<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

                          STERLING DRILLING FUND 1983-1
             (Exact name of Registrant as specified in its charter)

                           COMMISSION FILE NO. 2-84452

                NEW YORK                                 13-3167549
     (State or other jurisdiction of        (I.R.S. Employer Identification No.)
     incorporation or organization)

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

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

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

           Securities registered pursuant to Section 12(g) of the Act:
                          UNITS OF LIMITED PARTNERSHIP
                                (Title of Class)

         Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

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

         The Registrant has no voting stock. There is no market for the Units
and therefore no market value of the Units is reported. The number of Units of
the Registrant outstanding as of March 15, 2003, was: 11,077.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      NONE



<PAGE>

                       STERLING DRILLING FUND 1983-1, L.P.

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


                                     PART I

ITEM 1. BUSINESS

         Sterling Drilling Fund 1983-1, L.P., formerly Sterling-Fuel Resources
Drilling Fund 1983-1 (the "Registrant" or the "Partnership") is a limited
partnership formed under the laws of the State of New York on March 18, 1983.
The sole business of the Partnership was the drilling of formation extension
wells principally for natural gas in various locations in the State of West
Virginia. No exploratory drilling was undertaken.

         The principal place of business of the Partnership is at One Landmark
Square, Stamford, Connecticut 06901, telephone (203) 358-5700. The Managing
General Partner of the Partnership is PrimeEnergy Management Corporation, a New
York corporation which is a wholly-owned subsidiary of PrimeEnergy Corporation,
a publicly held Delaware corporation. Messrs. Charles E. Drimal, Jr., Oliver J.
Sterling and Samuel R. Campbell also are General Partners. Mr. Drimal is a
Director, President and Chief Executive Officer of PrimeEnergy Management
Corporation and PrimeEnergy Corporation, and Mr. Campbell is a Director of
PrimeEnergy Corporation.

         The aggregate contributions to the Partnership were $11,077,000, all of
which, net of the organization expenses of the Partnership, was expended in the
drilling of such formation extension wells. Such properties are located in Clay,
Roane, Calhoun, Gilmer, Wirt, Kanawha, Lincoln and Putnam Counties, West
Virginia. The Partnership does not operate any of the properties in which it has
an interest, but generally such properties are operated and serviced by Prime
Operating Company, a Texas corporation, and Eastern Oil Well Service Company, a
West Virginia corporation, both wholly-owned subsidiaries of PrimeEnergy
Corporation.

         During 2002, the Partnership did not engage in any development drilling
activities or the acquisition of any significant additional properties, but
engaged in the production of oil and gas from its producing properties in the
usual and customary course. Since January 1, 2003, and to the date of this
Report, the Partnership has not engaged in any drilling activities nor
participated in the acquisition of any material producing oil and gas
properties.

         During 2002, PrimeEnergy Management negotiated a Farmout Agreement with
Ardent Resources Inc. covering leasehold interests in acres located in Calhoun
County, West Virginia. Pursuant to this agreement, Ardent has the right but not
the obligation to select acreage and drill a deep well on the selected acreage,
subject to an overriding royalty interest due to the leasehold owners. If a test
well is not spudded by February 13, 2005 this agreement terminates. Acreage held
by Sterling Drilling Fund 1983-1 was included in the Farmout Agreement,
PrimeEnergy Management may discuss the possibility of farming out additional
deep rights held by the Partnership under the same terms with other parties,
however, there is no guarantee that any agreement will be entered into.



                                       2
<PAGE>

         During early 2001, PrimeEnergy Management negotiated a Farmout
Agreement with Eastern American Energy. (EAE) covering leasehold interests in
approximately 5,000 acres in Clay County, West Virginia. Acreage held by
Sterling Drilling Fund 1983-1 Limited Partnership was not included in the
Farmout Agreement. This agreement provided for a cash bonus paid at closing and
gives EAE the right but not the obligation to select acreage and drill a deep
well on the selected acreage, subject to an overriding royalty interest due to
the leasehold owners. PrimeEnergy will attempt to find other parties interested
in the Partnership's acreage, however there is no guarantee that a new agreement
will be made. This opportunity may come up again over the next few years,
PrimeEnergy will continue to purse this type of potential revenue if feasible.

         During 2000, PrimeEnergy Management negotiated a Farmout Agreement with
Columbia Natural Resources, Inc. (CNR) covering leasehold interests in
approximately 5,000 acres in Clay County, West Virginia. Pursuant to this
agreement, CNR has the right but not the obligation to select acreage and drill
a deep well on the selected acreage, subject to an overriding royalty interest
due to the leasehold owners. This agreement terminated in April 2001. CNR did
not exercise their rights to select acreage and drill a well. Acreage held by
Sterling Drilling Fund 1983-1 was not included in the CNR Farmout Agreement.

COMPETITION AND MARKETS

         Competitors of the Partnership in the marketing of its oil and gas
production include oil and gas companies, independent concerns, and individual
producers and operators, many of which have financial resources, staffs and
facilities substantially greater than those available to the Partnership.
Furthermore, domestic producers of oil and gas must not only compete with each
other in marketing their output, but must also compete with producers of
imported oil and gas and alternative energy sources such as coal, nuclear power
and hydroelectric power.

         The availability of a ready market for any oil and gas produced by the
Partnership at acceptable prices per unit of production will depend upon
numerous factors beyond the control of the Partnership, including the extent of
domestic production and importation of oil and gas, the proximity of the
Partnership's producing properties to gas pipelines and the availability and
capacity of such pipelines, the marketing of other competitive fuels,
fluctuation in demand, governmental regulation of production, refining,
transportation and sales, general national and worldwide economic conditions,
and pricing, use and allocation of oil and gas and their substitute fuels.

         The Partnership does not currently own or lease any bulk storage
facilities or pipelines, other than adjacent to and used in connection with
producing wells. The Partnership deals with a number of major and independent
companies for the purchase of its oil and gas production, in the areas of
production. In 2002, approximately $320,522 or 94.60% of the Partnership's gas
production was sold to one unaffiliated purchaser, Dominion Field Services
(formerly named Phoenix Diversified) and about $14,173 or 100% of oil production
was purchased by Clearfield Appalachian Holdings (formerly named American
Refining Group). Neither purchaser has any relationship or is otherwise
affiliated with the Partnership. Sales are made under short-term contractual
arrangements. The Partnership believes that its current purchasers will continue
to purchase oil and gas products and, if not, could be replaced by other
purchasers.



                                       3
<PAGE>

ENVIRONMENTAL MATTERS

         The petroleum industry is subject to numerous federal and state
environmental statutes, regulations and other pollution controls. In general,
the Partnership is, and will be subject to, present and future environmental
statutes and regulations, and in the future the cost of its activities may
materially increase as a result thereof. The Partnership's expenses relating to
preserving the environment during 2002 as they relate to its oil and gas
operations were not significant in relation to operating costs and the
Partnership expects no material change in the near future. The Partnership
believes that environmental regulations should not, in the future, result in a
curtailment of production or otherwise have a materially adverse effect on the
Partnership's operations or financial condition.

REGULATION

         The Partnership's oil and gas operations are subject to a wide variety
of federal, state and local regulations. Administrative agencies in such
jurisdictions may promulgate and enforce rules and regulations relating to,
among other things, drilling and spacing of oil and gas wells, production rates,
prevention of waste, conservation of natural gas and oil, pollution control, and
various other matters, all of which may affect the Partnership's future
operations and production of oil and gas. The Partnership's natural gas
production and prices received for natural gas are regulated by the Federal
Energy Regulatory Commission ("FERC") and the Natural Gas Policy Act of 1978 and
various state regulations. The Partnership is also subject to state drilling and
proration regulations affecting its drilling operations and production rates.

