SECURITIES AND EXCHANGE COMMISSION
                   Washington, D.C. 20549
                              
                          FORM 10-Q
                              
                              
/X/Quarterly  Report Pursuant to Section 13 or  15(d)of  the
Securities Exchange Act of 1934

For the Quarterly Period Ended September 30, 1995

                             or

/  /Transition Report Pursuant to Section 13 or 15(d)of  the
Securities Exchange Act of 1934

For the Transition Period Ended ______________________

                    Commission File Number 0-10501


               STERLING GAS DRILLING FUND 1981
     (Exact name of registrant as specified in charter)

                          New York
      (State or other jurisdiction of incorporation or
                        organization)
                              
                         13-3098770
            (IRS employer identification number)

      One Landmark Square, Stamford, Connecticut  06901
    (Address and Zip Code of principal executive offices)

                       (203) 358-5700

    (Registrant's telephone number, including area code)

                       Not Applicable
   (Former name, former address and former fiscal year, if
                 changed since last report)

Indicate by check mark whether the 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   / /

Part I
Item 1.   Financial Statements

The following Financial Statements are filed herewith:

Balance Sheets - September 30, 1995 and December 31, 1994.

Statements of Operations for the Nine and Three Months Ended September 30,
1995 and 1994.

Statements of Changes in Partners' Equity for the Nine and Three Months
Ended September 30, 1995 and 1994.

Statements of Cash Flows for the Nine Months Ended September 30, 1995 and
1994.

Note to Financial Statements


Item 2.   Management's Discussion and Analysis of Financial Condition
and Results of Operations

1.   Liquidity -

The oil and gas industry is intensely competitive in all its phases.
There is also competition among 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 Prospectus, 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 or for
the conduct of the Partnership's business.  As of September 30, 1995,
the General Partners have distributed to the Limited Partners
$3,955,500.  Such cash distributions are equivalent to 45 % of
original total Limited Partner capital contributions.


Columbia Gas Transmission Corp., a contract purchaser of the
Registrant's gas, filed a Chapter 11 petition in U.S. Bankruptcy Court
in Wilmington Delaware on July 31, 1991.  At that time, the Bankruptcy
Court released Columbia from any current contracts.  The Registrant
has filed a claim with the Bankruptcy Court to recover revenue
suspended at the time bankruptcy occurred.  Such amounts were not
recorded as revenue during the applicable period, therefore, no loss
contingency exists.  The Registrant has reviewed and accepted a
tentative settlement offer made by Columbia.  The Registrant is
hopeful that Columbia will make a final settlement within the next
three months.

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  (SEC  case)
associated  with such reserves, discounted at 10% as of  December  31,
1994  was approximately $703,000 as compared to the December 31,  1993
amount of $1,344,000.

The  decline in undiscounted future net cash flows for the Partnership
properties  at December 31, 1994 when compared to December  31,  1993,
was caused by a significant decline in prices between these two dates,
rather  than  changes  in  the estimated future  production  from  the
properties.   It  is  the  opinion  of  management,  and  the  general
consensus  in  the industry, that gas prices are unlikely  to  decline
significantly  below the December 31, 1994 price in the  near  future.
However, there can be no assurances that such price declines will  not
occur,  and   will  not  pose a threat to the Partnership's  continued
viability.
2.  Capital Resources -

The Registrant was formed for the sole purpose of drilling oil and gas
wells. The Registrant entered into a drilling contract with an
independent contractor in December 1981 for $6,900,000.  Pursuant to
the terms of this contract, wells have been drilled resulting in
thirty-seven producing wells, three non commercial wells and one
plugged well.   The Registrant has had a reserve report prepared which
details reserve value information, and such information is available
to the Limited Partners pursuant to the buy-out provisions of the
Prospectus as previously filed.

3.   Results of Operations -
 The Partnership's overall operating revenues decreasing minimally
from $194,956 in 1994 to $193,199 in 1995.    The  increased gas
production,  from 70,535 MCF in 1994 to  71,018 MCF in 1995, was
offset by lower  average price per MCF from $ 2.80 in 1994 to $2.54 in
1995.  Although the Partnership receives only a minor amount of
revenue from oil, higher oil production and average oil prices in 1995
did contribute to minimize the decline in overall operating revenues.

