SECURITIES AND EXCHANGE COMMISSION

                          Washington, D.C.  20549

                                 FORM 10-K


             Annual Report Pursuant to Section 13 or 15(d) of
                  the Securities and Exchange Act of 1934


For the fiscal year ended December 31, 1998

Commission file number 2-70390


        SANCHEZ-O'BRIEN 1981-A DRILLING COMPANY          
(Exact name of registrant as specified in its charter)


                 Texas                                      74-2216121     
      (State or other jurisdiction of                    (I.R.S. Employer  
       incorporation or organization)                   Identification No.)


5847 San Felipe  Suite 1900   Houston, Texas                       77057   
  (Address of principal executive offices)                       (Zip Code)


    Registrant's telephone number, including area code: (713) 783-8000

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


                                                      Name of each exchange
      Title of each class                              on which registered 
             None                                              None        

        Securities registered pursuant to Section 12(g) of the Act:
 
                       Limited Partnership Interest
                             (Title of class)
 
    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.

                            Yes     X        No

    Aggregate market value of the shares held by non affiliates of the
registrant:  Non-Applicable
    Documents incorporated by reference:  None
<PAGE>





                  SANCHEZ-O'BRIEN 1981-A DRILLING COMPANY
               ANNUAL REPORT ON FORM 10-K DECEMBER 31, 1998


                                   INDEX

PART I

Item 1.   Business                                             
Item 2.   Properties                                           
Item 3.   Legal Proceedings                                    
Item 4.   Submission of Matters to a Vote of Security Holders  

PART II 

Item 5.   Market for Registrant's Common Equity and Related
          Stockholder Matters                                  
Item 6.   Selected Financial Data                              
Item 7.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations                  
Item 8.   Financial Statements and Supplementary Data          
Item 9.   Disagreements on Accounting and Financial Disclosure 
 
PART III
 
Item 10.  Directors and Executive Officers of the Registrant 
Item 11.  Executive Compensation                             
Item 12.  Security Ownership of Certain Beneficial Owners
          and Management                                     
Item 13.  Certain Relationships and Related Transactions     

PART IV

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


SIGNATURES                                                    
<PAGE>
                                P A R T   I
Item 1.  Business

Purposes

    The registrant, Sanchez-O'Brien 1981-A Drilling Company (the "Drilling
Company"), is a limited partnership formed on December 18, 1980, pursuant to
the provisions of the Texas Uniform Limited Partnership Act.  On April 21,
1981, the effective date of the Securities Act of 1933 Registration covering
the offer and sale of the units (No. 2-70390), members of the National
Association of Securities Dealers, Inc. began the sale of limited partnership
interests.  The sales period was closed June 23, 1981 with the sale of 5,304
units for a sum of $26,520,000.  Sanchez Drilling Corporation (the
"General Partner"), the General Partner of the Drilling Company, contributed
$246,438 to the Drilling Company's capital.  Operations commenced on June 23,
1981.

Effective January 1, 1998, Sanchez-O'Brien Drilling Corporation's name was
changed to Sanchez Drilling Corporation. Also, Sanchez-O'Brien Oil & Gas
Corporation's name was changed to Sanchez Oil & Gas Corporation.

Description of Business

    The Drilling Company was formed to become a general partner in
Sanchez-O'Brien 1981-A Drilling Partnership (the "Drilling Partnership") to
participate in oil and natural gas exploration, drilling, development,
production and marketing in the United States with Sanchez Oil & Gas
Corporation (the "Managing General Partner") as Managing General Partner. 
All of these activities were conducted in the states of Texas, Louisiana,
Oklahoma, New Mexico, Colorado and Wyoming.  Substantially all of the
operations and activities of the Drilling Company relate to its interest in
the Drilling Partnership.

    As of December 31, 1998, forty-three wells have been drilled.  Of this
number, ten wells are commercially productive, twenty-four were dry holes
or have been depleted and abandoned, seven have been sold, and two are
shut-in.

Competitive Conditions

    The petroleum industry is comprised of a large number of entities, many
with greater financial resources than the Drilling Company, competing in the
exploration, development, production and marketing of oil and natural gas.

Employees

    The Drilling Company has no employees; however, the Managing General
Partner has a staff of geologists, petroleum engineers, landmen and
accounting personnel who administer all of the Drilling Company's operations. 
The direct administrative and overhead expenses which are attributable to the
Drilling Company's operations are a cost of the Drilling Company.
<PAGE>
Major Purchasers

    Tejas Gas Marketing, LLc purchased over 77% of the Drilling Company's
total oil and natural gas sales during the year ended December 31, 1998
(See Note 3 to the Financial Statements).

Long-term Debt

    At December 31, 1998, The Drilling Company does not have any long term
debt.

Marketing Conditions

    For 1998, the average price of oil decreased to $11.08/BBL from $15.27/BBL
for 1997, while the average price for natural gas decreased to $2.07/MCF for
1998 from $2.19/MCF in 1997.  Several factors contributed to the decrease of
natural gas and oil prices in 1998 compared to 1997.  1) The past two winters
have been milder than usual. 2) There was an oversupply of oil, due in part to;
the Asian financial crisis caused economies in the region to lower their demand;
the aforementioned mild winters caused demand to lower; the allowance of Iraq
to sell its oil for food flooded the market with more production.  3) A mini-
boom in drilling for natural gas during 1995-1997 increased the production
available for sale.

