##### Table of Contents

Table of Contents **Texland Drilling Program–1981, Ltd.** **Index To Financial Statements** **Reference Page** Balance Sheets at September 30, 2002 and December 31, 2001.  3    Statements of Operations for the Three Months and Nine Months Ended September 30, 2002 and 2001.  4    Statement of Partners’ Capital at September 30, 2002.  5    Statements of Cash Flows for Nine Months Ended September 30, 2002 and 2001.  6    Notes to Financial Statements.   7    2 
Table of Contents**Texland Drilling Program–1981, Ltd.****(A Limited Partnership)****Balance Sheets****September 30, 2002 and December 31, 2001****(Unaudited)**   **09/30/02**   12/31/01 **ASSETS**          **Current Assets**          Cash  **$****50,535**** **  $2,599 Accounts receivable—trade  ** ****147,525**** **   91,976 Accounts receivable—managing general partner        18,844         ** ****198,060**** **   113,419      **Property and Equipment, at Cost (Successful Efforts Method)**          Intangible development costs  ** ****7,309,040**** **   7,244,553 Lease and well equipment  ** ****4,229,599**** **   4,202,099 Producing leaseholds  ** ****161,495**** **   161,495         ** ****11,700,133**** **   11,608,147 Accumulated depreciation, depletion and amortization  ** ****(10,395,615****)**   (10,264,228)        ** ****1,304,518**** **   1,343,919         **$****1,502,579**** **  $1,457,338      **LIABILITIES AND PARTNERS’ CAPITAL**          **Current Liabilities**          Accounts payable:          Managing general partner  **$****73,340**** **  $55,102      **Partners’ Capital**          Limited partners—2,425 units outstanding  ** ****1,271,309**** **   1,241,922 General partners  ** ****157,930**** **   160,314         ** ****1,429,239**** **   1,402,236         **$****1,502,579**** **  $1,457,338       See accompanying notes tofinancial statements. 3 
Table of Contents**Texland Drilling Program–1981, Ltd.****(A Limited Partnership)** **Statements of Operations****September 30, 2002 and 2001****(Unaudited)**    **Three Months Ended****September30,**  **Nine Months Ended****September30,**   **2002**  2001  **2002**  2001**Revenue**                Oil and gas sales  **$****345,259**  $323,582  **$****909,597**  $1,089,513Interest income  ** ****59**   201  ** ****187**   1,140Miscellaneous Income  ** ****—  **   —    ** ****—  **   —  Gain on sale of assets  ** ****3,100**   —    ** ****10,255**   —              ** ****348,418**   323,783  ** ****920,039**   1,090,653         **Expense**                Fees to managing general partner  ** ****23,250**   21,975  ** ****69,750**   65,925Production expense  ** ****144,012**   132,979  ** ****396,566**   355,703Severance tax  ** ****17,293**   15,869  ** ****46,087**   57,645Depreciation, depletion and amortization  ** ****48,877**   39,450  ** ****141,642**   105,217Other  ** ****2,023**   1,684  ** ****20,704**   13,792            ** ****235,455**   211,957  ** ****674,749**   598,282         **Net Income (Loss)**  **$****112,963**  $111,826  **$****245,290**  $492,371         **Allocation of Net Income (Loss)**                Limited partners  **$****50,399**  $57,031  **$****96,075**  $251,109General partners  ** ****62,564**   54,795  ** ****149,215**   241,262            **$****112,963**  $111,826  **$****245,290**  $492,371                          **Net Income (Loss) per $5,000 Limited Partner (2,425 Units Outstanding)**  **$****21**  $24  **$****40**  $104          See accompanying notes tofinancial statements. 4 
Table of Contents**Texland Drilling Program–1981, Ltd.****(A Limited Partnership)** **Statements of Partners’ Capital****Nine Months Ended September 30, 2001****(Unaudited)**   **Limited Partners**   **General Partners**   **Total** **Balance at December 31, 2001**  $1,241,922   $160,314   $1,402,236 Partners’ distributions   (66,688)   (179,100)   (245,788)Partners’ contributions   —      27,501    27,501 Net income   96,075    149,215    245,290        **Balance at September 30, 2002**  $1,271,309   $157,930   $1,429,239         See accompanying notes tofinancial statements 5 
Table of Contents**Texland Drilling Program–1981, Ltd.****(A Limited Partnership)** **Statements of Cash Flow****Nine Months Ended September 30, 2002 and 2001****(Unaudited)**Net income (loss)  **$****245,290**** **  $492,371      Adjustments to reconcile net income to net cash provided by operating activities:          Depreciation, depletion and amortization  ** ****141,642**** **   105,217 Gain on sale of assets  ** ****(10,255****)**   —   (Increase) decrease in accounts receivable  ** ****(36,705****)**   8,761 (Decrease) increase in accounts payable  ** ****18,238**** **   25,504 Other  ** ****—  **** **   —           ** ****112,920**** **   139,482      Net cash provided by operating activities  ** ****358,210**** **   631,853      **Investing Activities**          Acquisition of property and equipment  ** ****(102,242****)**   (179,072)Proceeds from sale of assets  ** ****10,255**** **   —        Net cash used in investing activities  ** ****(91,987****)**   (179,072)     **Financing Activities**          Partners’ contributions  ** ****27,501**** **   42,570 Partners’ distributions  ** ****(245,788****)**   (533,968)     Net cash used in financing activities  ** ****(218,287****)**   (491,398)                **Net Increase in Cash**  ** ****47,936**** **   (38,617)Cash—beginning of year  ** ****2,599**** **   58,887      **Cash—End of Quarter**  **$****50,535**** **  $20,270       See accompanying notes tofinancial statements.  6 
