x  ANNUALREPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF1934

 oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934

|                                                                |   |                                      |
|---------------------------------------------------------------------|--------|-------------------------------------------|
| West Virginia                                                       |   | 20-5149573                                |
| (State      or other jurisdiction of incorporation or organization) |   | (I.R.S.      Employer Identification No.) |

| Title      of Each Class            |
|-------------------------------------|
| Investor      Limited Partner Units |

  No 

 o No 

 o No 
x

| Large      accelerated filer     o | Accelerated      filer      o         |
|-------------------------------------------------------------|---------------------------------------------------------------------|
|                                                        |                                                                |
| Non-accelerated      filer     x   | Smaller      reporting company      o |

  No 

----

|                      |                                                                                                                     | Page          |
|---------------------------|--------------------------------------------------------------------------------------------------------------------------|---------------|
|                      |                PART I                                                  |          |
| Item      1               | Business                                                                                                                 |   1 |
| Item      1A              | Risk      Factors                                                                                                        |   7 |
| Item      1B              | Unresolved      Staff Comments                                                                                           | 14            |
| Item      2               | Properties                                                                                                               | 14            |
| Item      3               | Legal      Proceedings                                                                                                   | 15            |
| Item      4               | Submissions      of Matters to a Vote of Security Holders                                                                | 16            |
|                      |                                                                                                                     |          |
|                      | PART      II                                                                                                        |          |
| Item      5               | Market      Registrants’ Common Equity, Related Stockholder Matters and Issuer      Purchases of Equity Securities | 16            |
| Item      6               | Selected      Financial Data                                                                                             | 17            |
| Item      7               | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations                    | 17            |
| Item      7A              | Quantitative      and Qualitative Disclosures about Market Risk                                                          | 24            |
| Item      8               | Financial      Statements and Supplementary Data                                                                         | 26            |
| Item      9               | Changes      in and Disagreements With Accountants on Accounting and Financial      Disclosure                           | 26            |
| Item      9A              | Controls      and Procedures                                                                                             | 26            |
| Item      9B              | Other      Information                                                                                                   | 28            |
|                      |                                                                                                                     |          |
|                      | PART      III                                                                                                       |          |
| Item      10              | Directors,      Executive Officers and Corporate Governance                                                              | 28            |
| Item      11              | Executive      Compensation                                                                                              | 31            |
| Item      12              | Security      Ownership of Certain Beneficial Owners and Management and Related      Stockholder Matters                 | 31            |
| Item      13              | Certain      Relationships and Related Transactions, and Director      Independence                                      | 31            |
| Item      14              | Principal      Accountant Fees and Services                                                                              | 34            |
|                      |                                                                                                                     |          |
|                      | PART      IV                                                                                                        |          |
| Item      15              | Exhibits,      Financial Statement Schedules                                                                             | 35            |
|                      |                                                                                                                     |
| Signatures                | 36                                                                                                                       |
|                      |                                                                                                                     |
| Financial      Statements | F-1                                                                                                                      |

----

|                                   |                                   |          |   |         |
|----------------------------------------|----------------------------------------|---------------|--------|--------------|
|                                   |                                   | Colorado      |   | North Dakota |
| Development      wells:  (a) |                                   |          |   |
|                                   | Drilled,      completed and producing  | 86            |   | 4            |
|                                   | Dry      holes                         |   1 |   | -            |
| Exploratory      wells:  (b) |                                   |          |   |
|                                   | Drilled      , completed and producing |   - |   | 1            |
|                                   | Dry      holes                         |   3 |   | 2            |
| Total      Wells Drilled               | 90                                     |          | 7      |

| a.   | A      development well is a well that is drilled close to and into the same      formation as a well which has already produced and sold oil or natural      gas. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | An      exploratory well is one which is drilled in an area where there has been      no oil or natural gas production, or a well which is drilled to a      previously untested or non-producing zone in an area where there are wells      producing from other formations. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

----

|   | 1. | Worker's      compensation insurance in full compliance with the laws for the States in      which the operator has employees; |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | Operator's      bodily injury liability and property damage liability insurance, each with      a limit of $1,000,000; |
|--------|----|------------------------------------------------------------------------------------------------------------------------|

|   | 3. | Employer's      liability insurance with a limit of not less than    $1,000,000; |
|--------|----|----------------------------------------------------------------------------------|

|   | 4. | Automobile      public liability insurance with a limit of not less than $1,000,000 per      occurrence, covering all automobile equipment;  and |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5. | Operator's      umbrella liability insurance with a limit of $50,000,000 for each well      location and in the aggregate. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

----

----

|                     |                                  | Gross Wells         |   | Net Wells                   |
|--------------------------|---------------------------------------|---------------------|--------|-----------------------------|
| Development      wells:  |                                  |                |   |
|                     | Drilled,      completed and producing |  90            |   | 89.07                       |
|                     | Dry      holes                        |    1 |   |   1.00            |
| Exploratory      wells:  |                                  |                |   |
|                     | Drilled,      completed and producing |    1 |   |     .64 |
|                     | Dry      holes                        |    5 |   |   5.00            |
| Total      Wells Drilled |  97                              |                | 95.71  |
|                     |                                  |                |   |                        |

----

----

----

|                                                       |                                                                                                                                                                                                        |   |                                                                                                                                                                                                                            |
|------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                       |                                                                                                                                                                                                        |   |  Period      from                                                                                                                                                                                                          |
|                                                       |                                                                                                                                                                                                        |   |  September      7, 2006                                                                                                                                                                                                    |
|                                                       |  Year      Ended                                                                                                                                                                                       |   |  (date      of inception) to                                                                                                                                                                                               |
|                                                       |  December 31, 2007                                                                                                                                                                                     |   |  December 31, 2006                                                                                                                                                                                                         |
|                                                       |                                                                                                                                                                                                        |   |                                                                                                                                                                                                                            |
|                                                       |                                                                                                                                                                                                        |   |                                                                                                                                                                                                                            |
| Oil      and gas sales                                     |  $                    31,942,229                                                                   |   |  $                      1,228,684                                                                            |
| Oil      and gas price risk management loss, net           |                        (1,145,968)                                                       |   |                                  (408)                     |
| Costs      and expenses                                    |                        21,666,752                                                        |   |                          2,721,058                                                                 |
| Loss      on impairment of oil and gas properties          |                          2,445,617                                             |   |                          7,129,683                                                                 |
| Exploratory      dry hole costs                            |                          8,132,943                                             |   |                                      - |
| Net      loss                                              |                        (1,282,915)                                                       |   |                        (7,456,539)                                                                           |
| Allocation      of net loss                                |                                                                                                                                                                                                        |   |                                                                                                                                                                                                                            |
| Managing      general partner                              |                           (474,679)                                       |   |                        (2,259,749)                                                                           |
| Investor      partners                                     |                           (808,236)                                       |   |                        (5,196,790)                                                                           |
| Investor      partners per unit                            |                                  (180) |   |                               (1,156)                                     |
|          Total assets (as of end of period) |                        95,815,846                                                        |   |                      113,026,550                                                                                       |
|                                                       |                                                                                                                                                                                                        |   |                                                                                                                                                                                                                            |

