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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File No. 2-84452-01

STERLING DRILLING FUND 1983-2, L.P.
(Exact name of registrant as specified in its charter)

NEW YORK 13-3167551
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

ONE LANDMARK SQUARE
STAMFORD, CONNECTICUT 06901
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (203) 358-5700

Securities registered pursuant to Section 12(b) of the Act:
NONE

Securities registered pursuant to Section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP
(Title of Class)

Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

The Registrant has no voting stock. There is no market for the Units
and therefore no market value of the Units is reported.

The number of Units of the Registrant outstanding as of March 15,
1996, was: 15,697.

DOCUMENTS INCORPORATED BY REFERENCE

NONE

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STERLING DRILLING FUND 1983-2, L.P.

FORM 10-K ANNUAL REPORT
FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1995

PART I

ITEM 1. BUSINESS

Sterling Drilling Fund 1983-2, L.P., formerly Sterling-Fuel Resources
Drilling Fund 1983-2 (the "Registrant" or the "Partnership") is a limited
partnership formed under the laws of the State of New York on May 26, 1983.
The sole business of the Partnership was the drilling of formation extension
wells principally for natural gas in various locations in the State of West
Virginia. No exploratory drilling was undertaken.

The principal place of business of the Partnership is at One Landmark
Square, Stamford, Connecticut 06901, telephone (203) 358-5700. The Managing
General Partner of the Partnership is PrimeEnergy Management Corporation, a New
York corporation, which is a wholly-owned subsidiary of PrimeEnergy
Corporation, a publicly held Delaware corporation. Messrs. Charles E. Drimal,
Jr., Oliver J. Sterling and Samuel R. Campbell also are General Partners. Mr.
Drimal is a Director, President and Chief Executive Officer of PrimeEnergy
Management Corporation and PrimeEnergy Corporation, and Mr. Campbell is a
Director of PrimeEnergy Corporation.

The aggregate contributions to the Partnership were $15,697,000, all
of which, net of the organization expenses of the Partnership, was expended in
the drilling of such formation extension wells. Such properties are located in
Clay, Roane, Calhoun, Wirt, Kanawha, Lincoln and Putnam Counties, West
Virginia. The Partnership does not operate any of the properties in which it
has an interest, but generally such properties are operated and serviced by
Prime Operating Company, a Texas corporation, and Eastern Oil Well Service
Company, a West Virginia corporation, both wholly-owned subsidiaries of
PrimeEnergy Corporation.

During 1995, the Partnership did not engage in any other development
drilling activities or the acquisition of any significant additional
properties, but engaged in the production of oil and gas from its producing
properties in the usual and customary course. Since January 1, 1996, and to
the date of this Report, the Partnership has not engaged in any drilling
activities nor participated in the acquisition of any material producing oil
and gas properties.


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COMPETITION AND MARKETS

Competitors of the Partnership in the marketing of its oil and gas
production include oil and gas companies, independent concerns, and individual
producers and operators, many of which have financial resources, staffs and
facilities substantially greater than those available to the Partnership.
Furthermore, domestic producers of oil and gas must not only compete with each
other in marketing their output, but must also compete with producers of
imported oil and gas and alternative energy sources such as coal, nuclear power
and hydro-electric power.

The availability of a ready market for any oil and gas produced by the
Partnership at acceptable prices per unit of production will depend upon
numerous factors beyond the control of the Partnership, including the extent of
domestic production and importation of oil and gas, the proximity of the
Partnership's producing properties to gas pipelines and the availability and
capacity of such pipelines, the marketing of other competitive fuels,
fluctuation in demand, governmental regulation of production, refining,
transportation and sales, general national and worldwide economic conditions,
and pricing, use and allocation of oil and gas and their substitute fuels.

The Partnership does not currently own or lease any bulk storage
facilities or pipelines, other than adjacent to and used in connection with
producing wells. The Partnership deals with a number of major and independent
companies for the purchase of its oil and gas production, in the areas of
production. In 1995, approximately $43,000, or 16%, and $213,000, or 80%, of
the Partnership's gas production was sold to Cabot Oil & Marketing Corporation
and Phoenix Energy Sales Company, respectively, and about $42,000, or 96%, of
the Partnership's oil production was sold to American Rivers Terminal. None of
the purchasers has any relationship or is otherwise affiliated with the
Partnership. The Partnership believes that its current purchasers will continue
to purchase oil and gas products and, if not, could be replaced by other
purchasers.

ENVIRONMENTAL MATTERS

The petroleum industry is subject to numerous federal and state
environmental statutes, regulations and other pollution controls. In general,
the Partnership is, and will be subject to, present and future environmental
statutes and regulations, and in the future the cost of its activities may
materially increase as a result thereof. The Partnership's expenses relating
to preserving the environment during 1995 as they relate to its oil and gas
operations were not significant in relation to operating costs and the
Partnership expects no material change in the near future. The Partnership
believes that environmental regulations should not, in the future, result in a
curtailment of production or otherwise have a materially adverse effect on the
Partnership's operations or financial condition.

REGULATION

The Partnership's oil and gas operations are subject to a wide variety
of federal, state and local regulations. Administrative agencies in such
jurisdictions may promulgate and enforce rules and regulations relating to,
among other things, drilling and spacing of oil and





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gas wells, production rates, prevention of waste, conservation of natural gas
and oil, pollution control, and various other matters, all of which may affect
the Partnership's future operations and production of oil and gas. The
Partnership's natural gas production and prices received for natural gas are
regulated by the Federal Energy Regulatory Commission ("FERC") and the Natural
Gas Policy Act of 1978 and various state regulations. The Partnership was
subject to the Crude Oil Windfall Profit Tax Act of 1980, which imposed an
excise tax on producers of crude oil at various rates for prices received in
excess of certain historical base prices. That Act was repealed in August,
1988. The Partnership is also subject to state drilling and proration
regulations affecting its drilling operations and production rates.

The FERC continues to regulate interstate natural gas pipeline
transportation rates and service conditions pursuant to the NGA and NGPA.
Federal regulation of interstate transporters affects the marketing of natural
gas produced by the Partnership as well as the revenues received by the
Partnership for sales of such natural gas. Since the latter part of 1985,
through its Order Nos. 436, 500 and 636 rulemakings, the FERC has endeavored to
make natural gas transportation accessible to gas buyers and sellers on an open
and non-discriminatory basis. The FERC's efforts have significantly altered the
marketing and pricing of natural gas. No prediction can be made as to what
additional legislation may be proposed, if any, affecting the competitive
status of a gas producer, restricting the prices at which a producer may sell
its gas, or the market demand for gas, nor can it be predicted which proposals,
including those presently under consideration, if enacted, might be effective.

