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


                                FORM 10-QSB


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

             For the quarterly period ended September 30, 1996

                                    OR

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

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

                      Commission file number 0-17557

          ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 1, L.P.
     (Exact name of small business issuer as specified in its charter)

          New Jersey                                           76-0251410
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                             Identification No.)

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

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

         Check whether the issuer (1) has filed all reports required to be filed
by  Section  13 or 15(d) of the  Exchange  Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),  and
(2) has been subject to such filing requirements for the past 90 days.
                                                 Yes x      No

Transitional Small Business Disclosure Format (Check one):

                                                  Yes        No x



<PAGE>


                              PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

<TABLE>
<CAPTION>
ENEX  88-89 INCOME AND RETIREMENT FUND - SERIES 1, L.P.
BALANCE SHEET
------------------------------------------------------------------------------

                                                             September 30,
ASSETS                                                            1996
                                                         ---------------------
                                                             (Unaudited)
CURRENT ASSETS:
<S>                                                      <C>                 
  Cash                                                   $              1,424
  Accounts receivable - oil & gas sales                                18,583
                                                         ---------------------

Total current assets                                                   20,007
                                                         ---------------------

OIL & GAS PROPERTIES
  (Successful efforts accounting method) - Proved
   mineral interests                                                1,578,968
  Less accumulated depletion                                        1,533,509
                                                         ---------------------

Property, net                                                          45,459
                                                         ---------------------

TOTAL                                                    $             65,466
                                                         =====================

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)

CURRENT LIABILITIES:
   Payable to general partner                            $             19,271
                                                         ---------------------



NONCURRENT PAYABLE TO GENERAL PARTNER                                  77,085
                                                         ---------------------

PARTNERS' CAPITAL (DEFICIT):
   Limited partners                                                   (35,063)
   General partner                                                      4,173
                                                         ---------------------

Total partners' capital                                               (30,890)
                                                         ---------------------

TOTAL                                                    $             65,466
                                                         =====================

Number of $500 Limited Partner units outstanding                        3,605
</TABLE>


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

                                       I-1
<PAGE>
<TABLE>
<CAPTION>
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 1, L.P.
STATEMENTS OF OPERATIONS
------------------------------------------------------------------------------------------


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

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

REVENUES:
<S>                               <C>                <C>                  <C>                  <C>               
  Oil and gas sales               $        2,946     $          6,280     $         29,224     $           26,545
                                 ----------------    -----------------    -----------------    -------------------

EXPENSES:
  Depletion and amortization                (877)              18,721               16,177                 38,113
  Impairment of property                       -                    -              333,294                      -
  Production taxes                           524                1,327                3,280                  2,301
  General and administrative               3,428                3,672               12,622                 11,649
                                 ----------------    -----------------    -----------------    -------------------

Total expenses                             3,075               23,720              365,373                 52,063
                                 ----------------    -----------------    -----------------    -------------------

NET (LOSS)                         $        (129)    $        (17,440)    $       (336,149)    $          (25,518)
                                 ================    =================    =================    ===================
</TABLE>



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

                                       I-2
<PAGE>
<TABLE>
<CAPTION>
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 1, L.P.
STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------------------------

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

                                                         September 30,            September 30,
                                                              1996                    1995
                                                      -------------------      -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                   <C>                        <C>                 
Net (loss)                                            $         (336,149)        $        (25,518)   
                                                      -------------------      -------------------

Adjustments to reconcile net (loss) to net cash
   provided by operating activities:
  Depletion and amortization                                      16,177                   38,113
  Impairment of property                                         333,294                        -
(Increase) decrease in:
  Accounts receivable - oil & gas sales                           (4,594)                  10,981
  Receivable from affiliated limited partnership                       -                     (221)
(Decrease) in:
   Accounts payable                                               (2,502)                  (3,050)
   Payable to general partner                                     (5,275)                 (13,868)
                                                      -------------------      -------------------

Total adjustments                                                337,100                   31,955
                                                      -------------------      -------------------