Production expenses decreased from $85,420 in 1994 to $65,265 in 1995.
Additional location and road repairs were expended during the spring
and summer of last year.  These costs were incurred because of the
freezing and flooding which occurred throughout the 1994 winter and
spring production periods.  Most expenditures for repairs, locations
and labor in 1995  were used to maintain the general upkeep of the
wells and well sites.

General and administrative expenses have been segregated on the
financial statements to show expenses paid to PrimeEnergy Management
Corporation(PEMC), a general partner.  These expenses are charged in
accordance with guidelines set forth in the Registrant's Management
Agreement.  The expenses attributable to the affairs and operations of
the Partnership, reimbursed to PEMC, shall not exceed an annual amount
equal to 5% of the Limited Partners capital contributions. Amounts
related to both 1995 and 1994 are substantially less than the amounts
allocable to the Registrant under the Partnership Agreement.  The
lower amounts reflect management's effort's to limit costs, both
incurred and allocated to the Registrant. Management continues to
reduce third party costs and use in-house resources to provide
efficient and timely services to the Partnership.

The Partnership records additional depreciation, depletion and
amortization to the extent that net capitalized costs exceed the
undiscounted future net cash flows attributable to the partnership
properties. A downward revision in reserve estimates due to lower year-
end gas prices in 1994 resulted in an additional charge of $250,000.
The lower depletion expense in 1995 is due to lower depletable cost
basis in oil and gas properties.

4. Other-

In, March, the Financial Accounting Standards Board issued Statement
of Financial Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of," (SFAS No.
121)which is effective for the fiscal years beginning after December
15, 1995. This statement establishes accounting standards for the
impairment of long-lived assets, requiring such assets to be reported
at the lower of carrying amount or fair value, less selling costs.
The statement amends SFAS No. 19, "Financial Accounting and Reporting
by Oil and Gas Producing Companies" by adding an impairment test for
proved properties in accordance with SFAS No. 121.

The Registrant currently performs a "ceiling test" by comparing the
total carrying value of oil and gas properties to the total future net
cash flows from the estimated production of proved oil and gas
properties. The effect of SFAS No. 121, which would change the way
this test is performed, is not known at this time.








PART II

Items 1 through 5 have been omitted in that each item is either
inapplicable or the answer is negative.Item .  Exhibits and Reports on
Form 8-K
The Partnership was not required to file any reports on Form 8-K and
no such form was filed during the period covered by this report.

Exhibit 27 - Financial Data Schedule is attached to the electronic
filing of this report.



                          S I G N A T U R E S
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.


                                    STERLING GAS DRILLING FUND 1981 
November 13, 1995                   BY: /S/Charles E.Drimal Jr.
(DATE)                                  -----------------------
                                    Charles E. Drimal, Jr.
                                    General Partner







                      STERLING DRILLING FUND 1981
                   (a New York Limited Partnership)
                            Balance Sheets
                              (unaudited)
                                         September       December
                                            30,          31, 1994
                                            1995
Assets                                                             
Current Assets:                                                    
  Cash and cash equivalents           $           25 $           43
                                          ----------    -----------
      Total current assets                        25             43
                                                                   
Oil and Gas properties -                                           
successful efforts method:                                         
  Leasehold costs                            236,502        236,502
  Well and related facilities              6,938,085      6,938,085
   less accumulated                                                
   depreciation, depletion and                                     
   amortization                           (5,861,280)    (5,785,763)
                                          ----------     ----------
                                           1,313,307      1,388,824
                                          ----------     ----------
       Total assets                   $    1,313,332 $    1,388,867
                                                             
Liabilities and Partners' Equity                             
  Current liabilities:                                       
   Due to affiliates                  $      214,982 $      252,719
                                          ----------     ----------
        Total current liabilities            214,982        252,719
                                          ----------     ----------
                                                                   