----

| ·   | changes      in production volumes, worldwide demand, and commodity prices for      petroleum natural resources; |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   | risks      incident to the operation of natural gas and oil  wells; |
|--------------------|---------------------------------------------------------------------|

| ·   | future      production and development costs; |
|--------------------|-----------------------------------------------|

| ·   | the      effect of existing and future laws, governmental regulations and the      political and economic climate of the United  States; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the      effect of natural gas and oil derivatives  activities; |
|--------------------|-----------------------------------------------------------------|

| ·   | availability      of capital and conditions in the capital markets;  and |
|--------------------|--------------------------------------------------------------------------|

| ·   | losses      possible from future litigation. |
|--------------------|----------------------------------------------|

----

|                                          |   | Period      from            |       |   |                       |   |       |           |   |   |          |   |   |               |            |   |              |   |
|-----------------------------------------------|--------|-----------------------------|------------|--------|----------------------------|--------|------------|----------------|--------|--------|---------------|--------|--------|--------------------|-----------------|--------|-------------------|--------|
|                                          |   | September      7, 2006      |       |   |                       |   |       |           |   |   |          |   |   |               |            |   |              |   |
|                                          |   | (date      of inception) to |       |   | For      the Quarter Ended |   |       |           |   |   |          |   |   |               |            |
| (Unaudited)                                   |   | September      30,          |       |   | December      31,          |   |       | March      31, |   |   | June      30, |   |   | September      30, |            |   | December      31, |   |
|                                          |   | 2006                        |       |   | 2006                       |   |       | 2007           |   |   | 2007          |   |   | 2007               |            |   | 2007              |   |
|                                          |   |                        |       |   |                       |   |       |           |   |   |          |   |   |               |            |   |              |   |
| Number      of Producing Wells:               |   |                        | -     |   |                       |   | 25         |           |   |   | 32            |   |   |               | 64              |   |              |   | 91 |   |   |   | 91 |   |
|                                          |   |                        |       |   |                       |   |       |           |   |   |          |   |   |               |            |   |              |   |   |   |   |   |   |   |
| Production:                                   |   |                        |       |   |                       |   |       |           |   |   |          |   |   |               |            |   |              |   |   |   |   |   |   |   |
| Natural      gas (Mcf)                        |   |                        | -     |   |                       |   | 52,706     |           |   |   | 273,331       |   |   |               | 848,953         |   |              |   | 1,157,075 |   |   |   | 857,545 |   |
| Oil      (Bbl)                                |   |                        | -     |   |                       |   | 16,728     |           |   |   | 59,138        |   |   |               | 104,673         |   |              |   | 74,864 |   |   |   | 58,802 |   |
| Natural      gas equivalents (Mcfe)           |   |                        | -          |   |                       |   | 153,074    |           |   |   | 628,159       |   |   |               | 1,476,991       |   |              |   | 1,606,259 |   |   |   | 1,210,357 |   |
|                                          |   |                        |       |   |                       |   |       |           |   |   |          |   |   |               |            |   |              |   |   |   |   |   |   |   |
| Average      Selling Price:                   |   |                        |       |   |                       |   |       |           |   |   |          |   |   |               |            |   |              |   |   |   |   |   |   |   |
| Natural      gas (per Mcf)                    |   | $                           | -          |   |                       | $      | 5.92       |           |   | $      | 5.60          |   |   | $                  | 5.03            |   |              | $      | 3.91 |   |   | $ | 4.90 |   |
| Oil      (per Bbl)                            |   | $                           | -          |   |                       | $      | 54.79      |           |   | $      | 45.22         |   |   | $                  | 53.86           |   |              | $      | 66.08 |   |   | $ | 70.71 |   |
| Natural      gas equivalents (per Mcfe)       |   | $                           | -          |   |                       | $      | 8.03       |           |   | $      | 6.69          |   |   | $                  | 6.71            |   |              | $      | 5.90 |   |   | $ | 6.91 |   |
|                                          |   |                        |       |   |                       |   |       |           |   |   |          |   |   |               |            |   |              |   |   |   |   |   |   |   |
| Average      Costs (per Mcfe):                |   |                        |       |   |                       |   |       |           |   |   |          |   |   |               |            |   |              |   |   |   |   |   |   |   |
| Production      and operating costs           |   | $                           | -          |   |                       | $      | 1.24       |           |   | $      | 1.18          |   |   | $                  | 1.05            |   |              | $      | 1.12 |   |   | $ | 1.22 |   |
| Depreciation,      depletion and amortization |   | $                           | -          |   |                       | $      | 6.55       |           |   | $      | 3.22          |   |   | $                  | 3.24            |   |              | $      | 3.02 |   |   | $ | 3.16 |   |
|                                          |   |                        |       |   |                       |   |       |           |   |   |          |   |   |               |            |   |              |   |   |   |   |   |   |   |
| Revenues:                                     |   |                        |       |   |                       |   |       |           |   |   |          |   |   |               |            |   |              |   |   |   |   |   |   |   |
| Oil      and gas sales                        |   | $                           | -          |   |                       | $      | 1,228,684  |           |   | $      | 4,204,666     |   |   | $                  | 9,904,797       |   |              | $      | 9,470,701 |   |   | $ | 8,362,065 |   |
| Oil      and gas price risk management        |   |                        |       |   |                       |   |       |           |   |   |          |   |   |               |            |   |              |   |   |   |   |   |   |   |
| (loss)      gain, net                         |   |                        | -          |   |                       |   | (408       | )              |   |   | (60,931       | )      |   |               | 80,000          |   |              |   | 524,671 |   |   |   | (1,689,708 | ) |
| Total      revenues                           |   |                        | -          |   |                       |   | 1,228,276  |           |   |   | 4,143,735     |   |   |               | 9,984,797       |   |              |   | 9,995,372 |   |   |   | 6,672,357 |   |
|                                          |   |                        |       |   |                       |   |       |           |   |   |          |   |   |               |            |   |              |   |   |   |   |   |   |   |
| Costs      and Expenses:                      |   |                        |       |   |                       |   |       |           |   |   |          |   |   |               |            |   |              |   |   |   |   |   |   |   |
| Production      and operating costs           |   |                        | -          |   |                       |   | 189,069    |           |   |   | 740,263       |   |   |               | 1,544,329       |   |              |   | 1,799,505 |   |   |   | 1,473,230 |   |
| Management      fee                           |   |                        | 1,349,108  |   |                       |   | -          |           |   |   | -             |   |   |               | -               |   |              |   | - |   |   |   | - |   |
| Direct      costs                             |   |                        | 114        |   |                       |   | 176,499    |           |   |   | 21,421        |   |   |               | 19,536          |   |              |   | 129,973 |   |   |   | 416,125 |   |
| Depreciation,      depletion and amortization |   |                        | -     |   |                       |   | 1,003,120  |           |   |   | 2,021,542     |   |   |               | 4,778,643       |   |              |   | 4,853,220 |   |   |   | 3,822,985 |   |
| Accretion      of asset retirement obligation |   |                        | -          |   |                       |   | 3,148      |           |   |   | 8,451         |   |   |               | 9,847           |   |              |   | 9,325 |   |   |   | 9,229 |   |
| Loss      on impairment of oil and            |   |                        |       |   |                       |   |       |           |   |   |          |   |   |               |            |   |              |   |   |   |   |   |   |   |
| gas      properties                           |   |                        | -          |   |                       |   | 7,129,683  |           |   |   | 1,135,208     |   |   |               | 1,310,409       |   |              |   | - |   |   |   | - |   |
| Exploratory      dry hole costs               |   |                        | -          |   |                       |   | -          |           |   |   | 3,395,210     |   |   |               | 3,150,266       |   |              |   | 1,577,101 |   |   |   | 10,366 |   |
| Total      costs and expenses                 |   |                        | 1,349,222  |   |                       |   | 8,501,519  |           |   |   | 7,322,095     |   |   |               | 10,813,030      |   |              |   | 8,369,124 |   |   |   | 5,741,063 |   |
|                                          |   |                        |       |   |                       |   |       |           |   |   |          |   |   |               |            |   |              |   |   |   |   |   |   |   |
| (Loss)      income from operations            |   |                        | (1,349,222 | )      |                       |   | (7,273,243 | )              |   |   | (3,178,360    | )      |   |               | (828,233        | )      |              |   | 1,626,248 |   |   |   | 931,294 |   |
|                                          |   |                        |       |   |                       |   |       |           |   |   |          |   |   |               |            |   |              |   |   |   |   |   |   |   |
| Interest      expense                         |   |                        | -          |   |                       |   | (15        | )              |   |   | (1,200        | )      |   |               | (1,927          | )      |              |   | (2,058 | ) |   |   | (2,358 | ) |
| Interest      income                          |   |                        | 232,642    |   |                       |   | 933,299    |           |   |   | 8,545         |   |   |               | 49,639          |   |              |   | 36,179 |   |   |   | 79,315 |   |
|                                          |   |                        |       |   |                       |   |       |           |   |   |          |   |   |               |            |   |              |   |   |   |   |   |   |   |
| Net      (loss) income                        |   | $                           | (1,116,580 | )      |                       | $      | (6,339,959 | )              |   | $      | (3,171,015    | )      |   | $                  | (780,521        | )      |              | $      | 1,660,369 |   |   | $ | 1,008,251 |   |
|                                          |   |                        |       |   |                       |   |       |           |   |   |          |   |   |               |            |   |              |   |   |   |   |   |   |   |
| Cash      distributions                       |   | $                           |  -    |   |                       | $      |  -    |           |   | $      |  -       |   |   | $                  |  4,255,017 |   |              | $      | 8,877,047 |   |   | $ | 7,513,464 |   |

