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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

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**Form 10-K**

 

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**(Mark One)**

 
| **x** | **ANNUAL REPORT PURSUANT TO SECTION 13 or  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|-------|-----------------------------------------------------------------------------------------------------|

 

**For The Fiscal Year Ended December 31, 2008**

 

**or**

 
| **o** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|-------|---------------------------------------------------------------------------------------------------------|

 

**For the Transition period from              to               **

 

### **COMMISSION FILE NUMBER333-122935-03**

 

**REEF GLOBAL ENERGY VIII, L.P.**

(Exact name of registrant as specified in its charter)

 

| **Nevada**                                                      | ** ** | **20-5209097**                        |
|-----------------------------------------------------------------|------------|---------------------------------------|
| (State or other jurisdiction of  incorporation or organization) |       | (I.R.S. Employer  Identification No.) |

 

**1901 N. Central Expressway, Suite 300, Richardson, TX 75080-3610**

(Address of principal executive offices including zip code)

 

**(972)-437-6792**

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act: ** None**

 

Securities registered pursuant to Section 12(g) of the Act:

 

**General and Limited Partnership Interests**

(Title of Class)

 

Indicate by check mark if theregistrant is a well-known seasoned issuer, as defined in Rule 405 of theSecurities Act.

Yes oNo x

 

Indicate by check mark if theregistrant is not required to file reports pursuant to Section 13 or Section 15(d) ofthe Act.

Yes oNo x

 

Indicate by check mark whetherthe registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90 days.  Yes xNo o

 

Indicate by check mark whether the registranthas submitted electronically and posted on its corporate Web site, if any,every Interactive Data File required to be submitted and posted pursuant to Rule 405of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months(or for such shorter period that the registrant was required to submit and postsuch files). Yes o No x

 

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 of Regulation S-K isnot contained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated byreference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

 

Indicate by check mark whetherthe registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer or a smaller reporting company. See the definitions of “largeaccelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2of the Exchange Act.

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

 

Indicate by check mark whetherthe registrant is a shell company (as defined in Rule 12b-2 of theExchange Act)

Yes oNo x

 

No market currently exists forthe limited and general partnership interests of the registrant.

 

As of March 31, 2009, theregistrant had 32.425 units of general partner interest held by the managinggeneral partner, and 616.076 units of limited partner interest outstanding.

 

Documents incorporated by reference: None

 

 

 

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REEF GLOBAL ENERGY VIII, L.P.

ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2008

TABLE OF CONTENTS

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

 

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**PART I**

 

**ITEM 1.**                                                     **BUSINESS**

 

**Introduction**

 

Reef Global Energy VIII, L.P.(the Partnership) is the third in a series of four Nevada limited partnershipscomprising a program called Reef Global Energy Ventures II (the Program). ThePartnership was formed in the state of Nevada on August 14, 2006. ThePartnership purchased working interests in oil and gas prospects andparticipated in the drilling of wells on those prospects. The primaryobjectives of the Partnership are to generate revenue from the production ofcrude oil and natural gas, distribute cash to the partners, and provide taxbenefits. Reef Oil & Gas Partners, L.P. (Reef) is the managing generalpartner of the Partnership.

 

The Partnership was formed todrill, complete and own working interests in oil and gas wells located onshorein the continental United States. The Partnership purchased working interestsin three developmental prospects located onshore in Texas, New Mexico, andLouisiana upon which it drilled eighteen developmental wells. The Partnershippurchased working interests in three exploratory prospects located onshore inTexas and Louisiana (two prospects) upon which it drilled three exploratorywells. During 2008, the Partnership completed drilling operations with thecapital previously raised by the Partnership. The Partnership will not purchaseadditional prospects. In accordance with the Partnership Agreement, thePartnership may conduct additional drilling operations to fully develop thoseprospects already owned by the Partnership.

 

Other partnerships formed as apart of the Program also own working interests in some of the prospects ownedby this Partnership. Reef has also purchased working interests in certainpartnership prospects for some of the other partnerships it manages. In suchcases where the percentage ownership of the Partnership and Reef-affiliatedentities in a prospect is large enough, Reef Exploration, L.P. (RELP) or itspredecessor OREI, Inc. (OREI) has served as operator of the prospect.During 2006, OREI transferred operator status of all prospects operated by OREIto RELP. RELP serves as operator of two developmental Partnership prospects.RELP operates eight successful wells located on one developmental prospect. Inthis Annual Report on Form 10-K (Annual Report), we use the term “successful”to refer to wells that are drilled, tested, and either capable of or actuallyproducing in commercial quantities. We use the term “unsuccessful” to refer towells that do not meet one or more of these criteria.

 

**Acquisitionand Drilling of Undeveloped Prospects**

 

The Partnership purchasedworking interests in two developmental prospects internally sourced by RELP,and one developmental and three exploratory prospects generated by andpurchased from third parties. A “prospect” is generally defined as a contiguousoil and gas leasehold estate, or lesser interest in a leasehold estate, uponwhich drilling operations may be conducted. A prospect may be characterized as “exploratory”or “developmental” based upon the type of well to be drilled on theprospect.  A development well is a welldrilled within a proved area of an oil or gas reservoir to the depth of astratigraphic horizon known to be productive. Generally an exploratory well isany well that is not a development well, including wells drilled to find andproduce oil or gas in an unproven area, wells drilled to find a new reservoirin a field previously found to be productive of oil or gas, or wells drilled toextend a known reservoir.

 

Prospects were evaluatedutilizing data generated by RELP or provided by unaffiliated third parties toRELP. This data included well logs, production records from other area wells,seismic, geological and geophysical information, and such other informationavailable and considered useful. Prospects in which the Partnership purchased aworking interest were evaluated by petroleum engineers, geophysicists,geologists, and other technical consultants employed by or retained by RELP onthe Partnership’s behalf.

 

The Partnership prospects wereacquired pursuant to an arrangement in which the Partnership purchased part ofthe working interest. A working interest bears a specified portion of the costsof development, operation and maintenance. A working interest is subject tolandowners’ royalty interests and may be subject to other royalty interestspayable to unaffiliated third parties. Where the Partnership acquired less than100% of the working interest, costs were reduced proportionately. ThePartnership’s limited partnership agreement (the Partnership Agreement)prohibits Reef or any of its affiliates from retaining any overriding royaltyinterest, that is, any royalty interest that

 

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would be paid out of thePartnership’s working interest, in any working interest purchased by thePartnership. The Partnership is a non-operator working interest owner in allprospects purchased by the Partnership.

 

**ConsultingAgreements for Prospect Acquisitions**

 

Reef entered into an agreement (the CMI NorthSea Agreement) with Challenger Minerals Inc. (CMI), a subsidiary ofGlobalSantaFe Corporation and a screener of oil and gas prospects in the NorthSea region. The CMI North Sea Agreement provided Reef the opportunity to reviewand selectively participate in exploratory and developmental prospects in theNorth Sea either originated or previewed by CMI. Reef paid CMI for thegeological and geophysical services provided by CMI under the CMI North Seaagreement. The agreement expired in November, 2006.

 

Reef also entered into an agreement withAccess Exploration Corp. (“AEC”), a screener of domestic oil and gas prospectsboth onshore and in the Gulf of Mexico. This agreement provided Reef theopportunity to review and selectively participate in exploratory anddevelopmental prospects previewed by AEC. Reef paid AEC an annual fee for thegeological and geophysical services provided by AEC. This agreement expired in October 2007.

 

Prospects approved for acquisition by Reefunder these agreements could be assigned to this Partnership as well as otherlimited partnerships formed as part of the Program. Each partnership formed asa part of the Program paid Reef, on a pro rata basis, a portion of the feespaid by Reef under these agreements during the term of the Program. Totalreimbursements to Reef by the partnerships formed as a part of this Programwere equal to the actual fees paid by Reef under these agreements. ThePartnership paid Reef $104,545 as its pro rata share of these fees. This amounthas been capitalized as geological and geophysical costs in accordance with thefull cost method of accounting for oil and gas properties.

 

**Drillingand Completion Phase of Operations**

 

RELP is currently the operatorof two developmental prospects, and serves as operator of eight successfulwells in which the Partnership has a working interest. RELP also serves asoperator for eight unsuccessful Partnership wells located on the Sand Dunesprospect discussed in more detail in Item 2 — Properties. As a well operator,RELP receives operator fees during the drilling and production phase of eachwell at the competitive rate in the geographical area where the well islocated.  These fees are charged as amonthly fee per well as agreed to in an operating agreement signed by thePartnership and participating third parties in the well. The wells are subjectto a model form operating agreement issued by the American Association ofPetroleum Landmen and an accounting procedure for joint operations issued bythe Council of Petroleum Accountants Societies of North America.

 

On all prospects operated byOREI and later transferred to RELP, drilling operations were contracted toindependent third party drillers, and the costs of the wells to the Partnershipwere determined by actual third party costs, plus OREI’s or RELP’s monthlyoperator fees at the competitive rate for the geographical area where the wellsare located.

 

The Partnership generally paysdrilling and completion costs as incurred.  Wells drilled that fail to result in the discoveryof commercial quantities of crude oil or natural gas were plugged and abandonedin accordance with applicable regulations. Nine development wells and twoexploratory wells drilled by the Partnership were unsuccessful.  Of the nine unsuccessful developmental wells,eight developmental wells on the Sand Dunes prospect in which the Partnershipparticipated have not been plugged and abandoned at this time.

 

**ProductionPhase of Operations**

 

Wells capable of producingquantities of crude oil and/or natural gas in commercial quantities werecompleted by installing all surface equipment necessary to control the flow ofproduction or to shut down the well, and by installing any storage facilities,gathering lines, or sales lines required to produce and sell the crude oiland/or natural gas production from the well. The Partnership drilled ninesuccessful developmental wells and one successful exploratory well. Onedevelopment wells and two exploratory wells were unsuccessful and have beenplugged and abandoned. Eight developmental wells on the Sand Dunes prospect inwhich the Partnership participated are unsuccessful but have not been pluggedand abandoned at this time.

 

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The Partnership has enteredinto agreements with third party marketers to sell the crude oil and/or naturalgas produced from successful wells on a competitive basis at the best availableterms and prices. In some cases the Partnership has elected to sell itsproduction under marketing arrangements entered into by the operator of thewell. Generally, purchase contracts for the sale of crude oil are cancelable on30 days’ notice, but purchase contracts for the sale of natural gas may have alonger term.  The Partnership sellsnatural gas discovered by it at negotiated prices domestically, based upon anumber of factors, such as the quality of the gas, well pressure, estimatedreserves, prevailing supply conditions and any applicable price regulationspromulgated by the Federal Energy Regulatory Commission (FERC).

 

Historically, the oil and gas market hasexperienced significant price fluctuations. Prices are impacted by localweather, supply in the area, availability and price of competitive fuels,seasonal variations in local demand, limited transportation capacity to otherregions, and the worldwide supply and demand balance for crude oil.

 

The Partnership has not and does not expectto engage in commodity futures trading or hedging activities, or to enter intoderivative financial instrument transactions for trading or other speculativepurposes. Accordingly, the Partnership is at risk for the volatility incommodity prices inherent in the oil and gas industry, and the level ofcommodity prices has a significant impact on the Partnership’s results ofoperations.  See “Item 7A. Quantitativeand Qualitative Disclosure About Market Risk.”

 

The Partnership’s share ofrevenue from productive wells is burdened by and/or subject to royalties andoverriding royalties, monthly operating charges, and other operatingcosts.  These items of expenditureinvolve amounts payable solely out of, or expenses incurred solely by reasonof, production operations.  ThePartnership deducts operating expenses from the production revenue for thecorresponding period.

 

**MajorCustomers**

 

ThePartnership sells crude oil and natural gas on credit terms to refiners,pipelines, marketers, and other users of petroleum commodities. Revenues arereceived directly from these parties or, in certain circumstances, paid to theoperator of the property who disburses to the Partnership its percentage shareof the revenues. During the year ended December 31, 2008, one marketer andone operator accounted for 70.3% and 25.3% of the Partnership’s crude oil andnatural gas revenues, respectively. During the year ended December 31,2007, two marketers accounted for 79.3% and 20.1% of the Partnership’s crudeoil and natural gas revenues, respectively. Due to the competitive nature ofthe market for purchase of crude oil and natural gas, the Partnership does notbelieve that the loss of any particular purchaser would have a material adverseimpact on the Partnership.

 

**Insurance**

 

The Partnership is a namedinsured under blowout, pollution, public liability and workmen’s compensationinsurance policies obtained by RELP. Such insurance, however, may not besufficient to cover all liabilities. Each unit held by general partners represents an open-ended security forunforeseen events including, without limitation, blowouts, lost circulation,and stuck drill pipe that may result in unanticipated additional liabilitymaterially in excess of a general partner’s initial investment in thePartnership.

 

The Partnership is a namedinsured under various insurance policies and intends to maintain such policiessubject to its analysis of their premium costs, coverage and otherfactors.  In the exercise of Reef ‘sfiduciary duty as managing general partner, Reef has obtained insurance onbehalf of the Partnership to provide the Partnership with such coverage as Reefbelieves is sufficient to protect the investor partners against the foreseeablerisks of drilling and production. Reef reviewed the Partnership insurancecoverage prior to commencing drilling operations and periodically evaluates thesufficiency of insurance. In no event will the Partnership maintain publicliability insurance of less than two times the Partnership’s capitalization.****Subject to the foregoing, Reef may, in itssole discretion, increase or decrease the policy limits and types of insurancefrom time to time as Reef deems appropriate under the circumstances, which mayvary materially.

 

In accordance with thePartnership Agreement of the Partnership, all general partner units held byinvestors were converted into limited partner units during the third quarter of2008. At that time, Reef amended the Certificate of Limited Partnership toeffectuate the conversion of the interest of the former investor general partnersto that of a limited partner. Investor general partners will have limitedliability as a limited partner for any Partnership operations conducted aftertheir conversion date. However, investor general partners that converted tolimited

 

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partners continue to haveunlimited liability regarding partnership activities that occurred prior totheir conversion date.

 

**Competition**

 

There are thousands of oil andnatural gas companies in the United States. Competition is strong among persons and entities involved in theexploration for and production of oil and natural gas.  Reef expects the Partnership to encounter strongcompetition at every phase of business. The Partnership competes with entities having financial resources andstaffs substantially larger than those available to it.

 

The national supply of naturalgas is widely diversified, with no one entity controlling over 5% of thesupply.  As a result of deregulation ofthe natural gas industry enacted by Congress and FERC, natural gas prices aregenerally determined by competitive market forces.  Prices of crude oil, condensate and naturalgas liquids are not currently regulated and are generally determined bycompetitive market forces.

 

**Markets**

 

The marketing of crude oil andnatural gas produced by the Partnership is affected by a number of factors thatare beyond the Partnership’s control and whose exact effect cannot beaccurately predicted.  These factorsinclude:

 

·                                  the amount of crudeoil and natural gas imports;

·                                  the availability,proximity and cost of adequate pipeline and other transportation facilities;

·                                  the success ofefforts to market competitive fuels, such as coal and nuclear energy and thegrowth and/or success of alternative energy sources such as wind power;

·                                  the effect of UnitedStates and state regulation of production, refining, transportation and sales;

·                                  other mattersaffecting the availability of a ready market, such as fluctuating supply anddemand; and

·                                  general economicconditions in the United States and around the world.

 

The supply and demand balanceof crude oil and natural gas in world markets has caused significant variationsin the prices of these products over recent years.  The North American Free Trade Agreementeliminated trade and investment barriers between the United States, Canada, andMexico, resulting in increased foreign competition for domestic natural gasproduction.  New pipeline projectsrecently approved by, or presently pending before, FERC, as well asnondiscriminatory access requirements could further substantially increase theavailability of gas imports to certain U.S. markets. Such imports could have anadverse effect on both the price and volume of natural gas sales fromPartnership wells.

 

Members of the Organization ofPetroleum Exporting Countries (OPEC) establish prices and production quotas forpetroleum products from time to time with the intent of affecting the globalsupply of crude oil and reducing, increasing or maintaining certain pricelevels.  Reef is unable to predict whateffect, if any, such actions will have on the amount of or the prices receivedfor oil produced and sold from the Partnership’s wells.

 

In several initiatives, FERChas required pipelines to develop electronic communication and to providestandardized access via the Internet to information concerning capacity andprices on a nationwide basis, so as to create a national market.  Parallel developments toward an electronicmarketplace for electric power, mandated by FERC, are serving to createmulti-national markets for energy products generally.  These systems will allow rapid consummationof natural gas transactions.  Althoughthis system may initially lower prices due to increased competition, it isanticipated to expand natural gas markets and to improve their reliability.

 

**Regulation**

 

The Partnership’s operationswill be affected from time to time in varying degrees by domestic and foreignpolitical developments and by federal and state laws and regulations.

 

*Production.*  In most areas of operations within the UnitedStates the production of crude oil and natural gas is regulated by stateagencies that set allowable rates of production and otherwise control theconduct of oil and gas operations. Among the ways that states controlproduction is through regulations that establish the spacing of wells or limitthe number of days in a given month during which a well can produce.

 

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*Environmental.*  The Partnership’s drilling and productionoperations are also subject to environmental protection regulations establishedby federal, state, and local agencies that may necessitate significant capitaloutlays that, in turn, would materially affect the financial position andbusiness operations of the Partnership. These regulations, enacted to protectagainst waste, conserve natural resources and prevent pollution, couldnecessitate spending funds on environmental protection measures, rather than ondrilling operations. If any penalties or prohibitions were imposed on thePartnership for violating such regulations, the Partnership’s operations couldbe adversely affected.

 

*Natural GasTransportation and Pricing.*  FERC regulates the rates for interstatetransportation of natural gas as well as the terms for access to natural gaspipeline capacity. Pursuant to the Wellhead Decontrol Act of 1989, however,FERC may not regulate the price of natural gas. Such deregulated natural gasproduction may be sold at market prices determined by supply and demand, Btucontent, pressure, location of wells, and other factors. Reef anticipates thatall of the natural gas produced by the Partnership’s wells will be consideredprice-decontrolled natural gas and that the Partnership’s natural gas will besold at fair market value.

 

*Proposed Regulation.*Variouslegislative proposals are being considered in Congress and in the legislaturesof various states, which, if enacted, may significantly and adversely affectthe petroleum and gas industries. Such proposals involve, among other things,the imposition of price controls on all categories of natural gas production,the imposition of land use controls, such as prohibiting drilling activities oncertain federal and state lands in protected areas, as well as other measures.At the present time, it is impossible to predict what proposals, if any, willactually be enacted by Congress or the various state legislatures and whateffect, if any, such proposals will have on the Partnership’s operations.

