FORM 10-K
                    SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, D.C.  20549
(Mark One)

[x]    Annual  report  pursuant to Section 13 or 15(d)  of  the  Securities
       Exchange Act of 1934

For the fiscal year ended December 31, 2002

                                    OR

[ ]    Transition  report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934

For the transition period from                      to

Commission File Number 000-24181

                       Southwest Partners III, L.P.
                (Exact name of registrant as specified in
                    its limited partnership agreement)

Delaware                                                         75-2699554
(State or other jurisdiction                             (I.R.S. Employer
of incorporation or organization)                       Identification No.)

407 N. Big Spring, Suite 300, Midland, Texas                 79701
(Address of principal executive office)                   (Zip Code)

Registrant's telephone number, including area code   (915) 686-9927

       Securities registered pursuant to Section 12(b) of the Act:

                                   None

       Securities registered pursuant to Section 12(g) of the Act:

                      limited partnership interests

Indicate by check mark whether registrant (1) has filed 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 (229.405 of this chapter) 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.     [x]

The  registrant's  outstanding  securities  consist  of  Units  of  limited
partnership  interests for which there exists no established public  market
from which to base a calculation of aggregate market value.

The  total  number of pages contained in this report is ___.  There  is  no
exhibit index.




<PAGE>
                            Table of Contents

Item                                                                   Page

                                  Part I

 1.  Business                                                            3

 2.  Properties                                                          4

 3.  Legal Proceedings                                                   5

 4.  Submission of Matters to a Vote of Security Holders                 5

                                 Part II

 5.  Market for Registrant's Common Equity and Related
     Stockholder Matters                                                 6

 6.  Selected Financial Data                                             7

 7.  Management's Discussion and Analysis of
     Financial Condition and Results of Operations                       8

 8.  Financial Statements and Supplementary Data                        13

 9.  Changes in and Disagreements with Accountants
     on Accounting and Financial Disclosure                             23

                                 Part III

10.  Directors and Executive Officers of the Registrant                 24

11.  Executive Compensation                                             26

12.  Security Ownership of Certain Beneficial Owners and
     Management                                                         26

13.  Certain Relationships and Related Transactions                     28

                                 Part IV

14.  Exhibits, Financial Statement Schedules, and Reports
     on Form 8-K                                                        29

     Signatures                                                         30








<PAGE>
                                  Part I

Item 1.   Business

General
Southwest   Partners  III,  L.P.,  a  Delaware  limited  partnership   (the
"Partnership") was organized March 11, 1997 to invest in oil field  service
companies  and assets.  The Partnership's business strategy was to  acquire
interests  in  oil  field  service companies and  assets  with  a  view  to
providing capital appreciation in the value of the Partnership's  units  of
limited partnership interest (the "Units").  The Partnership concluded  its
acquisition of oil field service company assets in December 1997.

Private Placement
From  March 15, 1997 to June 30, 1997, the Partnership originally conducted
a  "blind  pool"  offering  of the Units in accordance  with  Regulation  D
promulgated under the Securities Act (the "Private Placement").  On July 1,
1997,  the  Partnership  amended  the  offering,  which  was  concluded  on
September  30, 1997, to invest the entire proceeds in the common  stock  of
Basic  Energy  Services,  Inc.  ("Basic"), an  oil  field  service  company
affiliated with the General Partner.  A total of 170.92511 Units were  sold
to   525  Investors  for  an  aggregate  net  price  of  $17,092,510.   The
Partnership  invested  a  total  of  $17,054,500  (including  the   capital
contribution  of  the General Partner) in 2,005 shares  of  Basic's  common
stock.

      Basic  in  March  2000 filed a restated certificate of  incorporation
increasing its authorized common shares to 25,000,000 and completed a  400-
for-1 stock split.  All shares had been restated as if the stock split  had
occurred  at the beginning of 1998.  The 400-for-1 stock split was reversed
during 2000.  Basic on December 21, 2000 completed a 100-for-1 dividend.

      On  May 21, 2001, Basic issued a Notice to Stockholders of Preemptive
Rights.   The Partnership purchased an additional 19,000 shares  of  common
stock at $380,000.  The Partnership as of December 31, 2002 owns a total of
5.39%, or 219,500 shares of Basic's outstanding common stock.

The General Partner
The  general partner of the Partnership is Southwest Royalties,  Inc.  (the
"General Partner").  The General Partner was formed in 1983 to acquire  and
develop oil and gas properties. The General Partner initially financed  the
acquisition  of  oil and gas reserves and its exploration  and  development
efforts  through  public  and  private limited partnership  offerings.  The
General  Partner  has raised approximately $115 million in  31  public  and
private  limited partnership offerings. The General Partner  is  a  general
partner of these limited partnerships, owns interests in these partnerships
and  receives management fees and operating cost reimbursements  from  such
partnerships. Since its inception, The General Partner, on behalf of itself
and  the investment partnerships, has acquired over $320 million of oil and
gas  properties,  primarily in the Permian Basin  of  West  Texas  and  New
Mexico.

The  principal executive offices of the Partnership are located at  407  N.
Big  Spring, Suite 300, Midland, Texas, 79701.  The General Partner of  the
Partnership,  and  its  staff  of  82 individuals,  together  with  certain
independent  consultants  used  on an "as needed"  basis,  perform  various
services on behalf of the Partnership.  The Partnership has no employees.

The Partnership
The   sole  business  of  the  Partnership  is  holding  Basic  stock.  The
Partnership has no employees and has no operations, except through Basic.

Basic Energy Services, Inc.
Basic  provides a broad range of services used for the drilling, completion
and  operation  of  oil  and gas wells, including well  servicing,  liquids
handling  and  fresh and brine water supply and disposal  services.   Basic
provides  services in its areas of operation in Texas, New Mexico, Oklahoma
and  Louisiana.   These  services are used by  oil  and  gas  companies  to
complete  newly  drilled  oil  and gas wells,  maintain  and  optimize  the
performance  of  existing wells, recomplete wells to  additional  producing
zones and plug and abandon wells at the end of their useful lives.  Basic's
well  servicing and fluid service equipment fleets includes well  servicing
rigs and fluid service trucks.




<PAGE>
Basic  uses  its  well  servicing rigs to provide completion,  maintenance,
workover  and plugging and abandonment services.  Basic's related  trucking
services are used to move large equipment to and from the job sites of  its
customers.   Basic  also  provides an integrated mix  of  liquids  handling
services,  including vacuum truck services, frac tank  rentals,  test  tank
rentals and Enviro-Vat system rentals. Basic's fresh and brine water supply
and  disposal services include the production and sale of fresh  and  brine
water which is used in drilling, completion and workover processes, as well
as  operation  of injection wells that dispose of produced salt  water  and
incidental  non-hazardous oil field wastes.  Basic  also  provides  certain
other well services, including pit lining services and hot oil services.

Environmental
Hazards  in the operation of oil field service companies, such as  employee
injuries  on  the  job site and accidental petroleum or waste  spills,  are
sometimes  encountered.  Such hazards may cause substantial liabilities  to
third  parties or governmental entities, the payment of which could  reduce
ultimately   the  funds  available  for  distribution.   Although   it   is
anticipated that customary insurance will be obtained, the Partnership  may
be  subject  to liability for pollution and other damages due  to  hazards,
which  cannot  be  insured against or will not be insured  against  due  to
prohibitive  premium costs or for other reasons.  Environmental  regulatory
matters  also  could  increase the cost of doing business  or  require  the
modification  of  operations in certain areas.  Environmental  expenditures
are  expensed  or  capitalized depending on their future economic  benefit.
Expenditures that relate to an existing condition caused by past operations
and  that  have no future economic benefits are expensed.  Liabilities  for
expenditures  of  a  noncapital  nature  are  recorded  when  environmental
assessment  and/or remediation is probable, and the costs can be reasonably
estimated.

