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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                                   (Mark One)
               [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

                   For the fiscal year ended December 31, 1995

             [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

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

                         Commission file number 0-15434

                              ENEX OIL & GAS INCOME
                          PROGRAM III - Series 2, L.P.
                 (Name of small business issuer in its charter)

       New Jersey                                                 76-0179824
(State or other jurisdiction of                                (I.R.S. Employer
 incorporation or organization)                              Identification No.)

      800 Rockmead Drive
    Three Kingwood Place
      Kingwood, Texas                                          77339
(Address of principal executive offices)                      (Zip Code)

         Issuer's telephone number, including area code: (713) 358-8401

       Securities registered under Section 12(b) of the Exchange Act: None

         Securities registered under Section 12(g) of the Exchange Act:

                          Limited Partnership Interest

            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

            Check if there is no disclosure of delinquent  filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained,  to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.[x]

       State issuer's revenues for its most recent fiscal year. $ 175,023

            State  the  aggregate  market  value  of the  voting  stock  held by
non-affiliates  computed by  reference to the price at which the stock was sold,
or the average bid and asked prices of such stock as of a specified  date within
the past 60 days (See  definition  of  affiliate  in Rule 12b-2 of the  Exchange
Act):

                                 Not Applicable

                      Documents Incorporated By Reference:

                                      None

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<PAGE>



                                TABLE OF CONTENTS

                            FORM 10-KSB ANNUAL REPORT
                      FOR THE YEAR ENDED DECEMBER 31, 1995
               ENEX OIL & GAS INCOME PROGRAM III - SERIES 2, L.P.


Item No.                            Part I                             Page
--------                            ------                             ----

   1               Description of Business                              I-1

   2               Description of Property                              I-3

   3               Legal Proceedings                                    I-4

   4               Submission of Matters to a Vote
                   of Security Holders                                  I-4


                                     Part II
                                  ------------


   5               Market for Common Equity and
                   Related Security Holder Matters                     II-1

   6               Management's Discussion and Analysis
                   or Plan of Operations                               II-2

   7               Financial Statements and Supplementary
                   Data                                                II-4

   8               Changes In and Disagreements With Accountants
                   on Accounting and Financial Disclosure              II-14

                                    Part III
                                 ---------------


   9               Directors, Executive Officers, Promoters and
                   Control Persons; Compliance With Section 16(a)
                   of the Exchange Act                                 III-1

  10               Executive Compensation                              III-3

  11               Security Ownership of Certain
                   Beneficial Owners and Management                    III-4

  12               Certain Relationships and Related
                   Transactions                                        III-4

  13               Exhibits and Reports on Form 8-K                    III-4

                   Signatures                                           S-1


<PAGE>



                                     PART I
Item 1.          Description of Business

General

                 Enex  Oil & Gas  Income  Program  III -  Series  2,  L.P.  (the
"Company")  was formed  under the New Jersey  Uniform  Limited  Partnership  Law
(1976) on March 20, 1986 and  commenced  operations  on  November  20, 1986 with
aggregate  subscriptions  of  $2,135,224,  $2,113,872 of which was received from
2,011 limited partners,  including  investors whose  distributions  from earlier
partnerships   sponsored  by  the  Company's  general  partner,  Enex  Resources
Corporation ("Enex"), were automatically invested in the Company.

                 The Company is engaged in the oil and gas business  through the
ownership  of  various  interests  in  producing  oil  and  gas  properties.  If
warranted, the Company may further develop its oil and gas properties.  However,
the Company does not intend to engage in significant drilling  activities.  Such
activities may be conducted, however, as an incidental part of the management of
producing  properties  or with a view toward  enhancing  the value of  producing
properties.  In no event will the Company engage in exploratory drilling, or use
any of the limited partners' net subscriptions to fund drilling activities.  Any
developmental  drilling will be financed primarily through third party borrowing
or with funds provided from operations. The expenses of drilling, completing and
equipping  and  operating  development  wells are  allocated  90% to the limited
partners and 10% to the general partner.  See Note 1 to the Financial Statements
for  information  relating to the  allocation of costs and revenues  between the
limited  partners  and  the  general  partner.   The  Company's  operations  are
concentrated in a single industry segment.

     The principal  executive  office of the Company is maintained at Suite 200,
Three Kingwood Place, Kingwood, Texas 77339. The telephone number at this office
is (713) 358-8401. The Company has no regional offices.

     The Company has no employees.  On March 1, 1996, Enex and its  subsidiaries
employed 24 persons.

Marketing

                 The  marketing  of oil  and  gas  produced  by the  Company  is
affected  by a number of factors  which are beyond the  Company's  control,  the
exact nature of which cannot be accurately predicted.  These factors include the
quantity and price of crude oil imports, fluctuating supply and demand, pipeline
and other transportation  facilities,  the marketing of competitive fuels, state
and federal  regulation of oil and gas  production  and  distribution  and other
matters  affecting the availability of a ready market.  All of these factors are
extremely volatile.

                 Amoco Production  Company and Exxon  Corporation  accounted for
24%  and  13%,  respectively,  of the  Company's  total  sales  in  1995.  Amoco
Production   Company  and  Exxon   Corporation   accounted   for  22%  and  12%,
respectively,  of  the  Company's  total  sales  in  1994.  No  other  purchaser
individually  accounted  for more than 10% of such sales.  Although  the Company
marketed a significant  portion of its sales to the above noted companies,  such
reliance  is not deemed  material by the  general  partner due to the  commodity
nature of the Company's products.

                                       I-1

<PAGE>



Environmental and Conservation Regulation

                 State regulatory authorities in the states in which the Company
owns  producing  properties  are  empowered to make and enforce  regulations  to
prevent waste of oil and gas and to protect correlative rights and opportunities
to produce  oil and gas as between  owners of a common  reservoir.  Each of such
regulatory  authorities  also  regulates  the amount of oil and gas  produced by
assigning allowable rates of production,  which may be increased or decreased in
accordance  with supply and demand.  Requirements  regarding the  prevention and
clean-up of  pollution  and  similar  environmental  matters are also  generally
applicable.  The costs,  if any, the Company may incur in this regard  cannot be
predicted.

                 The existence of such  regulations has had no material  adverse
effects on the Company's  operations to date, and the cost of compliance has not
yet been material.  There are no material administrative or judicial proceedings
arising under such laws or regulations pending against the Company.  The Company
is unable to assess or predict the impact that compliance with environmental and
pollution  control  laws  and  regulations  may have on its  future  operations,
capital expenditures, earnings or competitive position.

