|U.S. SECURITIES AND EXCHANGE COMMISSION                                                                                                                                                                                                                                                                                                          
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Washington, D.C. 20549                                                                                                                                                                                                                                                                                                                           
|________________________________                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                 
|FORM 10-Q                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                 
|/X/	Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                 
|For the Quarterly Period Ended September 30, 2001                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                 
|or                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                 
|/ / 	Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                 
|For the Transition Period From __________ to ___________                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                 
|______________________                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                 
|Commission File Number 0-7406                                                                                                                                                                                                                                                                                                                    
|______________________                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                 
|PrimeEnergy Corporation                                                                                                                                                                                                                                                                                                                          
|(Exact name of registrant as specified in its charter)                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                 
|Delaware                                                                                                                                                                                                                                                                                                                                         
|(State or other jurisdiction of incorporation or organization)                                                                                                                                                                                                                                                                                   
|84-0637348                                                                                                                                                                                                                                                                                                                                       
|(IRS employer identification number)                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                 
|One Landmark Square, Stamford, Connecticut  06901                                                                                                                                                                                                                                                                                                
|(Address of principal executive offices)                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                 
|(203) 358-5700                                                                                                                                                                                                                                                                                                                                   
|(Registrant's telephone number, including area code)                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                 
|(Former name, former address and former fiscal year, if changed since last report)                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                 
|Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes /X/    No  / /
|                                                                                                                                                                                                                                                                                                                                                 
|The number of shares outstanding of each class of the Registrant's Common Stock as of November 12, 2001 was: Common Stock, $0.10 par value, 3,849,945 shares.                                                                                                                                                                                    



|                                                            | PrimeEnergy Corporation                                    |        
|----------------------------------------------------------- | ---------------------------------------------------------- | -------
|                                                            |                                                            |        
|                                                            | Index to Form 10-Q                                         |        
|                                                            |                                                            |        
|                                                            | September 30, 2001                                         |        
|                                                            |                                                            |        
|Part I - Financial Information                              |                                                           
|                                                            |                                                            |        
|Item 1. Financial Statements                                |                                                           
|                                                            |                                                            |        
|                                                            | Consolidated Balance Sheets - September 30, 2001 and       |        
|                                                            | December 31, 2000                                          | 3 - 4  
|                                                            |                                                            |        
|                                                            | Consolidated Statements of Operations for the nine months  |        
|                                                            | ended September 30, 2001 and 2000                          | 5      
|                                                            |                                                            |        
|                                                            | Consolidated Statements of Operations for the three months |        
|                                                            | ended September 30, 2001 and 2000                          | 6      
|                                                            |                                                            |        
|                                                            | Consolidated Statement of Stockholders' Equity for the     |        
|                                                            | nine months ended September 30, 2001                       | 7      
|                                                            |                                                            |        
|                                                            | Consolidated Statements of Cash Flows for the nine months  |        
|                                                            | ended September 30, 2001 and 2000                          | 8      
|                                                            |                                                            |        
|                                                            | Notes to Consolidated Financial Statements                 | 9 - 17 
|                                                            |                                                            |        
|Item 2. Management's Discussion and Analysis of Financial   |                                                           
|                                                            | Condition and Results of Operations                        | 18 - 21
|                                                            |                                                            |        
|Item 3. Quantitative and Qualitative Disclosures About      |                                                           
|                                                            | Market Risk                                                | 22     
|                                                            |                                                            |        
|Part II -  Other Information                                |                                                           
|                                                            |                                                            |        
|Item 1. Legal Proceedings                                   | 22                                                        
|                                                            |                                                            |        
|Item 2. Changes in Securities and Use of Proceeds           | 22                                                        
|                                                            |                                                            |        
|Item 3. Defaults Upon Senior Securities                     | 22                                                        
|                                                            |                                                            |        
|Item 4. Submission of Matters to a Vote of Security Holders | 22                                                        
|                                                            |                                                            |        
|Item 5. Other Information                                   | 22                                                        
|                                                            |                                                            |        
|Item 6. Exhibits And Reports On Form 8-K                    | 22                                                        
|                                                            |                                                            |        
|Signatures                                                  | 23                                                        





2



|PrimeEnergy Corporation

Consolidated Balance Sheets

September 30, 2001 and December 31, 2000
|----------------------------------------------------------------------------------------------
|                                                                                              
|ASSETS                                                                                        
|Current assets:                                                                               
|Cash and cash equivalents                                                                     
|Restricted cash and cash equivalents (Note 2)                                                 
|Accounts Receivable (Note 3)                                                                  
|Due from related parties (Note 9)                                                             
|Prepaid Expenses                                                                              
|Other current assets                                                                          
|Deferred income taxes (Note 1)                                                                
|                                                                                              
|Total current assets                                                                          
|                                                                                              
|Property and equipment, at cost (Notes 1 and 4):                                              
|Oil and gas properties (successful efforts method):                                           
|Proved                                                                                        
|Unproved                                                                                      
|Furniture, fixtures and equipment                                                             
|including leasehold improvements                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Accumulated depreciation and  depletion                                                       
|                                                                                              
|Net property and equipment                                                                    
|                                                                                              
|Other assets                                                                                  
|                                                                                              
|Total assets                                                                                  
|                                                                                              

















See accompanying notes to the consolidated financial statements.



