12)                             750,000         1,174,000
      Accounts receivable, net (Note 3)                                        4,126,000         3,798,000
      Due from related parties (less allowance for doubtful
         accounts of $800,000 in 2002 and 2001) (Note 11)                      4,771,000         4,924,000
      Prepaid expenses                                                           239,000            64,000
      Other current assets (Notes 4 and 9)                                       322,000         1,006,000
      Deferred income taxes (Notes 1 and 9)                                      309,000           274,000
                                                                            ------------      ------------
         Total current assets                                                 12,403,000        11,325,000
                                                                            ------------      ------------

Property and equipment, at cost (Notes 1 and 2):
      Oil and gas properties(successful efforts method):
         Proved                                                               74,319,000        63,418,000
         Unproved                                                              1,134,000           286,000
      Furniture, fixtures and equipment including leasehold
         improvements                                                          8,949,000         8,622,000
                                                                            ------------      ------------
                                                                              84,402,000        72,326,000
      Accumulated depreciation, depletion and amortization                   (52,102,000)      (48,039,000)
                                                                            ------------      ------------
         Net property and equipment                                           32,300,000        24,287,000
                                                                            ------------      ------------


Other assets                                                                     206,000           204,000
                                                                            ------------      ------------

         Total assets                                                       $ 44,909,000      $ 35,816,000
                                                                            ============      ============

</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, 2002 and 2001

<Table>
<Caption>
                                                                               2002              2001
                                                                           ------------      ------------
<S>                                                                        <C>               <C>
LIABILITIES and STOCKHOLDERS' EQUITY:

Current liabilities:
        Accounts payable (Note 14)                                         $  6,100,000      $  5,788,000
        Current portion of other long-term obligations (Notes 5 and 6)          824,000           230,000
        Accrued liabilities:
           Payroll, Benefits, and Related Items                                 996,000         1,157,000
           Interest and other                                                   803,000         1,023,000
        Due to related parties (Note 11)                                      1,485,000           983,000
                                                                           ------------      ------------
        Total current liabilities                                            10,208,000         9,181,000

Long-term bank debt (Note 5)                                                 23,700,000        16,950,000
Other long-term obligations (Note 6)                                             34,000             8,000
Deferred income taxes (Note 9)                                                2,592,000         2,314,000
                                                                           ------------      ------------
        Total liabilities                                                    36,534,000        28,453,000
                                                                           ------------      ------------

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 2002 and 2001                                    769,000           769,000
        Paid in capital                                                      11,024,000        11,024,000
        Retained earnings                                                     9,676,000         7,919,000
                                                                           ------------      ------------
                                                                             21,469,000        19,712,000
        Treasury stock, at cost 4,001,964 common shares in 2002
           and 3,909,102 in 2001                                            (13,094,000)      (12,349,000)
                                                                           ------------      ------------
        Total stockholders' equity                                            8,375,000         7,363,000
                                                                           ------------      ------------
        Total liabilities and equity                                       $ 44,909,000      $ 35,816,000
                                                                           ============      ============
</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, 2002, 2001 and 2000

<Table>
<Caption>
                                                             2002             2001              2000
                                                         ------------      ------------     ------------
<S>                                                      <C>               <C>              <C>
Revenue:
Oil and gas sales                                        $ 18,330,000      $ 22,998,000     $ 23,223,000
District operating income                                  15,308,000        17,082,000       13,585,000
Administrative revenue (Note 11)                            1,473,000         1,535,000        1,655,000
Reporting and management fees (Note 11)                       275,000           297,000          321,000
Gains/(losses) on derivative instruments net                 (113,000)               --               --
Interest income                                                52,000           138,000          169,000
Other income                                                  609,000           358,000          229,000
                                                         ------------      ------------     ------------
                                                           35,934,000        42,408,000       39,182,000
                                                         ------------      ------------     ------------
Costs and expenses:
Lease operating expense                                    10,210,000        11,083,000        9,114,000
District operating expense                                 13,020,000        13,368,000       11,235,000
Depreciation and depletion of oil and gas properties        3,988,000         4,522,000        5,060,000
Impairment of oil and gas properties (Note 1)                      --           753,000          295,000
General and administrative expense                          4,888,000         4,310,000        4,033,000
Exploration costs                                             894,000           509,000        1,797,000
Interest expense (Note 5)                                     766,000           895,000        1,500,000
                                                         ------------      ------------     ------------
                                                           33,766,000        35,440,000       33,034,000
                                                         ------------      ------------     ------------
Income (loss) from operations                               2,168,000         6,968,000        6,148,000