Industry Regulations and Guidelines
Certain  industry  regulations and guidelines apply  to  the  registration,
qualification  and operation of limited partnerships.  The  Partnership  is
subject  to  these  guidelines, which regulate  and  restrict  transactions
between  the General Partner and the Partnership.  The Partnership complies
with  these  guidelines and the General Partner does  not  anticipate  that
continued  compliance would have a material adverse effect  on  Partnership
operations.

Partnership Employees
The  Partnership has no employees; however the General Partner has a  staff
of  geologists,  engineers, accountants, landmen  and  clerical  staff  who
engage  in  Partnership  activities and operations and  perform  additional
services  for  the  Partnership as needed.   In  addition  to  the  General
Partner's  staff, the Partnership engages independent consultants  such  as
petroleum  engineers  and geologists as needed.  As of  December  31,  2002
there  were  82  individuals directly employed by the  General  Partner  in
various capacities.

Item 2.   Properties

The  Partnership  does  not  currently own  or  lease  any  property.   The
Partnership  operates from the offices of its General Partner  in  Midland,
Texas.

Basic's  corporate  office is located in Midland, Texas, which  complements
the  core of its operations in the Permian Basin of West Texas and  eastern
New Mexico ("the Permian Basin").  Within the Permian Basin, Basic owns and
leases  field  offices.   Additionally, Basic has field  offices  in  South
Texas, East Texas and Oklahoma.

Basic's well servicing equipment fleet includes well servicing rigs,  fluid
service  trucks, Enviro-Vat systems and frac and test tanks.  Additionally,
the  Company  operates injection wells and fresh or brine  water  stations.
Basic  uses  its  well  servicing rigs to provide completion,  maintenance,
workover  and plugging and abandonment services.  Basic's related  trucking
services are used to move large equipment to and from the job sites of  its
customers  as  well  as  provide  an integrated  mix  of  liquids  handling
services,  including vacuum truck services, frac tank  rentals,  test  tank
rentals  and  Enviro-Vat system rentals.  Basic's  fresh  and  brine  water
supply  and disposal services include the production and sale of fresh  and
brine  water which is used in drilling, completion and workover  processes,
as well as operation of injection wells that dispose of produced salt water
and incidental non-hazardous oil field wastes.

Basic  believes  it  has satisfactory title to all  of  its  properties  in
accordance  with  standards generally accepted within  the  well  servicing
industry.



<PAGE>
Item 3.   Legal Proceedings

The Partnership is not currently involved in any legal proceeding nor is it
party to any pending or threatened claims that could reasonably be expected
to  have a material adverse effect on its financial condition or results of
operations.

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

No  matter  was submitted to a vote of security holders during  the  fourth
quarter of 2002 through the solicitation of proxies or otherwise.

<PAGE>
                                 Part II

Item 5.   Market   for   the   Registrant's  Common  Equity   and   Related
          Stockholder Matters

Market Information
There is no trading market for the Units, and it is unlikely that a trading
market will exist at any time in the future.  The Partnership does not have
any  units  (i)  that  are subject to outstanding options  or  warrants  to
purchase, or securities convertible into, common equity of the Partnership,
(ii)  that could be sold pursuant to Rule 144 under the Securities  Act  or
that  we  have  agreed to register under the Securities  Act  for  sale  by
security  holders, or (iii) that are being, or have been publicly  proposed
to  be,  publicly offered by the Partnership, the offering of  which  could
have  a  material  effect  on the market price of the  limited  partnership
units.   Any  transfer  of  the  Units is severely  restricted  by  certain
conditions  outlined in the Partnership Agreement and requires the  consent
of the General Partner.

There have been no cash distributions to the Limited Partners to date.   In
general,  the  Partnership expects to reinvest all cash flow received  from
operations  and does not expect to make distributions until liquidation  of
the  Partnership.   The  following  is  a  summary  of  certain  allocation
provisions of the Partnership Agreement and is qualified in its entirety by
reference  to the Partnership Agreement, which was filed as an  Exhibit  to
the  partnership's  Form 10, filed April 1998.  Any distributions  of  cash
flow,  income, gain, profit, or loss will be allocated 85% to  the  Limited
Partners  and  15% to the General Partner in accordance with their  capital
accounts  until  the  Limited Partners have recovered,  through  cumulative
distributions  100% of their capital contributions plus  a  10%  cumulative
(but not compounded) return.  Thereafter, distributions will be made 75% to
the Limited Partners and 25% to the General Partner.

The   revenues  generated  and  capital  appreciation,  if  any,  from  the
Partnership's  investment  in Basic is highly  dependent  upon  the  future
prices  and  demand for oil and gas in that the level of use of  oil  field
services and equipment is directly related to the amount of activity in the
oil fields.  In addition, investments in oil field service companies, while
presenting  significant potential for capital appreciation, may  take  from
four  to  seven years from the date of initial investment to reach  such  a
state  of  maturity  that  disposition can  be  considered.   Thus,  it  is
anticipated  that capital gains or losses typically will take two  to  five
years or longer to realize.  In view of these factors, it is unlikely  that
any  significant  distributions of the proceeds  from  the  disposition  of
investments will be made until such time.  The Partnership's investment  in
Basic will generate little, if any, current income.

The  General  Partner  has the right, but not the obligation,  to  purchase
limited  partnership units should an investor desire to sell.  The investor
must  give  written notice of intentions to dispose of their units  to  the
General   Partner  along  with  the  nature  and  terms  of  the   proposed
disposition.  The notice shall be deemed to constitute an offer to sell the
units  to  the General Partner.  The General Partner has 15 days  from  the
date of the offer to indicate in writing to the investor its decision as to
whether  it will purchase all or any of the offered units.  As of  December
31,  2002, no limited partner units were purchased by the Managing  General
Partner.   Southwest,  as  Managing  General  Partner,  evaluated   several
liquidity alternatives for the partnerships in 2001 and 2002.  During 2002,
Southwest  specifically pursued the possible roll-up and merger of  twenty-
one   (21)  partnerships  with  the  general  partner.   Because   of   the
complexities and conflicts of interest in such a transaction, the  Managing
General  Partner  did not make a formal repurchase offer in  2002  but  has
responded  to  limited  partners  desiring  to  sell  their  units  in  the
partnerships  on  an "as requested" basis.  Southwest anticipates  that  it
will maintain this policy in 2003 because the aforementioned transaction is
ongoing.   As  of  December  31, 2001 the General  Partner  purchased  0.15
limited partner units for $13,950.

Number of Limited Partner Interest Holders
As of December 31, 2002, there were 528 holders of limited partner units in
the Partnership.

Distributions
Pursuant  to Section 4.1 of the Partnership's Certificate and Agreement  of
Limited  Partnership, "Net Cash From Operations and Net Cash From Sales  or
Refinancings"  shall be distributed, at such times as the  General  Partner
may  determine  in  its  sole discretion.  "Net Cash  From  Operations"  is
defined  as "the gross cash proceeds from Partnership operations  less  the
portion  thereof  used  to  pay or establish reasonable  reserves  for  all
Partnership  expenses, fees, commissions, debt payments,  new  investments,
capital  improvements,  replacements, repairs and contingencies,  and  such
other  purposes  deemed  appropriate, all  as  determined  by  the  General
Partner."   "Net Cash From Sales or Refinancings" is defined  as  "the  net
cash  proceeds  from all sales and other dispositions (other  than  in  the
ordinary  course of business) and all refinancings of Partnership Property,
less  any portion thereof used to establish reserves, all as determined  by
the General Partner.  There have been no cash distributions to date.

