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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Fiscal Year Ended December 31, 2009
 OR
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 Commission File No. 0-19279
 EVERFLOW EASTERN PARTNERS, L.P.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    34-1659910(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)585 West Main StreetP.O. Box 629Canfield, Ohio
    
    44406(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code: 330-533-2692
  Name of each exchangeTitle of each class
    
    on which registered
   Units of Limited Partnership Interest
 Yes o No þ
 Yes o No þ
 þ o
 Yes o No o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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PART I
 ITEM 1.
    
    BUSINESS
 Introduction
  Exchange Offer
   The Company
 Description of the Business
 General
  -1-




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Subsidiaries
  Current Operations
   Business Plan
 Acquisition of Prospects
  -2-




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Acquisition of Producing Properties
  Funding for Activities
   -3-




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MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
 (1)
    
    The Partnership Agreement was amended and restated in
February 2010. The Amended and
Restated Agreement of Limited Partnership of Everflow Eastern Partners, L.P.
dated February
10, 2010 is incorporated herein as Exhibit 3.8.  Marketing
 Crude Oil
   -4-




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Natural Gas
     -5-




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Dominion
    
    
    IGS
    
    
    TotalWeighted-
    
    
    
    
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Year Ending
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageDecember 31:
    
    BCF
    
    
    Price/MCF
    
    
    BCF
    
    
    Price/MCF
    
    
    BCF
    
    
    Price/MCF2010
    
    
    1.18
    
    
    $
    9.13
    
    
    
    0.66
    
    
    $
    8.84
    
    
    
    1.84
    
    
    $
    9.032011
    
    
    0.46
    
    
    
    8.00
    
    
    
    0.33
    
    
    
    8.10
    
    
    
    0.79
    
    
    
    8.041.64
    
    
    $
    8.81
    
    
    
    0.99
    
    
    $
    8.59
    
    
    
    2.63
    
    
    $
    8.73
   Seasonality
  -6-




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Title to Properties
 Competition
     -7-




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Regulation of Oil and Gas Industry
    -8-




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Environmental Regulation
  Operating Hazards and Uninsured Risks
   -9-




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Conflicts of Interest
  Employees
 ITEM 1A.
    
    RISK FACTORS
   -10-




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Continued weakness in the United States and global economic condition or in any of the industries
in which purchasers of crude oil or natural gas operate, or sustained uncertainty in financial
markets may have a material adverse impact on our business and financial condition that we
currently cannot predict.
    -11-




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Natural gas and crude oil prices fluctuate widely, and low prices for an extended period of time
are likely to have a material adverse impact on our business.
   
    
    the level of consumer product demand;
    
    weather conditions;
    
    political conditions in natural gas and crude oil producing regions,
including the Middle East;
    
    the ability of the members of the Organization of Petroleum Exporting
Countries to agree to and maintain oil price and production controls;
    
    the price of foreign imports;
    
    actions of governmental authorities;
    
    pipeline capacity constraints;
    
    inventory storage levels;
    
    additional supply made available to the marketplace through new or previously
inaccessible formations;
    
    domestic and foreign governmental regulations;
    
    the price, availability and acceptance of alternative fuels; and
    
    overall economic conditions.
   -12-




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Drilling natural gas and crude oil wells is a high-risk activity.
  
    
    unexpected drilling conditions, pressure or irregularities in formations;
    
    equipment failures or accidents;
    
    adverse weather conditions;
    
    compliance with governmental requirements; and
    
    shortages or delays in the availability of drilling rigs or crews and
the delivery of equipment.
  
    
    the availability of sufficient capital resources to us and the other
participants for the drilling of the prospects;
    
    economic and industry conditions at the time of drilling, including
prevailing and anticipated prices for natural gas and crude oil and
the availability of drilling rigs and crews;
    
    our financial resources and results; and
    
    the availability of leases and permits on reasonable terms for the prospects.
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Reserve estimates depend on many assumptions that may prove to be inaccurate. Any material
inaccuracies in our reserve estimates or underlying assumptions could cause the quantities and net
present value of our reserves to be overstated.
  
    
    the quality and quantity of available data;
    
    the interpretation of that data;
    
    the accuracy of various mandated economic assumptions; and
    
    the judgment of the persons preparing the estimate.
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Our future performance depends on our ability to find or acquire additional natural gas and crude
oil reserves that are economically recoverable.
    We may incur substantial impairment write downs.
    -15-




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Disruptions in the financial and credit markets may adversely impact the availability and cost of
credit as well as our ability to raise additional capital, which could adversely affect our
business, results of operations and financial condition.
  We depend on certain key customers for sales of our natural gas and crude oil. To the extent these
customers reduce the volumes of natural gas and crude oil they purchase from us, our revenues and
cash available for distributions could decline.
  Many of our leases are in areas that have been partially depleted or drained by offset wells .
  We face a variety of hazards and risks that could cause substantial financial losses.
  
    
    blowouts, surface cratering and explosions;
    
    mechanical problems;
    
    uncontrolled flows of natural gas, crude oil or well fluids;
    
    fires;
    
    formations with abnormal pressures;
    
    pollution and other environmental risks; and
    
    natural disasters.
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We have limited control over the activities on properties we do not operate.
  Terrorist activities and the potential for military and other actions could adversely affect our
business.
  Our ability to sell our natural gas and crude oil production could be materially harmed if we fail
to obtain adequate services such as transportation and processing.
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Competition in our industry is intense, and many of our competitors have substantially greater
financial and technological resources than we do, which could adversely affect our competitive
position.
  The loss of key personnel could adversely affect our ability to operate.
  We are subject to complex laws and regulations, including environmental regulations, which can
adversely affect the cost, manner or feasibility of doing business.
   -18-




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Members of our management team own a significant number of limited partnership Units and are in a
position to significantly influence the outcome of matters requiring a Unitholder vote .
  ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
  ITEM 2.
    
    PROPERTIES
   Natural Gas and Crude Oil Reserves
 
    
    Introduce a new definition of oil and gas producing activities. This new definition
allows companies to include in their reserve base volumes from unconventional resources.
Such unconventional resources include bitumen extracted from oil sands and oil and gas
extracted from coal beds and shale formations;
 
    
    report oil and gas reserves using an unweighted average price using the prior 12-month
period, based on the closing prices on the first day of each month, rather than year-end
pricing. This should maximize the comparability of reserve estimates among companies and
mitigate the distortion of the estimates that arises when using a single pricing date;
 
    
    permit companies to disclose their probable and possible reserves on a voluntary basis.
Current rules limit disclosure to only proved reserves;
  -19-




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
    
    update and revise reserve definitions to reflect changes in the oil and gas industry and
new technologies. New updated definitions include by geographic area and reasonable
certainty;
 
    
    permit the use of new technologies to determine proved reserves if those technologies
have been demonstrated empirically to lead to reliable conclusions about reserves volumes;
and
 
    
    require additional disclosures regarding the qualifications of the chief technical
person who oversees the companys overall reserve estimation process. Additionally,
disclosures are required related to internal controls over reserve estimation, as well as a
report
addressing the independence and qualifications of a companys reserves preparer or auditor
based on Society of Petroleum Engineers criteria.
     -20-




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Reserves Reported to Other Agencies
 Proved
Reserves (1)
 Oil (BBLS)
    
    
    Gas (MCF)Proved Developed
    
    
    602,000
    
    
    
    31,560,000Proved Undeveloped
    
    
    