Other income:
Gain on sale and exchange of assets                            32,000           166,000           28,000
                                                         ------------      ------------     ------------
Income before provision for income taxes                    2,200,000         7,134,000        6,176,000
Provision for income taxes (Notes 1 and 9)                    443,000         1,721,000          811,000
                                                         ------------      ------------     ------------
Net income                                               $  1,757,000      $  5,413,000     $  5,365,000
                                                         ============      ============     ============

Basic net income per common share (Notes 1 and 15)       $       0.47      $       1.39     $       1.26

Diluted net income per common share (Notes 1 and 15)
                                                         $       0.40      $       1.18     $       1.08
</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, 2002, 2001 and 2000

<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, 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

Purchased 92,862 shares of
 common stock                                                                                   (745,000)       (745,000)

Net income                                                                     1,757,000                       1,757,000
                               ------------   ------------   ------------   ------------    ------------    ------------

Balance at December 31, 2002      7,694,970   $    769,000   $ 11,024,000   $  9,676,000    $(13,094,000)   $  8,375,000
                               ============   ============   ============   ============    ============    ============
</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, 2002, 2001 and 2000

<Table>
<Caption>
                                                          2002            2001            2000
                                                      ------------    ------------    ------------
<S>                                                   <C>             <C>             <C>
Cash flows from operating activities:
  Net income (loss)                                   $  1,757,000    $  5,413,000    $  5,365,000
  Adjustments to reconcile net loss to net cash
  provided by operating activities:
    Depreciation, depletion and amortization             5,231,000       5,599,000       6,000,000
    Impairment of oil and gas properties                        --         753,000         295,000
    Dry hole and abandonment costs                         894,000         496,000       1,787,000
    Gain on sale of properties                             (32,000)       (166,000)        (28,000)
    Provision (benefit) of deferred income taxes           243,000       1,684,000         356,000
Changes in assets and liabilities:
    (Increase) decrease in accounts receivable            (328,000)      1,865,000      (2,028,000)
    (Increase) decrease in due from related parties        153,000        (578,000)     (1,177,000)
    (Increase) decrease in other assets                    682,000        (874,000)         36,000
    (Increase) decrease in prepaid expenses               (175,000)         48,000         (28,000)
    Increase (decrease) in accounts payable                736,000      (1,086,000)       (346,000)
    Increase (decrease) in accrued liabilities             (19,000)       (559,000)        944,000
    Increase (decrease) in due to related parties          502,000        (282,000)        322,000
                                                      ------------    ------------    ------------
Net cash provided by operating activities                9,644,000      12,313,000      11,498,000
                                                      ------------    ------------    ------------
Cash flows from investing activities:
  Proceeds from sale of properties and equipment            32,000         520,000          71,000
  Additions to property and equipment                  (14,442,000)     (8,527,000)    (11,632,000)
  Proceeds from payment on notes receivable                                                453,000
                                                      ------------    ------------    ------------
      Net cash used in investing activities            (14,410,000)     (8,007,000)    (11,108,000)

Cash flows from financing activities:
    Purchase of stock for treasury                        (745,000)     (3,156,000)     (1,323,000)
    Repayment of long-term bank debt and other
    long-term obligations                              (43,260,000)    (40,619,000)    (27,844,000)
    Increase in long-term bank debt and other
    long-term obligations                               50,572,000      38,740,000      27,690,000
    Proceeds from exercised stock options                       --         130,000              --
                                                      ------------    ------------    ------------
      Net cash provided by (used in)
          financing activities                           6,567,000      (4,905,000)     (1,477,000)
                                                      ------------    ------------    ------------
      Net increase (decrease) in cash                    1,801,000        (599,000)     (1,087,000)

Cash and cash equivalents, beginning of year                85,000         684,000       1,771,000
                                                      ------------    ------------    ------------
Cash and cash equivalents, end of year                $  1,886,000          85,000         684,000
                                                      ============    ============    ============
Supplemental disclosures:
  Income taxes paid during the year                             --       1,200,000          53,000
  Net income tax refunds received during the year          745,000              --              --
  Interest paid during the year                            766,000         901,000       1,462,000

</Table>

Supplemental information of noncash investing and financing activities:

     In 2002, the Company recorded capital lease obligations in the amount of
$59,000.