<PAGE>

Item 6.   Selected Financial Data

The  following  selected financial data for the years  ended  December  31,
2002,  2001,  2000,  1999 and 1998 should be read in conjunction  with  the
financial statements included in Item 8:

                                       Years ended December 31,
                                --------------------------------------

                              2002     2001      2000      1999     1998
                              ----     ----      ----      ----     ----

Revenues                 $  220      4,021     11,403    11,164   11,514

Equity     loss      in
unconsolidated
 subsidiary                 -        -         -         (2,005,0 (5,046,3
                                                         00)      21)

Impairment  of   equity
investment
    of   unconsolidated     -        -         -         -        (9,460,7
subsidiary                                                        65)

Net loss                    (5,611)  (1,643)   (63,169)  (2,120,4 (14,702,
                                                         33)      959)

Partners' share of  net
loss:

General partner             (842)    (246)     (9,475)   (318,065 (2,195,1
                                                         )        81)

Limited partners            (4,769)  (1,397)   (53,694)  (1,802,3 (12,507,
                                                         68)      778)

Limited partners' net
loss per unit               (28)     (8)       (314)     (10,545) (73,177)

Total assets             $  404,828  408,120   404,112   392,709  2,386,54
                                                                  5




<PAGE>
Item 7.   Management's  Discussion and Analysis of Financial Condition  and
          Results of Operations

Southwest Partners III, L.P.

General
Southwest   Partners  III,  L.P.  was  organized  as  a  Delaware   limited
partnership on March 11, 1997.  The Partnership was formed for the  purpose
of  investing  in Basic Energy Services, Inc., an oilfield service  company
which  provides  services and products to oil and  gas  operators  for  the
workover,  maintenance and plugging of existing oil and gas  wells  in  the
southwestern United States.

The Partnership intends to wind up its operations and distribute its assets
or the proceeds therefrom on or before December 31, 2008, at which time the
Partnership's  existence  will  terminate,  unless  sooner  terminated   or
extended in accordance with the terms of the Partnership agreement.  As  of
December  31, 2002, the Partnership owned a 5.39% interest in Basic,  which
is accounted for using the cost method of accounting.

Results of Operations
For the year ended December 31, 2002

Revenues
Revenues  consisted of interest income.  The surplus cash remaining  before
and  after  the  May  21,  2001 additional investment  in  Basic  generated
interest income of $220.

Expenses
Direct  expenses  totaled  $5,831 for the year,  relating  to  general  and
administrative.   General and administrative expenses  primarily  represent
independent accounting fees incurred to audit the Partnership.

Results of Operations
For the year ended December 31, 2001

Revenues
Revenues  consisted of interest income.  The surplus cash remaining  before
and  after  the  May  21,  2001 additional investment  in  Basic  generated
interest income of $4,021.

Expenses
Direct  expenses  totaled  $5,664 for the year,  relating  to  general  and
administrative.   General and administrative expenses  primarily  represent
independent accounting fees incurred to audit the Partnership.

<PAGE>


Revenue and Distribution Comparison

Partnership  losses for the years ended December 31, 2002,  2001  and  2000
were  $5,611,  $1,643 and $63,169, respectively.  Since  inception  of  the
Partnership, no cash distributions have been made to the partners.

Liquidity and Capital Resources

Cash  flows  (used in) provided by operating activities were  approximately
$(3,292)  in 2002 compared to $4,008 in 2001 and approximately  $11,403  in
2000.

There were no cash flows used in investing activities during 2002 and 2000.
Cash  flows  used  in investing activities were approximately  $380,000  in
2001.

There were no cash flows used in financing activities during 2002, 2001 and
2000.

The  Partnership  as of December 31, 2002 has negative working  capital  of
$323,249, which includes a payable to the General Partner of $348,077.  The
Partnership does not generate operating income and has no current means  of
settling the liability to the General Partner, but believes the fair  value
of  its  assets  are  sufficient  to  meet  their  current  obligations  if
necessary.  The General Partner, should it become necessary, has agreed  to
either  extend the payment terms until the Partnership can comfortably  pay
the  balance or make other mutually acceptable arrangements to  settle  the
payable by transfer, sale or assignment of Partnership assets.

Liquidity - Investment in Subsidiary

Southwest Partners III consist entirely of an investment in Basic's  common
stock.   The  investment had been accounted for using  the  equity  method.
Based on the December 21, 2000 transaction discussed below, the Partnership
accounted for the investment using the cost method.  Southwest Partners III
no  longer  holds a 20% or more interest in Basic and exerts no significant
influence over Basic's operations.

On December 21, 2000, Basic entered into a refinancing and restructuring of
its  debt and equity.  Upon the signing of the documents, the Partnership's
percentage  of ownership was diluted from 44.94% to 10.57%.  A  new  equity
investor,  in  exchange  for  1,441,730 shares  of  Basic's  common  stock,
purchased  and  retired  $24.5 million of Basic's debt  from  its  previous
lender.  The equity investor received a 76% ownership.  Additionally, $10.5
million of the debt held by the previous lender was refinanced with  a  new
lender.   The  remaining debt held by the previous lender of  approximately
$21.7 million was cancelled.

Basic's new equity investor mentioned in the above paragraphs purchased  an
additional  576,709  shares,  during  the  first  part  of  2001,   thereby
increasing their ownership from 76% to 81.6%.  As a result of the purchase,
the Partnership's ownership decreased at that time from 10.57% to 8.11%.

On  May  21,  2001,  Basic  issued a Notice to Stockholders  of  Preemptive
Rights.   The Partnership purchased an additional 19,000 shares  of  common
stock  at  $380,000.  The Partnership at December 31, 2002 owns a total  of
5.39%, or 219,500 shares of Basic's outstanding common stock.




<PAGE>
Liquidity - General Partner

The  Managing General Partner has a highly leveraged capital structure with
approximately $124.0 million of principal due between December 31, 2002 and
December  31, 2004.  The Managing General Partner is constantly  monitoring
its cash position and its ability to meet its financial obligations as they
become due, and in this effort, is continually exploring various strategies
for  addressing  its  current  and future liquidity  needs.   The  Managing
General Partner regularly pursues and evaluates recapitalization strategies
and  acquisition  opportunities  (including  opportunities  to  engage   in
mergers,  consolidations or other business combinations) and at  any  given
time may be in various stages of evaluating such opportunities.

Based   on  current  production,  commodity  prices  and  cash  flow   from
operations,  the Managing General Partner has adequate cash  flow  to  fund
debt  service, developmental projects and day to day operations, but it  is
not  sufficient  to  build a cash balance which would  allow  the  Managing
General  Partner to meet its debt principal maturities scheduled for  2004.
Therefore  the Managing General Partner must renegotiate the terms  of  its
various  obligations or seek new lenders or equity investors  in  order  to
meet  its financial obligations, specifically those maturing in 2004.   The
Managing General Partner would also consider disposing of certain assets in
order to meet its obligations.

There  can  be  no  assurance  that  the Managing  General  Partner's  debt
restructuring  efforts  will be successful or that the  debt  holders  will
agree  to a course of action consistent with the Managing General Partner's
requirements in restructurings the obligations.  Furthermore, there can  be
no  assurance that the sales of assets can be successfully accomplished  on
terms acceptable to the Managing General Partner.

Recent Accounting Pronouncements
The  FASB  has  is sued Statement No. 143 "Accounting for Asset  Retirement
Obligations" which establishes requirements for the accounting of  removal-
type  costs  associated with asset retirements.  The standard is  effective
for  fiscal  years beginning after June 15, 2002, with earlier  application
encouraged.   Assessment by the General Partner revealed this pronouncement
to have no impact on the partnership.