  Partners' Equity                                                 
   Limited partners                        1,218,950      1,261,971
   General partners                         (120,600)      (125,823)
                                          ----------     ----------
         Total partners' equity            1,098,350      1,136,148
                                          ----------     ----------
                                                                   
         Total liabilities and                                     
          partners' equity            $    1,313,332 $    1,388,867
                                          ==========     ==========
                                   
                                   
                                   
See accompanying note to the financial statements
                      STERLING DRILLING FUND 1981
                   (a New York Limited Partnership)
                        Statement of Operations
                              (unaudited)
                                   
                                   Nine Months Ended
                                   September 30, 1995

                               Limited     General      
                               Partners    Partners     Total
Revenue:                                                
Operating revenue           $    162,577 $    30,622 $    193,199
                                --------    --------      -------
  Total Revenue                  162,577      30,622      193,199
                                --------    --------      -------
                                                        
Costs and Expenses:                                     
Production expense                54,920      10,345       65,265
General and administrative                                       
 to a related party               63,110      11,887       74,997
General and administrative        12,806       2,412       15,218
Depreciation, depletion                                          
 and amortization                 74,762         755       75,517
                                --------    --------      -------
  Total Costs and Expenses       205,598      25,399      230,997
                                --------    --------      -------
  Net Income(loss)          $    (43,021) $    5,223  $   (37,798)
                                ========    ========      =======
Net Income(loss)                                                 
    per equity unit         $      (4.89)                         
                                  ======                         
                                                                 
                                                                 
                                   
                                   
See accompanying note to the, financials
                      STERLING DRILLING FUND 1981
                   (a New York Limited Partnership)
                        Statement of Operations
                              (unaudited)
                                   
                                   Nine Months Ended
                                   September 30, 1994

                               Limited     General     
                               Partners    Partners    Total
Revenue:                                               
Operating revenue           $    164,055      30,901 $    194,956
                                --------    --------      -------
  Total Revenue                  164,055      30,901      194,956
                                --------    --------      -------
                                                       
Costs and Expenses:                                    
Production expense                71,881      13,539       85,420
General and administrative                                       
 to a related party               72,706      13,694       86,400
General and administrative        11,644       2,193       13,837
Depreciation, depletion                                          
 and amortization                 81,603         824       82,427
                                --------    --------      -------
  Total Costs and Expenses       237,834      30,250      268,084
                                --------    --------      -------
  Net Income(loss)          $    (73,779)        651  $   (73,128)
                                ========    ========      =======
Net Income(loss)                                                 
    per equity unit         $      (8.39)                         
                                  ======                         
                                   
                                   
See accompanying note to the, financials
                                   


                      STERLING DRILLING FUND 1981
                   (a New York Limited Partnership)
                        Statement of Operations
                              (unaudited)
                                   
                                   Three Months Ended
                                   September 30, 1995

                               Limited     General                  
                               Partners    Partners            Total
Revenue:                                                
Operating revenue            $    52,739       9,934  $       62,673
                                --------    --------       ---------
  Total Revenue                   52,739       9,934          62,673
                                --------    --------       ---------
                                                                    
Costs and Expenses:                                                 
Production expense                15,893       2,994          18,887
General and administrative                                          
 to a related party               21,037       3,962          24,999
General and administrative         2,852         537           3,389
Depreciation, depletion                                             
 and amortization                 24,920         252          25,172
                                --------    --------       ---------
  Total Costs and Expenses        64,702       7,745          72,447
                                --------    --------       ---------
  Net Income(loss)           $   (11,963)      2,189   $      (9,774)
                                ========    ========       =========
Net Income(loss)                                                    
    per equity unit          $     (1.36)
                                ========                            
                                   
                                   
See accompanying note to the, financials
                                   

                      STERLING DRILLING FUND 1981
                   (a New York Limited Partnership)
                        Statement of Operations
                              (unaudited)
                                   
