**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

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**Form 10-K**

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| **(Mark One)**                                                                                                               |
|------------------------------------------------------------------------------------------------------------------------------|
| ** **                                                                                                                   |
| **x**                                                                                                                        | **ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF  THE SECURITIES EXCHANGE ACT OF 1934** |
| ** **                                                                                                                   | ** ** |
| **For The  Fiscal Year Ended December 31, 2006**                                                                             |
| ** **                                                                                                                   | ** ** |
| **OR**                                                                                                                       |
| ** **                                                                                                                   | ** ** |
| **o**                                                                                                                        | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
| ** **                                                                                                                   | ** ** |
| **For the  Transition period from                 to** |

 

### **COMMISSION FILENUMBER 333-122935-01**

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

(Exact name of registrantas specified in its charter)

** **

| **Nevada**                       |   | **20-3170768**       |
|----------------------------------|--------|----------------------|
| (State or other  jurisdiction of |   | (I.R.S. Employer     |
| incorporation or  organization)  |   | Identification  No.) |

 

| **1901 N. Central Expressway, Suite 300, Richardson, TX 75080-3610** |
|----------------------------------------------------------------------|
| (Address of  principal executive offices including zip code)         |
|                                                                 |
| **(972)-437-6792**                                                   |
| (Registrant’s  telephone number, including area code)           |

 

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

Securities registeredpursuant to Section 12(g) of the Act:

**Generaland Limited Partnership Interests**

(Title of Class)

Indicate by check mark if the registrant is awell-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes o No x

Indicate by check mark if the registrant is not requiredto file reports pursuant to Section 13 or Section 15(d) of the Act.Yes o No x

Note – checking the box above will not relieve anyregistrant required to file reports pursuant to Section 13 or 15(d) of theExchange Act from their obligations under those sections.

Indicate by check mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.  Yes x  No o

Indicate by check mark if disclosure of delinquentfilers pursuant to Item 405 of Regulation S-K is not contained herein, andwill not be contained, to the best of registrant’s knowledge, in definitiveproxy or information statements incorporated by reference in Part III of thisForm 10-K or any amendment to this Form 10-K. x

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer. See the definition of “accelerated filer and largeaccelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o      Accelerated filer o        Non-accelerated filer x

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act) Yes o No x

No market currently exists for the limited and generalpartnership interests of the registrant.

As of March 31, 2007, the registrant had 75.363 unitsheld by the managing general partner, 1,190.561 units of additional generalpartner interest and 241.336 units of limited partner interest outstanding.

##### Documentsincorporated by reference:  None

 

 

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REEF GLOBAL ENERGY VI,L.P.

FORM 10-K

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

 

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**PART I**

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

**Introduction**

ReefGlobal Energy VI, L.P. (the Partnership) is the first in a series of Nevadalimited partnerships comprising a program called Reef Global Energy Ventures II(the Program). The Partnership was formed in the state of Nevada on July 18,2005.  The Partnership purchases workinginterests in oil and natural gas prospects and participates in the drilling ofwells on those prospects. The primary purposes of the Partnership are to generaterevenue from the production of oil and natural gas, distribute cash to thepartners, and provide tax benefits. Reef Oil & Gas Partners, L.P. (Reef) isthe managing general partner of the Partnership.

ThePartnership was formed to drill, complete and own working interests in oil andnatural gas wells located primarily onshore in the continental United States orin U.S. coastal waters in the Gulf of Mexico. However, the Partnership mayacquire interests in drilling prospects in such locations as its managinggeneral partner deems advisable. To date, the Partnership has acquiredinterests in 31 prospects on which it expects to drill 40 wells.  These prospects are located in Texas,Louisiana, Oklahoma, and in U.S. coastal waters in the Gulf of Mexico. The Partnershipexpects the drilling of these 40 wells will utilize all of its availablecapital. The Partnership has acquiredworking interests in prospects generated by Reef Exploration, L.P. (RELP) orOREI, Inc. (OREI), both affiliates of Reef, and by third parties. Workinginterests acquired may be assigned to other public partnerships in thisProgram, to private drilling partnerships managed by Reef, and to thirdparties. Reef may also retain, for its sole benefit, a working interest in aprospect and participate in the drilling and development of the prospect on thesame basis as the Partnership.  In suchcases where the percentage ownership of the Partnership and Reef affiliatedentities is large enough in a prospect, OREI or RELP may be elected as operatorof the prospect.  As of the date of thisreport, RELP operates 10 Partnership prospects upon which 10 wells are expectedto be drilled.

Theattainment of the Partnership’s business objectives, including the generationof revenue from Partnership operations, the distribution of cash to the partnersand the provision of tax benefits, will depend upon many factors, including:

·              Reef’sability to select productive prospects;

·              thedrilling and completion of wells in an economical manner;

·              thesuccessful management of prospects;

·              thelevel of oil and natural gas prices in the future;

·              thedegree of governmental regulation over the production and sale of oil andnatural gas;

·              thefuture economic conditions in the United States and throughout the world; and

·              changesin the Internal Revenue Code (the Code).

Accordingly,there can be no assurance that the Partnership will achieve its businessobjectives.  In addition, distributionsto partners will decrease over time due to the fact that oil and natural gaswells are depleting assets, and production rates will decline over the life ofan individual well.  Distribution levelswill also be highly dependent upon oil and natural gas prices. Distributionswill be partially sheltered by the percentage depletion allowance.