         The FERC continues to regulate interstate natural gas pipeline
transportation rates and service conditions pursuant to the NGA and NGPA.
Federal regulation of interstate transporter's affects the marketing of natural
gas produced by the Partnership as well as the revenues received by the
Partnership for sales of such natural gas. Since the latter part of 1985,
through its Order Nos. 436, 500 and 636 rulemakings, the FERC has endeavored to
make natural gas transportation accessible to gas buyers and sellers on an open
and non-discriminatory basis. The FERC's efforts have significantly altered the
marketing and pricing of natural gas. No prediction can be made as to what
additional legislation may be proposed, if any, affecting the competitive status
of a gas producer, restricting the prices at which a producer may sell its gas,
or the market demand for gas, nor can it be predicted which proposals, including
those presently under consideration, if enacted, might be effective.

         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 Partnership cannot predict when or if any
such proposals might become effective, or their effect, if any, on the
Partnership's operations. The Partnership believes that it will comply with all
orders and regulation changes applicable to its operations. However, in view of
the many uncertainties with respect to the current controls, including their
duration and possible modification together with any new proposals that may be
enacted, the Partnership cannot predict the overall effect, if any, of such
controls on its operations.



                                       4
<PAGE>

TAXATION

         The Partnership received an opinion of its counsel that the Partnership
would be classified as a partnership and the holders of Partnership Units would
be treated as limited partners for federal income tax purposes. The Partnership
itself, to the extent that it is treated for federal income tax purposes as a
partnership, is not subject to any federal income taxation, but it is required
to file annual partnership returns. Each holder of Partnership Units will be
allocated his distributive shares of the Partnership's income, gain, profit,
loss, deductions, credits, tax preference items and distributions for any
taxable year of the Partnership ending within or with his taxable year without
regard as to whether such holder has received or will receive any cash
distributions from the Partnership.

ITEM 2. PROPERTIES

         The Partnership has no interest in any properties other than its oil
and gas properties. The information set forth below summarizes the Partnership's
oil and gas wells, production and reserves, for the periods indicated.

PRODUCING WELLS AND OPERATING INFORMATION

         The Partnership, following its formation, and in November, 1983,
contracted for the drilling of 38 development wells, which resulted in 37
producing wells and one dry hole.

         As of December 31, 2002, the Partnership had ownership interests in the
following gross and net producing oil and gas wells and gross and net producing
acres(1). The Partnership has no material undeveloped leasehold, mineral or
royalty acreage.

         Producing wells:

<Table>
<Caption>
                        Gross   Net
                        -----  -----
<S>                     <C>    <C>
Oil Wells                   0      0
Gas Wells                  39   31.3

Producing acres         1,833  1,771
</Table>

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

The following table sets forth the Partnership's oil and gas production, average
sales prices and average production costs as of and for the periods indicated:


<Table>
<Caption>
                                                            YEARS ENDED DECEMBER 31,
                                   ----------------------------------------------------------------------
                                      2002           2001           2000           1999           1998
                                   ----------     ----------     ----------     ----------     ----------
<S>                                <C>            <C>            <C>            <C>            <C>
Production
Oil and Condensate (bbl)                  690            550          1,263            877          1,232
Gas (Mcf)                              90,845        101,937        103,533         95,379        100,993
Average Price of Sales:
Oil and Condensate ($ per bbl)     $    20.45     $    21.78     $    27.11     $    16.16     $    12.05
Gas ($ per Mcf)                    $     3.73     $     5.42     $     3.52     $     2.50     $     3.17
Production Expense per Dollar
Of Operating Revenue               $     0.41     $     0.42     $     0.46     $     0.46     $     0.45
</Table>



                                       5
<PAGE>

OIL AND GAS RESERVES

         The Partnership's interests in proved developed oil and gas properties
have been evaluated by Ryder Scott Company, L.P. for the periods indicated
below. All of the Partnership's reserves are located in the continental United
States. The following table summarizes the Partnership's oil and gas reserves at
the dates shown (figures rounded):

<Table>
<Caption>
                                 Proved Developed
As of                       -------------------------
12-31                       Oil (bbls)      Gas (mcf)
-----                       ----------      ---------
<S>                         <C>             <C>
1998                            13,000      1,808,900
1999                            11,900      1,587.600
2000                            11,300      1,793,400
2001                             8,940      1,751,900
2002                             8,900      1,535,500
</Table>

The estimated future net revenue using current prices and costs as of the dates
indicated, exclusive of income taxes (at a 10% discount for estimated timing of
cash flow) for the Partnership's proved developed oil and gas reserves for the
periods indicated are summarized as follows (figures rounded):

<Table>
<Caption>
                                   Proved Developed
                          -------------------------------------
As of                      Future Net         Present Value
12-31                     Revenue ($)     Future Net Revenue($)
-----                     -----------     ---------------------
<S>                       <C>             <C>
 1998                       2,293,000               915,800
 1999                       2,597,600             1,153,900
 2000                      14,397,393             5,503,164
 2001                       2,665,100             1,140,100
 2002                       3,775,700             1,607,900
</Table>

         The estimated reserve quantities and future income quantities are
related to hydrocarbon prices. Therefore, volumes of reserves actually recovered
and amounts of income actually received may differ significantly from the
estimated quantities presented in this report.

         In accordance with FASB Statement No. 69, December 31, 2002 market
prices were 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, 2002 and 2001 were not considered. The
spot price for gas at December 31, 2002 was $4.75 per MMBTU. 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 spot price for gas at December 31, 2001 was $2.63 per
MMBTU. The range of spot prices during the year 2001 was a low of $1.77 and a
high of $10.29 and the average was $3.94. The range during the first quarter of
2003 has been from $4.88 to $9.50 with an average of $6.62. The recent futures
market prices have been in the $5.00 range.



                                       6
<PAGE>

         While it may reasonably be anticipated that the prices received by
Sterling Drilling Fund 1983-1 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 partnership may vary significantly from the SEC case

         Since January 1, 2003, the Partnership has not filed any estimates of
its oil and gas reserves with, nor were any such estimates included in any
reports, to any federal authority or agency, other than the Securities and
Exchange Commission.

ITEM 3. LEGAL PROCEEDINGS

         The Partnership is not a party to, nor is any of its property the
subject of, any legal proceedings actual or threatened, which would have a
material adverse effect on the business and affairs of the Partnership.

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

         There were no matters submitted during 2002 for vote by the holders of
Partnership Units.

                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS

         There is no market for the Limited Partnership Units (the "Units") of
the Partnership. As of March 15, 2003, there were 525 holders of record of the
Units.

         The Units are not regarded as stock and payments or distributions to
holders of Units are not made in the form of dividends. Cash distributions to
the holders of Units for 2002 aggregated $110,770. Aggregate cash distributions
to the holders of the Units as of December 31, 2002, is $2,630,788.

         The Managing General Partner may purchase Units directly from the unit
holders if presented to the Managing General Partner, subject to conditions,
including limitations on numbers of Units, and at a price to be fixed by the
Managing General Partner in accordance with certain procedures, all as provided
for in the Limited Partnership Agreement of the Partnership.

ITEM 6. SELECTED FINANCIAL DATA

         The information required hereunder is set forth under "Selected
Financial Data" in the Financial Information section included in this Report.
The index to the Financial Information section is at page F-1.