| ·   | Bbl      – One barrel or 42 U.S. gallons liquidvolume |
|--------------------|-------------------------------------------------------------|

| ·   | Mcf      – One thousand cubic feet |
|--------------------|------------------------------------------|

| ·   | Mcfe      – One thousand cubic feet of natural gas equivalents, based on a ratio of      6 Mcf for each barrel of oil, which reflects the relative energy      content. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                   |   | Period      from         |   |   |               |   |    |            |   |   |               |   |   |              |    |   |              |   |
|------------------------------------------------------------------------|--------|--------------------------|--------|--------|--------------------|--------|---------|-----------------|--------|--------|--------------------|--------|--------|-------------------|---------|--------|-------------------|--------|
|                                                                   |   | September      7, 2006   |   |   |               |   |    |            |   |   |               |   |   |              |    |   |              |   |
|                                                                   |   | (date      of inception) |   |   | Quarter      ended |   |    | Year      ended |   |
|                                                                   |   | to      December 31,     |   |   | March      31      |   |    | June      30,   |   |   | September      30, |   |   | December      31, |    |   | December      31, |   |
|                                                                   |   | 2006                     |   |   | 2007               |   |    | 2007            |   |   | 2007               |   |   | 2007              |    |   | 2007              |   |
| Realized      gain                                                     |   | $                        | -      |   |               | $      | -       |            |   | $      | 4,571              |   |   | $                 | 46,068  |   |              | $      | 156,786 |   |   | $ | 207,425 |   |
| Unrealized      (loss) gain                                            |   |                     | (408   | )      |               |   | (60,932 | )               |   |   | 75,429             |   |   |              | 478,587 |   |              |   | (1,846,494 | ) |   |   | (1,353,410 | ) |
| Oil      and gas price risk management (loss)      gain,      net |   | $                        | (408   | )      |               | $      | (60,932 | )               |   | $      | 80,000             |   |   | $                 | 524,655 |   |              | $      | (1,689,708 | ) |   | $ | (1,145,985 | ) |

----

----

|                              |   |                                               |   |                                                                                                                |   |                                                                                                                |   |                                                                                                                |   |                                               |
|-----------------------------------|--------|----------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|
|                              |   |                                               |   |                                                                                                                |   |                                                                                                                |   |                                                                                                                |   |                                               |
|                              |   | Payments      due by period                        |
| Contractual      Obligations and  |   |                                               |   | Less      than                                                                                                      |   |                                                                                                                |   |                                                                                                                |   | More      than                                     |
| Contingent      Commitments       |   | Total                                              |   | 1      year                                                                                                         |   | 1-3      years                                                                                                      |   | 3-5      years                                                                                                      |   | 5      years                                       |
|                              |   |                                               |   |                                                                                                                |   |                                                                                                                |   |                                                                                                                |   |                                               |
|                              |   |                                               |   |                                                                                                                |   |                                                                                                                |   |                                                                                                                |   |                                               |
| Asset      Retirement Obligations |   |  $      775,652 |   |                    - |   |                    - |   |                    - |   |  $      775,652 |
|                              |   |                                               |   |                                                                                                                |   |                                                                                                                |   |                                                                                                                |   |                                               |

----

----

----

| ·   | For      swap instruments, we receive a fixed price for the hedged commodity and      pay a floating market price to the counterparty. The fixed-price payment      and the floating-price payment are netted, resulting in a net amount due      to or from the counterparty. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Collars      contain a fixed floor price (put) and ceiling price (call). If the market      price exceeds the call strike price or falls below the fixed put strike      price, we receive the fixed price and pay the market price. If the market      price is between the call and the put strike price, no payments are due      from either party. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                             |                                                                                                                                            |   |  Period      from                                                                                                                          |
|----------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|
|                             |                                                                                                                                            |   |  September      7, 2006                                                                                                                    |
|                             |  Year      Ended                                                                                                                           |   |  (date      of inception) to                                                                                                               |
|                             |  December 31, 2007                                                                                                                         |   |  December 31, 2006                                                                                                                         |
|                             |                                                                                                                                            |   |                                                                                                                                            |
| Average      index closing price |                                                                                                                                            |   |                                                                                                                                            |
| Natural      gas (per Mmbtu)     |                                                                                                                                            |   |                                                                                                                                            |
|        CIG                  |  $                      3.97 |   |  $                      4.80 |
|                             |                                                                                                                                            |   |                                                                                                                                            |
| Oil      (per Bbl)               |                                                                                                                                            |   |                                                                                                                                            |
|        NYMEX                |  $                    69.79            |   |  $                    61.81            |
|                             |                                                                                                                                            |   |                                                                                                                                            |
| Average      sales price         |                                                                                                                                            |   |                                                                                                                                            |
|        Natural gas          |  $                      4.63 |   |  $                      5.92 |
|        Oil                  |  $                    58.55            |   |  $                    54.79            |
|                             |                                                                                                                                            |   |                                                                                                                                            |