    
    
    
    Total
    
    
    602,000
    
    
    
    31,560,000
 
 (1)
    
    The Company has not determined proved reserves associated
with its proved undeveloped acreage which are not deemed
significant at December 31, 2009. A reconciliation of the
Companys proved reserves is included in the Notes to the
Financial Statements.  -21-




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Standardized
Measure of Discounted Future Net Cash Flows (1)
 (Thousands)Future cash inflows from sales of oil and gas
    
    $
    166,184Future production and development costs
    
    
    (75,549
    )Future asset retirement obligations, net of salvage
    
    
    (11,613
    )Future income tax expense
    
    
    (1,687
    )Future net cash flows
    
    
    77,335Effect of discounting future net cash flows
at 10% per annum
    
    
    (27,664
    )Standardized measure of discounted future
net cash flows
    
    $
    49,671
 
 (1)
    
    See the Notes to the Financial Statements for additional information. Production
 AverageProduction
    
    
    Sales Price
    
    
    Average Lifting CostOil (BBLS)
    
    
    Gas (MCFS)
    
    
    per BBL
    
    
    per MCF
    
    
    per Equivalent MCF (1)2009
    
    
    69,000
    
    
    
    2,955,000
    
    
    $
    52.56
    
    
    $
    7.50
    
    
    $
    1.292008
    
    
    76,000
    
    
    
    3,530,000
    
    
    
    96.80
    
    
    
    9.67
    
    
    
    1.032007
    
    
    70,000
    
    
    
    3,228,000
    
    
    
    66.06
    
    
    
    9.19
    
    
    
    1.05
 
 (1)
    
    Oil production is converted to MCF equivalents at the rate of 6 MCF per
BBL (barrel).  -22-




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Productive Wells
 Gross Wells
    
    
    Net WellsOil (1)
    
    
    Gas (1)
    
    
    Total
    
    
    Oil (1)
    
    
    Gas (1)
    
    
    Total151
    
    
    
    1,289
    
    
    
    1,440
    
    
    
    83
    
    
    
    797
    
    
    
    880
 
 (1)
    
    Oil wells are those wells which generate the majority
of their revenues from oil production; gas wells are those
wells which generate the majority of their revenues from
gas production. Acreage
 Drilling Activity
 Development Wells(1)Productive
    
    
    DryGross
    
    
    Net
    
    
    Gross
    
    
    Net2009
    
    
    15
    
    
    
    3.40
    
    
    
    
    
    
    
    2008
    
    
    91
    
    
    
    38.11
    
    
    
    
    
    
    
    2007
    
    
    73
    
    
    
    28.54
    
    
    
    2
    
    
    
    0.36
 
 (1)
    
    All wells are located in the United States. All wells are development wells.
No exploratory wells were drilled. Present Activities
  -23-




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Delivery
Commitments
 Company Headquarters
 ITEM 3.
    
    LEGAL PROCEEDINGS
  ITEM 4.
    
    REMOVED AND RESERVED
  -24-




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PART II
 ITEM 5.
    
    MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
 Market
  Distribution History
  Repurchase Right
   -25-




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ITEM 6.
    
    SELECTED FINANCIAL DATA
  Year Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Revenue
    
    $
    26,398,062
    
    
    $
    42,069,515
    
    
    $
    34,835,438
    
    
    $
    34,847,915
    
    
    $
    33,114,351Net Income
    
    
    3,913,369
    
    
    
    24,117,868
    
    
    
    23,505,248
    
    
    
    23,142,714
    
    
    
    22,968,275Net Income Per Unit
    
    
    0.69
    
    
    
    4.23
    
    
    
    4.12
    
    
    
    4.04
    
    
    
    3.99Total Assets
    
    
    70,630,631
    
    
    
    83,441,393
    
    
    
    75,123,907
    
    
    
    72,462,307
    
    
    
    71,329,497Debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash Distributions Per Unit
    
    
    3.00
    
    
    
    3.00
    
    
    
    4.00
    
    
    
    3.75
    
    
    
    2.50
 ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 General
     -26-




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Liquidity and Capital Resources
 Financial Position
  December 31, 2009
    
    
    December 31, 2008Amount
    
    
    %
    
    
    Amount
    
    
    %(Amounts in Thousands)
    
    
    (Amounts in Thousands)Working capital
    
    $
    19,782
    
    
    
    29
    %
    
    $
    18,853
    
    
    
    24
    %Property and equipment (net)
    
    
    47,706
    
    
    
    70
    
    
    
    59,928
    
    
    
    75Other
    
    
    474
    
    
    
    1
    
    
    
    904
    
    
    
    1Total
    
    $
    67,962
    
    
    
    100
    %
    
    $
    79,685
    
    
    
    100
    %Deferred income taxes
    
    $
    320
    
    
    
    
    %
    
    $
    360
    
    
    
    
    %Long-term liabilities
    
    
    5,069
    
    
    
    8
    
    
    
    3,568
    
    
    
    5Partners equity
    
    
    62,573
    
    
    
    92
    
    
    
    75,757
    
    
    
    95Total
    
    $
    67,962
    
    
    
    100
    %
    
    $
    79,685
    
    
    
    100
    %
    -27-




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Cash Flows from Operating, Investing and Financing Activities
   2009
    
    
    2008Dollars
    
    
    %
    
    
    Dollars
    
    
    %(Amounts in Thousands)Operating Activities:Net income before adjustments
    
    $
    3,913
    
    
    
    18
    %
    
    $
    24,118
    
    
    
    63
    %Adjustments
    
    
    15,331
    
    
    
    70
    
    
    
    11,645
    
    
    
    37Cash flow from operations before
working capital changes
    
    
    19,244
    
    
    
    88
    
    
    
    35,763
    
    
    
    100Changes in working capital
    
    
    2,657
    
    
    
    12
    
    
    
    (133
    )
    
    
    Net cash provided by
operating activities
    
    
    21,901
    
    
    
    100
    
    
    
    35,630
    
    
    
    100Investing Activities:Proceeds received from
employees notes receivables
    
    
    217
    
    
    
    1
    
    
    
    250
    
    
    
    1Advances disbursed to employees
    
    
    (113
    )
    
    
    
    
    
    
    (688
    )
    
    
    (2
    )Proceeds from sale of investments
    
    
    
    
    
    
    
    
    
    
    6,076
    
    
    
    17Purchase of property and equipment
    
    
    (2,971
    )
    
    
    (14
    )
    
    
    (15,423
    )
    
    
    (43
    )Proceeds from sale of property
and equipment
    
    
    223
    
    
    
    1
    
    
    
    4
    
    
    
    Net cash used by investing
activities
    
    
    (2,644
    )
    
    
    (12
    )
    
    
    (9,781
    )
    
    
    (27
    )Financing Activities:Distributions
    
    
    (17,071
    )
    
    
    (78
    )
    
    
    (17,103
    )
    
    
    (48
    )Repurchase and retirement of Units
    
    
    (27
    )
    
    
    
    
    
    
    (308
    )
    
    
    (1
    )Net cash used by financing activities
    
    
    (17,098
    )
    
    
    (78
    )
    
    
    (17,411
    )
    
    
    (49
    )Net increase in cash and equivalents
    
    $
    2,159
    
    
    
    10
    %
    
    $
    8,438
    
    
    
    24
    %
 Note:
    