**Acquisition and Drilling ofUndeveloped Prospects**

ThePartnership has acquired interests in prospects internally generated by OREI orRELP, or generated by and purchased from third parties. To date, thePartnership has acquired interests in 31 prospects. A “prospect” is generallydefined as a contiguous oil and gas leasehold estate, or lesser interest in aleasehold estate, upon which drilling operations may be conducted. A prospectmay be characterized as “exploratory” or “developmental” based upon the type ofwell to be drilled on the prospect.  Adevelopment well is a well drilled within a proved area of an oil or gasreservoir. Generally an exploratory well is any well that is not a developmentwell, including wells drilled to find and produce oil or gas in an unprovenarea, wells drilled to find a new reservoir in a field previously found to beproductive of oil or gas, or wells drilled to extend a known reservoir.

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Prospectsare evaluated utilizing data generated by RELP or provided by unaffiliatedthird parties to RELP. This data may include well logs, production records fromRELP’s and others’ wells, seismic, geological and geophysical information, andsuch other information as may be available and useful. Partnership prospectsare evaluated by petroleum engineers, geophysicists, geologists, and othertechnical consultants employed by or retained by RELP on the Partnership’sbehalf.

ThePartnership prospects are acquired pursuant to an arrangement in which thePartnership purchases part of the working interest. A working interest bears aspecified portion of the costs of development, operation and maintenance.  A working interest is subject to landowners’royalty interests and may be subject to other royalty interests payable tounaffiliated third parties. At its discretion, the Partnership may acquire lessthan 100% of the working interest provided that costs are reducedproportionately.  The Partnership’slimited partnership agreement (the Partnership Agreement) prohibits Reef or anyof its affiliates from retaining any overriding royalty interest, that is, anyroyalty interest that would be paid out of the Partnership’s working interest,in any working interest purchased by the Partnership. The Partnership will be anon-operator working interest owner in all prospects purchased by the Partnership.Working interests in prospects purchased by the Partnership may also be ownedby other public partnerships in this Program or by private drillingpartnerships managed by Reef. Reef may, for its sole benefit, also retain aportion of the working interest in a prospect and participate in the drillingand development of the prospect on the same basis as the Partnership. If thetotal working interest in any prospect either retained or sold to thisPartnership or other affiliated partnerships is large enough, OREI or RELP maybe elected operator of the prospect. RELP serves as operator for 10 of the 31prospects which have been purchased by this Partnership.

Inacquiring interests in leases, the Partnership may pay such consideration andmake such contractual commitments and agreements, as Reef deems fair, reasonableand appropriate.  The term “lease” meansany full or partial interest in:

·              undevelopedoil and gas leases;

·              oiland gas mineral rights;

·              licenses;

·              concessions;

·              contracts;

·              feerights; or

·              otherrights authorizing the owner to drill for, reduce to possession and produce oiland gas.

Leaseswill be acquired by the Partnership directly from unaffiliated persons or fromReef or its affiliates. All leases that are transferred to the Partnership fromReef or its affiliates will be transferred at cost, unless Reef has reason tobelieve that cost is materially more than the fair market value of suchproperty, in which case the price will not exceed the fair market value of theproperty.

ThePartnership expects that the 40 wells currently expected to be drilled willutilize all of its available capital. If a well is not drilled a substitutewell or wells will be drilled in its place. The Partnership has attempted tominimize drilling risk to the partners by the diversity created fromparticipating in drilling activities on 31 different prospects.

**Consulting Agreements forProspect Acquisitions**

Reef entered into three agreements (the CMI Agreements) with ChallengerMinerals Inc. (CMI), a subsidiary of GlobalSantaFe Corporation and a screenerof oil and gas prospects in the Gulf of Mexico and North Sea regions. The firstagreement, dated October 2001, was amended by a second agreement dated January2004. That amended agreement provided, among other things, that CMI wouldpresent a minimum of 50 prospects per year in the Gulf of Mexico region toReef, and that Reef would have the option to purchase up to 7.5% of theinterest made available to CMI. Reef paid CMI a fee of $300,000 per year underthe terms of the amended agreement. Reef allowed this amended agreement toexpire effective January 31, 2006.

Under the terms of the third agreement, Reef was allowed to acquire upto 5% of the interest made available to CMI in all offshore prospects locatedin the North Sea region that were identified and initially reviewed by CMIduring the term of the agreement.  Reefpaid CMI a fee of $75,000 per year under the terms of this three year agreement.  CMI was not obligated to present Reef with aspecific number of prospects under the North Sea agreement, and

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under certain circumstances further described in the North Sea agreement.Reef could be excluded from participation in certain prospects. Reef allowedthis agreement to expire effective November 30, 2006.

Reef has also entered into an agreement with Access Exploration Corp.(AEC) for the period from October 1, 2004 thru October 2, 2007. Under terms ofthe agreement, Reef has the option to participate for up to 10% of the interestmade available to AEC in any Gulf of Mexico developmental project screened byAEC, and to participate for up to 12.5% of the interest made available to AECin any Gulf of Mexico exploration projects screened by AEC. There is no minimumnumber of prospects which AEC is required to screen and present to Reef forparticipation. As part of this agreement, AEC will make available to Reef 5% ofthe interest made available to AEC in all projects outside the Gulf of Mexico.Reef will pay AEC the sum of $100,000 per year during the three year term ofthis agreement for the services rendered by AEC.