Tax Laws

                 The  operations  of the  Company  are  affected  by the federal
income tax laws contained in the Internal  Revenue Code of 1986, as amended (the
"Code"). Under the Code, generally, the Company will report income from the sale
of oil and gas,  against  which it may deduct its  ordinary  business  expenses,
depletion, depreciation and intangible drilling and development costs.

                 It is anticipated  that most of the Company's  income,  if any,
will be from a "passive  activity" for purposes of the Code. A passive  activity
includes an  activity in which the  taxpayer  does not  materially  participate,
including the ownership of a limited partnership  interest,  such as an interest
in the Company.  "Passive  income,"  however,  does not include portfolio income
(i.e. dividends,  interest,  royalties,  etc.). Although taxpayers generally may
not deduct  losses or use tax credits  derived  from  passive  activities  in an
amount  greater than their income  derived from such  activities,  if and to the
extent that the Company generates passive income, it will be available to offset
the limited partners' passive losses from other sources.

                 Partnerships  with  interests  that are  "publicly  traded" are
taxed as  corporations  unless  at  least  90% of their  income  is  "qualifying
income."  Because  the  Company's  income  will be  qualifying  income  for this
purpose, the Company will not be taxed as a corporation under this rule. Passive
income  or  losses  from  publicly  traded  partnerships  that are not  taxed as
corporations  generally  cannot be used to offset  passive income or losses from
other  sources.   Enex  believes  that  the  Company  is  not  publicly  traded.
Consequently,  limited  partners  should  continue  to be able to utilize  their
income and losses from the Company to offset  losses and income from their other
passive activities.

                 In order to prevent  the adverse  tax  consequences  that would
affect the limited partners if the Company's limited partnership  interests were
to become  publicly  traded in the future,  the general partner may, after final
regulations have been issued by the Internal  Revenue Service,  submit to a vote
of limited  partners  a proposal  to amend the  Company's  agreement  of limited
partnership to provide,  among other things,  (a) that Enex shall have the right
to refuse to  recognize  any  transfer of limited  partnership  interests  if it
believes that such transfer  occurred on a secondary  market or the  substantial
equivalent

                                       I-2

<PAGE>



thereof;  and (b) that all assignors  and  assignees of the limited  partnership
interests  shall be required to  represent  to Enex that any transfer of limited
partnership  interests  did  not,  to the best of  their  knowledge,  occur on a
secondary market or the substantial equivalent thereof.


Item 2.          Description of Property

                 Presented  below  is  a  summary  of  the  Company's   property
acquisitions.

     The CONCORD acquisition consists of working interests and royalty interests
in more than 10,600 wells in 137 counties in Texas, with very minor interests in
12 other states.  The Company acquired its interests  effective January 1987 for
$1,510,162.

                 Effective August 1990, the Company sold its interest in a small
field  (the  North  Robertson  Unit) in the  Concord  acquisition  for  $16,128,
realizing a net gain of $11,610.

                 Effective  June 30,  1992,  the Company  sold its interest in a
small field (the Spraberry Unit) in the Concord acquisition for $9,120 realizing
a net gain of $5,289.

                 Effective  September 30, 1993, the Company sold its interest in
a small field in the Concord  acquisition  (the Coleman Ranch Unit) for $18,806.
This sale resulted in a net loss to the Company of $2,902.

     Effective  October 1, 1994,  the Company  acquired  additional  working and
royalty  interests  in the Concord  acquisition  for $8,166  from an  affiliated
partnership.  The purchase price  represents the fair market value as determined
from the receipt of bids solicited from independent third party companies.

                 The Company  retains  working  interests  ranging from 0.01% to
1.22% of the total  Concord  acquisition  at  December  31,  1995.  The  Concord
acquisition is operated by nearly 100 different oil and gas producers.

                 The FLORIDA  acquisition  consists of working  interests  and a
small  overriding  royalty  interest  in 3  producing  wells in  Hendry  County,
Florida. The Company acquired its interests effective June of 1987 for $327,725.
Effective  October  1,  1994,  the  Company  sold its  interest  in the  Florida
acquisition  to Enex  Resources  Corporation  for  $55,485  plus  assumption  of
plugging and abandonment  liabilities of the properties by Enex. No gain or loss
was recognized as a result of this sale.

                 Purchase price as used above is defined as the actual  contract
price plus finders' fees, if  applicable.  Miscellaneous  acquisition  expenses,
subsequent capital items, etc. are not included.

Oil and Gas Reserves

                 For  quantitative  information  regarding the Company's oil and
gas  reserves,  please see  Supplementary  Oil and Gas  Information  and related
tables which follow the Notes to Financial  Statements in Item 7 of this report.
The Company has not filed any current oil and gas reserve  estimates or included
any such estimates in reports to any federal or foreign  governmental  authority
or agency, including the Securities and Exchange Commission.

                                       I-3

<PAGE>



                 Proved  oil and gas  reserves  reported  herein  are  based  on
engineering reports prepared by the petroleum engineering  consulting firm of H.
J.. Gruy and Associates, Inc. The reserves included in this report are estimates
only and should not be  construed as exact  quantities.  Future  conditions  may
affect  recovery of  estimated  reserves  and  revenue,  and all reserves may be
subject to  revision  as more  performance  data  become  available.  The proved
reserves used in this report conform to the applicable  definitions  promulgated
by the Securities and Exchange Commission. No major discovery or other favorable
or adverse  event  that  could  potentially  cause a  significant  change in the
estimated proved reserves has occurred since December 31, 1995.


Net Oil and Gas Production

                 The following table shows for the years ended December 31, 1995
and 1994, the approximate  production  attributable to the Company's oil and gas
interests. The figures in the table represent "net production"; i.e., production
owned by the Company and produced to its interest  after  deducting  royalty and
other similar interests. All production occurred in the United States.


                                             1995                1994
                                             ----                ----


Crude oil and condensate (Bbls)..........   9,805                10,609

Natural gas (Mcf)........................   13,356               11,302



                 The  following  table sets forth the  Company's  average  sales
price per barrel of oil,  per Mcf of gas, and average  production  cost per unit
produced for the years ended December 31, 1995 and 1994.


                                                     1995           1994
                                                     ----           ----


Average sales price per barrel of oil..........  $   15.67        $  14.31

Average sales price per Mcf of gas.............      1.60            1.76

Average production cost per equivalent
   barrel of production........................      5.75            9.34



Item 3.  Legal Proceedings

                 There are no material  pending legal  proceedings  to which the
Company is a party.