    All items in the previous table are calculated as a percentage of total cash sources.
Total cash sources include the following items, if positive: cash flow from operations before
working capital changes, changes in working capital, net cash provided by investing activities
and net cash provided by financing activities, plus any decrease in cash and equivalents.
  -28-




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-30-




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Results of Operations
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Revenues:Oil and gas sales
    
    
    98
    %
    
    
    99
    %
    
    
    98
    %Well management and operating
    
    
    2
    
    
    
    1
    
    
    
    2Total Revenues
    
    
    100
    
    
    
    100
    
    
    
    100Expenses:Production costs
    
    
    16
    
    
    
    10
    
    
    
    11Well management and operating
    
    
    1
    
    
    
    1
    
    
    
    1Depreciation, depletion and
amortization
    
    
    34
    
    
    
    18
    
    
    
    15Accretion expense
    
    
    2
    
    
    
    
    
    
    
    Write down/impairment and
abandonment of oil and gas properties
    
    
    22
    
    
    
    9
    
    
    
    1General and administrative expense
    
    
    10
    
    
    
    5
    
    
    
    6Other income
    
    
    (1
    )
    
    
    (1
    )
    
    
    (2
    )Income tax expense
    
    
    1
    
    
    
    1
    
    
    
    1Total Expenses
    
    
    85
    
    
    
    43
    
    
    
    33Net income
    
    
    15
    %
    
    
    57
    %
    
    
    67
    %
    -31-




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Application of Critical Accounting Policies
 Property and Equipment
  -33-




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Asset Retirement Obligations
  -34-




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Inflation and Changes in Prices
    ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
   -36-




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EVERFLOW EASTERN PARTNERS, L. P.
 2009 CONSOLIDATED FINANCIAL REPORT
  F-1




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##### 



PageREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    F-3FINANCIAL STATEMENTSConsolidated balance sheets
    
    
    F-4  F-5Consolidated statements of income
    
    
    F-6Consolidated statements of partners equity
    
    
    F-7Consolidated statements of cash flows
    
    
    F-8Notes to consolidated financial statements
    
    
    F-9  F-27Exhibit 14.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 99.1
   F-2




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Report of Independent Registered Public Accounting Firm
 
     
  F-3




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2009
    
    
    2008ASSETSCURRENT ASSETSCash and equivalents
    
    $
    16,610,772
    
    
    $
    14,451,825Accounts receivable:Production
    
    
    5,143,587
    
    
    
    7,568,917Joint venture partners
    
    
    62,365
    
    
    
    353,039Employees notes receivable
    
    
    544,909
    
    
    
    219,006Other
    
    
    88,980
    
    
    
    15,980Total current assets
    
    
    22,450,613
    
    
    
    22,608,767PROPERTY AND EQUIPMENTProved properties (successful efforts accounting method)
    
    
    169,904,570
    
    
    
    167,562,754Pipeline and support equipment
    
    
    555,564
    
    
    
    555,564Corporate and other
    
    
    2,037,170
    
    
    
    2,020,829172,497,304
    
    
    
    170,139,147Less accumulated depreciation, depletion, amortization
and write down
    
    
    124,791,532
    
    
    
    110,210,57647,705,772
    
    
    
    59,928,571OTHER ASSETSEmployees notes receivable
    
    
    396,700
    
    
    
    826,509Other
    
    
    77,546
    
    
    
    77,546474,246
    
    
    
    904,055$
    70,630,631
    
    
    $
    83,441,393
   F-4




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2009
    
    
    2008LIABILITIES AND PARTNERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    1,555,798
    
    
    $
    1,761,683Accrued expenses
    
    
    1,112,290
    
    
    
    1,994,696Total current liabilities
    
    
    2,668,088
    
    
    
    3,756,379DEFERRED INCOME TAXES
    
    
    320,000
    
    
    
    360,000ASSET RETIREMENT OBLIGATIONS
    
    
    5,069,368
    
    
    
    3,567,665COMMITMENTS AND CONTINGENCIES
    
    
    
    
    
    
    LIMITED PARTNERS EQUITY, SUBJECT TO REPURCHASE
RIGHTAuthorized  8,000,000 UnitsIssued and outstanding  5,621,851 and 5,624,293 Units,
respectively
    
    
    61,835,159
    
    
    
    74,864,217GENERAL PARTNERS EQUITY
    
    
    738,016
    
    
    
    893,132Total partners equity
    
    
    62,573,175
    
    
    
    75,757,349$
    70,630,631
    
    
    $
    83,441,393
   F-5




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2009
    
    
    2008
    
    
    2007REVENUESOil and gas sales
    
    $
    25,813,201
    
    
    $
    41,469,978
    
    
    $
    34,275,635Well management and operating
    
    
    581,565
    
    
    
    596,339
    
    
    
    556,061Other
    
    
    3,296
    
    
    
    3,198
    
    
    
    3,74226,398,062
    
    
    
    42,069,515
    
    
    
    34,835,438DIRECT COST OF REVENUESProduction costs
    
    
    4,348,866
    
    
    
    4,124,563
    
    
    
    3,820,544Well management and operating
    
    
    283,520
    
    
    
    254,811
    
    
    
    234,583Depreciation, depletion and amortization
    
    
    8,990,492
    
    
    
    7,515,445
    
    
    
    5,136,780Accretion expense
    
    
    603,446
    
    
    
    212,800
    
    
    
    212,798Write down/impairment and abandonment of
oil and gas properties
    
    
    5,911,702
    
    
    
    3,876,903
    
    
    
    223,592Total direct cost of revenues
    
    
    20,138,026
    
    
    
    15,984,522
    
    
    
    9,628,297GENERAL AND ADMINISTRATIVE EXPENSE
    
    
    2,527,691
    
    
    
    1,958,384
    
    
    
    2,005,335Total cost of revenues
    
    
    22,665,717
    
    
    
    17,942,906
    
    
    
    11,633,632INCOME FROM OPERATIONS
    
    
    3,732,345
    
    
    
    24,126,609
    
    
    
    23,201,806OTHER INCOMEInterest income
    
    
    99,968
    
    
    
    343,705
    
    
    
    691,129Gain on sale of property and equipment
    
    
    223,076
    
    
    
    3,500
    
    
    
    13,145323,044
    
    
    
    347,205
    
    
    
    704,274INCOME BEFORE INCOME TAXES
    
    
    4,055,389
    
    
    
    24,473,814
    
    
    
    23,906,080INCOME TAX EXPENSE (BENEFIT)Current
    
    
    182,020
    
    
    
    395,946
    
    
    
    435,832Deferred
    
    
    (40,000
    )
    
    
    (40,000
    )
    
    
    (35,000
    )142,020
    
    
    
    355,946
    
    
    
    400,832NET INCOME
    
    $
    3,913,369
    
    
    $
    24,117,868
    
    
    $
    23,505,248Allocation of Partnership Net IncomeLimited Partners
    
    $
    3,867,223
    
    
    $
    23,834,006
    
    
    $
    23,229,076General Partner
    
    
    46,146
    
    
    
    283,862
    
    
    
    276,172$
    3,913,369
    
    
    $
    24,117,868
    
    
    $
    23,505,248Net income per unit
    
    $
    0.69
    
    
    $
    4.23
    
    
    $
    4.12
   F-6




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##### Table of Contents



2009
    
    
    2008
    
    
    2007PARTNERS EQUITY  JANUARY 1
    
    $
    75,757,349
    
    
    $
    69,050,460
    
    
    $
    68,398,967Net income
    
    
    3,913,369
    
    
    
