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

                                  FORM 10-QSB/A
   
                                   Amendment I
    

              [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 0-17559

               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

Transitional Small Business Disclosure Format (Check one):

                                    Yes No x


<PAGE>

                              PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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

                                                                  September 30,
ASSETS                                                                 1996
                                                              ---------------------
                                                                   (Unaudited)
CURRENT ASSETS:

<S>                                                           <C>
  Accounts receivable - oil & gas sales                       $             27,709
  Other current assets                                                       2,490
                                                              ---------------------

Total current assets                                                        30,199
                                                              ---------------------

OIL & GAS PROPERTIES
  (Successful efforts accounting method) - Proved
   mineral interests and related equipment & facilities                  1,996,940
  Less  accumulated depreciation and depletion                           1,834,644
                                                              ---------------------

Property, net                                                              162,296
                                                              ---------------------


TOTAL                                                         $            192,495
                                                              =====================

LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
   Accounts payable                                           $             22,110
   Payable to general partner                                               83,761
                                                              ---------------------

Total current liabilities                                                  105,871
                                                              ---------------------

PARTNERS' CAPITAL:
   Limited partners                                                         47,656
   General partner                                                          38,968
                                                              ---------------------

Total partners' capital                                                     86,624
                                                              ---------------------

TOTAL                                                         $            192,495
                                                              =====================

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


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

                                       I-1
<PAGE>
<TABLE>
<CAPTION>
ENEX OIL & GAS INCOME PROGRAM III - SERIES 7, 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                  $        62,751     $         57,419     $        194,884   $ $          191,633
                                    -----------------    -----------------    -----------------    -------------------

EXPENSES:
  Depreciation and depletion                  14,926               25,669               41,776                 75,958
  Impairment of property                           -                    -              128,116
  Lease operating expenses                    28,968               32,660               95,136                100,270
  Production taxes                             3,683                3,221               11,761                 11,013
  General and administrative                   7,197                9,710               27,013                 33,700
                                    -----------------    -----------------    -----------------    -------------------

Total expenses                                54,774               71,260              303,802                220,941
                                    -----------------    -----------------    -----------------    -------------------

INCOME (LOSS) FROM OPERATIONS                  7,977              (13,841)            (108,918)               (29,308)
                                    -----------------    -----------------    -----------------    -------------------

OTHER INCOME:
  Gain on sale of property                       541                    -               27,257                      -
                                    -----------------    -----------------    -----------------    -------------------

NET INCOME (LOSS)                    $        8,518     $        (13,841)    $        (81,661)  $ $          (29,308)
                                    =================    =================    =================    ===================
</TABLE>



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

                                       I-2
<PAGE>
<TABLE>
<CAPTION>
ENEX OIL & GAS INCOME PROGRAM III - SERIES 7, L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
------------------------------------------------------------------------------
                                                                                    PER $500
                                                                                    LIMITED
                                                                                    PARTNER
                                                 GENERAL           LIMITED          UNIT OUT-
                                  TOTAL          PARTNER          PARTNERS          STANDING
                               --------------   -------------    --------------     --------

<S>                            <C>              <C>               <C>               <C>                           
BALANCE, JANUARY 1, 1994       $     313,713    $     25,155      $    288,558      $    64

CASH DISTRIBUTIONS                   (66,168)         (6,619)          (59,549)         (13)

NET INCOME (LOSS)                    (27,650)          7,995           (35,645)          (8)
                               --------------   -------------    --------------     --------

BALANCE, DECEMBER 31, 1994           219,895          26,531           193,364(1)        43

CASH DISTRIBUTIONS                   (30,331)         (3,035)          (27,296)          (6)

NET INCOME (LOSS)                    (11,608)          7,619           (19,227)          (4)
                               --------------   -------------    --------------     --------

BALANCE, DECEMBER 31, 1995     $     177,956    $     31,115       $   146,841 (1)  $    33

CASH DISTRIBUTIONS                    (9,670)           (968)           (8,702)          (2)

NET INCOME (LOSS)                    (81,662)          8,821           (90,483)         (20)
                               --------------   -------------    --------------     --------

BALANCE, SEPTEMBER 30, 1996    $      86,624    $     38,968       $    47,656 (1)  $    11
                               ==============   =============    ==============     ========
</TABLE>

(1)  Includes 839 units purchased by the general partner as a limited partner.