                                       7
<PAGE>

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

         The information required hereunder is set forth under "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Financial Information section included in this Report. The index to the
Financial Information section is at page F-1.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Registrant is a "small business issuer" as defined in the Securities
and Exchange Act Rule 12b-2 and no information is required to be provided by
this Item 7A.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The information required hereunder is set forth under "Report of
Independent Public Accountants," "Balance Sheets," "Statements of Operations"
"Statements of Changes in Partners' Equity," "Statements of Cash Flows" and
"Notes to Financial Statements" in the Financial Information section included in
this Report. The index to the Financial Information section is at page F-1.

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

         There was no disagreement between the Partnership and its certified
public accountants on any matter of accounting principles or practices or
financial statement disclosure.


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The Managing General Partner of the Partnership is PrimeEnergy
Management Corporation, a New York corporation ("Management"). The principal
business of Management is the management of the Partnership and other publicly
and privately held exploration and development limited partnerships and joint
ventures and publicly held asset and income fund limited partnerships. As of
March 15, 2003, Management acts as the Managing General Partner in a total of 38
limited partnerships and joint ventures, of which 3 are publicly held, and is
the Managing Trustee of 2 Delaware Business Trusts. The primary activity of such
Partnerships, joint ventures and trusts is the production of oil and gas and
Management, as the Managing General Partner of the Partnership, will devote such
of its time as it believes necessary in the conduct and management of the
business and affairs of the Partnership. Management, and other of the General
Partners of the Partnership, are engaged in and intend to continue to engage in
the oil and gas business for their own accounts and for the accounts of others.



                                       8
<PAGE>

         Management, which provides all of the executive, management and
administrative functions of the Partnership, is a wholly-owned subsidiary of
PrimeEnergy Corporation ("PrimeEnergy"), a publicly held Delaware corporation.
The principal offices of PrimeEnergy and Management are in Stamford,
Connecticut. The operating subsidiaries of PrimeEnergy, Prime Operating Company
and Eastern Oil Well Service Company, maintain their principal offices in
Houston, Texas, with district offices in Midland, Texas, Oklahoma City,
Oklahoma, and Charleston, West Virginia. PrimeEnergy and its subsidiaries have
approximately 201 employees, including their principal officers providing
management and administrative services, accounting, geologists, production
engineers, land department personnel and field employees.

         Set forth below is information concerning the directors and executive
officers of Management and PrimeEnergy who are involved with the conduct of the
business and operations of the Partnership.

         Charles E. Drimal, Jr., age 55, is a Director and President of
Management and has held those positions since May 1983. He is also a Director
and President of Prime Energy and the operating subsidiaries. He graduated from
the University of Maryland in 1970 and from Stamford University School of Law in
1973 and is a member of the New York State Bar.

         Beverly A. Cummings, age 49, has been a Director and Vice President of
Finance for Management since August 1985. She is also a Director and Vice
President of Finance, and Treasurer of PrimeEnergy and the operating
subsidiaries. Ms. Cummings is a Certified Public Accountant and holds a Bachelor
of Science degree from the State University of New York and a Master in Business
Administration from Rutgers University.

         Lynne G. Pizor, age 43, has been Controller of Prime Operating Company
since January 1992 and Eastern Oil Well Service Company since September 1990.
She also held that position with Management from January 1986 to August 1994,
and PrimeEnergy from May 1990 to August, 1994. She joined Management in October
1984, as Manager of Partnership Accounting. She is a graduate of Wagner College
with a Bachelor of Science degree in Economics and Business Administration and
is a Certified Public Accountant.

         Joan Podlovits, age 37, has been Controller of PrimeEnergy Management
Corporation since September 2002. She joined Management in July 1989 as a staff
accountant. She held the position of. Accounting Manager for Management from
April 1994 to August 2002. She is a graduate of Pace University with a Bachelor
of Business Administration degree in Public Accounting

         James F. Gilbert, age 70, has been Secretary of Management since June
1990, and has been Secretary of PrimeEnergy since March 1973, and was a Director
of PrimeEnergy from that date to October, 1987. He also serves as Secretary of
the operating subsidiaries. He is an attorney in Dallas, Texas.



                                       9
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

         The Partnership has no officers, directors or employees. The officers
and employees of the Managing General Partner and PrimeEnergy perform all
management and operational functions of the Partnership. The Partnership does
not pay any direct salaries or other remuneration to the officers, directors or
employees of the Managing General Partner or PrimeEnergy. The Managing General
Partner is reimbursed for the general and administrative expenses of the
Partnership which are allocated to the Partnership for expenses incurred on
behalf of the Partnership, together with administrative work by third parties,
limited annually to 5% of the aggregate capital contribution of the holders of
the Partnership Units. During 2002 and 2001, the allocation of general and
administrative expenses to the Partnership was $ 100,800 per year.

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

         The Partnership does not know of any person, entity or group, other
than the Managing general Partner that beneficially owns more than five percent
of the Partnership Units. The following table shows as of March 15, 2003, the
name and address of such beneficial owners, and the number and percent of
partnership units beneficially owned by them, all of which are directly owned.

<Table>
<Caption>
                                                              Number
Name and Address of Beneficial Owner                          of Units          Percent
------------------------------------                          --------          -------
<S>                                                           <C>               <C>
PrimeEnergy Management Corporation
One Landmark Square
Stamford, CT 06901                                               1,152            10.40%

PrimeEnergy Corporation
  One Landmark Square
  Stamford, Connecticut 06901                                    3,530            31.87%
</Table>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Prime Operating Company acts as the operator for most of the producing
oil and gas wells of the Partnership pursuant to operating agreements with the
Partnership and other working interest owners, including other partnerships
managed by the Managing General Partner, and in 2002 was paid well operating
fees ranging from about $248 to $495 per month per well. Well operating supplies
and equipment and related servicing operations are generally provided by Eastern
Oil Well Service Company. The Partnership pays its proportionate part of such
operating fees and expenses. Such fees and expenses vary depending on such
matters as the location of the well, the complexity of the producing equipment,
whether wells produce oil or gas or both and similar factors. The Partnership
believes that such services are as favorable to the Partnership as they would be
if the Partnership entered into such transactions with unaffiliated third
parties. In 2002 and 2001, the Partnership paid an aggregate of $110,989 and
$151,853, respectively, in such fees and expenses.



                                       10
<PAGE>

                                     PART IV

ITEM 14. CONTROLS AND PROCEDURES

         PrimeEnergy Management Corporation ("PEMC"), the Managing General
Partner of the Partnership, maintains a system of controls and procedures
designed to provide reasonable assurance as to the reliability of the financial
statements and other disclosures included in this Report, as well as to
safeguard assets from unauthorized use or disposition. Within 90 days prior to
the filing of this Report, PEMC's Chief Executive Officer and Chief Financial
Officer have evaluated the effectiveness of the design and operation of its
disclosure controls and procedures with the assistance and participation of
other members of management. Based upon that evaluation, PEMC's Chief Executive
Officer and Chief Financial Officer concluded that such disclosure controls and
procedures are effective for gathering, analyzing and disclosing the information
the Partnership is required to disclose in the reports it files under the
Securities Exchange Act of 1934 within the time periods specified in the SEC's
rules and forms. There have been no significant changes in PEMC's internal
controls or in other factors which could significantly affect internal controls
subsequent to the date MDC carried out its evaluation.