 

**Employees**

 

The Partnership has noemployees, and is managed by its managing general partner, Reef. Through January 1,2006, OREI employed a staff including geologists, petroleum engineers, landmen,and accounting personnel who administered all of the Partnership’s operations.On January 2, 2006, the employees of OREI were transferred to RELP, wherethey continue to administer all of the Partnership’s operations.  The Partnership reimburses OREI and RELP fortechnical and administrative services at cost. See “Item 11- EXECUTIVE COMPENSATION.”

 

**FORWARD-LOOKING STATEMENTS**

 

This Annual Report containsforward-looking statements that involve risks and uncertainties.  You should exercise extreme caution withrespect to all forward-looking statements made in this Annual Report.  Specifically, the following statements areforward-looking:

 

·                                  statements regardingthe Partnership’s overall strategy for acquiring prospects, including itsintent to diversify the Partnership’s investments;

·                                  statements estimatingany number or specific type or size of prospects the Partnership may acquire orsize of the interest the Partnership may acquire in such prospects;

·                                  statements regardingthe state of the oil and gas industry and the opportunity to profit within theoil and gas industry, competition, pricing, level of production, or theregulations that may affect the Partnership;

·                                  statements regardingthe plans and objectives of Reef for future operations, including, withoutlimitation, the uses of Partnership funds and the size and nature of the coststhe Partnership expects to incur and people and services the Partnership mayemploy;

·                                  any statements usingthe words “anticipate,” “believe,” “estimate,” “expect” and similar suchphrases or words; and

·                                  any statements ofother than historical fact.

 

Reef believes that it isimportant to communicate its future expectations to the partners.  Forward-looking statements reflect thecurrent view of management with respect to future events and are subject tonumerous risks, uncertainties and assumptions, including, without limitation,the factors listed in Item 1A of this Annual Report captioned “RISK FACTORS.”Although Reef believes that the expectations reflected in such forward-lookingstatements are reasonable, Reef can give no assurance that such expectationswill prove to have been correct.  Shouldany one or more of these or other risks or uncertainties materialize or shouldany underlying assumptions prove incorrect, actual

 

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results are likely to varymaterially from those described herein. There can be no assurance that the projected results will occur, thatthese judgments or assumptions will prove correct or that unforeseen developmentswill not occur.

 

Reef does not intend to updateits forward-looking statements.  Allsubsequent written and oral forward-looking statements attributable to Reef orpersons acting on its behalf are expressly qualified in their entirety by theapplicable cautionary statements.

 

**ITEM 1A.****                                            RISKFACTORS**

 

**Our business activities aresubject to certain risks and hazards, including the risks discussed below. Ifany of these events should occur, it could materially and adversely affect ourbusiness, financial condition, cash flow, or results of operations. The risksbelow are not the only risks we face. We may experience additional risks anduncertainties not currently known to us or, as a result of developmentsoccurring in the future, conditions that we currently deem to be immaterial mayalso materially and adversely affect our business, financial condition, cashflow, and results of operations.**

 

**Crude oiland natural gas prices are volatile, and fluctuate due to a number of factorsoutside of our control.**

 

The financialcondition, results of operations, and the carrying value of our oil and gasproperties depend primarily upon the prices received for our crude oil andnatural gas production. Crude oil and natural gas prices historically have beenvolatile and likely will continue to be volatile given current geopoliticalconditions. Cash flow from operations is highly dependent upon the sales pricesreceived from crude oil and natural gas production. The prices for oil andnatural gas are subject to a variety of factors beyond our control. These factorsinclude:

 

·                                  the domestic andforeign supply of oil and natural gas; consumer demand for oil and gas, andmarket expectations regarding supply and demand;

·                                  the ability of themembers of OPEC to agree to and maintain oil price and production controls;

·                                  domestic governmentregulations and taxes;

·                                  the price andavailability of foreign exports and alternative fuel sources;

·                                  weather conditions,including hurricanes and tropical storms in and around the Gulf of Mexico;

·                                  political conditionsin oil and natural gas producing regions, including the Middle East, Nigeria,and Venezuela; and

·                                  domestic andworldwide economic conditions.

 

These factors andthe volatility of the energy markets make it extremely difficult to predictprice movements. Also, crude oil and natural gas prices do not necessarily movein tandem. Declines in crude oil and natural gas prices would not only reducerevenues and cash flow available for distributions to partners, but couldreduce the amount of oil and natural gas that can be economically produced fromsuccessful wells drilled by the Partnership, and, therefore, have an adverseeffect upon financial condition, results of operations, crude oil and naturalgas reserves, and the carrying value of the Partnership’s oil and gasproperties. Approximately 45.5% of the Partnership’s estimated proved reserveswere crude oil reserves and 54.5% were natural gas reserves at December 31,2008. As a result, the Partnership’s financial results are sensitive tofluctuations in both crude oil and natural gas prices.

 

The Partnership, while notprohibited from engaging in commodity trading or hedging activities in aneffort to reduce exposure to short-term fluctuations in the price of crude oiland natural gas, has not engaged in such activities. Accordingly, thePartnership is at risk for the volatility in crude oil and natural gas prices,and the level of commodity prices has a significant impact upon the Partnership’sresults of operations.

 

**We aresubject to substantial operating risks that may adversely affect the results ofoperations.**

 

There are numeroushazards involved in the drilling and operation of oil and gas wells, includingblowouts involving possible damages to property and third parties, bodilyinjuries, mechanical failures, explosions, uncontrollable flows of crude oil,natural gas or well fluids, fires, formations with abnormal pressure,pollution, releases of toxic gas and other environmental hazards and risks. ThePartnership could suffer substantial losses as a result of any of these risks.The Partnership is not fully insured against all risks inherent to the oil andgas business. Uninsured liabilities would reduce the funds available to thePartnership, may result in the loss of Partnership properties and may createliability for the general partners. Although the Partnership maintainsinsurance coverage in amounts Reef deems appropriate, it is possible thatinsurance coverage may be insufficient. In that case Partnership assets mayhave to be

 

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sold to paypersonal injury and property claims and the cost of controlling blowouts orreplacing damaged equipment rather than for drilling activities.

 

**We cannotcontrol activities on non-operated properties.**

 

The Partnershiphas limited ability to exercise influence over and control the risks associatedwith operations on properties not operated by RELP. The failure of an operatorof our wells to adequately perform operations, an operator’s breach of theapplicable agreements, or an operator’s failure to act in ways that are in ourbest interest could reduce our production and revenues. The success and timingof drilling and development activities on properties operated by others dependsupon a number of factors outside of our control, including the operator’s

 

·                                  timing and amount ofcapital expenditures;

·                                  expertise andfinancial resources;

·                                  inclusion of otherparticipants in drilling wells; and

·                                  use of technology.

 

In addition the Partnershipcould be held liable for the joint interest obligations of other workinginterest owners, such as nonpayment of costs and liabilities arising from theactions of other working interest owners. Full development of prospects may bejeopardized in the event other working interest owners cannot pay their shareof drilling and completion costs.

 

**Crude oiland natural gas reserve data are estimates based upon assumptions that may beinaccurate and existing economic and operating conditions that may differ fromfuture economic and operating conditions.**

 

Securities andExchange Commission (SEC) rules require the Partnership to present annualestimates of reserves. Reservoir engineering is a subjective and inexactprocess of estimating underground accumulations of crude oil and natural gasthat cannot be measured in an exact manner, and is based upon assumptions thatmay vary considerably from actual results. Accordingly, reserve estimates maybe subject to upward or downward adjustments. Actual production, revenues andexpenditures with respect to reserves will likely vary from estimates, and suchvariances could be material.

 

You should not assumethat any present value of future net cash flows from our producing reservesshown in this Annual Report is the market value for our estimated crude oil andnatural gas reserves. The estimated discounted future net cash flows from ourproved reserves are based upon prices and costs in effect at the end of theperiod held constant and discounted at 10%. Actual future prices and costs maybe materially higher or lower. Further, actual future net cash flows will beaffected by factors such as the amount and timing of actual developmentexpenditures, the rate and timing of production, and changes in governmentalregulations and tax rates.

 

**ThePartnership Agreement limits Reef’s liability to each partner and thePartnership and requires the Partnership to indemnify Reef against certainlosses.**

 

Reef will have no liability tothe Partnership or to any partner for any loss suffered by the Partnership, andwill be indemnified by the Partnership against loss sustained by it inconnection with the Partnership if:

 

·                                  Reef determines ingood faith that its action was in the best interest of the Partnership;

·                                  Reef was acting onbehalf of or performing services for the Partnership; and

·                                  Reef’s actions didnot constitute negligence or misconduct.

 

**Drillingexploratory wells is riskier than drilling developmental wells.**

 

Drilling exploratory wellsinvolves greater risks of dry holes and loss of the partners’ investment thanthe drilling of developmental wells. Drilling developmental wells generally involves less risk of dry holes,although sometimes developmental acreage is more expensive and subject togreater royalties and other burdens on production. The Partnership purchasedworking interests in three exploratory prospects upon which three exploratorywells were drilled. Two exploratory wells were unsuccessful, and oneexploratory well was successful and is producing natural gas.

 

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**Theproduction and producing life of Partnership wells is uncertain.**

 

Production will decline. It isnot possible to predict the life and production of any well. The actual lifecould differ from that which is anticipated. Sufficient crude oil or naturalgas may not be produced for a partner to receive a profit or even to recoverhis initial investment. In addition, production from the Partnership’s oil andgas wells, if any, will decline over time, and does not indicate any consistentlevel of future production. This production decline may be rapid and irregularwhen compared to a well’s initial production.

 

**Extreme weather conditions may adversely affectproduction operations and partner distributions.**

 

The Partnership conductsoperations in the coastal regions of Louisiana and Texas. This area issusceptible to extreme weather conditions, especially those associated withhurricanes. In the event of a hurricane and related storm activity, such aswindstorms, storm surges, floods and tornados, Partnership operations in theregion may be adversely affected. The occurrence of a hurricane or otherextreme weather may harm or delay the Partnership’s operations or distributionof revenues, if any.

 

**Ourdependence on third parties for the processing and transportation of crude oiland natural gas may adversely affect the Partnership’s revenues and,consequently, the distribution of net cash flows to investor partners*.***

 

We rely on third parties toprocess and transport the crude oil and natural gas produced by the Partnership’ssuccessful wells. In the event a third party upon whom we rely is unable toprovide transportation or processing services, and another third party is unavailableto provide such services, the Partnership may have to temporarily shut-insuccessful wells, and revenues to the Partnership and distributions to investorpartners related to those wells may be delayed.

 

**We facestrong competition within the energy industry.**

 

The oil and gasindustry is highly competitive. Competition is encountered in all aspects ofPartnership operations, including the requisition of drilling and servicecontractors. Many of our competitors are larger, well-established companieswith substantially larger operating staffs and greater capital resources thanthose of the Partnership, Reef and its affiliates. We may not be able toconduct our operations successfully, obtain drilling and service contractors,consummate transactions, and obtain technical, managerial and otherprofessional personnel in this highly competitive environment. Specifically,larger competitors may be able to pay more for competent personnel than thePartnership, Reef and its affiliates. In addition, such competitors may be ableto expend greater resources on the existing and changing technologies that willbe increasingly important to success. Such competitors may also be in a betterposition to secure drilling and oilfield services, as well as equipment, moretimely or on more favorable terms. Finally, oil and gas producers areincreasingly facing competition from providers of non-fossil energy, andgovernment policy may favor those competitors in the future.

 

**ThePartnership has limited external sources of funds, which could result in ashortage of working capital.**

 

The Partnership expended fundsin excess of the previously raised capital in connection with the drilling andcompletion of wells and acquisition of the prospects during the drilling phaseof operations. The Partnership only has nominal funds available for partnershippurposes until there are revenues from Partnership operations.  Any future requirement for additional fundingfor drilling or for repayment of the excess capital spent during the drillingphase of operations will have to come, if at all, from the Partnership’srevenues or from borrowings. Reef cannot assure the partners that Partnershipoperations will be sufficient to provide the Partnership with necessaryadditional funding.  Reef cannot assurethe partners that the Partnership will be able to borrow funds from thirdparties on commercially reasonable terms or at all.

 

**ThePartnership may incur liability for liens against its subcontractors.**

 

Although Reef will try todetermine the financial condition of nonaffiliated subcontractors, ifsubcontractors fail to timely pay for materials and services, the properties ofthe Partnership could be subject to materialmen’s and workmen’s liens.  In that event, the Partnership could incurexcess costs in discharging such liens.

 

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**Otherpartnerships Reef sponsors will compete with the Partnership for equipment,contractors, and personnel.**

 

Reef plans to offer interestsin other partnerships to be formed for substantially the same purposes as thoseof the Partnership. Therefore, a number of partnerships with unexpended capitalfunds, including those partnerships to be formed in future oil and gas programssponsored by Reef, may exist at the same time. Due to competition among the partnerships for equipment, contractors,and Reef’s personnel, the fact that other partnerships organized by Reef andits affiliates may still be purchasing prospects and drilling and completingwells when the Partnership is attempting to drill and complete wells on itsprospects may make such activities of the Partnership more difficult.

 

**ITEM 1B.****                                            UNRESOLVEDSTAFF COMMENTS**

 

None.

 

**ITEM 2.****                                                     PROPERTIES**

 

**DrillingActivities and Productive Wells**

 

Partnership prospects arelocated onshore in Louisiana, Texas, and New Mexico. The Partnership purchasedworking interests in three developmental prospects. The Partnership drilledeight successful developmental wells on the Cole Ranch prospect in GlasscockCounty, Texas. The Partnership drilled one successful and one unsuccessfuldevelopmental well on a prospect located in Terrebonne Parish, Louisiana.

 

The Partnership participated inthe drilling of eight developmental wells on the Sand Dunes prospect located inEddy County, New Mexico during the fourth quarter of 2007 and the first quarterof 2008. Initial testing confirmed the presence of crude oil and natural gas inall eight wells; however, the field was temporarily shut-in because of the lackof electric service and because of the high cost of trucking offsite the saltwater volumes associated with the production of the crude oil and natural gasfrom the wells. Electrical service to the field was connected in September 2008.Based upon initial testing, larger bottom hole pumps were placed below the wellperforations in three of the wells and testing was resumed to determine thethree wells’ commercial productivity. Water continued to be trucked offsite,and RELP applied for and received a permit which would allow for the conversionof one of the eight wells into a water disposal well. RELP has also exploredthe possibility of drilling a ninth well as a salt water disposal well for thefield. Testing results on two of the three wells were positive, and salt waterproduction volumes declined as a result of pumping off the wells using thelarger bottom hole pumps. However, the price of crude oil declined at a rapidrate while testing was being conducted. In late December 2008, two of thethree testing wells were shut-in again. Crude oil prices continued declining toa level below $40 per barrel. In February 2009, following a mechanicalfailure in the third testing well, RELP, as operator, shut-in the field. Theeight wells cannot be commercially productive without efficient salt waterdisposal capabilities, and RELP does not believe any of the options regardingsalt water disposal are economically viable at current commodity prices. As aresult, as of December 31, 2008, the eight Sand Dunes wells have beenclassified as unsuccessful, and there are no crude oil and natural gas reservesfor these wells included in the December 31, 2008 reserve informationpresented in this Annual Report. However, RELP has made no plans to plug andabandon the wells at this time, and will continue to monitor and evaluate theeconomics of the field based upon commodity prices.

 

The Partnership also hasinterests in unproved property consisting of un-drilled leasehold interests (11potential drilling locations) in the Sand Dunes prospect. The Partnership hasfully impaired this unproved property during the fourth quarter of 2008 basedupon the eight already drilled wells being classified as unsuccessful at December 31,2008. The Partnership currently has no plans to conduct any drilling operationson this acreage.

 

The Partnership purchasedworking interests in three exploratory prospects upon which three exploratorywells were drilled. The Partnership drilled one successful exploratory welllocated in Lavaca County, Texas that is currently productive. The Partnershipdrilled two unsuccessful exploratory wells located in St. Mary and IbervilleParish, Louisiana.

 

All ten of the successful wellsin which the Partnership participated drilling are currently productive.

 

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**ProvedCrude Oil and Natural Gas Reserves**

 

The Partnership used an independentpetroleum engineer, Gleason Engineering, of Arlington, Texas, to prepare its December 31,2008 and 2007 estimates of net proved crude oil and natural gas reserves.  The estimated net proved crude oil andnatural gas reserves at December 31, 2008 and 2007 are summarized below.The estimated quantities of proved crude oil and natural gas reserves discussedin this section include only the amounts which the Partnership reasonablyexpects to recover in the future from known oil and gas reservoirs under thecurrent economic and operating conditions. Proved reserves include onlyquantities that the Partnership expects to recover commercially using currentprices, costs, existing regulatory practices, and technology. Therefore, anychanges in future prices, costs, regulations, technology or other unforeseenfactors could materially increase or decrease the proved reserve estimates.

 
| ** **                                        | ** ** | **Oil (BBL)** | ** ** | **Gas (MCF)** | ** ** |
|---------------------------------------------------|------------|--------------------|------------|--------------------|------------|
| Net proved reserves as of December 31,  2007 |       | 74,932             |       | 376,991            |       |
| Net proved reserves as of December 31,  2008 |       | 23,716             |       | 170,476            |       |

 

The standardized measure ofdiscounted future net cash flows as of December 31, 2008 and 2007 iscomputed by applying year-end prices, costs, and legislated tax rates and adiscount factor of 10% to net proved reserves. The standardized measure ofdiscounted future net cash flows does not purport to present the fair value ofour crude oil and natural gas reserves.

 
| Standardized measure of discounted future  net cash flows as of December 31, 2007 |   | $ | 4,381,920 |   |
|-----------------------------------------------------------------------------------|--------|---|-----------|--------|
| Standardized measure of discounted future  net cash flows as of December 31, 2008 |   | $ | 1,012,742 |   |

 

During the years ended December 31,2008 and 2007, the Partnership recorded property impairment costs of provedproperties totaling $3,252,689 and $8,031,060 as a result of the netcapitalized costs of proved oil and gas properties exceeding the sum ofestimated future net revenues from proved reserves, using prices in effect atthe end of the period held constant and discounted at 10%.

