FORM 10-K
                    SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, D.C.  20549
(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, 2002

                                    OR

[ ]    Transition  report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934

For the transition period from                      to

Commission File Number 0-16494

        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                (Exact name of registrant as specified in
                    its limited partnership agreement)

Delaware                                                     75-2220418
(State or other jurisdiction                             (I.R.S. Employer
of incorporation or organization)                       Identification No.)

407 N. Big Spring, Suite 300, Midland, Texas                   79701
(Address of principal executive office)                     (Zip Code)

Registrant's telephone number, including area code (915) 686-9927

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

                                   None

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

                      limited partnership interests

Indicate by check mark whether registrant (1) has filed reports required to
be  filed  by  Section 13 or 15(d) of the Securities Exchange Act  of  1934
during  the  preceding  12  months (or for such  shorter  period  that  the
registrant was required to file such reports), and (2) has been subject  to
such filing requirements for the past 90 days:     Yes   x    No

Indicate by check mark if disclosure of delinquent filers pursuant to  Item
405  of  Regulation S-K (229.405 of this chapter) is not contained  herein,
and  will  not  be  contained,  to the best of registrant's  knowledge,  in
definitive  proxy or information statements incorporated  by  reference  in
Part III of this Form 10-K or any amendment to this Form 10-K.     [x]

The  registrant's  outstanding  securities  consist  of  Units  of  limited
partnership  interests for which there exists no established public  market
from which to base a calculation of aggregate market value.

The  total  number of pages contained in this report is  40.   The  exhibit
index is found on page 38.

<PAGE>
                            Table of Contents

Item                                                                   Page

                                  Part I

 1.  Business                                                            3

 2.  Properties                                                          5

 3.  Legal Proceedings                                                   6

 4.  Submission of Matters to a Vote of Security Holders                 6

                                 Part II

 5.  Market for Registrant's Common Equity and Related
     Stockholder Matters                                                 7

 6.  Selected Financial Data                                             8

 7.  Management's Discussion and Analysis of
     Financial Condition and Results of Operations                       9

 8.  Financial Statements and Supplementary Data                        16

 9.  Changes in and Disagreements with Accountants
     on Accounting and Financial Disclosure                             29

                                 Part III

10.  Directors and Executive Officers of the Registrant                 30

11.  Executive Compensation                                             32

12.  Security Ownership of Certain Beneficial Owners and
     Management                                                         32

13.  Certain Relationships and Related Transactions                     33

                                 Part IV

14.  Exhibits, Financial Statement Schedules, and Reports
     on Form 8-K                                                        34

     Signatures                                                         35

<PAGE>
                                  Part I

Item 1.   Business

General
Southwest   Royalties   Institutional  Income  Fund   VIII-B,   L.P.   (the
"Partnership"  or  "Registrant")  was  organized  as  a  Delaware   limited
partnership  on  November 30, 1987.  The offering  of  limited  partnership
interests  began  March 31, 1988, reached minimum capital  requirements  on
July  11,  1988  and concluded on March 31, 1989.  The Partnership  has  no
subsidiaries.

The  Partnership  has  expended  its  capital  and  acquired  interests  in
producing oil and gas properties.  After such acquisitions, the Partnership
has  produced and marketed the crude oil and natural gas produced from such
properties.  In most cases the Partnership purchased royalty or  overriding
royalty interests and working interests in oil and gas properties that were
converted into net profits interests or other nonoperating interests.   The
Partnership  purchased  either all or part of the  rights  and  obligations
under various oil and gas leases.

The  principal executive offices of the Partnership are located at  407  N.
Big Spring, Suite 300, Midland, Texas, 79701.  The Managing General Partner
of  the  Partnership,  Southwest Royalties,  Inc.  (the  "Managing  General
Partner")   and  its  staff  of  82  individuals,  together  with   certain
independent  consultants  used  on an "as needed"  basis,  perform  various
services on behalf of the Partnership, including the selection of  oil  and
gas properties and the marketing of production from such properties.  H. H.
Wommack, III, Chairman, Director, President and Chief Executive Officer  of
the Managing General Partner, is also a general partner. Effective December
31,  2001,  Mr. Wommack sold his general partner interest to  the  Managing
General Partner.  The Partnership has no employees.

Principal Products, Marketing and Distribution
The  Partnership has acquired and holds royalty interests  and  net  profit
interests  in oil and gas properties located in New Mexico and Texas.   All
activities  of  the  Partnership are confined  to  the  continental  United
States.   All  oil  and  gas  produced from these  properties  is  sold  to
unrelated third parties in the oil and gas business.

The  revenues  generated from the Partnership's oil and gas activities  are
dependent upon the current market for oil and gas.  The prices received  by
the Partnership for its oil and gas production depend upon numerous factors
beyond   the   Partnership's  control,  including  competition,   economic,
political  and regulatory developments and competitive energy sources,  and
make it particularly difficult to estimate future prices of oil and natural
gas.

In  2002, fighting and threats of fighting in the Middle East and a  strike
in  a  major  oil exporting country dominated the direction  of  crude  oil
prices.  While OPEC agreed to keep production constant throughout the year,
conflicts between the United States and Iraq, as well as between Israel and
the  Palestinians  threatened supplies and caused oil prices  to  surge  in
2002.   In  addition,  a  strike by oil workers in  Venezuela,  the  fourth
largest  supplier to the United States, took a signficant amount  of  crude
oil off the market toward the end of the year.  As a result, OPEC agreed in
January 2003 to increase output by 1.5 million barrels per day in an effort
to make up for the lost supply and stabilize prices.

In  2002,  spot prices for natural gas fell by 27.5% from the unprecedented
heights  reached in 2001, averaging just under $3.00/MMBtu  for  the  year.
Most  of  the  lowest  prices were seen early on, with  the  first  quarter
averaging  of  $2.24/MMBtu.   But as the year  progressed,  prices  climbed
higher,  ending  with a $3.99 average in December.  As for  2003,  industry
analysts are divided on their gas price predictions, with estimates ranging
anywhere  from $4.00 to $6.00/MMBtu.  Weather forecasts, storage  inventory
levels,  a  tighter  supply and demand balance, and the unstable  situation
with  Iraq  are  all  factors that will have a significant  impact  on  the
direction  prices will take.  Overall however, analysts are  maintaining  a
bullish perspective, expecting gas prices to remain at or above $4.00/MMBtu
in 2003.

Following  is a table of the ratios of revenues received from oil  and  gas
production for the last three years:

            Oil       Gas
           -----     -----
2002        88%       12%
2001        84%       16%
2000        86%       14%

As  the table indicates, the majority of the Partnership's revenue is  from
its   oil  production;  therefore,  Partnership  revenues  will  be  highly
dependent upon the future prices and demands for oil.
<PAGE>
Seasonality of Business
Although the demand for natural gas is highly seasonal, with higher  demand
in  the colder winter months and in very hot summer months, the Partnership
has  been able to sell all of its natural gas, either through contracts  in
place or on the spot market at the then prevailing spot market price.  As a
result,  the volumes sold by the Partnership have not fluctuated materially
with the change of season.

Customer Dependence
No  material portion of the Partnership's business is dependent on a single
purchaser,  or a very few purchasers, where the loss of one  would  have  a
material  adverse impact on the Partnership.  Two purchasers accounted  for
84%  of the Partnership's total oil and gas production during 2002:  Plains
Marketing LP for 63% and Exxon Company for 21%.  Three purchasers accounted
for  79%  of  the Partnership's total oil and gas production  during  2001:
Plains  Marketing LP for 57%, Mobil Corporation for 11% and  Exxon  Company
USA  for 11%.  Two purchasers accounted for 80% of the Partnership's  total
oil  and gas production during 2000:  Plains Marketing LP for 57% and Mobil
Corporation  for  23%.   All purchasers of the Partnership's  oil  and  gas
production  are  unrelated  third parties.   In  the  event  any  of  these
purchasers were to discontinue purchasing the Partnership's production, the
Managing General Partner believes that a substitute purchaser or purchasers
could be located without undue delay.  No other purchaser accounted for  an
amount  equal to or greater than 10% of the Partnership's sales of oil  and
gas production.

Competition
Because  the  Partnership has utilized all of its funds available  for  the
acquisition  of net profits or royalty interests in producing oil  and  gas
properties,  it  is  not  subject to competition from  other  oil  and  gas
property purchasers.  See Item 2, Properties.

Factors  that  may  adversely  affect the  Partnership  include  delays  in
completing  arrangements  for  the sale of production,  availability  of  a
market for production, rising operating costs of producing oil and gas  and
complying  with  applicable  water  and  air  pollution  control  statutes,
increasing  costs  and  difficulties of transportation,  and  marketing  of
competitive  fuels.   Moreover, domestic oil  and  gas  must  compete  with
imported oil and gas and with coal, atomic energy, hydroelectric power  and
other forms of energy.

Regulation

Oil  and Gas Production - The production and sale of oil and gas is subject
to  federal and state governmental regulation in several respects, such  as
existing price controls on natural gas and possible price controls on crude
oil,  regulation of oil and gas production by state and local  governmental
agencies, pollution and environmental controls and various other direct and
indirect   regulation.    Many  jurisdictions  have  periodically   imposed
limitations on oil and gas production by restricting the rate of  flow  for
oil  and  gas wells below their actual capacity to produce and by  imposing
acreage limitations for the drilling of wells.  The federal government  has
the  power  to  permit increases in the amount of oil imported  from  other
countries and to impose pollution control measures.

Various  aspects of the Partnership's oil and gas activities are  regulated
by  administrative agencies under statutory provisions of the states  where
such  activities  are  conducted and by certain  agencies  of  the  federal
government for operations on Federal leases.  Moreover, certain prices  at,
which  the  Partnership may sell its natural gas production, are controlled
by  the  Natural Gas Policy Act of 1978, the Natural Gas Wellhead Decontrol
Act  of  1989  and  the  regulations  promulgated  by  the  Federal  Energy
Regulatory Commission.

Environmental  - The Partnership's oil and gas activities  are  subject  to
extensive  federal,  state  and local laws and  regulations  governing  the
generation,  storage, handling, emission, transportation and  discharge  of
materials into the environment.  Governmental authorities have the power to
enforce compliance with their regulations, and violations carry substantial
penalties.   This  regulatory burden on the oil and gas industry  increases
its cost of doing business and consequently affects its profitability.  The
Managing  General  Partner  is  unable to  predict  what,  if  any,  effect
compliance will have on the Partnership.

Industry  Regulations  and  Guidelines - Certain industry  regulations  and
guidelines  apply to the registration, qualification and operation  of  oil
and  gas programs in the form of limited partnerships.  The Partnership  is
subject  to  these  guidelines, which regulate  and  restrict  transactions
between the Managing General Partner and the Partnership.

The  Partnership  complies with these guidelines and the  Managing  General
Partner  does not anticipate that continued compliance will have a material
adverse effect on Partnership operations.

<PAGE>
Partnership Employees
The  Partnership has no employees; however the Managing General Partner has
a  staff of geologists, engineers, accountants, landmen and clerical  staff
who  engage in Partnership activities and operations and perform additional
services  for  the  Partnership as needed.  In  addition  to  the  Managing
General  Partner's  staff, the Partnership engages independent  consultants
such  as petroleum engineers and geologists as needed.  As of December  31,
2002,  there were 82 individuals directly employed by the Managing  General
Partner in various capacities.

Item 2.   Properties

In  determining whether an interest in a particular producing property  was
to  be  acquired, the Managing General Partner considered such criteria  as
estimated  oil  and  gas reserves, estimated cash flow  from  the  sale  of
production,  present  and  future prices of oil  and  gas,  the  extent  of
undeveloped  and  unproved reserves, the potential for secondary,  tertiary
and other enhanced recovery projects and the availability of markets.