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

                 No matter was  submitted to a vote of security  holders  during
the fourth quarter of the fiscal year covered by this report.

                                       I-4

<PAGE>




                                     PART II


Item 5.          Market for Common Equity and Related Security Holder Matters

Market Information

                 There is no established public trading market for the Company's
outstanding limited partnership interests.



Number of Equity Security Holders

                                             Number of Record Holders
                  Title of Class               (as of March 1, 1996)

                  --------------             ------------------------


             General Partner's Interests                 1

             Limited Partnership Interests             1,195



Dividends

             The Company  discontinued the payment of distributions in the first
quarter of 1994. Future distributions are dependent upon, among other things, an
increase in the prices  received for oil and gas.  The Company will  continue to
recover  its  reserves  and  reduce  obligations  in 1996.  Based  upon  current
projected cash flows from its property, it does not appear that the Company will
have sufficient net cash flow after debt service to pay distributions.


                                      II-1


<PAGE>



Item 6.          Management's Discussion and Analysis or Plan of Operations


Results of Operations

                 This  discussion   should  be  read  in  conjunction  with  the
financial  statements of the Company and the notes thereto included in this Form
10-KSB.

                 Oil and gas  sales  in 1995  were  $175,023  as  compared  with
$171,731 in 1994. Oil and gas sales increased by $3,292 or 2% from 1994 to 1995.
Oil sales  increased  by $1,889 or 1%. A 10%  increase  in the average oil sales
price  increased sales by $13,335.  This increase was partially  offset by an 8%
decline  in oil  production.  Gas  revenues  increased  by  $1,403 or 7%. An 18%
increase  in gas  production  increased  sales  by  $3,540.  This  increase  was
partially  offset by a 9% decrease in the average gas sales price.  The increase
in gas  production  was primarily  the result of the  completion of a waterflood
project on the Schafter Lake field and the acquisition of additional interest in
the  Concord  acquisition  in the fourth  quarter of 1994.  The  decrease in oil
production  was a result of the sale of the  Florida  acquisition  in the fourth
quarter of 1994 and due to natural production declines,  partially offset by the
acquisition of additional  interest in the Concord  acquisition.  The changes in
average oil and gas sales prices  correspond  with changes in the overall market
for the sale of oil and gas.

                 Lease operating  expenses were $61,350 in 1995 as compared with
$108,501 in 1994. Lease operating expenses decreased by $47,151 or 43% from 1994
to 1995.  This  decrease  was  primarily  due to operating  and  workover  costs
incurred on the Florida acquisition in 1994 which was sold in the fourth quarter
of 1994.

                 Depreciation  and  depletion  expense  was  $58,229  in 1995 as
compared with $86,547 in 1994.  Depletion and depreciation  expense decreased by
$28,318 or 33% from 1994 to 1995. A 30% decrease in the  depletion  rate reduced
depreciation and depletion expense by $25,124. The changes in production,  noted
above,  reduced  depreciation and depletion expense by an additional $3,194. The
decrease in the depletion  rate was primarily a result of the  recognition of an
impairment of $75,472 in December 1994,  coupled with an upward  revision of the
oil and gas reserves during 1995.

                 Due to reserve revisions and lower prices, the Company recorded
an impairment of property of $75,472 in 1994.  This  impairment  represented the
excess of the net capitalized  costs, over the undiscounted  future net revenues
of the reserves.

                 Effective October 1, 1994, the Company sold its interest in the
Florida  acquisition  to  Enex  Resources  Corporation  for  $55,485,  plus  the
assumption of plugging and  abandonment  costs by Enex. The wells in the Florida
acquisition were non-producing.  The sales price represents the salvage value of
the wellhead equipment on the wells.

                 General and  administrative  expenses  were  $27,465 in 1995 as
compared with $32,073 in 1994. General and administrative  expenses decreased by
$4,608 or 14% from 1994 to 1995.  This  decrease was  primarily a result of less
time being  required to manage the Company in 1995 and due to a $1,486  decrease
in direct expenses incurred by the Company in 1995.


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 and from the sale of
the Florida acquisition, noted above. Accordingly, the

                                      II-2

<PAGE>



changes in cash flow from 1994 to 1995 are  primarily  due to the changes in oil
and gas sales and property  sale,  described  above and the repayment of $11,490
and $89,602 of debt in 1995 and 1994, respectively.


                 The Company  discontinued  the payment of  distributions in the
first  quarter of 1994.  Future  distributions  are  dependent  upon among other
things,  an increase in the prices  received  for oil and gas.  The Company will
continue to recover its reserves and reduce its obligations in 1996.  Based upon
current  projected  cash flows from its  property,  it does not appear  that the
Company will have sufficient cash to pay its operating expenses,  repay its debt
obligations  and pay  distributions.  The Company repaid the note payable to the
general  partner  in 1995,  and plans to repay the  payable  amount  owed to the
general partner over a nine year period.

                 At December 31, 1995,  the Company had no material  commitments
for  capital  expenditures.  The  Company  does  not  intend  to  engage  in any
significant developmental drilling activity.

                                      II-3

<PAGE>



Item 7.           Financial Statements and Supplementary Data



INDEPENDENT AUDITORS' REPORT


The Partners
Enex Oil & Gas Income
  Program III - Series 2, L.P.:


We have audited the accompanying  balance sheet of Enex Oil & Gas Income Program
III - Series 2, L.P. (a New Jersey limited  partnership) as of December 31, 1995
and  the  related  statements  of  operations,   changes  in  partners'  capital
(deficit), and cash flows for each of the two years in the period ended December
31, 1995.  These  financial  statements  are the  responsibility  of the general
partner of Enex Oil & Gas Income Program III - Series 2, L.P. Our responsibility
is to express an opinion on the financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects,  the financial  position of Enex Oil & Gas Income Program III - Series
2, L.P. at December  31,  1995 and the  results of its  operations  and its cash
flows  for each of the two  years  in the  period  ended  December  31,  1995 in
conformity with generally accepted accounting principles.