     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
         38 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
         144 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.




                                      F-9
<PAGE>
                    PRIMEENERGY CORPORATION and SUBSIDIARIES

                   NOTES to CONSOLIDATED FINANCIAL STATEMENTS

                                    ---------

         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.

         Hedging:

         The Company periodically enters into oil and gas financial instruments
         to manage its exposure to oil and gas price volatility. The oil and gas
         reference prices upon which the price hedging instruments are based
         reflect various market indices that have a high degree of historical
         correlation with actual prices received by the Company.

         The financial instruments are accounted for in accordance with
         Financial Accounting Standards ("SFAS") No. 133, "Accounting for
         Derivative Instruments and Hedging Activities", which established new
         accounting and reporting requirements for derivative instruments and
         hedging activities. SFAS No. 133, as amended by SFAS No. 138, requires
         that all derivative instruments subject to the requirements of the
         statement be measured at fair market value and recognized as assets or
         liabilities in the balance sheet. The accounting for changes in the
         fair value of a derivative depends on the intended use of the
         derivative and the resulting designation is generally established at
         the inception of a derivative. For derivatives designated as cash flow
         hedges and meeting the effectiveness guidelines of SFAS No. 133,
         changes in fair value, to the extent effective, are recognized in other
         comprehensive income until the hedged item is recognized in earnings.
         Hedge effectiveness is measured at least quarterly based on the
         relative changes in fair value between the derivative contract and the
         hedged item over time. Any change in fair value of a derivative
         resulting from ineffectiveness or an excluded component of the
         gain/loss is recognized immediately in the statement of operations.

         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. The adoption of SFAS 142 did not have an impact on the
         Company's consolidated 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.



                                      F-10
<PAGE>
                    PRIMEENERGY CORPORATION and SUBSIDIARIES

                   NOTES to CONSOLIDATED FINANCIAL STATEMENTS

                                    ---------

         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. The
         adoption of SFAS 144 did not have an impact on the Company's
         consolidated financial statements.

         In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
         Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and
         Technical Corrections." Prior to the adoption of the provisions of SFAS
         No. 145, generally accepted accounting principles required gains or
         losses on the early extinguishment of debt be classified in a company's
         periodic consolidated statements of operations as extraordinary gains
         or losses, net of associated income taxes, below the determination of
         income or loss from continuing operations. SFAS No. 145 changes
         generally accepted accounting principles to require, except in the case
         of events or transactions of a highly unusual and infrequent nature,
         gains or losses from the early extinguishment of debt be classified as
         components of a company's income or loss from continuing operations.
         The adoption of the provisions of SFAS No. 145 in 2003 is not expected
         to affect the Company's financial position or results of operations.

         In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
         Associated with Exit or Disposal Activities." SFAS No. 146 requires
         that a liability for a cost associated with an exit or disposal
         activity be recognized and measured initially at fair value only when
         the liability is incurred. SFAS No. 146 is effective for exit or
         disposal activities that are initiated after December 31, 2002. The
         adoption of SFAS No. 146 in 2003 is not expected to have an effect on
         the Company's financial position or results of operations.

         In November 2002, the FASB issued Financial Interpretation No. 45,
         "Guarantor's Accounting and Disclosure Requirements for Guarantees,
         including Indirect Guarantee of Indebtedness of Others" (FIN 45). FIN
         45 requires that upon issuance of a guarantee, the guarantor must
         recognize a liability for the fair value of the obligation it assumes
         under that guarantee. FIN 45's provisions for initial recognition and
         measurement should be applied on a prospective basis to guarantees
         issued or modified after December 31, 2002. The guarantor's previous
         accounting for guarantees that were issued before the date of FIN 45's
         initial application may not be revised or restated to reflect the
         effect of the recognition and measurement provisions of the
         Interpretation. The disclosure requirements are effective for financial
         statements of both interim and annual periods that end after December
         15, 2002. The adoption of FIN 45 did not have an impact on the
         Company's consolidated financial statements.