A number of legislative proposals have been introduced in Congress and
the state legislatures of various states, that, if enacted, would significantly
affect the petroleum industry. Such proposals involve, among other things, the
imposition of land and use controls and certain measures designed to prevent
petroleum companies from acquiring assets in other energy areas. In addition,
there is always the possibility that if market conditions change dramatically
in favor of oil and gas producers that some new form of "windfall profit" or
severance tax may be proposed for and imposed upon either oil or gas. At the
present time it is impossible to predict which proposals, if any, will actually
be enacted by Congress or the various state legislatures. The Partnership
believes that it will comply with all orders and regulations applicable to its
operations. However, in view of the many uncertainties with respect to the
current controls, including their duration and possible modification together
with any new proposals that may be enacted, the Partnership cannot predict the
overall effect, if any, of such controls on its operations.

TAXATION

The Partnership received an opinion of its counsel that the
Partnership would be classified as a partnership and the holders of Partnership
Units would be treated as limited partners for federal income tax purposes.
The Partnership itself, to the extent that it is treated for federal income tax
purposes as a partnership, is not subject to any federal income taxation, but
it is required to file annual partnership returns. Each holder of Partnership
Units will be allocated his distributive shares of the Partnership's income,
gain, profit, loss, deductions, credits, tax preference items and distributions
for any taxable year of the Partnership ending within or with his taxable year
without regard as to whether such holder has received or will receive any cash
distributions from the Partnership.





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ITEM 2. PROPERTIES

The Partnership has no interest in any properties other than its oil
and gas properties. The information set forth below summarizes the
Partnership's oil and gas wells, production and reserves, for the periods
indicated.

PRODUCING WELLS AND OPERATING INFORMATION

The Partnership, following its formation, and in December, 1983,
contracted for the drilling of 52 development wells, which resulted in 51
producing wells and one dry hole.

As of December 31, 1995, the Partnership had ownership interests in
the following gross and net producing oil and gas wells and gross and net
producing acres.(1) The Partnership has no material undeveloped leasehold,
mineral or royalty acreage.

Producing wells:


Gross Net
----- ---

Oil Wells . . . . . . . . . . . 1 1
Gas Wells . . . . . . . . . . . 60 48.3

Producing acres . . . . . . . . 6,086 4,898


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(1) A gross well is a well in which an interest is owned; a net
well is the sum of the interests owned in gross wells. Wells
are classified by their primary product. Some wells produce
both oil and gas.

The following table sets forth the Partnership's oil and gas
production, average sales prices and average production costs as of and for the
periods indicated:


YEAR ENDED DECEMBER 31,
-----------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----

Production:
Oil and Condensate (bbl) . . . . 2,766 1,865 2,766 3,413 3,119
Gas (Mcf) . . . . . . . . . . . 134,028 104,110 144,397 150,277 155,132
Average Price of Sales:
Oil and Condensate ($ per bbl) . $15.83 14.57 14.37 19.99 18.24
Gas ($ per Mcf) . . . . . . . . $2.10 3.30 2.59 2.18 2.84

Production Expense per Dollar
of Operating Revenue . . . . . . $0.46 0.55 0.46 0.42 0.48


OIL AND GAS RESERVES

The Partnership's interests in proved developed oil and gas properties
have been evaluated by Ryder Scott Company for the periods indicated below.
All of the Partnership's reserves are located in the continental United States.
The following table summarizes the Partnership's oil and gas reserves at the
dates shown (figures rounded):


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Proved Developed
As of ----------------
12-31 Oil (bbls) Gas (Mcf)
----- ---------- ---------

1991 22,000 2,492,000
1992 22,000 2,287,000
1993 24,000 2,662,000
1994 12,000 1,809,000
1995 17,400 2,554,600


The estimated future net revenue (using current prices and costs as of
the dates indicated, exclusive of income taxes (at a 10% discount for estimated
timing of cash flow) for the Partnership's proved developed oil and gas
reserves for the periods indicated are summarized as follows (figures rounded):



Proved Developed
----------------
As of Future Net Present Value of
12-31 Revenue Future Net Revenue
----- ---------- ------------------

1991 $2,136,000 $ 960,000
1992 2,400,000 1,142,000
1993 4,199,000 1,863,000
1994 1,413,000 678,000
1995 2,410,900 947,600


Since January 1, 1995, the Partnership has not filed any estimates of
its oil and gas reserves with, nor were any such estimates included in any
reports, to any federal authority or agency, other than the Securities and
Exchange Commission.

ITEM 3. LEGAL PROCEEDINGS

The Partnership is not a party to, nor is any of its property the
subject of, any legal proceedings actual or threatened, which would have a
material adverse effect on the business and affairs of the Partnership.

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

There were no matters submitted during 1995 for vote by the holders of
Partnership Units.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS

There is no market for the Limited Partnership Units (the "Units) of
the Partnership. As of March 15, 1996, there were 1,232 holders of record of
the Units.





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The Units are not regarded as stock and payments or distributions to
holders of Units are not made in the form of dividends. Cash distributions to
the holders of Units for 1995 aggregated $39,243. Aggregate cash distributions
to the holders of the Units as of December 31, 1995, is $1,632,488.

The Managing General Partner may purchase Units directly from the unit
holders if presented to the Managing General Partner, subject to conditions,
including limitations on numbers of Units, and at a price to be fixed by the
Managing General Partner in accordance with certain procedures, all as provided
for in the Limited Partnership Agreement of the Partnership.

ITEM 6. SELECTED FINANCIAL DATA

The information required hereunder is set forth under "Selected
Financial Data" in the Financial Information section included in this Report.
The index to the Financial Information section is at page F-1.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The information required hereunder is set forth under "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
the Financial Information section included in this Report. The index to the
Financial Information section is at page F-1.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required hereunder is set forth under "Report of
Independent Public Accountants," "Balance Sheets," "Statements of Operations,"
"Statements of Changes in Partners' Equity," "Statements of Cash Flows" and
"Notes to Financial Statements" in the Financial Information section included
in this Report. The index to the Financial Information section is at page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

There was no disagreement between the Partnership and its certified
public accountants on any matter of accounting principles or practices or
financial statement disclosure.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Managing General Partner of the Partnership is PrimeEnergy
Management Corporation, a New York corporation ("Management"). The principal
business of Management is the management of the Partnership and other publicly
and privately held exploration and development limited partnerships and joint
ventures and publicly held asset and income fund limited partnerships. As of
March 15, 1996, Management acts as the Managing General Partner





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in a total of 51 limited partnerships and joint ventures, of which 6 are
publicly held, and is the Managing Trustee of 2 Delaware Business Trusts. The
primary activity of such Partnerships, joint ventures and trusts is the
production of oil and gas and Management, as the Managing General Partner of
the Partnership, will devote such of its time as it believes necessary in the
conduct and management of the business and affairs of the Partnership.
Management, and other of the General Partners of the Partnership, are engaged
in and intend to continue to engage in the oil and gas business for their own
accounts and for the accounts of others.