As  of December 31, 2002, the Partnership possessed an interest in oil  and
gas  properties  located in Eddy and Lea Counties of New  Mexico;  Andrews,
Cochran,  Crockett,  Dawson,  Dimmitt, Gaines, Garza,  Glasscock,  Hockley,
Martin,  Nolan, Pecos, Reagan, Scurry, Sterling, Stonewall, Terry, Winkler,
Ward,  Yoakum  and Zavala Counties of Texas.  The Partnership owns  royalty
interests  and  net profit interests in the wells; however,  a  substantial
majority  of  the  interests  are net profit  interests.  These  properties
consist of various interests in approximately 2,463 wells and units.

Due  to  the  Partnership's  objective of  maintaining  current  operations
without engaging in the drilling of any developmental or exploratory wells,
or additional acquisitions of producing properties, there have not been any
significant changes in properties during 2002, 2001 and 2000.

There were no property sales during 2002, 2001 and 2000.

Significant Properties
The  following  table  reflects the significant  properties  in  which  the
Partnership has an interest:

                              Date
                            Purchased    No. of       Proved
                                                    Reserves*
Name and Location              and        Wells     Oil (bbls)   Gas (mcf)
                            Interest
-----------------          ----------   --------    ----------  ----------
                             ------                 ----------      ---
                                                       ---

Mobil                      4/89 at 5%      19         69,000      141,000
                               to
Ward and Reeves              50% net
                             profits
Counties, Texas             interest

North American               3/89 at        3        253,000         -
                             50% to
Royalties                   100% net
                             profits
Yoakum County,              interest
Texas

Rasmussen                    6/89 at       21         77,000      47,000
                              1.5%
Winkler County,              to 19%
                             royalty
                               and
Texas                          net
                             profits
                            interest


*Ryder Scott Company, L.P. prepared the reserve and present value data  for
the  Partnership's existing properties as of January 1, 2003.  The  reserve
estimates  were  made  in  accordance with guidelines  established  by  the
Securities and Exchange Commission pursuant to Rule 4-10(a) of Regulation S-
X.   Such guidelines require oil and gas reserve reports be prepared  under
existing economic and operating conditions with no provisions for price and
cost escalation except by contractual arrangements.

<PAGE>
Oil  price  adjustments were made in the individual evaluations to  reflect
oil quality, gathering and transportation costs. The results of the reserve
report as of January 1, 2003 are an average price of $29.32 per barrel.

Gas  price  adjustments were made in the individual evaluations to  reflect
BTU  content,  gathering and transportation costs and  gas  processing  and
shrinkage.  The results of the reserve report as of January 1, 2003 are  an
average price of $4.76 per Mcf.

As  also discussed in Part II, Item 7, Management's Discussion and Analysis
of  Financial Condition and Results of Operations, oil and gas prices  were
subject to frequent changes in 2002.

The  evaluation  of  oil and gas properties is not  an  exact  science  and
inevitably involves a significant degree of uncertainty, particularly  with
respect to the quantity of oil or gas that any given property is capable of
producing.   Estimates  of  oil and gas reserves  are  based  on  available
geological and engineering data, the extent and quality of which  may  vary
in  each  case  and,  in  certain instances, may prove  to  be  inaccurate.
Consequently,  properties may be depleted more rapidly than the  geological
and engineering data have indicated.

Unanticipated  depletion, if it occurs, will result in lower reserves  than
previously  estimated; thus an ultimately lower return for the Partnership.
Basic  changes in past reserve estimates occur annually.  As  new  data  is
gathered  during the subsequent year, the engineer must revise his  earlier
estimates.  A year of new information, which is pertinent to the estimation
of  future  recoverable volumes, is available during  the  subsequent  year
evaluation.   In applying industry standards and procedures, the  new  data
may cause the previous estimates to be revised.  This revision may increase
or  decrease the earlier estimated volumes.  Pertinent information gathered
during the year may include actual production and decline rates, production
from  offset  wells  drilled to the same geologic formation,  increased  or
decreased water production, workovers, and changes in lifting costs,  among
others.   Accordingly,  reserve  estimates are  often  different  from  the
quantities of oil and gas that are ultimately recovered.

The  Partnership  has  reserves, which are classified as  proved  developed
producing and proved undeveloped.  All of the proved reserves are  included
in  the  engineering  reports,  which evaluate  the  Partnership's  present
reserves.

Because  the  Partnership  does  not engage  in  drilling  activities,  the
development of proved undeveloped reserves is conducted pursuant  to  farm-
out  arrangements  with  the Managing General Partner  or  unrelated  third
parties.  Generally, the Partnership retains a carried interest such as  an
overriding  royalty  interest under the terms of a  farm-out,  or  receives
cash.

The  Partnership or the owners of properties in which the Partnership  owns
an  interest  can  engage  in workover projects or  supplementary  recovery
projects,  for example, to extract behind the pipe reserves, which  qualify
as   proved  developed  non-producing  reserves.   See  Part  II,  Item  7,
Management's Discussion and Analysis of Financial Condition and Results  of
Operations.

Item 3.  Legal Proceedings

There are no material pending legal proceedings to which the Partnership is
a party.

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

No  matter  was submitted to a vote of security holders during  the  fourth
quarter of 2002 through the solicitation of proxies or otherwise.

<PAGE>
                                 Part II

Item 5.  Market  for the Registrant's Common Equity and Related Stockholder
         Matters

Market Information
Limited  partnership interests, or units, in the Partnership were initially
offered and sold for a price of $500.  Limited partner units are not traded
on  any  exchange  and there is no public or organized trading  market  for
them.  The Managing General Partner has become aware of certain limited and
sporadic transfers of units between limited partners and third parties, but
has no verifiable information regarding the prices at which such units have
been  transferred.   Further,  a transferee may  not  become  a  substitute
limited partner without the consent of the Managing General Partner.

After  completion of the Partnership's first full fiscal year of operations
and each year thereafter, the Managing General Partner has offered and will
continue  to  offer  to  purchase each limited partner's  interest  in  the
Partnership,  at a price based on tangible assets of the Partnership,  plus
the  present  value  of  the future net revenues  of  proved  oil  and  gas
properties,  minus liabilities with a risk factor discount of  up  to  one-
third  which  may  be implemented in the sole discretion  of  the  Managing
General  Partner.   However, the Managing General Partner's  obligation  to
purchase  limited partner units is limited to an expenditure of  an  amount
not  in  excess  of  10%  of  the  total limited  partner  units  initially
subscribed  for  by limited partners. As of December 31, 2002,  no  limited
partner  units were purchased by the Managing General Partner.   Southwest,
as  Managing General Partner, evaluated several liquidity alternatives  for
the  partnerships  in  2001 and 2002.  During 2002, Southwest  specifically
pursued  the  possible roll-up and merger of twenty-one  (21)  partnerships
with  the  general partner.  Because of the complexities and  conflicts  of
interest in such a transaction, the Managing General Partner did not make a
formal  repurchase  offer  in 2002 but has responded  to  limited  partners
desiring  to  sell  their units in the partnerships on  an  "as  requested"
basis.   Southwest anticipates that it will maintain this  policy  in  2003
because  the  aforementioned transaction is ongoing. In 2001,  379  limited
partner  units  were  tendered to and purchased  by  the  Managing  General
Partner  at  an  average base price of $314.39 per unit.   In  2000,  650.0
limited  partner  units  were tendered to and  purchased  by  the  Managing
General Partner at an average base price of $178.93 per unit.

Number of Limited Partner Interest Holders
As of December 31, 2002, there were 520 holders of limited partner units in
the Partnership.

Distributions
Pursuant  to Article IV, Section 4.01 of the Partnership's Certificate  and
Agreement  of  Limited Partnership "Net Cash Flow" is  distributed  to  the
partners  on  a quarterly basis.  "Net Cash Flow" is defined as  "the  cash
generated  by  the  Partnership's investments  in  producing  oil  and  gas
properties,  less  (i)  General and Administrative  Costs,  (ii)  Operating
Costs,  and  (iii) any reserves necessary to meet current  and  anticipated
needs  of  the  Partnership, as determined in the sole  discretion  of  the
Managing General Partner."

<PAGE>
During  2002,  quarterly  distributions were made totaling  $230,133,  with
$207,120  distributed to the limited partners and $23,013  to  the  general
partners.   For the year ended December 31, 2002, distributions  of  $20.41
per limited partner unit were made, based upon 10,147 limited partner units
outstanding.   During  2001,  quarterly distributions  were  made  totaling
$620,264, with $558,238 distributed to the limited partners and $62,026  to
the  general partners.  For the year ended December 31, 2001, distributions
of  $55.02  per  limited partner unit were made, based upon 10,147  limited
partner units outstanding.  During 2000, quarterly distributions were  made
totaling  $650,236, with $585,212 distributed to the limited  partners  and
$65,024  to  the general partners.  For the year ended December  31,  2000,
distributions  of  $57.67 per limited partner unit were  made,  based  upon
10,147 limited partner units outstanding.

Item 6.  Selected Financial Data

The  following  selected financial data for the years  ended  December  31,
2002,  2001,  2000,  1999 and 1998 should be read in conjunction  with  the
financial statements included in Item 8:

                                      Years ended December 31,
                           -----------------------------------------------
                                              ---------
                             2002      2001     2000      1999      1998
                            ------    ------   ------    ------    ------

Revenues                $  389,422   542,990  824,878   386,378   197,832

Net income (loss)          281,984   411,583  713,329   275,872   (398,635
                                                                  )

Partners' share of net
income  (loss):

General partners           31,098    46,458   74,533    30,887    10,699

Limited partners           250,886   365,124  638,796   244,985   (409,334
                                                                  )

Limited partners'
 net income (loss)
  per unit                  24.73
                                     35.98    62.95     24.14     (40.34)

Limited partners'
 cash distributions
  per unit                  20.41
                                     55.02    57.67     15.97     21.53

Total assets            $  582,740   530,902  739,259   676,489   580,626


<PAGE>
Item 7.   Management's  Discussion and Analysis of Financial Condition  and
          Results of Operations

General
The  Partnership was formed to acquire nonoperating interests in  producing
oil  and  gas  properties, to produce and market crude oil and natural  gas
produced  from  such  properties and to distribute any  net  proceeds  from
operations  to  the  general  and  limited  partners.   Net  revenues  from
producing  oil  and  gas  properties are not reinvested  in  other  revenue
producing  assets except to the extent that producing facilities and  wells
are  reworked  or  where  methods are employed to improve  or  enable  more
efficient  recovery  of oil and gas reserves.  The  economic  life  of  the
Partnership thus depends on the period over which the Partnership's oil and
gas reserves are economically recoverable.

Increases   or   decreases   in  Partnership   revenues   and,   therefore,
distributions  to partners will depend primarily on changes in  the  prices
received  for  production,  changes in volumes of  production  sold,  lease
operating  expenses, enhanced recovery projects, offset drilling activities
pursuant  to  farm-out arrangements and on the depletion of  wells.   Since
wells  deplete over time, production can generally be expected  to  decline
from year to year.

Well  operating costs and general and administrative costs usually decrease
with   production   declines;  however,  these  costs  may   not   decrease
proportionately.   Net  income available for distribution  to  the  limited
partners  is therefore expected to fluctuate in later years based on  these
factors.

Based  on current conditions, management anticipates performing development
drilling  projects and workovers during the years 2003 and 2004 to  enhance
production.  The partnership may have an increase in production volumes for
the  years  2003  and  2004, otherwise, the partnership  will  most  likely
experience  the  historical production decline, which have approximated  of
approximately 6% per year.

Critical Accounting Policies
Full cost ceiling calculations The Partnership follows the full cost method
of  accounting  for  its  oil and gas properties.   The  full  cost  method
subjects  companies to quarterly calculations of a "ceiling", or limitation
on  the  amount of properties that can be capitalized on the balance sheet.
If  the  Partnership's capitalized costs are in excess  of  the  calculated
ceiling, the excess must be written off as an expense.