----

| ·   | The      completeness, accuracy, validity and restricted access of certain key      financial statement spreadsheets that support all significant balance      sheet and income statement accounts.  Specifically, the Company      has inadequate controls over:  1) the security and integrity of      the data used in the various spreadsheets, 2) access to the spreadsheets,      3) changes to spreadsheet functionality and the related approval process      and documentation and 4) management's review of the      spreadsheets. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Effective      policies and procedures, or personnel with sufficient technical expertise      to record derivative activities in accordance with generally accepted      accounting principles.  Specifically, the Company's internal      control processes did not ensure the completeness and accuracy of the      derivative activities in the fourthquarter. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Installed      new software supporting the derivative valuation process.  The      new system enhanced the existing internal controls framework over      reporting more accurate information by automating a previously manual      control. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Installed      new software supporting the accounts payable process as part of a broader      financial reporting system implementation.  The new system      enhanced the existing internal control framework over accounts payable and      cash distribution process by automating several of the previously manual      controls. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Reinforced      reconciliation procedures to ensure the timely reconciliation, review and      adjustments to significant balance sheet and income statement      accounts; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Developed      and approved extensive policies and procedures concerning the controls      over financial reporting forderivatives; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Provided      additional training regarding derivatives for key personnel;      and |
|--------------------|-------------------------------------------------------------------------------------|

| ·   | Developed      a review process to ensure proper accounting for oil and gas properties,      specifically the capitalization of costs and calculation of depreciation      and depletion. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| Name                         |   | Age    |   | Positions      andOffices Held                                      |   | DirectorSince |   | DirectorshipTerm Expires |
|------------------------------|--------|--------|--------|---------------------------------------------------------------------|--------|---------------|--------|--------------------------|
|                         |   |   |   |                                                                |   |          |   |                     |
| Steven      R. Williams      |   | 57     |   | Chairman,      Chief Executive Officer and Director                 |   | 1983          |   | 2009                     |
|                         |   |   |   |                                                                |   |          |   |                     |
| Richard      W McCullough    |   | 56     |   | Vice      Chairman, President, Chief Financial Officer and Director |   | 2007          |   | 2008                     |
|                         |   |   |   |                                                                |   |          |   |                     |
| Eric      R. Stearns         |   | 50     |   | Executive      Vice President                                       |   | -             |   | -                        |
|                         |   |   |   |                                                                |   |          |   |                     |
| Darwin      L. Stump         |   | 53     |   | Chief      Accounting Officer                                       |   | -             |   | -                        |
|                         |   |   |   |                                                                |   |          |   |                     |
| Daniel      W. Amidon        |   | 47     |   | General      Counsel and Secretary                                  |   | -             |   | -                        |
|                         |   |   |   |                                                                |   |          |   |                     |
| Barton      R. Brookman, Jr. |   | 45     |   | Senior      Vice President Exploration and Production               |   | -             |   | -                        |
|                         |   |   |   |                                                                |   |          |   |                     |
| Vincent      F. D'Annunzio   |   | 55     |   | Director                                                            |   | 1989          |   | 2010                     |
|                         |   |   |   |                                                                |   |          |   |                     |
| Jeffrey      C. Swoveland    |   | 53     |   | Director                                                            |   | 1991          |   | 2008                     |
|                         |   |   |   |                                                                |   |          |   |                     |
| Kimberly      Luff Wakim     |   | 49     |   | Director                                                            |   | 2003          |   | 2009                     |
|                         |   |   |   |                                                                |   |          |   |                     |
| David      C. Parke          |   | 41     |   | Director                                                            |   | 2003          |   | 2008                     |
|                         |   |   |   |                                                                |   |          |   |                     |
| Anthony      J. Crisafio     |   | 55     |   | Director                                                            |   | 2006          |   | 2009                     |
|                         |   |   |   |                                                                |   |          |   |                     |
| Joseph      E. Casabona      |   | 64     |   | Director                                                            |   | 2007          |   | 2008                     |
|                         |   |   |   |                                                                |   |          |   |                     |
| Larry      F. Mazza     |   | 47     |   |  Director                                                      |   | 2007          |   | 2008                     |

----

----

| Recipient                                    | Transaction                                           | CompensationSeptember      7, 2006 (date of inception) to December 31, 2006 | CompensationYear      Ended December      31, 2007 |
|----------------------------------------------|-------------------------------------------------------|-----------------------------------------------------------------------------|----------------------------------------------------|
| Managing      General Partner                | Drilling      compensation                            | $3,244,129                                                                  | $10,117,387                                        |
| Managing      General Partner                | Operator's      monthly per-well charges and services | $28,102                                                                     | $508,340                                           |
| Managing      General Partner                | Purchased      partnership interest                   | $38,912,342                                                                 | $      -                                           |
| Managing      General Partner                | Sale      of leases to the partnership                | $630,091                                                                    | $908,880                                           |
| Managing      General Partner                | Contract      drilling rates                          | $25,116,964                                                                 | $79,387,844                                        |
| Managing      General Partner                | Gathering,      compression and processing            | $14,465                                                                     | $280,403                                           |
| Managing      General Partner and Affiliates | Gas      marketing, supplies and equipment            | $33,029                                                                     | $2,336,455                                         |
| Managing      General Partner                | Direct      costs                                     | $176,613                                                                    | $557,083                                           |
| Affiliate                                    | Organization      and offering costs                  | $9,084,039                                                                  | $      -                                           |
| Managing      General Partner                | One-time      management fee                          | $1,349,108                                                                  | $      -                                           |

----

| ·   | reimbursement      at actual cost for all direct expenses incurred on behalf of the      Partnership, |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | monthly      well operating charges for operating and maintaining the wells during      producing operations at a competitive rate,and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | monthly      administration charge for Partnership  activities. |
|--------------------|-----------------------------------------------------------------|

| ·   | well      tending, routine maintenance, andadjustment; |
|--------------------|--------------------------------------------------------|

| ·   | reading      meters, recording production, pumping, maintaining appropriate books and      records; and |
|--------------------|---------------------------------------------------------------------------------------------------------|

| ·   | preparing      production related reports to the Partnership and government      agencies. |
|--------------------|--------------------------------------------------------------------------------------------|

| ·   | the      purchase of equipment, materials, or third-party  services; |
|--------------------|----------------------------------------------------------------------|

| ·   | the      cost of compression and third-party gathering services, or gathering      costs; |
|--------------------|-------------------------------------------------------------------------------------------|

| ·   | brine      disposal; and |
|--------------------|--------------------------|

| ·   | rebuilding      of access roads. |
|--------------------|----------------------------------|

----

----

----

|  Exhibit      No.   |   |   Description                                                                                                                                                                                                                       |
|------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1                                |   | Limited      Partnership Agreement (incorporated by reference to Exhibit No. 3 of      Amendment No. 1 to Form 10-12G/A, SEC File number    000-53787)                                                                                        |
|                               |   |                                                                                                                                                                                                                                          |
| 3.2                                |   | Certificate      of limited partnership which reflects the organization of the Partnership      under West Virginia law (incorporated by reference to Exhibit No. 3.1 of      Amendment No. 1 to Form 10-12G/A, SEC File number    000-53787) |
|                               |   |                                                                                                                                                                                                                                          |
| 10.1                               |   | Form      of assignment of leases to the Partnership (incorporated by reference to      Exhibit #10.1 of Amendment No. 1 to Form 10-12G/A, SEC File number      000-53787)                                                                    |
|                               |   |                                                                                                                                                                                                                                          |
| 10.2                               |   | Drilling      and operating agreement between PDC as managing general partner and the      Partnership (incorporated by reference to Exhibit #10.2 of Amendment No. 1      to Form 10-12G/A, SEC File number 000-53787)                       |
|                               |   |                                                                                                                                                                                                                                          |
| 31.1                               |   | Rule      13a-14(a)/15d-14(c) Certification of Chief Executive Officer of Petroleum      Development Corporation, the Managing General Partner of the Limited      Partnership.                                                               |
|                               |   |                                                                                                                                                                                                                                          |
| 31.2                               |   | Rule      13a-14(a)/15d-14(c) Certification of Chief Financial Officer of Petroleum      Development Corporation, the Managing General Partner of the Limited      Partnership.                                                               |
|                               |   |                                                                                                                                                                                                                                          |
| 32.1                               |   | Title      18 U.S.C. Section 1350 (Section 906 of Sarbanes-Oxley Act of 2002)      Certifications by Chief Executive Officer and Chief Financial Officer of      Petroleum Development Corporation.                                           |