See accompanying notes to financial statements.
------------------------------------------------------------------------------
                                       I-3


<PAGE>

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

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

                                                       September 30,            September 30,
                                                            1995                    1995
                                                    -------------------      -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                 <C>                                 <C>
Net (loss)                                          $          (81,661)          $      (29,308)
                                                    -------------------      -------------------

Adjustments to  reconcile  net (loss) to net cash
  provided  (used) by operating activities:
  Depreciation, depletion and amortization                      41,776                   75,958
  Impairment of property                                       128,116                        -
  Gain on sale of property                                     (27,257)                       -
(Increase) decrease in:
  Accounts receivable - oil & gas sales                         (7,141)                   2,830
  Other current assets                                            (159)                    (682)
(Decrease) in:
   Accounts payable                                             (1,655)                  (4,832)
   Payable to general partner                                  (57,495)                  (4,452)
                                                    -------------------      -------------------

Total adjustments                                               76,185                   68,822
                                                    -------------------      -------------------

Net cash provided (used) by operating activities                (5,476)                  39,514
                                                    -------------------      -------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Proceeds from sale of property                              37,143                        -
    Property additions - development costs                     (30,423)                  (5,336)
                                                    -------------------      -------------------

Net cash provided (used) by investing activities                 6,720                   (5,336)
                                                    -------------------      -------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Cash distributions                                           (9,670)                 (30,330)
                                                    -------------------      -------------------

NET INCREASE (DECREASE) IN CASH                                 (8,426)                   3,848

CASH AT BEGINNING OF YEAR                                        8,426                    1,384
                                                    -------------------      -------------------

CASH AT END OF PERIOD                               $                0           $        5,232
                                                    ===================      ===================
</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.  Effective  April 1, 1996,  the Company  sold its interest in the
         Kidd well in the Enexco acquisition for $16,000. The Company recognized
         a $15,375 gain from the sale.  Effective June 1, 1996, the Company sold
         its interest in the Harper well in the RIC acquisition for $13,904. The
         Company recognized a gain of $10,948 from the sale. Effective August 1,
         1996 the  Company  sold its  interest  in the Spider  Lake 3-2 well for
         $939. The Company recognized a gain of $541 from the sale.

3.       On August 9, 1996, the Company's General Partner submitted  preliminary
         proxy material to the Securities  Exchange Commission with respect to a
         proposed  consolidation  of the Company with 33 other  managed  limited
         partnerships.  On November  13,  1996,  the Company  submitted  amended
         preliminary   proxy   material   to  the  SEC  with   respect  to  this
         consolidation.  The terms and conditions of the proposed  consolidation
         are set forth in such preliminary proxy material.

4.       A cash  distribution was made to the limited partners of the Company in
         the amount of $7,097,  representing  net revenues  from the sale of oil
         and  gas  produced  from   properties   owned  by  the  Company.   This
         distribution was made on July 31, 1996.

5.   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.


Third Quarter 1995 Compared to Third Quarter 1996

Oil and gas  sales for the  third  quarter  increased  to  $62,751  in 1996 from
$57,419 in 1995.  This represents a increase of $5,332 (9%). Oil sales increased
by $383 (1%).  A 36%  increase in the average  oil sales price  caused  sales to
increase by $11,945. This increase was partially offset by a 25% decrease in oil
production.  Gas sales  increased by $4,662 (37%). A 48% increase in the average
gas sales price increased sales by $5,654. This increase was partially offset by
an 8%  decrease  gas  production.  The  changes  in  the  average  sales  prices
correspond  with changes in the overall  market for the sale of oil and gas. The
decreases in oil and gas production were primarily the result of the sale of the
Credo  acquisition in the first quarter of 1996 and the sale of the Kidd well in
the Enexco  acquisition  in the second  quarter of 1996,  coupled  with  natural
production declines.

Lease operating  expenses decreased to $28,968 in the third quarter of 1996 from
$32,660 in the third quarter of 1995.  The decrease of $3,692 (11%) is primarily
due to the changes in production, noted above.