3





|PrimeEnergy Corporation

Consolidated Balance Sheets

September 30, 2001 and December 31, 2000
|----------------------------------------------------------------------------------------------
|                                                                                              
|                                                                                              
|                                                                                              
|LIABILITIES and STOCKHOLDERS' EQUITY:                                                         
|Current liabilities:                                                                          
|Accounts payable                                                                              
|Current portion of other long-term                                                            
|obligations (Notes 6 and 7)                                                                   
|Accrued liabilities:                                                                          
|Payroll, benefits and related items                                                           
|Taxes                                                                                         
|Interest and other                                                                            
|Due to related parties (Note 9)                                                               
|                                                                                              
|Total current liabilities                                                                     
|                                                                                              
|Long-term bank debt (Note 5)                                                                  
|Other long-term obligations (Notes 6 and 7)                                                   
|Deferred income taxes (Note 1)                                                                
|                                                                                              
|Total liabilities                                                                             
|                                                                                              
|Stockholders' equity:                                                                         
|Preferred stock, $.10 par value,                                                              
|authorized 5,000,000 shares, none issued                                                      
|Common stock, $.10 par value, authorized                                                      
|10,000,000 shares; issued 7,694,970                                                           
|in 2001 and 7,607,970 in 2000                                                                 
|Paid in capital                                                                               
|Retained earnings                                                                             
|                                                                                              
|                                                                                              
|Treasury stock, at cost, 3,832,025 common shares                                              
|in 2001 and 3,488,942 common shares in 2000                                                   
|                                                                                              
|Total stockholders' equity                                                                    
|                                                                                              
|Total liabilities and equity                                                                  
|                                                                                              

See accompanying notes to the consolidated financial statements.



4



|PrimeEnergy Corporation

Consolidated Statements of Operations

Nine Months Ended September 30, 2001 and 2000
(Unaudited)
|-------------------------------------------------------------------------------------------------------------------------
|                                                                                                                         
|Revenue:                                                                                                                 
|Oil and gas sales                                                                                                        
|District operating income                                                                                                
|Administrative revenue (Note 9)                                                                                          
|Reporting and management fees (Note 9)                                                                                   
|Interest and other income                                                                                                
|                                                                                                                         
|Total revenue                                                                                                            
|                                                                                                                         
|Costs and expenses:                                                                                                      
|Lease operating expense                                                                                                  
|District operating expense                                                                                               
|Depreciation and depletion of oil and gas properties                                                                     
|General and administrative expense                                                                                       
|Exploration costs                                                                                                        
|Interest expense (Note 5)                                                                                                
|                                                                                                                         
|Total costs and expenses                                                                                                 
|                                                                                                                         
|Income from operations                                                                                                   
|Gain on sale and exchange of assets                                                                                      
|                                                                                                                         
|Net income before income taxes                                                                                           
|                                                                                                                         
|Provision for income taxes                                                                                               
|                                                                                                                         
|Net income                                                                                                               
|                                                                                                                         
|                                                                                                                         
|Basic income per common share (Notes 1 and 10)                                                                           
|                                                                                                                         
|Diluted income per common share (Notes 1 and 10)                                                                         











See accompanying notes to the consolidated financial statements.



5



|PrimeEnergy Corporation

Consolidated Statements of Operations

Three Months Ended September 30, 2001 and 2000
(Unaudited)
|--------------------------------------------------------------------------------------------------------------------------
|                                                                                                                          
|Revenue:                                                                                                                  
|Oil and gas sales                                                                                                         
|District operating income                                                                                                 
|Administrative revenue (Note 9)                                                                                           
|Reporting and management fees (Note 9)                                                                                    
|Interest and other income                                                                                                 
|                                                                                                                          
|Total revenue                                                                                                             
|                                                                                                                          
|Costs and expenses:                                                                                                       
|Lease operating expense                                                                                                   
|District operating expense                                                                                                
|Depreciation and depletion of oil and gas properties                                                                      
|General and administrative expense                                                                                        
|Exploration costs                                                                                                         
|Interest expense (Note 5)                                                                                                 
|                                                                                                                          
|Total costs and expenses                                                                                                  
|                                                                                                                          
|Income from operations                                                                                                    
|Gain on sale and exchange of assets                                                                                       
|                                                                                                                          
|Net income before income taxes                                                                                            
|                                                                                                                          
|Provision for income taxes                                                                                                
|                                                                                                                          
|Net income                                                                                                                
|                                                                                                                          
|                                                                                                                          
|Basic income per common share (Notes 1 and 10)                                                                            
|                                                                                                                          
|Diluted income per common share (Notes 1 and 10)                                                                          











See accompanying notes to the consolidated financial statements.





