----

| Delaware                                       |   | 75-2220418               |
|------------------------------------------------|--------|--------------------------|
| (State      or other jurisdiction              |   | (I.R.S.      Employer    |
| of      incorporation or organization)         |   | Identification      No.) |
|                                           |   |                     |
| 6 Desta Drive, Suite 6500, Midland,      Texas |   | 79705                    |
| (Address      of principal executive office)   |   | (Zip      Code)          |

| Indicate      by check mark if the registrant is a well-known seasoned issuer, as      defined in Rule 405 of the Securities Act.                                                                                                                                                                                                                                                 | ¨    Yes | x  No      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                              |          |       |
| Indicate      by check mark if the registrant is not required to file reports pursuant      to Section 13 or Section 15(d) of the Act.                                                                                                                                                                                                                                            | ¨    Yes | x  No      |
|                                                                                                                                                                                                                                                                                                                                                                              |          |       |
| Indicate      by check mark whether the registrant (1) has filed all 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. | x    Yes      | ¨  No |

| Indicate      by check mark if disclosure of delinquent filers pursuant to Item 405 of      Regulation S-K 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 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Indicate      by check mark whether the registrant is a large accelerated filer, an      accelerated filer, or a non-accelerated filer.  See definition      of “accelerated filer and large accelerated filer” in Rule 12b-2 of the      Exchange Act. |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Large      accelerated filer ¨                                                                                                                                                                                                                                           |   | Accelerated      filer ¨ |   | Non-accelerated      filer  x |   | Smaller      reporting company¨ |   |

| Indicate      by check mark whether the registrant is a shell company (as defined in      Rule 12b-2 of the Act). | ¨    Yes | x  No |
|-------------------------------------------------------------------------------------------------------------------|---------------|-------|

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Page   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Part I                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Business                                                                                                                                                     | 3      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      1A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Risk      Factors                                                                                                                                            | 7      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      1B.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Unresolved Staff      Comments                                                                                                                               | 8      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Properties                                                                                                                                                   | 9      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Legal      Proceedings                                                                                                                                       | 10     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      4.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Submission of Matters to a Vote of Security      Holders                                                                                                     | 10     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Part II                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      5.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Market for Registrant's Common Equity,      Related                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Stockholder      Matters and Issuer Purchases of Equity Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 11     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      6.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Selected Financial      Data                                                                                                                                 | 12     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      7.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Management's Discussion and Analysis of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Financial      Condition and Results of      Operations                                                                                                                          | 13     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      7A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Quantitative and Qualitative Disclosures About Market      Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 15     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      8.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Financial Statements and Supplementary      Data                                                                                                             | 16     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      9.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Changes in and Disagreements with      Accountants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | on Accounting      and Financial      Disclosure                                                                                                                                 | 29     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      9A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Controls and      Procedures                                                                                                                                 | 29     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      9B.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Other      Information                                                                                                                                       | 30     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Part III                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      10.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Directors, Executive Officers and Corporate      Governance                                                                                                  | 31     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      11.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Executive      Compensation                                                                                                                                  | 31     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      12.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Security Ownership of Certain Beneficial Owners and      Management and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Related      Stockholder      Matters                                                                                                                                            | 32     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      13.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Certain Relationships and Related Transactions, and      Director Independence                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 32     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      14.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Principal Accounting Fees and      Services                                                                                                                  | 32     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Part IV                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      15.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Exhibits and Financial Statement      Schedules                                                                                                              | 33     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Glossary of Oil and Gas      Terms                                                                                                                   | 34                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Signatures                                                                                                                                           | 36                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