Projects approved for acquisition by Reef under these agreements areassigned to this Partnership as well as other limited partnerships formed aspart of the Program. Initially, each partnership formed as a part of theProgram will reimburse Reef a portion of the actual consulting fees paid on anestimated basis. Upon the completion of the Program’s offering in 2007, theactual consulting fees paid during the period by Reef will be allocated to eachpartnership formed based upon total capital contributions, and each partnershipformed will either receive an additional assessment or refund of fees. Under nocircumstances will the partnerships reimburse any amount in excess of theactual fees paid by Reef and affiliates as consulting fees under theseagreements. The Partnership paid Reef $287,500 in 2005. The fees paid to CMI byReef through the termination dates of the CMI Agreements in 2006 have beenallocated only to partnerships in this Program formed during 2005 and 2006.This Partnership has accrued and received from Reef a refund of fees totaling$46,842 in connection with the allocation of the fees paid to CMI. The netamount paid of $240,658 has been capitalized as geological and geophysicalcosts in accordance with the full cost method of accounting for oil and gasproperties.

**Drilling and Completion Phase ofOperations**

Whenthe combined prospect ownership of the Partnership and any other Reefaffiliated entities, if any, total less than a 50% working interest in aprospect, it is probable that the majority owner of the prospect will selectthe operator for the wells drilled on the prospect. Reef will monitor theoperator’s performance and activity, will represent the Partnership in decisionmaking with regard to the Partnership’s prospects, and will otherwise representthe Partnership with regard to the activities of the Partnership.  When OREI or RELP serves as operator of aprospect, it will receive operator fees during the drilling and productionphase of operations at the competitive rate in the area where the prospect islocated.  Typically, these are charged asa monthly fee per well as agreed to in an operating agreement signed by thePartnership and participating third parties in the well. When OREI or RELP doesserve as operator on any Partnership wells, it does so pursuant to a model formoperating agreement issued by the American Association of Petroleum Landmen andan accounting procedure for joint operations issued by the Council of PetroleumAccountants Societies of North America. RELP is currently the operator of 10Partnership prospects upon which 10 wells are expected to be drilled.

WhenOREI or RELP serves as the operator, it contracts the drilling of the well toan independent third party, and the resulting costs of the well to thePartnership are determined by the actual third party costs, plus OREI’s or RELP’smonthly charges for supervision, engineering, geology, accounting and otherservices for the area where the well is located. Under no circumstances willOREI, RELP, Reef, or any other affiliate act as contractor or subcontractor inconnection with the drilling of any Partnership well.

ThePartnership normally pays drilling and completion costs as incurred. ThePartnership is permitted to make advance payments where necessary to secure thetax benefits of prepaid intangible drilling costs and where there is a validbusiness reason. In order to comply with conditions to secure the tax benefitsof prepaid intangible drilling costs, the operator may not refund any portionof amounts paid in the event actual costs are less than amounts paid, but mayapply any such amounts solely for payment of additional drilling services tothe Partnership. A well that fails to result in the discovery of oil or naturalgas, or that is determined to be unable to produce oil or natural gas incommercial quantities will be plugged and abandoned in accordance withapplicable regulations. Generally, the costs of abandoning a well locationinclude restoration of the well site to its original condition prior to thedrilling of the well.

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**Production Phase of Operations**

Forany well capable of producing quantities of oil and/or natural gas incommercial quantities, production operations commence once a Partnership wellhas been completed by installing all surface equipment necessary to control theflow of production or to shut down the well, and by installing any storagefacilities, gathering, or sales lines required to produce and sell the oiland/or natural gas production from the well.

ThePartnership sells oil and/or natural gas production from its wells torefineries, industrial users, gas brokers, interstate pipelines or localutilities.  In many cases the Partnershipelects to sell its production under marketing arrangements entered into by theoperator of the well. Due to rapidly changing market conditions and normalcontracting procedures, final terms and contracts are not completed until afterthe wells have been drilled.

ThePartnership attempts to sell the oil and/or natural gas produced fromsuccessful wells on a competitive basis at the best available terms andprices.  Domestic sales of oil will be atmarket prices. Generally, purchase contracts for the sale of oil are cancelableon 30 days’ notice, but purchase contracts for the sale of natural gas may havea term of a number of years and may require the dedication of the gas from awell for the life of its reserves.  ThePartnership will sell natural gas discovered by it at negotiated pricesdomestically, based upon a number of factors, such as the quality of the gas,well pressure, estimated reserves, prevailing supply conditions and anyapplicable price regulations promulgated by the Federal Energy RegulatoryCommission (FERC).

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

The Partnership has not engaged in commodity futurestrading or hedging activities, nor has it entered into derivative financialinstrument transactions for trading or other speculative purposes. Accordingly,the Partnership is at risk for the volatility in commodity prices inherent inthe oil and gas industry, and the level of commodity prices has a significantimpact on the Partnership’s results of operations.  See “Item 7A. — Quantitative and QualitativeDisclosures About Market Risk.”

ThePartnership’s share of revenue from productive wells will is burdened by and/orsubject to royalties and overriding royalties, monthly operating charges, andother operating costs.  These items ofexpenditure involve amounts payable solely out of, or expenses incurred solelyby reason of, production operations.  ThePartnership deducts operating expenses from the production revenue for thecorresponding period.