----

| Signature                                          |   | Title                                               |   | Date              |
|----------------------------------------------------|--------|-----------------------------------------------------|--------|-------------------|
| /s/ Steven R. Williams                             |   | Chairman,      Chief Executive Officer and          |   | May      21, 2008 |
|     Steven      R. Williams    |   | Director      of Petroleum Development Corporation, |   |              |
|                                               |   | Managing      General Partner of the Registrant     |   |              |
|                                               |   | (principal      executive officer)                  |   |              |
|                                               |   |                                                |   |              |
| /s/ Richard W. McCullough                          |   | Chief      Financial Officer and Director           |   | May      21, 2008 |
|     Richard W.      McCullough |   | Petroleum      Development Corporation,             |   |              |
|                                               |   | Managing      General Partner of the Registrant     |   |              |
|                                               |   | (principal      financial officer)                  |   |              |
|                                               |   |                                                |   |              |
| /s/ Darwin L. Stump                                |   | Chief      Accounting Officer                       |   | May      21, 2008 |
|     Darwin L.      Stump       |   | Petroleum      Development Corporation,             |   |              |
|                                               |   | Managing      General Partner of the Registrant     |   |              |
|                                               |   | (principal      accounting officer)                 |   |              |
|                                               |   |                                                |   |              |
| /s/ Jeffrey C. Swoveland                           |   | Director                                            |   | May      21, 2008 |
|     Jeffrey C.      Swoveland  |   | Petroleum      Development Corporation,             |   |              |
|                                               |   | Managing      General Partner of the Registrant     |   |              |
|                                               |   |                                                |   |              |
| /s/ Anthony J. Crisafio                            |   | Director                                            |   | May      21, 2008 |
|     Anthony J.      Crisafio   |   | Petroleum      Development Corporation              |   |              |
|                                               |   |                                                |   |              |
| /s/ Joseph E. Casabona                             |   | Director                                            |   | May      21, 2008 |
|     Joseph E.      Casabona    |   | Petroleum      Development Corporation              |   |              |

----

|                                                                                             |   |   |
|--------------------------------------------------------------------------------------------------|--------|--------|
| Report      of Independent Registered Public Accounting Firm                                     |   | F-2    |
|                                                                                             |   |   |
| Balance      Sheets – December 31, 2007 and December 31, 2006                              |   | F-3    |
|                                                                                             |   |   |
| Statements      of Operations – For the Year Ended December 31, 2007                       |   |   |
|   and      Period from September 7, 2006 (Date of Inception) to December 31,      2006 |   | F-4    |
|                                                                                             |   |   |
| Statements      of Cash Flows – For the Year Ended December 31, 2007                       |   |   |
|   and      Period from September 7, 2006 (Date of Inception) to December 31,      2006 |   | F-5    |
|                                                                                             |   |   |
| Statements      of Partners' Equity –For the Year Ended December 31, 2007                  |   |   |
|   and      Period from September 7, 2006 (Date of Inception) to December 31,      2006 |   | F-6    |
|                                                                                             |   |   |
| Notes      to Financial Statements                                                               |   | F-7    |
|                                                                                             |   |   |

----

----

| Balance      Sheets                                                               |   |
|-----------------------------------------------------------------------------------|--------|
|                                                                              |   |   |   |   |   |   |
| December      31, 2007 and 2006                                                   |   |
|                                                                              |   |   |   |   |   |   |
| Assets                                                                            |   | 2007 |   |   | 2006 |   |
|                                                                              |   |   |   |   |   |   |
|                                                                              |   |   |   |   |   |   |
| Current      assets:                                                              |   |   |   |   |   |   |
|        Cash and cash equivalents                                             |   | $ | 1,183,810 |   |   | $ | 1,154,594 |   |
|        Accounts receivable oil and gas sales                                 |   |   | 8,524,415 |   |   |   | 1,228,684 |   |
|        Due from Managing General Partner - derivatives, current      portion |   |   | - |   |   |   | 1,549 |   |
|        Interest receivable                                                   |   |   | 40,000 |   |   |   | - |   |
|          Total current assets                                      |   |   | 9,748,225 |   |   |   | 2,384,827 |   |
|                                                                              |   |   |   |   |   |   |   |   |
| Oil      and gas properties, successful efforts method                            |   |   | 101,950,453 |   |   |   | 21,835,420 |   |
| Wells      in progress                                                            |   |   | - |   |   |   | 89,428,539 |   |
|                                                                              |   |   | 101,950,453 |   |   |   | 111,263,959 |   |
| Less      accumulated depreciation, depletion and amortization                    |   |   | (15,882,832 | ) |   |   | (623,946 | ) |
|                                                                              |   |   | 86,067,621 |   |   |   | 110,640,013 |   |
|                                                                              |   |   |   |   |   |   |   |   |
| Noncurrent      assets:                                                           |   |   |   |   |   |   |   |   |
|        Finance charges                                                       |   |   | - |   |   |   | 238 |   |
|        Due from Managing General Partner - derivatives                       |   |   | - |   |   |   | 1,472 |   |
|          Total noncurrent assets                                   |   |   | - |   |   |   | 1,710 |   |
|                                                                              |   |   |   |   |   |   |   |   |
| Total      Assets                                                                 |   | $ | 95,815,846 |   |   | $ | 113,026,550 |   |
|                                                                              |   |   |   |   |   |   |   |   |
|                                                                              |   |   |   |   |   |   |   |   |
| Liabilities and Partners'      Equity                                             |   |   |   |   |   |   |   |   |
|                                                                              |   |   |   |   |   |   |   |   |
| Current      liabilities:                                                         |   |   |   |   |   |   |   |   |
|   Accounts      payable and accrued expenses                            |   | $ | 598,390 |   |   | $ | 113,473 |   |
|        Due to Managing General Partner - derivatives                         |   |   | 1,080,170 |   |   |   | - |   |
|        Due to Managing General Partner - other                               |   |   | 2,977,786 |   |   |   | 244,544 |   |
|          Total current liabilities                                 |   |   | 4,656,346 |   |   |   | 358,017 |   |
|                                                                              |   |   |   |   |   |   |   |   |
| Asset      retirement obligation                                                  |   |   | 775,652 |   |   |   | 356,242 |   |
|                                                                              |   |   |   |   |   |   |   |   |
| Partners'      equity                                                             |   |   | 90,383,848 |   |   |   | 112,312,291 |   |
|                                                                              |   |   |   |   |   |   |   |   |
| Total      Liabilities and Partners' Equity                                       |   | $ | 95,815,846 |   |   | $ | 113,026,550 |   |
|                                                                              |   |   |   |   |   |   |   |   |
|                                                                              |   |   |   |   |   |   |   |   |
| See      accompanying notes to financial statements.                              |   |   |   |   |   |   |   |   |
|                                                                              |   |   |   |   |   |   |   |   |