Critical Accounting Policies

The  Partnership used the cost method of accounting for its  investment  in
Basic  since December 21, 2000.  Prior to December 21, 2000 the Partnership
used  the  equity method of accounting for the investment.  Under the  cost
method  of  accounting  the  Partnership  recognizes  as  income  dividends
received  that are distributed from net accumulated earnings of an investee
subsequent  to the date of acquisition of the investment.  The  Partnership
would  recognize  a loss when there is a loss in value in  the  investment,
which  is  other than a temporary decline.  In its assessment of value  the
Partnership considers future cash flows either in the form of dividends  or
other distributions from the investee or from selling it's investment to an
unrelated party.


Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

The  Partnership  is  not a party to any derivative or embedded  derivative
instruments.





<PAGE>
Item 8.   Financial Statements and Supplementary Data

                      Index to Financial Statements

                                                                       Page

Independent Auditors Report                                             14

Balance Sheets                                                          15

Statements of Operations                                                16

Statement of Changes in Partners' Equity                                17

Statements of Cash Flows                                                18

Notes to Financial Statements                                           19

<PAGE>









                        INDEPENDENT AUDITORS REPORT

The Partners
Southwest Partners III, L.P.
(A Delaware Limited Partnership):


We  have audited the accompanying balance sheets of Southwest Partners III,
L.P.  (the "Partnership") as of December 31, 2002 and 2001, and the related
statements  of operations, changes in partners' equity and cash  flows  for
each  of the years in the three year period ended December 31, 2002.  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 Southwest Partners III,
L.P. as of December 31, 2002 and 2001 and the results of its operations and
its  cash  flows  for  each  of the years in the three  year  period  ended
December  31,  2002  in  conformity  with accounting  principles  generally
accepted in the United States of America.






                                                  KPMG LLP



Midland, Texas
March 14, 2003





<PAGE>
                       Southwest Partners III, L.P.
                     (a Delaware limited partnership)
                              Balance Sheets
                        December 31, 2002 and 2001


                                   2002      2001
                                   ----      ----
Assets

Current asset:
Cash and cash equivalents     $  24,828    28,120
                                 --------  --------
                                 --        --
  Total current assets           24,828    28,120
                                 --------  --------
                                 --        --
Investment                       380,000   380,000
                                 --------  --------
                                 --        --
  Total assets                $  404,828   408,120
                                 ======    ======


Liabilities  and   Partners'
Equity

Current liabilities:
Payable to General Partner    $  348,077   345,758
                                 --------  --------
                                 --        --
  Total current liabilities      348,077   345,758
                                 --------  --------
                                 --        --
Partners' equity:
 General Partner                 (908,313  (907,471
                                 )         )
 Limited partners                965,064   969,833
                                 --------  --------
                                 --        --
  Total partners' equity         56,751    62,362
                                 --------  --------
                                 --        --
                              $  404,828   408,120
                                 ======    ======

















                  The accompanying notes are an integral
                   part of these financial statements.

<PAGE>
                       Southwest Partners III, L.P.
                     (a Delaware limited partnership)
                         Statements of Operations
                Years Ended December 31, 2002, 2001 and 2000

                              2002      2001      2000
                              ----      ----      ----

Revenues

Interest income           $ 220       4,021     11,403
                            --------  --------  --------
                            --        --        --
                            220       4,021     11,403
                            --------  --------  --------
                            --        --        --
Expenses

General              and    5,831     5,664     74,572
administrative
                            --------  --------  --------
                            --        --        --
                            5,831     5,664     74,572
                            --------  --------  --------
                            --        --        --
Net loss                  $ (5,611)   (1,643)   (63,169)
                            ======    ======    ======
 Net loss allocated to:

 General Partner          $ (842)     (246)     (9,475)
                            ======    ======    ======
 Limited partners         $ (4,769)   (1,397)   (53,694)
                            ======    ======    ======
   Per  limited  partner  $ (28)      (8)       (314)
unit
                            ======    ======    ======

























                  The accompanying notes are an integral
                   part of these financial statements.

<PAGE>
                       Southwest Partners III, L.P.
                     (a Delaware limited partnership)
                 Statement of Changes in Partners' Equity
               Years Ended December 31, 2002, 2001 and 2000


                                 General   Limited
                                 Partner   Partners   Total
                                 --------  --------   -----
Balance - December 31, 1999   $  (897,750  1,024,92  127,174
                                 )         4

Net loss                         (9,475)   (53,694)  (63,169)
                                 --------  --------  --------
                                 --        ----      --
Balance - December 31, 2000      (907,225  971,230   64,005
                                 )

Net loss                         (246)     (1,397)   (1,643)
                                 --------  --------  --------
                                 --        ----      --
Balance - December 31, 2001      (907,471  969,833   62,362
                                 )

Net loss                         (842)     (4,769)   (5,611)
                                 --------  --------  --------
                                 --        ----      --
Balance - December 31, 2002   $  (908,313  965,064   56,751
                                 )
                                 ======    =======   ======































                  The accompanying notes are an integral
                   part of these financial statements.

<PAGE>
                       Southwest Partners III, L.P.
                     (a Delaware limited partnership)
                         Statements of Cash Flows
               Years Ended December 31, 2002, 2001 and 2000

                                 2002     2001      2000
                                 ----     ----      ----

Cash  flows from  operating
activities:

 Paid to suppliers           $ (3,512)  (13)      -
 Interest received             220      4,021     11,403
                               -------  -------   --------
                               -----    ---       --
Net cash (used in) provided
by operating
 activities                    (3,292)  4,008     11,403
                               -------  -------   --------
                               -----    ---       --

Cash  flows from  investing
activities:

    Purchase    of    Basic    -        (380,00   -
Investment                              0)
                               -------  -------   --------
                               -----    ---       --

Net (decrease) increase  in
cash and cash
 equivalents                   (3,292)  (375,99   11,403
                                        2)

Beginning of period            28,120   404,112   392,709
                               -------  -------   --------
                               -----    ---       --
End of period                $ 24,828   28,120    404,112
                               =======  ======    ======

Reconciliation of net  loss
to net cash
   (used  in)  provided  by
operating activities:

Net loss                     $ (5,611)  (1,643)   (63,169)

Adjustments  to   reconcile
net loss to net cash
   (used  in)  provided  by
operating activities:

   Increase   in   accounts    2,319    5,651     74,572
payable
                               -------  -------   --------
                               -----    ---       ---
Net cash (used in) provided
by                           $ (3,292)  4,008     11,403
 operating activities
                               =======  ======    ======











                  The accompanying notes are an integral
                   part of these financial statements.

<PAGE>
                       Southwest Partners III, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements

1.   Organization
     Southwest  Partners III, L.P. (the "Partnership") was organized  under
     the laws of the state of Delaware on March 11, 1997 for the purpose of
     investing  in or acquiring oil field service companies'  assets.   The
     Partnership  intends  to  wind up its operations  and  distribute  its
     assets  or the proceeds therefrom on or before December 31,  2008,  at
     which  time the Partnership's existence will terminate, unless  sooner
     terminated or extended in accordance with the terms of the Partnership
     Agreement.   Southwest Royalties, Inc., a Delaware corporation  formed
     in  1983, is the General Partner of the Partnership.  Revenues,  costs
     and expenses are allocated as follows:

                              Limited   General
                              Partners  Partner
                              -------   --------
Interest  income on  capital    (1)       (1)
contributions
All other revenues              85%       15%
Organization  and   offering    100%       -
costs
Syndication costs               100%       -
Amortization of organization    100%       -
costs
Gain  or  loss  on  property    85%       15%
disposition
Operating and administrative    85%       15%
costs
All other costs                 85%       15%

     After  payout, allocations will be seventy-five (75%) to  the  limited
     partners and twenty-five (25%) to the General Partner.  Payout is when
     the  limited partners have received an amount equal to one hundred ten
     percent (110%) of their limited partner capital contributions.