The  Partnership's discounted present value of its proved oil  and  natural
gas  reserves  is  a  major  component  of  the  ceiling  calculation,  and
represents  the  component  that requires the  most  subjective  judgments.
Estimates  of  reserves are forecasts based on engineering data,  projected
future  rates  of  production and the timing of future  expenditures.   The
process  of  estimating oil and natural gas reserves  requires  substantial
judgment,  resulting  in  imprecise determinations,  particularly  for  new
discoveries.   Different reserve engineers may make different estimates  of
reserve  quantities  based  on the same data.   The  Partnership's  reserve
estimates are prepared by outside consultants.

The  passage  of  time  provides  more  qualitative  information  regarding
estimates of reserves, and revisions are made to prior estimates to reflect
updated  information.   However,  there  can  be  no  assurance  that  more
significant  revisions  will not be necessary  in  the  future.  If  future
significant  revisions  are  necessary  that  reduce  previously  estimated
reserve quantities, it could result in a full cost property writedown.   In
addition to the impact of these estimates of proved reserves on calculation
of  the  ceiling,  estimates  of proved reserves  are  also  a  significant
component of the calculation of DD&A.

While  the quantities of proved reserves require substantial judgment,  the
associated prices of oil and natural gas reserves that are included in  the
discounted  present  value of the reserves do not  require  judgment.   The
ceiling calculation dictates that prices and costs in effect as of the last
day  of  the  period are generally held constant indefinitely. Because  the
ceiling  calculation dictates that prices in effect as of the last  day  of
the  applicable quarter are held constant indefinitely, the resulting value
is  not indicative of the true fair value of the reserves.  Oil and natural
gas  prices have historically been cyclical and, on any particular  day  at
the  end of a quarter, can be either substantially higher or lower than the
Partnership's  long-term price forecast that is a barometer for  true  fair
value.

Prior  to October 1, 2002, the Partnership calculated depletion of oil  and
gas  properties under the units of revenue method.  The Partnership changed
methods  of estimating depletion effective October 1, 2002 to the units  of
production  method.   The units of production method is more  predominantly
used throughout the oil and gas industry and will allow the Partnership  to
more  closely align itself with its peers.  This change in estimate had  no
impact on depletion expense for the fourth quarter.

<PAGE>
Results of Operations

A.  General Comparison of the Years Ended December 31, 2002 and 2001

The  following  table  provides certain information  regarding  performance
factors for the years ended December 31, 2002 and 2001:

                               Year Ended      Percenta
                                                  ge
                              December 31,     Increase
                             2002      2001    (Decreas
                                                  e)
                            ------    ------   --------
                                                ------
Average price per       $   24.37                 1%
barrel of oil                        24.21
Average price per mcf   $    3.22               (22%)
of gas                               4.12
Oil production in          36,300    40,100      (9%)
barrels
Gas production in mcf      35,700    43,700     (18%)
Income from net         $  386,297   538,441    (28%)
profits interests
Partnership             $  230,133   620,264    (63%)
distributions
Limited partner         $  207,120   558,238    (63%)
distributions
Per unit distribution   $   20.41               (63%)
to limited partners                  55.02
Number of limited          10,147    10,147
partner units

Revenues

The  Partnership's income from net profits interests decreased to  $386,297
from $538,441 for the years ended December 31, 2002 and 2001, respectively,
a  decrease of 28%.  The principal factors affecting the comparison of  the
years ended December 31, 2002 and 2001 are as follows:

1.  The  average  price  for a barrel of oil received  by  the  Partnership
    increased  during the year ended December 31, 2002 as compared  to  the
    year ended December 31, 2001 by 1%, or $.16 per barrel, resulting in an
    increase  of approximately $5,800 in income from net profits interests.
    Oil  sales represented 88% of total oil and gas sales during  the  year
    ended  December  31,  2002 as compared to 84%  during  the  year  ended
    December 31, 2001.

    The  average  price  for  an  mcf of gas received  by  the  Partnership
    decreased during the same period by 22%, or $.90 per mcf, resulting  in
    a  decrease  of  approximately  $32,100  in  income  from  net  profits
    interests.

    The  net total decrease in income from net profits interests due to the
    change  in prices received from oil and gas production is approximately
    $26,300.   The market price for oil and gas has been extremely volatile
    over  the  past  decade  and management expects  a  certain  amount  of
    volatility to continue in the foreseeable future.

<PAGE>
2.  Oil  production decreased approximately 3,800 barrels or 9% during  the
    year ended December 31, 2002 as compared to the year ended December 31,
    2001,  resulting in a decrease of approximately $92,000 in income  from
    net profits interests.

    Gas production decreased approximately 8,000 mcf or 18% during the same
    period, resulting in a decrease of approximately $33,000 in income from
    net profits interests.

    The  total  decrease in income from net profits interests  due  to  the
    change  in production is approximately $125,000.  The decrease  in  gas
    production  is primarily due to a lease that had a well with  a  casing
    leak resulting in downtime, the well is currently under assessment  for
    repairing or plugging.

3.  Lease operating costs and production taxes were less than 1% higher, or
    approximately  $700  more during the year ended December  31,  2002  as
    compared to the year ended December 31, 2001.

Costs and Expenses

Total  costs and expenses decreased to $107,438 from $131,407 for the years
ended  December 31, 2002 and 2001, respectively, a decrease  of  18%.   The
decrease is the result of lower depletion expense, partially offset  by  an
increase in general and administrative expense.

1.  General and administrative costs consists of independent accounting and
    engineering  fees,  computer services, postage,  and  Managing  General
    Partner  personnel  costs. General and administrative  costs  increased
    less  than  1% or approximately $30 during the year ended December  31,
    2002 as compared to the year ended December 31, 2001.

2.   Depletion expense decreased to $29,000 for the year ended December 31,
   2002 from $53,000 for the same period in 2001.  This represents a decrease
   of 45%.  Prior to October 1, 2002, the Partnership calculated depletion of
   oil and gas properties under the units of revenue method.  The Partnership
   changed methods of estimating depletion effective October 1, 2002 to the
   units  of  production method.  The units of production  method  is  more
   predominantly used throughout the oil and gas industry and will allow the
   Partnership to more closely align itself with its peers.  This change in
   estimate had no impact on depletion expense for the fourth quarter.

   The  major  factor  in  the decrease in depletion  expense  between  the
   comparative  periods was the increase in the price of oil and  gas  used
   to  determine the Partnership's reserves for January 1, 2003 as compared
   to  2002,  and  the  decrease in oil and gas revenues  received  by  the
   Partnership during 2002 as compared to 2001.



<PAGE>

Results of Operations

B.  General Comparison of the Years Ended December 31, 2001 and 2000

The  following  table  provides certain information  regarding  performance
factors for the years ended December 31, 2001 and 2000:

                              Year Ended      Percenta
                                                 ge
                             December 31,     Increase
                            2001      2000    (Decreas
                                                 e)
                           ------    ------   --------
                                               ------
Average price per      $   24.21                (16%)
barrel of oil                       28.73
Average price per mcf  $    4.12                (7%)
of gas                              4.45
Oil production in         40,100    41,000      (2%)
barrels
Gas production in mcf     43,700    43,600        -
Income from net        $  538,441   813,940     (34%)
profits interests
Partnership            $  620,264   650,236     (5%)
distributions
Limited partner        $  558,238   585,212     (5%)
distributions
Per unit distribution  $   55.02                (5%)
to limited partners                 57.67
Number of limited         10,147    10,147
partner units

Revenues

The  Partnership's income from net profits interests decreased to  $538,441
from $813,940 for the years ended December 31, 2001 and 2000, respectively,
a  decrease of 34%.  The principal factors affecting the comparison of  the
years ended December 31, 2001 and 2000 are as follows:

1.  The  average  price  for a barrel of oil received  by  the  Partnership
    decreased  during the year ended December 31, 2001 as compared  to  the
    year ended December 31, 2000 by 16%, or $4.52 per barrel, resulting  in
    a  decrease  of  approximately $181,300  in  income  from  net  profits
    interests.  Oil sales represented 84% of total oil and gas sales during
    the  year  ended December 31, 2001 as compared to 86% during  the  year
    ended December 31, 2000.

    The  average  price  for  an  mcf of gas received  by  the  Partnership
    decreased during the same period by 7%, or $.33 per mcf, resulting in a
    decrease of approximately $14,400 in income from net profits interests.

    The  total  decrease in income from net profits interests  due  to  the
    change  in prices received from oil and gas production is approximately
    $195,700.  The market price for oil and gas has been extremely volatile
    over  the  past  decade  and management expects  a  certain  amount  of
    volatility to continue in the foreseeable future.

<PAGE>
2.  Oil  production decreased approximately 900 barrels or  2%  during  the
    year ended December 31, 2001 as compared to the year ended December 31,
    2000,  resulting in a decrease of approximately $25,900 in income  from
    net profits interests.

    Gas  production increased approximately 100 mcf or less than 1%  during
    the  same  period,  resulting in an increase of approximately  $400  in
    income from net profits interests.

    The  net total decrease in income from net profits interests due to the
    change in production is approximately $25,500.

3.  Lease  operating  costs  and  production  taxes  were  10%  higher,  or
    approximately $54,500 more during the year ended December 31,  2001  as
    compared to the year ended December 31, 2000.

Costs and Expenses

Total  costs and expenses increased to $131,407 from $111,549 for the years
ended  December 31, 2001 and 2000, respectively, an increase of  18%.   The
increase is the result of higher depletion expense, partially offset  by  a
decrease in general and administrative expense.

1.  General and administrative costs consists of independent accounting and
    engineering  fees,  computer services, postage,  and  Managing  General
    Partner personnel costs. General and administrative costs decreased  1%
    or  approximately  $1,100 during the year ended December  31,  2001  as
    compared to the year ended December 31, 2000.

2.  Depletion expense increased to $53,000 for the year ended December  31,
    2001  from  $32,000  for the same period in 2000.   This  represents  a
    decrease  of 66%.  Depletion is calculated using the units  of  revenue
    method  of  amortization based on a percentage of current period  gross
    revenues  to  total future gross oil and gas revenues, as estimated  by
    the Partnership's independent petroleum consultants.

   The  major  factor  in  the increase in depletion  expense  between  the
   comparative  periods was the decrease in the price of oil and  gas  used
   to  determine the Partnership's reserves for January 1, 2002 as compared
   to  2001,  and  the  decrease in oil and gas revenues  received  by  the
   Partnership  during  2001 as compared to 2000.   Revisions  of  previous
   estimates  can  be attributed to the changes in production  performance,
   oil  and  gas  price and production costs.  The impact of  the  revision
   would  have  increased  depletion expense approximately  $15,000  as  of
   December 31, 2000.



<PAGE>

C.  Revenue and Distribution Comparison

Partnership net income for the years ended December 31, 2002, 2001 and 2000
was  $281,984, $411,583 and $713,329, respectively.  Excluding the  effects
of depreciation, depletion, and amortization net income for the years ended
December  31,  2002, 2001 and 2000 would have been $310,984,  $464,583  and
$745,329, respectively.  Correspondingly, Partnership distributions for the
years  ended  December 31, 2002, 2001 and 2000 were $230,133, $620,264  and
$650,236, respectively.  These differences are indicative of the changes in
oil and gas prices, production and properties during 2002, 2001 and 2000.

The  sources  for  the  2002 distributions of $230,133  were  oil  and  gas
operations  of  approximately  $246,100,  resulting  in  excess  cash   for
contingencies  or  subsequent distributions.   The  sources  for  the  2001
distributions  of  $620,264  were oil and gas operations  of  approximately
$581,400, with the balance from available cash on hand at the beginning  of
the  period.  The sources for the 2000 distributions of $650,236  were  oil
and  gas operations of approximately $687,000, resulting in excess cash for
contingencies or subsequent distributions.

