United States
                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                                 FORM 10-QSB


            [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934

              For the quarterly period ended September 30, 1996

                                     OR

           [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934

       For the transition period from...............to...............

                       Commission file number 0-16552

             ENEX OIL & GAS INCOME PROGRAM III - SERIES 4, L.P.
      (Exact name of small business issuer as specified in its charter)

           New Jersey                                           76-0179822
 (State or other jurisdiction of                             (I.R.S. Employer
 incorporation or organization)                             Identification No.)

                       Suite 200, Three Kingwood Place
                            Kingwood, Texas 77339
                  (Address of principal executive offices)


                         Issuer's telephone number:
                               (713) 358-8401


         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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

Transitional Small Business Disclosure Format (Check one):

                            Yes        No x


<PAGE>


                               PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
<TABLE>
<CAPTION>
ENEX OIL & GAS INCOME PROGRAM III - SERIES 4, L.P.
BALANCE SHEET
------------------------------------------------------------------------------

                                                                 September 30,
ASSETS                                                                1996
                                                             ------------------
                                                                  (Unaudited)
CURRENT ASSETS:
<S>                                                          <C>         
  Cash                                                       $      2,687
  Accounts receivable - oil & gas sales                            23,588
  Other current assets                                              4,343
                                                             -------------

Total current assets                                               30,618
                                                             -------------

OIL & GAS PROPERTIES
  (Successful efforts accounting method) - Proved
   mineral interests and related equipment & facilities         1,700,170
  Less  accumulated depreciation and depletion                  1,342,531
                                                             -------------

Property, net                                                     357,639
                                                             -------------

TOTAL                                                        $    388,257
                                                             =============

LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
   Accounts payable                                          $     11,227
   Payable to general partner                                      31,700
                                                             -------------

Total current liabilities                                          42,927
                                                             -------------

NONCURRENT PAYABLE TO GENERAL PARTNER                             126,801
                                                             -------------

PARTNERS' CAPITAL:
   Limited partners                                               203,703
   General partner                                                 14,826
                                                             -------------

Total partners' capital                                           218,529
                                                             -------------

TOTAL                                                        $    388,257
                                                             =============


Number of $500 Limited Partner units outstanding                    5,410
</TABLE>

See accompanying notes to financial statements.
--------------------------------------------------------------------------

                                       I-1
<PAGE>
<TABLE>
<CAPTION>
ENEX OIL & GAS INCOME PROGRAM III - SERIES 4, L.P.
STATEMENTS OF OPERATIONS
---------------------------------------------------------------------


(UNAUDITED)                            QUARTER ENDED                         NINE MONTHS ENDED
                                 -------------------------------------    ----------------------------------------

                                  September 30,        September 30,        September 30,         September 30,
                                      1996                  1995                 1996                  1995
                                 ----------------    -----------------    -----------------    -------------------

REVENUES:
<S>                               <C>                <C>                  <C>                  <C>               
  Oil and gas sales               $       43,779     $         33,895     $        120,899     $          114,131
                                 ----------------    -----------------    -----------------    -------------------

EXPENSES:
  Depreciation and depletion               7,771               13,025               15,939                 38,548
   Impairment of property                      -                    -               88,363                      -
  Lease operating expenses                16,915               27,360               60,494                 73,220
  Production taxes                         2,506                2,178                7,059                  8,006
  General and administrative               5,257                6,126               18,434                 20,865
                                 ----------------    -----------------    -----------------    -------------------

Total expenses                            32,449               48,689              190,289                140,639
                                 ----------------    -----------------    -----------------    -------------------

OTHER INCOME:
  Gain on sale of property                     -                3,969                    -                  3,969
                                 ----------------    -----------------    -----------------    -------------------

NET INCOME (LOSS)                 $       11,330     $        (10,825)    $        (69,390)    $          (22,539)
                                 ================    =================    =================    ===================
</TABLE>



See accompanying notes to financial statements.
-------------------------------------------------------------------------