----

Part

Item1

----

----

----

----

Item1A

----

Item

----

Item

|                                    |   | Proved      Developed |    |   | Proved       |   |   | Total       |   |
|-----------------------------------------|--------|-----------------------|---------|--------|--------------|--------|--------|-------------|--------|
|                                    |   | Producing             |    |   | Nonproducing |   |   | Undeveloped |   |   | Proved |   |
| Oil      (Bbls)                         |   |                  | 606,000 |   |         |   | -      |        |   |   | 1,000 |   |   |   | 607,000 |   |
| Gas      (Mcf)                          |   |                  | 331,000 |   |         |   | -      |        |   |   | 1,000 |   |   |   | 332,000 |   |
| Total      (BOE)                        |   |                  | 661,000 |   |         |   | -      |        |   |   | 1,000 |   |   |   | 662,000 |   |
|                                    |   |                  |    |   |         |   |   |        |   |   |   |   |   |   |   |   |
| Standardized      measure of discounted |   |                  |    |   |         |   |   |        |   |   |   |   |   |   |   |   |
| future net cash      flows              |   |                  |    |   |         |   |   |        |   |   |   |   |   | $ | 16,612,000 |   |

|     |   | Proved      Reserves |    |   |   |   |
|----------|--------|----------------------|---------|--------|--------|--------|
|     |   |                 |    |   |   |   |   | Total      Oil |   |   | Percent      of |   |
|     |   | Oil                  |    |   | Gas    |   |   | Equivalent |   |   | Total      Oil |   |
|     |   | (Bbls)               |    |   | (Mcf)  |   |   | (BOE) |   |   | Equivalent |   |
| Block D  |   |                 | 340,000 |   |   |   | - |   |   |   | 340,000 |   |   |   | 51.4 | % |
| Collie   |   |                 | 75,000  |   |   |   | 114,000 |   |   |   | 94,000 |   |   |   | 14.2 | % |
| Hendrick |   |                 | 87,000  |   |   |   | 23,000 |   |   |   | 90,000 |   |   |   | 13.6 | % |
| Scott    |   |                 | 66,000  |   |   |   | 136,000 |   |   |   | 89,000 |   |   |   | 13.4 | % |
| Other    |   |                 | 39,000  |   |   |   | 59,000 |   |   |   | 49,000 |   |   |   | 7.4 | % |
| Total    |   |                 | 607,000 |   |   |   | 332,000 |   |   |   | 662,000 |   |   |   | 100.0 | % |

----

Item3

Item4

----

Part II

Item

|                |   | Total      Number |   |   |               |   |
|---------------------|--------|-------------------|--------|--------|--------------------|--------|
|                |   | of      Units     |   |   | Average      Price |   |
| Period              |   | Purchased         |   |   | Paid      Per Unit |   |
| January      2007   |   |              | -      |   |               | $      | - |   |
| February      2007  |   |              | -      |   |               |   | - |   |
| March      2007     |   |              | -      |   |               |   | - |   |
| April      2007     |   |              | 257    |   |               |   | 499.70 |   |
| May      2007       |   |              | -      |   |               |   | - |   |
| June      2007      |   |              | -      |   |               |   | - |   |
| July      2007      |   |              | -      |   |               |   | - |   |
| August      2007    |   |              | -      |   |               |   | - |   |
| September      2007 |   |              | 9      |   |               |   | 481.23 |   |
| October      2007   |   |              | -      |   |               |   | - |   |
| November      2007  |   |              | -      |   |               |   | - |   |
| December      2007  |   |              | 99     |   |               |   | 461.81 |   |
| TOTALS              |   |              | 365    |   |               | $      | 488.96 |   |