Total  distributions during the year ended December 31, 2002 were  $230,133
of  which  $207,120 was distributed to the limited partners and $23,013  to
the general partners.  The per unit distribution to limited partners during
the  same  period was $20.41.  Total distributions during  the  year  ended
December  31, 2001 were $620,264 of which $558,238 was distributed  to  the
limited  partners  and  $62,026  to the general  partners.   The  per  unit
distribution to limited partners during the same period was $55.02.   Total
distributions  during  the year ended December 31, 2000  were  $650,236  of
which  $585,212 was distributed to the limited partners and $65,024 to  the
general partners.  The per unit distribution to limited partners during the
same period was $57.67.

Since  inception of the Partnership, cumulative monthly cash  distributions
of  $7,262,220  have been made to the partners.  As of December  31,  2002,
$6,556,483 or $646.15 per limited partner unit has been distributed to  the
limited partners, representing a 100% return of capital and a 29% return on
capital contributed.

Liquidity and Capital Resources

The  primary source of cash is from operations, the receipt of income  from
interests in oil and gas properties.  The Partnership knows of no  material
change, nor does it anticipate any such change.

Cash flows provided by operating activities were approximately $246,100  in
2002 compared to $581,400 in 2001 and approximately $687,000 in 2000.   The
primary  source  of  the  2002  cash flow  from  operating  activities  was
profitable operations.

The  Partnership had no cash flows from investing activities in 2002,  2001
and 2000

Cash flows used in financing activities were approximately $230,100 in 2002
compared to $619,900 in 2001 and approximately $650,600 in 2000.  The  only
use in financing activities was the distributions to partners.

As  of  December  31, 2002, the Partnership had approximately  $203,800  in
working  capital.   The  Managing  General  Partner  knows  of  no  unusual
contractual  commitments.  Although the partnership  held  many  long-lived
properties   at  inception,  because  of  the  restrictions   on   property
development  imposed  by the partnership agreement,  the  Managing  General
Partner  anticipates that at some point in the near future, the partnership
will  need  to be liquidated.  Maintenance of properties and administrative
expenses are increasing relative to production.  As the properties continue
to  deplete,  maintenance  of  properties and  administrative  costs  as  a
percentage of production will continue to increase.

As  the  partnerships  properties have matured, the  net  cash  flows  from
operations  for the partnership have generally declined, except in  periods
of substantially increased commodity pricing.  Since the partnership cannot
develop their non-producing properties, the producing reserves continue  to
deplete causing cash flow to steadily decline.

On October 17, 2002, Southwest Royalties, Inc. the Managing General Partner
filed  an S-4 "Registration of Securities, Business Combinations" with  the
Securities and Exchange Commission.  The S-4 relates to a proposed plan  of
merger of twenty-one limited partnerships.


<PAGE>
Liquidity - Managing General Partner

The  Managing General Partner has a highly leveraged capital structure with
approximately $124.0 million of principal due between December 31, 2002 and
December  31, 2004.  The Managing General Partner is constantly  monitoring
its cash position and its ability to meet its financial obligations as they
become due, and in this effort, is continually exploring various strategies
for  addressing  its  current  and future liquidity  needs.   The  Managing
General Partner regularly pursues and evaluates recapitalization strategies
and  acquisition  opportunities  (including  opportunities  to  engage   in
mergers,  consolidations or other business combinations) and at  any  given
time may be in various stages of evaluating such opportunities.

Based   on  current  production,  commodity  prices  and  cash  flow   from
operations,  the Managing General Partner has adequate cash  flow  to  fund
debt  service, developmental projects and day to day operations, but it  is
not  sufficient  to  build a cash balance which would  allow  the  Managing
General  Partner to meet its debt principal maturities scheduled for  2004.
Therefore  the Managing General Partner must renegotiate the terms  of  its
various  obligations or seek new lenders or equity investors  in  order  to
meet  its financial obligations, specifically those maturing in 2004.   The
Managing  General Partner may be required to dispose of certain  assets  in
order to meet its obligations.

There  can  be  no  assurance  that  the Managing  General  Partner's  debt
restructuring  efforts  will be successful or that the  debt  holders  will
agree  to a course of action consistent with the Managing General Partner's
requirements in restructurings the obligations.  Furthermore, there can  be
no  assurance that the sales of assets can be successfully accomplished  on
terms acceptable to the Managing General Partner.

Recent Accounting Pronouncements

The  FASB  has  issued Statement No. 143 "Accounting for  Asset  Retirement
Obligations" which establishes requirements for the accounting of  removal-
type  costs  associated with asset retirements.  The standard is  effective
for  fiscal  years beginning after June 15, 2002, with earlier  application
encouraged.  The Managing General Partner is currently assessing the impact
on the partnerships financial statements.



Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

The  Partnership  is  not a party to any derivative or embedded  derivative
instruments.

<PAGE>
Item 8.   Financial Statements and Supplementary Data

                      Index to Financial Statements

                                                                       Page

Independent Auditors Report                                             17

Balance Sheets                                                          18

Statements of Operations                                                19

Statement of Changes in Partners' Equity                                20

Statements of Cash Flows                                                21

Notes to Financial Statements                                           22

<PAGE>









                        INDEPENDENT AUDITORS REPORT

The Partners
Southwest Royalties Institutional
 Income Fund VIII-B, L.P.
 (A Delaware Limited Partnership)


We  have  audited  the  accompanying balance sheets of Southwest  Royalties
Institutional Income Fund VIII-B, L.P. (the "Partnership") as  of  December
31,  2002  and 2001, and the related statements of operations,  changes  in
partners'  equity and cash flows for each of the years in  the  three  year
period  ended  December  31,  2002.  These  financial  statements  are  the
responsibility of the Partnership's management.  Our responsibility  is  to
express an opinion on these financial statements based on our audits.

We  conducted  our  audits in accordance with auditing standards  generally
accepted in the United States of America.  Those standards require that  we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit  includes
examining, on a test basis, evidence supporting the amounts and disclosures
in  the  financial  statements.   An  audit  also  includes  assessing  the
accounting principles used and significant estimates made by management, 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 financial statements referred to above present fairly,
in  all  material  respects, the financial position of Southwest  Royalties
Institutional Income Fund VIII-B, L.P. as of December 31, 2002 and 2001 and
the  results of its operations and its cash flows for each of the years  in
the three year period ended December 31, 2002 in conformity with accounting
principles generally accepted in the United States of America.








                                                  KPMG LLP



Midland, Texas
March 14, 2003

<PAGE>

        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)
                              Balance Sheets
                        December 31, 2002 and 2001


                                   2002      2001
                                  ------    ------
Assets
----------

Current assets:
 Cash and cash equivalents    $  79,078    63,123
  Receivable  from  Managing     125,224   60,341
General Partner
                                 --------  --------
                                 ----      ----
   Total current assets          204,302   123,464
                                 --------  --------
                                 ----      ----
Oil  and  gas  properties  -
using the full-
 cost method of accounting       4,133,49  4,133,49
                                 6         6
       Less      accumulated
depreciation,
         depletion       and     3,755,05  3,726,05
amortization                     8         8
                                 --------  --------
                                 ----      ----
      Net   oil   and    gas     378,438   407,438
properties
                                 --------  --------
                                 ----      ----
                              $  582,740   530,902
                                 =======   =======
Liabilities  and   Partners'
Equity
----------------------------
------------

Current     liability      -  $  510       523
distributions payable
                                 --------  --------
                                 ----      ----
Partners' equity:
 General partners                14,705    6,620
 Limited partners                567,525   523,759
                                 --------  --------
                                 ----      ----
   Total partners' equity        582,230   530,379
                                 --------  --------
                                 ----      ----
                              $  582,740   530,902
                                 =======   =======














                  The accompanying notes are an integral
                   part of these financial statements.

<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)
                         Statements of Operations
               Years ended December 31, 2002, 2001 and 2000


                                   2002      2001      2000
                                   ----      ----      ----
Revenues
-------------

  Income  from  net  profits  $  386,297   538,441   813,940
interests
 Interest                        871       4,549     7,024
 Miscellaneous                   2,254     -         3,914
                                 --------  --------  --------
                                 --        --        --
                                 389,422   542,990   824,878
                                 --------  --------  --------
                                 --        --        --
Expenses
------------

 General and administrative      78,438    78,407    79,549
 Depreciation, depletion and     29,000    53,000    32,000
amortization
                                 --------  --------  --------
                                 --        --        --
                                 107,438   131,407   111,549
                                 --------  --------  --------
                                 --        --        --
Net income                    $  281,984   411,583   713,329
                                 ======    ======    ======
 Net income allocated to:

 Managing General Partner     $  31,098    41,812    67,080
                                 ======    ======    ======
 General partner              $  -         4,646     7,453
                                 ======    ======    ======
 Limited partners             $  250,886   365,125   638,796
                                 ======    ======    ======
  Per limited partner unit    $    24.73
                                           35.98     62.95
                                 ======    ======    ======
















                  The accompanying notes are an integral
                   part of these financial statements.

<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)
                 Statement of Changes in Partners' Equity
               Years ended December 31, 2002, 2001 and 2000


                                 General   Limited
                                 Partners  Partners   Total
                                 --------  --------   -----
Balance at December 31, 1999  $  12,679    663,287   675,966

 Net income                      74,533    638,796   713,329

 Distributions                   (65,024)  (585,212  (650,236
                                           )         )
                                 --------  --------  --------
                                 --        ----      ---
Balance at December 31, 2000     22,188    716,871   739,059

 Net income                      46,458    365,125   411,583

 Distributions                   (62,026)  (558,238  (620,264
                                           )         )
                                 --------  --------  --------
                                 --        ----      ---
Balance at December 31, 2001     6,620     523,759   530,379

 Net income                      31,098    250,886   281,984

 Distributions                   (23,013)  (207,120  (230,133
                                           )         )
                                 --------  --------  --------
                                 --        ----      ---
Balance at December 31, 2002  $  14,705    567,525   582,230
                                 ======    =======   ======























                  The accompanying notes are an integral
                   part of these financial statements.

<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)
                         Statements of Cash Flows
               Years ended December 31, 2002, 2001 and 2000

                                   2002      2001      2000
                                   ----      ----      ----
Cash  flows  from  operating
activities:

   Cash  received  from  net  $  321,201   654,636   761,009
profits interests
   Cash   paid  to  Managing
General Partner
   for  administrative  fees
and general
      and     administrative     (78,225)  (77,831)  (80,804)
overhead
 Interest received               871       4,549     7,024
 Miscellaneous settlement        2,254     -         -
                                 --------  --------  --------
                                 ---       ---       ---
     Net  cash  provided  by     246,101   581,354   687,229
operating activities
                                 --------  --------  --------
                                 ---       ---       ---
Cash flows used in financing
activities:

 Distributions to partners       (230,146  (619,939  (650,560
                                 )         )         )
                                 --------  --------  --------
                                 ---       ---       ---
Net  increase (decrease)  in
cash and
 cash equivalents                15,955    (38,585)  36,669

Beginning of year                63,123    101,708   65,039
                                 --------  --------  --------
                                 ---       ---       ---
End of year                   $  79,078    63,123    101,708
                                 ======    ======    ======

Reconciliation of net income
to net
  cash provided by operating
activities:

Net income                    $  281,984   411,583   713,329

Adjustments to reconcile net
income to
   net   cash  provided   by
operating activities:

 Depreciation, depletion and     29,000    53,000    32,000
amortization
   (Increase)  decrease   in     (65,096)  116,195   (56,845)
receivables
   Increase  (decrease)   in     213       576       (1,255)
payables
                                 --------  --------  --------
                                 ---       ---       ---
Net    cash   provided    by  $  246,101   581,354   687,229
operating activities
                                 =======   ======    ======









                  The accompanying notes are an integral
                   part of these financial statements.