**Major Customers**

The Partnership sells crudeoil and natural gas on credit terms to refiners, pipelines, marketers, andother users of petroleum commodities. Revenues are received directly from theseparties or, in certain circumstances, paid to the operator of the property whodisburses to the Partnership its percentage share of the revenues. During 2006,five operators accounted for 31.9%, 14.9%, 14.2%, 11.5%, and 11.2% of thePartnership’s oil and gas revenues. As of December 31, 2005, the Partnershiphad no oil and gas production and, therefore, had no customers. Due to thecompetitive nature of the market for purchase of crude oil and natural gas, thePartnership does not believe that the loss of any particular purchaser wouldhave a material adverse impact on the Partnership.

**Insurance**

ThePartnership is a named insured under blowout, pollution, public liability andworkmen’s compensation insurance policies obtained by RELP. Such insurance,however, may not be sufficient to cover all liabilities.  Each unit held by general partners representsan open-ended security for unforeseen events such as blowouts, lostcirculation, stuck drill pipe, etc. that may result in unanticipated additionalliability materially in excess of a general partner’s initial investment in thePartnership.

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ThePartnership is a named insured under various insurance policies and intends tomaintain such policies subject to its analysis of their premium costs, coverageand other factors.  In the exercise ofReef’s fiduciary duty as managing general partner, Reef has obtained insuranceon behalf of the Partnership to provide the Partnership with such coverage asReef believes is sufficient to protect the investor partners against theforeseeable risks of drilling and production. Reef reviewed the Partnership insurance coverage prior to commencingdrilling operations and periodically evaluates the sufficiency of insurance. Inno event will the Partnership maintain public liability insurance of less thantwo times the Partnership’s capitalization.****Subjectto the foregoing, Reef may, in its sole discretion, increase or decrease thepolicy limits and types of insurance from time to time as Reef deemsappropriate under the circumstances, which may vary materially.

Reefwill notify all investor general partners of the Partnership at least 30 daysprior to any material change in the amount of the Partnership’s insurancecoverage.  Within this 30-dayperiod and otherwise after the expiration of one year following the closing ofthe offering of the Partnership, investor general partners have the right toconvert their units into units of limited partnership interest by giving Reefwritten notice of their intent to convert. At any time during this 30-dayperiod, upon receipt of the required written notice from an investor generalpartner of his intent to convert, Reef will amend the Partnership Agreement andwill file the amendment with the State of Nevada prior to the effective date ofthe change in insurance coverage.  Thisamendment to the Partnership Agreement will effectuate the conversion of theinterest of the former investor general partner to that of a limitedpartner.  Effecting conversion is subjectto the express requirement that the conversion will not cause a termination ofthe Partnership for federal income tax purposes.  Investor general partners will have limitedliability as a limited partner for any Partnership operations conducted aftertheir conversion date, effective upon the filing of an amendment to theCertificate of Limited Partnership of the Partnership. However, even after anelection of conversion, the investor partner will continue to have unlimitedliability regarding partnership activities that occurred while he was aninvestor general partner.

**Competition**

Thereare thousands of oil and natural gas companies in the United States.  Competition is strong among persons andcompanies involved in the exploration for and production of oil and naturalgas.  Reef expects the Partnership toencounter strong competition in every phase of business.  The Partnership competes with entities havingfinancial resources and staffs substantially larger than those available to it.

Thenational supply of natural gas is widely diversified, with no one entitycontrolling over 5%.  As a result ofderegulation of the natural gas industry enacted by Congress and FERC, naturalgas prices are generally determined by competitive market forces.  Prices of crude oil, condensate and naturalgas liquids are not currently regulated and are generally determined by competitivemarket forces.

Thereis competition among operators for drilling equipment, goods, and drillingcrews. Such competition may affect the ability of the Partnership to developleases suitable for development by the Partnership once they are acquired.

**Markets**

Themarketing of any oil and natural gas produced by the Partnership is affected bya number of factors that are beyond the Partnership’s control and whose exacteffect cannot be accurately predicted. These factors include:

·              theamount of crude oil and natural gas imports;

·              theavailability, proximity and cost of adequate pipeline and other transportationfacilities;

·                                          thesuccess of efforts to market competitive fuels, such as coal and nuclearenergy, and the growth and/or success of alternative energy sources such aswind power;

·              theeffect of United States and state regulation of production, refining,transportation and sales;

·              othermatters affecting the availability of a ready market, such as fluctuatingsupply and demand; and

·              generaleconomic conditions in the United States and around the world.

The supply and demand balance of crude oil and naturalgas in world markets has caused significant variations in the prices of theseproducts over recent years.  The NorthAmerican Free Trade Agreement eliminated trade and 

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investmentbarriers between the United States, Canada, and Mexico, resulting in increasedforeign competition for domestic natural gas production.  New pipeline projects recently approved by,or presently pending before, FERC, as well as nondiscriminatory accessrequirements, could further substantially increase the availability of gasimports to certain U.S. markets.  Suchimports could have an adverse effect on both the price and volume of gas salesfrom Partnership wells.