 

**Title toProperties**

 

The Partnership’s interests inproducing and non-producing acreage are in the form of assigned directinterests in leases held by the Partnership or by Reef on behalf of thePartnership. Such properties are subject to customary royalty interests andcould be subject to liens incident to operating agreements, liens for currenttaxes and overriding royalty interests and other burdens.  The Partnership believes that none of theseburdens will materially interfere with the use of such properties in theoperation of the Partnership’s business and that it has or will obtainsatisfactory title to all of its leases. Title will be held by the Partnershipor by Reef on behalf of the Partnership.

 

**ITEM 3.****                                                     LEGALPROCEEDINGS**

 

The Partnership is not, and hasnot been, a party to any legal proceedings.

 

**ITEM 4.****                                                     SUBMISSIONOF MATTERS TO A VOTE OF SECURITY HOLDERS**

 

None.

 

**PART II**

 
| **ITEM 5.** | **MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS  AND ISSUER PURCHASES OF EQUITY SECURITIES** |
|-------------|------------------------------------------------------------------------------------------------------------------------|

 

As of December 31, 2008,the Partnership had one managing general partner, and 536 investor limitedpartners. Pursuant to the Partnership Agreement of the Partnership, all generalpartner units held by investor partners were converted into limited partnerunits during the 3rd quarter of 2008.Reef holds a total of 32.425 general partner units and the investor partnershold 616.076 limited partner units. No established trading market exists forthe units.

 

Cash which, in the solejudgment of the managing general partner, is not required to meet the Partnership’s

 

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obligations is distributed tothe partners at least quarterly in accordance with the Partnership Agreement.The Partnership has made monthly cash distributions to the partners of interestincome and crude oil and natural gas sales revenues, less operating, generaland administrative and other costs since April 2007. Cash distributionsare distributed 15.45% to the managing general partner (based upon the 11%interest not represented by units and the 4.45% interest represented byPartnership units) and 84.55% to investor partners.

 

Investor limited partnerinterests are transferable, subject to certain restrictions contained in thePartnership Agreement; however, no assignee of a unit in the Partnership canbecome a substituted partner without the written consent of both the transferorand Reef.

 

The Partnership has adopted aunit repurchase program. Under the terms of the program, the managing generalpartner is obligated to purchase up to 5% of the units in the Partnership peryear during the period set forth in the Partnership Agreement unless changes inoil and gas pricing meet certain criteria specified in the prospectussupplement, dated July 14, 2006. However, the managing general partner’sobligation to purchase units is limited to $500,000 per year in the aggregatefor all partnerships previously or subsequently organized by the managinggeneral partner or its affiliates. The Partnership did not repurchase any unitsin 2008.

 

**Use ofProceeds**

 

In connection with theRegistration Statement filed on form S-1 (No. 333-122935) and declaredeffective July 7, 2005, Reef filed a final prospectus for the Program on July 8,2005. On July 14, 2006, Reef filed a prospectus supplement describing thePartnership and commenced the offering of units in the Partnership. All salesof Partnership units were made through the Program’s dealer-manager, ReefSecurities, Inc., and a number of soliciting dealers. The offeringterminated December 29, 2006. Under the terms of the offering, a minimumof 40 Partnership units at a price of $25,000 per unit were required to be soldin order to form the Partnership. Upon meeting this requirement, thePartnership was formed on August 14, 2006.

 

The Partnership registered atotal of 400 units of limited partner interests and 1,600 units of generalpartner interests. The aggregate offering amount registered was $50,000,000.During the offering period that terminated on December 29, 2006, thePartnership sold 616.076 units to investor partners, consisting of 95.283 unitsof limited partner interest and 520.793 units of additional general partnerinterest. Reef purchased 32.425 general partner units, equaling 5.00% of thetotal Partnership units sold. The Partnership did not sell the remainingregistered units. Total offering proceeds were $16,090,928. Reef alsocontributes 1% of all leasehold, drilling, and completion costs as incurred. AtDecember 31, 2008, Reef had contributed $128,025 in connection with thisobligation.

 

All units except thosepurchased by Reef paid a 15% management fee to Reef to pay for the Partnershiporganization and offering costs, including sales commissions. These coststotaled $2,310,285, leaving capital contributions of $13,908,668 available forPartnership oil and gas operations. As of December 31, 2008, thePartnership had expended $13,862,509 on property acquisitions and $46,355 ongeneral and administrative expenses. Expenditures in excess of availablecapital contributions will be deducted from Partnership distributions during2009.

 

**ITEM 6.**                                                     **SELECTED FINANCIAL DATA**

 

The following table sets forthselected financial data. The selected financial data presented below has beenderived from the audited financial statements of the Partnership.

 
| ** **                    | ** ** | **Year ended  December 31,** | ** ** | **Year ended  December 31,** | ** ** | **Period from  inception (August  14, 2006) to  December 31,** | ** ** |
|-------------------------------|------------|----------------------------------------|------------|----------------------------------------|------------|-----------------------------------------------------------------------------------------|------------|
| ** **                    | ** ** | **2008**                               | ** ** | **2007**                               | ** ** | **2006**                                                                                | ** ** |
|                          |       |                                   |       |                                   |       |                                                                                    |       |
| Oil and gas sales revenue     |       | $                                      | 1,682,789  |                                   | $          | 1,213,154                                                                               |       | $ | — |   |
| Interest income               |       | 14,852                                 |       | 233,093                                |       | 76,702                                                                                  |       |
| Costs and expenses            |       | 5,036,689                              |       | (9,184,540                             | )          | (56,693                                                                                 | )          |
| Partnership net income (loss) |       | (3,339,048                             | )          | (7,738,293                             | )          | 20,009                                                                                  |       |
|                               |            |                                        |            |                                        |            |                                                                                         |            |  |  |  |

 

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| ** **                                       | ** ** | **Year ended  December 31,** | ** ** | **Year ended  December 31,** | ** ** | **Period from  inception (August  14, 2006) to  December 31,** | ** ** |
|--------------------------------------------------|------------|----------------------------------------|------------|----------------------------------------|------------|-----------------------------------------------------------------------------------------|------------|
| ** **                                       | ** ** | **2008**                               | ** ** | **2007**                               | ** ** | **2006**                                                                                | ** ** |
| Allocation of net income (loss):                 |       |                                   |       |                                   |       |                                                                                    |       |
| Managing general partner                         |       | (123,770                               | )          | (352,799                               | )          | 10,816                                                                                  |       |
| General partner units                            |       | 123,577                                |       | (6,243,247                             | )          | 7,771                                                                                   |       |
| Limited partner units                            |       | (3,338,855                             | )          | (1,142,247                             | )          | 1,422                                                                                   |       |
| Net income (loss) per managing partner unit      |       | (3,817.12                              | )          | (10,880.45                             | )          | 333.58                                                                                  |       |
| Net income (loss) per general partner unit       |       | 237.29                                 |       | (11,987.96                             | )          | 14.92                                                                                   |       |
| Net income (loss) per limited partner unit       |       | (5,218.96                              | )          | (11,987.96                             | )          | 14.92                                                                                   |       |
|                                             |       |                                   |       |                                   |       |                                                                                    |       |
| Total assets                                     |       | 1,575,857                              |       | 6,225,728                              |       | 16,268,841                                                                              |       |
| Distributions to managing general partner        |       | 155,527                                |       | 156,586                                |       | —                                                                                  |       |
| Distributions to investor partners               |       | 851,123                                |       | 856,914                                |       | —                                                                                  |       |
| Distributions per general partner unit           |       | 639.81                                 |       | 1,390.92                               |       | —                                                                                  |       |
| Distributions per limited partner unit           |       | 1,381.52                               |       | 1,390.92                               |       | —                                                                                  |       |
| Distributions per managing general partner  unit |       | 4,796.52                               |       | 4,829.18                               |       | —                                                                                  |       |
|                                             |       |                                   |       |                                   |       |                                                                                    |       |
| **Operating Data**                               |       |                                   |       |                                   |       |                                                                                    |       |
| Annual sales volume:                             |       |                                   |       |                                   |       |                                                                                    |       |
| Gas (MCF)                                        |       | 46,147                                 |       | 22,974                                 |       | —                                                                                  |       |
| Oil (BBL)                                        |       | 12,259                                 |       | 12,330                                 |       | —                                                                                  |       |
|                                             |       |                                   |       |                                   |       |                                                                                    |       |
| Average sales price:                             |       |                                   |       |                                   |       |                                                                                    |       |
| Gas (per MCF)                                    |       | $                                      | 10.27      |                                   | $          | 10.62                                                                                   |       | $ | — |   |
| Oil (per BBL)                                    |       | $                                      | 98.62      |                                   | $          | 78.61                                                                                   |       | $ | — |   |

 
| **ITEM 7.** | **MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND  RESULTS OF OPERATIONS** |
|-------------|-------------------------------------------------------------------------------------------------|

 

The following discussion willassist you in understanding the Partnership’s financial position, liquidity,and results of operations. The information should be read in conjunction withthe audited financial statements and notes to financial statements containedherein. The discussion contains historical and forward-looking information.

 

For a discussion of riskfactors that could impact the Partnership’s financial results, please see Item1A of this Annual Report.

 

**CriticalAccounting Policies**

 

Thepreparation of financial statements in conformity with accounting principlesgenerally accepted in the United States of America requires us to makeestimates and assumptions that can affect the reporting of assets, liabilities,equity, revenues, and expenses. We base our estimates on historical experienceand various other assumptions that are believed to be reasonable under thecircumstances. Actual results may differ from these estimates under differentassumptions or conditions. We are also required to select among alternativeacceptable accounting policies. See Note 2 to the financial statements for acomplete list of significant accounting policies.

 

**Oiland Gas Properties**

 

The Partnership follows thefull cost method of accounting for oil and gas properties. Under this method,all direct costs and certain indirect costs associated with acquisition ofproperties and successful as well as unsuccessful exploration and developmentactivities are capitalized. Depreciation, depletion, and amortization ofcapitalized oil and gas properties and estimated future development costs,excluding unproved properties, are based on the unit-of-production method usingestimated proved reserves.  For thesepurposes, proved natural gas reserves are converted to equivalent barrels ofcrude oil at a rate of 6 Mcf to 1 Bbl. Net capitalized costs of oil and gasproperties, as 

 

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adjusted for asset retirementobligations, are limited to the lower of unamortized cost or the cost ceiling,defined as the sum of the present value of estimated future net revenues fromproved reserves based on prices in effect at the end of the period heldconstant and discounted at 10 percent, plus the lower of cost or estimated fairvalue of unproved properties, if any. Pursuant to full cost accounting rules,the Partnership performs a ceiling test quarterly as of the balance sheet dateon its proved oil and gas properties. Excess capitalized costs are charged toproperty impairment expense. No gain or loss is recognized upon sale ordisposition of oil and gas properties, unless such a sale would significantlyalter the rate of depletion and amortization. During the years ended December 31,2008 and 2007, the Partnership recognized property impairment expense of provedproperties totaling $3,252,689 and $8,031,060, respectively.

 

Unproved properties consist ofundeveloped leasehold interest. Investments in unproved properties are notdepleted pending determination of the existence of proved reserves. Unprovedproperties are assessed for impairment quarterly as of the balance sheet dateby considering the primary lease term, the holding period of the properties,geologic data obtained relating to the properties, and other drilling activityin the immediate area of the properties. Any impairment resulting from thisquarterly assessment is reported as property impairment expense in the currentperiod, as appropriate. During the year ended December 31, 2008, thePartnership recognized property impairment expense of unproved propertiestotaling $153,330.

 

The estimate of proved crude oil and natural gas reserves used todetermine property impairment expense, and also utilized in the Partnership’sdisclosures of supplemental information regarding and gas producing activities,including the standardized measure of discounted cash flows, was prepared by anindependent petroleum engineer at December 31, 2008 and 2007, utilizingthe period end prices and costs as promulgated by the SEC. The Partnership hadno proved reserves at December 31, 2006. Reservoir engineering is asubjective and inexact process of estimating underground accumulations of crudeoil and natural gas that cannot be measured in an exact manner, and is basedupon assumptions that may vary considerably from actual results. Accordingly,reserve estimates may be subject to upward or downward adjustments. Actualproduction, revenues and expenditures with respect to reserves will likely varyfrom estimates, and such variances could be material.

 

The determination of depreciation, depletion and amortization expenserecognized in the financial statements is also dependent upon the estimates ofproved crude oil and natural gas reserves and will be computed using theunits-of-production method based upon this estimate of proved reserves. Duringthe years ended December 31, 2008 and 2007, the Partnership haddepreciation, depletion, and amortization expense totaling $754,949 and$840,172, respectively. The Partnership had no productive oil and gasproperties as of December 31, 2006.

 

The Partnership accounts forits asset retirement obligations in accordance with Statement of FinancialAccounting Standards (“SFAS”) No. 143, “Accounting for Asset RetirementObligations” (“SFAS No. 143”). Asset retirement costs and liabilitiesassociated with future site restoration and abandonment of long-lived assetsare initially measured at fair value which approximates the cost a third partywould incur in performing the tasks necessary to retire such assets. The fairvalue is recognized in the financial statements as the present value ofexpected future cash expenditures for site restoration and abandonment.Subsequent to the initial measurement, the effect of the passage of time on theliability for the net asset retirement obligation (accretion expense) and theamortization of the asset retirement cost are recognized in the results ofoperations. During the years ended December 31,2008 and 2007, the Partnership recognized $79,341 and $103,092 of assetretirement obligations and additional capitalized cost in connection withsuccessful wells drilled by the Partnership. The Partnership had no productive oil and gas properties at December 31,2006.

 

**Recognitionof Revenue**

 

The Partnership has entered into sales contracts for disposition of itsshare of crude oil and natural gas production from productive wells. Revenue isrecognized based upon the metered volumes delivered to those purchasers eachmonth. Any significant over or under balanced gas positions are disclosed inthe financial statements. As of December 31, 2007 and 2006, thePartnership had no material gas imbalance positions.

 

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**New Accounting Pronouncements**

 

**Modernization of Oil and Gas Reporting**

 

In January 2009, the SEC issuedrevisions to the oil and gas reporting disclosures, “Modernization of Oil andGas Reporting; Final Rule” (“the Final Rule”). In addition to changing thedefinition and disclosure requirements for oil and gas reserves, the Final Rule changesthe requirements for determining quantities of oil and gas reserves. The Final Rule alsochanges certain accounting requirements under the full cost method ofaccounting for oil and gas activities. The amendments are designed to modernizethe requirements for the determination of oil and gas reserves, aligning themwith current practices and updating them for changes in technology. The Final Rule iseffective for annual reports on Form 10-K for fiscal years ending on orafter December 31, 2009. The Partnership has not yet determined theimpact, if any, on the financial statements.

 

**The Hierarchy of Generally AcceptedAccounting Principles**

 

In May 2008, the FASB issued SFAS No. 162,“The Hierarchy of Generally Accepted Accounting Principles” (“SFAS 162”). SFAS162 identifies the sources for accounting principles and the framework forselecting the principles to be used in preparing financial statements ofnongovernmental entities that are presented in conformity with generallyaccepted accounting principles in the United States. This Statement becameeffective in November 2008.

 

**Disclosures About Derivative Instruments andHedging Activities**

 

In March 2008, the FASB issued SFAS No. 161,“Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”).SFAS 161 requires entities that utilize derivative instruments to providequalitative disclosures about their objectives and strategies for using suchinstruments, as well as any details of credit-risk-related contingent featurescontained within derivatives. The Partnership does not utilize derivative instruments;therefore, the Partnership does not expect this pronouncement to have anyimpact on the Partnership’s results of operations, cash flows or financialposition.

 

**Non-controlling Interests in ConsolidatedFinancial Statements**

 

In December 2007, the FASB issued SFAS No. 160,“Noncontrolling Interests in Consolidated Financial Statements, an amendment ofAccounting Research Bulletin No. 51” (“SFAS 160”), which improves therelevance, comparability and transparency of the financial information that areporting entity provides in its consolidated financial statements byestablishing accounting and reporting standards for the noncontrolling interestin a subsidiary and for the deconsolidation of a subsidiary. The Partnershipdoes not own any subsidiaries, and does not expect this pronouncement to haveany impact on the Partnership’s results of operations, cash flows or financialposition.

 

**Business Combinations**

 

In December 2007, the FASB issued SFAS No. 141(revised 2007), “Business Combinations” (“SFAS 141R”), which replaces SFAS No. 141,“Business Combinations” (“SFAS 141”). SFAS 141R retains the fundamentalrequirements in SFAS 141 that the acquisition method of accounting (which SFAS141 called the purchase method) be used for all business combinations. ThePartnership has no business combinations in progress or, at this time, infuture plans. The Partnership does not expect this pronouncement to have anyimpact on the Partnership’s results of operations, cash flows or financialposition.

 

**Accounting Standard Fair Value for FinancialAssets and Financial Liabilities**

 

In February 2007, the FASB issued SFAS No. 159,“The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS159”). SFAS 159 allows entities the option to measure eligible financialinstruments at fair value as of specified dates. The Partnership did not electfair value as an alternative as provided under SFAS 159 for any of itsfinancial assets and liabilities that are not currently measured at fair value.

 

**Overview**

 

ReefGlobal Energy VIII, L.P. is a Nevada limited partnership formed to acquire,explore, develop, and produce crude oil, natural gas, and natural gas liquidsfor the benefit of its investor partners. The Partnership’s primary 

 

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purposesare to generate revenues from the production of crude oil and natural gas,distribute cash flow to investors, and provide tax benefits to investors. Themajority of the Partnership’s proceeds have been used to purchase prospects anddrill oil and gas wells upon those prospects.

 

ThePartnership raised capital from the sale of Partnership units to investorpartners and Reef, and used those funds for the purchase of working interestsin prospects and for drilling and completion operations and administrativecosts during its drilling phase of operations. The Partnership did not borrowfunds during the drilling phase of operations, and interest income and crudeoil and natural gas revenues from successful wells, net of expenses, are beingdistributed monthly to the partners. The Partnership is allowed to borrow fundsin accordance with the Partnership Agreement, or utilize cash flows fromsuccessful wells in order to conduct further development upon prospectsinitially purchased by and drilled on by the Partnership during the drillingphase of operations. The Partnership completed its drilling phase of operationsduring the first quarter of 2008. The Partnership currently has no plans todrill additional wells on any Partnership prospect, or to acquire anyadditional prospects.