Net cash provided by operating activities                            951                    6,437
                                                      -------------------      -------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Cash distributions                                                 -                   (7,600)
                                                      -------------------      -------------------

NET INCREASE (DECREASE) IN CASH                                      951                   (1,163)

CASH AT BEGINNING OF YEAR                                            473                    4,171
                                                      -------------------      -------------------

CASH AT END OF PERIOD                                 $            1,424         $          3,008    
                                                      ===================      ===================

</TABLE>


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

                                       I-3

<PAGE>

ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 1, L.P.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

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

2.   The Financial  Accounting Standards Board has issued Statement of Financial
     Accounting  Standard  ("SFAS") No. 121,  "Accounting  for the Impairment of
     Long-Lived  Assets  and for  Long-Lived  Assets to be  Disposed  Of," which
     requires  certain assets to be reviewed for impairment  whenever  events or
     circumstances indicate the carrying amount may not be recoverable. Prior to
     this pronouncement,  the Company assessed properties on an aggregate basis.
     Upon  adoption of SFAS 121,the  Company  began  assessing  properties on an
     individual  basis,  wherein  total  capitalized  costs may not  exceed  the
     property's  fair market  value.  The fair market value of each property was
     determined by H. J. Gruy and  Associates  Inc.,  (Gruy").  To determine the
     fair market value,  Gruy  estimated  each  property's oil and gas reserves,
     applied certain assumptions regarding price and cost escalations, applied a
     10%  discount  factor  for time and  certain  discount  factors  for  risk,
     location,  type of ownership  interest,  category of reserves,  operational
     characteristics,  and other  factors.  In the first  quarter  of 1996,  the
     Company recognized a non-cash impairment  provision of $333,294 for certain
     oil and gas  properties due to market  conditions and reserve  revisions on
     the Lake Decade acquisition, which indicated that the carrying amounts were
     not fully recoverable.


                                       I-4

<PAGE>



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


Third Quarter 1995 Compared to Third Quarter 1996

Oil and gas sales for the third quarter  decreased to $2,946 in 1996 from $6,280
in 1995.  This  represents a decrease of $3,334  (53%).  Oil sales  decreased by
$1,122 or 30%. A 5% decrease in average net oil prices  reduced sales by $154. A
26% decrease in oil  production  reduced sales by an additional  $968. Gas sales
decreased  by $2,212 or 91%. A 115%  decrease  in the  average  gas sales  price
decreased sales by $1,617. A 158% decrease in gas production decreased gas sales
an additonal  $595. The decrease in oil production was primarily due to seasonal
decreases. The decrease in gas production was primarily due to higher production
from the Corinne  acquisition  in the third quarter of 1995. The decrease in the
average net oil sales price was primarily due to higher  operating costs charged
against the Company's net profits royalty  properties,  especially at the Bagley
acquisition, which had a workover in the third quarter of 1996, partially offset
by higher prices in the overall  market for the sale of oil. The decrease in the
average net gas sales price was primarily due to  relatively  higher  production
from the Corinne acquisition which has a lower gas sales price.

Depletion expense decreased to a negative $877 in the third quarter of 1996 from
$18,721 in the third  quarter of 1995.  This  represents  an decrease of $19,598
(105%). The changes in production,  noted above,  increased depletion expense by
$19,439. A 100% decrease in the depletion rate decreased depletion expense by an
additional  $159.  This rate  increase was  primarily the result of a relatively
higher  production from  properties with a higher  depletion rate coupled with a
downward revision of the gas reserves during December 1995,  partially offset by
the lower property basis resulting from the  recognition of a $333,294  property
impairment.

General and  administrative  expenses decreased to $3,428 in 1996 from $3,672 in
1995.  This  decrease  of $244 (7%) is  primarily  due to less  staff time being
required to manage the Company's operations.