    Wellhead prices per MCF during March 1999 were in the $1.65 to $1.75 range,
and we are optimistic that prices will average $2.00 per MCF in 1999.
During January and February 1999 gas was sold for an estimated $1.73.
Despite natural gas storage being high in the first quarter, 1999 prices
should average approximately $2.00/MCF during 1999.

Regulation

    Various aspects of the Drilling Partnership's oil and natural gas
operations are regulated by administrative agencies under statutory
provisions of the states where such operations are conducted and by certain
agencies of the Federal government for operations on Federal leases.

Future Operations

    As of December 31, 1998, each Limited Partner has received $435 per each
$5,000 unit. Future distributions will be made after litigation on the
S.W. Escobas (Trevino leases) prospect is settled.

     Subsequent to year-end, the Company began considering selling all of its
producing properties.  As of March 30, 1999, no firm offer had been accepted.

<PAGE>
Item 2.  Properties

    The following table summarizes the Drilling Company's well count (#
wells) and average net working interest (ANWI) in oil and natural gas wells
by state that are commercially productive as of December 31, 1998:

                                     Oil      Natural Gas            Total   
                            # Wells ANWI    # Wells  ANWI     # Wells ANWI

    Texas............         -      -         7      .11        7     .11

    Louisiana........         -      -         1      .35        1     .35
    
    Oklahoma.........         -      -         -        -        -       - 

    New Mexico.......         -      -         -        -        -       - 
    
    Colorado.........         -      -         -        -        -       -

    Wyoming..........         2    .12         -        -        2     .12

                              2    .12         8      .14       10     .14

    See Note 8 to the Financial Statements for reserve information.

    No events during the first quarter of 1999 have substantially changed
these numbers.

Item 3.  Legal Proceedings

    The litigation against Pennzoil Exploration and Production Company
(Pennzoil) and Sanchez Oil and Gas Corporation (Sanchez) on the Trevino leases
in the S.W. Escobas Prospect is ongoing.  The interests in the Trevino leases,
which comprise part of the S.W. Escobas Prospect, were acquired from
Pennzoil.  There are currently four producing wells on the Trevino Leases,
in which the Drilling Partnership holds between 22.53%-23.177% gross working
interest.  The interest in dispute in this lawsuit is 7/96 or 7.29% of
Sanchez-O'Brien's and Pennzoil's interest.  The trial judge, on November 9,
1992, ruled in favor of the defendants, Pennzoil and Sanchez.
The plaintiffs appealed the trial court ruling to the Court of Appeals for
the Fourth District of Texas at San Antonio.  In May 1994, the San Antonio
Court of Appeals affirmed the trial court's judgement.The appellants
(plaintiffs) filed an application for writ of error to the Texas Supreme
Court after the Fourth Court Appeals rejected a motion for a rehearing.
On November 6, 1994, the Texas Supreme Court denied the writ of error.
On December 8, 1994, plaintiffs filed a motion for a rehearing with
Texas Supreme Court.  The Texas Supreme Court granted a rehearing and heard
oral arguments during September 1995.  On October 18, 1996, the Texas Supreme
Court reversed the judgements of both lower courts.On November 20, 1996, a
motion for rehearing was filed.  The Texas Supreme Court granted the motion
for a rehearing, but on February 26, 1998, The Texas Supreme Court rendered
an opinion reversing the San Antonio Court of Appeals and the trial court
and rendering judgement for plaintiff.  A motion for a rehearing was
filed during March 1998. The motion for a rehearing was denied and all appeals
exhausted.

    As a result of the unfavorable ruling, the Drilling Company will have to
forfeit the funds being held in escrow.  In addition, the Drilling Company
would lose approximately 7.29% of its' interest in the Trevino properties.
The Company should have enough funds in escrow to pay the plantiff.
 
<PAGE>                   

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

    No matters were submitted to the Security Holders during the fourth
quarter of 1998.

                                P A R T  II

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

    The Drilling Company has no outstanding common stock at December 31,
1998.  There is no market for the limited partnership units of the
Drilling Company and transferability is subject to certain conditions,
including the consent of the Managing General Partner.  The Drilling Company
has 1,480 limited partners as of December 31, 1998.

<PAGE>
    As of December 31, 1998, each Limited Partner has received $435 per each
$5,000 unit.  Future cash distributions will be made after litigation on
the S.W. Escobas (Trevino leases) has been settled.

    According to the terms of the Drilling Company's Partnership Agreement,
the General Partner is obligated to repurchase, if requested, the interests
of limited partners in the Drilling Company.  The maximum repurchase
obligation is 10% of the Aggregate Limited Partners Contributions.  The
repurchase price will be based primarily on the discounted value of the
Drilling Company's share of the oil and natural gas properties.  The
Managing General Partner repurchased 9 units during 1998.  As of December
31, 1998, the Managing General Partner has repurchased 2,822 units, or
53.20%, of the total 5,304 units.  At January 1, 1998, the managing general
parnter assigned 941 units to Mr. O'Brien as part of a settlement.  A
repurchase offer for each outstanding $5,000 unit at December 31, 1998 has 
not been made.