<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements

1.   Organization
     Southwest  Royalties  Institutional  Income  Fund  VIII-B,  L.P.   was
     organized  under  the laws of the state of Delaware  on  November  30,
     1987,  for  the purpose of acquiring producing oil and gas  properties
     and to produce and market crude oil and natural gas produced from such
     properties  for a term of 50 years, unless terminated  at  an  earlier
     date  as  provided for in the Partnership Agreement.  The offering  of
     limited   partner   units  began  March  31,  1988,  minimum   capital
     requirements  were met July 11, 1988, with the offering  concluded  on
     March 31, 1989.

     The  Partnership  sells its oil and gas production  to  a  variety  of
     purchasers  with the prices it receives being dependent upon  the  oil
     and  gas  economy.  Southwest Royalties, Inc. serves as  the  Managing
     General  Partner  and  H. H. Wommack, III, as the  individual  general
     partner.   Effective December 31, 2001, Mr. Wommack sold  his  general
     partner interest to the Managing General Partner.

     Revenues, costs and expenses are allocated as follows:

                              Limited   General
                              Partners  Partners
                              --------  --------
                                ----      ----
Interest  income on  capital    100%       -
contributions
Oil  and gas sales from  net    90%       10%
profits interests
All other revenues              90%       10%
Organization  and   offering    100%       -
costs (1)
Amortization of organization    100%       -
costs
Property acquisition costs      100%       -
Gain/loss    on     property    90%       10%
dispositions
Operating and administrative    90%       10%
costs (2)
Depreciation, depletion  and
amortization
 of oil and gas properties      100%       -
All other costs                 90%       10%

          (1)   All  organization costs in excess of 3% of initial  capital
          contributions  will be paid by the Managing General  Partner  and
          will  be treated as a capital contribution.  The Partnership paid
          the  Managing  General Partner an amount equal to 3%  of  initial
          capital contributions for such organization costs.

          (2)  Administrative costs in any year, which exceed 2% of capital
          contributions shall be paid by the Managing Partner and  will  be
          treated as a capital contribution.

2.   Summary of Significant Accounting Policies

     Oil and Gas Properties
     Oil  and  gas properties are accounted for at cost under the full-cost
     method.   Under  this  method, all productive and nonproductive  costs
     incurred   in   connection  with  the  acquisition,  exploration   and
     development of oil and gas reserves are capitalized.  Gain or loss  on
     the   sale  of  oil  and  gas  properties  is  not  recognized  unless
     significant oil and gas reserves are involved.

     Prior to October 1, 2002, the Partnership calculated depletion of  oil
     and gas properties under the units of revenue method.  The Partnership
     changed  methods of estimating depletion effective October 1, 2002  to
     the  units  of production method.  The units of production  method  is
     more  predominantly used throughout the oil and gas industry and  will
     allow  the  Partnership to more closely align itself with  its  peers.
     This  change  in estimate had no impact on depletion expense  for  the
     fourth quarter.

<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements

2.   Summary of Significant Accounting Policies - continued

     Oil and Gas Properties - continued
     Should the net capitalized costs exceed the estimated present value of
     oil  and  gas reserves, discounted at 10%, such excess costs would  be
     charged  to current expense.  In applying the units of revenue  method
     for  the  years ended December 31, 2001, 2000 and for the nine  months
     ended  September 30, 2002, we have not excluded royalty and net profit
     interest  payments from gross revenues as all of our royalty  and  net
     profit  interests have been purchased and capitalized to the depletion
     basis  of our proved oil and gas properties.  As of December 31, 2002,
     2001  and  2000 the net capitalized costs did not exceed the estimated
     present value of oil and gas reserves.

     The  Partnership's interest in oil and gas properties consists of  net
     profits  interests in proved properties located within the continental
     United States.  A net profits interest is created when the owner of  a
     working  interest  in a property enters into an arrangement  providing
     that  the  net profits interest owner will receive a stated percentage
     of  the net profit from the property.  The net profits interest  owner
     will not otherwise participate in additional costs and expenses of the
     property.

     The Partnership recognizes income from its net profits interest in oil
     and  gas  property  on  an  accrual basis, while  the  quarterly  cash
     distributions  of the net profits interest are based on a  calculation
     of  actual  cash  received from oil and gas  sales,  net  of  expenses
     incurred during that quarterly period. The net profits interest  is  a
     calculated  revenue  interest  that  burdens  the  underlying  working
     interest  in the property, and the net profits interest owner  is  not
     responsible   for  the  actual  development  or  production   expenses
     incurred.   Accordingly,  if  the  net  profits  interest  calculation
     results in expenses incurred exceeding the oil and gas income received
     during a quarter, no cash distribution is due to the Partnership's net
     profits  interest  until  the deficit is  recovered  from  future  net
     profits.  The Partnership accrues a quarterly loss on its net  profits
     interest  provided there is a cumulative net amount  due  for  accrued
     revenue as of the balance sheet date.  As of December 31, 2002,  there
     were  no  timing differences, which resulted in a deficit  net  profit
     interest.

     Estimates and Uncertainties
     The  preparation of financial statements in conformity with  generally
     accepted  accounting principles requires management to make  estimates
     and  assumptions  that  affect  the reported  amounts  of  assets  and
     liabilities and disclosure of contingent assets and liabilities at the
     date  of the financial statements and the reported amounts of revenues
     and  expenses during the reporting period. The Partnerships  depletion
     calculation and full-cost ceiling test for oil and gas properties uses
     oil and gas reserves estimates, which are inherently imprecise. Actual
     results could differ from those estimates.

     Syndication Costs
     Syndication  costs  are  accounted for as a reduction  of  partnership
     equity.

     Environmental Costs
     The  Partnership  is  subject to extensive federal,  state  and  local
     environmental laws and regulations.  These laws, which are  constantly
     changing, regulate the discharge of materials into the environment and
     may  require  the Partnership to remove or mitigate the  environmental
     effects of the disposal or release of petroleum or chemical substances
     at   various  sites.   Environmental  expenditures  are  expensed   or
     capitalized depending on their future economic benefit.

     Costs, which improve a property as compared with the condition of  the
     property  when  originally constructed or acquired  and  costs,  which
     prevent    future   environmental   contamination   are   capitalized.
     Expenditures  that  relate  to an existing condition  caused  by  past
     operations  and  that have no future economic benefits  are  expensed.
     Liabilities for expenditures of a non-capital nature are recorded when
     environmental assessment and/or remediation is probable, and the costs
     can be reasonably estimated.

     Revenue Recognition
     We  recognize  oil  and gas sales when delivery to the  purchaser  has
     occurred  and title has transferred.  This occurs when production  has
     been delivered to a pipeline or transport vehicle.


<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements

2.   Summary of Significant Accounting Policies - continued
     Gas Balancing
     The  Partnership  utilizes the sales method  of  accounting  for  gas-
     balancing  arrangements.  Under this method the Partnership recognizes
     sales  revenue  on all gas sold.  As of December 31,  2002,  2001  and
     2000, there were no significant amounts of imbalance in terms of units
     or value.

     Cash and Cash Equivalents
     For purposes of the statement of cash flows, the Partnership considers
     all  highly liquid debt instruments purchased with a maturity of three
     months or less to be cash equivalents.  The Partnership maintains  its
     cash at one financial institution.

     Income Taxes
     No  provision  for  income  taxes  is  reflected  in  these  financial
     statements, since the tax effects of the Partnership's income or  loss
     are passed through to the individual partners.

     In   accordance  with  the  requirements  of  Statement  of  Financial
     Accounting  Standards  No. 109, "Accounting  for  Income  Taxes",  the
     Partnership's tax basis in its oil and gas properties at December  31,
     2002  and  2001 is $70,575 and $130,730, more respectively, than  that
     shown  on the accompanying Balance Sheets in accordance with generally
     accepted accounting principles.

     Number of Limited Partner Units
     As  of  December  31, 2002, 2001 and 2000, there were  10,147  limited
     partner units outstanding held by 520, 520 and 537 partners.

     Concentrations of Credit Risk
     The  Partnership is subject to credit risk through trade  receivables.
     Although  a  substantial portion of its debtors'  ability  to  pay  is
     dependent upon the oil and gas industry, credit risk is minimized  due
     to  a  large customer base.  All partnership revenues are received  by
     the   Managing  General  Partner  and  subsequently  remitted  to  the
     partnership and all expenses are paid by the Managing General  Partner
     and subsequently reimbursed by the partnership.

     Fair Value of Financial Instruments
     The  carrying amount of cash and accounts receivable approximates fair
     value due to the short maturity of these instruments.

     Net Income (loss) per limited partnership unit
     The  net  income (loss) per limited partnership unit is calculated  by
     using the number of outstanding limited partnership units.

     Recent Accounting Pronouncements
     The FASB has issued Statement No. 143 "Accounting for Asset Retirement
     Obligations"  which  establishes requirements for  the  accounting  of
     removal-type costs associated with asset retirements.  The standard is
     effective for fiscal years beginning after June 15, 2002, with earlier
     application  encouraged.  The Managing General  Partner  is  currently
     assessing the impact on the partnerships financial statements.


<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements


3.   Liquidity - Managing General Partner
     The  Managing General Partner has a highly leveraged capital structure
     with  approximately $124.0 million of principal due  between  December
     31,  2002  and  December 31, 2004.  The Managing  General  Partner  is
     constantly  monitoring its cash position and its ability to  meet  its
     financial  obligations  as they become due, and  in  this  effort,  is
     continually  exploring various strategies for addressing  its  current
     and  future  liquidity needs.  The Managing General Partner  regularly
     pursues  and  evaluates  recapitalization strategies  and  acquisition
     opportunities   (including  opportunities  to   engage   in   mergers,
     consolidations or other business combinations) and at any  given  time
     may be in various stages of evaluating such opportunities.

     Based  on  current  production, commodity prices and  cash  flow  from
     operations,  the Managing General Partner has adequate  cash  flow  to
     fund  debt  service, developmental projects and day to day operations,
     but it is not sufficient to build a cash balance which would allow the
     Managing  General  Partner  to  meet  its  debt  principal  maturities
     scheduled  for  2004.   Therefore the Managing  General  Partner  must
     renegotiate  the terms of its various obligations or seek new  lenders
     or  equity  investors  in  order to meet  its  financial  obligations,
     specifically  those  maturing in 2004.  The Managing  General  Partner
     would  also consider disposing of certain assets in order to meet  its
     obligations.

     There  can  be  no assurance that the Managing General Partner's  debt
     restructuring efforts will be successful or that the debt holders will
     agree  to  a  course  of action consistent with the  Managing  General
     Partner's    requirements   in   restructurings    the    obligations.
     Furthermore, there can be no assurance that the sales of assets can be
     successfully accomplished on terms acceptable to the Managing  General
     Partner.

4.   Commitments and Contingent Liabilities
     After  completion  of  the Partnership's first  full  fiscal  year  of
     operations and each year thereafter, the Managing General Partner  has
     offered  and will continue to offer to purchase each limited partner's
     interest  in the Partnership, at a price based on tangible  assets  of
     the Partnership, plus the present value of the future net revenues  of
     proved  oil  and gas properties, minus liabilities with a risk  factor
     discount  of  up  to one-third which may be implemented  in  the  sole
     discretion  of  the Managing General Partner.  However,  the  Managing
     General  Partner's  obligation to purchase limited  partner  units  is
     limited  to  an expenditure of an amount not in excess of 10%  of  the
     total  limited  partner  units initially  subscribed  for  by  limited
     partners.