    24,117,868
    
    
    
    23,505,248Cash distributions ($3.00 per unit in 2009 and 2008,
respectively, and $4.00 per unit in 2007)
    
    
    (17,070,510
    )
    
    
    (17,102,635
    )
    
    
    (22,843,116
    )Repurchase and retirement of Units
    
    
    (27,033
    )
    
    
    (308,344
    )
    
    
    (10,639
    )PARTNERS EQUITY  DECEMBER 31
    
    $
    62,573,175
    
    
    $
    75,757,349
    
    
    $
    69,050,460
   F-7




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##### Table of Contents



2009
    
    
    2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIESNet income
    
    $
    3,913,369
    
    
    $
    24,117,868
    
    
    $
    23,505,248Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation, depletion and amortization
    
    
    9,078,764
    
    
    
    7,600,061
    
    
    
    5,211,169Accretion expense
    
    
    603,446
    
    
    
    212,800
    
    
    
    212,798Write down/impairment and abandonment of
oil and gas properties
    
    
    5,911,702
    
    
    
    3,876,903
    
    
    
    223,592Gain on sale of property and equipment
    
    
    (223,076
    )
    
    
    (3,500
    )
    
    
    (13,145
    )Investment earnings
    
    
    
    
    
    
    (1,567
    )
    
    
    (269,335
    )Deferred income taxes
    
    
    (40,000
    )
    
    
    (40,000
    )
    
    
    (35,000
    )Changes in assets and liabilities:Accounts receivable
    
    
    2,716,004
    
    
    
    (74,037
    )
    
    
    (8,365
    )Other current assets
    
    
    (73,000
    )
    
    
    (4,750
    )
    
    
    20,078Other assets
    
    
    
    
    
    
    
    
    
    
    5,356Accounts payable
    
    
    49,237
    
    
    
    (63,268
    )
    
    
    559,516Accrued expenses
    
    
    (35,834
    )
    
    
    9,522
    
    
    
    132,040Total adjustments
    
    
    17,987,243
    
    
    
    11,512,164
    
    
    
    6,038,704Net cash provided by operating activities
    
    
    21,900,612
    
    
    
    35,630,032
    
    
    
    29,543,952CASH FLOWS FROM INVESTING ACTIVITIESProceeds received from employees notes receivables
    
    
    216,590
    
    
    
    249,660
    
    
    
    76,507Advances disbursed to employees
    
    
    (112,684
    )
    
    
    (687,945
    )
    
    
    (526,644
    )Purchase of investments
    
    
    
    
    
    
    
    
    
    
    (17,512,480
    )Proceeds from sale of investments
    
    
    
    
    
    
    6,076,000
    
    
    
    20,288,000Purchase of property and equipment
    
    
    (2,971,104
    )
    
    
    (15,422,548
    )
    
    
    (10,472,558
    )Proceeds from sale of property and equipment
    
    
    223,076
    
    
    
    3,500
    
    
    
    46,900Net cash used by investing activities
    
    
    (2,644,122
    )
    
    
    (9,781,333
    )
    
    
    (8,100,275
    )CASH FLOWS FROM FINANCING ACTIVITIESDistributions
    
    
    (17,070,510
    )
    
    
    (17,102,635
    )
    
    
    (22,843,116
    )Repurchase and retirement of Units
    
    
    (27,033
    )
    
    
    (308,344
    )
    
    
    (10,639
    )Net cash used by financing activities
    
    
    (17,097,543
    )
    
    
    (17,410,979
    )
    
    
    (22,853,755
    )NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS
    
    
    2,158,947
    
    
    
    8,437,720
    
    
    
    (1,410,078
    )CASH AND EQUIVALENTS  JANUARY 1
    
    
    14,451,825
    
    
    
    6,014,105
    
    
    
    7,424,183CASH AND EQUIVALENTS  DECEMBER 31
    
    $
    16,610,772
    
    
    $
    14,451,825
    
    
    $
    6,014,105Supplemental disclosures of cash flow information:Cash paid during the year for:Income taxes
    
    $
    239,056
    
    
    $
    450,422
    
    
    $
    382,531
   F-8




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##### Table of Contents



Note 1. Organization and Summary of Significant Accounting Policies
 A.
    
    Organization  Everflow Eastern Partners, L. P. (Everflow) is a
Delaware limited partnership which was organized in September 1990 to engage in the
business of oil and gas acquisition, exploration, development and production.
Everflow was formed to consolidate the business and oil and gas properties of
Everflow Eastern, Inc. (EEI) and subsidiaries and the oil and gas properties
owned by certain limited partnership and working interest programs managed or
sponsored by EEI (EEI Programs or the Programs).
  B.
    
    Principles of Consolidation  The consolidated financial statements
include the accounts of Everflow, its wholly-owned subsidiaries, including EEI, and
interests with joint venture partners (collectively, the Company), which are
accounted for under the proportional consolidation method. All significant
accounts and transactions between the consolidated entities have been eliminated.
 C.
    
    Use of Estimates  The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America (generally accepted accounting principles, or GAAP) requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The Companys
financial statements are based on a number of significant estimates (including oil
and gas reserves and their related quantities, future net cash flows and remaining
lives of wells) certain of which are utilized in the calculation of depreciation,
depletion and amortization, the evaluation of impairment of oil and gas properties,
and the measurement of asset retirement obligations.
  D.
    
    Accounting Standards Codification  In July 2009, the Company adopted a
new accounting standard on The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles (the Codification). The
Codification was approved by the Financial Accounting Standards Board (FASB)
in June 2009 as the single source of authoritative nongovernmental GAAP.
All existing accounting standard documents, such as FASB, American Institute of
Certified Public Accountants, Emerging Issues Task Force, and other related
accounting
  F-9




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##### Table of Contents



Note 1. Organization and Summary of Significant Accounting Policies (continued)
 D.
    
    Accounting Standards Codification (continued)
  E.
    
    Fair Value of Financial Instruments  The fair values of cash and
equivalents, accounts and notes receivable, accounts payable and other short-term
obligations approximate their carrying values because of the short maturity of
these financial instruments. The carrying values of the Companys long-term
obligations approximate their fair value. In accordance with generally accepted
accounting principles, rates available to the Company at the balance sheet dates
are used to estimate the fair value of existing obligations.
 F.
    
    Cash and Equivalents  The Company considers all highly liquid debt
instruments purchased with an original maturity of three months or less to be cash
equivalents. The Company maintains, at various financial institutions, cash and
equivalents which may exceed federally insured amounts and which may, at times,
significantly exceed balance sheet amounts due to float.
 G.
    
    Property and Equipment  The Company uses the successful efforts method
of accounting for oil and gas exploration and production activities. Under
successful efforts, costs to acquire mineral interests in oil and gas properties,
to drill and equip development wells and related asset retirement costs are
capitalized. Costs of development wells (on properties the Company has no further
interest in) that do not find proved reserves and geological and geophysical costs
are expensed. The Company has not participated in exploratory drilling and owns no
interest in unproved properties.
    F-10




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##### Table of Contents



Note 1. Organization and Summary of Significant Accounting Policies (continued)
 G.
    
    Property and Equipment (continued)
     H.
    