6

PrimeEnergy Corporation



Consolidated Statement of Stockholders' Equity



Nine Months Ended September 30, 2001







|                              | Common Stock | Paid In    | Retained      | Treasury       |                 
|----------------------------- | ------------ | ---------- | ------------- | -------------- | ----------------
|                              | Shares       | Amount     | Capital       | Earnings       | Stock           
|                              |              |            |               |                |                 
|Balance at December 31, 2000  | 7,607,970    | $761,000   | $10,902,000   | $2,506,000     | ($9,193,000)    
|                              |              |            |               |                |                 
|Purchased 343,083 shares of   |              |            |               |                |                 
|common stock                  |              |            |               |                | (2,537,000)     
|                              |              |            |               |                |                 
|Exercised stock options       | 87,000       | 8,000      | 122,000       |                |                 
|                              |              |            |               |                |                 
|Net income                    |              |            |               | 5,206,000      |                 
|                              | -----------  | ---------- | ------------- | -------------- | ----------------
|Balance at September 30, 2001 | 7,694,970    | $769,000   | $11,024,000   | $7,712,000     | ($11,730,000)   
|                              | ========     | =======    | =========     | =========      | ===========     



















See accompanying notes to the consolidated financial statements.



7



|PrimeEnergy Corporation

Consolidated Statements of Cash Flows

Nine Months Ended September 30, 2001 and 2000
(Unaudited)
|-------------------------------------------------------------------------------------------------------------------------
|                                                                                                                         
|Cash flows from operating activities:                                                                                    
|Net income                                                                                                               
|Adjustments to reconcile net income to net cash provided by                                                              
|operating activities:                                                                                                    
|Depreciation, depletion and amortization                                                                                 
|Dry hole and abandonment costs                                                                                           
|Gain on sale of properties                                                                                               
|Provision for deferred income taxes                                                                                      
|Changes in assets and liabilities:                                                                                       
|(Increase) decrease in accounts receivable                                                                               
|(Increase) decrease in due from related parties                                                                          
|Increase in other assets                                                                                                 
|(Increase) decrease in prepaid expenses                                                                                  
|Increase (decrease) in accounts payable                                                                                  
|Increase (decrease) in accrued liabilities                                                                               
|Increase (decrease) in due to related parties                                                                            
|                                                                                                                         
|Net cash provided by operating activities:                                                                               
|                                                                                                                         
|Cash flows from investing activities:                                                                                    
|Capital expenditures, including dry hole costs                                                                           
|Proceeds from sale of property and equipment                                                                             
|Proceeds from payments on notes receivable                                                                               
|                                                                                                                         
|Net cash used in investing activities                                                                                    
|                                                                                                                         
|Cash flows from financing activities:                                                                                    
|Purchase of treasury stock                                                                                               
|Increase in long-term bank debt and other long-term obligations                                                          
|Repayment of long-term bank debt and other long-term obligations                                                         
|Proceeds from exercised stock options                                                                                    
|                                                                                                                         
|Net cash used in financing activities                                                                                    
|                                                                                                                         
|Net increase (decrease) in cash and cash equivalents                                                                     
|                                                                                                                         
|Cash and cash equivalents at the beginning of the period                                                                 
|                                                                                                                         
|Cash and cash equivalents at the end of the period                                                                       
|                                                                                                                         

See accompanying notes to the consolidated financial statements.

8

PrimeEnergy Corporation



Notes to Consolidated Financial Statements



September 30, 2001



(1) Description of Operations and Significant Accounting Policies:

Nature of Operations-



PrimeEnergy Corporation ("PEC"), a Delaware corporation, was organized in March 1973. PrimeEnergy Management Corporation ("PEMC"), a wholly-owned subsidiary, acts as the managing general partner, providing administration, accounting and tax preparation services for 47 private and publicly-held limited partnerships and 2 trusts (collectively, the "Partnerships"). PEC owns Eastern Oil Well Service Company, EOWS Midland Company, and Southwest Oilfield Construction Company, all of which perform oil and gas field services.  PEC also owns Prime Operating Company, which serves as operator for most of the producing oil and gas properties owned by the Company and affiliated entities. Field service revenues and the administrative overhead fees earned as operator are reported as 'District operating income' on the consolidated statement of operations. PrimeEnergy Corporation and its wholly-owned subsidiaries are herein referred to as the "Company".



The Company is engaged in the development, acquisition and production of oil and natural gas properties.  The Company owns leasehold, mineral and royalty interests in producing and non-producing oil and gas properties across the continental United States, including Colorado, Kansas, Louisiana, Mississippi, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, Texas, Utah, West Virginia and Wyoming.  The Company operates approximately 1,600 wells and owns non-operating interests in over 800 additional wells.  Additionally, the Company provides well-servicing support operations, site-preparation and construction services for oil and gas drilling and re-working operations, both in connection with the Company's activities and providing contract services for third parties.  The Company is publicly traded on the NASDAQ under the symbol "PNRG."



The markets for the Company's products and services are highly competitive, as oil and gas are commodity products and prices depend upon numerous factors beyond the control of the Company, such as economic, political and regulatory developments and competition from alternative energy sources.



Principles of Consolidation-



The consolidated financial statements include the accounts of PrimeEnergy Corporation and its wholly-owned subsidiaries.  All material inter-company accounts and transactions between these entities have been eliminated. Oil and gas properties include ownership interests in the Partnerships.  The statement of operations includes the Company's proportionate share of revenue and expenses related to oil and gas interests owned by the Partnerships.



9

Use of Estimates-



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



Estimates of oil and gas reserves, as determined by independent petroleum engineers, are continually subject to revision based on price, production history and other factors.  Depletion expense, which is computed based on the units of production method, could be significantly impacted by changes in such estimates.  Additionally, SFAS No. 121 requires that, if the expected future cash flow from an asset is less than its carrying cost, that asset must be written down to its fair market value.  As the fair market value of a property is generally substantially less than the total future cash flow expected from the asset, small changes in the estimated future net revenue from an asset could lead to the necessity of recording a significant impairment of that asset.