                                   Three Months Ended
                                   September 30, 1994

                               Limited     General      
                               Partners    Partners     Total
Revenue:                                                
Operating revenue           $     61,268      11,541 $       72,809
                                --------    --------    -----------
  Total Revenue                   61,268      11,541         72,809
                                --------    --------    -----------
                                                        
Costs and Expenses:                                     
Production expense                23,177       4,365         27,542
General and administrative                                         
 to a related party               24,236       4,564         28,800
General and administrative         3,309         623          3,932
Depreciation, depletion                                            
 and amortization                 27,202         274         27,476
                                --------    --------    -----------
  Total Costs and Expenses        77,924       9,826         87,750
                                --------    --------    -----------
  Net Income(loss)          $    (16,656)  $   1,715 $      (14,941)
                                ========    ========    ===========
Net Income(loss)                                                   
    per equity unit         $      (1.89)
                                  ======                           


See accompanying note to the, financials




                      STERLING DRILLING FUND 1981
                   (a New York Limited Partnership)
               Statement of Changes in Partners' Equity
                              (unaudited)
                                   
                                   Nine Months Ended
                                   September 30, 1995


                            Limited        General                   
                            Partners       Partners             Total
                                                         
Balance at beginning of                                               
period                   $    1,261,971  $   (125,823)  $    1,136,148
Net Income(Loss)                (43,021)        5,223          (37,798)
                              ---------      --------      -----------
Balance at end of period $    1,218,950      (120,600) $     1,098,350
                              =========      ========      ===========
                                          
                                          
                                  Nine Months Ended
                                 September 30, 1994

                              Limited      General                    
                              Partners     Partners              Total
                                                                      
Balance at beginning of                                              
period                      $  1,641,938 $    (120,979)  $  1,520,959
  Net Income(Loss)               (73,779)          651        (73,128)
                               ---------      --------      ----------
Balance at end of period    $  1,568,159      (120,328)  $  1,447,831
                               =========      ========      ==========
                                   
                                   
See accompanying note to the, financials
                                   
                      STERLING DRILLING FUND 1981
                   (a New York Limited Partnership)
               Statement of Changes in Partners' Equity
                              (unaudited)
                                   
                                   Three Months Ended
                                   September 30, 1995


                               Limited      General                    
                               Partners     Partners              Total
                                                                       
Balance at beginning of                                                
period                      $   1,230,913 $   (122,789) $     1,108,124
  Net Income(Loss)                (11,963)       2,189           (9,774)
                                 --------     --------       ----------
Balance at end of period    $   1,218,950     (120,600) $     1,098,350
                                 ========     ========       ==========
                                            
                                            
                                   Three Months Ended
                                   September 30, 1994

                              Limited      General         
                              Partners     Partners        Total
                                                           
Balance at beginning of                                               
period                      $  1,584,815 $  (122,043)   $    1,462,772
  Net Income(Loss)               (16,656)      1,715           (14,941)
                               ---------    --------         ----------
Balance at end of period    $  1,568,159    (120,328)   $    1,447,831
                               =========   =========         ==========
                                                           
                                   
See accompanying note to the, financials
                                   
                      STERLING DRILLING FUND 1981
                   (a New York Limited Partnership)
                        Statement of Cash Flows
                              (unaudited)
                                   
                                        Nine months     Nine months
                                           ended           ended
                                         September       September
                                         30, 1995         30, 1994
                                                                    
Net cash provided by(used in)                                       
operating activities                 $          (18) $            1
                                          ----------      ---------
Net increase(decrease) in cash and                                  
  cash equivalents                              (18)              1
Cash and cash equivalents at                                        
beginning of period                              43              30
                                          ----------      ---------
Cash and cash equivalents at end of                                 
period                               $           25 $            31
                                          ==========      =========

See accompanying note to the, financials


                STERLING GAS DRILLING FUND 1981
               (a New York limited partnership)
                 Note to Financial Statements
                     September 30, 1995


1.   The accompanying statements for the period ending September 30,
1995 are unaudited but reflect all the adjustments necessary to
present fairly the results of operations.  Certain reclassifications
were made to the prior periods financial statements to conform to the
current period presentation.
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SECURITIES AND EXCHANGE COMMISSION
                   Washington, D.C. 20549
                              