     (1)   Interest   earned  on  promissory  notes  related   to   Capital
     Contributions is allocated to the specific holders of those notes.

     Method of Allocation of Administrative Costs

     For  the  purpose  of  allocating Administrative  Costs,  the  General
     Partner will allocate each employee's time among three divisions:  (1)
     operating  partnerships; (2) corporate activities; and  (3)  currently
     offered  or  proposed partnerships.  The General Partner determines  a
     percentage  of total Administrative Costs per division  based  on  the
     total  allocated  time  per  division and personnel  costs  (salaries)
     attributable to such time. Within the operating partnership  division,
     Administrative Costs are further allocated on the basis of  the  total
     capital of each partnership invested in its operations.

2.   Summary of Significant Accounting Policies

     Investment
     Investment in Basic Energy Services, Inc. in which the Partnership had
     a  5.39%  interest at December 31, 2002, is accounted for by the  cost
     method.  Southwest Partners III no longer holds a 20% or more interest
     in  Basic and exerts no significant influence over Basic's operations.
     Under  the  cost  method of accounting the Partnership  recognizes  as
     income  dividends received that are distributed from  net  accumulated
     earnings of an investee subsequent to the date of acquisition  of  the
     investment.  The Partnership would recognize a loss when  there  is  a
     loss  in  value  in  the investment, which is other than  a  temporary
     decline.  In its assessment of value the Partnership considers  future
     cash flows either in the form of dividends or other distributions from
     the  investee  or from selling it's investment to an unrelated  party.
     Prior  to  December 2000, the Partnership accounted for the investment
     on the equity method.

     Estimates and Uncertainties
     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.
<PAGE>
                       Southwest Partners III, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements

2.   Summary of Significant Accounting Policies - continued

     Syndication Costs
      Syndication  costs  are accounted for as a reduction  of  partnership
equity.

     Income Taxes
     No  provision  for  income  taxes  is  reflected  in  these  financial
     statements, since the tax effects of the Partnership's income or  loss
     are passed through to the individual partners.

     In   accordance  with  the  requirements  of  Statement  of  Financial
     Accounting  Standards  No. 109, "Accounting  for  Income  Taxes,"  the
     Partnership's  tax basis in its assets is $17,054,500 and  $17,059,762
     more,  as  of  December  31,  2002 and  2001  as  that  shown  on  the
     accompanying  Balance  Sheet  in accordance  with  generally  accepted
     accounting principles.

     Cash and Cash Equivalents
     For purposes of the statement of cash flows, the Partnership considers
     all  highly liquid debt instruments purchased with a maturity of three
     months or less to be cash equivalents.  The Partnership maintains  its
     cash at one financial institution.

     Number of Limited Partner Units
     There  were  170.925 limited partner units outstanding as of  December
     31, 2002, held by 528 partners.

     Concentrations of Credit Risk
     All  partnership  revenues are received by  the  General  Partner  and
     subsequently remitted to the partnership and all expenses are paid  by
     the General Partner and subsequently reimbursed by the partnership.

     Fair Value of Financial Instruments
     The  carrying amount of cash approximates fair value due to the  short
     maturity of these instruments.

     Net loss per limited partnership unit
     The  net loss per limited partnership unit is calculated by using  the
     number of outstanding limited partnership units.

     Recent Accounting Pronouncements
     The  FASB  has  is  sued  Statement  No.  143  "Accounting  for  Asset
     Retirement  Obligations"  which  establishes  requirements   for   the
     accounting  of  removal-type costs associated with asset  retirements.
     The  standard is effective for fiscal years beginning after  June  15,
     2002,  with earlier application encouraged.  Assessment by the General
     Partner  revealed  this  pronouncement  to  have  no  impact  on   the
     partnership.

3.   Liquidity - Partnership
     The  Partnership as of December 31, 2002 has negative working  capital
     of  $323,249,  which  includes a payable to  the  General  Partner  of
     $348,077.  The Partnership does not generate operating income and  has
     no current means of settling the liability to the General Partner, but
     believes  the  fair value of its assets are sufficient to  meet  their
     current  obligations  if necessary.  The General  Partner,  should  it
     become necessary, has agreed to either extend the payment terms  until
     the Partnership can comfortably pay the balance or make other mutually
     acceptable  arrangements to settle the payable by  transfer,  sale  or
     assignment of Partnership assets.

<PAGE>
                       Southwest Partners III, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements

4.   Liquidity - General Partner
     The  Managing General Partner has a highly leveraged capital structure
     with  approximately $124.0 million of principal due  between  December
     31,  2002  and  December 31, 2004.  The Managing  General  Partner  is
     constantly  monitoring its cash position and its ability to  meet  its
     financial  obligations  as they become due, and  in  this  effort,  is
     continually  exploring various strategies for addressing  its  current
     and  future  liquidity needs.  The Managing General Partner  regularly
     pursues  and  evaluates  recapitalization strategies  and  acquisition
     opportunities   (including  opportunities  to   engage   in   mergers,
     consolidations or other business combinations) and at any  given  time
     may be in various stages of evaluating such opportunities.

     Based  on  current  production, commodity prices and  cash  flow  from
     operations,  the Managing General Partner has adequate  cash  flow  to
     fund  debt  service, developmental projects and day to day operations,
     but it is not sufficient to build a cash balance which would allow the
     Managing  General  Partner  to  meet  its  debt  principal  maturities
     scheduled  for  2004.   Therefore the Managing  General  Partner  must
     renegotiate  the terms of its various obligations or seek new  lenders
     or  equity  investors  in  order to meet  its  financial  obligations,
     specifically  those  maturing in 2004.  The Managing  General  Partner
     would  also consider disposing of certain assets in order to meet  its
     obligations.

     There  can  be  no assurance that the Managing General Partner's  debt
     restructuring efforts will be successful or that the debt holders will
     agree  to  a  course  of action consistent with the  Managing  General
     Partner's    requirements   in   restructurings    the    obligations.
     Furthermore, there can be no assurance that the sales of assets can be
     successfully accomplished on terms acceptable to the Managing  General
     Partner.

5.   Investment
     Common stock ownership in Basic Energy Services, Inc. was as follows:

December  31, 1997 to  March  45.89%
31, 1999
March  31,  to December  21,  44.94%
2000
December   21,    2000    to  10.57%
December 31, 2000
January  1, 2001 to May  20,  8.11%
2001
May 21, 2001 to February 13,  6.32%
2002
February   14,    2002    to  5.39%
December 31, 2002

     Southwest  Partners III consist entirely of an investment  in  Basic's
     common  stock.  The investment had been accounted for using the equity
     method.   Based on the December 21, 2000 transaction discussed  below,
     the  Partnership accounted for the investment using the  cost  method.
     Southwest Partners III no longer holds a 20% or more interest in Basic
     and exerts no significant influence over Basic's operations.

     On   December   21,  2000,  Basic  entered  into  a  refinancing   and
     restructuring  of  its  debt and equity.   Upon  the  signing  of  the
     documents, the Partnership's percentage of ownership was diluted  from
     44.94%  to  10.57%.  A new equity investor, in exchange for  1,441,730
     shares of Basic's common stock, purchased and retired $24.5 million of
     Basic's debt from its previous lender.  The equity investor received a
     76%  ownership. Additionally, $10.5 million of the debt  held  by  the
     previous lender was refinanced with a new lender.  The remaining  debt
     held  by  the  previous  lender  of approximately  $21.7  million  was
     cancelled.

     Basic's   new  equity  investor  mentioned  in  the  above  paragraphs
     purchased an additional 576,709 shares, during the first part of 2001,
     thereby increasing their ownership from 76% to 81.6%.  As a result  of
     the  purchase, the Partnership's ownership decreased at that time from
     10.57% to 8.11%.