Property and Equipment-



The Company follows the "successful efforts" method of accounting for its oil and gas properties.  Under the successful efforts method, costs of acquiring undeveloped oil and gas leasehold acreage, including lease bonuses, brokers' fees and other related costs are capitalized. Provisions for impairment of undeveloped oil and gas leases are based on periodic evaluations. Annual lease rentals and exploration expenses, including geological and geophysical expenses and exploratory dry hole costs, are charged against income as incurred. Costs of drilling and equipping productive wells, including development dry holes and related production facilities, are capitalized.  Costs incurred by the Company related to the exploration, development and acquisition of oil and gas properties on behalf of the Partnerships or joint ventures are deferred and charged to the related entity upon the completion of the acquisition.  To the extent that the Company acquires an interest in the property, an appropriate allocation of internal costs are capitalized as part of the depletable base of the property.



All other property and equipment are carried at cost.  Depreciation and depletion of oil and gas production equipment and properties are determined under the unit-of-production method based on estimated proved recoverable oil and gas reserves.  Depreciation of all other equipment is determined under the straight-line method using various rates based on useful lives.  The cost of assets and related accumulated depreciation is removed from the accounts when such assets are disposed of, and any related gains or losses are reflected in current earnings.



Income Taxes-



The Company records income taxes in accordance with Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes".  SFAS No. 109 is an asset and liability approach to accounting for income taxes, which requires the recognition of deferred tax assets and liabilities for the expected future consequences of



10

events that have been recognized in the Company's financial statements or tax returns.



Deferred tax liabilities or assets are established for temporary differences between financial and tax reporting bases and are subsequently adjusted to reflect changes in the rates expected to be in effect when the temporary differences reverse.  A valuation allowance is established for any deferred tax asset for which realization is not likely.



General and Administrative Expenses-



General and administrative expenses represent costs and expenses associated with the operation of the Company.  Certain of the Partnerships and joint ventures sponsored by the Company reimburse general and administrative expenses incurred on their behalf.



Income per share-



Income per share of common stock has been computed based on the weighted average number of common shares and common stock equivalents outstanding during the respective periods in accordance with SFAS No. 128, "Earnings per Share".



Statements of cash flows-



For purposes of the consolidated statements of cash flows, the Company considers short-term, highly liquid investments with original maturities of less than ninety days to be cash equivalents.



Concentration of Credit Risk-



The Company maintains significant banking relationships with financial institutions in the State of Texas.  The Company limits its risk by periodically evaluating the relative credit standing of these financial institutions.  The Company's oil and gas production purchasers consist primarily of independent marketers and major gas pipeline companies.



Hedging-



From time to time, the Company may enter into futures contracts in order to reduce its exposure related to changes in oil and gas prices.  In accordance with Statement of Financial Accounting Standards No. 133, any gain or loss on such contracts is treated as an adjustment to oil and gas revenue. Cash activity related to hedging transactions is treated as operating activity on the Statements of Cash Flows.



Recently Issued Accounting Standards-



In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No.101, Revenue Recognition in Financial Statements ("SAB No. 101").  SAB No. 101 provides guidance for revenue recognition under certain circumstances.  The adoption of SAB 101 in 2000 did not have a significant impact on the Company's financial position, results of operations or cash flows.



In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS



11

No. 141, "Business Combinations." SFAS No. 141 is intended to improve the transparency of the accounting and reporting for business combinations by requiring that all business combinations be accounted for under a single method - the purchase method. SFAS 141 is effective for all transactions completed after June 30, 2001, except transactions using the pooling-of-interests method that were initiated prior to July 1, 2001. The adoption of SFAS 141 did not have an impact on the Company's consolidated financial statements.

In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets." This statement applies to intangibles and goodwill acquired after June 30, 2001, as well as goodwill and intangibles previously acquired. Under this statement, goodwill as well as other intangibles determined to have an infinite life will no longer be amortized; however, these assets will be reviewed for impairment on a periodic basis. This statement is effective for the Company for the first quarter in the fiscal year ending December 31, 2002. Management does not believe that the adoption of this statement will have a material effect on the Company's financial statements.

In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 requires the fair value of a liability for an asset retirement obligation to be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. Management has not yet determined the impact of the adoption of this statement.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 requires that long-lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or in discontinued operations. Therefore, discontinued operations will no longer be measured at net realizable value or include amounts for operating losses that have not yet occurred. SFAS No. 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001 and generally, is to be applied prospectively.





(2)  Restricted Cash and Cash Equivalents:

Restricted cash and cash equivalents includes $1,166,000 and $1,128,000 at September 30, 2001 and December 31, 2000, respectively, of cash primarily pertaining to undistributed royalty payments. There were corresponding accounts payable recorded at September 30, 2001 and December 31, 2000 for these liabilities.