Membersof the Organization of Petroleum Exporting Countries (OPEC) establish pricesand production quotas for petroleum products from time to time with the intentof affecting the global supply of crude oil and reducing, increasing ormaintaining certain price levels.  Reefis unable to predict what effect, if any, such actions will have on the amountof or the prices received for oil produced and sold from the Partnership’swells.

Inseveral initiatives, FERC has required pipelines to develop electronic communicationand to provide standardized access via the Internet to information concerningcapacity and prices on a nationwide basis, so as to create a nationalmarket.  Parallel developments toward anelectronic marketplace for electric power, mandated by FERC, are serving tocreate multi-national markets for energy products generally.  These systems will allow rapid consummationof natural gas transactions. Although this system may initially lower pricesdue to increased competition, it is anticipated to expand natural gas marketsand to improve their reliability.

**Regulation**

ThePartnership’s operations will be affected from time to time in varying degreesby domestic and foreign political developments, and by federal and state lawsand regulations.

*Production.*  In most areas of operations within the UnitedStates the production of oil and natural gas is regulated by state agenciesthat set allowable rates of production and otherwise control the conduct of oiland natural gas operations. Among the ways that states control production isthrough regulations that establish the spacing of wells or limit the number ofdays in a given month during which a well can produce.

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

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

*Proposed Regulation.*Variouslegislative proposals are being considered in Congress and in the legislaturesof various states, which, if enacted, may significantly and adversely affectthe petroleum and natural gas industries. Such proposals involve, among otherthings, the imposition of price controls on all categories of natural gasproduction, the imposition of land use controls, such as prohibiting drillingactivities on certain federal and state lands in protected areas, as well asother measures. At the present time, it is impossible to predict whatproposals, if any, will actually be enacted by Congress or the various statelegislatures and what effect, if any, such proposals will have on thePartnership’s operations.

**Employees**

ThePartnership has no employees, and is managed by its managing general partner,Reef. Through January 1, 2006, OREI employed a staff including geologists,petroleum engineers, landmen, and accounting personnel who administered all ofthe Partnership’s operations. On January 2, 2006, the employees of OREI weretransferred to

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RELP, a new Reef affiliate formed during 2005. RELPnow employs this staff of geologists, geophysicists, petroleum engineers,landmen and accounting personnel who administer all of the Partnership’soperations. The Partnership reimburses OREI and RELP for technical and administrativeservices at cost.  See “Item 11 –Executive Compensation.”

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

**Oil andgas drilling is a speculative activity involving numerous risks and substantialand uncertain costs which could adversely affect the Partnership.**

Drillingfor oil and natural gas involves numerous risks, including the risk that nocommercially productive oil and/or natural gas reserves will be discovered.There can be no assurance that wells drilled by the Partnership will beproductive or recover all or any portion of the investment in such wells.Drilling and completion costs are substantial and uncertain, and drillingoperations may be curtailed, delayed, or cancelled due to a variety of factorsbeyond our control, including shortages or delays in the availability ofdrilling rigs and crews, unexpected drilling conditions, title problems,pressure or irregularities in formations, equipment failures or accidents,adverse weather conditions, and compliance with environmental and othergovernmental regulations. Our drilling activities may not be successful and, ifunsuccessful, will have an adverse effect on the Partnership’s results ofoperations and cash flow available for distribution to the partners. Unexpectedcosts incurred in the drilling of certain wells may limit the total number ofwells the Partnership is able to drill with the capital raised by thePartnership, thus increasing the overall risk of the Partnership’s drillingprogram.

**Oil andnatural gas prices are volatile.**

Thefinancial condition, results of operations, and the carrying value of our oiland natural gas properties depend primarily upon the prices received for ouroil and natural gas production. Oil and natural gas prices historically havebeen volatile and likely will continue to be volatile given currentgeopolitical conditions. Cash flow from operations is highly dependent upon thesales prices received from oil and natural gas production. The prices for oiland natural gas are subject to a variety of factors beyond our control. Thesefactors include:

·                                          thelevel of consumer demand for oil and natural gas;

·                                          thedomestic and foreign supply of oil and natural gas;

·                                          theability of the members of OPEC to agree to and maintain oil price andproduction controls;

·                                          theprice of foreign oil and natural gas;

·                                          domesticgovernment regulations and taxes;

·                                          theprice and availability of alternative fuel sources;

·                                          weatherconditions, including hurricanes and tropical storms in and around the Gulf ofMexico;

·                                          marketuncertainty;

·                                          politicalconditions in oil and natural gas producing regions, including the Middle East;and

·                                          worldwideeconomic conditions.

Thesefactors and the volatility of the energy markets make it extremely difficult topredict price movements. Also, oil and natural gas prices do not necessarilymove in tandem. Declines in oil and natural gas prices would not only reducerevenues and cash flow available for distributions to partners, but couldreduce the amount of oil and natural gas that can be economically produced fromsuccessful wells drilled by the Partnership, and, therefore, have an adverseeffect upon financial condition, results of operations, oil and gas reserves,and the carrying value of the Partnership’s oil and natural gas properties.

ThePartnership, while not prohibited from engaging in commodity trading or hedgingactivities in an effort to reduce exposure to short-term fluctuations in theprice of oil and natural gas, has not engaged in such activities. Accordingly,the Partnership is at risk for the volatility in oil and natural gas prices,and the level of commodity prices has a significant impact upon the Partnership’sresults of operations.

