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

FORM 10-QSB

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 1996

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

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

Commission file number 0-16552

ENEX OIL & GAS INCOME PROGRAM III - SERIES 4, L.P.
(Exact name of small business issuer as specified in its charter)

New Jersey 76-0179822
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

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

Issuer's telephone number:
(713) 358-8401

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes x No

Transitional Small Business Disclosure Format (Check one):

Yes No x

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ENEX OIL & GAS INCOME PROGRAM III - SERIES 4, L.P.
BALANCE SHEET
- ------------------------------------------------------------------------------

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

Cash $ 2,687
Accounts receivable - oil & gas sales 23,588
Other current assets 4,343
-------------

Total current assets 30,618
-------------

OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 1,700,170
Less accumulated depreciation and depletion 1,342,531
-------------

Property, net 357,639
-------------

TOTAL $ 388,257
=============

LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
Accounts payable $ 11,227
Payable to general partner 31,700
-------------

Total current liabilities 42,927
-------------

NONCURRENT PAYABLE TO GENERAL PARTNER 126,801
-------------

PARTNERS' CAPITAL:
Limited partners 203,703
General partner 14,826
-------------

Total partners' capital 218,529
-------------

TOTAL $ 388,257
=============

Number of $500 Limited Partner units outstanding 5,410

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

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ENEX OIL & GAS INCOME PROGRAM III - SERIES 4, L.P.
STATEMENTS OF OPERATIONS
- ---------------------------------------------------------------------

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

September 30, September 30, September 30, September 30,
1996 1995 1996 1995
---------------- ----------------- ----------------- -------------------

REVENUES:

Oil and gas sales $ 43,779 $ 33,895 $ 120,899 $ 114,131
---------------- ----------------- ----------------- -------------------

EXPENSES:
Depreciation and depletion 7,771 13,025 15,939 38,548
Impairment of property - - 88,363 -
Lease operating expenses 16,915 27,360 60,494 73,220
Production taxes 2,506 2,178 7,059 8,006
General and administrative 5,257 6,126 18,434 20,865
---------------- ----------------- ----------------- -------------------

Total expenses 32,449 48,689 190,289 140,639
---------------- ----------------- ----------------- -------------------

OTHER INCOME:
Gain on sale of property - 3,969 - 3,969
---------------- ----------------- ----------------- -------------------

NET INCOME (LOSS) $ 11,330 $ (10,825) $ (69,390) $ (22,539)
================ ================= ================= ===================

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

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ENEX OIL AND GAS INCOME PROGRAM III - SERIES 4, L.P.
STATEMENTS OF CASH FLOWS

(UNAUDITED)
NINE MONTHS ENDED

September 30, September 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) $ (69,390) $ (22,539)

Adjustments to reconcile net (loss) to
net cash provided by operating activities:
Depreciation and depletion 15,939 38,548
Impairment of property 88,363 -
Gain on sale of property 0 (3,969)
(Increase) decrease in:
Accounts receivable - oil & gas sales (11,326) 965
Other current assets (4) (11,830)
Increase (decrease) in:
Accounts payable (10,876) 5,856
Payable to affiliated partnership - (15)
Payable to general partner (4,170) (5,316)

Total adjustments 77,926 24,239

Net cash provided by operating activities 8,536 1,700

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property - 10,000
Property additions - development costs (6,064) (2,059)

Net cash provided (used) by investing activities(6,064) 7,941

CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions - (7,507)

NET INCREASE IN CASH 2,472 2,134

CASH AT BEGINNING OF YEAR 215 801

CASH AT END OF PERIOD $ 2,687 $ 2,935

See accompanying notes to financial statements.

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ENEX OIL & GAS INCOME PROGRAM III - SERIES 4, L.P.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

1. The interim financial information included herein is unaudited;
however, such information reflects all adjustments (consisting solely
of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of results for the
interim periods.

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

3. The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which
requires certain to be reviewed for impairment whenever events or
circumstances indicate the carrying amount may not be recoverable. Prior to
this pronouncement, the Company assessed properties on an aggregate basis.
Upon adoption of SFAS 121, the Company began assessing properties on an
individual basis, wherein total capitalized costs may not exceed the
property's fair market value. The fair market value of each property was
determined by H. J. Gruy and Associates, ("Gruy"). To determine the fair
market value, Gruy estimated each property's oil and gas reserves, applied
certain assumptions regarding price and cost escalations, applied a 10%
discount factor for time and certain discount factors for risk, location,
type of ownership interest, category of reserves, operational
characteristics, and other factors. In the first quarter of 1996, the
Company recognized a non-cash impairment provision of $88,363 for certain
oil and gas properties due to market indications that the carrying amounts
were not fully recoverable.

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

Third Quarter 1995 Compared to Third Quarter 1996

Oil and gas sales for the third quarter increased to $43,779 in 1996 from
$33,895 in 1995. This represents an increase of $9,884 (29%). Oil sales
decreased by $2,277 (7%). A 31% decrease in the oil production caused sales to
decrease by $9,455. This decrease was partially offset by a 33% increase in oil
sales price. Gas sales increased by $12,161 (415%). A 51% increase in the
average gas sales price increased sales by $5,064. A 243% increase in gas
production increased gas sales by an additional $7,097. The increase in average
oil sales price was primarily the result of lower net profits payments on the
Shana acquisition which had a pump replaced on the Dorothy Stevens #4 well in
1995, and by higher prices in the overall market for the sale of oil. The
increase in the average gas sales price was primarily the result of higher
prices in the overall market for the sale of gas coupled with higher production
from properties with a relatively higher gas price. The lower oil production was
primarily due to natural production declines. The higher gas production was
primarily the result of higher production from the Shana acquisition, which was
shut-in in 1995 for a pump replacement, partially offset by natural production
declines.