----

Item6

|                                      |   | Years      ended December 31, |      |
|-------------------------------------------|--------|-------------------------------|-----------|
|                                      |   | 2007                          |      |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
| Revenues                                  |   | $                             | 1,718,192 |   |   | $ | 1,647,951 |   |   | $ | 1,506,592 |   |   | $ | 1,096,546 |   |   | $ | 668,388 |   |
|                                      |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      from continuing operations    |   |                          | 1,573,448 |   |   |   | 1,521,435 |   |   |   | 1,397,100 |   |   |   | 981,156 |   |   |   | 547,871 |   |
|                                      |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Results      from discontinued operations |   |                          | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 11,801 |   |
|                                      |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      before cumulative             |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| effects of accounting      changes        |   |                          | 1,573,448 |   |   |   | 1,521,435 |   |   |   | 1,397,100 |   |   |   | 981,156 |   |   |   | 559,672 |   |
|                                      |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                           |   |                          | 1,573,448 |   |   |   | 1,521,435 |   |   |   | 1,397,100 |   |   |   | 981,156 |   |   |   | 474,787 |   |
|                                      |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Partners'      share of net income:       |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                      |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General      partner                      |   |                          | 159,161   |   |   |   | 153,638 |   |   |   | 141,119 |   |   |   | 99,678 |   |   |   | 49,679 |   |
|                                      |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Limited      partners                     |   |                          | 1,414,287 |   |   |   | 1,367,797 |   |   |   | 1,255,981 |   |   |   | 881,478 |   |   |   | 425,108 |   |
|                                      |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Limited      partners' income per         |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| unit before discontinued      operations  |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and cumulative effect      of             |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| accountingchange                          |   |                          | 139.38    |   |   |   | 134.80 |   |   |   | 123.78 |   |   |   | 86.87 |   |   |   | 48.37 |   |
|                                      |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discontinued      operations per          |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| limited partner    unit                   |   |                          | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1.04 |   |
|                                      |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Limited      partners'                    |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| net income per    unit                    |   |                          | 139.38    |   |   |   | 134.80 |   |   |   | 123.78 |   |   |   | 86.87 |   |   |   | 41.89 |   |
|                                      |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Limited      partners'                    |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| cash distributions per      unit          |   |                          | 130.87    |   |   |   | 146.40 |   |   |   | 126.39 |   |   |   | 75.43 |   |   |   | 57.36 |   |
|                                      |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      assets                         |   | $                             | 829,934   |   |   | $ | 702,098 |   |   | $ | 713,950 |   |   | $ | 707,421 |   |   | $ | 566,121 |   |

----

Item7

----

|                                           |   | Year      Ended December 31, |      |
|------------------------------------------------|--------|------------------------------|-----------|
|                                           |   | 2007                         |      |   | 2006 |   |   | 2005 |   |
| Oil      production in barrels                 |   |                         | 33,744    |   |   |   | 35,708 |   |   |   | 37,013 |   |
| Gas      production in mcf                     |   |                         | 33,417    |   |   |   | 32,716 |   |   |   | 31,883 |   |
| Total      (BOE)                               |   |                         | 39,314    |   |   |   | 41,161 |   |   |   | 42,327 |   |
| Average      price per barrel of oil           |   | $                            | 69.74     |   |   | $ | 61.76 |   |   | $ | 51.99 |   |
| Average      price per mcf of gas              |   | $                            | 8.05      |   |   | $ | 7.37 |   |   | $ | 7.09 |   |
| Partnership      distributions                 |   | $                            | 1,475,600 |   |   | $ | 1,650,633 |   |   | $ | 1,425,000 |   |
| Limited      partner distributions             |   | $                            | 1,327,985 |   |   | $ | 1,485,497 |   |   | $ | 1,282,500 |   |
| Per      unit distribution to limited partners |   | $                            | 130.87    |   |   | $ | 146.40 |   |   | $ | 126.39 |   |
| Number      of limited partner units           |   |                         | 10,147    |   |   |   | 10,147 |   |   |   | 10,147 |   |

----

Item

----

tem

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Page   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| Report of Independent Registered Public Accounting      Firm                                                                                                    |   | 17     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |
| Balance      Sheets                                                                                                                                             |   | 18     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |
| Statements of      Operations                                                                                                                                   |   | 19     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |
| Statements of Changes in Partners'      Equity                                                                                                                  |   | 20     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |
| Statements of Cash      Flows                                                                                                                                   |   | 21     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |
| Notes to Financial      Statements                                                                                                                              |   | 22     |