 

ThePartnership does not operate in any other industry segment. The Partnershipexpended approximately $599,000 for the purchase of working interests in threedevelopmental prospects, and expended approximately $368,000 for the purchaseof working interests in three exploratory prospects.  The Partnership has three prospects inLouisiana, two in Texas, and one in New Mexico, all of which are locatedonshore. The Partnership has drilled eighteen developmental and threeexploratory wells on these prospects as of December 31, 2008. Eighteenwells were drilled during 2007, and three were drilled during 2008. ThePartnership drilled nine successful developmental wells, all of which arecurrently productive, and nine unsuccessful developmental wells. The Partnershipdrilled one successful exploratory well which is currently productive, and twounsuccessful exploratory wells.

 

Shouldthe Partnership elect to borrow monies for additional development activity onits prospects, it will be subject to the interest rate risk inherent inborrowing activities. The Partnership has no current plans for additionaldrilling. The Partnership is permitted but is not expected to engage incommodity futures trading or hedging activities, and therefore is subject tocommodity price risk.  See “Item 7A .-QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.”

 

**Liquidityand Capital Resources**

 

The Partnership was funded withinitial capital contributions totaling $16,090,928. Investor partners purchased520.793 general partner units and 95.283 limited partner units for $15,401,896.Reef purchased 32.425 general partner units, or 5% of the total units sold, for$689,032. As of December 31, 2008, Reef has also contributed $128,025 inconnection with its obligation to pay 1% of all leasehold, drilling, andcompletion costs. Organization and offering costs totaled $2,310,285, leavingcapital contributions of $13,908,668 available for Partnership activities. ThePartnership was formed on August 14, 2006 and the last partner was admittedto the Partnership on December 29, 2006.

 

The Partnership did not borrowadditional funds in accordance with limitations set forth in the PartnershipAgreement during the drilling phase of operations. The Partnership expended$13,862,509 on the drilling of 21 wells and $46,355 on general andadministrative expenses during its initial drilling phase of operations.Expenditures in excess of available capital contributions will be deducted fromPartnership distributions during 2009.

 

Please see Item 1A of thisAnnual Report for a list of risk factors that could impact the Partnership.

 

The table below summarizesPartnership drilling expenditures during the drilling phase of operations bytype and classification of well:

 
| ** **          | ** ** | **Leasehold  Costs** | ** ** | **Drilling,  Completion,  and Facilities  Costs** | ** ** | **Total Costs** | ** ** |
|---------------------|------------|----------------------|------------|--------------------------------------------------------|------------|----------------------|------------|
| Developmental wells |       | $                    | 599,449    |                                                   | $          | 10,219,269           |       | $ | 10,818,718 |   |
| Exploratory wells   |       | 367,526              |       | 2,676,265                                              |       | 3,043,791            |       |
| Total               |       | $                    | 966,975    |                                                   | $          | 12,895,534           |       | $ | 13,862,509 |   |
|                |       |                 |       |                                                   |       |                 |       |
| Successful wells    |       | $                    | 327,341    |                                                   | $          | 8,512,844            |       | $ | 8,840,185 |   |
| Unsuccessful wells  |       | 486,304              |       | 4,382,690                                              |       | 4,868,994            |       |
| Unproved properties |       | 153,330              |       | —                                                 |       | 153,330              |       |
| Total               |       | $                    | 966,975    |                                                   | $          | 12,895,534           |       | $ | 13,862,509 |   |

 

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The Partnership had workingcapital of $105,493 at December 31, 2008. Subsequent to expending theinitial available Partnership capital contributions on prospect acquisitionsand drilling and completion costs of partnership wells, the Partnership workingcapital consists primarily of cash flows from productive properties utilized topay cash distributions to investors.

 

**Results ofOperations**

 

**Year endedDecember 31, 2008 compared to Year ended December 31, 2007**

 

During 2008, the Partnershipincurred a net loss of $3,339,048, compared to a net loss of $7,738,293incurred during 2007. During 2008, the final successful Partnership well beganproduction operations in May. The well accounted for 20.4% of total 2008 crudeoil sales volumes and 41.5% of total 2008 natural gas sales volumes. As aresult, despite declining sales volumes from other Partnership wells, crude oilsales volumes fell by only 0.6%, and natural gas sales volumes increased by 100.8%during 2008. The average sales price per barrel received from the sale of crudeoil for 2008 increased by 25.5% from its 2007 level. The average sales priceper MCF of natural gas declined by approximately 3.3%, but the Partnership’snatural gas sales volume more than doubled. Consequently, overall salesrevenues increased from $1,213,154 in 2007 to $1,682,789 in 2008.

 

Property impairment expensetotaling $8,031,060 was incurred during 2007. Of this amount, $6,528,851 wasthe result of a decline in crude oil and natural gas production volumes fromthe eight Cole Ranch wells at a greater rate than originally anticipated duringthe third and fourth quarters of 2007. Of the total property impairmentexpense, $1,502,209 was incurred during the first two quarters of 2007 as aresult of two unsuccessful wells. The property impairment expense was theprimary cause of the 2007 net loss. In comparison, property impairment expensefor 2008 totaled only $3,406,019. Of this amount, $153,330 was impairment ofunproved property relating to the Partnership’s interest in the Sand Dunesprospect, and $3,252,689 was impairment of proved properties. The entire$3,252,689 impairment of proved properties resulted from a ceiling testwritedown (see Note 2 to the Partnership’s financial statements). ThePartnership’s year-end reserve report utilizes current year end prices andcosts to compute estimated discounted future net cash flows from successfulwells. The base year end prices used in the Partnership’s reserve studies were$44.60 per barrel of oil and $5.71 per MCF of natural gas at December 31,2008, compared to $89.16 per barrel of oil and $7.207 per MCF of natural gas atDecember 31, 2007.  The lower 2008year-end prices directly affect the estimated economic lives and, therefore,estimated reserves recoverable from Partnership wells. At December 31,2008, the estimated discounted future net cash flows of the Partnership totaled$1,012,742, compared to $4,381,920 at December 31, 2007. The Partnershiprecorded property impairment expense of proved properties totaling $3,252,689in order to reduce the proved property amount shown on the accompanying balancesheet at December 31, 2008 to the estimated discounted future net cashflow from wells at December 31, 2008.

 

As production and sales volumesfrom the eight Cole Ranch wells decreased, operating costs on a barrels of oil equivalent(BOE) basis have risen, since operating costs tend to increase as a propertyages and production tends to decline. During the year ended December 31,2008, total production expenses for all wells averaged $26.83 per BOE producedcompared to $12.55 per BOE produced during 2007. The decline rate attributableto the eight Cole Ranch wells has slowed significantly; however, thePartnership expects that natural declines in production will cause 2009quarterly sales volumes to begin to trend downward from the level achievedduring the fourth quarter of 2008, and that operating costs per BOE will slowlyincrease.

 

General and administrativecosts increased from $105,748 in 2007 to $290,673 in 2008 as a result of twoprimary factors. Reef implemented a new method for allocating overhead thattakes actual overhead and allocates it based upon the summation of revenues,expenses, and capital costs incurred. Under the prior method of allocatingoverhead, not all allocable general and administrative expenses were charged tothe Partnership during 2007. In addition, during the fourth quarter expenseswere incurred in connection with Sarbanes-Oxley compliance and improvement offinancial reporting. The Partnership expects to have continuing costs during2009 related to Sarbanes-Oxley compliance, as RELP is required to beSarbanes-Oxley compliant by December 31, 2009. Third 

 

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party costs in connection withfinancial reporting ended during January 2009.  The administrative overhead charge to thePartnership for the year ended December 31, 2008 was $175,801, compared to$35,397 for the year ended December 31, 2007.

 

The rapid decline in crude oiland natural gas prices that occurred during the fourth quarter of 2008, theimpairment of proved properties and unproved properties, and the significantincrease in general and administrative costs incurred during the fourth quarterof 2008 caused the Partnership to have a net loss of $3,688,546 for the fourthquarter. RELP and Reef are working to cut overhead costs, and even with costsin connection with Sarbanes-Oxley compliance, the Partnership expects to incuroverall lower general and administrative costs during 2009. Average salesprices during the first quarter of 2009 will continue to decline from fourthquarter 2008 levels. The Partnership expects that prior to depletion expenseand any possible impairment charges it will continue to generate net income.Nonetheless, 2009 results are expected to decline significantly from 2008results.

 

**Year endedDecember 31, 2007 compared to the Period from Inception (August 14,2006) thru December 31, 2006**

 

During 2007, the Partnershipincurred a net loss of $7,738,293, compared to net income of $20,009 for theperiod from inception (August 14, 2006) to December 31, 2006.

 

The Partnership beganoperations in August 2006. During the period between August and December 2006,the Partnership purchased working interests in four prospects, and begandrilling two wells on those prospects. At December 31, 2006, thePartnership had no productive wells, and the sole source of income to thePartnership during 2006 was the interest income earned from the investment ofunexpended partner capital contributions. This interest income of $76,702 wasoffset by organization costs of $50,000 (a one time expense), and by generaland administrative costs of $6,693, producing net income of $20,009 for theperiod from inception (August 14, 2006) to December 31, 2006.

 

During 2007, the Partnershipcompleted the drilling of eighteen wells, including the two in progress at December 31,2006, and had four wells in progress on its Sand Dunes prospect for whichdrilling was completed during the first quarter of 2008. The Partnershipdrilled eight successful developmental wells on the Cole Ranch prospect inGlasscock County, Texas. Six Cole Ranch wells began production operationsduring the second quarter of 2007, and two began production operations duringthe third quarter of 2007. One successful Partnership developmental welllocated in Terrebonne Parish, Louisiana was drilling at December 31, 2007and began production operations in May 2008. The Partnership drilled onesuccessful exploratory well in Lavaca County, Texas that began productionoperations in late December 2007. The Partnership drilled two unsuccessfulexploratory wells and one unsuccessful developmental well. The Partnership also drilled eight wells onits Sand Dunes prospect, three of which completed drilling operations duringthe first quarter of 2008.  These eightwells have been classified as unsuccessful during the fourth quarter of2008.  The Partnership had salesrevenues of totaling $1,213,154 during 2007 from the nine successful wells thatbegan production operations at various times during 2007.

 

The crude oil and natural gasproduction volumes from the eight Cole Ranch wells began declining at a greaterrate than originally anticipated during the third and fourth quarters of2007.  The Partnership reduced theestimated reserves it expects to recover from the Cole Ranch prospect wells inthe third quarter of 2007 and recorded property impairment expense of $534,900.Continued declining production rates and increasing production expenses duringthe fourth quarter led to additional reductions in the estimated recoverablereserves from these eight wells, and resulted in fourth quarter propertyimpairment expense totaling $5,993,951. The Partnership also recorded propertyimpairment costs totaling $1,502,209 during the first two quarters of 2007 as aresult of two unsuccessful wells, for a total 2007 property impairment expenseof $8,031,060. The property impairment expense was the primary cause of the2007 net loss. The Partnership had no impairment expense during 2006 becausethe Partnership had not completed the drilling of any wells as of December 31,2006.

 

General and administrativecosts totaled $105,748 during 2007 as compared to $6,693 during 2006.Administrative costs paid to Reef were $35,397 during 2007 compared to $0during 2006. These costs were directly related to the Partnership havingeighteen drilled wells at December 31, 2007 compared to none at December 31,2006. Legal, accounting, and printing costs related to the Partnership’srequired SEC filings rose from $5,594 for the period from inception (August 14,2006) to December 31, 2006 to $63,979 during 2007. The 2006 fees pertainedto one 

 

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Quarterly Report on Form 10-Q(“Quarterly Report”) filed with the SEC, while the 2007 fees covered three suchQuarterly Reports plus the Annual Report filed with the SEC.

 

**Off-BalanceSheet Arrangements**

 

ThePartnership does not participate in transactions that generate relationshipswith unconsolidated entities or financial partnerships, such as entities oftenreferred to as structure finance or special purpose entities (SPEs), whichwould have been established for the purpose of facilitating off-balance sheetarrangements or other contractually narrow or limited purposes.  As of December 31, 2008, 2007 and 2006,the Partnership was not involved in any unconsolidated SPE transactions or anyother off-balance sheet arrangements.

 

**ContractualObligations Table**

 
| ** **                   | ** ** | **Payment due by period** | ** ** |
|------------------------------|------------|------------------------------------------|------------|
| **Contractual  obligations** | ** ** | **Total**                                | ** ** | **Less than 1  Year** | ** ** | **1-3 Years** | ** ** | **3-5 years** | ** ** | **More than 5  Years** | ** ** |
| Purchase obligations *       |       | $                                        | 100,053    |   | $ | 100,053 |   | — |   | — |   | — |   |
|                              |            |                                          |            |  |  |  |  |  |  |  |  |  |  |

 

----

* The15% management fee due Reef for organization and offering costs, includingsales commissions, is payable in two parts. Reef initially received an amount,not to exceed 13.5%, to recover actual commissions and organization andoffering costs. As of December 31, 2008, the Partnership is obligated topay Reef $100,053 representing the portion of the management feein excess of actual commissions and organization and offering costs, from theoil and gas cash flows available for partner distributions at a rate not toexceed $1 million per year. The Partnership is paying this balance at a rate of$10,000 per month beginning in January 2008.

 

**ITEM 7A.****                                            QUANTITATIVEAND QUALITATIVE DISCLOSURE ABOUT MARKET RISK**

 

**InterestRate Risk**

 

The Partnership has notborrowed any funds to date. The Partnership Agreement allows borrowings frombanks or other financial sources of up to 25% of the aggregate capitalcontributions to the Partnership without investor approval, provided the lenderagrees it will have no recourse against individual investor partners, andallows borrowings in excess of 25% of the aggregate capital contributions tothe Partnership with the consent of investor partners. Should the Partnershipelect to borrow monies for additional drilling activity on Partnershipproperties, it will be subject to the interest rate risk inherent in borrowingactivities. Changes in interest rates could significantly affect thePartnership’s results of operations and the amount of net cash flow availablefor partner distributions. Also, to the extent that changes in interest ratesaffect general economic conditions, the Partnership will be affected by such changes.

 

**CommodityPrice Risk**

 

The Partnership has not anddoes not expect to engage in commodity futures trading or hedging activities orto enter into derivative financial instrument transactions for trading or otherspeculative purposes. The Partnership sells a vast majority of its productionfrom successful oil and gas wells on a month-to-month basis at current spotmarket prices. Accordingly, the Partnership is at risk for the volatility incommodity prices inherent in the oil and gas industry, and the level ofcommodity prices has a significant impact on the Partnership’s results ofoperations.

 

Assuming the production levelswe attained during the year ended December 31, 2008, a 10% change in theprice received for our crude oil would have had an approximate $120,900 impacton our crude oil revenues, and a 10% change in the price received for ournatural gas would have had an approximate $47,400 impact on our natural gasrevenues.

 

**ITEM 8.****                                                     FINANCIALSTATEMENTS AND SUPPLEMENTARY DATA**

 

The reports of our independentregistered public accounting firm, and the Partnership’s financial statements,related notes, and supplementary data are set forth in a separate section tothis Annual Report, beginning on page F-1.

 

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| **ITEM 9.** | **CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND  FINANCIAL DISCLOSURE** |
|-------------|-------------------------------------------------------------------------------------------|

 

None.

 
| **ITEM 9A.** | **CONTROLS  AND PROCEDURES** |
|--------------|------------------------------|

 

**Evaluationof Disclosure Controls and Procedures**

 

As the managing general partner of the Partnership, Reef maintains asystem of controls and procedures designed to provide reasonable assurance asto the reliability of the financial statements and other disclosures includedin this Annual Report, as well as to safeguard assets from unauthorized use ordisposition. The Partnership, under the supervision and with participation ofits management, including the principal executive officer and principalfinancial officer of the Partnership’s managing general partner, Reef Oil &Gas Partners, L.P., evaluated the effectiveness of its “disclosure controls andprocedures” as such term is defined in Rule 13a-15(e) under theSecurities Exchange Act of 1934, as amended (the “Exchange Act”), as of the endof the period covered by this Annual Report. Based on that evaluation, theprincipal executive officer and principal financial officer of our managinggeneral partner have concluded that the Partnership’s disclosure controls andprocedures are effective to ensure that information required to be disclosed bythe Partnership in reports that it files or submits under the Exchange Act isrecorded, processed, summarized, and reported within the time periods specifiedin Securities and Exchange Commission rules and forms, and includescontrols and procedures designed to ensure that information required to bedisclosed by us in such reports is accumulated and communicated to ourmanagement, including the principal executive officer and principal financialofficer of our managing general partner, as appropriate to allow timelydecisions regarding financial disclosure.

 

**ManagementReport on Internal Control Over Financial Reporting**

 

Management of the Partnership is responsiblefor establishing and maintaining adequate internal control over financialreporting, as such term is defined in Exchange Act Rule 13a-15(f). Ourmanagement conducted an evaluation of the effectiveness of our internal controlover financial reporting based on the framework in Internal Control -Integrated Framework issued by the Committee of Sponsoring Organizations of theTreadway Commission. Based on this evaluation under the framework in InternalControl — Integrated Framework, management of the Partnership concluded thatthe Partnership’s internal control over financial reporting was effective as ofDecember 31, 2008.

 

This annual report does not include anattestation report of the Partnership’s registered public accounting firmregarding internal control over financial reporting. Management’s report wasnot subject to attestation by the Partnership’s registered public accountingfirm pursuant to temporary rules of the SEC that permit the Partnership toprovide only management’s report in this annual report.

 

**Changesin Internal Controls**

 

There have notbeen any changes in the Partnership’s internal controls over financialreporting during the fiscal quarter ended December 31, 2008 that havematerially affected, or are reasonably likely to materially affect, thePartnership’s internal control over financial reporting.

 
| **ITEM 9B.** | **OTHER INFORMATION** |
|--------------|-----------------------|

 

None.

 

**PART III**

 
| **ITEM 10.** | **DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE** |
|--------------|-------------------------------------------------------------|

 

The Partnership has nodirectors or executive officers. Its managing general partner is Reef Oil &Gas Partners, L.P.