                          FORM 10-Q
                              
                              
/X/Quarterly  Report Pursuant to Section 13 or  15(d)of  the
Securities Exchange Act of 1934

For the Quarterly Period Ended September 30, 1995

                             or

/  /Transition Report Pursuant to Section 13 or 15(d)of  the
Securities Exchange Act of 1934

For the Transition Period Ended ______________________

                    Commission File Number 0-10501

               STERLING GAS DRILLING FUND 1981
     (Exact name of registrant as specified in charter)

                          New York
      (State or other jurisdiction of incorporation or
                        organization)
                              
                         13-3098770
            (IRS employer identification number)

      One Landmark Square, Stamford, Connecticut  06901
    (Address and Zip Code of principal executive offices)

                       (203) 358-5700

    (Registrant's telephone number, including area code)

                       Not Applicable
   (Former name, former address and former fiscal year, if
                 changed since last report)

Indicate by check mark whether the 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   / /

Part I
Item 1.   Financial Statements

The following Financial Statements are filed herewith:

Balance Sheets - September 30, 1995 and December 31, 1994.

Statements of Operations for the Nine and Three Months Ended September 30,
1995 and 1994.

Statements of Changes in Partners' Equity for the Nine and Three Months
Ended September 30, 1995 and 1994.

Statements of Cash Flows for the Nine Months Ended September 30, 1995 and
1994.

Note to Financial Statements

Item 2.   Management's Discussion and Analysis of Financial Condition
and Results of Operations

1.   Liquidity -

The oil and gas industry is intensely competitive in all its phases.
There is also competition among 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 Prospectus, 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 or for
the conduct of the Partnership's business.  As of September 30, 1995,
the General Partners have distributed to the Limited Partners
$3,955,500.  Such cash distributions are equivalent to 45 % of
original total Limited Partner capital contributions.

Columbia Gas Transmission Corp., a contract purchaser of the
Registrant's gas, filed a Chapter 11 petition in U.S. Bankruptcy Court
in Wilmington Delaware on July 31, 1991.  At that time, the Bankruptcy
Court released Columbia from any current contracts.  The Registrant
has filed a claim with the Bankruptcy Court to recover revenue
suspended at the time bankruptcy occurred.  Such amounts were not
recorded as revenue during the applicable period, therefore, no loss
contingency exists.  The Registrant has reviewed and accepted a
tentative settlement offer made by Columbia.  The Registrant is
hopeful that Columbia will make a final settlement within the next
three months.

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  (SEC  case)
associated  with such reserves, discounted at 10% as of  December  31,
1994  was approximately $703,000 as compared to the December 31,  1993
amount of $1,344,000.

The  decline in undiscounted future net cash flows for the Partnership
properties  at December 31, 1994 when compared to December  31,  1993,
was caused by a significant decline in prices between these two dates,
rather  than  changes  in  the estimated future  production  from  the
properties.   It  is  the  opinion  of  management,  and  the  general
consensus  in  the industry, that gas prices are unlikely  to  decline
significantly  below the December 31, 1994 price in the  near  future.
However, there can be no assurances that such price declines will  not
occur,  and   will  not  pose a threat to the Partnership's  continued
viability.
2.  Capital Resources -

The Registrant was formed for the sole purpose of drilling oil and gas
wells. The Registrant entered into a drilling contract with an
independent contractor in December 1981 for $6,900,000.  Pursuant to
the terms of this contract, wells have been drilled resulting in
thirty-seven producing wells, three non commercial wells and one
plugged well.   The Registrant has had a reserve report prepared which
details reserve value information, and such information is available
to the Limited Partners pursuant to the buy-out provisions of the
Prospectus as previously filed.

3.   Results of Operations -
 The Partnership's overall operating revenues decreasing minimally
from $194,956 in 1994 to $193,199 in 1995.    The  increased gas
production,  from 70,535 MCF in 1994 to  71,018 MCF in 1995, was
offset by lower  average price per MCF from $ 2.80 in 1994 to $2.54 in
1995.  Although the Partnership receives only a minor amount of
revenue from oil, higher oil production and average oil prices in 1995
did contribute to minimize the decline in overall operating revenues.