(3)  Accounts Receivable:

Accounts receivable at September 30, 2001 and December 31, 2000 consisted of the following:







12





|                             | September 30, | December 31,   
|---------------------------- | ------------- | ---------------
|                             | 2001          | 2000           
|                             |               |                
|Joint Interest Billing       | $             | 1,172,000      
|Trade Receivables            |               | 1,361,000      
|Oil and Gas Sales            |               | 2,417,000      
|Other                        |               | 109,000        
|                             |               | ---------------
|                             |               | 5,059,000      
|Less, Allowance for doubtful |               |                
|accounts                     |               | (141,000)      
|                             |               | ---------------
|                             | $             | 4,918,000      
|                             |               | ==========     





(4)  Property and equipment:

Property and equipment at September 30, 2001 and December 31, 2000 consisted of the following:







|                                        | September 30, | December 31,    
|--------------------------------------- | ------------- | ----------------
|                                        | 2001          | 2000            
|                                        |               |                 
|                                        |               |                 
|Proved oil and gas properties at cost   | $             | 61,790,000      
|Unproved oil and gas properties at cost |               | 176,000         
|Less, accumulated depletion             |               |                 
|and depreciation                        |               | (41,564,000)    
|                                        |               | ----------------
|                                        |               | 20,402,000      
|                                        |               |                 
|Furniture, fixtures and equipment       |               | 8,536,000       
|Less, accumulated depreciation          |               | (4,925,000)     
|                                        |               | ----------------
|                                        |               | 3,611,000       
|                                        |               | ----------------
|Total net property and equipment        | $             | 24,013,000      
|                                        |               | ==========      





(5)  Long-Term Bank Debt:

The Company has been party to a series of credit agreements with its primary lender or its predecessors since 1983.  The current agreement, entered into in April 1995, provides



13

for borrowings under a Master Note.  Advances under the agreement, as amended, are limited to the borrowing base as defined in the agreement.  The borrowing base is re-determined by the lender on a semi-annual basis.  Since the beginning of 1999, the borrowing base has ranged from $18.95 million to $23.7 million.  The credit agreement provides for interest on outstanding borrowings at the bank's base rate, as defined, payable monthly, or at rates ranging from 1.5% to 2% over the London Inter-Bank Offered Rate (LIBO rate) depending upon the Company's utilization of the available line of credit, payable at the end of the applicable interest period.



The combined average interest rates paid on outstanding borrowings subject to interest at the bank's base rate and on outstanding borrowings bearing interest based upon the LIBO rate were 6.59% during the first nine months of 2001 as compared to 8.40% during the same period of 2000.  As of September 30, 2001 and December 31, 2000, the total outstanding borrowings were $14.5 million and $17.2 million, respectively, with an additional $8.3 million and $1.75 million available, and $14.2 million and $13.5 million of the amounts outstanding accruing interest at the LIBO rate option.



The Company's oil and gas properties as well as certain receivables and equipment are pledged as security under the loan agreement. The agreement requires the Company to maintain, as defined, a minimum current ratio, tangible net worth, debt coverage ratio and interest coverage ratio, and restrictions are placed on the payment of dividends and the amount of treasury stock the Company may purchase.



(6) Other Long-Term Obligations:



Other long-term obligations at September 30, 2001 and December 31, 2000 consisted of the following:





|                               | September 30, | December 31,  
|------------------------------ | ------------- | --------------
|                               | 2001          | 2000          
|                               |               |               
|Due under oil and gas property |               |               
|purchase (Note 7)              | $             | 1,056,000     
|Capital lease obligations      |               | 14,000        
|                               |               |               
|Less, current portion          |               | (1,061,000)   
|                               |               | --------------
|                               | $             | 9,000         
|                               |               | =========     

(7) Contingent Liabilities:



In connection with the purchase of oil and gas properties located in various counties in Oklahoma in November of 1999, the Company is committed to pay contingent consideration to the seller based upon the performance of the properties purchased. As  of December 31, 2000, the total amount of contingent consideration estimated to be paid under the agreement was $1,850,000.  $1,000,000 of this obligation was included in 'Other long-term obligations' with the remaining $850,000 included in  'Current portion



14

of other long-term obligations'. As of September 30, 2001, the total estimated amount of consideration to be paid was reduced by $150,000 to $1,700,000 of which $644,000 was paid in the first nine months of 2001, leaving a net estimated amount due at September 30, 2001 of $1,056,000, all of which is included in 'Current portion of other long-term obligations'.



PEMC, as managing general partner of the affiliated Partnerships is responsible for all Partnership activities, including the review and analysis of oil and gas properties for acquisition, the drilling of development wells and the production and sale of oil and gas from productive wells.  PEMC also provides the administration, accounting and tax preparation work for the Partnerships and is liable for all debts and liabilities of the affiliated Partnerships, to the extent that the assets of a given limited Partnership are not sufficient to satisfy its obligations.

As a general partner, PEMC is committed to offer to purchase the limited partners' interests in certain of its managed Partnerships at various annual intervals.  Under the terms of a partnership agreement, PEMC is not obligated to purchase an amount greater than 10% of the total partnership interest outstanding.  In addition, PEMC will be obligated to purchase interests tendered by the limited partners only to the extent of one hundred fifty (150) percent of the revenues received by it from such partnership in the previous year.  Purchase prices are based upon annual reserve reports of independent petroleum engineering firms discounted by a risk factor.  Based upon historical production rates and prices, management estimates that if all such offers were to be accepted, the maximum annual future purchase commitment would be approximately $500,000.