----

| Statements      of Operations                                                    |   |
|----------------------------------------------------------------------------------|--------|
|                                                                             |   |   |   |   |   |   |
| For      the Year Ended December 31, 2007 and                                    |   |
| Period      from September 7, 2006 (date of inception) to December 31,      2006 |   |
|                                                                             |   |   |   |   |   |   |
|                                                                             |   |   |   |   | Period      from |   |
|                                                                             |   |   |   |   | September      7, 2006 |   |
|                                                                             |   |   |   |   | (date      of inception) |   |
|                                                                             |   |   |   |   | to      December 31, |   |
|                                                                             |   | 2007 |   |   | 2006 |   |
|                                                                             |   |   |   |   |   |   |
| Revenues:                                                                        |   |   |   |   |   |   |
|        Oil and gas sales                                                    |   | $ | 31,942,229 |   |   | $ | 1,228,684 |   |
|        Oil and gas price risk management loss, net                          |   |   | (1,145,968 | ) |   |   | (408 | ) |
|          Total revenue                                            |   |   | 30,796,261 |   |   |   | 1,228,276 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| Costs      and expenses:                                                         |   |   |   |   |   |   |   |   |
|        Production and operating costs                                       |   |   | 5,557,327 |   |   |   | 189,069 |   |
|        Direct costs                                                         |   |   | 596,183 |   |   |   | 176,613 |   |
|        Depreciation, depletion and amortization                             |   |   | 15,476,390 |   |   |   | 1,003,120 |   |
|        Accretion of asset retirement obligations                            |   |   | 36,852 |   |   |   | 3,148 |   |
|        Loss on impairment of oil and gas properties                         |   |   | 2,445,617 |   |   |   | 7,129,683 |   |
|        Exploratory dry hole costs                                           |   |   | 8,132,943 |   |   |   | - |   |
|        Management fee                                                       |   |   | - |   |   |   | 1,349,108 |   |
|          Total costs and expenses                                 |   |   | 32,245,312 |   |   |   | 9,850,741 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| Loss      from operations                                                        |   |   | (1,449,051 | ) |   |   | (8,622,465 | ) |
|                                                                             |   |   |   |   |   |   |   |   |
| Interest      expense                                                            |   |   | (7,543 | ) |   |   | (15 | ) |
| Interest      income                                                             |   |   | 173,679 |   |   |   | 1,165,941 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| Net      loss                                                                    |   | $ | (1,282,915 | ) |   | $ | (7,456,539 | ) |
|                                                                             |   |   |   |   |   |   |   |   |
| Net      loss available to Investor Partners                                     |   | $ | (808,236 | ) |   | $ | (5,196,790 | ) |
|                                                                             |   |   |   |   |   |   |   |   |
| Net      loss per Investor Partner unit                                          |   | $ | (180 | ) |   | $ | (1,156 | ) |
|                                                                             |   |   |   |   |   |   |   |   |
| Investor      Partner units outstanding                                          |   |   | 4,497 |   |   |   | 4,497 |   |
|                                                                             |   |   |   |   |   |   |   |   |
| See      accompanying notes to financial statements.                             |   |   |   |   |   |   |   |   |

----

| Statements      of Cash Flows                                                           |   |
|-----------------------------------------------------------------------------------------|--------|
|                                                                                    |   |   |   |   |   |   |
| For      the Year Ended December 31, 2007 and                                           |   |
| Period      from September 7, 2006 (date of inception) to December 31,      2006        |   |
|                                                                                    |   |   |   |   |   |   |
|                                                                                    |   |   |   |   | Period      from |   |
|                                                                                    |   |   |   |   | September      7, 2006 |   |
|                                                                                    |   |   |   |   | (date      of inception) |   |
|                                                                                    |   |   |   |   | to      December 31, |   |
|                                                                                    |   | 2007 |   |   | 2006 |   |
|                                                                                    |   |   |   |   |   |   |
| Cash      flows from operating activities:                                              |   |   |   |   |   |   |
|                                                                                    |   |   |   |   |   |   |
| Net      loss                                                                           |   | $ | (1,282,915 | ) |   | $ | (7,456,539 | ) |
| Adjustments      to reconcile net loss to net cash provided by                          |   |   |   |   |   |   |   |   |
|             (used in) operating activities:               |   |   |   |   |   |   |   |   |
|        Loss on impairment of oil and gas properties                                |   |   | 2,445,617 |   |   |   | 7,129,683 |   |
|        Depreciation, depletion and amortization                                    |   |   | 15,476,390 |   |   |   | 1,003,120 |   |
|        Accretion of asset retirement obligation                                    |   |   | 36,852 |   |   |   | 3,148 |   |
|        Unrealized loss on derivative transactions                                  |   |   | 1,342,708 |   |   |   | 408 |   |
|        Exploratory dry hole costs                                                  |   |   | 8,132,943 |   |   |   | - |   |
|        Changes in operating assets and liabilities:                                |   |   |   |   |   |   |   |   |
|          Increase in due from Managing General Partner -derivatives      |   |   | (259,517 | ) |   |   | (3,429 | ) |
|          Increase in accounts receivable - oil and gas sales             |   |   | (7,295,731 | ) |   |   | (1,228,684 | ) |
|          Increase in interest receivable                                 |   |   | (40,000 | ) |   |   | - |   |
|          Decrease (increase) in financing charges                        |   |   | 238 |   |   |   | (238 | ) |
|          Increase in accounts payable and accrued expenses               |   |   | 484,917 |   |   |   | 113,473 |   |
|          Increase in due to Managing General Partner - other             |   |   | 1,633,242 |   |   |   | 244,544 |   |
|            Net cash provided by (used in) operating activities |   |   | 20,674,744 |   |   |   | (194,514 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                              |   |   |   |   |   |   |   |   |
|        Expenditures for oil and gas properties                                     |   |   | - |   |   |   | (118,419,722 | ) |
|          Net cash used in investing activities                           |   |   | - |   |   |   | (118,419,722 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                              |   |   |   |   |   |   |   |   |
|        Investor Partners' contributions                                            |   |   | - |   |   |   | 89,940,527 |   |
|        Managing General Partner contribution                                       |   |   | - |   |   |   | 38,912,342 |   |
|        Syndication costs paid                                                      |   |   | - |   |   |   | (9,084,039 | ) |
|        Distributions to partners                                                   |   |   | (20,645,528 | ) |   |   | - |   |
|          Net cash (used in) provided by financing activities             |   |   | (20,645,528 | ) |   |   | 119,768,830 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Net      increase in cash and cash equivalents                                          |   |   | 29,216 |   |   |   | 1,154,594 |   |
| Cash      and cash equivalents at beginning of period                                   |   |   | 1,154,594 |   |   |   | - |   |
| Cash      and cash equivalents at end of period                                         |   | $ | 1,183,810 |   |   | $ | 1,154,594 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Supplemental      disclosure of non-cash activity:                                      |   |   |   |   |   |   |   |   |
|        Asset retirement obligation, with a corresponding increase                  |   |   |   |   |   |   |   |   |
|         to oil and gas properties                                             |   | $ | 382,558 |   |   | $ | 353,094 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Investment      in oil and gas properties                                               |   | $ | 1,100,000 |   |   | $ | - |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| See      accompanying notes to financial statements.                                    |   |   |   |   |   |   |   |   |