DELOITTE & TOUCHE  LLP




Houston, Texas
March 18, 1996

                                      II-4

<PAGE>




BALANCE SHEET, DECEMBER 31, 1995
----------------------------------------------------------------------------
<TABLE>
<CAPTION>

ASSETS
                                                                      1995
                                                                ------------
CURRENT ASSETS:
<S>                                                             <C>        
  Cash                                                          $     2,129
  Accounts receivable - oil & gas sales                              13,590
  Other current assets                                                3,946
                                                                ------------

Total current assets                                                 19,665
                                                                ------------

OIL & GAS PROPERTIES
  (Successful efforts accounting method) - Proved
    mineral interests and related equipment & facilities          1,642,894
  Less  accumulated depreciation and depletion                    1,276,289
                                                                ------------

Property, net                                                       366,605
                                                                ------------

TOTAL                                                           $   386,270
                                                                ============

LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
   Accounts payable                                             $    13,450
   Current portion of payable to general partner                     36,754
                                                                ------------

Total current liabilities                                            50,204
                                                                ------------

NONCURRENT PAYABLE TO GENERAL PARTNER                               294,032
                                                                ------------

PARTNERS' CAPITAL (DEFICIT):
   Limited partners                                                  (7,335)
   General partner                                                   49,369
                                                                ------------

Total partners' capital                                              42,034
                                                                ------------

TOTAL                                                           $   386,270
                                                                ============

</TABLE>


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

                                      II-5



<PAGE>

ENEX OIL & GAS INCOME PROGRAM III - SERIES 2, L.P.

STATEMENTS OF OPERATIONS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
-----------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                    1995        1994
                                                ----------   ----------

REVENUES:
<S>                                             <C>          <C>                                                
  Oil and gas sales                             $ 175,023    $ 171,731                                           
                                                ----------   ----------

EXPENSES:
  Depreciation and depletion                       58,229       86,547
  Impairment of property                                -       75,472
  Lease operating expenses                         61,350      108,501
  Production taxes                                  7,884        8,179
  General and administrative:
    Allocated from general partner                 22,943       26,065
    Direct expense                                  4,522        6,008
                                                ----------   ----------

Total expenses                                    154,928      310,772
                                                ----------   ----------

INCOME (LOSS) FROM OPERATIONS                      20,095     (139,041)
                                                ----------   ----------

OTHER EXPENSE:
  Interest expense                                   (989)      (6,882)
                                                ----------   ----------

NET INCOME (LOSS)                               $  19,106    $(145,923)                                          
                                                ==========   ==========

</TABLE>



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

                                      II-6

<PAGE>

ENEX OIL & GAS INCOME PROGRAM III - SERIES 2, L.P.

STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
----------------------------------------------------------------------------
<TABLE>
<CAPTION>

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

<S>                          <C>          <C>          <C>         <C>                                                
BALANCE, JANUARY 1, 1994     $ 168,851    $  40,029    $128,822    $     30                                           

NET INCOME (LOSS)             (145,923)       1,610    (147,533)        (35)
                             ----------   ----------   ---------   ---------

BALANCE, DECEMBER 31, 1994      22,928       41,639     (18,711)         (5)

NET INCOME                      19,106        7,730      11,376           3
                             ----------   ----------   ---------   ---------

BALANCE, DECEMBER 31, 1995   $  42,034    $  49,369    $ (7,335)(1)$     (2)                                          
                             ==========   ==========   =========   =========


</TABLE>

(1)  Includes 773 units purchased by the general partner as a limited partner.









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

                                      II-7

<PAGE>

ENEX OIL AND GAS INCOME PROGRAM III - SERIES 2, L.P.

STATEMENTS OF CASH FLOWS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                             1995             1994
                                                         ---------      -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                      <C>            <C>                                                  
Net income (loss)                                        $ 19,106       $ (145,923)                                          
                                                         ---------      -----------

Adjustments to reconcile net income (loss) to net cash
   provided by operating activities
  Depreciation and depletion                               58,229           86,547
  Impairment of property                                        -           75,472
(Increase) decrease in:
  Accounts receivable - oil & gas sales                    (1,347)           1,293
  Other current assets                                      1,332           (4,019)
Increase (decrease) in:
   Accounts payable                                         2,774          (41,061)
   Payable to general partner                             (46,012)          54,874
                                                         ---------      -----------

Total adjustments                                          14,976          173,106
                                                         ---------      -----------

Net cash provided by operating activities                  34,082           27,183
                                                         ---------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Property (additions) credits - development costs      (20,957)           5,930
    Proceeds from sale of property                              -           55,485
                                                         ---------      -----------

Net cash provided (used) by investing activities          (20,957)          61,415
                                                         ---------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   (Decrease) in note payable to general partner          (11,490)         (89,602)
                                                         ---------      -----------

NET INCREASE (DECREASE) IN CASH                             1,635           (1,004)

CASH AT BEGINNING OF YEAR                                     494            1,498
                                                         ---------      -----------

CASH AT END OF YEAR                                      $  2,129              494                                           
                                                         =========      ===========

Cash paid during year for interest                       $    989       $    1,095                                           
                                                         =========      ===========
</TABLE>



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

                                      II-8



<PAGE>

ENEX OIL & GAS INCOME PROGRAM III - SERIES 2, L.P.

NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
--------------------------------------------------------------------------------


1.    PARTNERSHIP ORGANIZATION

      Enex Oil & Gas  Income  Program  III -  Series  2,  L.P.  (the
      "Company"),  a  New  Jersey  limited  partnership,   commenced
      operations  on November  20, 1986 for the purpose of acquiring
      proved  oil  and  gas   properties.   Total  limited   partner
      contributions   were   $2,135,224,   of  which   $21,352   was
      contributed  by  Enex  Resources  Corporation  ("Enex"),   the
      general partner.

      In accordance with the partnership agreement, the Company paid
      commissions  of $205,788 for solicited  subscriptions  to Enex
      Securities  Corporation,  a subsidiary of Enex, and reimbursed
      Enex for organization expenses of approximately $64,000.

      Information  relating to the  allocation of costs and revenues
      between Enex, as general partner,  and the limited partners is
      as follows:
                                                              Limited
                                                 Enex         Partners

     Commissions and selling expenses                           100%
     Company reimbursement of organization
       expense                                                  100%
     Company property acquisition                               100%
     General and administrative costs             10%            90%
     Costs of drilling and completing
       development wells                          10%            90%
     Revenues from temporary investment of
       partnership capital                                      100%
     Revenues from producing properties           10%            90%
     Operating costs (including general and
       administrative costs associated with
       operating producing properties)            10%            90%

     At the point in time when the cash distributions to the limited
     partners  equal their  subscriptions  ("payout"),  the costs of
     drilling  and  completing   development  wells,  revenues  from
     producing  properties,  general  and  administrative  costs and
     operating  costs will be allocated  15% to the general  partner
     and 85% to the limited partners.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Oil  and Gas  Properties  - The  Company  uses  the  successful
     efforts  method of accounting  for its oil and gas  operations.
     Under  this  method,  the  costs of all  development  wells are
     capitalized.   Capitalized   costs   are   amortized   on   the
     units-of-production  method  based on  estimated  total  proved
     reserves.   The  acquisition   costs  of  proved  oil  and  gas
     properties  are  capitalized  and  periodically   assessed  for
     impairments.