 

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**Reef Oil &Gas Partners, L.P. and Reef Exploration, L.P.**

 

The Manager, officers and keypersonnel of the managing general partner, their ages, current positions withthe managing general partner and/or RELP, and certain additional informationare set forth below:

 
| **Name**                        | ** ** | **Age** | ** ** | **Positions and Offices Held**                                          |
|---------------------------------|------------|---------|------------|----------------------------------------------------------------------------------------|
| Michael J.  Mauceli             |       | 52      |       | Manager of Reef  Oil & Gas Partners GP, LLC;  Chief Executive Officer of RELP |
| H. Walt  Dunagin                |       | 51      |       | Vice  President — Land Manager of RELP                                            |
| Lawrence J.  Harrison, Jr. |       | 58      |       | Vice  President — Business Development of RELP                                    |
| Byron H.  Dean                  |       | 59      |       | Manager of  Acquisitions and Divestitures of RELP                                      |
| Daniel C.  Sibley               |       | 57      |       | General  Counsel of RELP                                                               |
| L. Mark  Price                  |       | 46      |       | Chief  Financial Officer of Reef and of RELP                                           |
| David M.  Tierney               |       | 56      |       | Chief  Accounting Officer — Public Partnerships                                   |

 

**Michael J. Mauceli** is the Manager and a memberof Reef Oil & Gas Partners, GP, LLC, which is the general partner ofReef, as well as the Chief Executive Officer of RELP. Mr. Mauceli has beenthe principal executive officer of Reef since its formation in February 1999.He has served in this position with RELP since January 2006 and has servedin this position with its predecessor entity, OREI, since 1987.  Mr. Mauceli attended the University ofMississippi where he majored in business management and marketing as well asthe University of Houston where he received his Commercial Real Estate License.He entered the oil and natural gas business in 1976 when he joined Tenneco Oil &Gas Company.  Mr. Mauceli moved toDallas in 1979, where he was independently employed by several exploration anddevelopment firms in planning exploration and marketing feasibility ofprivately sponsored drilling programs.

 

**H. Walt Dunagin** is Vice President - LandManager of RELP. He has held this position since January 2006 and hasserved in this position with its predecessor entity, OREI, since 1990. He isresponsible for all contracts with other industry partners and all landactivities required for exploration, development and production, includinglease acquisition, title opinions, curative, permitting, unitization,rights-of-way and environmental issues. A graduate of the University ofMississippi in 1969 with a B.B.A. degree, Walt’s career has also involved landwork for ExxonMobil, ChevronTexaco, UNOCAL, Santa Fe Energy and Oryx Energy(now Kerr-McGee). Walt is a member of the Dallas Association of PetroleumLandmen and the Association of International Petroleum Negotiators.

 

**Lawrence J. Harrison, Jr.**isVice President — Business Development of RELP. He joined RELP in October 2006following fourteen years with The Oil & Gas Asset Clearinghouse, a leadingacquisition and divestiture advisory firm. Mr. Harrison has served as anindependent landman verifying title ownership and acquiring leases and otheragreements in support of clients drilling programs. He worked for Mobil OilCorporation and several other companies before joining The Clearinghouse. Mr. Harrisonis a 1972 graduate of the University of Southern Mississippi with a Bachelor ofScience degree in Communications. Mr. Harrison is a past president of theHouston Association of Professional Landmen and a past member of the AmericanAssociation of Professional Landmen Executive Committee. He is currently aDirector of the Louisiana Oil & Gas Association (LOGA) and a member ofthe ADAM Energy Forum and the Independent Petroleum Association of America.

 

**Byron H. (Howard) Dean**is Manager — Acquisitions andDivestitures of RELP and is responsible for solicitation and technicalevaluation of acquisition and development opportunities for Reef. A registeredpetroleum engineer, Mr. Dean has over 30 years of industry experience withoil and natural gas operations and reservoir engineering, both domestic onshoreand offshore. Prior to joining RELP, Mr. Dean was Senior PetroleumEngineer and Acquisition and Divestiture Specialist for PLS, Inc. andNoble Royalties, Inc. He is a 1974 graduate of the University of Texas atArlington with a Bachelor of Science degree in Civil Engineering. Mr. Deanis an active member of the Society of Petroleum Engineers, the Society ofPetroleum Evaluation Engineers, ADAM Energy Forum, and Texas IndependentProducer and Royalty Owners Association.

 

**Daniel C. Sibley**isGeneral Counsel of RELP. Mr. Sibley was appointed General Counsel of RELPon January 14, 2009. Previously, Mr. Sibley served as Chief FinancialOfficer of Reef and RELP. Mr. Sibleywas employed as a Certified Public Accountant with Grant Thornton from 1977 to1980. From 1980 to 1994, he was involved in the private practice of law. Hereceived a B.B.A. in accounting from the University of North Texas in 1973, alaw 

 

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degree (J.D.) from the University of Texas in 1977, and a Master ofLaws-Taxation degree (L.L.M.) from Southern Methodist University in 1984.

 

**L. Mark Price** is Chief Financial Officerof Reef and RELP.  Mr. Price wasappointed to this position January 9, 2009.  Mr. Price has over twenty-two years ofexperience working in the oil and gas and manufacturing industries. Hepreviously served as the Chief Financial Officer for The Terramar Group, Inc.,an international oil and gas and manufacturing company, since 2007. From 2004to 2007, he served as the Chief Accounting Officer for Lancer Corporation, aninternational manufacturing company. Additionally, Mr. Price served as theChief Financial Officer of Nunn Manufacturing, and for PCLC Asset Managementafter its acquisition of Nunn Manufacturing in 1998, from 1996 until 2004. Mr. Pricereceived his BBA in accounting and finance from Texas Tech University and is aTexas Certified Public Accountant.

 

**David M. Tierney**is****Chief Accounting Officer — PublicPartnerships. Mr. Tierney was appointed to this position in July 2008.Mr. Tierneyhas been employed by RELP since January 2006 and was previously with itspredecessor entity, OREI, since March 2001.  Mr. Tierney was previously theController of the Reef Global Energy Ventures and Reef Global Energy VenturesII partnerships. Mr. Tierney received a Bachelor’s degree from DavidsonCollege in 1974, a Masters of Business Administration from Tulane University in1976, and is a Texas Certified Public Accountant. Mr. Tierney has workedin public accounting, and has worked in the oil and gas industry since 1979.From 1992 through 2000 he served as controller/treasurer of an independent oiland gas exploration company.

 

**AuditCommittee and Nominating Committee**

 

Becausethe Partnership has no directors, it does not have an audit committee, an auditcommittee financial expert or a nominating committee.

 

**Codeof Ethics**

 

Because the Partnership has no employees, itdoes not have a code of ethics. Employees of the Partnership’s managing general partner, Reef, mustcomply with Reef’s Code of Ethics, a copy of which will be provided to any person,without charge, upon request made to Reef Oil & Gas Partners, L.P.,1901 N. Central Expressway, Suite 300, Richardson, Texas 75080, Attention:Daniel C. Sibley.

 
| **ITEM 11.** | **EXECUTIVE COMPENSATION** |
|--------------|----------------------------|

 

The following table summarizesthe items of compensation to be received by Reef as the managing generalpartner from the Partnership.

 
| **Recipient**                                | ** ** | **Form of Compensation**                                                                   | ** ** | **Amount**                  |
|----------------------------------------------|------------|------------------------------------------------------------------------------------------------------|------------|-----------------------------|
| Managing  General Partner                    |       | Partnership interest (excluding any  partnership interest resulting from the purchase of units) |       | 10% interest                |
| Managing  General Partner                    |       | Management fee                                                                                       |       | 15% of  subscriptions       |
| Managing  General Partner and its Affiliates |       | Direct and administrative costs                                                                      |       | Reimbursement  at cost      |
| Affiliate of  the Managing General Partner   |       | Operator’s per-well charges                                                                     |       | Competitive  prices         |
| Managing  General Partner and its Affiliates |       | Payment for equipment, supplies, marketing,  and other services                                      |       | Cost or  competitive prices |

 

Reef’s “partnership interest,”as described in the table above, refers only to its interest as managinggeneral partner and does not include the interest Reef has as the result of itspurchase of units in the Partnership, or the 1% interest Reef has as the resultof its payment of 1% of all leasehold, drilling, and completion costs.  Reef purchased 5.00% of the outstandingPartnership units. Reef received a 10% interest as managing general partner ofthe Partnership and a 1% interest as a result of Reef’s payment of 1% of allleasehold, drilling, and completion costs, for a total of an 11% interest.  This 11% interest is not represented bypartnership units.  Reef has a totalinterest in the Partnership of 15.45%.

 

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Reef is entitled to receive amanagement fee equal to 15% of the Partnership subscriptions exclusive of theunits purchased by Reef. From this amount Reef pays all of the Partnership’sorganization and offering costs, including sales commissions. The managementfee is payable to Reef in two parts. Reef initially received an amount not toexceed 13.5% to cover actual sales commissions and actual organization andoffering costs. The remainder of the management fee is paid to Reef from thenet cash flow available for partner distributions, at a rate not to exceed $1million per year. The total management fee owed Reef is $2,310,285. ThePartnership recorded $2,260,285 of this amount as offering costs, and $50,000as organization costs. Of this amount, $2,085,232 has been paid to Reef tocover actual sales commissions and organization and offering costs, $125,000has been paid to Reef from net cash flow, and $100,053 has been accrued at December 31,2008 as an account payable to be paid to Reef from future net cash flows of thePartnership. The Partnership is currently reimbursing this fee to Reef at arate of $10,000 per month.

 

Reef is reimbursed for directcosts and all documented out-of-pocket expenses incurred on behalf of thePartnership, including administrative costs. During the years ended December 31,2008 and 2007 and the period from inception (August 14, 2006) to December 31,2006, the Partnership reimbursed Reef $62,446, $699,401 and $36,343,respectively, for technical services costs which have been capitalized as projectcosts, and $175,801, $35,397 and $0, respectively, for administrative costsincluded as general and administrative expenses.

 

OREI and RELP receive operatorfees during the drilling and production phase of each well at the competitiverate in the geographical area where the well is located.  These fees are charged as a monthly fee perwell as agreed to in an operating agreement signed by the Partnership andparticipating third party working interest owners in the well. During the yearsended December 31, 2008 and, 2007 and the period from inception (August 14,2006) to December 31, 2006, the Partnership paid operator fees totaling$39,363, $50,961, and $0 to RELP and OREI. RELP (previously OREI) serves asoperator for two Partnership prospects upon which eight successful wells andeight unsuccessful wells have been drilled, including the eight Sand Dunesprospect wells classified as unsuccessful that have not yet been plugged andabandoned.

 

**CompensationCommittee**

 

Because the Partnership has nodirectors, it does not have a compensation committee.

 
| **ITEM 12.** | **SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND  RELATED STOCKHOLDER MATTERS** |
|--------------|-----------------------------------------------------------------------------------------------------|

 

The followingtable sets forth information as of December 31, 2008 concerning allpersons known by Reef to own beneficially more than 5% of the interests in thePartnership. Unless expressly indicated otherwise, each partner exercises solevoting and investment power with respect to the interests beneficially owned.

 
| **Person or Group**              | ** ** | **Number of Units  Beneficially  Owned** | ** ** | **Percent of Total  Partnership Units  Outstanding** | ** ** | **Percentage of  Total Partnership  Interests  Beneficially  Owned** | ** ** |
|--------------------------------------------|------------|----------------------------------------------------|------------|---------------------------------------------------------------------|------------|--------------------------------------------------------------------------------|------------|
| Reef Oil & Gas Partners, L.P. (1) |       | 32.425                                             |       | 5.00                                                                | %          | 4.45                                                                           | %          |
| Reef Oil & Gas Partners, L.P. (1) |       | —                                             |       | —                                                              |       | 11.00                                                                          | %          |

 

----

(1) Reef Oil & GasPartners, L.P.’s address is 1901 N. Central Expressway, Suite 300,Richardson, Texas 75080.

 

The managing general partnerreceived a 10% interest in the Partnership as compensation for forming thePartnership, and also holds a 1% interest in the Partnership as a result ofpaying 1% of all leasehold, drilling and completion costs. In addition to this11% interest not represented by Partnership units, Reef purchased 5% of the648.501 Partnership units and, therefore, holds 5% of the 89% interest in the Partnership(4.45%) held by the unit holders.

 

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

 

The Partnership is managed by a managing generalpartner and does not have directors. Reef is the managing general partner ofthe Partnership.  Along with itsaffiliates, Reef has entered into agreements with, and received compensation from,the Partnership for services it performs for the Partnership.  See “Item 11. - EXECUTIVE COMPENSATION.”

 
| **ITEM 14.** | **PRINCIPAL ACCOUNTANT FEES AND SERVICES** |
|--------------|--------------------------------------------|

 

The Partnership incurredprofessional audit and tax fees from its principal auditor BDO Seidman, LLP, asdisclosed in the table below:

 
| ** **         | ** ** | **2007** | ** ** | **2007** | ** ** |
|--------------------|------------|----------|------------|----------|------------|
| Audit fees         |       | $        | 48,658     |     | $          | 45,079 |   |
| Audit related fees |       | —   |       | —   |       |
| Tax fees           |       | 2,243    |       | 866      |       |
| All other fees     |       | —   |       | —   |       |
|                    |            |          |            |          |            |  |  |

 

Tax fees are for review of the Partnership’stax return.

 

As indicated in Item 10 above, thePartnership does not have any directors or an audit committee.

 

**PART IV**

 
| **ITEM 15.** | **EXHIBITS AND FINANCIAL STATEMENT SCHEDULES** |
|--------------|------------------------------------------------|

 
| (a)    | 1. Financial Statements                                  |   |
|--------|----------------------------------------------------------|--------|
|   |                                                     |   |
|   | Report of Independent Registered Public Accounting  Firm | F-1    |
|   | Balance  Sheets                                          | F-2    |
|   | Statements  of Operations                                | F-3    |
|   | Statements of Partnership Equity                         | F-4    |
|   | Statements  of Cash Flows                                | F-5    |
|   | Notes to Financial Statements                            | F-6    |
|   |                                                     |   |
|   |                                                     |   |
|   | 2.  Financial Statement Schedules                        | None   |
|   |                                                     |   |
|   | 3.  Exhibits                                             |   |

 

A list of the exhibits filed orfurnished with this Annual Report (or incorporated by reference to exhibitspreviously filed or furnished by us) is provided in the Exhibit Index inthis Annual Report.  Those exhibitsincorporated by reference herein are indicated as such by the informationsupplied in the parenthetical thereafter. Otherwise, the exhibits are filedherewith.

 

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**SIGNATURES**

 

Pursuant to the requirements ofSection 13 or 15(d) of the Securities Exchange Act of 1934, theregistrant has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized.

 
| Date:       April 15, 2009 | **REEF GLOBAL ENERGY VIII, L.P.**      |
|---------------------------------------------------------------|----------------------------------------|
|                                                          |                                   |
|                                                          |                                   |
|                                                          | Reef Oil & Gas Partners, L.P. |
|                                                          | Managing General Partner               |
|                                                          |                                   |
|                                                          | By:                                    | Reef  Oil & Gas Partners, GP, LLC |
|                                                          |                                   | General  Partner |
|                                                          |                                   |
|                                                          |                                   |
|                                                          | By:                                    | /s/ Michael  J. Mauceli |
|                                                          |                                   | Michael J.  Mauceli |
|                                                          |                                   | Manager  (Principal Executive Officer) |
|                                                               |                                        |  |  |

 

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Pursuantto the requirements of the Securities Exchange Act of 1934, this report hasbeen signed below by the following persons on behalf of the registrant and inthe capacities and on the dates indicated.

 
| **Signature**          | ** ** | **Title**                                                                            | ** ** | **Date**            |
|------------------------|------------|--------------------------------------------------------------------------------------|------------|---------------------|
|                   |       |                                                                                 |       |                |
| /s/ Michael J. Mauceli |       | Manager and  Member of the general partner of Reef Oil & Gas Partners, L.P. |       | April 15, 2009 |
| Michael J. Mauceli     |       | (*Principal Executive Officer*)                                                      |       |                |
|                   |       |                                                                                 |       |                |
| /s/ David M.  Tierney  |       | Chief  Accounting Officer-Public Partnerships Reef Exploration, L.P.                 |       | April 15, 2009 |
| David M.  Tierney      |       | *(Principal  Financial and Accounting Officer)*                                      |       |                |

 

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Reef Global Energy VIII, L.P.

 

Financial Statements

 

Years Ended December 31,2008 and 2007, and the Period from Inception (August 14, 2006) to December 31,2006

 

**Contents**

 
| Report of  Independent Registered Public Accounting Firm | F-1    |
|----------------------------------------------------------|--------|
|                                                     |   |
| Audited  Financial Statements                            |   |
|                                                     |   |
| Balance sheets                                           | F-2    |
| Statements of  operations                                | F-3    |
| Statements of  partnership equity                        | F-4    |
| Statements of  cash flows                                | F-5    |
| Notes to  financial statements                           | F-6    |

 

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Report of Independent Registered PublicAccounting Firm

 

The Partners

Reef Global Energy VIII, L.P.

 

We have auditedthe accompanying balance sheets of Reef Global Energy VIII, L.P. as of December 31,2008 and 2007 and the related statements of operations, partnership equity, andcash flows for the years ended December 31, 2008 and 2007, and the periodfrom inception (August 14, 2006) to December 31, 2006. Thesefinancial statements are the responsibility of the Partnership’s management.Our responsibility is to express an opinion on these financial statements basedon our audits.

 

We conducted our audits inaccordance with the standards of the Public Company Accounting Oversight Board(United States). Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. The Partnership is not required to have, nor were weengaged to perform, an audit of its internal control over financial reporting.An audit includes consideration of internal control over financial reporting asa basis for designing audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectivenessof the Partnership’s internal control over financial reporting. Accordingly, weexpress no such opinion. An audit also includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements,assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financialstatements referred to above present fairly, in all material respects, thefinancial position of Reef Global Energy VIII, L.P. at December 31, 2008and 2007, and the results of its operations and its cash flows for the yearsended December 31, 2008 and 2007, and the period from inception (August 14,2006) to December 31, 2006, in conformity with accounting principlesgenerally accepted in the United States of America.