Management, which provides all of the executive, management and
administrative functions of the Partnership, is a wholly-owned subsidiary of
PrimeEnergy Corporation ("PrimeEnergy"), a publicly held Delaware corporation.
The principal offices of PrimeEnergy and Management are in Stamford,
Connecticut. The operating subsidiaries of PrimeEnergy, Prime Operating
Company and Eastern Oil Well Service Company, maintain their principal offices
in Houston, Texas, with district offices in Midland, Texas, Oklahoma City,
Oklahoma, and Charleston, West Virginia. PrimeEnergy and its subsidiaries have
about 153 employees, including their principal officers, providing management
and administrative services, accounting, engineers, geologists, production
engineers, land department personnel and field employees.

Set forth below is information concerning the directors and executive
officers of Management and PrimeEnergy who are involved with the conduct of the
business and operations of the Partnership.

Charles E. Drimal, Jr., age 47, is a Director and President of
Management and has held those positions since May, 1983. He is also a Director
and President of Prime Energy and the operating subsidiaries. He graduated
from the University of Maryland in 1970 and from Samford University School of
Law in 1973 and is a member of the New York State Bar.

Beverly A. Cummings, age 42, has been a Director and Vice President,
Finance, of Management since August, 1985. She is also a Director and Vice
President, Finance, and Treasurer of PrimeEnergy and the operating
subsidiaries. Ms. Cummings is a Certified Public Accountant and holds a
Bachelor of Science degree from the State University of New York and a Master
in Business Administration from Rutgers University.

Bennie H. Wallace, Jr., age 43, is a Director and Vice President of
Management and has held such positions since May, 1989. He is also
Acquisitions Manager for Management, a Vice President of PrimeEnergy, a
Director of PrimeEnergy since June, 1993, and is a Vice President and Director
of the operating subsidiaries. He graduated from Louisiana State University in
1975 with a Bachelor of Science degree in petroleum engineering and is a
registered professional engineer in the States of Texas and Louisiana and was
an independent petroleum engineer engaged in the evaluation and operation of
oil and gas properties from 1983 to 1987.

Lyne G. Pizor, age 36, has been Controller of Prime Operating Company
since January, 1992, and Eastern Oil Well Service Company since September,
1990. She also held that position with Management from January, 1986, through
August, 1994, and PrimeEnergy from May, 1990, through August, 1994. She joined
Management in October, 1984, as Manager of Partnership Accounting. She is a
graduate of Wagner College with a Bachelor of Science degree in Economics and
Business Administration and is a Certified Public Accountant.





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James F. Gilbert, age 63, has been Secretary of Management since June,
1990, and has been Secretary of PrimeEnergy since March, 1973, and was a
Director of PrimeEnergy from that date to October, 1987. He also serves as
Secretary of the operating subsidiaries. He is an attorney in Dallas, Texas.

ITEM 11. EXECUTIVE COMPENSATION

The Partnership has no officers, directors or employees. The officers
and employees of the Managing General Partner and PrimeEnergy perform all
management and operational functions of the Partnership. The Partnership does
not pay any direct salaries or other remuneration to the officers, directors or
employees of the Managing General Partner or PrimeEnergy. The Managing General
Partner is reimbursed for the general and administrative expenses of the
Partnership which are allocated to the Partnership for expenses incurred on
behalf of the Partnership, together with administrative work by third parties
limited annually to 5% of the aggregate capital contribution of the holders of
the Partnership Units. During 1995, the allocation of general and
administrative expenses to the Partnership was $85,000.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The Partnership does not know of any person, entity or group, other
than the General Partners as a group (including affiliates) that beneficially
owns more than five percent of the Partnership Units. The following table shows
as of March 15, 1996, the name and address of the Managing General Partner and
of such Group and the number and percent of Partnership Units beneficially
owned by them, all of which are owned directly.


NUMBER
NAME AND ADDRESS OF BENEFICIAL OWNER OF UNITS PERCENT
- ------------------------------------ -------- -------

PrimeEnergy Management Corporation
One Landmark Square
Stamford, CT 06901 . . . . . . . . . . . . . . 866 5.52
General Partners as a Group
One Landmark Square
Stamford, CT 06901 . . . . . . . . . . . . . . 1,249 7.96


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Prime Operating Company acts as the operator for most of the producing
oil and gas wells of the Partnership pursuant to operating agreements with the
Partnership and other working interest owners, including other partnerships
managed by the Managing General Partner, and in 1995 was paid well operating
fees ranging from about $363 to $525 per month per well. Well operating
supplies and equipment and related servicing operations are generally provided
by Eastern Oil Well Service Company. The Partnership pays its proportionate
part of such operating fees and expenses. Such fees and expenses vary
depending on such matters as the location of the well, the complexity of the
producing equipment, whether wells produce oil or





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gas or both and similar factors. The Partnership believes that such services
are as favorable to the Partnership as they would be if the Partnership entered
into such transactions with unaffiliated third parties. In 1995, the
Partnership paid an aggregate of $103,669 in such fees and expenses.


PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K

(a) The following documents are filed as a part of this Report:

1. Financial Statements (Index to the Financial
Information at page F-1)

2. Exhibits:

(3) Form of Agreement of Limited Partnership of
Sterling-Fuel Resources Drilling Fund 1983-2,
now Sterling Drilling Fund 1983-2, L.P.
(Incorporated by reference to Exhibit (3) of
Sterling Drilling Fund 1983-2, L.P. Form 10-K
for the year ended December 31, 1994.)

(24) Consent of Ryder Scott Company (filed
herewith)

(27) Financial Data Schedule. (filed herewith)


(b) Reports on Form 8-K:

No reports on Form 8-K have been filed during the last quarter
of the year covered by this Report.


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SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 20th day of
March, 1995.


Sterling Drilling Fund 1983-2, L.P.


By: PrimeEnergy Management Corporation
Managing General Partner


By: /s/ Charles E. Drimal, Jr.
----------------------------------
Charles E. Drimal, Jr.
President


Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated and on the 20th day of March, 1995.