The Company is subject to environmental laws and regulations.  Management believes that future expenses, before recoveries from third parties, if any, will not have a material effect on the Company's financial condition.  This opinion is based on expenses incurred to date for remediation and compliance with laws and regulations which have not been material to the Company's results of operations.



(8)  Stock Options and Other Compensation:

In May 1989, non-statutory stock options were granted by the Company to four key executive officers for the purchase of shares of common stock.  At September 30, 2001 and 2000, options on 767,500 were outstanding and exercisable at prices ranging from $1.00 to $1.25.



On January 27, 1983, the Company adopted the 1983 Incentive Stock Option Plan.  At December 31, 2000, options on 87,000 shares were exercisable at $1.50 per share.  During July 2001, all outstanding options under this plan were exercised.



PEMC has a marketing agreement with its current President to provide assistance and advice to PEMC in connection with the organization and marketing of oil and gas partnerships and joint ventures and other investment vehicles of which PEMC is to serve as general or managing partner.  The Company had a similar agreement with its former Chairman.  Although that agreement has expired, the former Chairman is still entitled to



15

receive certain payments relating to partnerships formed during the time the agreement was in effect.  The President is entitled to a percentage of the Company's carried interest depending on total capital raised and annual performance of the Partnerships and joint ventures.

(9) Related Party Transactions:

PEMC is a general partner in several oil and gas Partnerships in which certain directors have limited and general partnership interests. As the managing general partner in each of the Partnerships, PEMC receives approximately 5% to 12% of the net revenues of each Partnership as a carried interest in the Partnerships' properties.

The Partnership agreements allow PEMC to receive management fees for various services provided to the Partnerships as well as reimbursement for certain costs incurred on behalf of the Partnerships, including property acquisition and development costs. Reimbursement of general and administrative overhead is reported in the statements of operations as administrative revenue.



Due to related parties at September 30, 2001 and December 31, 2000 primarily represent receipts collected by the Company, as agent, from oil and gas sales net of expenses. Receivables from affiliates consist of reimbursable general and administrative costs, lease operating expenses and reimbursements for property acquisitions, development and related costs.



In the first nine months of 2001, the Company purchased, in a number of separate transactions, 164,598 shares of treasury stock from related parties for total consideration of  $1,159,686.

(10) Income per share:

Basic earnings per share are computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding during the period.  Diluted earnings per share reflect per share amounts that would have resulted if dilutive potential common stock had been converted to common stock.  The following reconciles amounts reported in the financial statements:







|                   | Nine Months Ended  | Nine Months Ended 
|------------------ | ------------------ | ------------------
|                   | September 30, 2001 | September 30, 2000
|                   |                    |                   
|                   | Net
Income         | Number of         
|                   | Shares             | Amount            
|Net income per     |                    |                   
|common share       | $                  | 5,206,000         
|Effect of dilutive |                    |                   
|securities:        |                    |                   
|Options            |                    |                   
|                   |                    | ---------------   
|Diluted net income |                    |                   
|per common share   | $                  | 5,206,000         
|                   |                    | =========         
|                   |                    |                   
|                   |                    |                   

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|                   | Three Months Ended | Three Months Ended
|------------------ | ------------------ | ------------------
|                   | September 30, 2001 | September 30, 2000
|                   |                    |                   
|                   | Net
Income         | Number of         
|                   | Shares             | Amount            
|Net income per     |                    |                   
|common share       | $                  | 630,000           
|Effect of dilutive |                    |                   
|securities:        |                    |                   
|Options            |                    |                   
|                   |                    | ---------------   
|Diluted net income |                    |                   
|per common share   | $                  | 630,000           
|                   |                    | =========         
|                   |                    |                   
|                   |                    |                   























































































17

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



This discussion should be read in conjunction with the financial statements of the Company and notes thereto. The Company's subsidiaries are defined in Note 1 of the financial statements. PEMC is the managing general partner or managing trustee in numerous Limited Partnerships and Trusts (collectively, the "Partnerships").



LIQUIDITY AND CAPITAL RESOURCES



The Company feels that it has the ability to generate sufficient amounts of cash to meet long-term liquidity needs, as well as debt service.  The Company's goal is to generate increased cash flows by increasing its reserve base through continued acquisition, exploration and development. By increasing its reserve base, the Company's borrowing ability is increased due to additional properties available as collateral. Capital expenditures during 2001 were financed by internally generated funds coupled with cash balances available at the prior year-end.



The Company has been party to a series of credit agreements with its primary lender or its predecessors since 1983.  The current agreement, entered into in April 1995, provides for borrowings under a Master Note.  Advances under the agreement, as amended, are limited to the borrowing base as defined in the agreement.  The borrowing base is re-determined by the lender on a semi-annual basis.  Since the beginning of 1999, the borrowing base has ranged from $18.95 million to $23.7 million.  The credit agreement provides for interest on outstanding borrowings at the bank's base rate, as defined, payable monthly, or at rates ranging from 1.5% to 2% over the London Inter-Bank Offered Rate (LIBO rate) depending upon the Company's utilization of the available line of credit, payable at the end of the applicable interest period.



