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 March 31, 1997

                                       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 0-17559

               ENEX OIL & GAS INCOME PROGRAM III - SERIES 7, L.P.
        (Exact name of small business issuer as specified in its charter)

              New Jersey                           76-0214444
    (State or other jurisdiction of             (I.R.S. Employer
    incorporation or organization)             Identification No.)

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

                    Issuer's telephone number (713) 358-8401


         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.


                                    Yes x No

<PAGE>
                              PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ENEX OIL & GAS INCOME PROGRAM III - SERIES 7, L.P.
BALANCE SHEET
------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                   MARCH 31,
ASSETS                                                                1997
                                                              ----------------
                                                                 (Unaudited)
CURRENT ASSETS:
<S>                                                           <C>            
  Cash                                                        $        19,831
  Accounts receivable - oil & gas sales                                26,908
  Other current assets                                                  1,815
                                                              ----------------

Total current assets                                                   48,554
                                                              ----------------

OIL & GAS PROPERTIES
  (Successful efforts accounting method) - Proved
   mineral interests and related equipment & facilities             2,010,328
  Less  accumulated depreciation and depletion                      1,839,316
                                                              ----------------

Property, net                                                         171,012
                                                              ----------------


TOTAL                                                         $       219,566
                                                              ================

LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
   Accounts payable                                           $        21,688
   Payable to general partner                                          75,815
                                                              ----------------

Total current liabilities                                              97,503
                                                              ----------------

PARTNERS' CAPITAL:
   Limited partners                                                    79,083
   General partner                                                     42,980
                                                              ----------------

Total partners' capital                                               122,063
                                                              ----------------

TOTAL                                                         $       219,566
                                                              ================


Number of $500 Limited Partner units outstanding                        4,527
</TABLE>





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

                                       I-1

<PAGE>
ENEX OIL & GAS INCOME PROGRAM III - SERIES 7, L.P.
STATEMENTS OF OPERATIONS
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
 
(UNAUDITED)                                THREE MONTHS ENDED
                                       ----------------------------------------

                                          MARCH 31,              MARCH 31,
                                             1997                  1996
                                     -------------------    -------------------

REVENUES:
<S>                                  <C>                       <C>              
  Oil and gas sales                  $           71,242        $        69,273  
                                     -------------------    -------------------

EXPENSES:
  Depreciation and depletion                      8,652                 13,726
  Impairment of property                              -                128,116
  Lease operating expenses                       30,707                 36,869
  Production taxes                                4,270                  4,326
  General and administrative                      7,377                 10,760
                                     -------------------    -------------------

Total expenses                                   51,006                193,797
                                     -------------------    -------------------

INCOME (LOSS) FROM OPERATIONS                    20,236               (124,524)
                                     -------------------    -------------------

OTHER INCOME:
  Gain on sale of property                            -                    393
                                     -------------------    -------------------

NET INCOME (LOSS)                    $           20,236        $      (124,131) 
                                     ===================    ===================
</TABLE>



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

                                       I-2

<PAGE>
ENEX OIL & GAS INCOME PROGRAM III - SERIES 7, L.P.

STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1996 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1997
------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                                  PER $500
                                                                                                   LIMITED
                                                                                                   PARTNER
                                                         GENERAL              LIMITED             UNIT OUT-
                                    TOTAL                PARTNER             PARTNERS             STANDING
                              -----------------    ------------------   ------------------   ------------------

<S>              <C>          <C>                  <C>                  <C>                  <C>              
BALANCE, JANUARY 1, 1996      $        177,956     $          31,115    $         146,841    $              32

CASH DISTRIBUTIONS                      (9,671)                 (969)              (8,702)                  (2)

NET INCOME                             (66,458)                9,946              (76,404)                 (17)
                              -----------------    ------------------   ------------------   ------------------

BALANCE, DECEMBER 31, 1996             101,827                40,092               61,735                   13

NET INCOME                              20,236                 2,888               17,348                    4
                              -----------------    ------------------   ------------------   ------------------

BALANCE, MARCH 31, 1997       $        122,063     $          42,980    $          79,083 (1)$              17
                              =================    ==================   ==================   ==================
</TABLE>


(1)  Includes 840 units purchased by the general partner as a limited partner.




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

                                       I-3

<PAGE>
ENEX OIL AND GAS INCOME PROGRAM III - SERIES 7, L.P.
STATEMENTS OF CASH FLOWS
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>

(UNAUDITED)
                                                                 THREE MONTHS ENDED
                                                           ------------------------------------------

                                                              MARCH 31,                MARCH 31,
                                                                 1997                    1996
                                                         -------------------      -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                      <C>                         <C>              
Net income (loss)                                        $           20,236          $      (124,131) 
                                                         -------------------      -------------------

Adjustments to reconcile net income (loss) to net cash
   provided by operating activities:
  Depreciation and depletion                                          8,652                   13,726
  Impairment of property                                                  -                  128,116
  Gain on sale of property                                                -                     (393)
(Increase) decrease in:
  Accounts receivable - oil & gas sales                               2,411                   (9,924)
  Other current assets                                                  495                      129
(Decrease) in:
   Accounts payable                                                  (4,014)                 (14,042)
   Payable to general partner                                       (15,609)                  (6,786)
                                                         -------------------      -------------------

Total adjustments                                                    (8,065)                 110,826
                                                         -------------------      -------------------

Net cash provided (used) by operating activities                     12,171                  (13,305)
                                                         -------------------      -------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Proceeds from sale of property                                        -                    6,300
    Property credits - development costs                              1,460                      306
                                                         -------------------      -------------------

Net cash provided by investing activities                             1,460                    6,606
                                                         -------------------      -------------------

NET INCREASE (DECREASE) IN CASH                                      13,631                   (6,699)

CASH AT BEGINNING OF YEAR                                             6,200                    8,426
                                                         -------------------      -------------------

CASH AT END OF PERIOD                                    $           19,831         $          1,727  
                                                         ===================      ===================

</TABLE>




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

                                       I-4

<PAGE>

ENEX OIL & GAS INCOME PROGRAM III - SERIES 7, 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.   Effective  February  1, 1996,  the Company  sold its  interest in the Credo
     acquisition for $6,300. The Company recognized a gain of $393 on the sale.