/s/ Charles E. Drimal, Jr. Director and President,
- ------------------------------ PrimeEnergy Management Corporation;
Charles E. Drimal, Jr. The Principal Executive Officer



/s/ Beverly A. Cummings Director and Vice President and Treasurer,
- ------------------------------ PrimeEnergy Management Corporation;
Beverly A. Cummings The Principal Financial and Accounting
Officer


/s/ Bennie H. Wallace, Jr. Director, PrimeEnergy Management
- ------------------------------ Corporation
Bennie H. Wallace, Jr.


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STERLING DRILLING FUND 1983-2, L.P.

(A NEW YORK LIMITED PARTNERSHIP)

INDEX TO FINANCIAL STATEMENTS AND SCHEDULES



Page No.
--------

Selected Financial Data F-2

Management's Discussion and Analysis of Financial Condition
and Results of Operations F-2

Report of Independent Public Accountants F-5

Financial Statements:

Balance Sheets, December 31, 1995 and 1994 F-6

Statements of Operations for the Years Ended December 31,
1995, 1994 and 1993 F-7

Statements of Changes in Partners' Equity for the Years
Ended December 31, 1995, 1994 and 1993 F-8

Statements of Cash Flow for the Years Ended December 31,
1995, 1994 and 1993 F-9

Notes to Financial Statements F-10

Schedules:

V - Property and Equipment - Oil and Gas Properties for
the Years Ended December 31, 1995, 1994 and 1993 F-18

VI - Accumulated Depreciation, Depletion, and Amortization -
Oil and Gas Properties for the Years Ended December 31,
1995, 1994 and 1993 F-19


All other schedules have been omitted as the information required is either
included in the financial statements, related notes, or is not applicable.





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ITEM 6. SELECTED FINANCIAL DATA

The following table summarizes certain selected financial data to
highlight significant trends in the Registrant's financial condition and
results of operations for the periods indicated. The selected financial data
should be read in conjunction with the financial statements and related notes
included elsewhere in this report.



YEAR ENDED DECEMBER 31, (000'S OMITTED)
---------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----

Revenues . . . . . . . . . . . . $ 387 371 420 396 449
Net income (loss):
Limited Partners . . . . . . . 26 (455) (16) (77) (967)
General Partners . . . . . . . 29 (36) 15 2 (105)
Per equity unit . . . . . . . 1.69 (29.02) (1.04) (4.93) (61.61)
Total assets . . . . . . . . . . 1,371 1,412 1,934 2,030 2,140
Cash distributions:
Limited Partners . . . . . . . $ 39 39 39 39 39
General Partners . . . . . . . $ 12 11 12 12 10
Limited partners as
a % of original
contribution . . . . . . . . . 0.25% 0.25% 0.25% 0.25% 0.25%



ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL
CONDITION & RESULTS OF OPERATIONS

1. Liquidity: The oil and gas industry is intensely competitive in all
its phases. There is also competition between this industry and other
industries in supplying energy and fuel requirements of industrial and
residential consumers. It is not possible for the Registrant to calculate its
position in the industry as the Registrant competes with many other companies
having substantially greater financial and other resources. In accordance with
the terms of the Agreement of Limited Partnership of the Partnership, the
General Partners of the Registrant will make cash distributions of as much of
the Partnership cash credited to the capital accounts of the partners as the
General Partners have determined is not necessary or desirable for the payment
of any contingent debts, liabilities or expenses for the conduct of the
Partnership business. As of December 31, 1995, the General partners have
distributed $1,632,488, or 10.40%, of original Limited Partner capital
contributions, to the Limited Partners.

The net proved oil and gas reserves of the Partnership are considered
to be a primary indicator of financial strength and future liquidity. The
present value of unescalated future net revenues (S.E.C. case) associated with
such reserves, discounted at 10% as of December 31, 1995, was approximately
$947,600 as compared to the discounted reserves as of December 31, 1994, which
were approximately $678,000. The increase in total estimated discounted future
net revenue was due primarily to higher year end gas prices as of December 31,
1995, when compared to the low gas price in effect as of December 31, 1994. It
is the opinion of management, and the general consensus in the industry, that
gas prices are unlikely to fall significantly below the December 31, 1995,
price in the near future. However, there can be no assurance that such price
declines will not occur, and will not pose a threat to the Partnership's
continued viability.





F-2
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2. Capital Resources: The Partnership was formed for the sole
intention of drilling oil and gas wells. The Partnership entered into a
drilling contract with an independent contractor in December, 1993, for
$13,400,000. Pursuant to the terms of this contract fifty-two wells were
drilled resulting in fifty-one producing wells and one dry hole.

3. Results of operations:

1995 compared to 1994

Operating revenue declined from $371,060 in 1994 to $326,196 in 1995.
The Partnership experienced higher gas production, from 104,110 mcf in 1994 to
134,028 mcf in 1995. This production was offset by lower average mcf prices
from $3.30 per mcf in 1994 to $2.10 per mcf in 1995. Oil production and average
oil price per barrel both increased during 1995, from $14.57 per barrel and
production of 1,865 barrels in 1994, to $15.83 per barrel and production of
2,766 in 1995. The fluctuations in the average price per mcf of gas resulted in
the Partnership's overall revenue declining.

The Partnership generally renews contracts as they come due for twelve
month periods. The Partnership was in a fixed contract price for nine months of
1994. The negotiated renewal price offered late in 1994 for the 1994-1995
contracts was lower than was deemed favorable to the Partnership. Therefore,
the price remained at spot prices during the last quarter of 1994 and all of
1995. The spot price fluctuated significantly during peak and off peak usage
periods. During the fourth quarter of 1995, the Partnership locked into a
twelve month fixed price contract.

Columbia Gas Transmission Corp., a gas purchaser of the Partnership's
gas, filed a Chapter 11 petition in the U.S. Bankruptcy Court in Wilmington,
Delaware, on July 31, 1991. At that time, the Bankruptcy Court released
Columbia from any active contracts. The Partnership filed a claim with the
Bankruptcy Court to recover revenues suspended at the time the bankruptcy
occurred. Such amounts were not recorded during the applicable period since the
claim amount was undetermined and open-ended. The Court's settlement of the
Columbia bankruptcy proceedings were finalized in November of 1995. The
Partnership received $60,910, which was reported as other income for 1995.

Interest income fluctuates with changes in the interest rates received
as well as the amount of cash in the bank at any given time.