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 the Financial
                           Information at page F-1)

                  2.       Financial Statement Schedules:

                           Schedule V  Property and Equipment - Oil and Gas
                           Properties

                           Schedule VI Accumulated Depreciation, Depletion and
                           Amortization - Oil and Gas Properties

                  3.       Exhibits:

                          (3)    Form of Agreement of Limited Partnership of
                                 Sterling Drilling Fund 1983-1 (Incorporated by
                                 reference to Exhibit (3) of Sterling Drilling
                                 Fund 1983-1 Form 10-K for the year ended
                                 December 31, 1994.)

                          (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.



                                       11
<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 28 day of
March, 2003.


                                       Sterling Drilling Fund 1983-1, L.P.
                                       By:  PrimeEnergy Management Corporation
                                            Managing General Partner

                                       By:  /s/ Charles E. Drimal Jr.
                                            -------------------------
                                            Charles E. Drimal, Jr.
                                            President

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated and on the 28 day of March, 2002.



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



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



                                       12
<PAGE>

                                 CERTIFICATIONS

I, Charles E. Drimal, Jr., Chief Executive Officer of PrimeEnergy Management
Corporation, the Managing General Partner of the Partnership, certify that:

1. I have reviewed this annual report on Form 10-K of Sterling Gas Drilling
1983-1 L.P.

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 officers 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 we 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 officers 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 function);

          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 officers and I have indicated in this
annual report whether or not 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 28, 2003                         /s/ Charles E. Drimal Jr.
                                       -------------------------
                                       Charles E. Drimal Jr
                                       Chief Executive Officer
                                       PrimeEnergy Management Corporation
                                       Managing General Partner



                                       13
<PAGE>

                                 CERTIFICATIONS

I, Beverly A. Cummings, Chief Financial Officer of PrimeEnergy Management
Corporation, the Managing General Partner of the Partnership, certify that:

1. I have reviewed this annual report on Form 10-K of Sterling Gas Drilling
1983-1 L.P.

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 officers 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 we 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 officers 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 function);

          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 officers and I have indicated in this
annual report whether or not 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 28, 2003                         /s/ Beverly A. Cummings
                                       ----------------------------------
                                       Beverly A. Cummings
                                       Chief Financial Officer
                                       PrimeEnergy Management Corporation
                                       Managing General Partner



                                       14
<PAGE>

                       STERLING DRILLING FUND 1983-1, L.P.
                        (a New York limited partnership)

                  Index to Financial Information and Schedules


<Table>
<Caption>
                                                                                                  PAGE NO.
                                                                                                  --------
<S>                                                                                               <C>
Selected Financial Data                                                                               F-2

Management's Discussion and Analysis of Financial Condition
     and Results of Operations                                                                        F-2

Report of Independent Public Accountants                                                              F-6

Financial Statements:

     Balance Sheets, December 31, 2002 and 2001                                                       F-7

     Statements of Operations for the Years Ended December 31,
          2002, 2001 and 2000                                                                         F-8

     Statements of Changes in Partners' Equity for the Years
          Ended December 31, 2002, 2001 and 2000                                                      F-9

     Statements of Cash Flows for the Years
          Ended December 31, 2002, 2001 and 2000                                                     F-10

     Notes to Financial Statements                                                            F-11 - F-18

Schedules:

     V  - Property and Equipment - Oil and Gas Properties for
               the Years Ended December 31, 2002, 2001, and 2000                                     F-19

     VI - Accumulated Depreciation, Depletion and Amortization -
               Oil and Gas Properties for the Years Ended December 31,
               2002, 2001 and 2000                                                                   F-20
</Table>

All other schedules have been omitted as the information required is either
included in the financial statements, related notes, or is not applicable.



                                      F-1
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

         The following table summarizes certain selected financial data to
highlight significant trends in the Registrant's financial condition and results
of operations for the periods indicated. The selected financial data should be
read in conjunction with the financial statements and related notes included
elsewhere in this report.

<Table>
<Caption>
                                            YEAR ENDED DECEMBER 31, (000's omitted)
                               -----------------------------------------------------------------
                                 2002          2001          2000          1999           1998
                               --------      --------      --------      --------       --------
<S>                            <C>           <C>           <C>           <C>            <C>
Revenues                       $    377           609           419           261            346
Net income (loss):
Limited Partners               $     23           133            23           (65)           (15)
General Partners               $     20            53            20             6              9
Per equity unit                $   2.09         11.98          2.12         (5.87)         (1.35)
Total assets                   $  1,478         1,575         1,532         1,524          1,635
Cash distributions:
Limited Partners               $    110           110            28            42             42
General Partners               $     34            32             7            11             11
Limited Partners as a % of
original contribution
                                   1.00%         1.00%         0.25%        0.375%         0.375%
</Table>

ITEM 7. MANAGEMENTS DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
        OPERATIONS

         1. Liquidity: The oil and gas industry is intensely competitive in all
its phases. There is also competition between this industry and other industries
in supplying energy and fuel requirements of industrial and residential
consumers. It is not possible for the Partnership to calculate its position in
the industry as the Partnership competes with many other companies having
substantially greater financial and other resources. In accordance with the
terms of the Agreement of Limited Partnership of the Partnership, the General
Partners of the Partnership will make cash distributions of as much of the
Partnership cash credited to the capital accounts of the partners as the General
Partners have determined is not necessary or desirable for the payment of any
contingent debts, liabilities or expenses for the conduct of the Partnership
business. As of December 31, 2002, the General Partners have distributed to the
Limited Partners $2,630,788 or 23.75% of the total Limited Partner capital
contributions to the Limited Partnership.

         The net proved oil and gas reserves of the Partnership are considered
to be a primary indicator of financial strength and future liquidity. The
present value of unescalated future net revenue (S.E.C. case) associated with
such reserves, discounted at 10% as of December 31, 2001, was approximately
$1,140,108 as compared to the discounted reserves as of December 31, 2002, which
were approximately $1,607,868. Reservoir engineering is a subjective process of
estimating underground accumulations of gas and oil that cannot be measured in
an exact manner. The estimated reserve quantities and future income quantities
are related to hydrocarbon prices. Therefore, volumes of reserves actually
recovered and amounts of income actually received may differ significantly from
the estimated quantities presented in this report.



                                      F-2
<PAGE>


         In accordance with FASB Statement No. 69, December 31, 2002 market
prices were 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, 2002 and 2001 were not considered. The
spot price for gas at December 31, 2002 was $4.58 per MMBTU. 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 spot price for gas at December 31, 2001 was $2.63 per
MMBTU. The range of spot prices during the year 2001 was a low of $1.77 and a
high of $10.29 and the average was $3.94. The range during the first quarter of
2003 has been from $4.88 to $19.00 with an average of $6.62. The recent futures
market prices have been in the $5.00 range.

         While it may reasonably be anticipated that the prices received by
Sterling Drilling Fund 1983-1 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 partnership may vary significantly from the SEC case

         2. Capital resources: The Partnership was formed for the sole intention
of drilling oil and gas wells. The Partnership entered into a drilling contract
with an independent drilling contractor in November, 1983, for $9,400,000.
Pursuant to the terms of this contract, thirty-eight wells were drilled
resulting in thirty-seven producing wells and one dry-hole.