    Asset Retirement Obligations  Generally accepted accounting principles
require the fair value of a liability for an asset retirement obligation to be
recognized in the period in which it is incurred if a reasonable estimate of fair
value can be made. For the Company, these obligations include dismantlement,
plugging and abandonment of oil and gas wells and associated pipelines and
equipment. The associated asset retirement costs are capitalized as part of the
carrying amount of
the long-lived asset. The liability is accreted to its then
present value each period, and the capitalized cost is depleted over the
estimated useful life of the related asset.
  F-11




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##### Table of Contents



Note 1. Organization and Summary of Significant Accounting Policies (continued)
 H.
    
    Asset Retirement Obligations (continued)
 The estimated liability is based on historical experience in
dismantling, plugging and abandoning wells, estimated remaining lives of
those wells based on reserves estimates, estimates of the external cost to
dismantle, plug and abandon the wells in the future and federal and state
regulatory requirements. The liability is discounted using an assumed
credit-adjusted risk-free interest rate. Revisions to the liability will
likely occur due to: changes in estimates of dismantlement, plugging and
abandonment costs; changes in estimated remaining lives of the wells; changes
in federal or state regulations regarding plugging and abandonment
requirements; and other factors. At December 31, 2008, the Company made
significant revisions in estimates of plugging costs, discount rate, and
remaining lives of wells.
 The Company has no assets legally restricted for purposes of
settling its asset retirement obligations. The Company has determined that
there are no other material retirement obligations associated with tangible
long-lived assets.
  2009
    
    
    2008Beginning of Period
    
    $
    4,767,665
    
    
    $
    2,313,704Liabilities incurred
    
    
    51,685
    
    
    
    239,245Liabilities settled
    
    
    (43,428
    )
    
    
    (4,820
    )Accretion expense
    
    
    603,446
    
    
    
    212,800Revisions in estimated cash flows
    
    
    
    
    
    
    2,006,736End of period
    
    $
    5,379,368
    
    
    $
    4,767,665
  I.
    
    Revenue Recognition  The Company recognizes oil and gas revenues when production is sold to a
purchaser at a fixed or determinable price, when delivery has occurred, title and risk of loss have
transferred to the purchaser, and collectibility of the revenue is reasonably assured. The Company
utilizes the sales method to account for gas production volume imbalances. Under this method,
revenue is recognized only when gas is produced and sold on the Companys behalf. The Company had
no material gas imbalances at December 31, 2009, 2008 or 2007.
  F-12




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##### Table of Contents



Note 1. Organization and Summary of Significant Accounting Policies (continued)
 I.
    
    Revenue Recognition (continued)
   J.
    
    Income Taxes  Everflow is not a tax-paying entity and the net taxable
income or loss, other than the taxable income or loss allocable to EEI, which is a
C corporation owned by Everflow, will be allocated directly to its respective
partners. The Company is not able to determine the net difference between the tax
bases and the reported amounts of Everflows assets and liabilities due to separate
elections that were made by owners of the working interests and limited partnership
interests that comprised Programs.
   K.
    
    Allocation of Income and Per Unit Data  Under the terms of the limited
partnership agreement, initially, 99% of revenues and costs were allocated to the
unitholders (the limited partners) and 1% of revenues and costs were allocated to
the general partner. The allocation changes as unitholders elect to exercise the
repurchase right (see Note 4).
  F-13




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##### Table of Contents



Note 1. Organization and Summary of Significant Accounting Policies (continued)
 K.
    
    Allocation of Income and Per Unit Data (continued)
  L.
    
    Subsequent Events  Everflow paid a dividend in January 2010 of $0.50
per Unit. The distribution amounted to approximately $2,844,000.
   M.
    
    New Accounting Standards  In December 2008, the SEC unanimously
approved amendments to revise and modernize its oil and gas reserves estimation and
disclosure requirements. The amendments, among other things:
 
    
    allows the use of new technologies to determine proved reserves;
 
    
    permits the optional disclosure of probable and possible reserves;
 
    
    modifies the prices used to estimate reserves for SEC disclosure
purposes to a 12-month average price instead of a period-end price;
and
 
    
    requires that if a third party is primarily responsible for
preparing or auditing the reserve estimates, the company make
disclosures relating to the independence and qualifications of the
third party, including filing as an exhibit any report received from
the third party.
     F-14




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##### Table of Contents



Note 1. Organization and Summary of Significant Accounting Policies (continued)
 M.
    
    New Accounting Standards (continued)
    N.
    
    Reclassifications  Certain prior year amounts have been reclassified
to conform
with the current years presentation.
  F-15




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##### Table of Contents



Note 2. Current Liabilities
  2009
    
    
    2008Accounts Payable:Production and related other
    
    $
    1,094,026
    
    
    $
    1,088,504Other
    
    
    380,832
    
    
    
    337,117Drilling
    
    
    80,940
    
    
    
    336,062$
    1,555,798
    
    
    $
    1,761,683Accrued Expenses:Payroll and retirement contributions
    
    $
    663,270
    
    
    $
    617,034Current portion of asset retirement obligations
    
    
    310,000
    
    
    
    1,200,000Federal, state and local taxes
    
    
    139,020
    
    
    
    177,662$
    1,112,290
    
    
    $
    1,994,696
 Note 3. Credit Facilities and Long-Term Debt
  Note 4. Partners Equity
    F-16




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##### Table of Contents



Note 4. Partners Equity (continued)
   Per UnitCalculated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    UnitsPrice for
    
    
    Less
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OutstandingRepurchase
    
    
    Interim
    
    
    Net
    
    
    # of Units
    
    
    FollowingYear
    
    Right
    
    
    Distributions
    
    
    Price Paid
    
    
    Repurchased
    
    
    Repurchase2006
    
    $
    24.37
    
    
    $
    1.50
    
    
    $
    22.87
    
    
    
    
    
    
    
    30,584
    
    
    
    5,644,0942007
    
    $
    14.88
    
    
    $
    2.00
    
    
    $
    12.88
    
    
    
    
    
    
    
    826
    
    
    
    5,643,2682008
    
    $
    17.75
    
    
    $
    1.50
    
    
    $
    16.25
    
    
    
    
    
    
    
    18,975
    
    
    
    5,624,2932009
    
    $
    12.57
    
    
    $
    1.50
    
    
    $
    11.07
    
    
    
    
    
    
    
    2,442
    
    
    
    5,621,851
   F-17




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##### Table of Contents



Note 5. Provision for Income Taxes
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %Provision based on the
statutory rate (for taxable
income up to $10,000,000)
    
    $
    1,379,000
    
    
    
    34.0
    
    
    $
    8,321,000
    
    
    
    34.0
    
    
    $
    8,128,000
    
    
    
    34.0Tax effect of:Non-taxable status of the
Programs and Everflow
    
    
    (1,211,000
    )
    
    
    (29.9
    )
    
    
    (7,799,000
    )
    
    
    (31.9
    )
    
    
    (7,656,000
    )
    
    
    (32.0
    )Excess statutory depletion
    
    
    (92,000
    )
    
    
    (2.3
    )
    
    
    (129,000
    )
    
    
    (0.5
    )
    
    
    (110,000
    )
    
    
    (0.5
    )Graduated tax rates, state
income tax, tax credits
and other  net
    
    
    66,020
    
    
    
    1.6
    
    
    
    (37,054
    )
    
    
    (0.2
    )
    
    
    38,832
    
    
    
    0.2Total
    
    $
    142,020
    
    
    
    3.4
    
    
    $
    355,946
    
    
    
    1.4
    
    
    $
    400,832
    
    
    