Production expenses decreased from $205,041 in 1994 to $152,498 in
1995. This decrease in production costs can be attributed to higher labor,
repairs and location costs associated with the inclement weather conditions
throughout 1994. The weather caused line damages, floods and other situations
that increased normal maintenance costs. Most of the production expenses
incurred in 1995 were to maintain the general upkeep of the wells and well
sites. General and administrative costs showed only a very minor decrease from
$125,973 in 1994 to $110,101 in 1995. Amounts in both years are substantially
less than the $784,850 allocable to the Partnership under the Partnership
Agreement. The lower amounts reflect management's efforts to limit costs, both
incurred and allocated to the Partnership. Management





F-3
15
continues to monitor any third party costs and use in-house resources if it
will provide efficient and timely services to the Partnership.

The Partnership records additional depreciation, depletion and
amortization to the extent that the net capitalized costs exceeds the
undiscounted future net cash flows attributable to the Partnership. The
Partnership recorded a downward revision of $400,000 in 1994. No additional
depletion was needed in 1995. Depreciation, depletion and amortization rates
were significantly higher in 1994 compared to 1995 resulting in a higher normal
depletion expense, $131,658 for 1994 as compared to $69,923 in 1995. The
Partnership's basis in the properties was lower in 1995 due to the downward
revision from 1994.


1994 compared to 1993

Operating revenue declined from $419,806 in 1993 to $371,060 in 1994.
This decline can be attributed to both a production decline as well as lower
prices received during the last quarter of 1994. The Partnership generally
renews contracts as they come due for an additional twelve month period. The
price offered at the renewal date for the contracts was lower than was deemed
favorable. The Partnership is currently selling, at spot prices, to its normal
purchasers until the Partnership can lock into a twelve month contract with a
favorable price. The price in effect for three months of 1993 and nine months
of 1994 resulted in a higher average mcf price of $3.30 for 1994 as compared
with $2.59 for 1993. The average oil price per bbl showed very little change.
The price changes were significantly offset by a decline in gas production from
144,397 mcf in 1993 to 104,110 mcf in 1994 combined with a decrease in oil
produced, from 2,766 bbl in 1993 to 1,865 Bbl in 1994.

Interest income fluctuates with changes in the interest rates received
as well as the amount of cash in the bank at any given time.

Production expenses increased from $193,211 in 1993 to $205,041 in
1994. This increase can be attributed to higher labor, repairs and location
costs associated with the inclement weather conditions in early 1994. The
weather caused line damages, floods and other situations that increased normal
maintenance costs. General and administrative costs showed only a very minor
increase from $124,765 in 1993 to $125,973 in 1994. Amounts in both years are
substantially less then the $784,850 allocable to the Partnership under the
Partnership Agreement. The lower amounts reflect management's efforts to limit
costs, both incurred and allocated to the Partnership.

The Partnership records additional depreciation, depletion and
amortization to the extent that the net capitalized costs exceeds the
undiscounted future net cash flows attributable to the Partnership. The
Partnership recorded a downward revision of $400,000 in 1994. No additional
depletion was needed in 1993. Depreciation, depletion and amortization rates
were significantly higher in 1994 compared to 1993, resulting in a higher
normal depletion expense, $131,658 for 1994, as compared to $103,302 in 1993.
The higher rates are directly attributable to a downward revision in the oil
and gas reserves due to lower year-end prices.





F-4
16

STERLING DRILLING FUND 1983-2, L.P.
(a New York limited partnership)





REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Partners of
Sterling Drilling Fund 1983-2, L.P.:


We have audited the accompanying balance sheets of Sterling Drilling Fund
1983-2, L.P. (a New York limited partnership) as of December 31, 1995 and 1994,
and the related statements of operations, changes in partners' equity, and cash
flows for the years ended December 31, 1995, 1994 and 1993. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Sterling Drilling Fund 1983-2,
L.P. as of December 31, 1995 and 1994, and the results of its operations and
cash flows for the years ended December 31, 1995, 1994 and 1993 in conformity
with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the index to
financial statements and schedules are presented for purposes of complying with
the Securities and Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected to the auditing
procedures applied in the examination of the basic financial statements and, in
our opinion, fairly state in all material respects the financial data required
to be set forth therein in relation to the basic financial statements taken as
a whole.


/s/ PUSTORINO, PUGLISI & CO., LLP
PUSTORINO, PUGLISI & CO., LLP
New York, New York
March 5, 1996




F-5
17

STERLING DRILLING FUND 1983-2, L.P.
(a New York limited partnership)

BALANCE SHEETS

DECEMBER 31, 1995 AND 1994


Assets
------


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

Current Assets:
Cash and cash equivalents (Note 2) $ 8,410 $ 8,287
Due from affiliate (Note 6) 26,555 -
----------- -----------
Total Current Assets 34,965 8,287
----------- -----------


Oil and Gas Properties - successful efforts
method (Note 3) - (Schedules V and VI):
Leasehold costs 497,639 497,639
Wells and related facilities 12,916,422 12,915,028
----------- -----------
Total 13,414,061 13,412,667
Less - Accumulated depreciation, depletion
and amortization (12,078,506) (12,008,583)
----------- -----------

1,335,555 1,404,084
----------- -----------

Total Assets $ 1,370,520 $ 1,412,371
=========== ===========


Liabilities and Partners' Equity
--------------------------------

Current Liabilities:
Due to affiliates (Note 6) $ - $ 46,223
----------- -----------
Total Current Liabilities - 46,223
----------- -----------

Partners' Equity:
Limited partners 1,367,959 1,380,721
General partners 2,561 (14,573)
----------- -----------
Total Partners' Equity 1,370,520 1,366,148
----------- -----------

Total Liabilities and Partners' Equity $ 1,370,520 $ 1,412,371
=========== ===========



The Notes to Financial Statements are an integral part of these statements.