Item 6.  Selected Financial Data

    The financial results of operations of the Drilling Company as of and for
the years ended December 31, 1998, 1997 and 1996 are as follows:
[CAPTION]
                                1998         1997         1996 
[S]                          [C]         [C]         [C]
 Revenues. . . . . . . . . .$   462,242    763,517     462,242 
 Expenses. . . . . . . . . .    267,426    373,281     267,426 

 Net income. . . . . . . . .    194,816    390,236     194,816 

 LP's net income (99%) . . .    192,868    386,334     192,868 

 LP's net income per unit. .         36         73          36

 Total assets. . . . . . . .  1,582,964  1,380,407   1,582,964 
 Working capital increase ..$   308,641     34,688     308,641 

 Partners' equity (deficit)
    Limited partners . . . .$ 1,324,307  1,131,434   1,324,307 
    General partner. . . . .$    13,372     11,429      13,372 

    See Notes 1, 2 and 3 to the Financial Statements for a discussion of the
Drilling Company's significant accounting policies, allocations of revenues,
costs and expenses and oil and gas producing activities.


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

General

    The Drilling Company commenced operations on June 23, 1981. Substantially
all of the Drilling Company's revenues are comprised of its proportionate
share of the oil and natural gas sales of the Drilling Partnership.

<PAGE>


Liquidity and Capital Resources

    The principal sources of the Drilling Company's working capital have been
the capital contributions of the limited partners, bank borrowings (see Note
4 to the Financial Statements), advances from the Managing General Partner
and working capital provided from operations.

    During 1998, the price of natural gas and oil decreased from 1997. The
Drilling Company repaid the full amount of the note payable to the Managing
General Partner on July 1, 1993. 

Results of Operations

    The Drilling Company had net income of $194,816 in 1998, $390,236 in 1997,
and $378,346 in 1996.

    Oil and natural gas sales totaled $438,068 in 1998, $742,030 in 1997, and
$716,938 in 1996.

    Operating expenses as a percentage of oil and natural gas sales were
30.68% in 1998, 22.73% in 1997, and 25.49% in 1996.

    Interest income was $24,174 in 1998, $21,487 in 1997, and $12,331 in 1996.

    General and administrative expenses consist primarily of the Drilling
Company's proportionate share of such expenses allocated to the Drilling
Partnership from Sanchez Oil & Gas Corporation.

    The current year depletion amounted to $93,000.  Depletion per net
equivalent barrel of production was $2.40 in 1998, $2.73 in 1997, $2.48 in
1996.   

<PAGE>

Item 8.  Financial Statements and Supplementary Data


                Sanchez-O'Brien 1981-A Drilling Company
                        (a limited partnership)

                     Index to Financial Statements

Balance Sheets - December 31, 1998 and 1997                         

Statements of Operations - Years ended December 31, 1998, 1997
and 1996                                                                

Statements of Partners' Equity (Deficit) - Years ended December
31, 1998, 1997 and 1996                                             

Cash Flows Statement of - Years ended December 31, 1998, 1997
and 1996.                                                           

Notes to Financial Statements                                       

Schedule V - Property and Equipment - Years ended December 31, 1998,
1997 and 1996                                                       

Schedule VI - Accumulated Depreciation, Depletion and Amortization of
Property and Equipment - Years ended December 31, 1998, 1997 and 1996

All other schedules are omitted as the required information is
unapplicable or the information is included in the financial statements
or related notes.
<PAGE>
<TABLE>

                SANCHEZ-O'BRIEN 1981-A DRILLING COMPANY
                        (a limited partnership)

                            Balance Sheets

                      December 31, 1998 and 1997
                              (Unaudited)

<CAPTION>
        ASSETS                                 1998            1997 
<S>                                     <C>               <C>  
Current assets:
  Cash                                  $ 1,011,552         665,680 
  Accounts receivable                        18,843          48,333 

        Total current assets              1,030,395         714,013 

Oil and natural gas properties (full
  cost method), at cost, pledged
  (notes 3 and 4)                        31,022,493      31,043,318 
Less accumulated depreciation,
  depletion and amortization (note 3)    30,469,924      30,376,924 

        Net oil and natural gas
        properties                          552,569         666,394 

Organization costs, less applicable
  amortization                                 -               -    

        TOTAL ASSETS                      1,582,964       1,380,407 
<CAPTION>
LIABILITIES AND PARTNERS' EQUITY
<S>                                      <C>              <C>
Current liabilities:
  Accounts payable                           64,730          53,074 
  Suspense payable-investors                180,555         184,470 

        Total current liabilities           245,285         237,544 

Partners' equity:
  Limited partners                        1,324,307       1,131,439
  General partner                            13,372          11,424

        Total partners' equity            1,337,679       1,142,863

        TOTAL LIABILITES AND
         PARTNERS' EQUITY               $ 1,582,964       1,380,407


See accompanying notes to financial statements. 
<PAGE>

</TABLE>
<TABLE>
                SANCHEZ-O'BRIEN 1981-A DRILLING COMPANY
                        (a limited partnership)

                       Statements of Operations

             Years Ended December 31, 1998, 1997 and 1996
                              (Unaudited)