    1.7
  Note 6. Retirement Plan
  Note 7. Related Party Transactions
   F-18




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##### Table of Contents



Note 7. Related Party Transactions (continued)
    Note 8. Business Segments, Risks and Major Customers
     F-19




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##### Table of Contents



Note 8. Business Segments, Risks and Major Customers (continued)
  Customer
    
    2009
    
    
    2008
    
    
    2007Dominion Field Services, Inc. (Dominion)
    
    
    38
    %
    
    
    37
    %
    
    
    41
    %Interstate Gas Supply, Inc. (IGS)
    
    
    19
    
    
    
    18
    
    
    
    19Ergon Oil Purchasing, Inc. (Ergon Oil)
    
    
    13
    
    
    
    17
    
    
    
    1270
    %
    
    
    72
    %
    
    
    72
    %
     F-20




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##### Table of Contents



Note 8. Business Segments, Risks and Major Customers (continued)
  Dominion
    
    
    IGS
    
    
    TotalWeighted-
    
    
    
    
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Year Ending
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageDecember 31:
    
    BCF
    
    
    Price/MCF
    
    
    BCF
    
    
    Price/MCF
    
    
    BCF
    
    
    Price/MCF2010
    
    
    1.18
    
    
    $
    9.13
    
    
    
    0.66
    
    
    $
    8.84
    
    
    
    1.84
    
    
    $
    9.032011
    
    
    0.46
    
    
    
    8.00
    
    
    
    0.33
    
    
    
    8.10
    
    
    
    0.79
    
    
    
    8.041.64
    
    
    $
    8.81
    
    
    
    0.99
    
    
    $
    8.59
    
    
    
    2.63
    
    
    $
    8.73
  Note 9. Commitments and Contingencies
   F-21




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Note 10. Selected Quarterly Financial Data (Unaudited)
  Quarters Ended 2009March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31Revenues
    
    $
    7,051,873
    
    
    $
    6,246,084
    
    
    $
    6,735,384
    
    
    $
    6,364,721Income (loss) from operations
    
    
    2,993,967
    
    
    
    2,636,613
    
    
    
    3,288,849
    
    
    
    (5,187,084
    )Net income (loss)
    
    
    2,928,524
    
    
    
    2,564,612
    
    
    
    3,258,999
    
    
    
    (4,838,766
    )Net income (loss) per unit
    
    
    0.51
    
    
    
    0.45
    
    
    
    0.58
    
    
    
    (0.85
    )
 Quarters Ended 2008March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31Revenues
    
    $
    10,434,868
    
    
    $
    11,225,534
    
    
    $
    11,504,165
    
    
    $
    8,904,948Income from operations
    
    
    7,279,151
    
    
    
    8,260,552
    
    
    
    8,565,973
    
    
    
    20,933Net income
    
    
    7,296,984
    
    
    
    8,240,888
    
    
    
    8,519,625
    
    
    
    60,371Net income per unit
    
    
    1.28
    
    
    
    1.44
    
    
    
    1.50
    
    
    
    0.01
   F-22




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##### Table of Contents



Note 11.
    
    Supplemental Information Relating to Oil and Gas Producing Activities
(Unaudited)
   
 Years ended December 31,2009
    
    
    2008
    
    
    2007Proved oil and gas properties
    
    $
    169,904,570
    
    
    $
    167,562,754
    
    
    $
    151,057,527Pipeline and support equipment
    
    
    555,564
    
    
    
    555,564
    
    
    
    527,227170,460,134
    
    
    
    168,118,318
    
    
    
    151,584,754Accumulated depreciation, depletion,
amortization and write down
    
    
    124,116,126
    
    
    
    109,612,312
    
    
    
    98,399,963Net capitalized costs
    
    $
    46,344,008
    
    
    $
    58,506,006
    
    
    $
    53,184,791
  Years ended December 31,2009
    
    
    2008
    
    
    2007Property acquisition costs
    
    $
    321,030
    
    
    $
    689,549
    
    
    $
    588,641Development costs
    
    
    2,376,180
    
    
    
    13,605,540
    
    
    
    10,506,406
   F-23




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Note 11.
    
    Supplemental Information Relating to Oil and Gas Producing Activities
(Unaudited) (continued)
  Years ended December 31,2009
    
    
    2008
    
    
    2007Oil and gas sales
    
    $
    25,813,201
    
    
    $
    41,469,978
    
    
    $
    34,275,635Production costs
    
    
    (4,348,866
    )
    
    
    (4,124,563
    )
    
    
    (3,820,544
    )Depreciation, depletion and
amortization
    
    
    (8,990,492
    )
    
    
    (7,515,445
    )
    
    
    (5,136,780
    )Accretion expense
    
    
    (603,446
    )
    
    
    (212,800
    )
    
    
    (212,798
    )Write down/impairment and
abandonment of oil and gas properties
    
    
    (5,911,702
    )
    
    
    (3,876,903
    )
    
    
    (223,592
    )5,958,695
    
    
    
    25,740,267
    
    
    
    24,881,921Income tax expense
    
    
    150,000
    
    
    
    400,000
    
    
    
    500,000Results of operations for oil and gas
producing activities (excluding
corporate overhead and financing
costs)
    
    $
    5,808,695
    
    
    $
    25,340,267
    
    
    $
    24,381,921
   F-24




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##### Table of Contents



Note 11.
    
    Supplemental Information Relating to Oil and Gas Producing Activities
(Unaudited) (continued)
  Oil
    
    
    Gas(BBLS)
    
    
    (MCFS)Balance, January 1, 2007
    
    
    718,000
    
    
    
    43,006,000Extensions, discoveries and other
additions
    
    
    28,000
    
    
    
    2,672,000Production
    
    
    (70,000
    )
    
    
    (3,228,000
    )Revision of previous estimates
    
    
    70,000
    
    
    
    2,460,000Balance, December 31, 2007
    
    
    746,000
    
    
    
    44,910,000Extensions, discoveries and other
additions
    
    
    60,000
    
    
    
    2,553,000Production
    
    
    (76,000
    )
    
    
    (3,530,000
    )Revision of previous estimates
    
    
    (37,000
    )
    
    
    (2,801,000
    )Balance, December 31, 2008
    
    
    693,000
    
    
    
    41,132,000Extensions, discoveries and other
additions
    
    
    12,000
    
    
    
    267,000Production
    
    
    (69,000
    )
    
    
    (2,955,000
    )Sales of minerals in place
    
    
    
    
    
    
    (32,000
    )Revision of previous estimates
    
    
    (34,000
    )
    
    
    (6,852,000
    )Balance, December 31, 2009
    
    
    602,000
    
    
    
    31,560,000PROVED DEVELOPED RESERVES:December 31, 2007
    
    
    746,000
    
    
    
    44,910,000December 31, 2008
    
    
    693,000
    
    
    
    41,132,000December 31, 2009
    
    
    602,000
    
    
    
    31,560,000
   F-25




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##### Table of Contents



Note 11.
    