                                      II-9

<PAGE>



     The Financial Accounting Standards Board has issued Statement
     of Financial  Accounting Standards No. 121, "Accounting for the
     Impairment of Long Lived Assets and for Long-Lived Assets to Be
     Disposed Of." This statement  requires that  long-lived  assets
     and  certain  identifiable  intangibles  held  and  used by the
     Company be reviewed for impairment  whenever  events or changes
     in circumstances  indicate that the carrying amount of an asset
     may not be recoverable.

     The  Company  has not  determined  the  effect,  if any, on its
     financial  position or results of  operations  which may result
     from the  adoption of this  statement  in the first  quarter of
     1996.

     Cash Flows - The Company has presented its cash flows using the
     indirect  method and considers  all highly  liquid  investments
     with an original  maturity  of three  months or less to be cash
     equivalents.

     General and  Administrative  Expenses - The Company  reimburses
     the General Partner for direct costs and  administrative  costs
     incurred on its behalf.  Administrative  costs allocated to the
     Company  are  computed  on a  cost  basis  in  accordance  with
     standard industry practices by allocating the time spent by the
     General   Partner's   personnel   among  all  projects  and  by
     allocating rent and other overhead on the basis of the relative
     direct time charges.

     Uses of Estimates - The preparation of the 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 contigent  assets and  liabilities at the date of
     the financial  statements  and the reported  amounts of revenue
     and expenses during the reporting periods. Actual results could
     differ from these estimates.

3.   PAYABLE TO GENERAL PARTNER

     The payable to general  partner  primarily  consists of general
     and  administrative  expenses  allocated to the Company by Enex
     during  the  Company's  start-up  phase  and  for  its  ongoing
     operations.  The Company plans to repay the amounts owed to the
     general partner over a period of nine years.

4.   FEDERAL INCOME TAXES

     General - The  Company  is not a  taxable  entity  for  federal
     income  tax  purposes.   Such  taxes  are  liabilities  of  the
     individual partners and the amounts thereof will vary depending
     on the individual situation of each partner. Accordingly, there
     is no provision for income taxes in the accompanying  financial
     statements.


                                      II-10

<PAGE>



Set  forth  below  is a  reconciliation  of  net  income  as  reflected  in  the
accompanying  financial  statements and net income (loss) for federal income tax
purposes for the year ended December 31, 1995:
<TABLE>
<CAPTION>
  
                                             Allocable to         Per $500 Limited
                                            General     Limited      Partner Unit
                                  TOTAL     Partner     Partners      Outstanding
Net income as reflected in
the accompanying financial
<S>                             <C>         <C>          <C>           <C>  
statements                      $ 19,106    $ 7,730      $11,376       $   3
Reconciling items:
  Intangible drilling costs
     capitalized for financial
     reporting purposes which
     were charged-off for federal
     income tax purposes         (13,811)    (1,381)     (12,430)         (3)
  Difference in depreciation,
     depletion and amortization
     computed for federal income
     tax purposes and the amount
     computed for financial
     reporting purposes           (4,011)         -      (4,011)          (1)

Net income (loss) for federal
   income tax purposes          $  1,284      6,349     $(5,065)       $  (1)
</TABLE>

Net income  (loss) for federal  income tax  purposes is a summation  of ordinary
income (loss),  portfolio income (loss),  cost depletion and intangible drilling
costs as presented in the Company's federal income tax return.

Set forth below is a  reconciliation  between  partners'  capital  (deficit)  as
reflected in the  accompanying  financial  statements and partners'  capital for
federal income tax purposes as of December 31, 1995:
<TABLE>
<CAPTION>

                                                  Allocable to     Per $500 Limited
                                              General     Limited     Partner Unit
                                  TOTAL       Partner     Partners    Outstanding
Partners' capital (deficit) as 
reflected in the accompanying
<S>                             <C>         <C>           <C>           <C>    
 financial statements           $ 42,034    $  49,369     $(7,335)      $   (2)
Reconciling items:
  Intangible drilling costs
     capitalized for financial
     reporting purposes which
     were charged-off for federal
     income tax purposes         (229,388)    (22,943)    (206,445)        (48)
  Difference in accumulated
     depreciation, depletion and
     amortization for financial
     reporting and federal income
     tax purposes                 152,266          -        152,266         36
  Commissions and syndication
     fees capitalized for federal
     income tax purposes          205,788          -        205,788         48

Partners' capital for federal
     income tax purposes       $  170,700    $ 26,426      $144,274       $ 34
</TABLE>

                                II-11



<PAGE>


5.     REPURCHASE OF LIMITED PARTNER INTERESTS

       In  accordance  with the  partnership  agreement,  the  general
       partner is required to purchase  limited partner  interests (at
       the  option  of  the  limited  partners)  at  annual  intervals
       beginning  after the second year following the formation of the
       Company.  The purchase  price,  as specified in the partnership
       agreement,  is based primarily on reserve  reports  prepared by
       independent  petroleum engineers as reduced by a specified risk
       factor.

6.     SIGNIFICANT PURCHASERS

       Amoco Production  Company and Exxon  Corporation  accounted for
       24% and 13%,  respectively,  of the  Company's  total  sales in
       1995. Amoco Production Company and Exxon Corporation  accounted
       for 22% and 12%, respectively,  of the Company's total sales in
       1994. No other purchaser  individually  accounted for more than
       10% of such sales.

7.     PROPERTY TRANSACTIONS

       Effective  October 1, 1994,  the  Company  acquired  additional
       working and royalty  interests in the Concord  acquisition  for
       $8,166  from an  affiliated  partnership.  The  purchase  price
       represents the fair market value as determined from the receipt
       of bids solicited from independent third party companies.

       Effective October 1, 1994, the Company sold its interest in the
       Florida acquisition to Enex Resources  Corporation for $55,485,
       plus the assumption of plugging and abandonment  costs by Enex.
       The wells in the Florida  acquisition were  non-producing.  The
       sales  price  represents  the  salvage  value  of the  wellhead
       equipment on the wells.