Production expenses decreased from $85,420 in 1994 to $65,265 in 1995.
Additional location and road repairs were expended during the spring
and summer of last year.  These costs were incurred because of the
freezing and flooding which occurred throughout the 1994 winter and
spring production periods.  Most expenditures for repairs, locations
and labor in 1995  were used to maintain the general upkeep of the
wells and well sites.

General and administrative expenses have been segregated on the
financial statements to show expenses paid to PrimeEnergy Management
Corporation(PEMC), a general partner.  These expenses are charged in
accordance with guidelines set forth in the Registrant's Management
Agreement.  The expenses attributable to the affairs and operations of
the Partnership, reimbursed to PEMC, shall not exceed an annual amount
equal to 5% of the Limited Partners capital contributions. Amounts
related to both 1995 and 1994 are substantially less than the amounts
allocable to the Registrant under the Partnership Agreement.  The
lower amounts reflect management's effort's to limit costs, both
incurred and allocated to the Registrant. Management continues to
reduce third party costs and use in-house resources to provide
efficient and timely services to the Partnership.

The Partnership records additional depreciation, depletion and
amortization to the extent that net capitalized costs exceed the
undiscounted future net cash flows attributable to the partnership
properties. A downward revision in reserve estimates due to lower year-
end gas prices in 1994 resulted in an additional charge of $250,000.
The lower depletion expense in 1995 is due to lower depletable cost
basis in oil and gas properties.

4. Other-

In, March, the Financial Accounting Standards Board issued Statement
of Financial Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of," (SFAS No.
121)which is effective for the fiscal years beginning after December
15, 1995. This statement establishes accounting standards for the
impairment of long-lived assets, requiring such assets to be reported
at the lower of carrying amount or fair value, less selling costs.
The statement amends SFAS No. 19, "Financial Accounting and Reporting
by Oil and Gas Producing Companies" by adding an impairment test for
proved properties in accordance with SFAS No. 121.

The Registrant currently performs a "ceiling test" by comparing the
total carrying value of oil and gas properties to the total future net
cash flows from the estimated production of proved oil and gas
properties. The effect of SFAS No. 121, which would change the way
this test is performed, is not known at this time.

PART II

Items 1 through 5 have been omitted in that each item is either
inapplicable or the answer is negative.Item .  Exhibits and Reports on
Form 8-K
The Partnership was not required to file any reports on Form 8-K and
no such form was filed during the period covered by this report.

Exhibit 27 - Financial Data Schedule is attached to the electronic
filing of this report.

                          S I G N A T U R E S
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                    STERLING GAS DRILLING FUND 1981 
November 13, 1995                   BY: /S/Charles E.Drimal Jr.
(DATE)                                  -----------------------
                                    Charles E. Drimal, Jr.
                                    General Partner

                      STERLING DRILLING FUND 1981
                   (a New York Limited Partnership)
                            Balance Sheets
                              (unaudited)
                                         September       December
                                            30,          31, 1994
                                            1995
Assets                                                             
Current Assets:                                                    
  Cash and cash equivalents           $           25 $           43
                                          ----------    -----------
      Total current assets                        25             43
                                                                   
Oil and Gas properties -                                           
successful efforts method:                                         
  Leasehold costs                            236,502        236,502
  Well and related facilities              6,938,085      6,938,085
   less accumulated                                                
   depreciation, depletion and                                     
   amortization                           (5,861,280)    (5,785,763)
                                          ----------     ----------
                                           1,313,307      1,388,824
                                          ----------     ----------
       Total assets                   $    1,313,332 $    1,388,867
                                                             
Liabilities and Partners' Equity                             
  Current liabilities:                                       
   Due to affiliates                  $      214,982 $      252,719
                                          ----------     ----------
        Total current liabilities            214,982        252,719
                                          ----------     ----------
                                                                   