         3. Results of Operations:

         2002 compared to 2001

         The Partnership's oil production increased slightly and price per
average barrel sold declined slightly from 550 barrels and $21.78 in 2001 to 690
barrels and $20.45. The partnership also experienced significant declines in the
MCF produced and the average price per MCF sold from $ 5.42 in 2001 to $ 3.73 in
2002 and from 101,937 MCF in 2001 to 90,845 MCF in 2002. The Partnership's
overall operating revenue declined from $564,100 in 2001 to $352,903. A new
contract was entered into in December 2001 and the Partnership was paid based
upon current spot market prices until November 2002. The General Partners
elected to sell a substantial portion of the gas delivered under this contract
from June 2002 through October 2002 at a fixed price of $3.57 per MMBTU subject
to transportation costs. In December 2002 the Partnership entered into a
contract to sell approximately seventy five percent of the amount of its gas
sold under a fixed contract price subject to transportation cost. The remaining
gas to be sold by the Partnership will be sold at current spot market prices.
This combination allows the Partnership to sell its gas and avoid some of the
more significant negative swings that could occur in the spot market. The
production volume variations can be a result of changes in transportation line
pressures, miscellaneous shut-ins for maintenance and natural declines.

         The Partnership's other income is a result of a cash bonus paid to the
partnership for an additional farmout agreement. The farmout agreement allows a
third party the right to drill a deep well on leasehold acreage owned by the
partnership for a period of two years. If the third party



                                      F-3
<PAGE>

exercises their rights within the two years the Partnership could receive an
overriding royalty interest

         Interest income fluctuates with changes in the interest rates received
as well as the amount of cash in the bank at any given time.

         Production expenses decreased from $236,885 in 2001 to $146,134 in
2002. Production expenses can be variable in nature relating to the volumes
produced. Variable costs were reasonable based upon current production volumes
during both years. Other direct costs, which include but are not limited to,
involve repairs, labor, chemicals, and repairs to access the well sites. The
majority of the production expenditures during 2002 and 2001 related to routine
maintenance and upkeep at the well site. General and administrative costs
declined between 2001 and 2002, from $ 116,058 to $90,545, respectively.
Management will use in-house resources if it will provide efficient and timely
services to the partnership. Amounts in both years are substantially less than
the $553,850 allowed to be allocated to the Partnership under the Partnership
Agreement.

         The Partnership records additional depreciation, depletion and
amortization to the extent that the net capitalized costs exceed the
undiscounted future net cash flows attributable to the Partnership. No revisions
to the basis of the Partnership properties were needed in 2002 or 2001. The
overall depreciation and depletion for both years was consistent with the rates
used and the remaining property basis.

         2001 compared to 2000

         The Partnership's oil production and price per average barrel sold
declined from 1,263 barrels and $27.11 in 2000 to 550 barrels and $21.78 in
2001. This fluctuation was significantly offset because of the increase in
average price per MCF received, from $3.52 in 2000 to $ 5.42 in 2001 combined
with only a minor decline in gas production, from 103,533 MCF in 2000 to 101,937
MCF in 2001 The Partnership's overall operating revenue from $398,448 in 2000 to
$564,100 in 2001. For most of 2001 the Partnership's revenue was based upon a
higher contract price than was the average spot market price. A new contract was
entered into in December 2001 and the Partnership will be paid based upon
current spot market prices until November 2002.

         The Partnership's other income is a result of a cash bonus paid to the
partnership for a farmout agreement. The farmout agreement allows a third party
the right to drill a deep well on leasehold acreage owned by the partnership for
a period of two years. If the third party exercises their rights within the two
years the Partnership could receive an overriding royalty interest

         Interest income fluctuates with changes in the interest rates received
as well as the amount of cash in the bank at any given time

         Production expenses increased from $182,826 in 2000 to $236,885 in
2001. Production expenses can be variable in nature relating to the volumes
produced. Variable costs were reasonable based upon current production volumes
during both years. Other direct costs, which include but are not limited to,
involve repairs, labor, chemicals, and repairs to access the well sites. The
majority of the production expenditures during 2001 and 2000 related to routine
maintenance and upkeep at the well site. General and administrative costs
declined slightly between 2000 and



                                      F-4
<PAGE>

2001, from $119,184 to $ 116,058, respectively. Management will use in-house
resources if it will provide efficient and timely services to the partnership.
Amounts in both years are substantially less than the $553,850 allowed to be
allocated to the Partnership under the Partnership Agreement.

         The Partnership records additional depreciation, depletion and
amortization to the extent that the net capitalized costs exceed the
undiscounted future net cash flows attributable to the Partnership. No revisions
to the basis of the Partnership properties were needed in 2001 or 2000. The
overall depreciation and depletion for both years was consistent with the rates
used and the remaining property basis.



                                      F-5
<PAGE>

                       STERLING DRILLING FUND 1983-1, L.P.
                        (a New York limited partnership)

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Partners of
Sterling Drilling Fund 1983-1, L.P.:


We have audited the accompanying balance sheets of Sterling Drilling Fund
1983-1, L.P. (a New York limited partnership) as of December 31, 2002 and 2001,
and the related statements of operations, changes in partners' equity, and cash
flows for the years ended December 31, 2002, 2001 and 2000. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with 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 Sterling Drilling Fund 1983-1,
L.P. as of December 31, 2002 and 2001, and the results of its operations and
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.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the index to
financial statements and schedules are presented for purposes of complying with
the Securities and Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected to the auditing
procedures applied in the examination of the basic financial statements and, in
our opinion, fairly state in all material respects the financial data required
to be set forth therein in relation to the basic financial statements taken as a
whole.




PUSTORINO, PUGLISI & CO., LLP
New York, New York
March 28, 2003



                                      F-6
<PAGE>

                          STERLING DRILLING FUND 1983-1
                        (A NEW YORK LIMITED PARTNERSHIP)

                                 BALANCE SHEETS

                           DECEMBER 31, 2002 AND 2001


<Table>
<Caption>
                                              Assets
                                                                       2002              2001
                                                                   ------------      ------------
<S>                                                                <C>               <C>
Current Assets:
     Cash and cash equivalents (Note 2)                            $    297,286      $    318,796
     Due from affiliates (Note 6)                                        38,472            44,585
                                                                   ------------      ------------
           Total Current Assets                                         335,758           363,381
                                                                   ------------      ------------

Oil and Gas Properties - successful efforts methods (Note 3) -
     Leasehold costs                                                    321,314           321,314
      Wells and related facilities                                    8,934,084         8,934,084
                                                                   ------------      ------------
              Total                                                   9,255,398         9,255,398
       Less - Accumulated depreciation, depletion
                      and amortization                               (8,113,017)       (8,043,389)
                                                                   ------------      ------------
                                                                      1,142,381         1,212,009
                                                                   ------------      ------------
            Total Assets                                           $  1,478,139      $  1,575,390
                                                                   ============      ============
                                         Partners' Equity

Partners' Equity:
     Limited partners                                              $  1,411,475      $  1,499,047
     General partners                                                    66,664            76,343
                                                                   ------------      ------------
            Total Partners' Equity                                 $  1,478,139      $  1,575,390
                                                                   ============      ============
</Table>



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



                                      F-7
<PAGE>

                          STERLING DRILLING FUND 1983-1
                        (A NEW YORK LIMITED PARTNERSHIP)