F-6
18
STERLING DRILLING FUND 1983-2, L.P.
(a New York limited partnership)

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993





1995 1994
----------------------------------------- -----------------------------------------
Limited General Limited General
Partners Partners Total Partners Partners Total
-------- -------- --------- -------- -------- ---------

Revenues:
Operating revenues
from a related party $ - $ - $ - $ - $ - $ -
Operating revenues 249,540 76,656 326,196 283,861 87,199 371,060
Interest and other 457 42 499 346 32 378

Other revenue
(Note 11) 46,596 14,314 60,910 - - -
-------- ------- -------- --------- -------- ---------

Total Revenues 296,593 91,012 387,605 284,207 87,231 371,438
-------- ------- -------- --------- -------- ---------

Costs and Expenses:
Production expenses 116,661 35,837 152,498 156,856 48,185 205,041

Depreciation,
depletion and
amortization 69,224 699 69,923 486,467 45,191 531,658
General and
administrative
expenses (Note 7) 84,227 25,874 110,101 96,369 29,604 125,973
-------- ------- -------- --------- -------- ---------

Total Expenses 270,112 62,410 332,522 739,692 122,980 862,672
-------- ------- -------- --------- -------- ---------

Net Income (Loss) $ 26,481 $28,602 $ 55,083 $(455,485) $(35,749) $(491,234)
======== ======= ======== ========= ======== =========


Net Income (Loss) Per
Equity Unit (Note 2) $1.69 $(29.02)
===== =======

1993
-----------------------------------------
Limited General
Partners Partners Total
-------- -------- ---------

Revenues:
Operating revenues
from a related party $ 23,687 $ 7,277 $ 30,964
Operating revenues 297,464 91,378 388,842
Interest and other 263 25 288

Other revenue
(Note 11) - - -
--------- ------- --------

Total Revenues 321,414 98,680 420,094
--------- ------- --------

Costs and Expenses:
Production expenses 147,806 45,405 193,211

Depreciation,
depletion and
amortization 94,521 8,781 103,302
General and
administrative
expenses (Note 7) 95,445 29,320 124,765
--------- ------- --------

Total Expenses 337,772 83,506 421,278
--------- ------- --------

Net Income (Loss) $ (16,358) $15,174 $ (1,184)
========= ======= ========


Net Income (Loss) Per
Equity Unit (Note 2) $(1.04)
======




The Notes to Financial Statements are an integral part of these statements.





F-7
19

STERLING DRILLING FUND 1983-2, L.P.
(a New York limited partnership)

STATEMENTS OF CHANGES IN PARTNERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993







Limited General
Partners Partners Total
--------- -------- ---------

Balance at December 31, 1992 $1,931,050 $ 28,987 $1,960,037

Partners' contributions - 499 499

Distributions to partners (39,243) (11,985) (51,228)

Net Income (Loss) (16,358) 15,174 (1,184)
---------- -------- ----------

Balance at December 31, 1993 1,875,449 32,675 1,908,124

Partners' Contributions - 499 499

Distributions to partners (39,243) (11,998) (51,241)

Net (Loss) (455,485) (35,749) (491,234)
---------- -------- ----------

Balance at December 31, 1994 1,380,721 (14,573) 1,366,148

Partners' contributions - 499 499

Distributions to partners (39,243) (11,967) (51,210)

Net Income 26,481 28,602 55,083
---------- -------- ----------

Balance at December 31, 1995 $1,367,959 $ 2,561 $1,370,520
========== ======== ==========






The Notes to Financial Statements are an integral part of these statements.





F-8
20

STERLING DRILLING FUND 1983-2, L.P.
(a New York limited partnership)

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993







1995 1994 1993
-------- -------- --------

Cash Flows From Operating Activities:
Net income (loss) $ 55,083 $(491,234) $ (1,184)
Adjustments to reconcile net (loss) to
net cash provided by operating activities:
Depreciation, depletion and amortization 69,923 531,658 103,302
Changes in Assets and Liabilities:
(Increase) decrease due from affiliates (26,555) - -
Increase (decrease) in due to affiliates (46,223) 20,503 (44,605)
-------- --------- --------

Net Cash Provided by Operating Activities 52,228 60,927 57,513
-------- --------- --------

Cash Flows From Investing Activities:
Property additions (1,394) (33,167) -
-------- --------- --------

Cash Flows From Financing Activities:
Partners' contributions 499 499 499
Distributions to partners (51,210) (51,241) (51,228)
-------- --------- --------
Net Cash Used in Financing Activities (50,711) (50,742) (50,729)
-------- --------- --------

Net increase (decrease) in cash and cash
equivalents 123 (22,982) 6,784

Cash and cash equivalents at beginning of year 8,287 31,269 24,485
-------- --------- --------

Cash and cash equivalents at end of year $ 8,410 $ 8,287 $ 31,269
======== ========= ========


Supplemental Disclosures:
Interest received during the year $499 $378 $288
==== ==== ====






The Notes to Financial Statements are an integral part of these statements.





F-9
21

STERLING DRILLING FUND 1983-2, L.P.
(a New York limited partnership)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1994 AND 1993


(1) Organization and Capital Contributions:

Sterling Drilling Fund 1983-2, L.P., a New York limited partnership
(the "Partnership"), was formed on May 26, 1983 for the primary
purpose of acquiring, developing and producing oil and gas in the
state of West Virginia. The general partners are: PrimeEnergy
Management Corporation (PEMC), a wholly owned subsidiary of
PrimeEnergy Corporation (PEC), a wholly owned subsidiary of The
Brooklyn Union Gas Company, Charles E. Drimal, Jr., Oliver J. Sterling
and Samuel R. Campbell. Fifteen thousand six hundred ninety-seven
limited partnership units, (15,697), were sold at $1,000 per unit
aggregating total limited partner contributions of $15,697,000. The
general partners' contributions amounted to $1,284,839. Partnership
operations commenced on December 22, 1983.


(2) Summary of Significant Accounting Policies:

Revenue Recognition:

The Partnership recognizes operating revenues, consisting of sales of
oil and gas production, in the month of sale. Uncollected revenue is
accrued based on known facts and trends of the relevant oil and gas
properties on a monthly basis.

Basis of Accounting-

The accounts of the Partnership are maintained in accordance with
accounting practices permitted for federal income tax reporting
purposes. Under this method of accounting, (a) substantially all
exploration and development costs except leasehold and equipment costs
are expensed as paid, (b) costs of abandoned leases and equipment are
expensed when abandoned, and (c) depreciation (for equipment placed in
service) is provided on an accelerated basis. In order to present the
accompanying financial statements in accordance with generally
accepted accounting principles, memorandum adjustments have been made
to account for oil and gas properties, as discussed below.

Oil and Gas Producing Activities-

The Partnership accounts for its oil and gas operations using the
successful efforts method of accounting on a property by property
basis. The Partnership only participates in developmental drilling
and, accordingly, all costs of drilling and equipping these wells,
together with leasehold acquisition costs, are capitalized. These





F-10
22

STERLING DRILLING FUND 1983-2, L.P.
(a New York limited partnership)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1994 AND 1993




(2) Summary of Significant Accounting Policies - (Cont'd):

capitalized costs are amortized on a property by property basis by the
unit-of-production method based upon the ratio of production to proved
oil and gas reserves. Additional depreciation, depletion and
amortization is recorded to the extent that net capitalized costs
exceed the undiscounted future net cash flows attributable to
Partnership properties. (See Note 4)

Federal Income Taxes -

As federal income taxes are the liability of the individual partners,
the accompanying financial statements do not include any provision for
federal income taxes. (See Note 8)

Limited Partners' Loss Per Equity Unit:

The limited partners' loss per equity unit is computed on the 15,697
limited partner equity units.