         In December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based
         Compensation--Transition and Disclosure." SFAS No. 148 amends FASB
         Statement No. 123, "Accounting for Stock-Based Compensation" to provide
         alternative methods of transition for a voluntary change to the fair
         value based method of accounting for stock-based employee compensation.
         In addition, this Statement amends the disclosure for stock-based
         employee compensation and the effect of the method used on the reported
         results. The provisions of SFAS 148 are effective for financial
         statements with fiscal years ending after December 15, 2002. The
         adoption of this statement did not impact the Company's financial
         position or results of operations.

         In January 2003, the FASB issued Financial Interpretation No. 46,
         "Consolidation of Variable Interest Entities--an interpretation of ARB
         No. 51" (FIN 46). FIN 46 is an interpretation of Accounting Research
         Bulletin 51, "Consolidated Financial Statements", and addresses
         consolidation by business enterprises of variable interest entities
         (VIE's). The primary objective of FIN 46 is to provide guidance on the
         identification of, and financial reporting for, entities over which
         control is achieved through means other than voting rights; such
         entities are known as VIE's. FIN 46 requires an enterprise to
         consolidate a variable interest entity if that enterprise has a
         variable interest that will absorb a majority of the entity's expected
         losses if they occur, receive a majority of the entity's expected
         residual return if they occur, or both. An enterprise shall consider
         the rights and obligations conveyed by its variable interests in making
         this determination. This guidance applies immediately to variable
         interest entities created after January 31, 2003, and to variable
         interest entities in which an enterprise obtains an interest after that
         date. It applies in the first fiscal



                                      F-11
<PAGE>
                    PRIMEENERGY CORPORATION and SUBSIDIARIES

                   NOTES to CONSOLIDATED FINANCIAL STATEMENTS

                                    ---------

         year or interim period beginning after June 15, 2003, to variable
         interest entities in which an enterprise holds a variable interest that
         it acquired before February 1, 2003. The adoption of this
         interpretation is not expected to have an effect on the Company's
         financial position or results of operations.

2.       SIGNIFICANT ACQUISITIONS AND DISPOSITIONS

         2002

         As more fully described in Note 7, the Company is committed to offer to
         repurchase the interests of the partners and trust unit holders in
         certain of the Partnerships. During 2002, the Company purchased such
         interests in an amount totaling $1,203,500.

         2001

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

         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 partners and trust unitholders in
         certain of the Partnerships. During 2000, the Company purchased such
         interests in an amount totaling $1,257,000.

3.       ACCOUNTS RECEIVABLE

         Accounts receivable at December 31, 2002 and 2001 consisted of the
         following:

<Table>
<Caption>
                                                        December 31,
                                                ----------------------------
                                                     2002           2001
                                                ------------    ------------
<S>                                             <C>             <C>
      Joint interest billing                    $    571,000    $  1,372,000
      Trade receivables                            1,243,000       1,151,000
      Oil and gas sales                            2,070,000       1,460,000
      Other                                          561,000         154,000
                                                ------------    ------------
                                                   4,445,000       4,137,000
      Less, allowance for doubtful accounts         (319,000)       (339,000)
                                                ------------    ------------
      Total                                     $  4,126,000    $  3,798,000
                                                ============    ============
</Table>



                                      F-12
<PAGE>
                    PRIMEENERGY CORPORATION and SUBSIDIARIES

                   NOTES to CONSOLIDATED FINANCIAL STATEMENTS

                                    ---------

4.       OTHER CURRENT ASSETS

         Other current assets at December 31, 2002 and 2001 consisted of the
following:

<Table>
<Caption>
                                              December 31,
                                      ---------------------------
                                          2002           2001
                                      ------------   ------------

<S>                                   <C>            <C>
Tax overpayments                      $     73,000   $    708,000
Field service inventory                    249,000        268,000
Other                                            0         30,000
                                      ------------   ------------
Total                                 $    322,000   $  1,006,000
                                      ============   ============
</Table>

5.       LONG-TERM BANK DEBT

         As of December 2002, the Company entered in to a credit agreement with
         a new primary lender. The Company and the lender agreed to amend and
         restate in its entirety the credit agreement dated April 26, 1995
         between the Company and its predecessor lender. This agreement will
         continue to provide 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. The current borrowing base is $25 million and
         includes a Term Loan of $4 million. The Term Loan will be paid back in
         monthly installments of $66,667 beginning January 2003 and continuing
         until December 19, 2004 when such Term Loan shall be paid in full. The
         credit agreement provides for interest on outstanding borrowings at the
         bank's base rate, as defined, payable monthly, or at rates 2% over the
         London Inter-Bank Offered Rate (LIBO rate) payable at the end of the
         applicable interest period.