    Supplemental Information Relating to Oil and Gas Producing Activities
(Unaudited) (continued)
 
 December 31,2009
    
    
    2008
    
    
    2007(Thousands of Dollars)Future cash inflows from sales of oil
and gas
    
    $
    166,184
    
    
    $
    282,923
    
    
    $
    396,218Future production and development
costs
    
    
    (75,549
    )
    
    
    (107,649
    )
    
    
    (124,727
    )Future asset retirement obligations, net of
salvage
    
    
    (11,613
    )
    
    
    (11,610
    )
    
    
    (10,037
    )Future income tax expense
    
    
    (1,687
    )
    
    
    (3,369
    )
    
    
    (5,655
    )Future net cash flows
    
    
    77,335
    
    
    
    160,295
    
    
    
    255,799Effect of discounting future net cash
flows at 10% per annum
    
    
    (27,664
    )
    
    
    (71,681
    )
    
    
    (122,307
    )Standardized measure of discounted
future net cash flows
    
    $
    49,671
    
    
    $
    88,614
    
    
    $
    133,492
 
 Years Ended December 31,2009
    
    
    2008
    
    
    2007(Thousands of Dollars)Balance, beginning of year
    
    $
    88,614
    
    
    $
    133,492
    
    
    $
    104,715Extensions, discoveries and other
additions
    
    
    594
    
    
    
    7,169
    
    
    
    9,977Development costs incurred
    
    
    1,326
    
    
    
    838
    
    
    
    89Revision of quantity estimates
    
    
    (7,320
    )
    
    
    (5,257
    )
    
    
    8,865Sales of oil and gas, net of production
costs
    
    
    (21,464
    )
    
    
    (37,345
    )
    
    
    (30,455
    )Sales of minerals in place
    
    
    (223
    )
    
    
    
    
    
    
    Net change in income taxes
    
    
    799
    
    
    
    1,069
    
    
    
    (620
    )Net changes in prices and production
costs
    
    
    (27,707
    )
    
    
    (32,977
    )
    
    
    23,595Accretion of discount
    
    
    8,861
    
    
    
    13,349
    
    
    
    10,472Other
    
    
    6,191
    
    
    
    8,276
    
    
    
    6,854Balance, end of year
    
    $
    49,671
    
    
    $
    88,614
    
    
    $
    133,492
  F-26




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Note 11.
    
    Supplemental Information Relating to Oil and Gas Producing Activities
(Unaudited) (continued)
     F-27




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##### Table of Contents



ITEM 9A.(T)
    
    CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Managements Report on Internal Control Over Financial Reporting
  Internal
Control-Integrated Framework
 Internal Control  Integrated Framework
  -37-




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Changes in Internal Control Over Financial Reporting
  
    
    comprehensive formal policies and procedures regarding property and equipment have been
created and are now being maintained;
    
    formal finance and accounting policies and formal written policies and procedures
governing the financial reporting process have been developed and finalized and are now
being maintained on an ongoing basis; and
    
    formal policies and procedures governing the testing and monitoring of key internal
controls have been developed and finalized and are now being maintained on an ongoing
basis.
  ITEM 9B.
    
    OTHER INFORMATION
   -38-




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##### Table of Contents



PART III
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    Directors and Officers of EEI and EMC
 Positions and
    
    Positions andName
    
    Age
    
    Offices with EEI
    
    Offices with EMCThomas L. Korner
    
    
    56
    
    
    Chairman of the Board
and director
    
    Chairman of the Board
and directorRobert F. Sykes
    
    
    86
    
    
    Director
    
    DirectorPeter H. Sykes
    
    
    53
    
    
    None
    
    DirectorWilliam A. Siskovic
    
    
    54
    
    
    President, Principal
Executive Officer
and director
    
    President, Principal
Executive Officer
and directorBrian A. Staebler
    
    
    35
    
    
    Vice President, Secretary-Treasurer, Principal
Financial and Accounting
Officer and director
    
    Vice President, Secretary-Treasurer, Principal
Financial and Accounting
Officer and director
  -39-




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##### Table of Contents



Robert F. Sykes
 Peter H. Sykes
  -40-




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##### Table of Contents



Thomas L. Korner
 William A. Siskovic
  -41-




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##### Table of Contents



Brian A. Staebler
 Audit Committee
   -42-




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##### Table of Contents



REPORT OF THE AUDIT COMMITTEE
  Communication with Audit Committees
 Independence Discussions with Audit Committee
   
  -43-




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##### Table of Contents



Code of Ethics
   Section 16(a) Beneficial Ownership Compliance
  ITEM 11.
    
    EXECUTIVE COMPENSATION
  Overview of 2009 Executive Compensation Components
  
    
    base salary
    
    annual cash bonuses
    
    retirement and other benefits
  -44-




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##### Table of Contents



Base Salary
  Annual Cash Bonuses
    Retirement and Other Benefits
    -45-




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##### Table of Contents



Annual CompensationAll OtherName and
    
    
    
    
    
    
    
    
    
    
    
    
    
    Compen-Principal Position
    
    Year
    
    
    Salary
    
    
    Bonus
    
    
    sation (1)
    
    
    TotalThomas L. Korner
    
    
    2009
    
    
    $
    115,200
    
    
    $
    120,000
    
    
    $
    42,656

(2)
    
    $
    277,856President and Principal
    
    
    2008
    
    
    $
    113,000
    
    
    $
    120,000
    
    
    $
    42,812
    (2)
    
    $
    275,812Executive OfficerWilliam A. Siskovic
    
    
    2009
    
    
    $
    115,200
    
    
    $
    120,000
    
    
    $
    40,508
    (3)
    
    $
    275,708Vice President and
    
    
    2008
    
    
    $
    113,000
    
    
    $
    120,000
    
    
    $
    40,541
    (3)
    
    $
    273,541Principal Financial and
Accounting Officer
 
  (1)
    
    Includes amounts contributed under the Companys 401(K) Retirement Savings Plan. The Company
matched employees contributions to the 401(K) Retirement Savings Plan to the extent of 100%
of the first 6% of a participants salary reduction. Also includes amounts contributed under
the profit sharing component of the Companys 401(K) Retirement Savings Plan. The amounts
attributable to the Companys matching and profit sharing contributions vest immediately.
Includes amounts considered taxable wages with respect to personal use of a Company vehicle
and the Companys Group Term Life Insurance Plan.(2)
    
    During fiscal years ended December 31, 2009 and 2008, includes $23,364 and $23,220,
respectively, contributed under the profit sharing component of the Companys 401(K)
Retirement Savings Plan, $14,124 and $13,800, respectively, contributed by the Company as
matching contribution from the Companys 401(K) Retirement Savings Plan, $3,878 and $4,402,
respectively, considered taxable wages with respect to personal use of a Company vehicle and
$1,290 and $1,390, respectively, considered taxable wages with respect to the Companys Group
Term Life Insurance Plan.(3)
    
    During fiscal years ended December 31, 2009 and 2008, includes $23,364 and $23,220,
respectively, contributed under the profit sharing component of the Companys 401(K)
Retirement Savings Plan, $14,124 and $13,800, respectively, contributed by the Company as
matching contribution from the Companys 401(K) Retirement Savings Plan, $2,330 and $2,831,
respectively, considered taxable wages with respect to personal use of a Company vehicle and
$690 each year considered taxable wages with respect to the Companys Group Term Life
Insurance Plan.  -46-




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##### Table of Contents



Outstanding Equity Awards
  Director Compensation
  ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
   -47-




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BENEFICIAL OWNERSHIP OF UNITS IN THE COMPANY,
EVERFLOW MANAGEMENT LIMITED, LLC AND EMC
 PercentageInterest inPercentage
    
    
    Everflow
    
    
    PercentageUnits in
    
    
    of Units in
    
    
    Management
    
    
    Interest inName of Holder
    
    Company
    
    
    Company(1)
    
    
    Limited, LLC(2)
    