 

BDO Seidman, LLP

 

 

Dallas, Texas

April 14, 2009

 

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**Reef Global Energy VIII, L.P.**

**Balance Sheets**

 
| **December 31,**                                                          | ** ** | **2008**      | ** **    | **2007**      | ** ** |
|--------------------------------------------------------------------------------|------------|---------------|---------------|---------------|------------|
|                                                                           |       |          |          |          |       |
| **Assets**                                                                     |       |          |          |          |       |
|                                                                           |       |          |          |          |       |
| **Current assets:**                                                            |       |          |          |          |       |
| Cash and cash equivalents                                                      | ** ** | **$**         | 557,935       |          | **$**      | 1,678,818 | ** ** |
| Accounts receivable                                                            |       | 2,680         |          | —        |       |
| Accounts receivable from affiliates                                            |       | —        |          | 11,660        |       |
| Prepaid expenses                                                               |       | 2,500         |          | —        |       |
| **Total current assets**                                                       | ** ** | **563,115**   | ** **    | **1,690,478** | ** ** |
| ** **                                                                     | ** ** | ** **    | ** **    | ** **    | ** ** |
| **Oil and gas properties, full cost method of  accounting:**                   |       |          |          |          |       |
| Proved properties, net of accumulated  depletion of $12,878,870 and $8,871,232 |       | 1,012,742     |          | 4,381,920     |       |
| Unproved properties                                                            |       | —        |          | 153,330       |       |
| **Net oil and gas properties**                                                 | ** ** | **1,012,742** | ** **    | **4,535,250** | ** ** |
|                                                                           |       |          |          |          |       |
| **Total assets**                                                               | ** ** | $             | **1,575,857** | ** **    | $          | **6,225,728** | ** ** |
|                                                                           |       |          |          |          |       |
| **Liabilities and partnership equity**                                         |       |          |          |          |       |
|                                                                           |       |          |          |          |       |
| **Current liabilities:**                                                       |       |          |          |          |       |
| Accounts payable to affiliates                                                 |       | $             | 457,622       |          | $          | 796,282 |   |
| **Total current liabilities**                                                  | ** ** | **457,622**   | ** **    | **796,282**   | ** ** |
|                                                                           |       |          |          |          |       |
| **Long-term liabilities:**                                                     |       |          |          |          |       |
| Asset retirement obligation                                                    |       | 237,049       |          | 107,909       |       |
| Accounts payable to affiliates                                                 |       | —        |          | 100,053       |       |
| **Total long-term liabilities**                                                | ** ** | **237,049**   | ** **    | **207,962**   | ** ** |
|                                                                           |       |          |          |          |       |
| **Commitments and contingencies (Note 5)**                                     |       |          |          |          |       |
|                                                                           |       |          |          |          |       |
| **Partnership equity**                                                         |       |          |          |          |       |
| General partners                                                               |       | —        |          | 4,149,260     |       |
| Limited partners                                                               |       | 841,995       |          | 759,136       |       |
| Managing general partner                                                       |       | 39,191        |          | 313,088       |       |
| **Partnership equity**                                                         | ** ** | **881,186**   | ** **    | **5,221,484** | ** ** |
| ** **                                                                     | ** ** | ** **    | ** **    | ** **    | ** ** |
| **Total liabilities and partnership equity**                                   | ** ** | **$**         | **1,575,857** | ** **    | **$**      | **6,225,728** | ** ** |

 

*Seeaccompanying notes to financial statements.*

 

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**Reef Global Energy VIII, L.P.**

**Statements of Operations**

 
| ** **                                           | ** ** | **Year ended  December 31,  2008** | ** **     | **Year ended  December 31,  2007** | ** ** | **Period from  inception  (August 14,  2006) to  December 31,  2006** | ** ** |
|------------------------------------------------------|------------|----------------------------------------------|----------------|----------------------------------------------|------------|-------------------------------------------------------------------------------------------|------------|
| ** **                                           | ** ** | ** **                                   | ** **     | ** **                                   | ** ** | ** **                                                                                | ** ** |
| **Revenues**                                         | ** ** | **$**                                        | **1,682,789**  | ** **                                   | **$**      | **1,213,154**                                                                             | ** ** | **$** | **—** | ** ** |
| ** **                                           | ** ** | ** **                                   | ** **     | ** **                                   | ** ** | ** **                                                                                | ** ** |
| **Costs and expenses:**                              | ** ** | ** **                                   | ** **     | ** **                                   | ** ** | ** **                                                                                | ** ** |
| Lease operating expenses                             |       | 436,643                                      |           | 139,153                                      |       | —                                                                                    |       |
| Production taxes                                     |       | 98,606                                       |           | 63,590                                       |       | —                                                                                    |       |
| Depreciation, depletion and amortization             |       | 754,949                                      |           | 840,172                                      |       | —                                                                                    |       |
| Property impairment                                  |       | 3,406,019                                    |           | 8,031,060                                    |       | —                                                                                    |       |
| Accretion of asset retirement obligation             |       | 49,799                                       |           | 4,817                                        |       | —                                                                                    |       |
| General and administrative                           |       | 290,673                                      |           | 105,748                                      |       | 6,693                                                                                     |       |
| Organization expenses                                |       | —                                       |           | —                                       |       | 50,000                                                                                    |       |
| **Total costs and expenses**                         | ** ** | **5,036,689**                                | ** **     | **9,184,540**                                | ** ** | **56,693**                                                                                | ** ** |
| ** **                                           | ** ** | ** **                                   | ** **     | ** **                                   | ** ** | ** **                                                                                | ** ** |
| **Loss from operations**                             | ** ** | **(3,353,900**                               | **)**          | **(7,971,386**                               | **)**      | **(56,693**                                                                               | **)**      |
| ** **                                           | ** ** | ** **                                   | ** **     | ** **                                   | ** ** | ** **                                                                                | ** ** |
| Interest income                                      |       | 14,852                                       |           | 233,093                                      |       | 76,702                                                                                    |       |
| ** **                                           | ** ** | ** **                                   | ** **     | ** **                                   | ** ** | ** **                                                                                | ** ** |
| **Net income (loss)**                                | ** ** | **$**                                        | **(3,339,048** | **)**                                        | **$**      | **(7,738,293**                                                                            | **)**      | **$** | **20,009** | ** ** |
| ** **                                           | ** ** | ** **                                   | ** **     | ** **                                   | ** ** | ** **                                                                                | ** ** |
| Net income (loss) per general partner unit           | ** ** | **$**                                        | **237.29**     | ** **                                   | **$**      | **(11,987.96**                                                                            | **)**      | **$** | **14.92** | ** ** |
| Net income (loss) per limited partner unit           | ** ** | **$**                                        | **(5,218.96**  | **)**                                        | **$**      | **(11,987.96**                                                                            | **)**      | **$** | **14.92** | ** ** |
| Net income (loss) per managing general  partner unit | ** ** | **$**                                        | **(3,817.12**  | **)**                                        | **$**      | **(10,880.45**                                                                            | **)**      | **$** | **333.58** | ** ** |

 

*Seeaccompanying notes to financial statements.*

 

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**Reef Global Energy VIII, L.P.**

**Statements of Partnership Equity**

 
| ** **                                                               | ** ** | **General partners** | ** ** | **Limited partners** | ** ** | **Managing general  partner** | ** ** | **Total**  | ** ** |
|--------------------------------------------------------------------------|------------|---------------------------|------------|---------------------------|------------|------------------------------------|------------|------------|------------|
| ** **                                                               | ** ** | **Units**                 | ** ** | **Amount**                | ** ** | **Units**                          | ** ** | **Amount** | ** ** | **Units** | ** ** | **Amount** | ** ** | **Units** | ** ** | **Amount** | ** ** |
| Partner  contributions, net of offering costs                            |       | 520.793                   |       | $                         | 11,109,119 |                               | 95.283     |       | $          | 2,032,492 |   | 32.425 |   | $ | 702,313 |   | 648.501 |   | $ | 13,843,924 |   |
| Partner  distributions                                                   |       | —                    |       | —                    |       | —                             |       | —     |       | — |   | — |   | — |   | — |   |
| Net income                                                               |       | —                    |       | 7,771                     |       | —                             |       | 1,422      |       | — |   | 10,816 |   | — |   | 20,009 |   |
| Balance at  December 31, 2006                                       |       | 520.793                   |       | 11,116,890                |       | 95.283                             |       | 2,033,914  |       | 32.425 |   | 713,129 |   | 648.501 |   | 13,863,933 |   |
|                                                                     |       |                      |       |                      |       |                               |       |       |       |   |   |   |   |   |   |   |   |
| Balance at  December 31, 2006                                       |       | 520.793                   |       | 11,116,890                |       | 95.283                             |       | 2,033,914  |       | 32.425 |   | 713,129 |   | 648.501 |   | 13,863,933 |   |
| Partner  contributions                                                   |       | —                    |       | —                    |       | —                             |       | —     |       | — |   | 109,344 |   | — |   | 109,344 |   |
| Partner  distributions                                                   |       | —                    |       | (724,383                  | )          | —                             |       | (132,531   | )          | — |   | (156,586 | ) | — |   | (1,013,500 | ) |
| Net loss                                                                 |       | —                    |       | (6,243,247                | )          | —                             |       | (1,142,247 | )          | — |   | (352,799 | ) | — |   | (7,738,293 | ) |
| Balance at  December 31, 2007                                       |       | 520.793                   |       | 4,149,260                 |       | 95.283                             |       | 759,136    |       | 32.425 |   | 313,088 |   | 648.501 |   | 5,221,484 |   |
|                                                                     |       |                      |       |                      |       |                               |       |       |       |   |   |   |   |   |   |   |   |
| Distribution  amount per partnership unit                                |       |                      |       | $                         | 1,390.92   |                               |       |       | $          | 1,390.92 |   |   |   | $ | 4,829.18 |   |   |   |   |   |
|                                                                     |       |                      |       |                      |       |                               |       |       |       |   |   |   |   |   |   |   |   |
| Balance at  December 31, 2007                                       |       | 520.793                   |       | 4,149,260                 |       | 95.283                             |       | 759,136    |       | 32.425 |   | 313,088 |   | 648.501 |   | 5,221,484 |   |
| Partner  contributions                                                   |       | —                    |       | —                    |       | —                             |       | —     |       | — |   | 5,400 |   | — |   | 5,400 |   |
| Partner  distributions                                                   |       | —                    |       | (333,209                  | )          | —                             |       | (517,914   | )          | — |   | (155,527 | ) | — |   | (1,006,650 | ) |
| Net income (loss)                                                        |       | —                    |       | 123,577                   |       | —                             |       | (3,338,855 | )          | — |   | (123,770 | ) | — |   | (3,339,048 | ) |
| Conversion of  general partner units into limited partner units (Note 1) |       | (520.793                  | )          | (3,939,628                | )          | 520.793                            |       | 3,939,628  |       | — |   | — |   | — |   | — |   |
| Balance at  December 31, 2008                                       |       | —                    |       | $                         | —     |                               | 616.076    |       | $          | 841,995 |   | 32.425 |   | $ | 39,191 |   | 648.501 |   | $ | 881,186 |   |
|                                                                     |       |                      |       |                      |       |                               |       |       |       |   |   |   |   |   |   |   |   |
| Distribution  amount per partnership unit                                |       |                      |       | $                         | 639.81     |                               |       |       | $          | 1,381.52 |   |   |   | $ | 4,796.52 |   |   |   |   |   |

 

*Seeaccompanying notes to financial statements.*

 

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**Reef Global Energy VIII, L.P.**

**Statements of Cash Flows**

 
| ** **                                                                                | ** ** | **Year ended  December  31, 2008** | ** **  | **Year ended  December  31, 2007** | ** ** | **Period  from  inception  (August 14,  2006) to  December  31, 2006** | ** ** |
|-------------------------------------------------------------------------------------------|------------|----------------------------------------------|-------------|----------------------------------------------|------------|---------------------------------------------------------------------------------------|------------|
| **Operating Activities**                                                                  |       |                                         |        |                                         |       |                                                                                  |       |
| Net income (loss)                                                                         |       | $                                            | (3,339,048  | )                                            | $          | (7,738,293                                                                            | )          | $ | 20,009 |   |
| Adjustments for non-cash transactions:                                                    |       |                                         |        |                                         |       |                                                                                  |       |
| Depreciation, depletion and amortization                                                  |       | 754,949                                      |        | 840,172                                      |       | —                                                                                |       |
| Property impairment                                                                       |       | 3,406,019                                    |        | 8,031,060                                    |       | —                                                                                |       |
| Accretion of asset retirement obligation                                                  |       | 49,799                                       |        | 4,817                                        |       | —                                                                                |       |
| Adjustments to reconcile net income (loss)  to net cash provided by operating activities: |       |                                         |        |                                         |       |                                                                                  |       |
| Changes in operating assets and  liabilities:                                             |       |                                         |        |                                         |       |                                                                                  |       |
| Accounts receivable                                                                       |       | (2,680                                       | )           | —                                       |       | —                                                                                |       |
| Prepaid expenses                                                                          |       | (2,500                                       | )           | —                                       |       | —                                                                                |       |
| Accounts payable                                                                          |       | —                                       |        | (20,000                                      | )          | 20,000                                                                                |       |
| Accounts payable to affiliates                                                            |       | 313,848                                      |        | 15,177                                       |       | —                                                                                |       |
| **Net cash provided by operating activities**                                             | ** ** | **1,180,387**                                | ** **  | **1,132,933**                                | ** ** | **40,009**                                                                            | ** ** |
| ** **                                                                                | ** ** | ** **                                   | ** **  | ** **                                   | ** ** | ** **                                                                            | ** ** |
| **Investing Activities**                                                                  | ** ** | ** **                                   | ** **  | ** **                                   | ** ** | ** **                                                                            | ** ** |
| Property acquisition and development                                                      |       | (1,191,680                                   | )           | (9,464,870                                   | )          | (3,177,415                                                                            | )          |
| **Net cash used in investing activities**                                                 | ** ** | **(1,191,680**                               | **)**       | **(9,464,870**                               | **)**      | **(3,177,415**                                                                        | **)**      |
| ** **                                                                                | ** ** | ** **                                   | ** **  | ** **                                   | ** ** | ** **                                                                            | ** ** |
| **Financing Activities**                                                                  | ** ** | ** **                                   | ** **  | ** **                                   | ** ** | ** **                                                                            | ** ** |
| Partner capital contributions                                                             |       | 17,060                                       |        | 566,515                                      |       | 15,635,378                                                                            |       |
| Offering costs                                                                            |       | (120,000                                     | )           | (836,774                                     | )          | (1,203,458                                                                            | )          |
| Partner distributions                                                                     |       | (1,006,650                                   | )           | (1,013,500                                   | )          | —                                                                                |       |
| **Net cash provided by (used in) financing  activities**                                  | ** ** | **(1,109,590**                               | **)**       | **(1,283,759**                               | **)**      | **14,431,920**                                                                        | ** ** |
| ** **                                                                                | ** ** | ** **                                   | ** **  | ** **                                   | ** ** | ** **                                                                            | ** ** |
| **Net increase (decrease) in cash and cash  equivalents**                                 | ** ** | **(1,120,883**                               | **)**       | **(9,615,696**                               | **)**      | **11,294,514**                                                                        | ** ** |
| Cash and cash equivalents at beginning of  period                                         |       | 1,678,818                                    |        | 11,294,514                                   |       | —                                                                                |       |
| **Cash and cash equivalents at end of period**                                            | ** ** | **$**                                        | **557,935** | ** **                                   | **$**      | **1,678,818**                                                                         | ** ** | **$** | **11,294,514** | ** ** |
| ** **                                                                                | ** ** | ** **                                   | ** **  | ** **                                   | ** ** | ** **                                                                            | ** ** |
| **Non-cash investing transactions**                                                       |       |                                         |        |                                         |       |                                                                                  |       |
| Property additions included in accounts  payable to affiliates                            | ** ** | **$**                                        | 28,544      |                                         | $          | 661,105                                                                               |       | $ | 1,328,081 |   |
| Property additions and asset retirement  obligation                                       | ** ** | **$**                                        | 79,341      |                                         | $          | 103,092                                                                               |       | $ | — |   |
| **Non-cash financing transactions:**                                                      | ** ** | ** **                                   | ** **  | ** **                                   | ** ** | ** **                                                                            | ** ** |
| Managing partner contributions included in  accounts receivable from affiliates           | ** ** | **$**                                        | —      |                                         | $          | 11,660                                                                                |       | $ | 468,831 |   |
| Offering costs included in accounts payable  to affiliates                                | ** ** | **$**                                        | 100,053     |                                         | $          | 120,000                                                                               |       | $ | 549,846 |   |
| Offering costs included in non-current  accounts payable to affiliates                    | ** ** | **$**                                        | —      |                                         | $          | 100,053                                                                               |       | $ | 506,981 |   |

 

*Seeaccompanying notes to financial statements.*

 

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Reef Global EnergyVIII, L.P.

Notes to Financial Statements

December 31, 2008

 

**1.Organization and Basis of Presentation**

 

ReefGlobal Energy VIII, L.P. (the “Partnership”) is the third in a series of fourNevada limited partnerships comprising a program called Reef Global EnergyVentures II (the “Program”), pursuant to an S-1 Registration Statement declaredeffective by the Securities and Exchange Commission (the “SEC”) on July 7,2005. In order to be formed, each partnership was required to sell a minimum of40 partnership units at $25,000 per unit, including units purchased by themanaging general partner. Each partnership formed as a part of the Programoffered a minimum of 1,000 and a maximum of 2,000 units for sale. The Programwas authorized to sell up to 1,600 limited partner units and 6,400 generalpartner units during the period beginning July 8, 2005 through July 7,2007. The Partnership offered 2,000 units for sale ($50,000,000), consisting ofup to 400 limited partner units and up to 1,600 general partner units. Investorfunds were held in escrow and were subject to reimbursement with interest ifthe minimum number of units was not sold. The Program filed a prospectussupplement with the SEC on July 14, 2006 describing the Partnership, andcommenced offering units in the Partnership. Upon reaching the minimumsubscription level, the Partnership was formed on August 14, 2006. ThePartnership offering closed December 29, 2006, with sales to outsideinvestors totaling 520.793 general partner units and 95.283 limited partnerunits, and sales to the managing general partner totaling 32.425 generalpartner units.

 

ThePartnership is a Nevada limited partnership formed under the Nevada UniformLimited Partnership Act. Reef Oil & Gas Partners, L.P. (“Reef”) servesas the Partnership’s managing general partner. Partnership interests are heldby the managing general partner and investor partners who are general and limitedpartners (“investor partners”). The managing general partner received a 10%interest in the Partnership as compensation for forming the Partnership, andalso holds a 1% interest in the Partnership as a result of paying 1% of allleasehold, drilling and completion costs. This 11% interest is not representedby Partnership units. In addition, Reef purchased 5% of the Partnership unitsand, therefore, holds 5% of the 89% interest in the Partnership (4.45%) held bythe unit holders. The Partnership purchased working interests in exploratoryand developmental drilling prospects and drilled oil and gas wells locatedonshore in the continental United States. Other partnerships formed as a partof this Program, as well as other partnerships managed by Reef also owninterests in some of the prospects purchased by this Partnership. In instanceswhere Reef-affiliated entities own a majority working interest in a prospect,wells drilled on that prospect may be operated by OREI, Inc. (“OREI”) orReef Exploration, L.P. (“RELP”), affiliates of the managing general partner.