3.       On April 7, 1997, the Company's  General  Partner mailed proxy material
         to the limited partners with respect to a proposed consolidation of the
         Company  with 33 other  managed  limited  partnerships.  The  terms and
         conditions  of the proposed  consolidation  are set forth in such proxy
         material.

4.   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,  ("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 $128,116 for certain
     oil and gas properties due to changes in the overall market for the sale of
     oil and gas and  significant  decreases in the  projected  production  from
     certain of the Company's oil and gas properties.


                                       I-5

<PAGE>



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

First Quarter 1997 Compared to First Quarter 1996

Oil and gas  sales for the  first  quarter  increased  from  $69,273  in 1996 to
$71,242 in 1997. This represents an increase of $1,969 (3%). Oil sales increased
by $7,143 or 15%. A 36% increase in the average oil sales price  increased sales
by  $14,467.  This  increase  was  partially  offset  by a 15%  decline  in  oil
production.  Gas  sales  decreased  by  $5,174  or  24%.  A 48%  decline  in gas
production reduced sales by $10,609. This decrease was partially offset by a 48%
increase in the average gas sales  price.  The  decrease in oil  production  was
primarily  a  result  of  natural  production  declines.  The  decrease  in  gas
production  was due to sale of the Kidd well on the Enexco  acquisition in April
1996,  the sale of the Harper well in the RIC  acquisition in June 1996, and the
sale of the  Spider  Lake  well in the  RIC  acquisition  in  August  1996.  The
increases  in the  average  oil and gas  prices  were due to  relatively  higher
production from properties with a higher average sales price coupled with higher
prices in the overall market for the sale of oil and gas.

Lease operating  expenses decreased from $36,869 in the first quarter of 1996 to
$30,707 in the first quarter of 1997.  The decrease of $6,162 (17%) is primarily
due to the changes in production, noted above.

Depreciation and depletion  expense  decreased from $13,726 in the first quarter
of 1996 to $8,652 in the first  quarter of 1997.  This  represents a decrease of
$5,074 (37%). The changes in production,  noted above,  reduced depreciation and
depletion  expense by $3,660.  A 14%  decrease  in the  depletion  rate  reduced
depreciation and depletion expense by an additional $1,414. The rate decrease is
primarily due to an upward  revision of the oil and gas reserves during December
1996.

Effective  February  1,  1996,  the  Company  sold  its  interest  in the  Credo
acquisition for $6,300. The Company recognized a gain of $393 on the sale.

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,  ("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 $128,116 for certain
oil and gas  properties due to changes in the overall market for the sale of oil
and gas and  significant  decreases in the projected  production from certain of
the Company's oil and gas properties.

General and administrative  expenses decreased from $10,760 in the first quarter
of 1996 to $7,377 in the first quarter of 1997. This decrease of $3,383 (31%) is
primarily  due to less  staff  time  being  required  to  manage  the  Company's
operations,  partially  offset by $1,522 lower direct  expenses  incurred by the
Company in 1997.


                                       I-6

<PAGE>



CAPITAL RESOURCES AND LIQUIDITY

On April 7, 1997,  the Company's  General  Partner  mailed proxy material to the
limited partners with respect to a proposed consolidation of the Company with 33
other managed  limited  partnerships.  The terms and  conditions of the proposed
consolidation are set forth in such proxy material.

The  Company's  cash  flow is a direct  result  of the  amount  of net  proceeds
realized from the sale of oil and gas  production  after the payment of its debt
obligations.  Accordingly,  the  changes  in cash  flow  from  1996 to 1997  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
remaining  available  cash  flow  to  the  Company's  partners.   The  Company's
"available cash flow" is essentially equal to the net amount of cash provided by
operating, financing and investing activities.

The Company will continue to recover its reserves and  distribute to the limited
partners the net proceeds realized from the sale of oil and gas production after
the payment of its debt obligations.  Distribution amounts are subject to change
if net  revenues  are greater or less than  expected.  Nonetheless,  the general
partner  believes the Company will continue to have sufficient cash flow to fund
operations and to maintain a regular pattern of distributions.

As of March 31,  1997,  the  Company  had no  material  commitments  for capital
expenditures.  The  Company  does  not  intend  to  engage  in  any  significant
developmental drilling activity.


                                       I-7

<PAGE>





                           PART II. OTHER INFORMATION

         Item 1.   Legal proceedings.

                   None

         Item 2.   Changes in Securities.

                   None

         Item 3.   Defaults upon Senior Securities.

                   Not Applicable

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

                   Not Applicable

         Item 5.   Other Information.

                   Not Applicable

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

                   (a)  There are no exhibits to this report.

                   (b)  The  Company  filed no  reports  on Form 8-K  during the
                        quarter ended March 31, 1997.


                                      II-1

<PAGE>

                                  SIGNATURES


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


                                                      ENEX OIL & GAS INCOME
                                                     PROGRAM III - 7, 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




May 11, 1997                                      By: /s/ James A. Klein
                                                     -------------------
                                                          James A. Klein
                                                       Controller and Chief
                                                        Accounting Officer