                            STATEMENTS OF OPERATIONS

                FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, 2000



<Table>
<Caption>
                                     2002                             2001                            2000
                        ------------------------------   ------------------------------   ------------------------------
                        Limited    General               Limited    General               Limited    General
                        Partners   Partners    Total     Partners   Partners    Total     Partners   Partners     Total
                        --------   --------   --------   --------   --------   --------   --------   --------   --------
<S>                     <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Revenue:
  Operating
     revenues           $269,971   $ 82,932   $352,903   $431,537   $132,563   $564,100   $304,813   $ 93,635   $398,448
  Other revenue
     (Note 10)            15,935      4,895     20,830     27,753      8,526     36,279      8,035      2,468     10,503
Interest                   3,340        310      3,650      7,969        740      8,709      9,433        876     10,309
                        --------   --------   --------   --------   --------   --------   --------   --------   --------
Total Revenue            289,246     88,137    377,383    467,259    141,829    609,088    322,281     96,979    419,260
                        --------   --------   --------   --------   --------   --------   --------   --------   --------
Costs and Expenses:
Production expenses      111,793     34,341    146,134    181,217     55,668    236,885    139,862     42,964    182,826
 Depreciation,
  depletion and
  amortization            63,710      5,918     69,628     64,527      5,994     70,521     67,747      6,293     74,040
General and
 administrative
  expenses (Note 7)       90,545     27,815    118,360     88,784     27,274    116,058     91,176     28,008    119,184
                        --------   --------   --------   --------   --------   --------   --------   --------   --------
Total Expenses           266,048     68,074    334,112    334,528     88,936    423,464    298,785     77,265    376,050
                        --------   --------   --------   --------   --------   --------   --------   --------   --------
Net Income              $ 23,198   $ 20,063   $ 43,261   $132,731   $ 52,893   $185,624   $ 23,496   $ 19,714   $ 43,210
                        ========   ========   ========   ========   ========   ========   ========   ========   ========
Net Income Per
 Equity Unit (Note 2)   $   2.09                         $  11.98                         $   2.12
                        ========                         ========                         ========
</Table>



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



                                      F-8
<PAGE>

                          STERLING DRILLING FUND 1983-1
                        (A NEW YORK LIMITED PARTNERSHIP)

                    STATEMENTS OF CHANGES IN PARTNERS' EQUITY

                FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, 2000

<Table>
<Caption>
                                   Limited           General
                                   Partners          Partners            Total
                                 ------------      ------------      ------------
<S>                              <C>               <C>               <C>
Balance at December 31, 1999     $  1,481,283      $     42,358      $  1,523,641
Partners' contributions                    --               117               117
Distributions to partners             (27,693)           (7,325)          (35,018)
Net Income                             23,496            19,714            43,210
                                 ------------      ------------      ------------
Balance at December 31, 2000        1,477,086            54,864         1,531,950
Partners' contributions                    --               476               476
Distributions to partners            (110,770)          (31,890)         (142,660)
Net Income                            132,731            52,893           185,624
                                 ------------      ------------      ------------
Balance at December 31, 2001        1,499,047            76,343         1,575,390
Partners' contributions                    --             4,285             4,285
Distributions to partners            (110,770)          (34,027)         (144,797)
Net Income                             23,198            20,063            43,261
                                 ------------      ------------      ------------
Balance at December 31, 2002     $  1,411,475      $     66,664      $  1,478,139
                                 ============      ============      ============
</Table>



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



                                      F-9
<PAGE>

                          STERLING DRILLING FUND 1983-1
                        (A NEW YORK LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS

                FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, 2000

<Table>
<Caption>
                                                            2002            2001            2000
                                                         ----------      ----------      ----------
<S>                                                      <C>             <C>             <C>
Cash Flows From Operating Activities:
   Net Income                                            $   43,261      $  185,624      $   43,210
 Adjustments to reconcile net income to net cash
    provided by operating activities:
      Depreciation, depletion and amortization               69,628          70,521          74,040
      Changes in Assets and Liabilities:
         Increase (Decrease) in due from affiliates           6,113           5,988         (10,205)
         Increase in due to affiliates                           --              --              --
                                                         ----------      ----------      ----------
          Net Cash Provided by Operating  Activities        119,002         262,133         107,045
                                                         ----------      ----------      ----------
Cash Flows From Investing Activities:
    Equipment purchases                                          --              --              --
                                                         ----------      ----------      ----------
              Net Cash Used By Investing  Activities             --              --              --
Cash Flows From Financing Activities:
     Partners' contributions                                  4,285             476             117
     Distributions to partners                             (144,797)       (142,660)        (35,018)
                                                         ----------      ----------      ----------
              Net Cash Used In Financing  Activities       (140,512)       (142,184)        (34,901)
                                                         ----------      ----------      ----------
Net Increase (decrease) in cash and cash
   Equivalents                                              (21,510)        119,949          72,144
Cash and cash equivalents, beginning of
   Year                                                     318,796         198,847         126,703
                                                         ----------      ----------      ----------
Cash and cash equivalents, end of year                   $  297,286      $  318,796      $  198,847
                                                         ==========      ==========      ==========
</Table>



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



                                      F-10
<PAGE>

                       STERLING DRILLING FUND 1983-1, L.P.
                        (a New York limited partnership)

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 2002, 2001 AND 2000



(1)      Organization and Capital Contributions:

         Sterling Drilling Fund 1983-1, L.P., formerly Sterling-Fuel Resources
         Drilling Fund 1983-1, a New York limited partnership (the
         "Partnership"), was formed on March 18, 1983 for the primary purpose of
         acquiring, developing and producing oil and gas in the state of West
         Virginia. The general partners are: PrimeEnergy Management Corporation
         (PEMC), a wholly owned subsidiary of PrimeEnergy Corporation (PEC),
         Charles E. Drimal, Jr., Oliver J. Sterling and Samuel R. Campbell.
         Eleven thousand seventy-seven limited partnership units, (11,077), were
         sold at $1,000 per unit aggregating total limited partner contributions
         of $11,077,000. The general partners' contributions amounted to
         $902,847. Partnership operations commenced on November 10, 1983.

(2)      Summary of Significant Accounting Policies:

         Revenue Recognition:

         The Partnership recognizes operating revenues, consisting of sales of
         oil and gas production, in the month of sale. Uncollected revenue is
         accrued based on known facts and trends of the relevant oil and gas
         properties on a monthly basis.

         Basis of Accounting:

         The accounts of the Partnership are maintained in accordance with
         accounting practices permitted for federal income tax reporting
         purposes. Under this method of accounting, (a) substantially all
         exploration and development costs except leasehold and equipment costs
         are expensed as paid, (b) costs of abandoned leases and equipment are
         expensed when abandoned, and (c) depreciation (for equipment placed in
         service) is provided on an accelerated basis. In order to present the
         accompanying financial statements in accordance with generally accepted
         accounting principles, memorandum adjustments have been made to account
         for oil and gas properties, as discussed below.

         Oil and Gas Producing Activities:

         The Partnership accounts for its oil and gas operations using the
         successful efforts method of accounting on a property by property
         basis. The Partnership only participates in developmental drilling.
         Accordingly, all costs of drilling and equipping these wells, together
         with leasehold acquisition costs, are capitalized. These capitalized
         costs are amortized on a property by property basis by the unit-of-
         production method based



                                      F-11
<PAGE>

                       STERLING DRILLING FUND 1983-1, L.P.
                        (a New York limited partnership)

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 2002, 2001 AND 2000



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


         upon the ratio of production to proved oil and gas reserves. Additional
         depreciation, depletion and amortization may be recorded if net
         capitalized costs exceed the undiscounted future net cash flows
         attributable to Partnership properties. (See Note 4)

         Federal Income Taxes:

         As federal income taxes are the liability of the individual partners,
         the accompanying financial statements do not include any provision for
         federal income taxes. (See Note 8)

         Limited Partners' Loss Per Equity Unit:

         The limited partners' income (loss) per equity unit is computed on the
         11,077 limited partner equity units.