         The Company had been party to a series of credit agreements with its
         former lender or its predecessors since 1983. The agreement, entered
         into in April 1995, provided for borrowings under a Master Note.
         Advances under the agreement, as amended, were limited to the borrowing
         base as defined in the agreement and re-determined by the lender on a
         semi-annual basis. Since the beginning of 2000, the borrowing base
         ranged from $20 million to $23.7 million. The credit agreement provided
         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. This credit agreement was
         assigned to the Company's primary lender effective December 2002.

         The average interest rates paid on outstanding borrowings subject to
         interest at the bank's base rate during 2002 and 2001 were 4.25% and
         6.92%, respectively. During the same periods, the average rates paid on
         outstanding borrowings bearing interest based upon the LIBO rate were
         3.59% and 5.98% As of December 31, 2002 and 2001, the total outstanding
         borrowings were $24,500,000 and $16,950,000, respectively, with an
         additional $500,000 and $6,050,000 available. As of December 31, 2001
         $14,950,000 of the amounts outstanding accrued 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.



                                      F-13
<PAGE>
                    PRIMEENERGY CORPORATION and SUBSIDIARIES

                   NOTES to CONSOLIDATED FINANCIAL STATEMENTS

6.       COMMITMENTS CONTINUED

         Capital Leases:

         The Company has two capital lease for office equipment in other
         long-term obligations. Future minimum lease payments under operating
         and capital leases are as follows:

<Table>
<Caption>
                                             Operating        Capital
                                               Leases         Leases
                                            ------------   ------------
<S>                                         <C>            <C>
      2003                                       434,000         26,000
      2004                                        83,000         24,000
      2005                                         5,000         11,000
      2006                                            --             --
      Thereafter                                      --             --
                                            ------------   ------------
      Total minimum payments                $    522,000         61,000
                                            ============
      Less imputed interest                                      (3,000)
                                                           ------------
      Present value of minimum
          Lease payments                                   $     58,000
                                                           ============
</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.

         The Company owns approximately a 27% interest in a limited partnership
         which owns a shopping center in Alabama. The Company is a guarantor on
         a mortgage secured by the shopping center. The Company believes the
         cash flow from the center is sufficient to service the mortgage. The
         market value of the center is currently substantially higher than the
         balance owed on the mortgage. If the partnership were unable to pay its
         obligations under the mortgage agreement, the maximum amount the
         Company is committed to pay is $350,000.




                                      F-14
<PAGE>
                    PRIMEENERGY CORPORATION and SUBSIDIARIES

                   NOTES to CONSOLIDATED FINANCIAL STATEMENTS,

                                    ---------


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 expired, the former Chairman was still entitled
         to receive certain payments relating to partnerships formed during the
         time the agreement was in effect. In October 2002, the President and
         the former Chairman sold and assigned all rights, title and interest
         related to certain Partnerships formed under these marketing agreements
         to the Company. The President is still entitled to a percentage of the
         Company's carried interest depending on total capital raised and annual
         performance of other Partnerships and joint ventures.

9.       INCOME TAXES

         The components of the provision for income taxes for the years ended
         December 31, 2002, 2001 and 2000 are as follows:

<Table>
<Caption>
                                    2002           2001           2000
                                ------------   ------------   ------------
<S>                             <C>            <C>            <C>
    Federal:
         Current                $     95,000   $     25,000   $    201,000
         Deferred                    216,000      1,500,000        141,000
    State:
         Current                     104,000         13,000        254,000
         Deferred                     28,000        183,000        215,000
                                ------------   ------------   ------------
    Total                       $    443,000   $  1,721,000   $    811,000
                                ============   ============   ============
</Table>




                                      F-15
<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,
                                                                 2002          2001
                                                            ------------   ------------
<S>                                                         <C>            <C>
Current assets:
       Compensation and benefits                            $    184,000   $    185,000
       Allowance for doubtful accounts                           125,000         89,000
                                                            ------------   ------------
                                                                 309,000        274,000
                                                            ------------   ------------
Noncurrent assets:
       Depreciation                                              485,000        387,000
       Due from related parties reserve                          312,000        312,000
       Federal net operating loss carryforwards                       --        124,000
       Percentage depletion carryforwards                        297,000        367,000
       Alternative minimum tax credits                         1,040,000        943,000
                                                            ------------   ------------
                                                               2,134,000      2,133,000
                                                            ------------   ------------
Noncurrent liabilities:
       Basis differences relating to limited partnerships      1,211,000      1,798,000
       Depletion                                               3,515,000      2,649,000
                                                            ------------   ------------
                                                               4,726,000      4,447,000
                                                            ------------   ------------