----

OF INDEPENDENT 

----

Royalties Institutional 

|                                          |   | December      31, |      |
|-----------------------------------------------|--------|-------------------|-----------|
|                                          |   | 2007              |      |   | 2006 |   |
| Assets                                        |   |              |      |   |   |   |
|                                          |   |              |      |   |   |   |
| Current      assets:                          |   |              |      |   |   |   |
| Cash and cash      equivalents                |   | $                 | 104,800   |   |   | $ | 88,009 |   |
| Receivable from Managing General      Partner |   |              | 310,371   |   |   |   | 181,507 |   |
| New Mexico income tax      deposits           |   |              | 1,514     |   |   |   | 1,168 |   |
| Total current      assets                     |   |              | 416,685   |   |   |   | 270,684 |   |
|                                          |   |              |      |   |   |   |   |   |
| Oil      and gas properties - using the full- |   |              |      |   |   |   |   |   |
| cost method of      accounting                |   |              | 4,198,748 |   |   |   | 4,198,748 |   |
| Less accumulated      depreciation,           |   |              |      |   |   |   |   |   |
| depletion and      amortization               |   |              | 3,785,499 |   |   |   | 3,767,334 |   |
|                                          |   |              |      |   |   |   |   |   |
| Net oil and gas      properties               |   |              | 413,249   |   |   |   | 431,414 |   |
|                                          |   | $                 | 829,934   |   |   | $ | 702,098 |   |
|                                          |   |              |      |   |   |   |   |   |
| Liabilities and Partners'      Equity         |   |              |      |   |   |   |   |   |
|                                          |   |              |      |   |   |   |   |   |
| Asset      retirement obligation              |   | $                 | 352,594   |   |   | $ | 322,606 |   |
|                                          |   |              |      |   |   |   |   |   |
| Partners'      equity:                        |   |              |      |   |   |   |   |   |
| General partner                               |   |              | 14,577    |   |   |   | 3,031 |   |
| Limited partners                              |   |              | 462,763   |   |   |   | 376,461 |   |
|                                          |   |              |      |   |   |   |   |   |
| Total partners'      equity                   |   |              | 477,340   |   |   |   | 379,492 |   |
|                                          |   | $                 | 829,934   |   |   | $ | 702,098 |   |

----

Royalties Institutional 

|                                          |   | Years      ended December 31, |      |
|-----------------------------------------------|--------|-------------------------------|-----------|
|                                          |   | 2007                          |      |   | 2006 |   |   | 2005 |   |
| Revenues                                      |   |                          |      |   |   |   |   |   |   |
|                                          |   |                          |      |   |   |   |   |   |   |
| Income from net profits      interests        |   | $                             | 1,713,368 |   |   | $ | 1,641,567 |   |   | $ | 1,502,655 |   |
| Interest income                               |   |                          | 4,679     |   |   |   | 6,384 |   |   |   | 3,937 |   |
| Other                                         |   |                          | 145       |   |   |   | - |   |   |   | - |   |
|                                          |   |                          | 1,718,192 |   |   |   | 1,647,951 |   |   |   | 1,506,592 |   |
|                                          |   |                          |      |   |   |   |   |   |   |   |   |   |
| Expenses                                      |   |                          |      |   |   |   |   |   |   |   |   |   |
|                                          |   |                          |      |   |   |   |   |   |   |   |   |   |
| Depreciation, depletion and      amortization |   |                          | 18,165    |   |   |   | 14,943 |   |   |   | 14,092 |   |
| Accretionexpense                              |   |                          | 29,988    |   |   |   | 17,484 |   |   |   | 11,540 |   |
| General and      administrative               |   |                          | 96,591    |   |   |   | 94,089 |   |   |   | 83,860 |   |
|                                          |   |                          | 144,744   |   |   |   | 126,516 |   |   |   | 109,492 |   |
|                                          |   |                          |      |   |   |   |   |   |   |   |   |   |
| Net      income                               |   | $                             | 1,573,448 |   |   | $ | 1,521,435 |   |   | $ | 1,397,100 |   |
|                                          |   |                          |      |   |   |   |   |   |   |   |   |   |
| Net      income allocated to:                 |   |                          |      |   |   |   |   |   |   |   |   |   |
|                                          |   |                          |      |   |   |   |   |   |   |   |   |   |
| Managing General      Partner                 |   | $                             | 159,161   |   |   | $ | 153,638 |   |   | $ | 141,119 |   |
|                                          |   |                          |      |   |   |   |   |   |   |   |   |   |
| Limited partners                              |   | $                             | 1,414,287 |   |   | $ | 1,367,797 |   |   | $ | 1,255,981 |   |
|                                          |   |                          |      |   |   |   |   |   |   |   |   |   |
| Per limited partner      unit                 |   | $                             | 139.38    |   |   | $ | 134.80 |   |   | $ | 123.78 |   |