         Cash and Cash Equivalents:

         For purposes of the statements of cash flows the Partnership considers
         all highly liquid debt instruments with a maturity of three months or
         less to be cash equivalents.

         Use of Estimates:

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amounts of assets and
         liabilities and disclosure of contingent assets and liabilities at the
         date of the financial statements and the reported amounts of revenues
         and expenses during the reporting period. Actual results could differ
         from those estimates.



                                      F-12
<PAGE>

                       STERLING DRILLING FUND 1983-1, L.P.
                        (a New York limited partnership)

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 2002, 2001 AND 2000

(3)      Oil and Gas Properties:

         The Partnership acquired leases or farmouts from PEMC at its cost. Cost
         is defined as any amount paid for delay rentals, lease bonuses, if any,
         surveys and other expenses including such portion of any of the general
         partners', or their affiliates' reasonable, necessary and actual
         expenses for geological, geophysical, seismic, land, engineering,
         drafting, accounting, legal and other services. The Partnership
         currently pays royalties of approximately 12.5% to 17.9% of the selling
         price of the oil and gas extracted.

         The following table sets forth certain revenue and expense data
         concerning the Partnership's oil and gas activities for the years ended
         December 31, 2002, 2001 and 2000:

<Table>
<Caption>
                                         2002         2001         2000
                                       --------     --------     --------
<S>                                    <C>          <C>          <C>
Average sales price per MCF of gas     $   3.73     $   5.42     $   3.52
Average sales price per BBL of oil     $  20.45     $  21.78     $  27.11
   and other liquids
Production expense per dollar of       $   0.41     $   0.42     $   0.46
            operating revenue
</Table>

(4)      Quantities of Oil and Gas Reserves:

         The amount of proved developed reserves presented below have been
         estimated by an independent firm of petroleum engineers as of January
         1, 2003. Petroleum engineers on the staff of PEC have reviewed the data
         presented below, as of December 31, 2002, for consistency with current
         year production and operating history. All of the Partnership's oil and
         gas reserves are located within the United States:

<Table>
<Caption>
                                            (Unaudited)
                                     --------------------------
                                     GAS (MCF)        OIL (BBL)
                                     ----------      ----------
<S>                                  <C>             <C>
Reserves as of December 31, 1999      1,587,591          11,912
Revisions of previous estimates         309,340             657
Production                             (103,533)         (1,263)
                                     ----------      ----------

Reserves as of December 31, 2000      1,793,398          11,306
Revisions of previous estimates          60,472          (1,817)
Production                             (101,937)           (550)
                                     ----------      ----------

Reserves as of December 31, 2001      1,751,933           8,939
Revisions of previous estimates        (125,618)            642
Production                              (90,845)           (690)
                                     ----------      ----------

Reserves as of December 31, 2002      1,535,470           8,891
                                     ==========      ==========
</Table>



                                      F-13
<PAGE>

                       STERLING DRILLING FUND 1983-1, L.P.
                        (a New York limited partnership)

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 2002, 2001 AND 2000



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

         Should future prices decline, operation of certain wells would become
         uneconomic, on a pretax basis, as production levels decline with age.
         In accordance with the rules and regulations of the Securities and
         Exchange Commission, proved reserves exclude production which would be
         uneconomic. The partners are entitled to certain tax benefits and
         credits which, if available in the future, may result in production
         continuing beyond the level included in the above table.

         Revisions arise from changes in current prices, as well as engineering
         and geological data which would alter the useful life and therefore the
         overall predicted production of each well. Future changes in these
         estimates are common and would impact the reserve quantities used to
         calculate depreciation, depletion and amortization.

         As discussed in Note 2, the Partnership may record additional
         depreciation, depletion and amortization if net capitalized costs
         exceed the undiscounted future net cash flows attributable to
         Partnership properties. Price declines affect estimated future net
         revenues both directly and as a consequence of their impact on
         estimates of future production. The Partnership has recorded no
         additional provision for 2002, 2001 or 2000.



                                      F-14
<PAGE>

                       STERLING DRILLING FUND 1983-1, L.P.
                        (a New York limited partnership)

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 2002, 2001 AND 2000



(5)      Allocation of Partnership Revenues, Costs and Expenses:

         Under the terms of the Limited Partnership Agreement, all Partnership
         revenues and expenses, including deductions attributable thereto, are
         to be allocated as follows:

<Table>
<Caption>
                                                               Limited       General
                                                               Partners      Partners
                                                               --------      --------
<S>                                                            <C>           <C>
Participation in Costs:
  Sales commissions and dealer manager fees in excess of
the $50,000 paid by PEMC                                            100%            0%


 Offering costs other than $75,000 paid by the Partnership
and the Sterling Drilling Fund 1983-1, L.P                            0%          100%
  Management fee                                                    100%            0%
  Lease acquisition costs                                          91.5%          8.5%
  Drilling and completion costs                                    91.5%          8.5%
  General and administrative expenses                              76.5%         23.5%
  Production operator's fee                                        76.5%         23.5%
  Operating expenses                                               76.5%         23.5%
  All other costs                                                  91.5%          8.5%
Participation in Revenues:
  Sale of production                                               76.5%         23.5%
  Sale of properties                                               91.5%          8.5%
  Sale of equipment                                                91.5%          8.5%
  All other revenues                                               91.5%          8.5%
</Table>


(6)      Transactions With Affiliates:

         (a)      The due from affiliates at December 2002 and 2001 represents
                  general and administrative and certain other expenses incurred
                  on behalf of the Partnership by PEC and its subsidiaries, and
                  amounts due for production operator's fees (Note 6(b)), net of
                  production revenues collected on behalf of the Partnership.

         (b)      As operator of the Partnership's properties, Prime Operating
                  Company (POC), a subsidiary of PEC, receives, as compensation
                  from the Partnership, a monthly production operator's fee of
                  $248 for each producing gas well and $495 for each producing
                  oil or combination gas and oil well, based on the
                  Partnership's



                                      F-15
<PAGE>

                       STERLING DRILLING FUND 1983-1, L.P.
                        (a New York limited partnership)

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 2002, 2001 AND 2000



(6)      Transactions With Affiliates - (Cont'd):

                  percentage of working interest in the well. Such fee is
                  subject to annual adjustment by the percentage increase in the
                  Cost of Living Index published by the U.S. Department of Labor
                  over the year in which production began. During 2002, 2001,
                  and 2000 $95,394, $147,599 and $105,833, of production
                  operator's fees were incurred, respectively.

         (c)      In accordance with the terms of the Partnership Agreement, the
                  general partners are required to pay 8.5% of drilling and
                  completion costs, lease acquisition costs and certain other
                  costs, of which 1% will be paid for by the general partners
                  out of revenues received by them from the Partnership. At
                  December 31, 2002, $21,720 was due from certain general
                  partners for such costs.

         (d)      Eastern Oil Well Services Company (EOWSC), a subsidiary of
                  PEC, provided field services to the Partnership during the
                  years ending December 31, 2002, 2001, and 2000 for which it
                  was billed $15,594, $4,254, and $11,363, respectively.

(7)      General and Administrative Expenses:

         In accordance with the Management Agreement, the general partners are
         reimbursed for the portion of their in-house overhead, including
         salaries and related benefits, attributable to the affairs and
         operations of the Partnership.