     Southwest,  as  Managing General Partner, evaluated several  liquidity
     alternatives  for  the partnerships in 2001 and  2002.   During  2002,
     Southwest  specifically pursued the possible  roll-up  and  merger  of
     twenty-one (21) partnerships with the general partner.  Because of the
     complexities  and  conflicts of interest in such  a  transaction,  the
     Managing  General  Partner did not make a formal repurchase  offer  in
     2002  but  has  responded to limited partners desiring to  sell  their
     units  in  the  partnerships  on an "as requested"  basis.   Southwest
     anticipates  that  it will maintain this policy in  2003  because  the
     aforementioned transaction is ongoing.
<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements

4.   Commitments and Contingent Liabilities - continued
     The  Partnership  is  subject  to various  federal,  state  and  local
     environmental  laws  and  regulations, which establish  standards  and
     requirements  for  protection  of the  environment.   The  Partnership
     cannot  predict the future impact of such standards and  requirements,
     which  are  subject to change and can have retroactive  effectiveness.
     The  Partnership  continues to monitor the status of  these  laws  and
     regulations.

     As  of December 31, 2002, the Partnership has not been fined, cited or
     notified  of any environmental violations and management is not  aware
     of  any  unasserted  violations, which would have a  material  adverse
     effect upon capital expenditures, earnings or the competitive position
     in the oil and gas industry.

     However,  the  Managing  General Partner does recognize  by  the  very
     nature  of its business, material costs could be incurred in the  near
     term  to  bring the Partnership into total compliance.  The amount  of
     such  future expenditures is not reliably determinable due to  several
     factors,  including the unknown magnitude of possible  contaminations,
     the  unknown timing and extent of the corrective actions which may  be
     required,   the  determination  of  the  Partnership's  liability   in
     proportion  to other responsible parties and the extent to which  such
     expenditures  are recoverable from insurance or indemnifications  from
     prior owners of Partnership's properties.

5.   Related Party Transactions
     A  significant  portion  of the oil and gas properties  in  which  the
     Partnership  has  an interest are operated by and purchased  from  the
     Managing  General Partner.  As provided for in the operating agreement
     for  each respective oil and gas property in which the Partnership has
     an  interest,  the  operator  is  paid an  amount  for  administrative
     overhead attributable to operating such properties, with such  amounts
     to  Southwest  Royalties,  Inc.  as operator  approximating  $108,700,
     $108,900 and $104,100 for the years ended December 31, 2002, 2001  and
     2000,   respectively.    The   amounts  for  administrative   overhead
     attributable  to  operating  the  partnership  properties  have   been
     deducted from gross oil and gas revenues in the determination  of  net
     profit  interest.     In  addition, the Managing General  Partner  and
     certain  officers and employees may have an interest in  some  of  the
     properties that the Partnership also participates.

     Certain  subsidiaries  or affiliates of the Managing  General  Partner
     perform  various  oilfield  services  for  properties  in  which   the
     Partnership  owns an interest.  Such services aggregated approximately
     $29,700, $4,900 and $8,000 for the years ended December 31, 2002, 2001
     and  2000,  respectively.  The amounts for oilfield services performed
     for the partnership by affiliates of the Managing General Partner have
     been deducted from gross oil and gas revenues in the determination  of
     net profit interest.

     Southwest  Royalties,  Inc., the Managing General  Partner,  was  paid
     $72,000  during  2002,  2001 and 2000, as an  administrative  fee  for
     reimbursement   of   indirect  general  and  administrative   overhead
     expenses.  The  administrative  fees  are  included  in  general   and
     administrative expense on the statement of operations.

     Receivables  from  Southwest  Royalties, Inc.,  the  Managing  General
     Partner,  of approximately $125,200 and $60,300 are from oil  and  gas
     production, net of lease operating costs and production taxes,  as  of
     December 31, 2002 and 2001, respectively.

6.   Major Customers
     No  material portion of the Partnership's business is dependent  on  a
     single  purchaser, or a very few purchasers, where  the  loss  of  one
     would  have  a  material  adverse  impact  on  the  Partnership.   Two
     purchasers  accounted for 84% of the Partnership's total oil  and  gas
     production during 2002: Plains Marketing LP for 63% and Exxon  Company
     for 21%. Three purchasers accounted for 79% of the Partnership's total
     oil  and  gas  production during 2001:  Plains Marketing LP  for  57%,
     Mobil  Corporation  for  11%  and  Exxon  Company  USA  for  11%.  Two
     purchasers  accounted for 80% of the Partnership's total oil  and  gas
     production  during  2000:  Plains  Marketing  LP  for  57%  and  Mobil
     Corporation for 23%. All purchasers of the Partnership's oil  and  gas
     production  are  unrelated third parties. In the event  any  of  these
     purchasers   were   to   discontinue  purchasing   the   Partnership's
     production,  the Managing General Partner believes that  a  substitute
     purchaser or purchasers could be located without undue delay. No other
     purchaser accounted for an amount equal to or greater than 10% of  the
     Partnership's sales of oil and gas production.
<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements

7.   Estimated Oil and Gas Reserves (unaudited)
     The  Partnership's  interest in proved oil  and  gas  reserves  is  as
     follows:

                                Oil       Gas
                               (bbls)    (mcf)
                              --------  --------
                                 --        -
Proved     developed     and
undeveloped reserves -

January 1, 2000               448,000   990,000

   Revisions   of   previous  79,000    (210,000
estimates                               )
 Production                   (41,000)  (44,000)
                              --------  --------
                              --        ----
December 31, 2000             486,000   736,000

   Revisions   of   previous  (92,000)  (365,000
estimates                               )
 Production                   (40,000)  (44,000)
                              --------  --------
                              --        ----
December 31, 2001             354,000   327,000

   Revisions   of   previous  173,000   (3,000)
estimates
 Production                   (36,000)  (36,000)
                              --------  --------
                              --        ----
December 31, 2002             491,000   288,000
                              ======    =======

Proved developed reserves -

December 31, 2000             479,000   736,000
                              ======    =======
December 31, 2001             331,000   327,000
                              ======    =======
December 31, 2002             467,000   287,000
                              ======    =======

     All  of  the Partnership's reserves are located within the continental
     United States.

     *Ryder Scott Company, L.P. prepared the reserve and present value data
     for  the Partnership's existing properties as of January 1, 2003.  The
     reserve  estimates were made in accordance with guidelines established
     by  the Securities and Exchange Commission pursuant to Rule 4-10(a) of
     Regulation  S-X.  Such guidelines require oil and gas reserve  reports
     be  prepared under existing economic and operating conditions with  no
     provisions  for  price  and  cost  escalation  except  by  contractual
     arrangements.

     Oil  price  adjustments  were made in the  individual  evaluations  to
     reflect  oil quality, gathering and transportation costs. The  results
     of  the  reserve report as of January 1, 2003 are an average price  of
     $29.32 per barrel.

     Gas  price  adjustments  were made in the  individual  evaluations  to
     reflect  BTU  content,  gathering and  transportation  costs  and  gas
     processing  and shrinkage.  The results of the reserve  report  as  of
     January 1, 2003 are an average price of $4.76 per Mcf.



<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements

7.   Estimated Oil & Gas Reserves (unaudited) - continued
     The  evaluation of oil and gas properties is not an exact science  and
     inevitably  involves a significant degree of uncertainty, particularly
     with respect to the quantity of oil or gas that any given property  is
     capable of producing.  Estimates of oil and gas reserves are based  on
     available  geological and engineering data, the extent and quality  of
     which may vary in each case and, in certain instances, may prove to be
     inaccurate.   Consequently, properties may be  depleted  more  rapidly
     than the geological and engineering data have indicated.

     Unanticipated  depletion, if it occurs, will result in lower  reserves
     than  previously estimated; thus an ultimately lower  return  for  the
     Partnership.  Basic changes in past reserve estimates occur  annually.
     As  new data is gathered during the subsequent year, the engineer must
     revise  his  earlier estimates.  A year of new information,  which  is
     pertinent  to  the  estimation  of  future  recoverable  volumes,   is
     available during the subsequent year evaluation.  In applying industry
     standards  and  procedures,  the  new  data  may  cause  the  previous
     estimates  to be revised.  This revision may increase or decrease  the
     earlier estimated volumes.  Pertinent information gathered during  the
     year  may include actual production and decline rates, production from
     offset  wells  drilled  to the same geologic formation,  increased  or
     decreased  water production, workovers, and changes in lifting  costs,
     among others.  Accordingly, reserve estimates are often different from
     the quantities of oil and gas that are ultimately recovered.

     The Partnership has reserves, which are classified as proved developed
     producing  and  proved undeveloped.  All of the  proved  reserves  are
     included  in the engineering reports, which evaluate the Partnership's
     present reserves.

     Because  the  Partnership does not engage in drilling activities,  the
     development  of proved undeveloped reserves is conducted  pursuant  to
     farm-out  arrangements with the Managing General Partner or  unrelated
     third  parties.  Generally, the Partnership retains a carried interest
     such  as an overriding royalty interest under the terms of a farm-out,
     or receives cash.

     The  standardized measure of discounted future net cash flows relating
     to  proved oil and gas reserves at December 31, 2002, 2001 and 2000 is
     presented below:

                              2002      2001      2000
                             ------    ------    ------
Future   cash  inflows,
net of
     production     and  $  7,477,00  2,853,00  9,975,00
development costs           0         0         0
10% annual discount for
  estimated  timing  of     3,403,00  1,107,00  4,652,00
cash flows                  0         0         0
                            --------  --------  --------
                            ----      -----     ----
Standardized measure of
  discounted future net  $  4,074,00  1,746,00  5,323,00
cash flows                  0         0         0
                            =======   ========  =======


<PAGE>
        Southwest Royalties Institutional Income Fund VIII-B, L.P.
                     (a Delaware limited partnership)

                      Notes to Financial Statements

7.   Estimated Oil & Gas Reserves (unaudited) - continued
     The  principal  sources  of  change in  the  standardized  measure  of
     discounted  future  net cash flows for the years  ended  December  31,
     2002, 2001 and 2000 are as follows:

                              2002      2001      2000
                              ----      ----      ----

Sales  of oil  and  gas
produced,
   net   of  production  $  (386,000  (538,000  (814,000
costs                       )         )         )
Changes  in prices  and     1,457,00  (3,333,0  2,591,00
production costs            0         00)       0
Changes  of  production
rates
 (timing) and others        (222,000  415,000   (66,000)
                            )
Revisions of previous
 quantities estimates       1,304,00  (653,000  385,000
                            0         )
Accretion of discount       175,000   532,000   293,000
Discounted future net
 cash flows -
Beginning of year           1,746,00  5,323,00  2,934,00
                            0         0         0
                            --------  --------  --------
                            ----      ----      ----
End of year              $  4,074,00  1,746,00  5,323,00
                            0         0         0
                            =======   =======   =======

     Future  net cash flows were computed using year-end prices  and  costs
     that  related  to existing proved oil and gas reserves  in  which  the
     Partnership has mineral interests.

8.   Selected Quarterly Financial Results - (unaudited)

                                           Quarter
                            --------------------------------------
                                           --------
                             First     Second    Third     Fourth
                             ------   --------  -------   --------
                                         --                  --
      2002:
      Total revenues     $  74,334    67,595    127,586   119,907
      Total expenses        26,301    27,207    27,300    26,630
      Net income            48,033    40,388    100,286   93,277
      Net   income  per
      limited
       partners unit           4.19
                                      3.50      8.83      8.21

      2001:
      Total revenues     $  231,370   118,732   143,556   49,332
      Total expenses        30,163    30,779    38,587    31,878
      Net income            201,207   87,953    104,969   17,454
      Net   income  per
      limited
       partners unit          17.74
                                      7.69      9.12      1.43

Item 9.   Changes  in and Disagreements With Accountants on Accounting  and
          Financial Disclosure

None

<PAGE>
                                 Part III

Item 10.  Directors and Executive Officers of the Registrant

Management of the Partnership is provided by Southwest Royalties, Inc.,  as
Managing  General Partner.  The names, ages, offices, positions and  length
of  service of the directors and executive officers of Southwest Royalties,
Inc. are set forth below.  Each director and executive officer serves for a
term of one year.