8.     NOTE PAYABLE TO GENERAL PARTNER

       The Company borrowed $89,000 from the general partner in 1993 a
       portion  of which was  utilized  to repay a note  payable  to a
       bank.  On March 2, 1994,  the Company  borrowed  an  additional
       $30,000  in order to finance  workover  costs  incurred  at the
       Florida properties.  Principal payments of $119,602 and $11,490
       were made in 1994 and 1995,  repectively,  completely  repaying
       the  note  in  May  1995.   The  weighted   average   principal
       outstanding  was  $88,979  and  $3,969  during  1994 and  1995,
       respectively.  The note bore  interest  of an  average  rate of
       9.75% and 7.73% in 1995 and 1994,  respectively,  which was the
       general partners  borrowing rate of prime plus three-fourths of
       one percent.

9.     IMPAIRMENT OF PROPERTY

       A noncash  write-down of capitalized  costs of $75,472 was made
       in 1994.  This write-down was computed as the excess of the net
       capitalized  costs over the  undiscounted  future net  revenues
       from proved oil and gas reserves.  The undiscounted  future net
       revenues were computed using certain arbitrary assumptions such
       as  holding  the oil and gas prices  constant  at the prices in
       effect at the time of the computation.

                                      II-12

<PAGE>

ENEX OIL & GAS INCOME PROGRAM III - SERIES 2, L.P.                          
                                                                
SUPPLEMENTARY OIL AND GAS INFORMATION                                   
FOR THE TWO YEARS ENDED DECEMBER 31, 1995                                
                                                                
Proved Oil and Gas Reserve Quantities (Unaudited)                            
                                                                
The following  presents an estimate of the Company's  proved oil and gas reserve
quantities  and changes  therein  for each of the two years in the period  ended
December 31, 1995.  Oil reserves are stated in barrels  ("BBLS") and natural gas
in thousand cubic feet ("MCF"). The amounts per $500 limited partner unit do not
include a potential 5% reduction after payout. All of the Company's reserves are
located within the United States.
<TABLE>
<CAPTION>
                                                                
                                               Per $500                Per $500
                                               Limited       Natural    Limited
                                       Oil    Partner Unit   Gas      Partner Unit
                                     (BBLS)   Outstanding    (MCF)    Outstanding
                                                         
PROVED DEVELOPED AND                                                  
    UNDEVELOPED RESERVES:                                                    
<S>                                  <C>          <C>        <C>          <C>
January 1, 1994                      60,856       13         92,925       21
                                                         
    Revisions of previous estimates (1,699)       -         (16,169)      (4)
    Purchases of minerals in place     947        -           1,274        -  
    Production                     (10,609)      (2)        (11,302)      (3)
                                                         
December 31, 1994                   49,495       11          66,728       14
                                                         
    Revisions of previous estimates 22,012        5          28,385        6
    Production                      (9,805)      (2)        (13,356)      (3)
                                                         
December 31, 1995                   61,702       14          81,757       17
                                                         
                                                         
PROVED DEVELOPED RESERVES:                                                   
                                                         
January 1, 1994                     60,856       13         92,925        21
                                                         
December 31, 1994                   49,495       11         66,728        14
                                                         
December 31, 1995                   61,702       14         81,757        17
                                                         
</TABLE>
                                                              
                                                                
                                                                
                                                                
                                                                
                                      II-13
                                                                



<PAGE>


Item 8.         Changes In and Disagreements With Accountants on Accounting and 
                Financial Disclosure Not Applicable


                                     II-13

<PAGE>


                                    PART III

Item 9.       Directors, Executive Officers, Promoters and Control Persons;
              Compliance with Section 16(a) of the Exchange Act
              -------------------------------------------------------------  

     The  Company's  sole  General  Partner  is Enex  Resources  Corporation,  a
Delaware  corporation.  The Company has no Directors or executive officers.  The
Directors and executive officers of Enex are:

     Gerald B. Eckley. Mr. Eckley,  age 69, has served as a Director,  President
and Chief Executive  Officer of the General Partner since its formation in 1979.
He was employed by Shell Oil Company from 1951 to 1967 and served in  managerial
capacities from 1959 to 1967. From 1967 to 1969, he was Director of Fund Raising
at the  University of Oklahoma and from 1969 to 1971, was Vice President of Land
and Operations for Imperial American Management Company. In 1971, Mr. Eckley was
a  petroleum  consultant  and in  1972-1973  was General  Counsel and  Executive
Director of the Oil Investment  Institute.  From 1973 to 1974, he was Manager of
Oil Properties,  Inc. and from 1974 to 1976, was Vice President,  Land and Joint
Ventures for Petro-Lewis  Corporation.  From 1977 to August 1979, Mr. Eckley was
President of Eckley  Energy,  Inc., a company  engaged in purchasing and selling
oil and gas properties. Mr. Eckley received an L.L.B. degree from the University
of Oklahoma in 1951 and a Juris Doctor degree from the University of Oklahoma in
1970.

     William C.  Hooper,  Jr.  Mr.  Hooper,  age 58, has been a Director  of the
General  Partner  since its  formation  in 1979 and is a member  of the  General
Partner's Audit and Compensation and Options Committees.  In 1960 he was a staff
engineer in the Natural Gas Department of the Railroad Commission of Texas, with
principal  duties  involving  reservoir units and gas proration.  In 1961 he was
employed by the California  Company as a Drilling  Engineer and  Supervisor.  In
1963 he was employed as a Staff Engineer by California Research  Corporation and
in 1964 rejoined the  California  Company as a project  manager  having  various
duties involving  drilling and reservoir  evaluations.  In 1966 he was Executive
Vice  President  for Moran Bros.  Inc.,  coordinating  and  managing all company
activities,  drilling operations,  bidding and engineering.  From 1970 until the
present, he has been self-employed as a consulting  petroleum engineer providing
services to industry and  government  and engaged in business as an  independent
oil and gas operator and investor.  From 1975 to 1987 he was also a Director and
President of Verna Corporation,  a drilling contractor and service organization.
He received a B.S.  degree in Petroleum  Engineering in 1960 from the University
of Texas and an M.S. degree in Petroleum  Engineering  from that same University
in 1961.