Cash and Cash Equivalents -

For purposes of the statements of cash flows the Partnership considers
all highly liquid debt instruments with a maturity of three months or
less to be cash equivalents.

Use of Estimates:

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

Recently Issued Accounting Standards:

The Partnership has elected to implement the provisions of FAS
Statement No. 121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of." The implementation of
this standard has had no material effect on the financial statements.





F-11
23

STERLING DRILLING FUND 1983-2, L.P.
(a New York limited partnership)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1994 AND 1993


(3) Oil and Gas Properties:

The Partnership acquired leases or farmouts from PEMC at its cost.
Cost is defined as any amount paid for delay rentals, lease bonuses,
if any, surveys and other expenses including such portion of any of
the general partners', or their affiliates' reasonable, necessary and
actual expenses for geological, geophysical, seismic, land,
engineering, drafting, accounting, legal and other services. The
Partnership currently pays royalties of approximately 12.50% to 18.75%
of the selling price of the oil and gas extracted.

The following table sets forth certain revenue and expense data
concerning the Partnership's oil and gas activities for the years
ended December 31, 1995, 1994 and 1993:


1995 1994 1993
------ ------ ------

Average sales price per MCF of gas $ 2.10 $ 3.30 $ 2.59
Average sales price per BBL of oil
and other liquids 15.83 14.57 14.37
Production expense per dollar of
operating revenue 0.46 0.55 0.46



(4) Quantities of Oil and Gas Reserves:

The amount of proved reserves (all of which are developed) presented
below has been estimated by an independent firm of petroleum engineers
as of January 1, 1996. Petroleum engineers on the staff of PEC have
also reviewed the data presented below, as of December 31, 1995, for
consistency with current year production and operating history. All
of the Partnership's oil and gas reserves are located within the
United States.


(Unaudited)
------------------------
GAS (MCF) OIL (BBL)
--------- ---------

Reserves as of December 31, 1992 2,287,256 21,979
Revisions of previous estimates 519,118 4,845
Production (144,397) (2,766)
--------- -------

Reserves as of December 31, 1993 2,661,977 24,058
Revisions of previous estimates (748,551) (10,150)
Production (104,110) (1,865)
--------- -------

Reserves as of December 31, 1994 1,809,316 12,043
Revisions of previous estimates 879,398 8,138
Production (134,028) (2,766)
--------- -------

2,554,686 17,415
========= =======






F-12
24

STERLING DRILLING FUND 1983-2, L.P.
(a New York limited partnership)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1994 AND 1993





(4) Quantities of Oil and Gas Reserves - (Cont'd):

Should current prices continue into the future, operation of certain
wells would become uneconomic, on a pretax basis, as production levels
decline with age. In accordance with the rules and regulations of the
Securities and Exchange Commission, proved reserves exclude production
which would be uneconomic. The partners are entitled to certain tax
benefits and credits which, if available in the future, may result in
production continuing beyond the level included in the above table.

Revisions arise from changes in current prices, as well as engineering
and geological data which would alter the useful life and therefore
the overall predicted production of each well. Future changes in
these estimates are common and would impact the reserve quantities
used to calculate depreciation, depletion and amortization.

As discussed in Note 2, the Partnership records additional
depreciation, depletion and amortization to the extent that net
capitalized costs exceed the undiscounted future net cash flows
attributable to Partnership properties. Significant price declines
affect estimated future net revenues both directly and as a
consequence of their impact on estimates of future production. The
Partnership has recorded no additional provision for 1995 or 1993,
however, there was an additional provision of $400,000 in 1994. If
the additional provision had been computed based on the limited
partners' interest in capitalized costs and estimated future net
revenues, rather than on the basis of total Partnership interests, the
limited partners income for the year ended December 31, 1995 would not
have been reduced.





F-13
25

STERLING DRILLING FUND 1983-2, L.P.
(a New York limited partnership)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1994 AND 1993


(5) Allocation of Partnership Revenues, Costs and Expenses:

Under the terms of the Limited Partnership Agreement, all Partnership
revenues and expenses, including deductions attributable thereto, are
to be allocated as follows:


Limited General
Partners Partners
-------- --------

Participation in Costs:
Sales commissions and dealer manager fees 100% -%
in excess of the $50,000 paid by PEMC
Offering costs other than $75,000
paid by the Partnership and the
Sterling Drilling Fund 1983-1, L.P. - 100.0
Management fee 100.0 -
Lease acquisition costs 91.5 8.5
Drilling and completion costs 91.5 8.5
General and administrative expenses 76.5 23.5
Production operator's fee 76.5 23.5
Operating expenses 76.5 23.5
All other costs 91.5 8.5

Participation in Revenues:
Sale of production 76.5 23.5
Sale of properties 91.5 8.5
Sale of equipment 91.5 8.5
All other revenues 91.5 8.5



(6) Transactions With Affiliates:

(a) The payable to affiliates at December 1995 and 1994, represents
general and administrative and certain other expenses incurred
on behalf of the Partnership by PEC and its subsidiaries, and
amounts due for production operator's fees (Note 6(b)), net of
production revenues collected on behalf of the Partnership.

(b) As operator of the Partnership's properties, Prime Operating
Company (POC), a subsidiary of PEC, receives, as compensation
from the Partnership, a monthly production operator's fee of
$379 for each producing gas well and $525 for each producing oil
or combination gas and oil well, based on the Partnership's


F-14
26

STERLING DRILLING FUND 1983-2, L.P.
(a New York limited partnership)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1994 AND 1993





(6) Transactions With Affiliates - (Cont'd):

percentage of working interest in the well. Such fee is subject
to annual adjustment by the percentage increase in the Cost of
Living Index published by the U.S. Department of Labor over the
year in which production began. During 1995, 1994 and 1993,
$81,644, $103,632 and $114,043 of production operator's fees
were incurred, respectively.

(c) In accordance with the terms of the Partnership Agreement, the
general partners are required to pay 8.5% of drilling and
completion costs, lease acquisition costs and certain other
costs, of which 1% will be paid for by the general partners out
of revenues received by them from the Partnership. At December
31, 1995, $26,268 was due from certain general partners for such
costs.


(7) General and Administrative Expenses:

In accordance with the Management Agreement, the general partners will
be reimbursed for the portion of their in-house overhead, including
salaries and related benefits, attributable to the affairs and
operations of the Partnership.