<CAPTION>

                                   1998            1997          1996
<S> 
Revenues:                     <C>              <C>           <C>
  Oil and natural gas sales   $  438,068        742,030        716,938
  Interest income                 24,174         21,487         12,331
  Other income                      -               -              -   

                                 462,242        763,517        729,269

Expenses:
  Operating expenses             134,437        168,710        182,750
  General and administrative      
    expenses (note 7)             39,989         50,571         30,173
  Depreciation, depletion and
    amortization (note 3)         93,000        154,000        138,000
  Interest expense                  -               -             -

                                 267,426        373,281        350,923

      Net income              $  194,816        390,236        378,346

      Net income applicable
        to limited partners   $  192,868        386,334        374,563

      Net income of limited
        partners per unit
        of limited partnership
        interest              $       36             73             71

      Number of units of limited
        partnership interests
        outstanding                5,304          5,304           5,304  

See accompanying notes to financial statements. 
<PAGE>

</TABLE>
<TABLE>
                   SANCHEZ-O'BRIEN 1981-A DRILLING COMPANY
                           (a limited partnership)

                  Statements of Partners' Equity (Deficit)

                Years Ended December 31, 1998, 1997, and 1996
                                 (Unaudited)



                                   Limited Partners
                                                                   Partners' 
                                                        General     Equity   
                                  Units      Amount     Partner    (Deficit)  

<CAPTION>
<S>                                <C>    <C>         <C>         <C> 

Balances at December 31, 1995       5,304 $1,184,440      11,961   1,196,401 

  Cash distribution                         (393,822)     (3,978)   (397,800)

  Net income                                 374,563       3,783     378,346

Balances at December 31, 1996       5,304  1,165,181      11,766   1,176,947      

  Cash distribution                   -     (420,076)     (4,244)   (424,320)

  Net income                                 386,334       3,902     390,236

Balnaces at December 31, 1997       5,304  1,131,439      11,424   1,142,863

  Cash distribution                   -        -            -          -

  Net income                          -      192,868       1,948     194,816

Balances at December 31, 1998       5,304 $1,324,307      13,372   1,337,679

See accompanying notes to financial statements.
<PAGE>

</TABLE>
<TABLE>
                     SANCHEZ-O'BRIEN 1981-A DRILLING COMPANY
                             (a limited partnership)

                            Statements of Cash Flows

                        December 31, 1998, 1997 and 1996
                                   (Unaudited)

                                                  1998      1997       1996
<CAPTION>
<S>                                          <C>          <C>        <C>
Cash flows from operating activities:
  Net income                                 $  194,816    390,236     378,346
  Adjustments to reconcile net earnings
    to net cash provided by operating
      activities: Depreciation, depletion
      and amortization                           93,000    154,000     138,000
      Change in assets and liabilities:
        Accounts receivable                      29,490     54,884     (33,760)
        Accounts payable                         11,656     45,240    (111,622)
        Suspense payable                         (3,915)    29,845      33,265
         Total adjustments                      130,231    283,969      25,883

         Net cash provided by operating
            activities                          325,047    674,205     404,229

Cash flows from investing activities:
  Cash distributions                               -      (424,320)   (397,800)
  Additions to property and equipment            20,825    (85,503)    (26,465)

     Net cash used in investing activities       20,825   (509,823)   (424,265)
             
Cash flows from financing activities:
  Payments of long-term debt                       -          -           -
  Proceeds fom long-term debt                      -          -           -

         Net cash provided by financing
         activities                                -          -           -

Net increase (decrease) in cash and cash
  equivalents                                   345,872    164,382     (20,036)

Cash and cash equivalents at beginning of year  665,680    501,298     521,334

Cash and cash equivalents at end of year    $ 1,011,552    665,680     501,298
</TABLE>

<PAGE>

             SANCHEZ-O'BRIEN 1981-A DRILLING COMPANY
                     (a limited partnership)

                  Notes to Financial Statements

                   December 31, 1998 and 1997



(1) Organization and Summary of Significant Accounting Policies

    Organization - Sanchez-O'Brien 1981-A Drilling Company

    Sanchez-O'Brien 1981-A Drilling Company (the Drilling
    Company), a Texas limited partnership, was formed on December
    18, 1980 with Sanchez Drilling Corporation (a
    wholly-owned subsidiary of Sanchez Oil & Gas
    Corporation) as general partner and an organizational limited
    partner.  On June 23, 1981, Sanchez Drilling Corporation,
    as general partner, and investors, representing
    5,304 units of limited partnership interests ($5,000 per
    unit), entered into an Agreement of Limited Partnership for
    the Sanchez-O'Brien 1981-A Drilling Company.  The Drilling
    Company was to remain in existence until December 31, 2011,
    unless dissolved prior to that date according to provisions of
    the Drilling Company Partnership Agreement.  Sanchez Drilling
    Corporation and the individual limited partners are
    not required to make additional capital contributions to the
    Drilling Company.

    The Drilling Company Partnership Agreement provides for
    quarterly distributions from available cash.