     On  May  21, 2001, Basic issued a Notice to Stockholders of Preemptive
     Rights.   The  Partnership purchased an additional  19,000  shares  of
     common stock at $380,000.

     On  February 13, 2002, Basic sold 600,000 shares of common stock to  a
     group   of   related  investors.   Based  on  this  transaction,   the
     Partnerships  ownership percentage was diluted from  6.32%  to  5.39%.
     The Partnership at December 31, 2002 owns a total of 5.39%, or 219,500
     shares of Basic's outstanding common stock.
<PAGE>
                       Southwest Partners III, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements

6.   Commitments and Contingent Liabilities
     As  a  marketing  incentive, brokers who sold in excess  of  one  Unit
     received  three  percent (3%) of the Partnership liquidation  proceeds
     which  are  distributed to the General Partner in  proportion  to  the
     dollar  amount  of  Units sold by each such broker; provided,  however
     that no broker shall receive such interest unless the Partnership  has
     returned to the Limited Partners 100% of their Limited Partner Capital
     Contribution plus a 10% cumulative (but not compounded) return at  the
     time  of  liquidation.  As of December 31, 1998, there  were  13  such
     brokers  who  sold in excess of one Unit qualifying  for  the  special
     distribution.

     The  Partnership  is  subject  to various  federal,  state  and  local
     environmental  laws  and  regulations, which establish  standards  and
     requirements  for  protection  of the  environment.   The  Partnership
     cannot  predict the future impact of such standards and  requirements,
     which  are  subject to change and can have retroactive  effectiveness.
     The  Partnership  continues to monitor the status of  these  laws  and
     regulations.

     As  of December 31, 2002, the Partnership has not been fined, cited or
     notified  of any environmental violations and management is not  aware
     of  any  unasserted  violations, which would have a  material  adverse
     effect upon capital expenditures, earnings or the competitive position
     in the oil field service industry.

7.   Related Party Transactions
     Southwest  Royalties, Inc., the General Partner, was paid a management
     fee  of  $70,000  during 2000 for indirect general and  administrative
     expenses.   Effective July 2000, the General Partner ceased to  charge
     the Partnership management fees.

     Accounts payable to the General Partner at December 31, 2002 and  2001
     totaled $348,077 and $345,758 and primarily represents management fees
     billed in previous years.

8.   Selected Quarterly Financial Results - (unaudited)

                                      Quarter
                       --------------------------------------
                                      --------

                        First     Second    Third     Fourth
2002:                   ------   -------    ------    ------
 Total revenues     $  61        63        60        36
 Total expenses        1,223     1,419     1,929     1,260
 Net loss              (1,162)   (1,356)   (1,869)   (1,224)
 Net loss per
   limited partner     (6)       (7)       (9)       (6)
unit

2001:
 Total revenues     $  2,425     1,419     104       73
 Total expenses        1,292     2,136     1,000     1,236
 Net income (loss)     1,133     (717)     (896)     (1,163)
 Net income (loss)
per
   limited partner     6         (4)       (4)       (6)
unit


Item 9.   Changes  in and Disagreements With Accountants on Accounting  and
          Financial Disclosure

          None




<PAGE>
                                 Part III

Item 10.  Directors and Executive Officers of the Registrant

Management of the Partnership is provided by Southwest Royalties, Inc.,  as
General  Partner. The names, ages, offices, positions and length of service
of  the  directors and executive officers of Southwest Royalties, Inc.  are
set forth below.  Each director and executive officer serves for a term  of
one year.

         Name               Age               Position
H. H. Wommack, III          47      Chairman   of   the    Board,
                                    President, Director
                                    and Chief Executive Officer
James N. Chapman(1)         40      Director
William P. Nicoletti(2)     57      Director
Joseph J. Radecki,  Jr.     44      Director
(2)
Richard D. Rinehart(1)      67      Director
John M. White(2)            46      Director
Herbert  C. Williamson,     54      Director
III(1)
Bill E. Coggin              48      Executive Vice President  and
                                    Chief Financial Officer
J. Steven Person            44      Vice President, Marketing

(1)  Member of the Compensation Committee

(2)  Member of the Audit Committee

H.  H.  Wommack, III has served as Chairman of the Board, President,  Chief
Executive Officer and a director since Southwest's founding in 1983.  Since
1997  Mr.  Wommack  has  served as President, Chief Executive  Officer  and
Chairman of SRH, our former parent and current holder of 10% of our  voting
share  capital.  Since 1997 Mr. Wommack has served as chairman of the board
of  directors  of  Midland Red Oak Realty, Inc.  From 1997  until  December
2000,  Mr.  Wommack served as chairman of the board of directors  of  Basic
Energy  Services, Inc. and since December 2000 has continued  to  serve  on
Basic's board of directors.  Prior to our formation, Mr. Wommack was a self-
employed independent oil and gas producer engaged in the purchase and  sale
of  royalty and working interests in oil and gas leases and the drilling of
well.   Mr.  Wommack  graduated from the University of  North  Carolina  at
Chapel Hill and received his law degree from the University of Texas.

James N. Chapman has served as a director since the closing of the Exchange
Transaction.   Mr.  Chapman  has been involved in  the  investment  banking
industry  for 18 years, presently acting as a capital markets and strategic
planning  consultant with private and public companies across  a  range  of
industries,  including metals, mining, manufacturing,  aerospace,  airline,
service  and  healthcare.  Prior to establishing an independent  consulting
practice,  Mr.  Chapman worked for The Renco Group, Inc.,  a  multi-billion
private  corporation  in  New York, for which  Mr.  Chapman  developed  and
implemented  financing and merger and acquisitions strategies  for  Renco's
diverse portfolio of companies.  Prior to Renco, Mr. Chapman was a founding
principal  of Fieldstone Private Capital Group, a capital markets  advisory
firm  that he joined upon its inception in August 1990.   Prior to  joining
Fieldstone,  Mr. Chapman worked for Bankers Trust Company  for  six  years,
most  recently  in  the BT Securities Capital Markets  area.   Mr.  Chapman
received  an  MBA  degree with distinction from the  Amos  Tuck  School  at
Dartmouth College and was elected an Edward Tuck Scholar.   He received his
BA  degree  with  distinction magna cum laude, at  Dartmouth  College,  was
elected to Phi Beta Kappa and was a Rufus Choate Scholar.

William  P.  Nicoletti has served as a director since the  closing  of  the
Exchange  Transaction.  Mr. Nicoletti is Managing Director of  Nicoletti  &
Company  Inc., an investment banking and financial advisory firm.   He  was
formerly a senior officer and head of the Energy Investment Banking  Groups
of  E.  F.  Hutton & Company Inc., Paine Webber, Incorporated and  McDonald
Investments  Inc. Mr. Nicoletti is Chairman of the board  of  directors  of
Russell-Stanley Holdings, Inc., a manufacturer and marketer  of  steel  and
plastic  industrial  containers.   He is  a  director  of  MarkWest  Energy
Partners,  L.P.,  a  business engaged in the gathering  and  processing  of
natural gas and the fractionation and storage of natural gas liquids.   Mr.
Nicoletti  is also a Director and Chairman of the Audit Committee  of  Star
Gas Partners, L.P., the nation's largest retail distributor of home heating
oil  and  a  major retail distributor of propane gas.  Mr. Nicoletti  is  a
graduate  of Seton Hall University and received an MBA degree from Columbia
University Graduate School of Business.