                                       I-2
<PAGE>
<TABLE>
<CAPTION>
ENEX OIL AND GAS INCOME PROGRAM III - SERIES 4, L.P.
STATEMENTS OF CASH FLOWS

(UNAUDITED)
                                     NINE MONTHS ENDED

                                          September 30,       September 30,
                                              1996               1995
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                         <C>                <C>       
Net (loss)                                  $  (69,390)        $ (22,539)

Adjustments to reconcile net (loss) to
 net cash provided by operating activities:
  Depreciation and depletion                    15,939            38,548
  Impairment of property                        88,363                 -
  Gain on sale of property                           0            (3,969)
(Increase) decrease in:
  Accounts receivable - oil & gas sales        (11,326)              965
  Other current assets                              (4)          (11,830)
Increase (decrease) in:
   Accounts payable                            (10,876)            5,856
   Payable to affiliated partnership                 -               (15)
   Payable to general partner                   (4,170)           (5,316)

Total adjustments                               77,926            24,239

Net cash provided by operating activities        8,536             1,700

CASH FLOWS FROM INVESTING ACTIVITIES:
    Proceeds from sale of property                   -            10,000
    Property additions - development costs      (6,064)           (2,059)

Net cash provided (used) by investing activities(6,064)             7,941

CASH FLOWS FROM FINANCING ACTIVITIES:
   Cash distributions                                -             (7,507)

NET INCREASE IN CASH                             2,472              2,134

CASH AT BEGINNING OF YEAR                          215                801

CASH AT END OF PERIOD                        $   2,687          $   2,935
</TABLE>



See accompanying notes to financial statements.

                                       I-3


<PAGE>

ENEX OIL & GAS INCOME PROGRAM III - SERIES 4, L.P.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

1.       The  interim  financial   information  included  herein  is  unaudited;
         however,  such information reflects all adjustments  (consisting solely
         of  normal  recurring   adjustments)  which  are,  in  the  opinion  of
         management,  necessary  for a fair  presentation  of  results  for  the
         interim periods.

2.   On August 9, 1996,  the Company's  General  Partner  submitted  preliminary
     proxy  material to the  Securities  Exchange  Commission  with respect to a
     proposed  consolidation  of the  Company  with  33  other  managed  limited
     partnerships.   On  November  13,  1996,  the  Company  submitted   amended
     preliminary  proxy  material to the SEC with respect to this  consolidation
     The terms and  conditions  of the proposed  consolidation  are set forth in
     such preliminary proxy material.

3.   The Financial  Accounting Standards Board has issued Statement of Financial
     Accounting  Standard  ("SFAS") No. 121,  "Accounting  for the Impairment of
     Long-Lived  Assets  and for  Long-Lived  Assets to be  Disposed  Of," which
     requires  certain  to  be  reviewed  for  impairment   whenever  events  or
     circumstances indicate the carrying amount may not be recoverable. Prior to
     this pronouncement,  the Company assessed properties on an aggregate basis.
     Upon  adoption of SFAS 121, the Company  began  assessing  properties on an
     individual  basis,  wherein  total  capitalized  costs may not  exceed  the
     property's  fair market  value.  The fair market value of each property was
     determined by H. J. Gruy and  Associates,  ("Gruy").  To determine the fair
     market value, Gruy estimated each property's oil and gas reserves,  applied
     certain  assumptions  regarding price and cost  escalations,  applied a 10%
     discount factor for time and certain discount  factors for risk,  location,
     type   of   ownership   interest,   category   of   reserves,   operational
     characteristics,  and other  factors.  In the first  quarter  of 1996,  the
     Company recognized a non-cash  impairment  provision of $88,363 for certain
     oil and gas properties due to market  indications that the carrying amounts
     were not fully recoverable.

                                       I-4

<PAGE>



Item 2.  Management's Discussion and Analysis or Plan of Operation.