This amount, combined with certain direct expenses for geology,
engineering, legal, accounting, auditing, insurance and other items
shall not exceed an annual amount equal to 5% of limited partner
capital contributions. Excess expenses shall be borne by the general
partners in their individual capacity.

During 1995, 1994 and 1993, the Partnership accrued general and
administrative expenses incurred on its behalf by a general partner of
$85,000, $100,800 and $100,000, respectively.





F-15
27

STERLING DRILLING FUND 1983-2, L.P.
(a New York limited partnership)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1994 AND 1993




(8) Federal Income Taxes:

The following is a reconciliation between the net income (loss) as
reported on the Partnership's federal income tax return and the net
income (loss) reported in the accompanying financial statements:



Year Ended December 31,
-----------------------------------
1995 1994 1993
-------- -------- --------

Net income as reported
on the Partnership's
federal income tax
return $123,391 $ 6,733 $101,299

Gain on sale of property
reported differently for
financial reporting
purposes and for income
tax reporting purposes 1,394 33,167 -

Depreciation, depletion and
amortization for income
tax purposes in excess
of (less than) financial

reporting amount (69,702) (531,135) (102,483)
-------- --------- --------

Net income (loss) per
accompanying financial

statements $ 55,083 $(491,235) $ (1,184)
======== ========= ========


The tax returns of the Partnership, the qualifications of the
Partnership as such for tax purposes, and the amount of Partnership
income or loss are subject to examination by federal and state taxing
authorities. If such examinations result in changes with respect to
Partnership's qualifications or in changes to its income or loss, the
tax liability of the partners would be changed accordingly.

The Tax Reform Act of 1976 provides that no part of any depletion
deduction with respect to oil and gas wells is to be determined by the
Partnership but must be computed separately by the partners. Thus,
cost or percentage depletion, as applicable, must be computed by each
partner so that a specific depletion computation can be made when each
partner files his U.S. income tax return. Information is furnished to
the partners to compute the depletion deduction.





F-16
28

STERLING DRILLING FUND 1983-2, L.P.
(a New York limited partnership)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1994 AND 1993





(9) Major Customers:

A schedule of the major purchases of the Partnership's production is
as follows:



Purchaser 1995 1994 1993
--------- -------- -------- --------

Brooklyn Union $ - $ - $185,787
Phoenix $213,030 $263,460 $ -
Cabot $ 42,765 $ 51,950 $ 64,344
American River $ 41,514 $ - $ 43,753


The Partnership renewed its gas purchase contract in December, 1995
resulting in a fixed price for one year.


(10) Other Matters:

Effective October 1, 1988, Fuel Resources, Inc., a subsidiary of
Brooklyn Union Gas Company and also a general partner sold for cash
its interests in the revenues, costs and expenses, and profits and
losses of the Partnership to PrimeEnergy Assets and Income Fund L.P.
A-1 and PrimeEnergy Asset and Income Fund L.P. A-2, whose general
partners are also general partners of this Partnership. Effective
March 1, 1993, Fuel Resources, Inc. withdrew as a general partner.


(11) Other Revenue:

Other revenue represents settled claims against Columbia Gas
Transmission Corp. (Columbia) arising from amounts due from Columbia
when they declared bankruptcy. No significant additional claims are
expected concerning this matter.





F-17
29



SCHEDULE V


STERLING DRILLING FUND 1983-2, L.P.
(a New York limited partnership)

PROPERTY AND EQUIPMENT - OIL AND GAS PROPERTIES

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993






Balance at Balance
Beginning Additions Other at End
of Year at Cost Retirements Changes of Year
---------- --------- ----------- ------- -------

Year Ended December 31, 1995:
- ----------------------------
Leasehold costs $ 497,639 $ - $ - $ - $ 497,639
Wells and related facilities 12,915,028 1,394 - - 12,916,422
----------- -------- -------- -------- -----------
$13,412,667 $ 1,394 $ - $ - $13,414,061
=========== ======== ======== ======== ===========



Year ended December 31, 1994:
- ----------------------------
Leasehold costs $ 497,639 $ - $ - $ - $ 497,639
Wells and related facilities 12,881,861 33,167 - - 12,915,028
----------- -------- -------- -------- -----------
$13,379,500 $ 33,167 $ - $ - $13,412,667
=========== ======== ======== ======== ===========



Year Ended December 31, 1993:
- ----------------------------
Leasehold costs $ 497,639 $ - $ - $ - $ 497,639
Wells and related facilities 12,881,861 - - - 12,881,861
----------- -------- -------- -------- -----------
$13,379,500 $ - $ - $ - $13,379,500
=========== ======== ======== ======== ===========






F-18
30



SCHEDULE VI


STERLING DRILLING FUND 1983-2, L.P.
(a New York limited partnership)

ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION - OIL AND GAS PROPERTIES

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993






Balance at Charges to Balance
Beginning Costs and Other at End
of Year Expenses Retirements Changes of Year
---------- ---------- ----------- ------- -------

Year Ended December 31, 1995:
- ----------------------------
Wells and related facilities $11,521,640 $ 69,390 $ - $ - $11,591,030
Leasehold costs 486,943 533 - - 487,476
----------- -------- -------- -------- -----------
$12,008,583 $ 69,923 $ - $ - $12,078,506
=========== ======== ======== ======== ===========



Year ended December 31, 1994:
- ----------------------------
Wells and related facilities $10,990,777 $530,863 $ - $ - $11,521,640
Leasehold costs 486,148 795 - - 486,943
----------- -------- -------- -------- -----------
$11,476,925 $531,658 $ - $ - $12,008,583
=========== ======== ======== ======== ===========



Year Ended December 31, 1993:
- ----------------------------
Wells and related facilities $10,888,098 $102,679 $ - $ - $10,990,777
Leasehold costs 485,525 623 - - 486,148
----------- -------- -------- -------- -----------
$11,373,623 $103,302 $ - $ - $11,476,925
=========== ======== ======== ======== ===========






F-19
31
INDEX TO EXHIBITS



Sequentially
Exhibit Numbered
Number Exhibit Page
- ------ ------- ------------

(3) Form Agreement of Limited Partnership of Sterling-Fuel Resources
Drilling Fund 1983-1 (now Sterling Drilling Fund 1983-2, L.P.)
(incorporated by reference to Exhibit (3) of Sterling Gas Drilling
Fund 1983-2,L.P., Form 10-K for the year ended December 31, 1994)

(24) Consent of Ryder Scott Company (filed herewith)

(27) Financial Data Schedule. (filed herewith)