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

Thereare numerous hazards involved in the drilling and operation of oil and naturalgas wells, including blowouts involving possible damages to property and thirdparties, bodily injuries, mechanical failures, explosions, uncontrollable flowsof oil, natural gas or well fluids, fires, formations with abnormal pressure,pollution, releases of toxic gas and other environmental hazards and risks. ThePartnership could suffer substantial losses as a result of any of these risks.The Partnership is not fully insured against all risks inherent to the oil andgas business. Uninsured liabilities would reduce the funds available to thePartnership, may result in the loss of Partnership properties and may createliability for the general partners. Although the Partnership maintains insurancecoverage in amounts Reef deems appropriate, it is possible that insurancecoverage may be insufficient. In that case Partnership assets may have to besold to pay personal injury and property claims and the cost of controllingblowouts or replacing damaged equipment rather than for drilling activities.

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

ThePartnership will purchase minority non-operated working interests in many ofthe prospects it acquires. As a result, the Partnership will have limitedability to exercise influence over and control the risks associated withoperations of these properties. The failure of an operator of our wells toadequately perform operations, an operator’s breach of the applicableagreements, or an operator’s failure to act in ways that are in our bestinterest could reduce our production and revenues. The success and timing ofdrilling and development activities on properties operated by others dependsupon a number of factors outside of our control, including the operator’s

·                                          timingand amount of capital expenditures;

·                                          expertiseand financial resources;

·                                          inclusionof other participants in drilling wells; and

·                                          useof technology.

Inaddition, the Partnership could be held liable for the joint interestobligations of other working interest owners, such as nonpayment of costs andliabilities arising from the actions of the other working interest owners. Fulldevelopment of prospects may be jeopardized in the event other working interestowners cannot pay their share of drilling and completion costs.

**Highdemand for drilling contractors, field services and equipment, and the abilityof suppliers to meet demand may limit our ability to drill and produce our oiland natural gas properties.**

Due tocurrent industry demands, drilling contractors, well service providers andrelated equipment and personnel are in short supply. This is causing escalatingprices, delays in drilling and other exploration activities, and thepossibility of poor service coupled with potential damage to downholereservoirs and personnel injuries. Such pressures will likely increase theactual cost of services, extend the time to secure such services, and add costsfor damages due to any accidents sustained from overuse of equipment andinexperienced personnel.

**We facestrong competition from larger oil and natural gas companies.**

The oiland gas industry is highly competitive. Competition is encountered in allaspects of Partnership operations, including the acquisition of prospects fordrilling and requisition of drilling and service contractors. Many of ourcompetitors are larger, well-established companies with substantially largeroperating staffs and greater capital resources than those of the Partnership,Reef and its affiliates. We may not be able to conduct our operationssuccessfully, evaluate and select suitable prospects, obtain drilling andservice contractors, consummate transactions, and obtain technical, managerialand other professional personnel in this highly competitive environment. Specifically,larger competitors may be able to pay more for prospects and competentpersonnel than the Partnership, Reef and its affiliates. In addition, suchcompetitors may be able to expend greater resources on the existing andchanging technologies that will be increasingly important to success. Suchcompetitors may also be in a better position to secure drilling and oilfieldservices, as well as equipment, on a more timely basis or on more favorableterms.

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

Securitiesand Exchange Commission (SEC) rules require the Partnership to present annualestimates of reserves. Reservoir engineering is a subjective and inexactprocess of estimating underground accumulations of oil and natural gas thatcannot be measured in an exact manner, and is based upon assumptions that mayvary considerably from actual results. Accordingly, reserve estimates may besubject to upward or downward adjustments. Actual production, revenues andexpenditures with respect to reserves will likely vary from estimates, and suchvariances could be material.

**Reef and its affiliates have sponsoredventures in the past that have produced dry holes and abandoned wells.**

Reef Global Energy Ventures II is the second publicdrilling program sponsored by Reef as the managing general partner, and ReefGlobal Energy VI, L.P. is the first in a series of limited partnerships offeredunder that Program. Reef and its affiliate, OREI, have sponsored 61 venturesfrom 1996 to the present. Among these ventures, (i) eight were dedicated almostexclusively to the purchase of interests in already producing reserves, (ii)one was dedicated primarily to the purchase of interests in already producingreserves but has the ability to use up to 20% of capital raised for developmentpurposes, and (iii) two were dedicated to both the purchase of interests inproducing wells and the use of up to 50% of capital raised for development ofproven reserves.  We refer to theprograms described in clauses (i) and (ii) of the preceding sentence as “incomefund” ventures and to the programs described in (iii) as “income and developmentfund” ventures. Reef and its affiliates have also sponsored 50 drillingventures since 1996. Together, these ventures have drilled 107 wells (94 bydrilling ventures and 13 by income fund and income and development fundventures). Of the wells drilled by Reef and its affiliates’ ventures, 47 wereexploratory wells and 60 were developmental wells. Forty-one of the wellsdrilled were dry holes, and four wells were completed but were non-commercial.Of the 62 wells that were commercial, 44 are still owned by Reef or itsaffiliates’ ventures and are currently producing, one is awaiting connection toa pipeline, five have been plugged and abandoned, seven have been sold and fiveare currently shut-in. Using this data, approximately 57.9% of the wells drilledby these ventures were completed as commercially producing and 42.1% were dryholes (including the four wells that were completed but failed to becomecommercial producers). Approximately 4.7% of the wells drilled by our ventureswere subsequently abandoned.