<PAGE>

Joseph  J. Radecki, Jr. has served as a director since the closing  of  the
Exchange Transaction.  Mr. Radecki is currently a Managing Director in  the
Leveraged  Finance  Group  of CIBC World Markets where  he  is  principally
responsible for the firm's financial restructuring and distressed situation
advisory practice.  Prior to joining CIBC World Markets, Mr. Radecki was an
Executive Vice President and Director of the Financial Restructuring  Group
of  Jefferies & Company, Inc. from 1990 to 1998.  From 1983 until 1990, Mr.
Radecki was First Vice President in the International Capital Markets Group
at  Drexel  Burnham  Lambert,  Inc.,  where  he  specialized  in  financial
restructurings  and recapitalizations.  Over the past fourteen  years,  Mr.
Radecki  has  been  integrally involved in over 120  transactions  totaling
nearly  $50  billion  in recapitalized securities.   Mr.  Radeki  currently
serves  as a Director of Wherehouse Entertainment, Inc., a music and  video
specialty  retailer,  and  RBX Corporation, a manufacturer  of  rubber  and
plastic  foam  and  other polymer products.  He has  previously  served  as
Chairman of the Board of American Rice, Inc., an international rice  miller
and  marketer,  as  a member of the Board of Directors of  Service  America
Corporation,   a   national   food   service   management   firm,   Bucyrus
International, Inc., a mining equipment manufacturer, and ECO-Net,  a  non-
profit  engineering related network firm.  Mr. Radecki graduated magna  cum
laude in 1980 from Georgetown University with a B.A. in Government.

Richard  D.  Rinehart has served as a director since  the  closing  of  the
Exchange  Transaction.  Mr. Rinehart is a founding principal  of  PetroCap,
Inc.  and  president  of Kestrel Resources, Inc.  PetroCap,  Inc.  provides
investment and merchant banking services to a variety of clients active  in
the  oil and gas industry. Kestrel Resources, Inc. is a privately owned oil
and  gas  operating company. He served as Director of Coopers  &  Lybrand's
Energy  Systems  and  Services Division prior to the  founding  of  Kestrel
Resources, Inc. in 1992. Prior to joining Coopers & Lybrand, he  was  chief
executive  officer/founder of Dawn Information Resources, Inc.,  formed  in
1986  and acquired by Coopers & Lybrand in early 1991. Mr. Rinehart  served
as  CEO of Terrapet Energy Corporation during the period 1982 through 1986.
Prior to the formation of Terrapet in 1982, he was employed as President of
the  Terrapet  Division of E.I. DuPont de Nemours and Company.  Before  its
acquisition by DuPont, he served as CEO and President of Terrapet Corp.,  a
privately  owned E & P company. Before the formation of Terrapet  Corp.  in
1972,   he  was  manager  of  supplementary  recovery  methods  and  senior
evaluation engineer with H. J. Gruy and Associates, Inc., Dallas, Texas.

John  M.  White has served as a director since the closing of the  Exchange
Transaction Mr. White is currently an oil and gas analyst with BMO  Nesbitt
Burns,  responsible  for  Fixed Income research  on  oil,  gas  and  energy
companies.   Prior  to  joining BMO Nesbitt Burns in 1998,  Mr.  White  was
responsible for Fixed Income research on the oil and gas industry  at  John
S.  Herold, Inc., an independent oil and gas research and consulting  firm.
Mr.  White's experience also includes managing a portfolio of oil  and  gas
loans  for  The Bank of Nova Scotia, which included independent exploration
and  production  companies,  oil  service  companies,  gas  pipelines,  gas
processors and refiners.  Prior to entering banking, Mr. White was with  BP
Exploration, where he worked primarily in exploration and production.

Herbert  C.  Williamson, III has served as a director since the closing  of
the Exchange Transaction.  At present, Mr. Williamson is self-employed as a
consultant.   From  March 2001 to March 2002 Mr. Williamson  served  as  an
investment banker with Petrie Parkman & Co.  From April 1999 to March  2001
Mr.  Williamson served as chief financial officer and from August  1999  to
March 2001 as a director of Merlon Petroleum Company, a private oil and gas
company  involved in exploration and production in Egypt.   Mr.  Williamson
served as executive vice president, chief financial officer and director of
Seven  Seas  Petroleum,  Inc., a publicly traded oil  and  gas  exploration
company,  from March 1998 to April 1999.  From 1995 through April 1998,  he
served  as  director in the Investment Banking Department of Credit  Suisse
First  Boston.   Mr. Williamson served as vice chairman and executive  vice
president  of Parker and Parsley Petroleum Company, a publicly  traded  oil
and  gas  exploration company (now Pioneer Natural Resources Company)  from
1985 through 1995.

Bill  E.  Coggin  has served as Vice President and Chief Financial  Officer
since  joining  General  Partner  in  1985.   Previously,  Mr.  Coggin  was
Controller  for Rod Ric Corporation, an oil and gas drilling  company,  and
for  C.F.  Lawrence & Associates, a large independent oil and gas operator.
Mr.  Coggin  received  a B.S. in Education and a B.A.  in  Accounting  from
Angelo State University.

J.  Steven Person has served as our Vice President, Marketing since joining
General Partner in 1989.  Mr. Person began in the investment industry  with
Dean  Witter in 1983.  Prior to joining General Partner, Mr. Person  was  a
senior wholesaler with Capital Realty, Inc. While at Capital Realty, he was
involved in the syndication of mortgage based securities through the  major
brokerage  houses.   Mr.  Person  received  a  B.B.A.  degree  from  Baylor
University and an M.B.A. from Houston Baptist University.

<PAGE>
Key Employees

Jon  P.  Tate,  age  45, has served as Vice President, Land  and  Assistant
Secretary  of General Partner since 1989. From 1981 to 1989, Mr.  Tate  was
employed  by C.F. Lawrence & Associates, Inc., an independent oil  and  gas
company,  as  land  manager.  Mr. Tate is a member  of  the  Permian  Basin
Landman's Association.

R.  Douglas  Keathley, age 47, has served as Vice President, Operations  of
General  Partner since 1992. Before joining us, Mr. Keathley  worked  as  a
senior  drilling  engineer  for ARCO Oil and Gas  Company  and  in  similar
capacities for Reading & Bates Petroleum Co. and Tenneco Oil Co.

Item 11.  Executive Compensation

The  Partnership  does not have any directors or executive  officers.   The
executive  officers  of  the  General  Partner  do  not  receive  any  cash
compensation,  bonuses, deferred compensation or compensation  pursuant  to
any type of plan, from the Partnership.  The General Partner billed $70,000
during 2000, as an annual administrative fee.  Effective July 31, 2000, the
General Partner ceased billing management fees to the Partnership.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

There  are  no  limited partners who own of record, or  are  known  by  the
General  Partner  to  beneficially own,  more  than  five  percent  of  the
Partnership's limited partnership interests.

The  General  Partner owns a 15 percent interest in the  Partnership  as  a
general  partner.  Through repurchase, the General Partner also  owns  0.15
limited  partner  units,  a 0.07% limited partner  interest.   The  General
Partner's total percentage interest ownership in the Partnership is 15.07%.

No   officer  or  director  of  the  General  Partner  owns  units  in  the
Partnership.   The  officers  and directors  of  the  General  Partner  are
considered beneficial owners of the limited partner units acquired  by  the
General  Partner by virtue of their status as such.  A list  of  beneficial
owners  of  limited partner units, acquired by the General Partner,  is  as
follows:




<PAGE>

                                                 Amount and
                                                 Nature of      Percen
                                                                  t
                        Name and Address of      Beneficial       of
  Title of Class         Beneficial Owner        Ownership      Class
-------------------    ---------------------     ----------     ------
  --------------          --------------           ------       -----
Limited Partnership    Southwest  Royalties,     Directly       0.07%
Interest               Inc.                      Owns
                       Managing      General     0.15 Units
                       Partner
                       407   N.  Big  Spring
                       Street
                       Midland, TX 79701

Limited Partnership    H. H. Wommack, III        Indirectly     0.07%
Interest                                         Owns
                       Chairman    of    the     0.15 Units
                       Board,
                       President, and CEO
                       of          Southwest
                       Royalties, Inc.,
                       the  Managing General
                       Partner
                       407   N.  Big  Spring
                       Street
                       Midland, TX 79701


There  are  no arrangements known to the General Partner, which  may  at  a
subsequent date result in a change of control of the Partnership.