         Name               Age               Position
-----------------------     ---     -----------------------------
----------------------      --      -----------------------------
H. H. Wommack, III          47      Chairman   of   the    Board,
                                    President, Director
                                    and Chief Executive Officer
James N. Chapman(1)         40      Director
William P. Nicoletti(2)     57      Director
Joseph J. Radecki,  Jr.     44      Director
(2)
Richard D. Rinehart(1)      67      Director
John M. White(2)            46      Director
Herbert  C. Williamson,     54      Director
III(1)
Bill E. Coggin              48      Executive Vice President  and
                                    Chief Financial Officer
J. Steven Person            44      Vice President, Marketing

(1)      Member of the Compensation Committee

(2)      Member of the Audit Committee

H.  H.  Wommack, III has served as Chairman of the Board, President,  Chief
Executive Officer and a director since Southwest's founding in 1983.  Since
1997  Mr.  Wommack  has  served as President, Chief Executive  Officer  and
Chairman of SRH, Southwest's former parent and current holder of 10% of its
voting share capital.  Since 1997 Mr. Wommack has served as chairman of the
board  of  directors  of  Midland Red Oak Realty,  Inc.   From  1997  until
December 2000, Mr. Wommack served as chairman of the board of directors  of
Basic  Energy Services, Inc. and since December 2000 has continued to serve
on Basic's board of directors.  Prior to Southwest's formation, Mr. Wommack
was  a  self-employed  independent oil and  gas  producer  engaged  in  the
purchase  and sale of royalty and working interests in oil and  gas  leases
and  the  drilling of wells.  Mr. Wommack graduated from the University  of
North  Carolina  at  Chapel  Hill and received  his  law  degree  from  the
University of Texas.

James  N.  Chapman  has served as a director since  April  19,  2002.   Mr.
Chapman has been involved in the investment banking industry for 18  years,
presently  acting  as  a capital markets and strategic planning  consultant
with  private and public companies across a range of industries,  including
metals,  mining, manufacturing, aerospace, airline, service and healthcare.
Prior  to  establishing  an independent consulting  practice,  Mr.  Chapman
worked  for  The Renco Group, Inc., a multi-billion private corporation  in
New  York,  for  which Mr. Chapman developed and implemented financing  and
merger  and  acquisitions  strategies  for  Renco's  diverse  portfolio  of
companies.   Prior  to  Renco,  Mr. Chapman was  a  founding  principal  of
Fieldstone Private Capital Group, a capital markets advisory firm  that  he
joined  upon  its inception in August 1990.   Prior to joining  Fieldstone,
Mr.  Chapman worked for Bankers Trust Company for six years, most  recently
in  the  BT Securities Capital Markets area.  Mr. Chapman received  an  MBA
degree with distinction from the Amos Tuck School at Dartmouth College  and
was  elected  an  Edward Tuck Scholar.   He received  his  BA  degree  with
distinction magna cum laude, at Dartmouth College, was elected to Phi  Beta
Kappa and was a Rufus Choate Scholar.

William  P. Nicoletti has served as a director since April 19,  2002.   Mr.
Nicoletti  is Managing Director of Nicoletti & Company Inc., an  investment
banking and financial advisory firm.  He was formerly a senior officer  and
head  of  the  Energy Investment Banking Groups of E. F. Hutton  &  Company
Inc.,  Paine  Webber,  Incorporated  and  McDonald  Investments  Inc.   Mr.
Nicoletti  is  Chairman  of  the  board  of  directors  of  Russell-Stanley
Holdings, Inc., a manufacturer and marketer of steel and plastic industrial
containers.  He is a director of Mark WestEnergy Partners, L.P., a business
engaged   in  the  gathering  and  processing  of  natural  gas   and   the
fractionation and storage of natural gas liquids.  Mr. Nicoletti is also  a
Director  and  Chairman of the Audit Committee of Star Gas Partners,  L.P.,
the  nation's largest retail distributor of home heating oil  and  a  major
retail  distributor of propane gas.  Mr. Nicoletti is a graduate  of  Seton
Hall  University  and  received  an  MBA degree  from  Columbia  University
Graduate School of Business.

<PAGE>

Joseph J. Radecki, Jr. has served as a director since April 19, 2002.   Mr.
Radecki is currently a Managing Director in the Leveraged Finance Group  of
CIBC  World  Markets  where he is principally responsible  for  the  firm's
financial restructuring and distressed situation advisory practice.   Prior
to  joining CIBC World Markets, Mr. Radecki was an Executive Vice President
and  Director of the Financial Restructuring Group of Jefferies &  Company,
Inc.  from 1990 to 1998.  From 1983 until 1990, Mr. Radecki was First  Vice
President  in  the  International Capital Markets Group at  Drexel  Burnham
Lambert,  Inc.,  where  he  specialized  in  financial  restructurings  and
recapitalizations.   Over the past fourteen years,  Mr.  Radecki  has  been
integrally involved in over 120 transactions totaling nearly $50 billion in
recapitalized  securities.  Mr. Radeki currently serves as  a  Director  of
Wherehouse  Entertainment, Inc., a music and video specialty retailer,  and
RBX  Corporation,  a  manufacturer of rubber and  plastic  foam  and  other
polymer  products.  He has previously served as Chairman of  the  Board  of
American Rice, Inc., an international rice miller and marketer, as a member
of  the Board of Directors of Service America Corporation, a national  food
service  management firm, Bucyrus International, Inc., a  mining  equipment
manufacturer,  and ECO-Net, a non-profit engineering related network  firm.
Mr.  Radecki  graduated magna cum laude in 1980 from Georgetown  University
with a B.A. in Government.

Richard  D.  Rinehart has served as a director since April 19,  2002.   Mr.
Rinehart is a founding principal of PetroCap, Inc. and president of Kestrel
Resources,  Inc.   PetroCap, Inc. provides investment and merchant  banking
services  to  a  variety  of clients active in the oil  and  gas  industry.
Kestrel Resources, Inc. is a privately owned oil and gas operating company.
He  served  as Director of Coopers & Lybrand's Energy Systems and  Services
Division prior to the founding of Kestrel Resources, Inc. in 1992. Prior to
joining  Coopers & Lybrand, he was chief executive officer/founder of  Dawn
Information  Resources,  Inc., formed in 1986 and  acquired  by  Coopers  &
Lybrand  in  early  1991.  Mr. Rinehart served as CEO  of  Terrapet  Energy
Corporation during the period 1982 through 1986. Prior to the formation  of
Terrapet in 1982, he was employed as President of the Terrapet Division  of
E.I.  DuPont de Nemours and Company. Before its acquisition by  DuPont,  he
served  as  CEO and President of Terrapet Corp., a privately owned  E  &  P
company. Before the formation of Terrapet Corp. in 1972, he was manager  of
supplementary recovery methods and senior evaluation engineer  with  H.  J.
Gruy and Associates, Inc., Dallas, Texas.

John  M. White has served as a director since April 19, 2002. Mr. White  is
currently  an  oil and gas analyst with BMO Nesbitt Burns, responsible  for
Fixed  Income research on oil, gas and energy companies.  Prior to  joining
BMO  Nesbitt  Burns  in 1998, Mr. White was responsible  for  Fixed  Income
research  on  the  oil  and  gas  industry at  John  S.  Herold,  Inc.,  an
independent  oil  and  gas  research  and  consulting  firm.   Mr.  White's
experience also includes managing a portfolio of oil and gas loans for  The
Bank  of Nova Scotia, which included independent exploration and production
companies,  oil  service  companies,  gas  pipelines,  gas  processors  and
refiners.   Prior  to entering banking, Mr. White was with BP  Exploration,
where he worked primarily in exploration and production.

Herbert  C. Williamson, III has served as a director since April 19,  2002.
At  present, Mr. Williamson is self-employed as a consultant.   From  March
2001  to  March  2002  Mr. Williamson served as an investment  banker  with
Petrie  Parkman & Co.  From April 1999 to March 2001 Mr. Williamson  served
as chief financial officer and from August 1999 to March 2001 as a director
of  Merlon  Petroleum  Company, a private oil and gas company  involved  in
exploration  and production in Egypt.  Mr. Williamson served  as  executive
vice  president,  chief  financial  officer  and  director  of  Seven  Seas
Petroleum,  Inc., a publicly traded oil and gas exploration  company,  from
March  1998  to  April 1999.  From 1995 through April 1998,  he  served  as
director  in  the  Investment Banking Department  of  Credit  Suisse  First
Boston.   Mr.  Williamson  served  as  vice  chairman  and  executive  vice
president  of Parker and Parsley Petroleum Company, a publicly  traded  oil
and  gas  exploration company (now Pioneer Natural Resources Company)  from
1985 through 1995.

Bill  E.  Coggin  has served as Vice President and Chief Financial  Officer
since joining the Managing General Partner in 1985.  Previously, Mr. Coggin
was  Controller  for Rod Ric Corporation, an oil and gas drilling  company,
and  for  C.F.  Lawrence  &  Associates, a large independent  oil  and  gas
operator.  Mr. Coggin received a B.S. in Education and a B.A. in Accounting
from Angelo State University.

J.  Steven Person has served as Vice President, Marketing since joining the
Managing  General  Partner in 1989.  Mr. Person  began  in  the  investment
industry  with Dean Witter in 1983.  Prior to joining the Managing  General
Partner, Mr. Person was a senior wholesaler with Capital Realty, Inc. While
at  Capital  Realty, he was involved in the syndication of  mortgage  based
securities  through  the major brokerage houses.   Mr.  Person  received  a
B.B.A.  degree  from Baylor University and an M.B.A. from  Houston  Baptist
University.

<PAGE>

Key Employees

Jon  P.  Tate,  age  45, has served as Vice President, Land  and  Assistant
Secretary  of the Managing General Partner since 1989. From 1981  to  1989,
Mr.  Tate  was employed by C.F. Lawrence & Associates, Inc., an independent
oil  and  gas company, as land manager. Mr. Tate is a member of the Permian
Basin Landman's Association.

R.  Douglas  Keathley, age 47, has served as Vice President, Operations  of
the  Managing  General Partner since 1992. Before joining us, Mr.  Keathley
worked  as a senior drilling engineer for ARCO Oil and Gas Company  and  in
similar capacities for Reading & Bates Petroleum Co. and Tenneco Oil Co.

Item 11.  Executive Compensation

The  Partnership  does not have any directors or executive  officers.   The
executive officers of the Managing General Partner do not receive any  cash
compensation,  bonuses, deferred compensation or compensation  pursuant  to
any  type  of  plan,  from the Partnership.  The Managing  General  Partner
received  $72,000  during 2002, 2001 and 2000 as an  annual  administrative
fee.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

There  are  no  limited partners who own of record, or  are  known  by  the
Managing General Partner to beneficially own, more than five percent of the
Partnership's limited partnership interests.

The  Managing  General  Partner owns a ten percent interest  as  a  general
partner.   Through repurchase offers to the limited partners, the  Managing
General  Partner also owns 2,122.5 limited partner units, an 18.8%  limited
partner  interest.  The Managing General Partner total percentage  interest
ownership in the Partnership is 28.8%.