  Partners' Equity                                                 
   Limited partners                        1,218,950      1,261,971
   General partners                         (120,600)      (125,823)
                                          ----------     ----------
         Total partners' equity            1,098,350      1,136,148
                                          ----------     ----------
                                                                   
         Total liabilities and                                     
          partners' equity            $    1,313,332 $    1,388,867
                                          ==========     ==========
                                   
                                   
                                   
See accompanying note to the financial statements
                      STERLING DRILLING FUND 1981
                   (a New York Limited Partnership)
                        Statement of Operations
                              (unaudited)
                                   
                                   Nine Months Ended
                                   September 30, 1995

                               Limited     General      
                               Partners    Partners     Total
Revenue:                                                
Operating revenue           $    162,577 $    30,622 $    193,199
                                --------    --------      -------
  Total Revenue                  162,577      30,622      193,199
                                --------    --------      -------
                                                        
Costs and Expenses:                                     
Production expense                54,920      10,345       65,265
General and administrative                                       
 to a related party               63,110      11,887       74,997
General and administrative        12,806       2,412       15,218
Depreciation, depletion                                          
 and amortization                 74,762         755       75,517
                                --------    --------      -------
  Total Costs and Expenses       205,598      25,399      230,997
                                --------    --------      -------
  Net Income(loss)          $    (43,021) $    5,223  $   (37,798)
                                ========    ========      =======
Net Income(loss)                                                 
    per equity unit         $      (4.89)                         
                                  ======                         
                                                                 
                                                                 
                                   
                                   
See accompanying note to the, financials
                      STERLING DRILLING FUND 1981
                   (a New York Limited Partnership)
                        Statement of Operations
                              (unaudited)
                                   
                                   Nine Months Ended
                                   September 30, 1994

                               Limited     General     
                               Partners    Partners    Total
Revenue:                                               
Operating revenue           $    164,055      30,901 $    194,956
                                --------    --------      -------
  Total Revenue                  164,055      30,901      194,956
                                --------    --------      -------
                                                       
Costs and Expenses:                                    
Production expense                71,881      13,539       85,420
General and administrative                                       
 to a related party               72,706      13,694       86,400
General and administrative        11,644       2,193       13,837
Depreciation, depletion                                          
 and amortization                 81,603         824       82,427
                                --------    --------      -------
  Total Costs and Expenses       237,834      30,250      268,084
                                --------    --------      -------
  Net Income(loss)          $    (73,779)        651  $   (73,128)
                                ========    ========      =======
Net Income(loss)                                                 
    per equity unit         $      (8.39)                         
                                  ======                         
                                   
                                   
See accompanying note to the, financials
                                   

                      STERLING DRILLING FUND 1981
                   (a New York Limited Partnership)
                        Statement of Operations
                              (unaudited)
                                   
                                   Three Months Ended
                                   September 30, 1995

                               Limited     General                  
                               Partners    Partners            Total
Revenue:                                                
Operating revenue            $    52,739       9,934  $       62,673
                                --------    --------       ---------
  Total Revenue                   52,739       9,934          62,673
                                --------    --------       ---------
                                                                    
Costs and Expenses:                                                 
Production expense                15,893       2,994          18,887
General and administrative                                          
 to a related party               21,037       3,962          24,999
General and administrative         2,852         537           3,389
Depreciation, depletion                                             
 and amortization                 24,920         252          25,172
                                --------    --------       ---------
  Total Costs and Expenses        64,702       7,745          72,447
                                --------    --------       ---------
  Net Income(loss)           $   (11,963)      2,189   $      (9,774)
                                ========    ========       =========
Net Income(loss)                                                    
    per equity unit          $     (1.36)
                                ========                            
                                   
                                   
See accompanying note to the, financials
                                   

                      STERLING DRILLING FUND 1981
                   (a New York Limited Partnership)
                        Statement of Operations
                              (unaudited)
                                   