----

Royalties Institutional 

|                              |   | General  |     |   | Limited  |   |       |   |   |
|-----------------------------------|--------|----------|----------|--------|----------|--------|------------|--------|--------|
|                              |   | Partners |     |   | Partners |   |       | Total  |   |
| Balance      at December 31, 2004 |   | $        | 15,910   |   |     | $      | 520,680    |   |   | $ | 536,590 |   |
|                              |   |     |     |   |     |   |       |   |   |   |   |   |
| Net income                        |   |     | 141,119  |   |     |   | 1,255,981  |   |   |   | 1,397,100 |   |
|                              |   |     |     |   |     |   |       |   |   |   |   |   |
| Distributions                     |   |     | (142,500 | )      |     |   | (1,282,500 | )      |   |   | (1,425,000 | ) |
|                              |   |     |     |   |     |   |       |   |   |   |   |   |
| Balance      at December 31, 2005 |   |     | 14,529   |   |     |   | 494,161    |   |   |   | 508,690 |   |
|                              |   |     |     |   |     |   |       |   |   |   |   |   |
| Net income                        |   |     | 153,638  |   |     |   | 1,367,797  |   |   |   | 1,521,435 |   |
|                              |   |     |     |   |     |   |       |   |   |   |   |   |
| Distributions                     |   |     | (165,136 | )      |     |   | (1,485,497 | )      |   |   | (1,650,633 | ) |
|                              |   |     |     |   |     |   |       |   |   |   |   |   |
| Balance      at December 31, 2006 |   |     | 3,031    |   |     |   | 376,461    |   |   |   | 379,492 |   |
|                              |   |     |     |   |     |   |       |   |   |   |   |   |
| Net income                        |   |     | 159,161  |   |     |   | 1,414,287  |   |   |   | 1,573,448 |   |
|                              |   |     |     |   |     |   |       |   |   |   |   |   |
| Distributions                     |   |     | (147,615 | )      |     |   | (1,327,985 | )      |   |   | (1,475,600 | ) |
|                              |   |     |     |   |     |   |       |   |   |   |   |   |
| Balance      at December 31, 2007 |   | $        | 14,577   |   |     | $      | 462,763    |   |   | $ | 477,340 |   |

----

titutional 

|                                                      |   | Years      ended December 31, |       |
|-----------------------------------------------------------|--------|-------------------------------|------------|
|                                                      |   | 2007                          |       |   | 2006 |   |   | 2005 |   |
| Cash      flows from operating activities:                |   |                          |       |   |   |   |   |   |   |
| Cash received from net profits      interests             |   | $                             | 1,584,158  |   |   | $ | 1,653,936 |   |   | $ | 1,523,163 |   |
| Cash paid for administrative      fees and general        |   |                          |       |   |   |   |   |   |   |   |   |   |
| and administrative      overhead                          |   |                          | (96,591    | ) |   |   | (94,089 | ) |   |   | (83,860 | ) |
| Interestreceived                                          |   |                          | 4,679      |   |   |   | 6,384 |   |   |   | 3,937 |   |
| Other                                                     |   |                          | 145        |   |   |   | - |   |   |   | - |   |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| Net cash provided by operating      activities            |   |                          | 1,492,391  |   |   |   | 1,566,231 |   |   |   | 1,443,240 |   |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                |   |                          |       |   |   |   |   |   |   |   |   |   |
| Distributions to      partners                            |   |                          | (1,475,600 | ) |   |   | (1,650,633 | ) |   |   | (1,425,000 | ) |
| Decrease in distributions      payable                    |   |                          | -          |   |   |   | (683 | ) |   |   | (507 | ) |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| Net cash used in financing      activities                |   |                          | (1,475,600 | ) |   |   | (1,651,316 | ) |   |   | (1,425,507 | ) |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents |   |                          | 16,791     |   |   |   | (85,085 | ) |   |   | 17,733 |   |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| Beginning      of year                                    |   |                          | 88,009     |   |   |   | 173,094 |   |   |   | 155,361 |   |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| End      of year                                          |   | $                             | 104,800    |   |   | $ | 88,009 |   |   | $ | 173,094 |   |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| Reconciliation      of net income to net                  |   |                          |       |   |   |   |   |   |   |   |   |   |
| cash provided by operating      activities:               |   |                          |       |   |   |   |   |   |   |   |   |   |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| Net      income                                           |   | $                             | 1,573,448  |   |   | $ | 1,521,435 |   |   | $ | 1,397,100 |   |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| Adjustments      to reconcile net income to               |   |                          |       |   |   |   |   |   |   |   |   |   |
| net cash provided by operating      activities:           |   |                          |       |   |   |   |   |   |   |   |   |   |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| Depreciation, depletion and      amortization             |   |                          | 18,165     |   |   |   | 14,943 |   |   |   | 14,092 |   |
| Accretion expense                                         |   |                          | 29,988     |   |   |   | 17,484 |   |   |   | 11,540 |   |
| Settlement of asset retirement      obligations           |   |                          |       |   |   |   |   |   |   |   |   |   |
| for plugged and abandoned      wells                      |   |                          | -          |   |   |   | (4,126 | ) |   |   | - |   |
| (Increase) decrease in      receivables and deposits      |   |                          | (129,210   | ) |   |   | 16,495 |   |   |   | 20,508 |   |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| Net      cash provided by operating activities            |   | $                             | 1,492,391  |   |   | $ | 1,566,231 |   |   | $ | 1,443,240 |   |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| Noncash      investing and financing activities:          |   |                          |       |   |   |   |   |   |   |   |   |   |
| Increase in oil and gas properties      –           |   |                          |       |   |   |   |   |   |   |   |   |   |
| SFAS No. 143                                              |   | $                             | -          |   |   | $ | 104,671 |   |   | $ | 23,396 |   |