Table of Contents**Texland Drilling Program–1981, Ltd.****(A Limited Partnership)** **Notes to Financial Statements**September 30, 2002 Unaudited  **1.    Basis of Presentation** In the opinion of management, theaccompanying balance sheets and related interim statements of operations, cash flows, and partners’ capital include all adjustments, consisting only of normal recurring items necessary for their fair presentation in conformity with U.S.generally accepted accounting principals. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Actual results may differ from theseestimates. Interim results are not necessarily indicative of results for a full year. The information included in this From 10-Q should be read in conjunction with Management’s Discussion and Analysis and financial statements and notes theretoincluded in the Texland Drilling Program–1981, Ltd. 2001 Form 10-K.  **2.    Summary Of Significant AccountingPolicies** The Partnership was organized as a limited partnership on July 20, 1981 for the purpose of engaging in oil and gasexploration and production. Texland Properties–1981, a general partnership, and Texland Petroleum, Inc. are the General Partners. The Managing General Partner is Texland Petroleum, Inc. The Partnership’s accounting policies are summarizedbelow:  ***Basis Of Accounting*** The Partnership follows generally accepted accounting principles applicable to established enterprises in the extractive industries under a method which is generally known as the successful method of accounting. ***Property And Equipment*** Costs incurred for the acquisition of producing and nonproducing leaseholds are capitalized. Costs of intangible development and lease and well equipment incurred to drill and equip successful exploratory and development wells arecapitalized. Costs to drill and equip unsuccessful exploratory wells are charged to operations while costs of unsuccessful development wells remain capitalized. Costs associated with uncompleted wells are capitalized as wells-in-progress. ***Abandoned Leaseholds*** Costs of nonproducing properties are charged to expense at such time as they are deemed to be impaired, based upon periodic assessments of such costs.  ***Depletion*** Leasehold costs of producing properties are amortized on theunit of production method based on proved oil and gas reserves. Intangible development costs of producing properties are amortized on the unit of production method based on estimated proved developed oil and gas reserves.  ***Depreciation*** Depreciation ofequipment is provided by using the unit of production method based on estimated proved developed oil and gas reserves.  ***Organization Costs*** These costs are amortized by the straight-line method over ten years, the life of thePartnership. 7 
Table of Contents**Texland Drilling Program–1981, Ltd.****(A Limited Partnership)** **Management’s Discussion And Analysis Of Financial****Condition And Results Of Operations**September 30, 2002 (Unaudited)  The Partnership’s average price per barrel of oilfor the third quarter of 2002 was $20.16 as compared to $18.71 for the third quarter of 2001. The decreased revenue and related severance tax expense result primarily from normal expected declines in production.  Depreciation, depletion and amortization for the third quarter of 2002 was $48,877 as compared to $39,450 for the third quarter of 2001. Changes in depreciationand depletion for 2002 through 2001, are due primarily to the effect that changes in oil and gas prices have on the calculation of estimated future economically recoverable oil and gas reserves.  The Partnership was formed with cash contributions from the Limited and General Partners. Management does not intend to incur any substantial indebtedness and any developmental drillingwhich is necessary will be processed by farmout to other parties or by reinvestment of internally generated funds. Management, therefore, anticipates no liquidity problems during the life of the Partnership.  **Quantitative and Qualitative Disclosures****AboutMarket Risk** The Partnership is exposed to oil and gas price risks. The Partnership sells all of its oil and gas under short-termcontracts. None of these risks are hedged. 8 
Table of Contents **Part II** Items 1 through 5  Omitted—Not applicable to Registrant.  Item 6  (a) Exhibits:   99.1 Certification by CEO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.  99.2 Certification by CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.  (b) Reports on Form 8-K:  None.  **Signature** Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Texland Drilling Program–1981, Ltd.By /s/    Michael E. Chapman  M. E. Chapman, Vice Presidentof Texland Petroleum, Inc.,General Partner—TexlandProperties–1981 Date: November 14, 2002 9