 

Pursuantto the Partnership Agreement of the Partnership, all general partner units heldby investors other than the managing general partner were converted intolimited partner units. This conversion of general partner units into limitedpartner units occurred during the 3rd quarter of2008. The general partner equity at June 30, 2008 was transferred tolimited partner equity, and all income and expense items subsequent to thesecond quarter of 2008 have been allocated between the managing general partnerand the limited partners.

 

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Reef Global Energy VIII, L.P.

Notes to Financial Statements (continued)

 

Underthe terms of the partnership agreement, certain income and expense items areallocated differently between the managing general partner and the investorpartners. Allocations of income and expense to the managing general partner andinvestor partners are made quarterly based upon the number and type ofpartnership units held at the end of the quarter.

 

Organizationand offering costs are allocated 100% to investor partners, as the managinggeneral partner purchases its units net of the 15% fee for organization andoffering costs. Monthly cash distributions to partners are based upon thenumber and type of partnership units held at the close of the prior month. Cashdistributions to partners of the net cash flow from interest income and crudeoil and natural gas sales revenues, less operating, general and administrative,and other costs are distributed 15.45% to the managing general partner (basedupon the 11% interest not represented by units and the 4.45% interestrepresented by Partnership units) and 84.55% to investor partners.

 

**2.Summary of Accounting Policies**

 

**Use ofEstimates**

 

Thepreparation of financial statements in conformity with accounting principlesgenerally accepted in the United States of America requires management to makeestimates and assumptions that affect the amounts reported in the financialstatements and accompanying notes. Actual results could differ from theseestimates.

 

**Cashand Cash Equivalents**

 

ThePartnership considers all highly liquid investments with maturity dates of nomore than three months from the purchase date to be cash equivalents. Cash andcash equivalents consist of demand deposits and money market investmentsinvested with a major national bank, which at times may exceed federallyinsured limits. The Partnership has not experienced any losses in suchaccounts, and does not expect any loss from this exposure. The carrying valueof the Partnership’s cash equivalents approximates fair value.

 

**Risks and Uncertainties**

 

Historically,the oil and gas market has experienced significant price fluctuations. Pricesare impacted by local weather, supply in the area, availability and price ofcompetitive fuels, seasonal variations in local demand, limited transportationcapacity to other regions, and the worldwide supply and demand balance forcrude oil.

 

ThePartnership has not engaged in commodity futures trading or hedging activitiesand has not entered into derivative financial instrument transactions fortrading or other speculative purposes. Accordingly, the Partnership is at riskfor the volatility in commodity prices inherent in the oil

 

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Reef Global Energy VIII, L.P.

Notes to Financial Statements (continued)

 

andgas industry, and the level of commodity prices has a significant impact on thePartnership’s results of operations.

 

**Organization and Offering Costs**

 

Organization and offering costs total 15% ofinvestor capital contributions, except for units purchased by the managinggeneral partner, which are purchased net of the 15% cost. Partnershiporganization costs totaling $50,000 have been expensed in the financialstatements for the period from inception (August 14, 2006) to December 31,2006. Offering costs represent costs incurred in conjunction with the offeringof partnership units. These costs, totaling $2,260,285 during 2006, have beenrecorded as a reduction of the proceeds of the offering.

 

# **Crude Oil and Natural Gas Properties**

# ** **

ThePartnership follows the full cost method of accounting for crude oil andnatural gas properties. Under this method, all direct costs and certainindirect costs associated with acquisition of properties and successful as wellas unsuccessful exploration and development activities are capitalized.Depreciation, depletion, and amortization of capitalized crude oil and naturalgas properties and estimated future development costs, excluding unprovedproperties, are based on the unit-of-production method using estimated provedreserves.  For these purposes, provednatural gas reserves are converted to equivalent barrels of crude oil at a rateof 6 Mcf to 1 Bbl. Net capitalized costs of crude oil and natural gasproperties, as adjusted for asset retirement obligations, are limited to thelower of unamortized cost or the cost ceiling, defined as the sum of thepresent value of estimated future net revenues from proved reserves based onprices in effect at the end of the period held constant and discounted at 10percent, plus the lower of cost or estimated fair value of  unproved properties, if any. Pursuant to fullcost accounting rules, the Partnership performs a ceiling test quarterly as ofthe balance sheet date on its proved crude oil and natural gas properties.Excess capitalized costs are charged to property impairment expense. No gain orloss is recognized upon sale or disposition of crude oil and natural gasproperties, unless such a sale would significantly alter the rate of depletionand amortization. During the years ended December 31, 2008 and 2007, thePartnership recognized property impairment expense of proved propertiestotaling $3,252,689 and $8,031,060, respectively.

 

Unprovedproperties consist of undeveloped leasehold interests. Investments in unprovedproperties are not depleted pending determination of the existence of provedreserves. Unproved properties are assessed for impairment quarterly as of thebalance sheet date by considering the primary lease term, the holding period ofthe properties, geologic data obtained relating to the properties, and otherdrilling activity in the immediate area of the properties. Any impairmentresulting from this quarterly assessment is reported as property impairmentexpense in the current period, as appropriate. During the year ended December 31,2008 the Partnership recognized property impairment expense of unprovedproperties totaling $153,330.

 

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Reef Global Energy VIII, L.P.

Notes to Financial Statements (continued)

 

# **Restoration, Removal, andEnvironmental Liabilities**

# ** **

ThePartnership is subject to extensive Federal, state and local environmental lawsand regulations. These laws regulate the discharge of materials into theenvironment and may require the Partnership to remove or mitigate theenvironmental effects of the disposal or release of petroleum substances atvarious sites. Environmental expenditures are expensed or capitalized dependingon their future economic benefit. Expenditures that relate to an existingcondition caused by past operations and that have no future economic benefitare expensed.

 

Liabilitiesfor expenditures of a non-capital nature are recorded when environmentalassessments and/or remediation is probable, and the costs can be reasonablyestimated. Such liabilities are generally undiscounted values unless the timingof cash payments for the liability or component is fixed or reliablydeterminable.

 

ThePartnership accounts for its asset retirement obligations in accordance withStatement of Financial Accounting Standards (“SFAS”) No. 143, “Accountingfor Asset Retirement Obligations” (“SFAS No. 143”). Asset retirement costsand liabilities associated with future site restoration and abandonment oflong-lived assets are initially measured at fair value which approximates thecost a third party would incur in performing the tasks necessary to retire suchassets. The fair value is recognized in the financial statements as the presentvalue of expected future cash expenditures for site restoration andabandonment. Subsequent to the initial measurement, the effect of the passageof time on the liability for the net asset retirement obligation (accretionexpense) and the amortization of the asset retirement cost are recognized inthe results of operations.

 

Thefollowing table summarizes the Partnership’s asset retirement obligation for theyears ended December 31, 2008 and 2007.

 
| ** **                            | ** ** | **2008** | ** ** | **2007** | ** ** |
|---------------------------------------|------------|----------|------------|----------|------------|
| Beginning asset retirement obligation |       | **$**    | 107,909    |     | **$**      | — |   |
| Additions related to new properties   |       | 79,341   |       | 103,092  |       |
| Accretion expense                     |       | 49,799   |       | 4,817    |       |
| Ending asset retirement obligation    |       | **$**    | 237,049    |     | **$**      | 107,909 |   |

 

**Recognitionof Revenue**

 

The Partnership enters into sales contractsfor disposition of its share of crude oil and natural gas production fromproductive wells. Revenues are recognized based upon the Partnership’s share ofmetered volumes delivered to its purchasers each month. The Partnership had nomaterial gas imbalances at December 31, 2008, 2007 and 2006.

 

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Reef Global Energy VIII, L.P.

Notes to Financial Statements (continued)

 

**IncomeTaxes**

 

ThePartnership’s net income or loss flows directly through to its partners, whoare responsible for the payment of Federal taxes on their respective share ofany income or loss. Therefore, there is no provision for federal income taxesin the accompanying financial statements.

 

Asof December 31, 2008, the tax basis of the Partnership’s assets exceedsthe financial reporting basis of the assets by approximately $2.49 million,primarily due to the difference between property impairment costs deducted forfinancial reporting purposes and intangible drilling costs deducted for incometax purposes.

 

**Fair Value Measurements**

 

In September 2006, theFinancial Accounting Standards Board (“FASB”) issued SFAS No. 157, whichdefines fair value, establishes a framework for measuring fair value, andexpands disclosures about fair value measurements. Effective January 1,2008, the Partnership adopted SFAS No. 157, which applies to otheraccounting pronouncements that require or permit fair value measurements;however, it does not require any new fair value measurements.

 

SFAS No. 157establishes a hierarchy for disclosure of the inputs to valuation used tomeasure fair value. The hierarchy prioritizes the inputs into three broadlevels. Level 1 inputs are quoted prices (unadjusted) in active markets foridentical assets or liabilities. All of the Partnership’s cash equivalents fallinto Level 1 and consist of short-term, highly liquid investments, which havematurities of 90 days or less, including money market funds. The Partnershipdoes not have any assets or liabilities falling under Level 2 or 3.

 

**New Accounting Pronouncements**

 

**Modernization of Oil and GasReporting**

 

In January 2009, theSEC issued revisions to the oil and gas reporting disclosures, “Modernizationof Oil and Gas Reporting; Final Rule” (“the Final Rule”). In addition tochanging the definition and disclosure requirements for oil and gas reserves,the Final Rule changes the requirements for determining quantities of oiland gas reserves. The Final Rule also changes certain accountingrequirements under the full cost method of accounting for oil and gasactivities. The amendments are designed to modernize the requirements for thedetermination of oil and gas reserves, aligning them with current practices andupdating them for changes in technology. The Final Rule is effective forannual reports on Form 10-K for fiscal years ending on or after December 31,2009. The Partnership has not yet determined the impact, if any, on thefinancial statements.

 

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Reef Global Energy VIII, L.P.

Notes to Financial Statements (continued)

 

**The Hierarchy of GenerallyAccepted Accounting Principles**

 

In May 2008, the FASBissued SFAS No. 162, “The Hierarchy of Generally Accepted AccountingPrinciples” (“SFAS 162”). SFAS 162 identifies the sources for accountingprinciples and the framework for selecting the principles to be used inpreparing financial statements of nongovernmental entities that are presentedin conformity with generally accepted accounting principles in the UnitedStates. This Statement became effective in November 2008.

 

**Disclosures About DerivativeInstruments and Hedging Activities**

 

In March 2008, the FASBissued SFAS No. 161, “Disclosures about Derivative Instruments and HedgingActivities” (“SFAS 161”). SFAS 161 requires entities that utilize derivativeinstruments to provide qualitative disclosures about their objectives andstrategies for using such instruments, as well as any details ofcredit-risk-related contingent features contained within derivatives. ThePartnership does not utilize derivative instruments; therefore, the Partnershipdoes not expect this pronouncement to have any impact on the Partnership’sresults of operations, cash flows or financial position.

 

**Non-controlling Interests inConsolidated Financial Statements**

 

In December 2007, theFASB issued SFAS No. 160, “Noncontrolling Interests in ConsolidatedFinancial Statements, an amendment of Accounting Research Bulletin No. 51”(“SFAS 160”), which improves the relevance, comparability and transparency ofthe financial information that a reporting entity provides in its consolidatedfinancial statements by establishing accounting and reporting standards for thenoncontrolling interest in a subsidiary and for the deconsolidation of asubsidiary. The Partnership does not own any subsidiaries, and does not expectthis pronouncement to have any impact on the Partnership’s results ofoperations, cash flows or financial position.

 

**Business Combinations**

 

In December 2007, theFASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS141R”), which replaces SFAS No. 141, “Business Combinations” (“SFAS 141”).SFAS 141R retains the fundamental requirements in SFAS 141 that the acquisitionmethod of accounting (which SFAS 141 called the purchase method) be used forall business combinations. The Partnership has no business combinations inprogress or, at this time, in future plans. The Partnership does not expectthis pronouncement to have any impact on the Partnership’s results ofoperations, cash flows or financial position.

 

**Accounting Standard Fair Valuefor Financial Assets and Financial Liabilities**

 

In February 2007, theFASB issued SFAS No. 159, “The Fair Value Option for Financial Assets andFinancial Liabilities” (“SFAS 159”). SFAS 159 allows entities the option tomeasure eligible financial instruments at fair value as of specified dates. ThePartnership did not elect fair value as an alternative as provided under SFAS159 for any of its financial assets and liabilities that are not currentlymeasured at fair value.

 

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Reef Global Energy VIII, L.P.

Notes to Financial Statements (continued)

 

**3.Transactions with Affiliates**

 

ThePartnership has no employees. RELP employs a staff including geologists,petroleum engineers, landmen and accounting personnel who administer all of thePartnership’s operations. Prior to January 2, 2006, OREI employed thisstaff of employees. On January 2, 2006, the employees of OREI were transferredto RELP. In addition, during 2006 RELP assumed from OREI well operator statusfor all wells previously operated by OREI. The Partnership reimburses RELP andOREI for technical and administrative services at cost. During the years ended December 31,2008 and 2007, and the period from inception (August 14, 2006) to December 31,2006, the Partnership incurred technical services and administrative coststotaling $238,247, $734,798 and $36,343, respectively. Of these amounts,$62,446, $699,401 and $36,343 represent technical services costs capitalized asproject costs, and $175,801, $35,397 and $0 represent administrative costsincluded as general and administrative expenses.

 

Reefcontributes 1% of all leasehold, drilling, and completion costs when incurred.During the years ended December 31, 2008 and 2007, this 1% obligationtotaled $5,400 and $109,343, respectively. In connection with the 1%obligation, Reef owed the Partnership $11,660 at December 31, 2007. Reefalso purchased 5% of the Partnership units and pays 5% of the 99% of thesecosts paid by the unit holders (4.95%).

 

RELPprocesses joint interest billings and revenue payments on behalf of thePartnership. At December 31, 2008 and 2007, the Partnership owed RELP$357,569 and $676,282, respectively, for joint interest and technical andadministrative charges processed in excess of net revenues. The Partnershipsettles its balances with Reef and RELP on a quarterly basis.

 

Accountspayable to affiliates as of December 31, 2008 and 2007 also includes$100,053 and $220,053, respectively, for the unpaid portion of the 15%management fee due Reef for organization and offering costs, including salescommissions. The management fee is payable in two parts. Reef initiallyreceived an amount not to exceed 13.5% to recover actual commissions andorganization and offering costs. The portion of the management fee in excess ofactual commissions and organization and offering costs is paid to Reef from theoil and gas cash flows available for partner distributions, at a rate not toexceed $1 million per year. During 2008, the Partnership reimbursed $120,000 ofthis amount to Reef.  The Partnership isreimbursing this amount to Reef at a rate of $10,000 per month. As such, the$100,053 owed at December 31, 2008 has been classified as a currentliability.

 

Reefentered into, and allowed to expire, an agreement (the “CMI North Sea Agreement”)with Challenger Minerals Inc. (“CMI”), a subsidiary of GlobalSantaFe Corporationand a screener of oil and gas prospects in the North Sea region. The CMI NorthSea Agreement provided Reef the opportunity to review and selectivelyparticipate in exploratory and developmental prospects in the North Sea eitheroriginated or previewed by CMI. Reef paid CMI for the geological andgeophysical services provided by CMI under the CMI North Sea Agreement. Theagreement expired in November, 2006.

 

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Reef Global Energy VIII, L.P.

Notes to Financial Statements (continued)

 

Reefalso entered into an agreement with Access Exploration Corp. (“AEC”), ascreener of domestic oil and gas prospects both onshore and in the Gulf ofMexico. This agreement provided Reef the opportunity to review and selectivelyparticipate in exploratory and developmental prospects previewed by AEC. Reefpaid AEC for the geological and geophysical services provided by AEC under thisagreement. This agreement expired in October 2007.

 

Prospectsapproved for acquisition by Reef under these agreements could be assigned tothis Partnership as well as other limited partnerships formed as part of theProgram. Each partnership formed as a part of the Program paid Reef, on a prorata basis, a portion of the fees paid by Reef under these agreements duringthe term of the Program. Total reimbursements to Reef by the partnershipsformed as a part of this Program were equal to the actual fees paid by Reefunder these agreements. At December 31, 2006, this Partnership had apayable to Reef of $104,545 in connection with this obligation, which was paidto Reef during the first quarter of 2007. The payment has been capitalized asgeological and geophysical costs in accordance with the full cost method ofaccounting for oil and gas properties.

 

Ifan affiliate of Reef serves as operator of a Partnership prospect, thenoperator fees will be payable to the affiliate. Under such circumstances, suchaffiliate will receive fees at the competitive rate in the geographical areawhere the prospect is located during the drilling and production phase ofoperations. These fees are charged as a monthly fee per well as agreed to in anoperating agreement signed by the Partnership as well as outside third partyworking interest owners in the well. During the year ended December 31,2007, the Partnership paid drilling overhead fees totaling $28,086 to RELP.During the years ended December 31, 2008 and 2007, the Partnership paidoperating overhead fees totaling $39,363 and $22,875 to RELP, respectively.

 

**4.Major Customers**

 

The Partnership sells crude oil and naturalgas on credit terms to refiners, pipelines, marketers, and other users ofpetroleum commodities. Revenues are received directly from these parties or, incertain circumstances, paid to the operator of the property who disburses tothe Partnership its percentage share of the revenues. During the year ended December 31,2008, one marketer and one operator accounted for 70.3% and 25.3% of thePartnership’s crude oil and natural gas revenues, respectively. During the yearended December 31, 2007, two marketers accounted for 79.3% and 20.1% ofthe Partnership’s crude oil and natural gas revenues, respectively. Due to thecompetitive nature of the market for purchase of crude oil and natural gas, thePartnership does not believe that the loss of any particular purchaser wouldhave a material adverse impact on the Partnership.

 

**5. Commitments and Contingencies**

 

ThePartnership is not currently involved in any legal proceedings.

 

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Reef Global Energy VIII, L.P.

Notes to Financial Statements (continued)

 

**6. Partnership Equity**

 

Salesof Partnership units began on July 14, 2006. Proceeds received were placedinto an interest bearing escrow account until the Partnership reached theminimum subscription level of 40 units. The Partnership was formed on August 14,2006, and the sale of Partnership units was closed on December 29, 2006.The Partnership raised $15,401,896 from the sale of 616.076 Partnership unitsto investor partners. Reef purchased 32.425 units (5%) for $689,032. Reef alsocontributes 1% of all leasehold, drilling, and completion costs when incurred,in addition to paying its pro rata share (4.95%) of the leasehold, drilling,and completion costs paid by the Partnership. In connection with thisobligation, Reef has contributed $128,025 to the Partnership at December 31,2008.