Net deferred tax liabilities:                               $  2,283,000   $  2,040,000
                                                            ============   ============
</Table>

The total provision for income taxes for the years ended December 31, 2002, 2001
and 2000 varies from the federal statutory tax rate as a result of the
following:


<Table>
<Caption>
                                                  December 31,    December 31,    December 31,
                                                      2002            2001            2000
                                                  ------------    ------------    ------------
<S>                                               <C>             <C>             <C>
Expected tax expense                              $    748,000    $  2,426,000    $  2,100,000
State income tax, net of federal benefit               132,000         196,000         469,000
Benefit from net operating losses and other
      carryforwards previously reserved against             --              --      (1,670,000)
Credit for producing fuel from a
      non-conventional source                         (134,000)       (299,000)        (88,000)
Percentage depletion                                  (303,000)       (602,000)             --
                                                  ------------    ------------    ------------
Tax expense                                       $    443,000    $  1,721,000    $    811,000
                                                  ============    ============    ============
</Table>






                                      F-16
<PAGE>
                    PRIMEENERGY CORPORATION and SUBSIDIARIES

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued

                                    ---------

         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 federal rate in the 2000 tax year.

         The Company will utilize the $366,000 of net operating loss
         carryforwards for both regular and alternate minimum tax purposes in
         2002. All of the Company's net operating losses will be used or have
         expired as of December 31, 2002.

         In 2002 the Company generated approximately $380,000 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. Under current
         law the credit for producing fuel from a non conventional source will
         no longer be allowed after 2002.

         The Company has percentage depletion carryforwards of approximately
         $760,000 for regular tax purposes. The Company has approximately
         $1,040,,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 2002.

         Texon Distributing L.P.               18.6%

         Unimark LLC                           20.1%

         Plains All American, Inc.             10.1%

         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, 2002 and 2001 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-17
<PAGE>
                    PRIMEENERGY CORPORATION and SUBSIDIARIES

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued

                                    ---------

         affiliated Partnerships was $1,485,000 and $983,000 at December 31,
         2002 and 2001, 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 2002 and 2001 included shares acquired from
         related parties. Purchases from related parties include a total of
         49,267 shares purchased for a total consideration of $394,000 in 2002,
         and 228,800 shares purchased for a total consideration of $1,676,000 in
         2001.


12.      RESTRICTED CASH AND CASH EQUIVALENTS

         Restricted cash and cash equivalents includes $750,000 and $1,174,000
         at December 31, 2002 and 2001, respectively, of cash primarily
         pertaining to unclaimed royalty payments. There were corresponding
         accounts payable recorded at December 31, 2002 and 2001 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 $261,000 and $255,000 in 2002 and 2001, respectively.


14.      ACCOUNTS PAYABLE

         A summary of accounts payable at December 31, 2002 and 2001 is as
         follows:

<Table>
<Caption>
                                           2002             2001
                                       ------------     ------------
<S>                                    <C>              <C>
Payables to unaffiliated interests     $  5,816,000     $  5,743,000
Other                                       284,000           45,000
                                       ------------     ------------
                                       $  6,100,000     $  5,788,000
                                       ============     ============
</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, 2002
                                             ----------------------------------------------
                                                               Number of        Per share
                                              Net Income         Shares          Amount
                                             ------------     ------------     ------------
<S>                                          <C>                 <C>           <C>
Net income per common share                  $  1,757,000        3,738,753     $       0.47
Effect of dilutive securities:
   Options                                                         666,839
                                             ------------     ------------
Diluted net income per common share          $  1,757,000        4,405,592     $       0.40
                                             ============     ============
</Table>