    Organization - Sanchez-O'Brien 1981-A Drilling Partnership

    Sanchez-O'Brien 1981-A Drilling Partnership (the Drilling
    Partnership), a Texas general partnership, was organized on
    June 23, 1981 with Sanchez Oil & Gas Corporation as managing 
    general partner and Sanchez-O'Brien 1981-A Drilling
    Company as general partner.  The Drilling Partnership was
    formed to engage in oil and natural gas exploration, drilling,
    development, production and marketing in the United States. 
    The Drilling Partnership was to remain in existence until
    December 31, 2011, unless dissolved prior to that date
    according to provisions of the Drilling Partnership Agreement.

    Sanchez Oil & Gas Corporation, as managing general
    partner, is required to make capital contributions to the
    Drilling Partnership on a current basis sufficient to pay the
    costs allocated to the managing general partner under the
    terms of the Drilling Partnership Agreement. The managing
    general partner was required to make capital contributions in
    an amount equal to 20 percent of the capital contributions of
    the limited partners to the Drilling Company, reduced by any
    organization or other costs incurred by the managing general
    partner which were reimbursed by the Drilling Company or the
    Drilling Partnership, by June 23, 1983. This capital
    contribution requirement was met, and cumulative capital
    contributions by the managing general partner total $5,331,953
    as of December 31, 1998.
    <PAGE>
    
    The Drilling Partnership Agreement provides that funds in
    excess of amounts necessary to pay the partners' share of
    existing and anticipated expenditures, including the repayment
    of borrowings, shall be distributed quarterly to the partners
    of the Drilling Partnership.

    Basis of Financial Statement Presentation

    The financial statements of the Drilling Company include its
    proportionate share in specific assets, liabilities, revenues
    and expenses of the Drilling Partnership.  All significant
    intercompany balances and transactions have been eliminated.

    Oil and Gas Properties

    The Drilling Company follows the full cost method of
    accounting for its proportionate interest in the oil and
    natural gas operations of the Drilling Partnership.  Under
    this method, all costs incurred in the acquisition,
    exploration and development of properties, including costs of
    surrendered and abandoned leaseholds, delay lease rentals and
    dry holes, are capitalized.  Dispositions of oil and natural
    gas properties are accounted for as adjustments to capitalized
    costs, with no gain or loss recognized.  Depreciation,
    depletion and amortization of oil and natural gas properties
    is provided by the units-of-production method based on proved
    oil and natural gas reserves.

    Under the full cost method of accounting for oil and natural
    gas operations, capitalized costs of oil and natural gas
    properties are not to exceed the present value of future net
    revenues from estimated production of proved oil and natural
    gas properties plus the lower of cost or estimated fair market
    value of unproved properties.  If capitalized costs exceed
    this limitation, an additional provision is to be made to
    depreciation, depletion and amortization.

    Federal Income Taxes

    For Federal income tax purposes, the partners' respective
    interests in the revenues, expenses and other deductions and
    credits of the Drilling Company are reportable in their
    individual tax returns. Accordingly, no provision or liability
    for Federal income taxes has been shown on the accompanying
    financial statements.

    Organization Costs

    Organization costs were capitalized and amortized over five
    years using the straight-line method.
<PAGE>

    Syndication Costs

    Syndication costs (sales commissions to brokers for their
    sales of limited partnership interests) have been deducted
    directly from the capital accounts in the Drilling Company.

(2) Allocations of Revenues, Costs and Expenses
 
    Drilling Company

    All revenues, costs and expenses of the Drilling Company are
    allocated 1 percent to the general partner, Sanchez-O'Brien
    Drilling Corporation, and 99 percent to the limited partners.
    All revenues, costs and expenses are allocated to the
    individual limited partners in proportion to their capital
    accounts.

    Drilling Partnership

    Revenues and expenses of the Drilling Partnership which relate
    to capital wells (wells which are funded principally by
    capital contributions of the Drilling Company) are allocated
    30 percent to the managing general partner, Sanchez Oil & Gas
    Corporation, and 70 percent to the general partner, the Drilling
    Company, until partnership payout is reached, and
    50 percent to each partner thereafter.  All costs of capital
    wells which are non-capitalized costs for Federal income tax
    purposes are charged to the Drilling Company.  All capitalized
    costs of capital wells and leasehold costs relating to
    producing capital wells are charged to Sanchez Oil & Gas Corporation.

    All revenues, expenses, well costs and leasehold costs
    relating to subsequent wells (all wells other than the capital
    wells) are allocated 50 percent to Sanchez Oil & Gas
    Corporation and 50 percent to the Drilling Company.

    All interest earned as a result of the temporary investment of
    the Drilling Company's capital contribution to the Drilling
    Partnership are allocated 100 percent to the Drilling Company.
    

(3) Oil and Natural Gas Producing Activities
  
    The aggregate amount of capitalized costs of the Drilling
    Company's proportionate share of the oil and natural gas
    properties of the Drilling Partnership for the years ended
    December 31, 1998 and 1997 were as follows:
<PAGE>
[CAPTION]
                                         1998            1997
[S]                                  [C]              [C]
       Costs related to proved
         properties                  $31,022,493      31,043,318
       Costs related to unproved
         properties                        -               -    

                                      31,022,493      31,043,318

       Less accumulated depletion     30,469,924      30,376,924

                                     $   552,569         666,394

    The following schedule presents the results of operations of
    the Drilling Company's proportionate share of the oil and
    natural gas producing activities of the Drilling Partnership
    for the years ended December 31, 1997, 1996 and 1995:

[CAPTION]
                                      1998       1997       1996
[S]                                 [C]       [C]       [C]
       Oil and natural gas revenues $ 438,068   742,030   716,938
       Operating expenses             134,437   166,191   182,750
       Depreciation, depletion and
         amortization                  93,000   154,000   138,000

       Results of operations from
         producing activities
         (excluding overhead and
         interest costs)
         Net income                 $ 210,631   421,839   396,188


    Operating expenses include production taxes of $2,456, $ 2,520,
    and $3,119 in 1998, 1997 and 1996, respectively.