**The Partnership has limitedexternal sources of funds, which could result in a shortage of working capital.**

ThePartnership intends to utilize substantially all available capital for thedrilling and completion of wells and acquisition of prospects. The Partnershiponly has nominal funds available for partnership purposes until there arerevenues from Partnership operations. The Partnership Agreement permits the Partnership to borrow money onlyafter drilling has been completed and investor general partnership interestshave been converted into limited partnership interests.  Any future requirement for additional fundingwill have to come, if at all, from the Partnership’s revenues or fromborrowings. Reef cannot assure the partners that Partnership operations will besufficient to provide the Partnership with necessary additional funding.  Reef is prohibited under the PartnershipAgreement from loaning money to the Partnership, and Reef cannot assure the partnersthat the Partnership will be able to borrow funds from third parties oncommercially reasonable terms or at all.

**Other partnerships Reef sponsorswill compete with the Partnership for prospects, equipment, contractors, andpersonnel.**

Reefplans to offer interests in other partnerships to be formed for substantiallythe same purposes as those of the Partnership. Therefore, a number ofpartnerships with unexpended capital funds, including those partnerships to beformed in future oil and gas programs sponsored by Reef, may exist at the same time.  Due to competition among the partnerships forsuitable prospects and availability of equipment, contractors, and Reef’spersonnel, the fact that partnerships previously organized by Reef and itsaffiliates may still be purchasing prospects when the Partnership is attemptingto purchase prospects may make the completion of prospect acquisitionactivities by the Partnership more difficult.

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**The Partnership Agreement limitsReef’s liability to each partner and the Partnership and requires thePartnership to indemnify Reef against certain losses.**

Reefwill have no liability to the Partnership or to any partner for any losssuffered by the Partnership, and will be indemnified by the Partnership againstloss sustained by it in connection with the Partnership if:

·                                          Reefdetermines in good faith that its action was in the best interest of thePartnership;

·                                          Reefwas acting on behalf of or performing services for the Partnership; and

·                                          Reef’sactions did not constitute negligence or misconduct.

**Drilling exploratory wells isriskier than drilling developmental wells.**

Manyof the wells drilled by Reef and its affiliates since 1996 have beenexploratory wells. Drilling exploratory wells involves greater risks of dryholes and loss of the partners’ investment than the drilling of developmentalwells.  Drilling developmental wellsgenerally involves less risk of dry holes, although sometimes developmentalacreage is more expensive and subject to greater royalties and other burdens onproduction. The Partnership purchased interests in 13 exploratory prospectswith available capital, and has drilled six successful exploratory wells, oneof which is currently shut-in, and seven unsuccessful wells on these prospects.

**The Partnership may be requiredto pay delay rentals to hold properties, which may deplete Partnership capital.**

Oil and gas leases generally require that the propertymust be drilled upon by a certain date or additional funds known as delayrentals must be paid to keep the lease in effect.  Delay rentals typically must be paid within ayear of the entry into the lease if no production or drilling activity hascommenced.  If delay rentals become dueon any property the Partnership acquires, the Partnership will have to pay itsshare of such delay rentals or lose its lease on the property.  These delay rentals could equal or exceed thecost of the property.  Further, paymentof these delay rentals could seriously deplete the Partnership’s capitalavailable to fund drilling activities when they do commence.

**The Partnership may incurliability for liens against its subcontractors.**

AlthoughReef will try to determine the financial condition of nonaffiliatedsubcontractors, if subcontractors fail to timely pay for materials andservices, the properties of the Partnership could be subject to materialmen’sand workmen’s liens.  In that event, thePartnership could incur excess costs in discharging such liens.

**Shut-in wells and delays inproduction may adversely affect Partnership operations.**

Productionfrom wells drilled in areas remote from marketing facilities may be delayeduntil sufficient reserves are established to justify construction of necessarypipelines and production facilities. In addition, production from wells may bereduced or delayed due to seasonal marketing demands. Wells drilled for thePartnership may have access to only one potential market. Local conditions,including closing businesses, conservation, shifting population, pipelinemaximum operating pressure constraints, and development of local oversupply ordeliverability problems could halt sales from Partnership wells.

**The production and producing life of Partnershipwells is uncertain.**

Productionwill decline. It is not possible to predict the life and production of anywell. The actual lives could differ from those anticipated. Sufficient oil ornatural gas may not be produced for a partner to receive a profit or even torecover his initial investment. In addition, production from the Partnership’soil and natural gas wells, if any, will decline over time, and does notindicate any consistent level of future production. This production decline maybe rapid and irregular when compared to a well’s initial production.

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**Extreme weather conditions mayadversely affect drilling operations and distributions.**

The Partnership conductsdrilling operations in the Gulf of Mexico and the coastal regions of Louisianaand Texas. This region is susceptible to extreme weather conditions, especiallythose associated with hurricanes. In the event of a hurricane and related stormactivity, such as windstorms, storm surges, floods and tornados, Partnershipoperations in the region may be adversely affected. The occurrence of ahurricane or other extreme weather may harm or delay the Partnership’s drillingand production operations or distribution of revenues, if any.