                                      F-18
<PAGE>
                    PRIMEENERGY CORPORATION and SUBSIDIARIES

              NOTES to CONSOLIDATED FINANCIAL STATEMENTS, Continued

                                    ---------

<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>

<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>


16.      SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<Table>
<Caption>
                                    December 31,         Fourth            Third            Second             First
                                        2002            Quarter           Quarter           Quarter           Quarter
                                   -------------     -------------     -------------     -------------     -------------
<S>                                <C>               <C>               <C>               <C>               <C>
Revenue                            $  35,934,000     $   9,764,000         9,580,000         8,434,000         8,155,000
Operating income                       2,168,000           752,000          795 ,000           593,000            85,000
Net income                             1,757,000           585,000           642,000           475,000            70,000
Net income per common share        $        0.47     $        0.16     $        0.17     $        0.13     $        0.02
Diluted net income per
  common share                     $        0.40     $        0.13     $        0.15     $        0.11     $        0.02
</Table>

<Table>
<Caption>
                                    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 share        $       1.18      $        .06       $        .14      $        .34      $        .64
</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, 2002, 2001 and 2000

                                    ---------

                                   (Unaudited)



<Table>
<Caption>

                                                             2002             2001             2000
                                                          -----------     -----------      -----------
<S>                                                       <C>             <C>              <C>
Developed oil and gas properties                          $74,319,000     $63,418,000      $57,439,000

Undeveloped oil and gas properties                          1,134,000         286,000          159,000
                                                          -----------     -----------      -----------
                                                           75,453,000      63,704,000       57,598,000
Accumulated depreciation, depletion and
valuation allowance                                        46,912,000      42,924,000       37,686,000
                                                          -----------     -----------      -----------
Net capitalized costs                                     $28,541,000     $20,780,000      $19,912,000
                                                          ===========     ===========      ===========
</Table>


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

                  Years ended December 31, 2001, 2000 and 1999

                                    ---------

                                   (Unaudited)


<Table>
<Caption>
                                             2002              2001              2000
                                         ------------      ------------      ------------
<S>                                      <C>               <C>               <C>
Acquisition of Properties:
Developed                                 $ 1,668,000      $    316,000      $  4,679,000
Undeveloped                                   848,000           164,000           106,000

Exploration Costs                             894,000           509,000         1,797,000

Development Costs                           8,385,000         5,661,000         3,351,000



</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, 2002, 2001 and 2000

                                    ---------

                                   (Unaudited)




<Table>
<Caption>
                                                                  2002               2001               2000
                                                             -------------       ------------       ------------
<S>                                                           <C>                 <C>                <C>
Future cash inflows                                          $ 201,750,000       $102,916,000      $ 315,680,000


Future production and development costs                       (104,232,000)       (60,841,000)      (116,417,000)

Future income tax expenses                                     (24,230,000)        (7,930,000)       (59,914,000)
                                                             -------------        -----------       ------------

Future net cash flows                                           73,288,000         34,145,000        139,349,000

10% annual discount for estimated timing of cash flow          (30,512,000)       (13,179,000)       (59,339,000)
                                                              ------------       ------------       ------------
Standardized measure of discounted future net cash flows     $  42,776,000       $ 20,966,000       $ 80,010,000
                                                              ============       ============       ============
</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, 2002, 2001 and 2000

                                    ---------

                                   (Unaudited)


The following are the principal sources of change in the standardized measure of
discounted future net cash flows during 2002, 2001 and 2000:

<Table>
<Caption>
                                                                   2002                2001                2000
                                                              -------------       -------------       -------------
<S>                                                           <C>                 <C>                 <C>
Sales of oil and gas produced, net of production costs           (8,120,000)        (11,915,000)      $ (14,109,000)
Net changes in prices and production costs                       18,488,000         (92,118,000)         69,822,000
Extensions, discoveries and improved recovery                     8,462,000           3,335,000          13,705,000
Revisions of previous quantity estimates                          5,192,000             422,000           3,577,000
Reserves purchased, net of development costs                      5,824,000           1,082,000          11,698,000
Net change in development costs                                    (311,000)           (594,000)            (99,000)
Accretion of discount                                             2,097,000           8,001,000           2,386,000
Net change in income taxes                                       (9,809,000)         33,127,000         (30,779,000)
Other                                                               (13,000)           (384,000)            (51,000)
                                                               ------------       -------------       -------------
Net change                                                       21,810,000         (59,044,000)         56,150,000

Standardized measure of discounted future net cash flow:

Beginning of year                                                20,966,000          80,010,000          23,860,000
                                                               ------------       -------------       -------------
End of year                                                    $ 42,776,000          20,966,000          80,010,000
                                                               ============       =============       =============
</Table>