Item 13.  Certain Relationships and Related Transactions

The  General Partner contributed $1,692,698, which entitled it  to  receive
100%  of  the Partnership's general partner interest.  The general  partner
interest  entitles the General Partner to 15% interest in the  Partnership.
See "Item 5."

In  2002, the General Partner received no administrative fees.  The General
Partner  ceased to charge the Partnership for administrative fees effective
July 31, 2000.

The  Partnership originally invested primarily all of the proceeds  of  the
Private Placement in 2,005 shares 45.9% of Basic common stock.  On May  21,
2001,  Basic  issued  a Notice to Stockholders of Preemptive  Rights.   The
Partnership  purchased  an  additional 19,000 shares  of  common  stock  at
$380,000.   The Partnership at December 31, 2002 owns a total of 5.39%,  or
219,500 shares of Basic's outstanding common stock.

In  the  opinion  of  management, the terms of the above  transactions  are
similar to ones with unaffiliated third parties.

<PAGE>
                                 Part IV


Item 14.  Exhibits, Financial Statements Schedules and Reports on Form 8-K

          (a)(1)  Financial Statements:

                  Southwest Partners III, L.P. Financial Statements

                  Included in Part II Item 8 of this report -
                  Independent Auditors Report
                  Balance Sheets
                  Statements of Operations
                  Statement of Changes in Partners' Equity
                  Statements of Cash Flows
                  Notes to Financial Statements

                     (2)  Schedules required by Article 12 of Regulation S-
                  X  are either omitted because they are not applicable  or
                  because  the  required  information  is  shown   in   the
                  financial statements or the notes thereto.

            (3)   Exhibits:


4  (a)
                          Certificate  of Limited Partnership of  Southwest
                          Partners   III,  L.P.,  dated  March  11,   1997.
                          (Incorporated  by  reference  from  Partnership's
                          Form 10-K for the fiscal year ended December  31,
                          1998).


(b)   Agreement of Limited                  Partnership                  of
                          Southwest  Partners III, L.P.,  dated  March  11,
                          1997.    (Incorporated    by    reference    from
                          Partnership's Form 10-K for the fiscal year ended
                          December 31, 1998).


          (b)     Reports on Form 8-K

                  There  were  no  reports filed on  Form  8-K  during  the
              quarter ended December 31, 2002.

<PAGE>
                                Signatures


Pursuant  to  the  requirements of Section 13 or 15(d)  of  the  Securities
Exchange  Act  of 1934, the Partnership has duly caused this report  to  be
signed on its behalf by the undersigned, thereunto duly authorized.


                          Southwest Partners III, L.P.
                          a Delaware limited partnership



By:
                                 Southwest Royalties, Inc.,

General Partner


                          By:    /s/ H. H. Wommack, III
                                 ------------------------------------------
-----

H. H. Wommack, III, President


                          Date:  March 17, 2003


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
Partnership and in the capacities and on the dates indicated.

By:/s/ H. H. Wommack, III                    By:/s/ James N. Chapman
---------------------------                  ------------------------
--------------------                         -----------------------
H.    H.   Wommack,    III,                  James     N.    Chapman,
Chairman of the Board,                       Director
President,   Director   and
Chief Executive Officer

Date: April 17, 2003                         Date: April 17, 2003


By:/s/ William P. Nicoletti                  By:/s/     Joseph     J.
                                             Radecki, Jr.
---------------------------                  ------------------------
--------------------                         -----------------------
William    P.    Nicoletti,                  Joseph J. Radecki,  Jr.,
Director                                     Director

Date: April 17, 2003                         Date: April 17, 2003


By:/s/ Richard D. Rinehart                   By:/s/ John M. White
---------------------------                  ------------------------
--------------------                         -----------------------
Richard     D.    Rinehart,                  John M. White, Director
Director

Date: April, 2003                            Date: April 17, 2003


By:/s/      Herbert      C.
Williamson, III
---------------------------
--------------------
Herbert C. Williamson, III,
Director

Date: April 17, 2003



<PAGE>
                         CERTIFICATIONS

          I, H.H. Wommack, III, certify that:

          1.                                                   I have
reviewed  this  annual report on Form 10-K of Southwest  Partners
III, 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 functions):

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

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

          6.                                                   The
registrant's  other certifying 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.


Date:  April 17, 2003




/s/ H.H. Wommack, III
H. H. Wommack, III
Chairman, President, Director and Chief Executive Officer
  of Southwest Royalties, Inc., the
  Managing General Partner of
  Southwest Partners III, L.P.

<PAGE>

                         CERTIFICATIONS

          I, Bill E. Coggin, certify that:

          1.                                                   I have
reviewed  this  annual report on Form 10-K of Southwest  Partners
III, 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 functions):

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

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

          6.                                                   The
registrant's  other certifying 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.


Date:  April 17, 2003




/s/ Bill E. Coggin
Bill E. Coggin
Executive Vice President
  and Chief Financial Officer of
  Southwest Royalties, Inc., the
  Managing General Partner of
  Southwest Partners III, L.P.

<PAGE>

                    CERTIFICATION PURSUANT TO
                     19 U.S.C. SECTION 1350,
                     AS ADOPTED PURSUANT TO
          SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


      In  connection with the Annual Report of Southwest Partners
III,  Limited  Partnership (the "Company") on Form 10-K  for  the
period ending December 31, 2002 as filed with the Securities  and
Exchange  Commission on the date hereof (the "Report"),  I,  H.H.
Wommack,  III,  Chief Executive Officer of the  Managing  General
Partner of the Company, certify, pursuant to 18 U.S.C.  1350,  as
adopted  pursuant  to   906 of the Sarbanes-Oxley  Act  of  2002,
that:

     (1)                                                  The Report
       fully complies with the requirements of section 13(a) or 15(d) of
       the Securities Exchange Act of 1934; and

     (2)                                                      The
       information contained in the Report fairly presents, in all
       material respects, the financial condition and results  of
       operation of the Company.


Date:  April 17, 2003




/s/ H.H. Wommack, III
H. H. Wommack, III
Chairman, President, Director and Chief Executive Officer
  of Southwest Royalties, Inc., the
  Managing General Partner of
  Southwest Partners III, L.P.

<PAGE>
                    CERTIFICATION PURSUANT TO
                     19 U.S.C. SECTION 1350,
                     AS ADOPTED PURSUANT TO
          SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


  In connection with the Annual Report of Southwest Partners III,
Limited  Partnership (the "Company") on Form 10-K for the  period
ending  December  31,  2002  as filed  with  the  Securities  and
Exchange Commission on the date hereof (the "Report"), I, Bill E.
Coggin,  Chief Financial Officer of the Managing General  Partner
of  the Company, certify, pursuant to 18 U.S.C.  1350, as adopted
pursuant to  906 of the Sarbanes-Oxley Act of 2002, that:

     (3)                                                  The Report
       fully complies with the requirements of section 13(a) or 15(d) of
       the Securities Exchange Act of 1934; and

     (4)                                                      The
       information contained in the Report fairly presents, in all
       material respects, the financial condition and results  of
       operation of the Company.


Date:  April 17, 2003




/s/ Bill E. Coggin
Bill E. Coggin
Executive Vice President
  and Chief Financial Officer of
  Southwest Royalties, Inc., the
  Managing General Partner of
  Southwest Partners III, L.P.


<PAGE>