                                   Three Months Ended
                                   September 30, 1994

                               Limited     General      
                               Partners    Partners     Total
Revenue:                                                
Operating revenue           $     61,268      11,541 $       72,809
                                --------    --------    -----------
  Total Revenue                   61,268      11,541         72,809
                                --------    --------    -----------
                                                        
Costs and Expenses:                                     
Production expense                23,177       4,365         27,542
General and administrative                                         
 to a related party               24,236       4,564         28,800
General and administrative         3,309         623          3,932
Depreciation, depletion                                            
 and amortization                 27,202         274         27,476
                                --------    --------    -----------
  Total Costs and Expenses        77,924       9,826         87,750
                                --------    --------    -----------
  Net Income(loss)          $    (16,656)  $   1,715 $      (14,941)
                                ========    ========    ===========
Net Income(loss)                                                   
    per equity unit         $      (1.89)
                                  ======                           

See accompanying note to the, financials

                      STERLING DRILLING FUND 1981
                   (a New York Limited Partnership)
               Statement of Changes in Partners' Equity
                              (unaudited)
                                   
                                   Nine Months Ended
                                   September 30, 1995

                            Limited        General                   
                            Partners       Partners             Total
                                                         
Balance at beginning of                                               
period                   $    1,261,971  $   (125,823)  $    1,136,148
Net Income(Loss)                (43,021)        5,223          (37,798)
                              ---------      --------      -----------
Balance at end of period $    1,218,950      (120,600) $     1,098,350
                              =========      ========      ===========
                                          
                                          
                                  Nine Months Ended
                                 September 30, 1994

                              Limited      General                    
                              Partners     Partners              Total
                                                                      
Balance at beginning of                                              
period                      $  1,641,938 $    (120,979)  $  1,520,959
  Net Income(Loss)               (73,779)          651        (73,128)
                               ---------      --------      ----------
Balance at end of period    $  1,568,159      (120,328)  $  1,447,831
                               =========      ========      ==========
                                   
                                   
See accompanying note to the, financials
                                   
                      STERLING DRILLING FUND 1981
                   (a New York Limited Partnership)
               Statement of Changes in Partners' Equity
                              (unaudited)
                                   
                                   Three Months Ended
                                   September 30, 1995

                               Limited      General                    
                               Partners     Partners              Total
                                                                       
Balance at beginning of                                                
period                      $   1,230,913 $   (122,789) $     1,108,124
  Net Income(Loss)                (11,963)       2,189           (9,774)
                                 --------     --------       ----------
Balance at end of period    $   1,218,950     (120,600) $     1,098,350
                                 ========     ========       ==========
                                            
                                            
                                   Three Months Ended
                                   September 30, 1994

                              Limited      General         
                              Partners     Partners        Total
                                                           
Balance at beginning of                                               
period                      $  1,584,815 $  (122,043)   $    1,462,772
  Net Income(Loss)               (16,656)      1,715           (14,941)
                               ---------    --------         ----------
Balance at end of period    $  1,568,159    (120,328)   $    1,447,831
                               =========   =========         ==========
                                                           
                                   
See accompanying note to the, financials
                                   
                      STERLING DRILLING FUND 1981
                   (a New York Limited Partnership)
                        Statement of Cash Flows
                              (unaudited)
                                   
                                        Nine months     Nine months
                                           ended           ended
                                         September       September
                                         30, 1995         30, 1994
                                                                    
Net cash provided by(used in)                                       
operating activities                 $          (18) $            1
                                          ----------      ---------
Net increase(decrease) in cash and                                  
  cash equivalents                              (18)              1
Cash and cash equivalents at                                        
beginning of period                              43              30
                                          ----------      ---------
Cash and cash equivalents at end of                                 
period                               $           25 $            31
                                          ==========      =========

See accompanying note to the, financials

                STERLING GAS DRILLING FUND 1981
               (a New York limited partnership)
                 Note to Financial Statements
                     September 30, 1995

1.   The accompanying statements for the period ending September 30,
1995 are unaudited but reflect all the adjustments necessary to
present fairly the results of operations.  Certain reclassifications
were made to the prior periods financial statements to conform to the
current period presentation.