Depreciation and depletion  expense decreased to $14,926 in the third quarter of
1996 from $25,669 in the third  quarter of 1995.  This  represents a decrease of
$10,743 (42%). The changes in production,  noted above, reduced depreciation and
depletion  expense by $5,283,  while a 27% decrease in the depletion rate caused
depreciation and depletion expense to decrease by an additional $5,460. The rate
decrease  is  primarily  due to the  lower  property  basis  resulting  from the
recognition  of an  impairment  of property for $128,116 in the first quarter of
1996.

Effective  August 1, 1996 the Company  sold its  interest in the Spider Lake 3-2
well for $939. The Company recognized a gain of $541 from the sale.

General and administrative  expenses decreased to $7,197 in the third quarter of
1996 from $9,710 in the third quarter of 1996.  This decrease of $2,513 (26%) 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 $194,884 in 1996 from
$191,633 in 1995. This represents a increase of $3,251 (2%). Oil sales decreased
by $5,532 (4%). A 16% decrease in oil production reduced sales by $24,107.  This
decrease was partially  offset by a 15% increase in the average oil sales price.
Gas sales  increased  by $8,209  (18%).  A 36% increase in the average gas sales
price  increased sales by $14,235.  This increase was partially  offset by a 13%
decrease in gas production.  The changes in the average sales prices  correspond
with changes in the overall market for the sale of oil and gas. The decreases in
oil and gas production were primarily a result of natural production declines.


                                       I-6

<PAGE>



Lease operating  expenses  decreased to $95,136 in the first nine months of 1996
from  $100,270 in the first nine months of 1995.  The decrease of $5,134 (5%) is
primarily due to the changes in production, noted above.

Depreciation and depletion expense decreased to $41,776 in the first nine months
of 1996  from  $75,958  in the first  nine  months of 1995.  This  represents  a
decrease  of $34,182  (45%).  The changes in  production,  noted  above,  caused
depreciation and depletion expense to decrease by $11,727,  while a 35% decrease
in  the  depletion  rate  reduced  depreciation  and  depletion  expense  by  an
additional  $22,455.  The rate decrease is primarily  due to the lower  property
basis  resulting from the  recognition of an impairment of property for $128,116
in the first quarter of 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.
Effective  April 1, 1996,  the Company sold its interest in the Kidd well in the
Enexco  acquisition for $16,000.  The Company recognized a $15,375 gain from the
sale.  Effective  June 1, 1996, the Company sold its interest in the Harper well
in the RIC  acquisition  for $13,904.  The Company  recognized a gain of $10,948
from the sale.  Effective  August 1, 1996 the Company  sold its  interest in the
Spider Lake 3-2 well for $939.  The Company  recognized  a gain of $431 from 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.

   
On April 2, 1996, the Company settled a property  interest dispute on the Barnes
Estate acquisition.  In the settlement,  the Company agreed to pay $1,250 to the
plaintiff and convey 0.051  overriding  royalty interest in the Barnes Estate #1
and #2 wells.  Such conveyance  should not have a material impact on the current
or future  revenues  of the  Company  and,  as such,  should not have a material
impact on the current or future  results of operations,  financial  condition or
liquidity of the Company.
    

General  and  administrative  expenses  decreased  to  $27,013 in the first nine
months of 1996 from $33,700 in the first nine months of 1995.  This  decrease of
$6,687  (20%) is primarily  due to less staff time being  required to manage the
Company's operations.

                                       I-7

<PAGE>







CAPITAL RESOURCES AND LIQUIDITY

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  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
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.

On August 9, 1996, the Company's  General Partner  submitted  preliminary  proxy
material  to the  Securities  Exchange  Commission  with  respect  to a proposed
consolidation  of the Company with 33 other  managed  limited  partnerships.  On
November 13, 1996, the Company submitted  amended  preliminary proxy material to
the SEC with  respect to this  consolidation.  The terms and  conditions  of the
proposed consolidation are set forth in such preliminary proxy material.

As of September 30, 1996,  the Company had no material  commitments  for capital
expenditures.  The  Company  does  not  intend  to  engage  in  any  significant
developmental drilling activity.


                                       I-8

<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 September 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 OIL & GAS INCOME
                                  PROGRAM III - SERIES 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




   
January 30, 1997                  By: /s/ James A. Klein
                                      -------------------
                                            James A. Klein
                                        Controller and Chief
                                         Accounting Officer
    


<PAGE>