----

itution

| 1. | Organization |
|----|--------------|

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

----

| 2. | Summary of Significant      Accounting Policies -continued |
|----|------------------------------------------------------------|

----

| 2. | Summary of Significant      Accounting Policies -continued |
|----|------------------------------------------------------------|

|                                                             |   | 2007   |    |   | 2006   |   |
|------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Beginning      of year                                           |   | $      | 322,606 |   |   | $      | 204,577 |   |
| Reduction      of obligations due to wells plugged and abandoned |   |   | -       |   |   |   | (4,126 | ) |
| Accretion      expense                                           |   |   | 29,988  |   |   |   | 17,484 |   |
| Revisions      of previous estimates                             |   |   | -       |   |   |   | 104,671 |   |
| End      of year                                                 |   | $      | 352,594 |   |   | $      | 322,606 |   |

----

| 4. | Commitments and      Contingent Liabilities |
|----|---------------------------------------------|

| 5. | Related Party      Transactions |
|----|---------------------------------|

----

| 6. | Oil and Gas Reserves      Information (unaudited) |
|----|---------------------------------------------------|

|                                       |   | Oil      (bbls) |    |   | Gas      (mcf) |   |
|--------------------------------------------|--------|-----------------|---------|--------|----------------|--------|
| Total      Proved -                        |   |            |    |   |           |   |
|                                       |   |            |    |   |           |   |
| January      1, 2005                       |   |            | 501,000 |   |           |   | 393,000 |   |
|                                       |   |            |    |   |           |   |   |   |
| Revisions of previous      estimates       |   |            | 108,000 |   |           |   | 18,000 |   |
| Production from continuing      operations |   |            | (37,000 | )      |           |   | (32,000 | ) |
|                                       |   |            |    |   |           |   |   |   |
| December      31, 2005                     |   |            | 572,000 |   |           |   | 379,000 |   |
|                                       |   |            |    |   |           |   |   |   |
| Revisions of previous      estimates       |   |            | (48,000 | )      |           |   | (56,000 | ) |
| Production from continuing      operations |   |            | (36,000 | )      |           |   | (33,000 | ) |
|                                       |   |            |    |   |           |   |   |   |
| December      31, 2006                     |   |            | 488,000 |   |           |   | 290,000 |   |
|                                       |   |            |    |   |           |   |   |   |
| Revisions of previous      estimates       |   |            | 153,000 |   |           |   | 75,000 |   |
| Production from continuing      operations |   |            | (34,000 | )      |           |   | (33,000 | ) |
|                                       |   |            |    |   |           |   |   |   |
| December      31, 2007                     |   |            | 607,000 |   |           |   | 332,000 |   |
|                                       |   |            |    |   |           |   |   |   |
| Proved developed reserves      -           |   |            |    |   |           |   |   |   |
|                                       |   |            |    |   |           |   |   |   |
| December      31, 2005                     |   |            | 571,000 |   |           |   | 378,000 |   |
| December      31, 2006                     |   |            | 488,000 |   |           |   | 289,000 |   |
| December      31, 2007                     |   |            | 606,000 |   |           |   | 331,000 |   |