     Stuart  Strasner.  Mr.  Strasner,  age 66,  was a Director  of the  General
Partner from its  formation  until October of 1986.  He was  reappointed  to the
Board  on  April  19,  1990 to  fill a  vacancy.  He is a  member  of the  Audit
Committee. He is a professor of business law at Oklahoma City University and was
Dean of the law school at  Oklahoma  City  University  from July 1984 until June
1991.  Prior to July 1984, Mr. Strasner was an attorney in private practice with
McCollister,  McCleary, Fazio and Holliday in Oklahoma City, Oklahoma. From 1959
to 1974,  he was  employed  by various  banks,  bank  holding  companies  and an
insurance  company  in  executive  capacities.  From  1974  to  1978,  he  was a
consultant to various  corporations  such as insurance  companies,  bank holding
companies and small business investment companies. From 1978 until late 1981, he
was Executive  Director of the Oklahoma Bar  Association,  and from 1981 to 1983
was  a  Director  and  President  of  PRST  Enterprises,  Inc.,  a  real  estate
development  company.  Mr.  Strasner  holds an A.B.  degree from  Panhandle  A&M
College,  Oklahoma,  and a J.D. degree from the University of Oklahoma.  He is a
member  of the  Fellows  of the  American  Bar  Association  and a member of the
Oklahoma  Bar  Association.  Mr.  Strasner is also a director of Health  Images,
Inc., a public  company which  provides  fixed site magnetic  resonance  imaging
("MRI") services.

                                     III-1
<PAGE>

     Martin J. Freedman.  Mr. Freedman, age 71, was one of the General Partner's
founders  and a member of its Board of  Directors  as well as a board  member of
Enex Securities  Corporation until June of 1986. He was reappointed to the Board
on April 19,  1990 to fill a  vacancy.  He is a member of the  Compensation  and
Options  Committee.  He is  currently  President  of Freedman Oil & Gas Company,
engaged primarily in the management of its exploration and producing properties,
and the managing  partner  Martin J. Freedman & Company which has an interest in
approximately  one hundred  producing  oil and/or gas wells.  Mr.  Freedman is a
lifetime member of the Denver  Petroleum Club as well as being a lifetime member
of the Denver Association of Petroleum  Landmen.  He was an officer and Director
and/or  founder of several  former private and public  companies.  Mr.  Freedman
entered the oil and gas business in 1954 when he joined Mr.  Marvin Davis of the
Davis Oil Company.  In 1956, he became President of Central Oil  Corporation,  a
company engaged in oil and gas exploration.  From 1958 on, Mr. Freedman operated
as Martin J. Freedman Oil Properties and was President of Oil Properties,  Inc.,
a private corporation. Mr. Freedman attended Long Island University and New York
University.  He received a bachelor's degree in Psychology and also attended New
York University's graduate school.

     James  Thomas  Shorney.  Mr.  Shorney,  age 70, has been a Director  of the
General  Partner  since  April of 1990 and is a member of the  Compensation  and
Options Committee. He has been a petroleum consultant and Secretary/Treasurer of
the Shorney Company, a privately held oil and gas exploration company, from 1970
to date. From 1970 to 1976, he also served as a petroleum consultant in Land and
Lease Research Analysis Studies for the GHK Company. He was an oil and gas lease
broker  from  1962 to 1970  and  employed  by  Shell  Oil  Company  in the  Land
Department  from 1954 to 1962.  Before  joining Shell Oil Company,  he served as
Public  Information  Officer  in the  U.S.  Army  Air  Force  from  1950 to 1953
including attending  Georgetown  University Graduate School in 1952. Mr. Shorney
graduated  from the  University of Oklahoma with a B.A.  degree in Journalism in
1950.  From 1943 to 1945,  he  served in the U.S.  Army Air Force as an air crew
member  on a  B-24  Bomber.  Mr.  Shorney  is a  member  of  the  Oklahoma  City
Association  of  Petroleum  Landmen  on  which he has  served  as  Director  and
Secretary/Treasurer.  He is an active  member  of the  American  Association  of
Petroleum Landmen. In 1975, Mr. Shorney was first listed in the London Financial
Times' Who's Who in World Oil and Gas.

     Robert D. Carl,  III.  Mr.  Carl,  age 42, was  appointed a Director of the
General Partner on July 30, 1991 and is a member of the Audit  Committee.  He is
President,  Chief Executive  Officer and Chairman of the Board of Health Images,
Inc., a public company whose securities are traded on NYSE, which provides fixed
site magnetic  resonance imaging ("MRI")  services.  From 1978 to 1981, Mr. Carl
also  served as  President  of Carl  Investment  Associates,  Inc. a  registered
investment  advisor.  In 1981,  Mr. Carl joined  Cardio-Tech,  Inc.,  as general
counsel  and as an officer and  Director.  Upon the sale and  reorganization  of
Cardio-Tech,  Inc.  into  Cardiopul  Technologies  in  1982,  he  served  as its
Executive  Vice  President  and as a  Director.  In March,  1985 he was  elected
President,  Chief Executive Officer and Chairman of Cardiopul Technologies which
spun off its  non-imaging  medical  services  business  and  changed its name to
Health  Images,  Inc.  Mr. Carl  received a B.A. in History  from  Franklin  and
Marshall  College,  Lancaster,  Pennsylvania  in  1975  and a  J.D.  from  Emory
University  School of Law,  Atlanta,  Georgia in 1978.  Mr. Carl is a trustee of
Franklin & Marshall College and is a member of the State Bar of Georgia.

     On January 4, 1996, the SEC filed a complaint in the United States District
Court for the  District of Columbia  against  Mr.  Carl  alleging  that Mr. Carl
violated Section 16(a) of the Securities  Exchange Act of 1934 ("Exchange Act"),
and Rule 16a-2 and 16a-3  (and  former  Rule  16a-1)  thereunder,  by failing to
timely file  reports  concerning  thirty-eight  securities  transactions  in his
mother's  brokerage  accounts  involving  shares of Health Images,  Inc.  stock.
Although Mr. Carl's mother  apparently  did not

                                     III-2
<PAGE>

live in his  household,  the SEC took the  position  that  because  Mr. Carl (1)
provided  substantial  financial  support  to his  mother,  (2)  commingled  his
mother's  assets with his own, (3) provided a  substantial  portion of the funds
used to purchase  the shares in  question,  and (4)  received  from his mother a
substantial  portion  of the sales  proceeds,  he,  therefore,  had a  pecuniary
interest in, and was a beneficial owner of, the shares in question.