The combined average interest rates paid on outstanding borrowings subject to interest at the bank's base rate and on outstanding borrowings bearing interest based upon the LIBO rate were 6.59% during the first nine months of 2001 as compared to 8.40% during the same period of 2000.  As of September 30, 2001 and December 31, 2000, the total outstanding borrowings were $14.5 million and $17.2 million, respectively, with an additional $8.3 million and $1.75 million available, and $14.2 million and $13.5 million of the amounts outstanding accruing interest at the LIBO rate option.



Advances pursuant to the agreement are limited to the borrowing base as defined in the agreement.  Most of the Company's oil and gas properties as well as certain receivables and equipment are pledged as security under this agreement. Under the Company's credit agreement, the Company is required to maintain, as defined, minimum current, tangible net worth, debt coverage and interest coverage ratios.



The Company spent approximately $4,843,000 on the acquisition, exploration and development of oil and gas properties in the first nine months of 2001, including $467,000 spent to repurchase limited partner interests from investors in the oil and gas partnerships.



The Company also spent approximately $1,697,000 on field service equipment, and $91,000 on computer hardware and software in the first nine months of 2001.





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The Company spent $2,537,000 in the first nine months of 2001 to acquire treasury stock.



Most of the Company's capital spending is discretionary and the ultimate level of spending will be dependent on the Company's assessment of the oil and gas business, the availability of capital, the number of oil and gas prospects, and oil and gas business opportunities in general.



RESULTS OF OPERATIONS



The Company had net income of $5,206,000 for the nine months ended September 30, 2001 as compared to net income of $4,144,000 in the first nine months of 2000. The Company had net income of $630,000 in the third quarter of 2001 as compared to net income of $2,294,000 in the third quarter of 2000. The changes for both periods are primarily attributable to changes in oil and gas prices.  In both periods, there were significantly increased revenues and profitability from the Company's field service operations.



Oil and gas sales of $18,805,000 for the first nine months of 2001 represented an 18% increase over sales in the first nine months of 2000. Third quarter 2001 oil and gas sales of $5,045,000 represented a 27% decline in sales as compared to the same period in 2000. The tables below summarize production, prices and revenue in the periods under discussion.



|                        | Nine Months Ended                                      | Three Months Ended                                     
|----------------------- | ------------------------------------------------------ | -------------------------------------------------------
|                        | September  30,                                         | September 30,                                          
|                        | ------------------------------------------------------ | -------------------------------------------------------
|                        |                                                        |                                                        
|                        | 2001                                                   | 2000                                                   
|                        |                                                        |                                                        
|Barrels of Oil Produced | 227,224                                                | 222,192                                                
|Average Price Received  | $26.2287                                               | $27.8796                                               
|                        | ---------------                                        | ---------------                                        
|Oil Revenue             | $5,960,000                                             | $6,195,000                                             
|                        | ---------------                                        | ---------------                                        
|Mcf of Gas Produced     | 2,731,406                                              | 2,897,690                                              
|Average Price Received  | $4.7025                                                | $3.3739                                                
|                        | ---------------                                        | ---------------                                        
|Gas Revenue             | $12,845,000                                            | $9,776,000                                             
|                        | ---------------                                        | ---------------                                        
|Total Oil & Gas Revenue | $18,805,000                                            | $15,971,000                                            
|                        | =========                                              | =========                                              
|                        |                                                        |                                                        



Changes in production are due to the normal decline curves of properties offset by increased production from properties developed during 2000 and 2001, and from a full period of production from properties purchased during 2000.  The properties with the most significant production increases are summarized below:









- The East Wakita prospect contributed 186,000 Mcf of gas and 200 barrels of oil in the first nine months of 2001, as compared to 75,000 Mcf of gas and no oil in 2000.  The Company has drilled three successful wells on this property, the most recent of which



19



began production in July 2001. Further development of this property, which is located in Grant County, Oklahoma, is planned in the future.



- Seven wells located in Upton County, Texas, which were purchased during the second half of 2000, contributed 43,000 Mcf of gas and 8,700 barrels of oil in the first nine months of 2001, as compared to 6,000 Mcf and 2,300 barrels of oil in 2000.



- Six wells located in Garvin County, Oklahoma, which were purchased in the second half of 2000, contributed 6,900 barrels of oil in the first nine months of 2001, as compared to 1,200 barrels in 2000.





District operating income increased by $3,036,000, or 30%, between the first nine months of 2001 and the first nine months of 2000, and by $884,000, or 24%, in the third quarter of 2001 as compared to the same period in 2000. Both increases reflect the Company's investment in field servicing equipment, discussed above, and its efforts to increase the amount of field service work it performs on wells not operated by the Company, particularly through expanding its operations in the Midland, Texas area.



Administrative revenue for the first nine months of 2001 declined by 2% to $1,172,000, and by 6% to $384,000 in the three months ended September 30, 2001 as compared to that period in the previous year. Amounts received in all periods from certain Partnerships are substantially less than the amounts allocable to those Partnerships under the Partnership agreements. The lower amounts reflect PEMC's continuing efforts to limit costs incurred and the amounts allocated to the Partnerships.



Lease operating expense for the first nine months of 2001 increased by 27% or $1,740,000 compared to the first nine months of 2000, and by 10% or $260,000 in the three months ended September 30, 2001 compared to the same period in the previous year.  Approximately $750,000 of the nine month increase is attributable to properties purchased or developed in 2000 and 2001, with most of the remainder due to an increase in repair and fix-up work performed.



