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 0-17557

ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 1, L.P.
(Exact name of small business issuer as specified in its charter)

New Jersey 76-0251410
(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) has 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 88-89 INCOME AND RETIREMENT FUND - SERIES 1, L.P.
BALANCE SHEET
- ------------------------------------------------------------------------------

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

Cash $ 1,424
Accounts receivable - oil & gas sales 18,583
---------------------

Total current assets 20,007
---------------------

OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests 1,578,968
Less accumulated depletion 1,533,509
---------------------

Property, net 45,459
---------------------

TOTAL $ 65,466
=====================

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)

CURRENT LIABILITIES:
Payable to general partner $ 19,271
---------------------

NONCURRENT PAYABLE TO GENERAL PARTNER 77,085
---------------------

PARTNERS' CAPITAL (DEFICIT):
Limited partners (35,063)
General partner 4,173
---------------------

Total partners' capital (30,890)
---------------------

TOTAL $ 65,466
=====================

Number of $500 Limited Partner units outstanding 3,605

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

I-1

ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 1, 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 $ 2,946 $ 6,280 $ 29,224 $ 26,545
---------------- ----------------- ----------------- -------------------

EXPENSES:
Depletion and amortization (877) 18,721 16,177 38,113
Impairment of property - - 333,294 -
Production taxes 524 1,327 3,280 2,301
General and administrative 3,428 3,672 12,622 11,649
---------------- ----------------- ----------------- -------------------

Total expenses 3,075 23,720 365,373 52,063
---------------- ----------------- ----------------- -------------------

NET (LOSS) $ (129) $ (17,440) $ (336,149) $ (25,518)
================ ================= ================= ===================

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

I-2

ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 1, L.P.
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------------------------

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

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

Net (loss) $ (336,149) $ (25,518)
------------------- -------------------

Adjustments to reconcile net (loss) to net cash
provided by operating activities:
Depletion and amortization 16,177 38,113
Impairment of property 333,294 -
(Increase) decrease in:
Accounts receivable - oil & gas sales (4,594) 10,981
Receivable from affiliated limited partnership - (221)
(Decrease) in:
Accounts payable (2,502) (3,050)
Payable to general partner (5,275) (13,868)
------------------- -------------------

Total adjustments 337,100 31,955
------------------- -------------------

Net cash provided by operating activities 951 6,437
------------------- -------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions - (7,600)
------------------- -------------------

NET INCREASE (DECREASE) IN CASH 951 (1,163)

CASH AT BEGINNING OF YEAR 473 4,171
------------------- -------------------

CASH AT END OF PERIOD $ 1,424 $ 3,008
=================== ===================

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

I-3

ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 1, 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. The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which
requires certain assets to be reviewed for impairment whenever events or
circumstances indicate the carrying amount may not be recoverable. Prior to
this pronouncement, the Company assessed properties on an aggregate basis.
Upon adoption of SFAS 121,the Company began assessing properties on an
individual basis, wherein total capitalized costs may not exceed the
property's fair market value. The fair market value of each property was
determined by H. J. Gruy and Associates Inc., (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 $333,294 for certain
oil and gas properties due to market conditions and reserve revisions on
the Lake Decade acquisition, which indicated that the carrying amounts were
not fully recoverable.

I-4

.
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 decreased to $2,946 in 1996 from $6,280
in 1995. This represents a decrease of $3,334 (53%). Oil sales decreased by
$1,122 or 30%. A 5% decrease in average net oil prices reduced sales by $154. A
26% decrease in oil production reduced sales by an additional $968. Gas sales
decreased by $2,212 or 91%. A 115% decrease in the average gas sales price
decreased sales by $1,617. A 158% decrease in gas production decreased gas sales
an additonal $595. The decrease in oil production was primarily due to seasonal
decreases. The decrease in gas production was primarily due to higher production
from the Corinne acquisition in the third quarter of 1995. The decrease in the
average net oil sales price was primarily due to higher operating costs charged
against the Company's net profits royalty properties, especially at the Bagley
acquisition, which had a workover in the third quarter of 1996, partially offset
by higher prices in the overall market for the sale of oil. The decrease in the
average net gas sales price was primarily due to relatively higher production
from the Corinne acquisition which has a lower gas sales price.

Depletion expense decreased to a negative $877 in the third quarter of 1996 from
$18,721 in the third quarter of 1995. This represents an decrease of $19,598
(105%). The changes in production, noted above, increased depletion expense by
$19,439. A 100% decrease in the depletion rate decreased depletion expense by an
additional $159. This rate increase was primarily the result of a relatively
higher production from properties with a higher depletion rate coupled with a
downward revision of the gas reserves during December 1995, partially offset by
the lower property basis resulting from the recognition of a $333,294 property
impairment.

General and administrative expenses decreased to $3,428 in 1996 from $3,672 in
1995. This decrease of $244 (7%) is primarily due to less staff time being
required to manage the Company's operations.

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

Oil and gas sales for the first nine months increased to $29,224 in 1996 from
$26,545 in 1995. This represents an increase of $2,679 (10%). Oil sales
decreased by $874 or 9%. A 13% decrease in oil production reduced oil sales by
$1,320. This decrease was partially offset by a 4% increase in the average oil
sales price. Gas sales increased by $3,553. A 26% increase in the average gas
sales price increased sales by $4,152. This was partially offset by a 4%
decrease in gas production. The decrease in oil production was primarily due to
seasonal production declines. The decrease in gas production was primarily due
to lower production from the Corinne acquisition. The increase in the average
net oil sales price was primarily due to workover expenses incurred on the
Barnes Estate acquisition, on which the Company receives a net profits royalty.
The increase in gas price is result of the overall market conditions for gas.

I-5

Depletion expense decreased to $16,177 in the first nine months of 1996 from
$38,113 in the first nine months of 1995. This represents a decrease of $21,936
(58%). A 54% decrease in the depletion rate reduced depletion expense by
$19,374. A decrease in production noted above reduced expense an additional
$2,562. The decrease in the depletion rate was primarily due to the lower
property basis resulting from the recognition of a $333,294 property impairment
in the first quarter of 1996.

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long- Lived Assets to be Disposed Of," which requires
certain assets to be reviewed for impairment whenever events or circumstances
indicate the carrying amount may not be recoverable. Prior to this
pronouncement, the Company assessed properties on an aggregate basis. Upon
adoption of SFAS 121,the Company began assessing properties on an individual
basis, wherein total capitalized costs may not exceed the property's fair market
value. The fair market value of each property was determined by H. J. Gruy and
Associates Inc., ("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 $333,294 for
certain oil and gas properties due to market conditions and reserve revisions on
the Lake Decade acquisition, which indicated that the carrying amounts were not
fully recoverable.

General and administrative expenses increased to $12,622 in 1996 from $11,649 in
1995. This increase of $973 (8%) is primarily due to more staff time being
required to manage the Company's operations.

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 substantially all of the Company's available cash flow to the
Company's partners.

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. Future periodic distributions will
be made once sufficient net revenues are accumulated.

I-6

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 Septmeber 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 88-89 INCOME AND
RETIREMENT FUND - SERIES 1, 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