 

Allunits, except those purchased by Reef, paid a 15% management fee to Reef to payfor Partnership organization and offering costs, including sales commissions.These costs totaled $2,310,285, leaving net capital contributions of$13,908,668 available for Partnership oil and gas activities. Of the $2,310,285management fee, offering costs were $2,260,285 and organization costs were$50,000. The Partnership has drilled twenty-one wells at December 31,2008, and has completed drilling operations with the capital raised by thePartnership.

 

Reefexclusively manages and controls all aspects of the business of thePartnership. The Partnership agreement prohibits participation by investorpartners in the Partnership’s day-to-day business decisions.

 

**7.Partnership Prospects**

 

Asof December 31, 2008, the Partnership owns working interests in threedevelopmental prospects and three exploratory prospects, upon which a total oftwenty-one wells have been drilled.

 

ThePartnership drilled nine successful developmental wells and ten unsuccessfuldevelopment wells, including the eight Sand Dunes wells described below. ThePartnership drilled one successful exploratory well and two unsuccessfulexploratory wells. All of the Partnership’s successful wells are productive at December 31,2008.

 

ThePartnership participated in the drilling of eight developmental wells on theSand Dunes prospect during the fourth quarter of 2007 and the first quarter of2008. Initial testing confirmed the presence of crude oil and natural gas inall eight wells, however, the field was temporarily shut-in because of the lackof electric service and because of the high cost of trucking offsite the saltwater volumes associated with the production of the crude oil and natural gasfrom the wells. Electrical service to the field was connected in September 2008.Based upon initial testing, larger bottom hole pumps were placed below the wellperforations in three of the wells and testing was resumed to determine thethree wells’ commercial productivity. Water continued to be trucked offsite,and RELP applied for and received a permit which would allow for the conversionof one of the eight wells into a water disposal well. RELP has also exploredthe possibility of drilling a

 

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Reef Global Energy VIII, L.P.

Notes to Financial Statements (continued)

 

ninthwell as a salt water disposal well for the field. Testing results on two of thethree wells were positive, and salt water production volumes declined as aresult of pumping off the wells using the larger bottom hole pumps. However,the price of crude oil declined at a rapid rate while testing was beingconducted. In late December 2008 two of the three testing wells wereshut-in again. Crude oil prices continued declining to a level below $40 perbarrel. In February 2009, following a mechanical failure in the thirdtesting well, RELP, as operator, shut-in the field. The eight wells cannot becommercially productive without efficient salt water disposal capabilities, andRELP does not believe any of the options regarding salt water disposal areeconomically viable at current commodity prices. As a result, as of December 31,2008, the eight Sand Dunes wells have been classified as unsuccessful, andthere are no crude oil and natural gas reserves for these wells included in theDecember 31, 2008 reserve information presented in this Annual Report.However, RELP has made no plans to plug and abandon the wells at this time, andwill continue to monitor and evaluate the economics of the field based uponcommodity prices.

 

ThePartnership also has unproved property consisting of un-drilled leaseholdinterest (11 potential drilling locations) in the Sand Dunes prospect. ThePartnership has fully impaired this unproved property during the fourth quarterof 2008 based upon the eight already drilled wells being classified asunsuccessful at December 31, 2008. The Partnership currently has no plansto conduct any drilling operations on this acreage.

 

**8. Supplemental Information on Crude Oil & Natural GasExploration and Production Activities (unaudited)**

 

**Capitalized Costs**

 

Thefollowing table presents the Partnership’s aggregate capitalized costs relatingto oil and gas activities at the end of each of the years indicated:

 
| **December 31,**                                 | ** ** | **2008**       | ** **    | **2007**       |   | **2006**      | ** ** |
|-------------------------------------------------------|------------|----------------|---------------|----------------|--------|---------------|------------|
| ** **                                            | ** ** | ** **     | ** **    | ** **     |   | ** **    | ** ** |
| **Oil and natural gas properties:**                   | ** ** | ** **     | ** **    | ** **     |   | ** **    | ** ** |
| Unproved properties                                   |       | **$**          | —        |           | **$**  | 153,330       |       | **$** | 1,328,081 |   |
| Proved properties                                     |       | 13,891,612     |          | 13,253,152     |   | —        |       |
| **Total oil and gas properties**                      | ** ** | **13,891,612** | ** **    | **13,406,482** |   | **1,328,081** | ** ** |
| Less:                                                 | ** ** | ** **     | ** **    | ** **     |   | ** **    | ** ** |
| Accumulated depreciation, depletion, and amortization |       | (1,595,121     | )             | (840,172       | )      | **—**    | ** ** |
| Property impairment                                   |       | (11,283,749    | )             | (8,031,060     | )      | **—**    | ** ** |
| **Total**                                             | ** ** | **$**          | **1,012,742** | ** **     | **$**  | **4,535,250** |       | **$** | **1,328,081** | ** ** |

 

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Reef Global Energy VIII, L.P.

Notes to Financial Statements (continued)

 

**CostsIncurred**

 

Thefollowing table sets forth costs incurred in oil and gas exploration anddevelopment activities during the years ended December 31, 2008 and 2007,and the period from inception (August 14, 2006) to December 31, 2006:

 
| ** **                          | ** ** | **2008**   | ** **  | **2007**   | ** ** | **2006**       | ** ** |
|-------------------------------------|------------|------------|-------------|------------|------------|----------------|------------|
| ** **                          | ** ** | ** ** | ** **  | ** ** | ** ** | ** **     | ** ** |
| **Oil and natural gas properties:** |       |       |        |       |       |           |       |
| Exploration                         |       | **$**      | (23,971     | )          | **$**      | 2,607,831      |       | **$** | 466,836 |   |
| Development                         |       | 662,431    |        | 9,470,570  |       | 861,245        |       |
| **Total**                           | ** ** | **$**      | **638,460** | ** ** | **$**      | **12,078,401** | ** ** | **$** | **1,328,081** | ** ** |

 

**Resultsof Operations**

 

The following table sets forth results ofoperations from oil and gas producing activities for the years ended December 31,2008 and 2007. There were no oil and gas producing activities during the periodfrom inception (August 14, 2006) to December 31, 2006.

** **
| ** **                                | ** ** | **2008**   | ** **     | **2007**   | ** ** |
|-------------------------------------------|------------|------------|----------------|------------|------------|
| ** **                                | ** ** | ** ** | ** **     | ** ** | ** ** |
| **Oil and gas producing activities:**     | ** ** | ** ** | ** **     | ** ** | ** ** |
| Crude oil sales                           |       | **$**      | 1,208,950      |       | **$**      | 969,233 |   |
| Natural gas sales                         |       | 473,839    |           | 243,921    |       |
| Production expenses                       |       | (535,249   | )              | (202,743   | )          |
| Accretion of asset retirement obligation  |       | (49,799    | )              | (4,817     | )          |
| Depreciation , depletion and amortization |       | (754,949   | )              | (840,172   | )          |
| Property impairment expense               |       | (3,252,689 | )              | (8,031,060 | )          |
| **Results of producing activities**       | ** ** | **$**      | **(2,909,897** | **)**      | **$**      | **(7,865,638** | **)** |
| Depletion rate per BOE                    |       | **$**      | 37.84          |       | **$**      | 51.99 |   |

 

                 BOE = Barrels of OilEquivalent (6 MCF equals 1 BOE)

 

**Crude Oil and Natural Gas Reserves**

 

Thefollowing information describes changes during the year and balances of provedcrude oil and natural gas reserves as of December 31, 2008 and 2007. Thedefinitions used are in accordance with applicable SEC regulations.

 

Provedcrude oil and natural gas reserves are the estimated quantities of crude oil,natural gas and natural gas liquids which geological and engineering datademonstrate with reasonable certainty to be recoverable in future years fromknown reservoirs under existing economic and operating conditions, that is, pricesand costs as of the date the estimate is made.

 

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Reef Global Energy VIII, L.P.

Notes to Financial Statements (continued)

 

Pricesinclude consideration of changes in existing prices provided by contractualarrangements, but not escalations based upon future conditions. Additionaldevelopment costs required to recover these proved reserves are estimated at approximately$0 and $248,093 as of December 31, 2008 and 2007, respectively. ThePartnership had no proved reserves at December 31, 2006. All of thePartnership’s reserves are located in the United States.

 
| ** **                                                   | ** ** | **Oil  (BBL) (1)** | ** ** | **Gas  (mcf)** | ** ** | **BOE (2)** | ** ** |
|--------------------------------------------------------------|------------|-------------------------|------------|----------------|------------|-------------|------------|
| Net proved reserves for properties owned by the Partnership: | ** ** | ** **              | ** ** | ** **     | ** ** | ** **  | ** ** |
| Reserves at December 31, 2006                           | ** ** | **—**              | ** ** | **—**     | ** ** | **—**  | ** ** |
| New discoveries                                              |       | 87,262                  |       | 399,965        |       | 153,923     |       |
| Production                                                   |       | (12,330                 | )          | (22,974        | )          | (16,159     | )          |
| Reserves at December 31, 2007                           | ** ** | **74,932**              | ** ** | **376,991**    | ** ** | **137,764** | ** ** |
| ** **                                                   | ** ** | ** **              | ** ** | ** **     | ** ** | ** **  | ** ** |
| Revisions of previous estimates                              |       | (38,957                 | )          | (160,368       | )          | (65,685     | )          |
| Production                                                   |       | (12,259                 | )          | (46,147        | )          | (19,950     | )          |
| Reserves at December 31, 2008                           | ** ** | **23,716**              | ** ** | **170,476**    | ** ** | **52,129**  | ** ** |

 

----

| (1)    | Oil  includes both oil and natural gas liquids                                                                                                                                                                                         |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                   |
| (2)    | BOE  (barrels of oil equivalent) is calculated by converting 6 MCF of natural gas  to 1 BBL of oil. A BBL (barrel) of oil is one stock tank barrel, or 42  U.S. gallons liquid volume, of crude oil or other liquid hydrocarbons. |

 

**Standardized Measure of Discounted Future Net Cash Flows**

 

As required by the Financial Accounting Standards Board, thestandardized measure of discounted future net cash flows is computed byapplying year-end prices, costs and legislated tax rates and a discount factorof 10 percent to net proved reserves.

 

Changes in the demand for crude oil and natural gas, inflation, andother factors make such estimates inherently imprecise and subject tosubstantial revision. This table should not be construed to be an estimate ofthe current market value of the Partnership’s proved reserves.

 
| **December 31,**                                          | ** ** | **2008**      | ** **    | **2007**      | ** ** |
|----------------------------------------------------------------|------------|---------------|---------------|---------------|------------|
| Crude oil and natural gas properties owned by the Partnership: |       |          |          |          |       |
| Future cash inflows                                            |       | **$**         | 2,186,805     |          | **$**      | 9,270,671 |   |
| Future production costs                                        |       | (968,301      | )             | (3,589,920    | )          |
| Future development costs                                       |       | —        |          | (248,093      | )          |
| Future net cash flows                                          | ** ** | **1,218,405** | ** **    | **5,432,658** | ** ** |
| Effect of discounting net cash flows at 10%                    |       | (205,663      | )             | (1,050,738    | )          |
| Discounted future net cash flows                               | ** ** | **$**         | **1,012,742** | ** **    | **$**      | **4,381,920** | ** ** |

 

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Reef Global Energy VIII, L.P.

Notes to Financial Statements (continued)

 

**Changes in the Standardized Measure of DiscountedFuture Net Cash flows Relating to Proved Crude Oil and Natural Gas Reserves**

 
| **December 31,**                                          | ** ** | **2008**   | ** **    | **2007**   | ** ** |
|----------------------------------------------------------------|------------|------------|---------------|------------|------------|
| Crude oil and natural gas properties owned by the Partnership: | ** ** | ** ** | ** **    | ** ** | ** ** |
| Standardized measure at beginning of period                    |       | $          | 4,381,920     |       | $          | — |   |
| Extensions and discoveries                                     |       | —     |          | 5,387,514  |       |
| Net change in sales price, net of production costs             |       | (1,042,024 | )             | —     |       |
| Revisions of quantity estimates                                |       | (1,276,104 | )             | —     |       |
| Net changes in estimated future development costs              |       | (50,527    | )             | —     |       |
| Changes in production timimg rates                             |       | (340,974   | )             | —     |       |
| Accretion of discount                                          |       | 438,192    |          | —     |       |
| Sales net of production costs                                  |       | (1,097,741 | )             | (1,005,594 | )          |
| Net increase (decrease)                                        |       | (3,369,178 | )             | 4,381,920  |       |
| Standardized measure at end of year                            | ** ** | **$**      | **1,012,742** | ** ** | **$**      | **4,381,920** | ** ** |

 

**9. Supplementary Quarterly Financial Data (unaudited)**

 
| **Year ended December 31,  2007**    | ** ** | **1st Qtr** | ** ** | **2nd Qtr** | ** ** | **3rd Qtr** | ** ** | **4th Qtr** | ** ** | **Totals** | ** ** |
|-----------------------------------------------------|------------|------------------|------------|------------------|------------|------------------|------------|------------------|------------|------------|------------|
| Total crude oil and natural gas sales               |       | **$**            | —     |             | **$**      | 107,135          |       | **$**            | 599,788    |       | **$**      | 506,231 |   | **$** | 1,213,154 |   |
| Loss from operations                                |       | (655,815         | )          | (871,594         | )          | (375,911         | )          | (6,068,066       | )          | (7,971,386 | )          |
| Net loss                                            |       | (556,377         | )          | (800,839         | )          | (339,045         | )          | (6,042,032       | )          | (7,738,293 | )          |
| Net income (loss) per managing general partner unit |       | (742.30          | )          | (1,159.29        | )          | 931.21           |       | (9,910.07        | )          | (10,880.45 | )          |
| Net loss per general partner unit                   |       | (864.03          | )          | (1,238.89        | )          | (599.34          | )          | (9,285.70        | )          | (11,987.96 | )          |
| Net income loss per limited partner unit            |       | (864.03          | )          | (1,238.89        | )          | (599.34          | )          | (9,285.70        | )          | (11,987.96 | )          |
|                                                     |            |                  |            |                  |            |                  |            |                  |            |            |            |  |  |  |  |  |

 

Property impairment expense included in the above amounts is asfollows:

1st quarter  —  $651,500, 2nd quarter —   $850,709, 3rd quarter  —  $534,900, 4th quarter—  $5,993,951

 
| **Year ended December 31,  2008**    | ** ** | **1st Qtr** | ** ** | **2nd Qtr** | ** ** | **3rd Qtr** | ** ** | **4th Qtr** | ** ** | **Totals** | ** ** |
|-----------------------------------------------------|------------|------------------|------------|------------------|------------|------------------|------------|------------------|------------|------------|------------|
| Total crude oil and natural gas sales               |       | **$**            | 400,028    |             | **$**      | 527,062          |       | **$**            | 445.330    |       | **$**      | 310,369 |   | **$** | 1,682,789 |   |
| Income (loss) from operations                       |       | 43,412           |       | 149,058          |       | 143,106          |       | (3,689,476       | )          | (3,353,900 | )          |
| Net income (loss)                                   |       | 54,380           |       | 150,910          |       | 144,208          |       | (3,688,546       | )          | (3,339,048 | )          |
| Net income (loss) per managing general partner unit |       | 743.53           |       | 1,079.23         |       | 1,100.35         |       | (6,740.23        | )          | (3,817.12  | )          |
| Net income per general partner unit                 |       | 49.14            |       | 188.15           |       | —           |       | —           |       | 237.29     |       |
| Net income (loss) per limited partner unit          |       | 49.14            |       | 188.15           |       | 176.16           |       | (5,632.41        | )          | (5,218.96  | )          |
|                                                     |            |                  |            |                  |            |                  |            |                  |            |            |            |  |  |  |  |  |

 

Property impairment expense included in the 4th quarter totaled $3,406,019

 

F-18

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Tableof Contents

 

**EXHIBIT INDEX**

** **
| 3.1(a)(i)   |       | Certificate of Limited Partnership (incorporated  by reference to Exhibit 3.1 to Form 8-A, SEC File  No. 000-52541, as filed with the SEC on March 30, 2007.                                                                                                               |
|-------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                     |
| 3.1(a)(ii)  |       | Certificate of Amendment to the  Certificate of Limited Partnership of Reef Global Energy VIII, L.P., dated  August 27, 2008 (incorporated by reference to  Exhibit 3.1(i)(a) to Form 8-K, SEC File No. 000-52541, as filed with the SEC on  September 3, 2008). |
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                     |
| 3.1(a)(iii) |       | Certificate  of Amendment to the Certificate of Limited Partnership of Reef  Global Energy VIII, L.P., dated August 28, 2008 (incorporated by  reference to Exhibit 3.1(i)(b) to Form 8-K, SEC File No. 000-52541, as filed with the SEC on  September 3, 2008). |
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                     |
| 3.2         |       | Form of Limited Partnership  Agreement (incorporated by reference to Appendix A to the prospectus filed as  part of Post-Effective Amendment No. 2 to Registration Statement on  Form S-1, SEC File No.333-122935, filed with the SEC on July 7,  2006).                   |
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                     |
| 10.1        |       | Letter Agreement, dated November 7,  2001, by and between Reef Partners LLC and Challenger Minerals Inc.  (incorporated by reference to Exhibit 10.2 of the Report on  Form 10-K of Reef Global Energy Ventures as filed with the SEC on  March 5, 2002).                  |
|        |       |                                                                                                                                                                                                                                                                                           |
| 23.2        | *          | Consent  of Gleason Engineering.                                                                                                                                                                                                                                                               |
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                     |
| 31.1        | *          | Certification  of Principal Executive Officer pursuant to Rule 13a-14(a) under the  Securities Exchange Act of 1934.                                                                                                                                                                 |
|        |       |                                                                                                                                                                                                                                                                                           |
| 31.2        | *          | Certification  of Principal Financial Officer pursuant to Rule 13a-14(a) under the  Securities Exchange Act of 1934.                                                                                                                                                                 |
|        |       |                                                                                                                                                                                                                                                                                           |
| 32.1        | *          | Certification  of Principal Executive Officer pursuant to 18 U.S.C. §1350.                                                                                                                                                                                                                |
|        |       |                                                                                                                                                                                                                                                                                           |
| 32.2        | *          | Certification  of Principal Financial Officer pursuant to 18 U.S.C. §1350.                                                                                                                                                                                                                |

 

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|   |   | *  Attached  herewith |
|--------|--------|----------------------------|

 

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