Third Quarter 1995 Compared to Third Quarter 1996

Oil and gas  sales for the  third  quarter  increased  to  $43,779  in 1996 from
$33,895  in 1995.  This  represents  an  increase  of  $9,884  (29%).  Oil sales
decreased by $2,277 (7%). A 31% decrease in the oil  production  caused sales to
decrease by $9,455.  This decrease was partially offset by a 33% increase in oil
sales  price.  Gas sales  increased  by $12,161  (415%).  A 51%  increase in the
average  gas sales  price  increased  sales by $5,064.  A 243%  increase  in gas
production  increased gas sales by an additional $7,097. The increase in average
oil sales price was  primarily  the result of lower net profits  payments on the
Shana  acquisition  which had a pump replaced on the Dorothy  Stevens #4 well in
1995,  and by  higher  prices in the  overall  market  for the sale of oil.  The
increase  in the  average  gas sales  price was  primarily  the result of higher
prices in the overall market for the sale of gas coupled with higher  production
from properties with a relatively higher gas price. The lower oil production was
primarily due to natural  production  declines.  The higher gas  production  was
primarily the result of higher production from the Shana acquisition,  which was
shut-in in 1995 for a pump replacement,  partially offset by natural  production
declines.


Lease operating  expenses decreased to $16,915 in 1996 from $27,360 in 1995. The
decrease of $10,445 (38%) is primarily due to charges incurred to replace a pump
on the Shana  acquisition in the third quarter of 1995,  partially offset by the
changes in production, noted above.

Depreciation and depletion  expense  decreased to $7,771 in the third quarter of
1996 from $13,025 in the third  quarter of 1995.  This  represents a decrease of
$5,254 (40%). The changes in production,  noted above,  reduced depreciation and
depletion  expense  by  $213.  A 90%  decrease  in the  depletion  rate  reduced
depreciation and depletion expense by an additional  $5,041. The decrease in the
depletion rate was primarily due to the lower property basis  resulting from the
recognition  of an $88,363  property  impairment  in the first  quarter of 1996,
partially  offset by a  downward  revision  of the oil and gas  reserves  during
December 1995.

General and  administrative  expenses decreased to $5,257 in 1996 from $6,126 in
1995.  This  decrease  of $869 (14%) is  primarily  due to less staff time being
required to manage the Company's operations in 1996.


First Nine  Months in 1995 Compared to First Nine  Months in 1996
-----------------------------------------------------------------

Oil and gas sales for the first nine months  increased  to $120,899 in 1996 from
$114,131 in 1995. This represents a increase of $6,768 (6%). Oil sales decreased
by $22,096  (19%),  as a result of a 19% decrease in oil  production.  Gas sales
increased by $28,864 (1,985%). A 1,320% increase in average gas sales price. The
decrease  in average  oil sales was  primarily  the result of higher net profits
payments  on the Shana  acquisition  which had a pump  replaced  on the  Dorothy
Stevens #4 well in 1995, partially offset by higher prices in the overall market
for the sale of oil. The

                                       I-5

<PAGE>



increase  in the  average  gas sales  price was  primarily  the result of higher
prices in the overall market for the sale of gas coupled with higher  production
from properties with a relatively higher gas price.

Lease operating  expenses decreased to $60,494 in 1996 from $73,220 in 1995. The
decrease of $12,726 (17%) is primarily due to charges incurred to replace a pump
on the Shana  acquisition in the third quarter of 1995,  partially offset by the
changes in production, noted above.

Depreciation and depletion expense decreased to $15,939 in the first nine months
of 1996  from  $38,548  in the first  nine  months of 1995.  This  represents  a
decrease of $22,609  (59%).  The changes in  production,  noted  above,  reduced
depreciation  and depletion  expense by $4,174.  A 54% decrease in the depletion
rate reduced  depreciation and depletion expense by an additional  $18,435.  The
decrease in the depletion  rate was primarily  due to the lower  property  basis
resulting from the  recognition of an $88,363  property  impairment in the first
quarter  of 1996,  partially  offset by a downward  revision  of the oil and gas
reserves during December 1995.