----

|   | Southwest      Royalties Institutional Income Fund VIII-B,L.P. |
|--------|----------------------------------------------------------------|

| 6. | Oil and Gas Reserves      Information (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. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                               |   | 2007   |       |   | 2006   |   |       | 2005   |   |
|----------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
| Future      cash inflows                           |   | $      | 58,237,000 |   |   | $      | 29,013,000 |   |   | $ | 36,663,000 |   |
| Production,      development and abandonment costs |   |   | 21,360,000 |   |   |   | 13,454,000 |   |   |   | 14,595,000 |   |
| Future      net cash flows                         |   |   | 36,877,000 |   |   |   | 15,559,000 |   |   |   | 22,068,000 |   |
| 10%      annual discount for                       |   |   |       |   |   |   |       |   |   |   |   |   |
| estimated timing of cash      flows                |   |   | 20,265,000 |   |   |   | 7,475,000  |   |   |   | 11,698,000 |   |
| Standardized      measure of                       |   |   |       |   |   |   |       |   |   |   |   |   |
| discounted future net cash      flows              |   | $      | 16,612,000 |   |   | $      | 8,084,000  |   |   | $ | 10,370,000 |   |

|   | Changes      in the standardized measure of discounted future net cash flows relating      to proved reserves for the years ended December 31, 2007, 2006 and 2005      are as follows: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                        |   | 2007   |       |   | 2006   |   |       | 2005   |   |
|-------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
| Sales      of oil and gas produced, net of production costs |   | $      | (1,713,000 | )      |   | $      | (1,642,000 | )      |   | $ | (1,503,000 | ) |
| Changes      in prices and production costs                 |   |   | 6,276,000  |   |   |   | (1,642,000 | )      |   |   | 3,765,000 |   |
| Changes      of production rates (timing) and others        |   |   | (994,000   | )      |   |   | 825,000    |   |   |   | (295,000 | ) |
| Revisions      of previous quantities estimates             |   |   | 4,151,000  |   |   |   | (864,000   | )      |   |   | 1,812,000 |   |
| Accretion      of discount                                  |   |   | 808,000    |   |   |   | 1,037,000  |   |   |   | 599,000 |   |
| Discounted      future net cash flows -                     |   |   |       |   |   |   |       |   |   |   |   |   |
| Beginning      of year                                      |   |   | 8,084,000  |   |   |   | 10,370,000 |   |   |   | 5,992,000 |   |
| End      of year                                            |   | $      | 16,612,000 |   |   | $      | 8,084,000  |   |   | $ | 10,370,000 |   |

----

| 7. | Selected Quarterly      Financial Results –(unaudited) |
|----|--------------------------------------------------------------|

|                                      |   | Quarter |    |
|-------------------------------------------|--------|---------|---------|
|                                      |   | First   |    |   | Second |   |   | Third |   |   | Fourth |   |
| 2007:                                     |   |    |    |   |   |   |   |   |   |   |   |   |
| Total revenues                            |   | $       | 318,332 |   |   | $ | 414,302 |   |   | $ | 461,629 |   |   | $ | 523,929 |   |
| Total expenses                            |   |    | 27,976  |   |   |   | 39,040 |   |   |   | 37,818 |   |   |   | 39,910 |   |
| Net income                                |   | $       | 290,356 |   |   | $ | 375,262 |   |   | $ | 423,811 |   |   | $ | 484,019 |   |
|                                      |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income per limited partners      unit |   | $       | 25.71   |   |   | $ | 33.24 |   |   | $ | 37.54 |   |   | $ | 42.89 |   |