Lease operating expenses decreased to $16,915 in 1996 from $27,360 in 1995. The
decrease of $10,445 (38%) is primarily due to charges incurred to replace a pump
on the Shana acquisition in the third quarter of 1995, partially offset by the
changes in production, noted above.

Depreciation and depletion expense decreased to $7,771 in the third quarter of
1996 from $13,025 in the third quarter of 1995. This represents a decrease of
$5,254 (40%). The changes in production, noted above, reduced depreciation and
depletion expense by $213. A 90% decrease in the depletion rate reduced
depreciation and depletion expense by an additional $5,041. The decrease in the
depletion rate was primarily due to the lower property basis resulting from the
recognition of an $88,363 property impairment in the first quarter of 1996,
partially offset by a downward revision of the oil and gas reserves during
December 1995.

General and administrative expenses decreased to $5,257 in 1996 from $6,126 in
1995. This decrease of $869 (14%) is primarily due to less staff time being
required to manage the Company's operations in 1996.

First Nine Months in 1995 Compared to First Nine Months in 1996
- -----------------------------------------------------------------

Oil and gas sales for the first nine months increased to $120,899 in 1996 from
$114,131 in 1995. This represents a increase of $6,768 (6%). Oil sales decreased
by $22,096 (19%), as a result of a 19% decrease in oil production. Gas sales
increased by $28,864 (1,985%). A 1,320% increase in average gas sales price. The
decrease in average oil sales was primarily the result of higher net profits
payments on the Shana acquisition which had a pump replaced on the Dorothy
Stevens #4 well in 1995, partially offset by higher prices in the overall market
for the sale of oil. The

I-5

increase in the average gas sales price was primarily the result of higher
prices in the overall market for the sale of gas coupled with higher production
from properties with a relatively higher gas price.

Lease operating expenses decreased to $60,494 in 1996 from $73,220 in 1995. The
decrease of $12,726 (17%) is primarily due to charges incurred to replace a pump
on the Shana acquisition in the third quarter of 1995, partially offset by the
changes in production, noted above.

Depreciation and depletion expense decreased to $15,939 in the first nine months
of 1996 from $38,548 in the first nine months of 1995. This represents a
decrease of $22,609 (59%). The changes in production, noted above, reduced
depreciation and depletion expense by $4,174. A 54% decrease in the depletion
rate reduced depreciation and depletion expense by an additional $18,435. The
decrease in the depletion rate was primarily due to the lower property basis
resulting from the recognition of an $88,363 property impairment in the first
quarter of 1996, partially offset by a downward revision of the oil and gas
reserves during December 1995.

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long- Lived Assets to be Disposed Of," which requires
certain to be reviewed for impairment whenever events or circumstances indicate
the carrying amount may not be recoverable. Prior to this pronouncement, the
Company assessed properties on an aggregate basis. Upon adoption of SFAS 121,
the Company began assessing properties on an individual basis, wherein total
capitalized costs may not exceed the property's fair market value. The fair
market value of each property was determined by H. J. Gruy and Associates,
("Gruy"). To determine the fair market value, Gruy estimated each property's oil
and gas reserves, applied certain assumptions regarding price and cost
escalations, applied a 10% discount factor for time and certain discount factors
for risk, location, type of ownership interest, category of reserves,
operational characteristics, and other factors. In the first quarter of 1996,
the Company recognized a non-cash impairment provision of $88,363 for certain
oil and gas properties due to market indications that the carrying amounts were
not fully recoverable.

General and administrative expenses decreased to $18,434 in 1996 from $20,865 in
1995. This decrease of $2,431 (12%) is primarily due to less staff time being
required to manage the Company's operations in 1996.

CAPITAL RESOURCES AND LIQUIDITY

The Company's cash flow from operations is a direct result of the amount of net
proceeds realized from the sale of oil and gas production. Accordingly, the
changes in cash flow from 1995 to 1996 are primarily due to the changes in oil
and gas sales described above. It is the general partner's intention to
distribute the available cash flow to the Company's partners. The Company's
"available cash flow" is essentially equal to the net amount of cash provided by
operating activities.

I-6

The Company discontinued the payment of distributions during 1995. Future
distributions are dependent upon, among other things, an increase in prices
received for oil and gas. The Company will continue to recover its reserves and
distribute to the limited partners the net proceeds realized form the sale of
oil and gas production. Distribution amounts are subject to change if net
revenues are greater or less than expected. Based on the December 31, 1995
reserve report prepared by Gruy, there appears to be sufficient future net
revenues to pay all obligations and expenses. The General Partner does not
intend to accelerate the repayment of the debt beyond the Company's cash flow
provided by operating activities. Future periodic distributions will be made
once sufficient net revenues are accumulated.

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

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

I-7

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

None

Item 2. Changes in Securities.

None

Item 3. Defaults Upon Senior Securities.

Not Applicable

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

Not Applicable

Item 5. Other Information.

Not Applicable

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

(a) There are no exhibits to this report.

(b) The Company filed no reports on Form 8-K during the
quarter ended September 30, 1996.

II-1

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.

ENEX OIL & GAS INCOME
PROGRAM III - SERIES 4, L.P.
(Registrant)

By:ENEX RESOURCES CORPORATION
General Partner

By: /s/ R. E. Densford
R. E. Densford
Vice President, Secretary
Treasurer and Chief Financial
Officer

November 13, 1996 By: /s/ James A. Klein
-------------------
James A. Klein
Controller and Chief
Accounting Officer