The  Financial  Accounting  Standards  Board has issued  Statement  of Financial
Accounting  Standard  ("SFAS")  No.  121,  "Accounting  for  the  Impairment  of
Long-Lived  Assets and for Long- Lived Assets to be Disposed Of," which requires
certain to be reviewed for impairment whenever events or circumstances  indicate
the carrying amount may not be  recoverable.  Prior to this  pronouncement,  the
Company assessed  properties on an aggregate  basis.  Upon adoption of SFAS 121,
the Company began  assessing  properties on an individual  basis,  wherein total
capitalized  costs may not exceed the  property's  fair market  value.  The fair
market  value of each  property  was  determined  by H. J. Gruy and  Associates,
("Gruy"). To determine the fair market value, Gruy estimated each property's oil
and  gas  reserves,   applied  certain  assumptions  regarding  price  and  cost
escalations, applied a 10% discount factor for time and certain discount factors
for  risk,  location,   type  of  ownership  interest,   category  of  reserves,
operational  characteristics,  and other factors.  In the first quarter of 1996,
the Company  recognized a non-cash  impairment  provision of $88,363 for certain
oil and gas properties due to market  indications that the carrying amounts were
not fully recoverable.

General and administrative expenses decreased to $18,434 in 1996 from $20,865 in
1995.  This  decrease of $2,431 (12%) is primarily  due to less staff time being
required to manage the Company's operations in 1996.


CAPITAL RESOURCES AND LIQUIDITY

The Company's cash flow from  operations is a direct result of the amount of net
proceeds  realized  from the sale of oil and gas  production.  Accordingly,  the
changes in cash flow from 1995 to 1996 are  primarily  due to the changes in oil
and  gas  sales  described  above.  It is the  general  partner's  intention  to
distribute  the  available  cash flow to the Company's  partners.  The Company's
"available cash flow" is essentially equal to the net amount of cash provided by
operating activities.


                                       I-6

<PAGE>



The  Company  discontinued  the payment of  distributions  during  1995.  Future
distributions  are dependent  upon,  among other  things,  an increase in prices
received for oil and gas. The Company will  continue to recover its reserves and
distribute  to the limited  partners the net proceeds  realized form the sale of
oil and gas  production.  Distribution  amounts  are  subject  to  change if net
revenues  are  greater or less than  expected.  Based on the  December  31, 1995
reserve  report  prepared by Gruy,  there  appears to be  sufficient  future net
revenues to pay all  obligations  and  expenses.  The General  Partner  does not
intend to accelerate  the  repayment of the debt beyond the Company's  cash flow
provided by operating  activities.  Future periodic  distributions  will be made
once sufficient net revenues are accumulated.

On August 9, 1996, the Company's  General Partner  submitted  preliminary  proxy
material  to the  Securities  Exchange  Commission  with  respect  to a proposed
consolidation  of the Company with 33 other  managed  limited  partnerships.  On
November 13, 1996, the Company submitted  amended  preliminary proxy material to
the SEC with  respect  to this  consolidation  The terms and  conditions  of the
proposed consolidation are set forth in such preliminary proxy material.

As of September 30, 1996,  the Company had no material  commitments  for capital
expenditures.  The  Company  does  not  intend  to  engage  in  any  significant
developmental drilling activity.

                                       I-7

<PAGE>



                           PART II. OTHER INFORMATION


         Item 1.   Legal Proceedings.

                   None

         Item 2.   Changes in Securities.

                   None

         Item 3.   Defaults Upon Senior Securities.

                   Not Applicable

         Item 4.   Submission of Matters to a Vote of Security Holders.

                   Not Applicable

         Item 5.   Other Information.

                   Not Applicable

         Item 6.   Exhibits and Reports on Form 8-K.

                   (a)  There are no exhibits to this report.

                   (b)   The  Company  filed no  reports  on Form 8-K during the
                         quarter ended September 30, 1996.


                                      II-1

<PAGE>



                                   SIGNATURES


         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned  thereunto duly
authorized.


                                             ENEX OIL & GAS INCOME
                                        PROGRAM III - SERIES 4, L.P.
                                                 (Registrant)



                                         By:ENEX RESOURCES CORPORATION
                                                General Partner



                                         By: /s/ R. E. Densford
                                                 R. E. Densford
                                           Vice President, Secretary
                                         Treasurer and Chief Financial
                                                    Officer




November 13, 1996                        By: /s/ James A. Klein
                                            -------------------
                                                  James A. Klein
                                              Controller and Chief
                                               Accounting Officer

<PAGE>