|                                      |   | Quarter |    |
|-------------------------------------------|--------|---------|---------|
|                                      |   | First   |    |   | Second |   |   | Third |   |   | Fourth |   |
| 2006:                                     |   |    |    |   |   |   |   |   |   |   |   |   |
| Total revenues                            |   | $       | 490,032 |   |   | $ | 450,382 |   |   | $ | 445,720 |   |   | $ | 261,817 |   |
| Total expenses                            |   |    | 30,653  |   |   |   | 35,863 |   |   |   | 30,531 |   |   |   | 29,469 |   |
| Net income                                |   | $       | 459,379 |   |   | $ | 414,519 |   |   | $ | 415,189 |   |   | $ | 232,348 |   |
|                                      |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income per limited partners      unit |   | $       | 40.71   |   |   | $ | 36.73 |   |   | $ | 36.79 |   |   | $ | 20.57 |   |

----

Item

Item

----

Item9B

----

Part III

Item

Item

----

em

Item13

tem

| For      the Year Ended December 31, |   | 2007   |   |   | 2006   |   |
|--------------------------------------|--------|--------|--------|--------|--------|--------|
| Audit      Fees                      |   | $      | 16,932 |   |   | $      | 15,084 |   |
| Audit      Related Fees              |   |   | -      |   |   |   | - |   |
| Tax      Fees                        |   |   | -      |   |   |   | - |   |
| All      Other Fees                  |   |   | -      |   |   |   | - |   |
|                                 |   |   |   |   |   |   |   |   |
| TOTAL                                |   | $      | 16,932 |   |   | $      | 15,084 |   |

----

Part 

tem

| (a)    | (1)    | Financial      Statements:                                                                                                                                                                                          |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                |
|   |   | Included in Part II of this      report                                                                                                                                                                             |
|   |   |                                                                                                                                                                                                                |
|   |   | Report of Independent Registered      Public Accounting Firm                                                                                                                                                        |
|   |   | Balance Sheets                                                                                                                                                                                                      |
|   |   | Statements of      Operations                                                                                                                                                                                       |
|   |   | Statements 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 Partner­ship'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.)                      |
|   |   |                                                                                                                                                                                                                                                                                      |
|   | 31.1   | Rule      13a-14(a)/15d-14(a) Certification                                                                                                                                                                                                                                               |
|   | 31.2   | Rule      13a-14(a)/15d-14(a) Certification                                                                                                                                                                                                                                               |
|   | 32.1   | Certification      of Chief Executive Officer and Chief Financial Officer Pursuant to 18      U.S.C. Section 1350, as adopted Pursuant to Section 906 of the      Sarbanes-Oxley Act of 2002                                                                                              |

----

ossary

----

----

natu

|   | Southwest      Royalties Institutional Income Fund |
|--------|----------------------------------------------------|
|   | VIII-B,      L.P., a Delaware limited partnership  |
|   |                                               |
| By:    | Southwest      Royalties, Inc., Managing           |
|   | General      Partner                               |
|   |                                               |
|   |                                               |
| By:    | /s/      L. Paul Latham                            |
|   | L.      Paul Latham                                |
|   | President      and Chief Executive Officer         |
|   |                                               |
| Date:  | March      28, 2008                                |

|                                                                                       |   |                                                                                       |
|--------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------|
| /s/      Clayton W Williams                                                                |   | /s/      L. Paul Latham                                                                    |
| Clayton      W. Williams, Chairman of the Board                                            |   | L.      Paul Latham, President and a Director                                              |
| and      a Director                                                                        |   |                                                                                       |
|                                                                                       |   |                                                                                       |
| Date:           March      28, 2008 |   | Date:           March      28, 2008 |
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| /s/      Mel G. Riggs                                                                      |   |                                                                                       |
| Mel      G. Riggs, Vice President – Finance,                                         |   |                                                                                       |
| Treasurer      and a Director                                                              |   |                                                                                       |
|                                                                                       |   |                                                                                       |
| Date:           March      28, 2008 |   |                                                                                       |
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