     In response to the SEC's action, Mr. Carl disgorged to Health Images,  Inc.
approximately  $92,400 in  short-swing  profits from the trading in his mother's
account,  plus  interest  thereon  of  approximately  $52,600.  The SEC  further
requested the court to impose a $10,000 civil penalty  against Mr. Carl pursuant
to Section  21(d)(3)  of the  Exchange  Act.  Without  admitting  or denying the
allegations  in the  complaint,  Mr.  Carl  consented  to the  entry  of a final
judgement  imposing the $10,000  penalty.  On January 12, 1996, a federal  judge
entered the final judgement in this matter, and Mr. Carl has since filed amended
reports on Forms 4 and 5 reflecting these transactions in his mother's accounts.

     In relation to the same matter, the SEC has issued an administrative  Order
pursuant to Section 21C of the Exchange  Act against Mr.  Carl,  finding that he
violated  Section 16(a) and the rules  thereunder and requiring him to cease and
desist from  committing  or causing any  violation or future  violation of those
provisions. Without admitting or denying allegations in the SEC's Order, Mr.
Carl consented to the entry of the Order.

     Robert E. Densford.  Mr. Densford,  age 38, was appointed a Director of the
General  Partner  on  September  11,  1991.  He joined  the  General  Partner as
Controller  on May 1, 1985 and  became  Vice  President-Finance,  Secretary  and
Treasurer  on March 1, 1989.  From  January  1983 to April  1985,  he was Senior
Accountant for Deloitte Haskins & Sells in Houston, Texas, auditing both closely
held and publicly owned oil and gas  companies.  From September 1981 to December
1982, he was a staff  accountant for Coopers & Lybrand in Houston.  Mr. Densford
is a C.P.A.  and holds a B.B.A.  degree in Accounting and an M.S.  degree in Oil
and Gas  Accounting  from Texas Tech  University and is a member of the American
Institute of Certified  Public  Accountants  and the Texas  Society of Certified
Public Accountants.

     James A. Klein. Mr. Klein, age 32, joined the General Partner as Controller
in February 1991. In June 1993, he was appointed President and Principal of Enex
Securities  Corporation.  From June 1988 to February  1991,  he was  employed by
Positron Corporation in Houston.  From July 1987 to May 1988, he was employed by
Transworld  Oil Company in Houston and from  September  1985 until July 1987, he
was an accountant with Deloitte Haskins & Sells in Houston,  Texas, auditing oil
and gas and oil service  companies.  Mr. Klein is a Certified Public  Accountant
and holds a B.A. in  Accounting  (1985)  from the  University  of Iowa.  He is a
member of the American  Institute of Certified  Public  Accountants and the Iowa
Society of Certified Public Accountants.

Item 10.      Executive Compensation

              The Company has no Directors or executive officers.

              The  Company  does not pay a  proportional  or fixed  share of the
compensation paid to the officers of the General Partner.

              The Company  reimburses  the General  Partner for direct costs and
administrative  costs incurred on its behalf.  Administrative costs allocated to
the Company are computed on a cost basis in accordance  with  standard  industry
practices by allocating the time spent by the General Partner's  personnel among
all  projects  and by  allocating  rent and other  overhead  on the basis of the
relative direct time charges.

                                     III-3

<PAGE>



Item 11.        Security Ownership of Certain Beneficial Owners and Management


                                                 $500 Limited
                              Name of            Partner Units         Percent
    Title of Class       Beneficial Owner       Owned Directly        of Class

    Limited Partner       Enex Resources                773           18.1007%



Item 12.         Certain Relationships and Related Transactions


                 See the  Statements  of  Operations  included in the  Financial
Statements  in Item 7 of this  report for  information  concerning  general  and
administrative  costs incurred by Enex and allocated to the Company,  and Note 1
to  such  Financial  Statements  for  information  concerning  payments  to Enex
Securities  Corporation,  a  wholly  owned  subsidiary  of Enex  and to Enex for
certain offering and organization expenses incurred by the Company.

Item 13.  Exhibits and Reports on Form 8-K

                                                               Sequential
                                                                 Page No.

                                                              -----------


          (a)  Exhibits

               (3)    a.    Certificate of Limited Partnership, as amended,
                            Incorporated by reference to Exhibit 3(a) to the
                            Company's Annual Report on Form 10-K for the
                            year ended December 31, 1987.

                      b.    Amended agreement of Limited Partnership.
                            Incorporated by reference to Exhibit 2(b) (2) to
                            the registrant's Registration Statement on Form
                            8-A filed with the Securities and Exchange
                            Commission on or about February 23, 1987.

               (4)    Not Applicable

               (10)   Not Applicable

               (11)   Not Applicable

               (12)   Not Applicable

               (13)   Not Applicable

               (18)   Not Applicable

               (19)   Not Applicable

               (22)   Not Applicable




                                      III-4
<PAGE>

               (23)   Not Applicable

               (24)   Not Applicable

               (25)   Not Applicable

               (28)   Not Applicable

          (b)  Reports on Form 8-K

               No  reports  on Form 8-K were  filed  during the last
               quarter of the period covered by this report.


                                      III-5
<PAGE>

                                   SIGNATURES


                  In  accordance  with Section 13 or 15 (d) 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 2, L.P.

                                      By:    ENEX RESOURCES CORPORATION
                                              the General Partner



March 18, 1996                        By:     /s/   G. B. Eckley
                                              -------------------
                                                    G. B. Eckley, President


                  In  accordance  with the  Exchange  Act,  this report has been
signed  below on March 18,  1996,  by the  following  persons in the  capacities
indicated.


ENEX RESOURCES CORPORATION             General Partner


By:  /s/      G. B. Eckley

             ------------------------
              G. B. Eckley, President


     /s/      G. B. Eckley
                                        President, Chief Executive
              ------------------        Officer and Director


              G. B. Eckley


     /s/      R. E. Densford            Vice President, Secretary, Treasurer,
                                        Chief Financial Officer and Director
             -------------------


              R. E. Densford


     /s/      James A. Klein            Controller and Chief Accounting Officer

             -----------------

              James A. Klein




                                       S-1

<PAGE>





                                   /s/ Robert D. Carl, III

                                   --------------------------

                                       Robert D. Carl, III       Director



                                   /s/ Martin J. Freedman

                                   --------------------------

                                       Martin J. Freedman        Director


                                   /s/ William C. Hooper, Jr.

                                   --------------------------

                                       William C. Hooper, Jr.    Director


                                   /s/ Tom Shorney

                                   --------------------------

                                       Tom Shorney               Director


                                   /s/ Stuart Strasner

                                   --------------------------

                                       Stuart Strasner           Director



                                       S-2