    
    EMCDirectors and Executive OfficersRobert F. Sykes(3)(director of EMC)
    
    
    158,634
    
    
    
    2.82
    
    
    
    *
    
    
    
    *Thomas L. Korner (Chairman of the Board & director of EMC)
    
    
    138,575
    
    
    
    2.46
    
    
    
    16.6667
    
    
    
    16.6667William A. Siskovic (officer and director of EMC)
    
    
    71,731
    
    
    
    1.28
    
    
    
    16.6667
    
    
    
    16.6667Peter H. Sykes(4) (director of EMC)
    
    
    41,244
    
    
    
    .73
    
    
    
    *
    
    
    
    *Brian A. Staebler (officer and director of EMC)
    
    
    45
    
    
    
    *
    
    
    
    8.3333
    
    
    
    8.3333410,229
    
    
    
    7.29
    
    
    
    41.6667
    
    
    
    41.6667Other Beneficial Owners of > 5% of the CompanyDavid F. Sykes (5)
    
    
    774,099
    
    
    
    13.77
    
    
    
    50.0000
    
    
    
    50.00001,184,328
    
    
    
    21.06
    
    
    
    91.6667
    
    
    
    91.6667
 *
    
    Represents less than one percent.(1)
    
    Does not include the interest in the Company owned indirectly by such individuals as
a result of their ownership in (i) the General Partner (based on its 1.18% interest in the
Company) or (ii) EMC (based on EMCs 1% managing members interest in the General Partner).(2)
    
    Includes the interest in the General Partner owned indirectly by such individuals as
a result of their share ownership in EMC resulting from EMCs 1% managing members interest in
the General Partner.(3)
    
    Includes 79,639 Units held by the Robert F. Sykes 2009 Grantor Retained Annuity
Trust and 78,995 Units held in the Catherine H. Sykes 2009 Grantor Retained Annuity Trust.(4)
    
    Includes 41,244 Units held by PHS Associates, a New York limited partnership owned
by the family of Peter H. Sykes.(5)
    
    Includes 732,855 Units held by Sykes Associates, LLC, a New York limited liability
company located at 60 Brookside Drive, Rochester, NY, 14618 and owned by the four adult
children of Robert F. Sykes as members, and 41,244 Units of the Company held by DFS
Associates, a New York limited partnership owned by the family of David F. Sykes, who manages
Sykes Associates, LLC. David F. Sykes is the son of Robert F. Sykes and is not an officer or
director of EMC.  -48-




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##### Table of Contents



ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
     -49-




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##### Table of Contents



ITEM 14.
    
    PRINCIPAL ACCOUNTING FEES AND SERVICES
  December 31,2009
    
    
    2008Audit fees
    
    $
    132,922
    
    
    $
    135,115Audit related fees
    
    
    -0-
    
    
    
    -0-Tax fees
    
    
    -0-
    
    
    
    -0-All other fees
    
    
    39,780
    
    
    
    -0-Total
    
    $
    172,702
    
    
    $
    135,115
    -50-




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##### Table of Contents



PART IV
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
   Page(s)Report of Independent Registered Public Accounting Firm
    
    
    F-3Consolidated Balance Sheets
    
    
    F-4  F-5Consolidated Statements of Income
    
    
    F-6Consolidated Statements of Partners Equity
    
    
    F-7Consolidated Statements of Cash Flows
    
    
    F-8Notes to Consolidated Financial Statements
    
    
    F-9  F-27
 Financial Statements Schedules
  Exhibits
  Exhibits required by Item 601 of Regulation S-K
  Financial Statements Schedules required by Regulation S-X (17 CFR 210)
   -51-




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##### Table of Contents



SIGNATURES
   By:
    
    EVERFLOW MANAGEMENT LIMITED, LLCGeneral PartnerBy:
    
    EVERFLOW MANAGEMENT CORPORATIONManaging Member
 By:
    
    /s/ Robert F. Sykes

Robert F. Sykes
    
    Director
    
    March 31, 2010By:
    
    /s/ Peter H. Sykes

Peter H. Sykes
    
    Director
    
    March 31, 2010By:
    
    /s/ Thomas L. Korner

Thomas L. Korner
    
    Director
    
    March 31, 2010By:
    
    /s/ William A. Siskovic

William A. Siskovic
    
    President, Principal
Executive Officer and
Director
    
    March 31, 2010By:
    
    /s/ Brian A. Staebler

Brian A. Staebler
    
    Vice President, Secretary-Treasurer, Principal
Financial and Accounting
Officer and Director
    
    March 31, 2010




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##### Table of Contents



Exhibit Index
 Exhibit No.
    
    Description3.1
    
    
    Certificate of Limited Partnership of the Registrant
dated September 13, 1990, as filed with the Delaware
Secretary of State on September 14, 1990
    
    
    (1)3.2
    
    
    Amended and Restated Agreement of Limited Partnership
of the Registrant, dated as of February 15, 1991
    
    
    (2)3.3
    
    
    General Partnership Agreement of Everflow
Management Company
    
    
    (1)3.4
    
    
    Articles of Incorporation of Everflow Management
Corporation
    
    
    (1)3.5
    
    
    Code of Regulations of Everflow Management
Corporation
    
    
    (1)3.6
    
    
    Articles of Organization of Everflow Management
Limited LLC
    
    
    (3)3.7
    
    
    Amended and Restated Operating Agreement of Everflow
Management Limited, LLC dated December 31, 2009
    
    
    (4)3.8
    
    
    Amended and Restated Agreement of Limited Partnership
of Everflow Eastern Partners, L.P. dated February 10, 2010
    
    
    (5)10.1
    
    
    Shareholders Agreement for Everflow Management
Corporation
    
    
    (1)10.2
    
    
    Operating facility lease dated October 3, 1995 between
Everflow Eastern Partners, L.P. and A-1 Storage of
Canfield, Ltd.
    
    
    (6)14.1
    
    
    Code of Ethics21.1
    
    
    Subsidiaries of the Registrant
    
    
    (7)31.1
    
    
    Certification of CEO Pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    
    Certification of CFO Pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    
    Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 200299.1
    
    
    Report of Wright & Company, Inc. dated February 23, 2010
concerning evaluation of
oil and gas reserves.
 
 (1)
    
    Incorporated herein by reference to the appropriate exhibit to Registrants Registration
Statement on
Form S-1 (Reg. No. 33-36919).  E-1




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##### Table of Contents



Exhibit Index
 (2)
    
    Incorporated herein by reference to the appropriate exhibit to the Registrants Schedule
13E-4 filing dated April 30, 1992.(3)
    
    Incorporated herein by reference to the appropriate exhibit to the Registrants Quarterly
Report on
Form 10-Q for the first quarter ended March 31, 1999 (File No. 0-19279).(4)
    
    Incorporated herein by reference to the appropriate exhibit to the Registrants Annual Report
on
Form 10-K for the year ended December 31, 2008 (File No. 0-19279).(5)
    
    Incorporated herein by reference to the appropriate exhibit to the Registrants Current
Report on Form 8-K dated February 12, 2010 (File No. 0-19279).(6)
    
    Incorporated herein by reference to the appropriate exhibit to the Registrants Quarterly
Report on
Form 10-Q for the third quarter ended September 30, 1995 (File No. 0-19279).(7)
    
    Incorporated herein by reference to the appropriate exhibit to the Registrants Annual Report
on
Form 10-K for the year ended December 31, 1995 (File No. 0-19279).  E-2