The Company is reimbursed for costs incurred related to the evaluation, acquisition and development of properties in which interests are owned by its joint venture partners, related partnerships, and trusts. To the extent that these costs are expended at the district level, the reimbursements reduce total district operating expenses. To the extent such expenses are incurred by PEMC, such reimbursements reduce total general and administrative expenses. Such reimbursements totaled approximately $303,000 in the first nine months of 2001 as compared to $800,000 for the same period in 2000, and totaled $128,000 for the three months ended September 30, 2001, as compared to $300,000 for the same period in the prior year. These declines reflect a greater emphasis by the Company on the development and expansion of its field service businesses as opposed to the acquisition and development of oil and gas properties for other entities.



District operating expense increased by $1,645,000, or 20%, in the first nine months of 2001 as compared to the same period in 2000, and by $576,000 or 20% in third quarter of 2001 as compared to the third quarter of 2000. Both increases reflect the Company's continuing



20

investment in field servicing equipment and efforts to expand field service businesses.



Depreciation and depletion of oil and gas properties decreased by 3% or $112,000 for the nine months ended September 30, 2001 as compared to the same period in the previous year, and by 16% or $278,000 for the third quarter of 2001 as compared to that period last year.  These decreases are primarily due to decreases in oil and gas production, as discussed above.



General and administrative expenses increased 14% to $3,251,000 in the first nine months of 2001 as compared to the same period in the previous year, and by 10% to $929,000 in the three months ended September 30, 2001 as compared to the same period last year. The significant declines in cost reimbursement, previously discussed, contributed to these increases.

Exploration costs were $439,000 in the first nine months of 2001 as compared to $129,000 during the same period in 2000. The costs in 2001 consist primarily of the cost of three dry holes drilled during the year, including $175,000 recognized in the third quarter relating to a dry hole drilled in Zavala County, Texas.

Interest expense of $729,000 for the first nine months of 2001 represents a decrease of 37% from the same period in the previous year, and interest expense of $203,000 for the third quarter of 2001 represents a 48% decrease from the previous year. Both of these decreases are due to a combination of lower rates and smaller average balances.



This Report contains forward-looking statements that are based on management's current expectations, estimates and projections.  Words such as "expects," "anticipates," "intends," "plans," "believes," "projects" and "estimates," and variations of such words and similar expressions are intended to identify such forward-looking statements.  These statements constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, and are subject to the safe harbors created thereby.  These statements are not guarantees of future performance and involve risks and uncertainties and are based on a number of assumptions that could ultimately prove inaccurate and, therefore, there can be no assurance that they will prove to be accurate.  Actual results and outcomes may vary materially from what is expressed or forecast in such statements due to various risks and uncertainties.  These risks and uncertainties include, among other things, the possibility of drilling cost overruns and technical difficulties, volatility of oil and gas prices, competition, risks inherent in the Company's oil and gas operations, the inexact nature of interpretation of seismic and other geological and geophysical data, imprecision of reserve estimates, and the Company's ability to replace and expand oil and gas reserves. Accordingly, stockholders and potential investors are cautioned that certain events or circumstances could cause actual results to differ materially from those projected.



Tax expense increased to $1,914,000 for the first nine months of 2001 as compared to $565,000 in 2000.  Year 2000 tax expense was significantly reduced by the use of net operating loss and other tax carryforwards which had previously been fully reserved against.  The 2001 expense includes an increase of $1,682,000 in deferred tax liability, a non-cash item.













21

Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Our market risk sensitive instrument at September 30, 2001 is a revolving line of credit from a bank.  The interest rate on this debt is sensitive to market fluctuations; however, we do not believe that significant fluctuations in the market rate of interest have a material effect on our consolidated financial position, results of operations, or cash flow from operations.





PART II - OTHER INFORMATION

Item 1.	LEGAL PROCEEDINGS

From time to time, the Company is party to certain legal actions and claims arising in the ordinary course of business. While the outcome of these events cannot be predicted with certainty, management does not expect these matters to have a materially adverse effect on the financial position or results of operations of the Company.

Item 2.	CHANGES IN SECURITIES AND USE OF PROCEEDS

None

Item 3.	DEFAULTS UPON SENIOR SECURITIES

None

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

No matters were submitted to a vote of security holders during the period covered in this report.





Item 5.	OTHER INFORMATION

None



Item 6. EXHIBITS AND REPORTS ON FORM 8K



No reports on form 8K were filed by the Company during the nine months ended September 30, 2001.



















22





SIGNATURES





Pursuant to the requirements of the Securities and Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.









|                  | PrimeEnergy Corporation                   
|----------------- | ------------------------------------------
|                  | (Registrant)                              
|                  |                                           
|                  |                                           
|                  |                                           
|November 13, 2001 | /s/ Charles E. Drimal, Jr.                
|(Date)            | ------------------------------            
|                  | Charles E. Drimal, Jr.                    
|                  | President                                 
|                  | Principal Executive Officer               
|                  |                                           
|                  |                                           
|                  |                                           
|November 13, 2001 | /s/ Beverly A. Cummings                   
|(Date)            | -------------------------------           
|                  | Beverly A. Cummings                       
|                  | Executive Vice President                  
|                  | Principal Financial and Accounting Officer

































23