    The 1998 full cost ceiling test did not warrant an additional
    charge to depreciation, depletion and amortization. The
    calculation of the limitation on capitalized costs as of
    December 31, 1998 was based on $2.00 per MCF.

    The regular provision for depreciation, depletion and
    amortization per unit of production (net equivalent barrel)
    for the years ended December 31, 1998, 1997 and 1996 was
    $2.40, $2.73 and $2.48 respectively.  These rates are
    exclusive of the amounts attributable to the limitation on
    capitalized costs.

    Over seventy seven percent of the natural gas sales from seven S. W.
    Escobas producing wells were sold to Tejas Gas Marketing, LLC during 1998.
<PAGE>

(4) Notes Payable

    As of December 31, 1998, the Drilling Company does not have
    any debt.

(5) Federal Income Taxes

    Under the method of accounting followed by the Drilling
    Company for Federal income tax reporting purposes:  (a)
    expenditures incurred in acquiring undeveloped properties and
    equipping productive oil and natural gas properties are
    capitalized, whereas such expenditures relating to dry holes
    are charged against earnings;  (b) both productive and
    nonproductive intangible drilling and development costs are
    expensed currently;  (c) revenues, expenses, capital
    contributions and distributions are generally recognized as
    cash received or paid;  (d) tentative depletion expense is
    computed using the greater of cost or percentage depletion for
    each property;  and (e) depreciation of lease and well
    equipment is computed using the accelerated cost recovery
    system over a five year period.

    The following is a reconciliation of the net income of the
    Drilling Company as reported herein, to its earnings reported
    for Federal income tax purposes for the years ended December 31,
    1998, 1997 and 1996.

[CAPTION]
                                     1998       1997       1996 
[S]                            [C]           [C]      [C]
Net income as reported
  herein                       $  194,816    390,236    378,346

Less costs capitalized for
  financial reporting purposes
  which are expenses for tax
  purposes (primarily intangible
  drilling and dry hole costs)    (20,825)    83,524     13,475

Add depreciation, depletion and
  amortization for financial
  reporting purposes               93,000    154,000    138,000

Less depreciation and cost
  depletion for tax purposes       68,732     53,755     63,476

Differences in accrual method
  of accounting for financial
  reporting purposes and cash
  basis for tax purposes          (40,156)    31,397     18,063

Income for Federal income tax
  purposes                    $   199,753    438,354    457,458
<PAGE>

(6) Repurchase Obligations

    In accordance with the terms of the Drilling Company's
    Partnership Agreement, Sanchez Drilling Corporation is
    obligated to purchase, if requested, the interests of limited
    partners in the Drilling Company.  The purchase price is to be
    based primarily on annual determinations of the discounted
    value of the Drilling Company's share of the oil and natural
    gas properties of the Drilling Partnership.  The maximum
    repurchase obligation is 10% of the Aggregate Limited
    Partners' Capital Contributions.  Sanchez Oil & Gas
    Corporation purchased 9 units during 1998.

(7) Related Party Transactions

    Sanchez Oil & Gas Corporation functions as operator
    for the Drilling Partnership's wells.  In this capacity,
    Sanchez Oil & Gas Corporation receives monthly fees as
    operator on drilling and producing wells, and under the terms
    of the Drilling Company and Drilling Partnership Agreements,
    Sanchez Oil & Gas Corporation is reimbursed for direct
    costs of performing services for the Drilling Company and the
    Drilling Partnership and for that part of its administrative
    overhead that reasonably pertains to the Drilling Company and
    the Drilling Partnership.  These reimbursements amounted to
    $57,152 in 1998 for both the Drilling Partnership and Drilling
    Company.  Of these amounts, $30,000 was paid for overhead
    reimbursements and $27,152 for direct administrative charges.

    The Drilling Company's share of the above reimbursements
    included $20,377 of administrative charges, both overhead and
    direct charges, for the year 1998.

    Accounts payable on the accompanying balance sheets are due
    the Managing General Partner.

    Substantially all of the Drilling Partnership's oil and
    natural gas leases were acquired from the Managing General
    Partner at cost, plus carrying and administrative charges.