         This amount, combined with certain direct expenses for geology,
         engineering, legal, accounting, auditing, insurance and other items
         shall not exceed an annual amount equal to 5% of limited partner
         capital contributions. Excess expenses shall be borne by the general
         partners.

         During 2002, 2001, and 2000, the Partnership recognized general and
         administrative expenses incurred on its behalf by a general partner of
         $100,800, $100,800 and $100,000, respectively.



                                      F-16
<PAGE>

                       STERLING DRILLING FUND 1983-1, L.P.
                        (a New York limited partnership)

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 2002, 2001 AND 2000



(8)      Federal Income Taxes:

         The following is a reconciliation between the net income as reported on
         the Partnership's federal income tax return and the net income (loss)
         reported in the accompanying financial statements:

<Table>
<Caption>
                                                              Year Ended December 31,
                                                     ------------------------------------------
                                                        2002            2001            2000
                                                     ----------      ----------      ----------
<S>                                                  <C>             <C>             <C>
Net Income as reported on the Partnership's
federal income tax return                               112,889      $  256,146      $  112,241
Recompletion costs reported differently for
financial reporting purposes and for income tax
reporting purposes                                           --              --              --
Depreciation, depletion and amortization
For income tax purposes in excess of (less than)
financial reporting amounts                             (69,628)        (70,521)        (69,031)
                                                     ----------      ----------      ----------
Net Income/(Loss) per accompanying financial
statements                                           $   43,261      $  185,625      $   43,210
                                                     ==========      ==========      ==========
</Table>

         The tax returns of the Partnership, the qualifications of the
         Partnership as such for tax purposes, and the amount of Partnership
         income or loss are subject to examination by federal and state taxing
         authorities. If such examinations result in changes with respect to
         Partnership's qualifications or in changes to its income or loss, the
         tax liability of the partners would be changed accordingly.



                                      F-17
<PAGE>

                       STERLING DRILLING FUND 1983-1, L.P.
                        (a New York limited partnership)

                          NOTES TO FINANCIAL STATEMENTS

                        DECEMBER 31, 2002, 2001 AND 2000



(9)      Major Customers:

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


<Table>
<Caption>
Purchaser                     2002         2001         2000
---------                   --------     --------     --------
<S>                         <C>          <C>          <C>
Dominion Field Services     $320,522     $532,283     $345,794
</Table>

         In December 2002 the Partnership entered into a contract to sell
         approximately seventy five percent of the amount of its gas sold under
         a fixed contract price subject to transportation cost. The remaining
         gas sold by the Partnership will be sold at current spot market prices.


(10)     Other Revenue:

         In 2002 the Partnership's other income is a result of a cash bonus paid
         to the partnership for a three year farmout agreement. The farmout
         agreement allows a third party the right to drill a deep well on
         leasehold acreage owned by the partnership for a period of three years.
         If the third party exercises their rights with in the three years the
         Partnership could receive an overriding royalty interest.

         In 2001 the Partnership's other income is a result of a cash bonus paid
         to the partnership for a two-year farmout agreement. The farmout
         agreement allows a third party the right to drill a deep well on
         leasehold acreage owned by the partnership for a period of two years.
         If the third party exercises their rights with in the two years the
         Partnership could receive an overriding royalty interest.

         In 2000 the Partnership was a member of a Class of Oil Producers
         involved in litigation alleging that the principal refiners of Penn
         Grade crude engaged in a conspiracy to fix, lower, maintain and
         stabilize the purchase prices of crude purchased by the refiners from
         the oil producers. The Partnership received this amount pursuant to the
         Settlement Agreement of this litigation.



                                      F-18
<PAGE>

                                                                      SCHEDULE V

                       STERLING DRILLING FUND 1983-1, L.P.
                        (a New York limited partnership)

                 PROPERTY AND EQUIPMENT - OIL AND GAS PROPERTIES

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000


<Table>
<Caption>
                                   Balance at                                                   Balance
                                   Beginning      Additions                       Other          at End
                                    of Year        at Cost      Retirements      Changes        of Year
                                   ----------     ----------    -----------     ----------     ----------
<S>                                <C>            <C>            <C>            <C>            <C>
Year Ended December 31, 2002:
  Leasehold costs                  $  321,314     $       --     $       --     $       --     $  321,314
  Wells and related facilities      8,934,084             --             --             --      8,934,084
                                   ----------     ----------     ----------     ----------     ----------
                                   $9,255,398     $       --     $       --     $       --     $9,255,398
                                   ==========     ==========     ==========     ==========     ==========

Year Ended December 31, 2001:
  Leasehold costs                  $  321,314     $       --     $       --     $       --     $  321,314
  Wells and related facilities      8,934,084             --             --             --      8,934,084
                                   ----------     ----------     ----------     ----------     ----------
                                   $9,255,398     $       --     $       --     $       --     $9,255,398
                                   ==========     ==========     ==========     ==========     ==========

Year ended December 31, 2000:
  Leasehold costs                  $  321,314     $       --     $       --     $       --     $  321,314
  Wells and related facilities      8,934,084             --             --             --      8,934,084
                                   ----------     ----------     ----------     ----------     ----------
                                   $9,255,398     $       --     $       --     $       --     $9,255,398
                                   ==========     ==========     ==========     ==========     ==========
</Table>



                                      F-19
<PAGE>
                                                                     SCHEDULE VI


                       STERLING DRILLING FUND 1983-1, L.P.
                        (a New York limited partnership)

  ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION - OIL AND GAS PROPERTIES

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000


<Table>
<Caption>

                                   Balance at     Charges to                                     Balance
                                   Beginning      Costs and                       Other          at End
                                    of Year        Expenses     Retirements      Changes         of Year
                                   ----------     ----------    -----------     ----------     ----------
<S>                                <C>            <C>           <C>             <C>            <C>
Year Ended December 31, 2002:
  Wells and related facilities     $7,722,075     $   69,629     $       --     $       --     $7,791,704
  Leasehold costs                     321,314             --             --             --        321,314
                                   ----------     ----------     ----------     ----------     ----------
                                   $8,043,389     $   69,629     $       --     $       --     $8,113,018
                                   ==========     ==========     ==========     ==========     ==========

Year Ended December 31, 2001:
  Wells and related facilities     $7,651,554     $   70,521     $       --     $       --     $7,722,075
  Leasehold costs                     321,314             --             --             --        321,314
                                   ----------     ----------     ----------     ----------     ----------
                                   $7,972,868     $   70,521     $       --     $       --     $8,043,389
                                   ==========     ==========     ==========     ==========     ==========

Year ended December 31, 2000:
  Wells and related facilities     $7,577,514     $   74,040     $       --     $       --     $7,651,554
  Leasehold costs                     321,314             --             --             --        321,314
                                   ----------     ----------     ----------     ----------     ----------
                                   $7,898,828     $   74,040     $       --     $       --     $7,972,868
                                   ==========     ==========     ==========     ==========     ==========
</Table>



                                      F-20
<PAGE>

                                INDEX TO EXHIBITS

<Table>
<Caption>
EXHIBIT
NUMBER                                    EXHIBIT
------                                    -------
<S>               <C>
(3)               Form of Agreement of Limited Partnership of Sterling-Fuel
                  Resources Drilling Fund 1983-1 (now Sterling Drilling Fund
                  1983-1, L.P.) (incorporated by reference to Exhibit (3) of
                  Sterling Gas Drilling Fund 1983-1 Form 10-K for the year ended
                  December 31, 1994)

(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)
</Table>