----

| Statements      of Partners' Equity                                              |
|----------------------------------------------------------------------------------|
|                                                                             |   |   |   |   |   |   |   |   |   |
| For      the Year Ended December 31, 2007 and                                    |
| Period      from September 7, 2006 (date of inception) to December 31,      2006 |
|                                                                             |   |   |   |   |   |   |   |   |   |
|                                                                             |   |   |   |   |   |   |   |   |   |
|                                                                             |   |   |   |   | Managing |   |   |   |   |
|                                                                             |   | Investor |   |   | General |   |   |   |   |
|                                                                             |   | Partners |   |   | Partner |   |   | Total |   |
|                                                                             |   |   |   |   |   |   |   |   |   |
|                                                                             |   |   |   |   |   |   |   |   |   |
| Partners'      initial contributions                                             |   | $ | 89,940,527 |   |   | $ | 38,912,342 |   |   | $ | 128,852,869 |   |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Syndication      costs                                                           |   |   | (9,084,039 | ) |   |   | - |   |   |   | (9,084,039 | ) |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                    |   |   | (5,196,790 | ) |   |   | (2,259,749 | ) |   |   | (7,456,539 | ) |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2006                                                  |   |   | 75,659,698 |   |   |   | 36,652,593 |   |   |   | 112,312,291 |   |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Distributions      to Partners                                                   |   |   | (13,006,686 | ) |   |   | (7,638,842 | ) |   |   | (20,645,528 | ) |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                    |   |   | (808,236 | ) |   |   | (474,679 | ) |   |   | (1,282,915 | ) |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2007                                                  |   | $ | 61,844,776 |   |   | $ | 28,539,072 |   |   | $ | 90,383,848 |   |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| See      accompanying notes to financial statements.                             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

----

|   | Revenue      Recognition |
|--------|--------------------------|

----

----

----

| ·   | Disclosure of the objectives for      using derivative instruments be disclosed in terms of underlying risk and      accounting designation; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Disclosure of the fair values of      derivative instruments and their gains and losses in a tabular      format; |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

| ·   | Disclosure of information about      credit-risk-related contingent features;  and |
|--------------------|------------------------------------------------------------------------------------|

| ·   | Cross-reference      from the derivative footnote to other footnotes in which      derivative-related information isdisclosed. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------|

----

| (3) | Transactions with      Managing General Partner andAffiliates |
|-----|---------------------------------------------------------------|

|                                          |                                                                                                                                                                                              |   |  Period      from                                                                                                                           |
|-----------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|
|                                          |                                                                                                                                                                                              |   |  September      7, 2006                                                                                                                     |
|                                          |  Year      Ended                                                                                                                                                                             |   |  (date      of inception) to                                                                                                                |
|                                          |  December 31, 2007                                                                                                                                                                           |   |  December 31, 2006                                                                                                                          |
|                                          |                                                                                                                                                                                              |   |                                                                                                                                             |
|                                          |                                                                                                                                                                                              |   |                                                                                                                                             |
| Payment      of drilling and completion costs |  $                             -            |   |  $           118,419,722                                                             |
| Syndication      costs*                       |                                 - |   |                   1,816,808                            |
| Management      fee                           |                                 - |   |                   1,349,108                            |
| Well      operations fees                     |                      508,340                                                             |   |                        28,102 |

|   | *      Consists of organization and offering costs, including costs of organizing      and selling the offering (including total underwriting and brokerage      discounts and commissions), expenses for printing, mailing, salaries of      employees while engaged in sales activity, charges of transfer agents,      registrars, trustees, escrow holders, depositories, engineers and other      experts, expenses of qualification of the sale of the securities under      federal and state law, including accountants’ and attorneys’ fees and      other front end fees. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Open      Derivative Contracts                                                                              |                   |
|-------------------------------------------------------------------------------------------------------------|------------------------|
| Commodity                                                                                                   | Type                   |   | QuantityGas-Mmbtu      (a)Oil-Bbl |   |   | Weighted      Average Price |   |   | Fair      Market Value |   |
|                                                                                                        |                   |   |   |   |   |   |   |   |   |   |
| Partnership's      share of positions as of December 31, 2007                                               |                   |   |   |   |   |   |   |   |   |
|  Natural      Gas                                                                                      | Floors                 |   |   | 1,097,398 |   |   | $ | 5.44 |   |   | $ | 208,408 |   |
|  Natural      Gas                                                                                      | Ceilings               |   |   | 971,407 |   |   | $ | 10.26 |   |   | $ | (10,742 | ) |
| Oil                                                                                                         | Fixed-Price      Swaps |   |   | 146,808 |   |   | $ | 84.20 |   |   | $ | (1,277,836 | ) |
| Due      From Managing General Partner - Derivatives, Total                                                 |                   |   |   |   |   |   |   |   |   | $ | (1,080,170 | ) |
|                                                                                                        |                   |   |   |   |   |   |   |   |   |   |   |   |   |
| At      December 31, 2007, the maximum term for the derivative positions listed      above is 12 months.    |                   |
|                                                                                                        |                   |   |   |   |   |   |   |   |   |   |   |   |   |
| (a)      MMBtu - one million British thermal units. One British thermal unit      is the heat required |                   |   |   |   |   |
| to      raise the temperature of a one-pound mass of water from 58.5 to 59.5      degrees Fahrenheit.       |                   |   |   |   |   |

|   | Open      Derivative Contracts                                                                           |                           |
|--------|----------------------------------------------------------------------------------------------------------|--------------------------------|
|   | Commodity                                                                                                | Type                           |   | QuantityGas-MmbtuOil-Bbl |   |   | Weighted      Average Price |   |   | Fair      Market Value |   |
|   |                                                                                                     |                           |   |   |   |   |   |   |   |   |   |
|   | Partnership's      share of positions as of December 31, 2006:                                           |                           |   |   |   |   |   |   |   |   |
|   |  Natural      Gas                                                                                   | Cash      Settled Option Sales |   |   | 6,291 |   |   | $ | 5.25 |   |   | $ | 3,021 |   |
|   | Due      From Managing General Partner - Derivatives, Total                                              |                           |   |   |   |   |   |   |   |   | $ | 3,021 |   |
|   |                                                                                                     |                           |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Partership's      share of positions maturing within 12 months following December 31,      2006:         |                           |   |   |   |   |
|   | Natural      Gas                                                                                         | Cash      Settled Option Sales |   |   | 2,517 |   |   | $ | 5.25 |   |   | $ | 1,549 |   |
|   |                                                                                                     |                           |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Due      From Managing General Partner - Derivatives, Short-term                                         |                           |   |   |   |   |   | $ | 1,549 |   |
|   |                                                                                                     |                           |   |   |   |   |   |   |   |   |   |   |   |   |
|   | At      December 31, 2006, the maximum term for the derivative positions listed      above is 15 months. |                           |