               See accompanying notes to supplementary information



                                      F-23
<PAGE>
                    PRIMEENERGY CORPORATION and SUBSIDIARIES

                          RESERVE QUANTITY INFORMATION

                  Years ended December 31, 2002, 2001 and 2000

                                    ---------

                                   (Unaudited)


<Table>
<Caption>
                                 2002            2002             2001               2001                2000               2000
                             ------------    ------------     ------------       ------------       ------------       ------------
                                 Gas              Oil             Gas                 Oil               Gas                 Oil
                                (Mcf)           (bbls.)          (Mcf)              (bbls.)            (Mcf)              (bbls.)
                             -----------     -----------      ------------       ------------       ------------       ------------
<S>                                                           <C>                <C>                <C>                <C>
Proved developed and
  undeveloped reserves:
Beginning of year            24,719,000        1,996,000        27,029,000          2,362,000         22,202,000          2,110,000
Extensions, discoveries
   and improved recovery      3,011,000          273,000         2,764,000            136,000          1,961,000             13,000
Revisions of previous
   estimates                  2,798,000          198,000        (2,458,000)          (307,000)         3,763,000            162,000
Purchases                     2,929,000          173,000         1,148,000            111,000          3,034,000            375,000
Production                   (3,540,000)        (321,000)       (3,764,000)          (306,000)        (3,931,000)          (298,000)
                             ----------      -----------      ------------       ------------       ------------       ------------
End of year                  29,917,000        2,319,000        24,719,000          1,996,000         27,029,000          2,362,000
                             ==========      ===========      ============       ============       ============       ============
Proved developed reserves    29,917,000        2,319,000        24,226,000          1,996,000         27,029,000          2,362,000
                             ==========      ===========      ============       ============       ============       ============
</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, 2002, 2001 and 2000

                                    ---------

                                   (Unaudited)


<Table>
<Caption>
                                                              2002            2001             2000
                                                          -----------      -----------      -----------
<S>                                                       <C>              <C>              <C>
Revenue:
                Oil and gas sales                         $18,330,000      $22,998,000      $23,223,000
                                                          -----------      -----------      -----------

Costs and expenses:
                Lease operating expense                    10,210,000       11,083,000        9,114,000
                Exploration costs                             894,000          509,000        1,717,000
                Depreciation and depletion                  3,988,000        4,544,000        5,060,000
                Write down of oil and gas properties              ---          753,000          295,000
                Income tax expense                            443,000        1,473,000          811,000
                                                          -----------      -----------      -----------
                                                           15,535,000       18,362,000       16,997,000
                                                          -----------      -----------      -----------
Results of operations from producing activities           $ 2,735,000      $ 4,636,000      $ 6,226,000
(excluding corporate overhead and interest costs)         ===========      ===========      ===========
</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)

   10.3     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)

   10.17    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
            10-KSB for the year ended December 31, 1997)(1)

   10.22    Credit Agreement dated as of December 19, 2002, between
            PrimeEnergy Corporation, PrimeEnergy Management Corporation,
            Eastern Oil Well Service Company, Southwest Oilfield
            Construction Company, EOWS Midland Company, and Guaranty Bank,
            FSB (filed herewith)

   10.23    Mortgage, Deed of Trust, Security Agreement, Financing Statement
            and Assignment of Production from PrimeEnergy Corporation and
            PrimeEnergy Management Corporation for the benefit of Guaranty
            Bank, FSB (filed herewith)

   10.24    Act of Mortgage and Security Agreement by PrimeEnergy Corporation
            and PrimeEnergy Management Corporation to Guaranty Bank, FSB
            (filed herewith)

   21       Subsidiaries. (filed herewith)

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

   99.1     Certification of Chief Executive Officer pursuant to 18 U.S.C.
            Section 1350, as adopted pursuant to section 906 of the
            Sarbanes-Oxley Act of 2002 (filed herewith).

   99.2     Certification of Chief Financial Officer pursuant to 18 U.S.C.
            Section 1350, as adopted pursuant to section 906 of the
            Sarbanes-Oxley Act of 2002 (filed herewith).


    (b)     Reports on Form 8-K:

            No reports on Form 8-K have been filed during the last quarter of
            the year covered by this Report.
</Table>

-----------

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