No  officer or director of the Managing General Partner owns units  in  the
Partnership.  H. H. Wommack, III, as the individual general partner of  the
Partnership,  owned  a  one percent interest as  a  general  partner.   The
Managing  General  Partner  as of December 31, 2001,  repurchased  the  one
percent  owned by Mr. Wommack for approximately $34,496.  The officers  and
directors of the Managing General Partner are considered beneficial  owners
of  the  limited partner units acquired by the Managing General Partner  by
virtue  of  their  status as such. Beneficial ownership  is  determined  in
accordance  with  the rules of the Securities and Exchange  Commission  and
includes  voting  or investment power with respect to the  limited  partner
units.   To our knowledge, except under applicable community property  laws
or  as otherwise indicated, the persons named in the table have sole voting
and  sole  investment  control with regard to  all  limited  partner  units
beneficially owned.  We are presenting ownership information as of March 1,
2003. A list of beneficial owners of limited partner units, acquired by the
Managing General Partner, is as follows:

<PAGE>


                                                 Amount and
                                                 Nature of      Percen
                                                                  t
                        Name and Address of      Beneficial       of
  Title of Class         Beneficial Owner        Ownership      Class
-------------------    ---------------------     ----------     ------
  --------------          --------------           ------       -----
Limited Partnership    Southwest  Royalties,     Directly       18.8%
Interest               Inc.                      Owns
                       Managing      General     2,122.5
                       Partner                   Units
                       407   N.  Big  Spring
                       Street
                       Midland, TX 79701

Limited Partnership    H. H. Wommack, III        Indirectly     18.8%
Interest                                         Owns
                       Chairman    of    the     2,122.5
                       Board,                    Units
                       President, and CEO
                       of          Southwest
                       Royalties, Inc.,
                       the  Managing General
                       Partner
                       407   N.  Big  Spring
                       Street
                       Midland, TX 79701


There are no arrangements known to the Managing General Partner, which  may
at a subsequent date result in a change of control of the Partnership.

Item 13.  Certain Relationships and Related Transactions

In 2002, the Managing General Partner received $72,000 as an administrative
fee.   This  amount  is  part  of the general and  administrative  expenses
incurred by the Partnership.

In  some  instances the Managing General Partner and certain  officers  and
employees  may  be working interest owners in an oil and  gas  property  in
which  the Partnership also has a net profits interest.  Certain properties
in  which  the  Partnership has an interest are operated  by  the  Managing
General  Partner,  who was paid approximately $108,700  for  administrative
overhead attributable to operating such properties during 2002.

Certain  subsidiaries or affiliates of the Managing General Partner perform
various  oilfield services for properties in which the Partnership owns  an
interest.   Such  services aggregated approximately $29,700  for  the  year
ended December 31, 2002.

In  the  opinion  of  management, the terms of the above  transactions  are
similar to ones with unaffiliated third parties.

<PAGE>
                                 Part IV


Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

          (a)(1)  Financial Statements:

                  Included in Part II of this report --

                  Independent Auditors Report
                  Balance Sheets
                  Statements of Operations
                  Statement of Changes in Partners' Equity
                  Statements of Cash Flows
                  Notes to Financial Statements

                     (2)  Schedules required by Article 12 of Regulation S-
                  X  are either omitted because they are not applicable  or
                  because  the  required  information  is  shown   in   the
                  financial statements or the notes thereto.

             (3)  Exhibits:

                                      4      (a)   Certificate  of  Limited
                          Partnership  of Southwest Royalties Institutional
                          Income  Fund  VIII-B, L.P.,  dated  November  30,
                          1987.   (Incorporated by reference  from  Partner
                          ship's S-1 Registration Statement, File Number 33-
                          18852 effective March 31, 1988.)

                                            (b)    Agreement   of   Limited
                          Partnership  of Southwest Royalties Institutional
                          Income  Fund  VIII-B, L.P. dated July  11,  1988.
                          (Incorporated  by  reference  from  Partnership's
                          Form 10-K for the fiscal year ended December  31,
                          1988.)

                  99.1 Certification pursuant to 18 U.S.C. Section 1350
99.2 Certification pursuant to 18 U.S.C. Section 1350

          (b)  Reports on Form 8-K

                  There  were  no  reports filed on  Form  8-K  during  the
              quarter ended December 31, 2002.

<PAGE>
                                Signatures


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


                          Southwest Royalties Institutional Income Fund
                          VIII-B, L.P., a Delaware limited partnership


                                                          By:     Southwest
                                  Royalties, Inc., Managing
                                  General Partner


                           By:    /s/ H. H. Wommack, III
                                  -----------------------------------------
------
                                                     H.  H.  Wommack,  III,
                                 President


                           Date:  March 28, 2003


Pursuant  to the requirements of the Securities Exchange Act of 1934,  this
report  has  been signed below by the following persons on  behalf  of  the
Partnership and in the capacities and on the dates indicated.

By:/s/ H. H. Wommack, III                    By:    /s/   James    N.
                                             Chapman
---------------------------                  ------------------------
--------------------                         -----------------------
H.    H.   Wommack,    III,                  James     N.    Chapman,
Chairman of the Board,                       Director
President,   Director   and
Chief Executive Officer

Date:     March 28, 2003                     Date:     March 28, 2003


By:     /s/   William    P.                  By:    /s/   Joseph   J.
Nicoletti                                    Radecki, Jr.
---------------------------                  ------------------------
--------------------                         -----------------------
William    P.    Nicoletti,                  Joseph J. Radecki,  Jr.,
Director                                     Director

Date:     March 28, 2003                     Date:     March 28, 2003


By:     /s/   Richard    D.                  By:  /s/ John M. White
Rinehart
---------------------------                  ------------------------
--------------------                         -----------------------
Richard     D.    Rinehart,                  John M. White, Director
Director

Date:     March 28, 2003                     Date:     March 28, 2003


By:     /s/   Herbert    C.
Williamson, III
---------------------------
--------------------
Herbert C. Williamson, III,
Director

Date:     March 28, 2003

<PAGE>

                         CERTIFICATIONS

          I, H.H. Wommack, III, certify that:

          1.   I have reviewed this annual report on Form 10-K of Southwest
Royalties Institutional Income Fund VIII-B, L.P.;

          2.   Based on my knowledge, this annual report does not contain
any  untrue  statement of a material fact  or  omit  to  state  a
material fact necessary to make the statements made, in light  of
the  circumstances  under which such statements  were  made,  not
misleading  with  respect to the period covered  by  this  annual
report;

          3.   Based on my knowledge, the financial statements, and other
financial  information  included in this  annual  report,  fairly
present in all material respects the financial condition, results
of  operations and cash flows of the registrant as of,  and  for,
the periods presented in this annual report;

          4.   The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure  controls
and  procedures (as defined in Exchange Act Rules 13a-14 and 15d-
14) for the registrant and we have:
               a)   designed such disclosure controls and procedures to ensure
               that material information relating to the registrant, including
               its consolidated subsidiaries, is made known to us by others
               within those entities, particularly during the period in which
               this annual report is being prepared;

               b)   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

               c)   presented in this annual report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

          5.   The registrant's other certifying officers and I have
disclosed,   based  on  our  most  recent  evaluation,   to   the
registrant's  auditors  and the audit committee  of  registrant's
board   of   directors  (or  persons  performing  the  equivalent
functions):

               a)   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

               b)   any fraud, whether or not material, that involves management
               or other employees who have a significant role in the
               registrant's internal controls; and

          6.   The registrant's other certifying officers and I have
indicated  in  this  annual  report whether  or  not  there  were
significant changes in internal controls or in other factors that
could  significantly affect internal controls subsequent  to  the
date  of  our  most recent evaluation, including  any  corrective
actions  with  regard  to significant deficiencies  and  material
weaknesses.

Date:  March 28, 2003

/s/ H.H. Wommack, III
H. H. Wommack, III
Chairman, President, Director and Chief Executive Officer
  of Southwest Royalties, Inc., the
  Managing General Partner of
  Southwest Royalties Institutional
  Income Fund VIII-B, L.P.
<PAGE>
                         CERTIFICATIONS

          I, Bill E. Coggin, certify that:

          1.   I have reviewed this annual report on Form 10-K of Southwest
Royalties Institutional Income Fund VIII-B, L.P.;

          2.   Based on my knowledge, this annual report does not contain
any  untrue  statement of a material fact  or  omit  to  state  a
material fact necessary to make the statements made, in light  of
the  circumstances  under which such statements  were  made,  not
misleading  with  respect to the period covered  by  this  annual
report;

          3.   Based on my knowledge, the financial statements, and other
financial  information  included in this  annual  report,  fairly
present in all material respects the financial condition, results
of  operations and cash flows of the registrant as of,  and  for,
the periods presented in this annual report;

          4.   The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure  controls
and  procedures (as defined in Exchange Act Rules 13a-14 and 15d-
14) for the registrant and we have:
               a)   designed such disclosure controls and procedures to ensure
               that material information relating to the registrant, including
               its consolidated subsidiaries, is made known to us by others
               within those entities, particularly during the period in which
               this annual report is being prepared;

               b)   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

               c)   presented in this annual report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

          5.   The registrant's other certifying officers and I have
disclosed,   based  on  our  most  recent  evaluation,   to   the
registrant's  auditors  and the audit committee  of  registrant's
board   of   directors  (or  persons  performing  the  equivalent
functions):
               a)   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

               b)   any fraud, whether or not material, that involves management
               or other employees who have a significant role in the
               registrant's internal controls; and

          6.   The registrant's other certifying officers and I have
indicated  in  this  annual  report whether  or  not  there  were
significant changes in internal controls or in other factors that
could  significantly affect internal controls subsequent  to  the
date  of  our  most recent evaluation, including  any  corrective
actions  with  regard  to significant deficiencies  and  material
weaknesses.

Date:  March 28, 2003

/s/ Bill E. Coggin
Bill E. Coggin
Executive Vice President
  and Chief Financial Officer of
  Southwest Royalties, Inc., the
  Managing General Partner of
  Southwest Royalties Institutional
  Income Fund VIII-B, L.P.
<PAGE>

                              Exhibit Index


Item No.     Description                                           Page No.

             Exhibit 99.1 Certification pursuant to 18 U.S.C.       39
             Section 1350, as adopted pursuant to Section 906
             of the Sarbanes-Oxley Act of 2002

             Exhibit 99.2 Certification pursuant to 18 U.S.C.       40
             Section 1350, as adopted pursuant to Section 906
             of the Sarbanes-Oxley Act of 2002

<PAGE>
                    CERTIFICATION PURSUANT TO
                     19 U.S.C. SECTION 1350,
                     AS ADOPTED PURSUANT TO
          SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


      In connection with the Annual Report of Southwest Royalties
Institutional  Income  Fund  VIII-B,  Limited  Partnership   (the
"Company") on Form 10-K for the period ending December  31,  2002
as  filed with the Securities and Exchange Commission on the date
hereof  (the  "Report"), I, H.H. Wommack,  III,  Chief  Executive
Officer  of the Managing General Partner of the Company, certify,
pursuant to 18 U.S.C.  1350, as adopted pursuant to  906  of  the
Sarbanes-Oxley Act of 2002, that:

     (1)  The Report fully complies with the requirements of section
       13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in
       all material respects, the financial condition and results of
       operation of the Company.


Date:  March 28, 2003




/s/ H.H. Wommack, III
H. H. Wommack, III
Chairman, President, Director and Chief Executive Officer
  of Southwest Royalties, Inc., the
  Managing General Partner of
  Southwest Royalties Institutional Income Fund VIII-B, L.P.

<PAGE>
                    CERTIFICATION PURSUANT TO
                     19 U.S.C. SECTION 1350,
                     AS ADOPTED PURSUANT TO
          SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


      In connection with the Annual Report of Southwest Royalties
Institutional  Income  Fund  VIII-B,  Limited  Partnership   (the
"Company") on Form 10-K for the period ending December  31,  2002
as  filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, Bill E. Coggin, Chief Financial Officer
of the Managing General Partner of the Company, certify, pursuant
to  18 U.S.C.  1350, as adopted pursuant to  906 of the Sarbanes-
Oxley Act of 2002, that:

     (3)  The Report fully complies with the requirements of section
       13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (4)  The information contained in the Report fairly presents, in
       all material respects, the financial condition and results of
       operation of the Company.


Date:  March 28, 2003




/s/ Bill E. Coggin
Bill E. Coggin
Executive Vice President
  and Chief Financial Officer of
  Southwest Royalties, Inc., the
  Managing General Partner of
  Southwest Royalties Institutional Income Fund VIII-B, L.P.

<PAGE>