----

|                                                                                                                                | InvestorPartners                                                                 | ManagingGeneralPartner |
|-------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------|------------------------|
| Partnership      Costs                                                                                                              |                                                                             |                   |
|                                                                                                                                |                                                                             |                   |
| Organization      Costs (a)                                                                                                         |              0% | 100%                   |
| Broker-dealer      Commissions and Expenses (a)                                                                                     | 100%                                                                             | 0%                     |
| Management      Fee (b)                                                                                                             | 100%                                                                             | 0%                     |
| Undeveloped      Lease Costs                                                                                                        | 0%                                                                               | 100%                   |
| Tangible      Well Costs                                                                                                            | 0%                                                                               | 100%                   |
| Intangible      Drilling Costs (IDC)                                                                                                | 100%                                                                             | 0%                     |
| Managing      General Partner's Drilling Compensation                                                                               | 100%                                                                             | 0%                     |
| Direct      Drilling and Compensation Costs, excluding Managing      General   Partner’s Drilling Compensation | 63%                                                                              | 37%                    |
| Operating      Costs (c)                                                                                                            | 63%                                                                              | 37%                    |
| Direct      Costs (d)                                                                                                               | 63%                                                                              | 37%                    |
|                                                                                                                                |                                                                             |                   |
| Partnership      Revenue                                                                                                            |                                                                             |                   |
|                                                                                                                                |                                                                             |                   |
| Sale      of Oil and Gas Production                                                                                                 | 63%                                                                              | 37%                    |
| Sale      of Productive Properties                                                                                                  | 63%                                                                              | 37%                    |
| Sale      of Equipment                                                                                                              | 63%                                                                              | 37%                    |
| Sale      of Undeveloped Leases                                                                                                     | 63%                                                                              | 37%                    |
| Interest      Income                                                                                                                | 63%                                                                              | 37%                    |
|                                                                                                                                |                                                                             |                   |

|   |  (a) | The      Managing General Partner paid all legal, accounting, printing, and filing      fees associated with the organization of the Partnership and the offering      of units and is allocated 100% of these costs.  The Investor      Partners paid all dealer manager commissions, discounts, and due diligence      reimbursements and are allocated 100% of these  costs. |
|--------|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  (b) | Represents      a one-time fee paid to the Managing General Partner on the day the      Partnership was funded equal to 1-1/2% of total investor      subscriptions. |
|--------|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  (c) | Represents      operating costs incurred after the completion of productive wells,      including monthly per-well charges paid to the Managing General      Partner. |
|--------|-----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  (d) | The      Managing General Partner receives monthly reimbursement from the      Partnership for direct costs incurred by the Managing General Partner on      behalf of the Partnership. |
|--------|-----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                   |                                                                                                                                                                                              |   |  Period      from                                                                                                     |
|------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------|
|                   |                                                                                                                                                                                              |   |  September      7, 2006                                                                                               |
|                   |                                                                                                                                                                                              |   |  (date      of inception) to                                                                                          |
|                   |  December 31, 2007                                                                                                                                                                           |   |  December 31, 2006                                                                                                    |
|                   |                                                                                                                                                                                              |   |                                                                                                                       |
| Leasehold      costs   |  $                  822,436                                                                        |   |  $                  313,808 |
| Development      costs |               101,128,017                                                                                                   |   |                 21,521,612                 |
| Wells      in progress |                                 - |   |                 89,428,539                 |
|                   |  $           101,950,453                                                                                                              |   |  $           111,263,959                                       |
|                   |                                                                                                                                                                                              |   |                                                                                                                       |

|                                                 |                                                                                                                                                                     |   |  Period      from                                                                                                                                                     |
|------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                 |                                                                                                                                                                     |   |  September      7, 2006                                                                                                                                               |
|                                                 |  Year      Ended                                                                                                                                                    |   |  (date      of inception) to                                                                                                                                          |
|                                                 |  December 31, 2007                                                                                                                                                  |   |  December 31, 2006                                                                                                                                                    |
|                                                 |                                                                                                                                                                     |   |                                                                                                                                                                       |
|                                                 |                                                                                                                                                                     |   |                                                                                                                                                                       |
| Balance      at beginning of period                  |  $                      356,242                       |   |  $                           - |
| Obligations      assumed with development activities |                          382,558            |   |                      353,094                                      |
| Accretion      expense                               |                            36,852 |   |                          3,148                |
| Balance      at end of period                        |  $                      775,652                       |   |  $                  356,242                                                 |
|                                                 |                                                                                                                                                                     |   |                                                                                                                                                                       |

----

| (7) | Supplemental Reserve      Information and Standardized Measure      of Discounted Future Net Cash Flows and Changes Therein Relating to Proved      Oil and Gas Reserves (Unaudited) |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                        |   | Oil      (Bbls)   |       |
|---------------------------------------------|--------|-------------------|------------|
|                                        |   | December      31, |       |
|                                        |   | 2007              |       |   | 2006 |   |
|                                        |   |              |       |   |   |   |
| Proved      developed reserves:             |   |              |       |   |   |   |
|        Beginning of year               |   |              | 960,700    |   |   |   | - |   |
|        Revisions of previous estimates |   |              | 485,400    |   |   |   | - |   |
|        New discoveries and extensions  |   |              | 654,400    |   |   |   | 977,400 |   |
|        Production                      |   |              | (297,500   | ) |   |   | (16,700 | ) |
|           End of Period |   |              | 1,803,000  |   |   |   | 960,700 |   |
|                                        |   |              |       |   |   |   |   |   |
|                                        |   | Gas      (Mcfs)   |       |
|                                        |   | December      31, |       |
|                                        |   | 2007              |       |   | 2006 |   |
| Proved      developed reserves:             |   |              |       |   |   |   |   |   |
|        Beginning of year               |   |              | 9,013,800  |   |   |   | - |   |
|        Revisions of previous estimates |   |              | 7,894,600  |   |   |   | - |   |
|        New discoveries and extensions  |   |              | 10,571,300 |   |   |   | 9,066,500 |   |
|        Production                      |   |              | (3,136,400 | ) |   |   | (52,700 | ) |
|           End of Period |   |              | 24,343,300 |   |   |   | 9,013,800 |   |
|                                        |   |              |       |   |   |   |   |   |

----

|                                                        |   | December      31, |         |
|-------------------------------------------------------------|--------|-------------------|--------------|
|                                                        |   | 2007              |         |   | 2006 |   |
|                                                        |   |              |         |   |   |   |
| Future      estimated cash flows                            |   | $                 | 311,970,100  |   |   | $ | 96,697,800 |   |
| Future      estimated production costs                      |   |              | (78,301,700  | ) |   |   | (29,902,600 | ) |
| Future      estimated development costs                     |   |              | (12,218,400  | ) |   |   | (15,990,200 | ) |
|    Future      net cash flows                |   |              | 221,450,000  |   |   |   | 50,805,000 |   |
| 10%      annual discount for estimated timing of cash flows |   |              | (103,770,000 | ) |   |   | (19,220,000 | ) |
|        Standardized measure of discounted future       |   |              |         |   |   |   |   |   |
|    estimated      net cash flows             |   | $                 | 117,680,000  |   |   | $ | 31,585,000 |   |
|                                                        |   |              |         |   |   |   |   |   |

|                                                          |   | December      31, |        |
|---------------------------------------------------------------|--------|-------------------|-------------|
|                                                          |   | 2007              |        |   | 2006 |   |
|                                                          |   |              |        |   |   |   |
| Sales      of oil and gas production, net of production costs |   | $                 | (26,384,900 | ) |   | $ | (1,039,600 | ) |
| Net      changes in prices and production costs               |   |              | 13,287,000  |   |   |   | - |   |
| Extensions,      discoveries, and improved recovery,          |   |              |        |   |   |   |   |   |
|    less      related costs                     |   |              | 47,012,000  |   |   |   | 32,625,700 |   |
| Development      cost incurred during the period              |   |              | -           |   |   |   | - |   |
| Revisions      of previous quantity estimates                 |   |              | 36,666,000  |   |   |   | - |   |
| Accretion      of discount                                    |   |              | 2,887,000   |   |   |   | - |   |
| Timing      and other                                         |   |              | 12,627,900  |   |   |   | (1,100 | ) |
|     Net      change                       |   | $                 | 86,095,000  |   |   | $ | 31,585,000 |   |
|                                                          |   |              |        |   |   |   |   |   |

| (8) | Commitments and      Contingencies |
|-----|------------------------------------|

----

----