    A staff overriding royalty pool, consisting of a maximum of 7%
    of the Drilling Partnership's net revenue interest in all oil
    and natural gas leases, is shared by certain geological,
    engineering and other key employees of Sanchez Oil &
    Gas Corporation.
<PAGE>

(8) Oil and Natural Gas Reserves (Unaudited)

    The following is a summary of the Drilling Company's
    proportionate share of the proved oil and natural gas reserve
    quantities of the Drilling Partnership as estimated by Lone
    Cypress Engineering, Inc. of Houston, Texas.
[CAPTION] 
                                       Oil and          Natural 
                                      Condensate          Gas   
                                      (Barrels)          (MCF)  
       Proved developed and
         undeveloped reserves:
[S]                                    [C]           [C]  
         Balance at December 31, 1997    41,421       1,210,495 

           1998 adjustments             (15,977)       (401,389)

           Production                    (2,974)       (214,507)

         Balance at December 31, 1998    22,470         594,599 

       Proved developed and
         undeveloped reserves:
 
         December 31, 1996               43,481       1,511,612 

         December 31, 1997               41,421       1,210,495 

         December 31, 1998               22,470         594,599

    All the reserves of the Drilling Company are attributable to
    its interest in the Drilling Partnership, and are located within
    the United States.
<PAGE>
                                                                   Schedule V

                   SANCHEZ-O'BRIEN 1981-A DRILLING COMPANY
                           (a limited partnership)

                           Property and Equipment

                Years Ended December 31, 1998, 1997 and 1996
[CAPTION]                                      
                                                                
                             Balance at                          Balance at   
                            Beginning of                           End of    
Classification                 Period     Additions   Retirements  Period    
1996
[S]                            [C]          [C]             [C]   [C]
Oil and natural gas properties $30,931,350   26,465            0  30,957,815 

1997

Oil and natural gas properties $30,957,815   85,503            0  31,043,318

1998

Oil and natural gas properties $31,043,318        0       20,825  31,022,493

<PAGE>

                                                                  Schedule VI


                   SANCHEZ-O'BRIEN 1981-A DRILLING COMPANY
                           (a limited partnership)

Accumulated Depreciation, Depletion
and Amortization

                Years Ended December 31, 1998, 1997 and 1996
[CAPTION]                                      

                              Balance at                          Balance at   
                             Beginning of                           End of    
Classification                  Period     Additions   Retirements  Period    

1996
[S]                            [C]          [C]            [C]    [C]
Oil and natural gas properties $30,084,924  138,000           0   30,222,924 

1997

Oil and natural gas properties $30,222,924  154,000           0   30,376,924 

1998

Oil and natural gas properties $30,376,924   93,000           0   30,469,924
<PAGE>

Item 9.  Disagreements on Accounting and Financial Disclosure

    There have been no disagreements by the Drilling Company with
its accountants on accounting or financial disclosures which would
warrant disclosure pursuant to this item.

                            PART III

Item 10.  Directors and Executive Officers of the Registrant

    The Drilling Company has no directors or executive officers.
The General Partner, Sanchez Drilling Corporation, is a wholly
owned subsidiary of Sanchez Oil & Gas Corporation. The names,
ages (as of March 1, 1999) and positions of the directors and
executive officers of Sanchez Drilling Corporation are as
follows:

    NAME                   AGE             POSITION

Antonio R. Sanchez, Jr.     56     Chairman of the Board and
                                   Chief Executive Officer

Frank A. Guerra             50     President, COO and CFO

Minita M. Freeman           78     Senior Vice President,
                                   Secretary, Treasurer and
                                   Director

Olivero F. Garza, III       52     Assistant Secretary


    Antonio R. Sanchez, Jr., age 56, is Chairman of the Board and
Chief Executive Officer.  He holds a Bachelor of Business
Administration degree and a Doctor of Jurisprudence degree from St.
Mary's University of San Antonio, Texas.  Prior to 1973, Mr.
Sanchez, Jr., practiced law in both San Antonio and Laredo, Texas,
and served as an administrative assistant to the Lieutenant
Governor of Texas.  In addition to his oil and natural gas
investments, Mr. Sanchez, Jr. has other substantial investments.
<PAGE>

     Minita M. Freeman, age 78, is Senior Vice President, Secretary, Treasurer
and a Director.  Mrs. Freeman holds a Bachelor of Business Administration
degree from the University of Texas at Austin with a major in accounting.
Prior to joining affiliates of the Managing General Partner in 1975,
Mrs. Freeman practiced accounting primarily in Laredo, Texas.

     Frank A. Guerra, age 50, President, COO and CFO, was employed by the
Managing General Partner in early 1979.  He is in charge of accounting for the
Managing General Partner and all affiliates.  Mr. Guerra was previously
employed by Exxon Corporation as an accounting supervisor in the Exploration
and Production Department from 1977 to 1979 and as a senior auditor on various
staffs from 1972 to 1977.  Mr. Guerra received a Bachelor of Business
Administration degree in accounting from Texas A & M Universiry in 1971 and
is a Certified Public Accountant.

     Olivero F. Garza, III, age 52, is Vice President-Accounting/Administration
for the Managing General Partner.  He was employed in March 1980 as Manager of
Corporate Accounting.  Mr. Garza has been employed in the oil and natural gas
industry since 1968 with companies such as Exxon Corporation, Coastal
Corporation and TransOcean Oil Company. Mr. Garza received a Bachelor of
Business Administration degree in accounting from Pan American College in
Edinburg, Texas in 1968.

     The terms of each officer and director named above expire at the Company's
annual meeting of directors or such other time as his successor is duly elected
and qualified.