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

Oil and gas sales for the first nine  months  increased  to $29,224 in 1996 from
$26,545  in 1995.  This  represents  an  increase  of  $2,679  (10%).  Oil sales
decreased by $874 or 9%. A 13% decrease in oil  production  reduced oil sales by
$1,320.  This decrease was partially  offset by a 4% increase in the average oil
sales price.  Gas sales  increased by $3,553.  A 26% increase in the average gas
sales  price  increased  sales by  $4,152.  This was  partially  offset  by a 4%
decrease in gas production.  The decrease in oil production was primarily due to
seasonal production  declines.  The decrease in gas production was primarily due
to lower  production from the Corinne  acquisition.  The increase in the average
net oil sales  price was  primarily  due to  workover  expenses  incurred on the
Barnes Estate acquisition,  on which the Company receives a net profits royalty.
The increase in gas price is result of the overall market conditions for gas.

                                       I-5

<PAGE>




Depletion  expense  decreased  to $16,177 in the first nine  months of 1996 from
$38,113 in the first nine months of 1995.  This represents a decrease of $21,936
(58%).  A 54%  decrease  in the  depletion  rate  reduced  depletion  expense by
$19,374.  A decrease in  production  noted above  reduced  expense an additional
$2,562.  The  decrease  in the  depletion  rate was  primarily  due to the lower
property basis resulting from the recognition of a $333,294 property  impairment
in the first quarter of 1996.

The  Financial  Accounting  Standards  Board has issued  Statement  of Financial
Accounting  Standard  ("SFAS")  No.  121,  "Accounting  for  the  Impairment  of
Long-Lived  Assets and for Long- Lived Assets to be Disposed Of," which requires
certain assets to be reviewed for impairment  whenever  events or  circumstances
indicate  the   carrying   amount  may  not  be   recoverable.   Prior  to  this
pronouncement,  the Company  assessed  properties  on an aggregate  basis.  Upon
adoption of SFAS 121,the  Company  began  assessing  properties on an individual
basis, wherein total capitalized costs may not exceed the property's fair market
value.  The fair market value of each property was  determined by H. J. Gruy and
Associates Inc.,  ("Gruy").  To determine the fair market  value,Gruy  estimated
each  property's oil and gas reserves,  applied  certain  assumptions  regarding
price and cost  escalations,  applied a 10% discount factor for time and certain
discount factors for risk,  location,  type of ownership  interest,  category of
reserves,  operational characteristics,  and other factors. In the first quarter
of 1996, the Company recognized a non-cash impairment  provision of $333,294 for
certain oil and gas properties due to market conditions and reserve revisions on
the Lake Decade acquisition,  which indicated that the carrying amounts were not
fully recoverable.

General and administrative expenses increased to $12,622 in 1996 from $11,649 in
1995.  This  increase  of $973 (8%) is  primarily  due to more  staff time being
required to manage the Company's operations.


CAPITAL RESOURCES AND LIQUIDITY


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

The  Company  discontinued  the payment of  distributions  during  1995.  Future
distributions  are dependent  upon,  among other  things,  an increase in prices
received for oil and gas. The Company will  continue to recover its reserves and
distribute  to the limited  partners the net proceeds  realized form the sale of
oil and gas  production.  Distribution  amounts  are  subject  to  change if net
revenues are greater or less than expected.  Future periodic  distributions will
be made once sufficient net revenues are accumulated.


                                       I-6

<PAGE>



                           PART II. OTHER INFORMATION

         Item 1.   Legal Proceedings.

                   None

         Item 2.   Changes in Securities.

                   None

         Item 3.   Defaults Upon Senior Securities.

                   Not Applicable

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

                   Not Applicable

         Item 5.   Other Information.

                   Not Applicable

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

                   (a)  There are no exhibits to this report.

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


                                      II-1

<PAGE>



                                   SIGNATURES


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


                                                ENEX 88-89 INCOME AND
                                          RETIREMENT FUND - SERIES 1, L.P.
                                                    (Registrant)



                                            By:ENEX RESOURCES CORPORATION
                                                   General Partner



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




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


<PAGE>