Item 11.  Executive Compensation

     Inasmuch as the Drilling Company has no directors, officers or employees,
it paid no remuneration during 1998.  In accordance with the Agreement of
Limited Partnership, the Drilling Company reimbursed the Managing General
Partner for direct expenses and administrative and overhead expenses
attributable to the operations of the Drilling Company (see Note 7 to the
Financial Statements).

     All of the oil and natural gas properties of the Drilling Partnership were
acquired at cost (including carrying costs) or were obtained on its behalf by
the Managing General Partner from third parties.  The Managing General Partner
acts as operator for certain drilling or producing wells of the Drilling
Partnership.

Item 12.  Security Owenership of Certain Benefical Owners and Management

(a) Principal Security Holders

    At December 31, 1998, Sanchez Oil & Gas Corporation, owned a 35.63
percent interest (1,890 units) in the Drilling Company. One investor,
Brian E. O'Brien, owned 17.74 percent interest (941 units), but no other
limited partner owned, of record or beneficially, more than one percent
of the Drilling Company (See Note 6 to the Financial Statements).

    As provided under the terms of the Agreement of Limited Partnership, the
General Partner has a one percent interest in all of the Drilling Company's
revenues, expenses, profits or losses, and upon liquidation, a one percent
interest in the Drilling Company's properties.

    As provided under the terms of the Articles of Partnership of the
Drilling Partnership, Sanchez Oil & Gas Corporation, the Managing
General Partner of the Drilling Partnership, has a revenue interest which
varies from 30 percent to 50 percent in the Drilling Partnership's revenues.
 
(b)  Amount of Sanchez Oil & Gas Corporation Securities Owned by
     Officers and Directors of Sanchez Oil & Gas Corporation

    At March 1, 1998, the Estate of Antonio R. Sanchez and Antonio R. Sanchez,
Jr. own one hundred percent of the outstanding common stock of Sanchez Oil &
Gas Corporation.

(c)  Changes in control

    There have been no changes in control of the Drilling Company during the
period ended December 31, 1998.

Item 13.  Certain Relationships and Related Transactions

    During 1981, the Drilling Company paid Sanchez Drilling Corporation
$300,000 for costs related to organizing the Drilling Company and offering the
limited partnership interests therein.  As operator of the Drilling
Partnership's wells, Sanchez Oil & Gas Corporation receives monthly
fees on drilling and producing wells.  The Drilling Partnership also paid
Sanchez Oil & Gas Corporation a management fee of $1,193,400 in 1981.
Substantially all of the Drilling Partnership's oil and natural gas leases
were acquired from Sanchez Oil & Gas Corporation at cost plus administrative
and carrying charges.  Certain key employees of Sanchez Oil & Gas
Corporation participate in a staff overriding royalty pool consisting of a
maximum of 7% of the Drilling Partnership's net revenue interest in all oil
and natural gas leases.  (See Note 7 to the Financial Statements).
<PAGE>
                                  PART IV

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

Financial Statements and Schedules

(a)  The following documents are filed as part of this annual report on
     Form 10-K:

          1.  Financial Statements
                (See Index to Financial Statements in Item 8)

          2.  Financial Statement Schedules
                The financial statement schedules are filed as part
                of this report as listed in the Index to Financial Statements
                in Item 8.

          3.  Exhibits:

              *3.1-Articles of Limited Partnership, as amended,
                   filed as exhibit 4.1 to the Registrant's Registration
                   Statement on Form S-1 (Reg. No. 2-70390).

              *3.2-Articles of Partnership, as amended, filed as exhibit
                   4.2 to the Registrant's Registration Statement on
                   Form S-1 (Reg. No. 2-70390).

              *Incorporated by reference, as indicated.

(b)  Reports on Form 8-K

     There were no reports on Form 8-K for the twelve months ended
     December 31, 1998.
<PAGE>

                                    SIGNATURES


    Pursuant to the requirements of Section13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly aythorized on March 31, 1999.


                                     SANCHEZ OIL & GAS CORPORATION

                                     By  Sanchez Drilling Corporation



                                     By             Antonio R. Sanchez, Jr.
                                            Chairman of the Board of Directors
                                                  and Chief Executive Officer
                                                 (Principal Executive Officer) 
                     

    Pursuant to the requirements iof the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 31, 1999.


           Frank A. Guerra                        Minita M. Freeman
             President                          Senior Vice President,
  (Principal Operating Officer)          Secretary, Treasurer and Director
                                     (Principal Financial Officer and Director)


            Olivero F. Garza, III
             Assistant Secretary   
 
<PAGE>

    Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, the registrant hasduly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized on March 31, 1999.



 
                                     SANCHEZ OIL & GAS CORPORATION

                                     By Sanchez Drilling Corporation


                                     By            s/Antonio R. Sanchez, Jr.
                                                     Antonio R. Sanchez, Jr.
                                           Chairman of the Board of Directors
                                                and Chief Executive Officer
                                               (Principal Executive Officer)

  

        s/Frank A. Guerra                         s/Minita M. Freeman
          Frank A. Guerra                           Minita M. Freeman
             President                            Senior Vice President,
    (Principal Operating Officer)           Secretary, Treasurer and Director
                                       (Principal Financial Officer and Director


        s/Olivero F. Garza, III
          Olivero F. Garza, III
           Assistant Secretary