**Our dependence on third partiesfor the processing and transportation of oil and gas may adversely affect thePartnership’s revenues and, consequently, the distribution of net cash flows toinvestor partners.**

We rely on third partiesto process and transport the oil and gas produced by the Partnership’ssuccessful wells. In the event a third party upon whom we rely is unable toprovide transportation or processing services, and another third party isunavailable to provide such services, the Partnership may have to temporarilyshut-in successful wells, and revenues to the Partnership and distributions toinvestor partners related to those wells may be delayed.

**FORWARD-LOOKING STATEMENTS**

ThisReport on Form 10-K contains forward-looking statements that involverisks and uncertainties.  You shouldexercise extreme caution with respect to all forward-looking statementsmade in this Report.  Specifically, thefollowing statements are forward-looking:

·                                          statementsregarding the Partnership’s overall strategy for acquiring prospects, includingits intent to diversify the Partnership’s investments;

·                                          statementsestimating any number or specific type or size of prospects the Partnership mayacquire or size of the interest the Partnership may acquire in such prospects;

·                                          statementsregarding the state of the oil and gas industry and the opportunity to profitwithin the oil and gas industry, competition, pricing, level of production, orthe regulations that may affect the Partnership;

·                                          statementsregarding the plans and objectives of Reef for future operations, including,without limitation, the uses of Partnership funds and the size and nature ofthe costs the Partnership expects to incur and people and services the Partnershipmay employ;

·                                          anystatements using the words “anticipate,” “believe,” “estimate,” “expect” andsimilar such phrases or words; and

·                                          anystatements of other than historical fact.

Reefbelieves that it is important to communicate its future expectations to thepartners.  Forward-lookingstatements reflect the current view of management with respect to future eventsand are subject to numerous risks, uncertainties and assumptions, including,without limitation, the factors listed above in the section captioned “RISK FACTORS.” Although Reef believesthat the expectations reflected in such forward-looking statements arereasonable, Reef can give no assurance that such expectations will prove tohave been correct.  Should any one ormore of these or other risks or uncertainties materialize or should anyunderlying assumptions prove incorrect, actual results are likely to varymaterially from those described herein. There can be no assurance that the projected results will occur, thatthese judgments or assumptions will prove correct or that unforeseendevelopments will not occur.

Reefdoes not intend to update its forward-looking statements.  All subsequent written and oral forward-lookingstatements attributable to Reef or persons acting on its behalf are expresslyqualified in their entirety by the applicable cautionary statements.

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**ITEM 1B.**                    UNRESOLVEDSTAFF COMMENTS

**None**

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

**Drilling Activities andProductive Wells**

Partnershipproperties are located in Texas, Louisiana, Oklahoma, and offshore in U.S.coastal waters in the Gulf of Mexico. The Partnership has purchased interestsin 13 exploratory prospects upon which a total of 13 exploratory and ninedevelopmental wells are expected to be drilled, and purchased interests in 18developmental prospects upon which a total of 18 developmental wells areexpected to be drilled. Of the 31 prospects in which the Partnership haspurchased working interests, 19 are in Texas, 10 in Louisiana, one in Oklahoma,and one offshore in U.S. coastal waters in the Gulf of Mexico. As of December31, 2006, the Partnership had completed the drilling of 13 exploratory wellsand two developmental wells on 13 exploratory prospects, and completed thedrilling of 16 developmental wells on 16 developmental prospects. ThePartnership has six successful exploratory wells, one of which is currently shut-in,two successful developmental wells which have been subsequently drilled on oneof the exploratory prospects, and seven successful developmental wells. Thesefifteen successful wells are located as follows: one well each in Terrebonne,Acadia, and St. Martin Parish, Louisiana, three wells in Sterling County,Texas, two wells each in Lavaca and Jefferson County, Texas, one well each inPalo Pinto, Jackson, Harris, and Live Oak County, Texas, and one well inPittsburg County, Oklahoma. The Partnership has drilled 16 unsuccessful wellslocated as follows: one well offshore in U.S. coastal waters in the Gulf ofMexico, two wells each in West Baton Rouge and Cameron Parish, Louisiana, onewell each in Acadia, Calcasieu, and Beauregard Parish, Louisiana, two wells inLavaca County, Texas, and one well each in Hardin, Brazoria, Upton, Ector,Jefferson, and San Patricio County, Texas.

Subsequent toDecember 31, 2006, the Partnership has completed the drilling of oneunsuccessful developmental well located in Dawson County, Texas. ThePartnership has one developmental well drilling, one developmental welltesting, and six developmental wells which have not begun drilling.  Upon completion of drilling, a well will beconsidered “productive” if it is capable of producing oil and/or natural gas incommercial quantities. The Partnership expects the drilling of these 40 wellswill utilize all available Partnership capital.

The sixyet-to-be--drilled developmental wells located on two of the Partnership’ssuccessful exploratory prospects are located on non-operated prospects. ThePartnership currently expects these wells to be drilled during 2007 and 2008.

**ProvedOil and Gas Reserves**

Net proved oil andgas reserves as of December 31, 2006 and 2005, as prepared by a petroleumengineer employed by RELP, are summarized below. The quantities of proved oiland gas reserves discussed in this section include only the amounts which wereasonably expect to recover in the future from known oil and gas reservoirsunder the current economic and operating conditions. Proved reserves includeonly quantities that we expect to recover commercially using current prices,costs, existing regulatory practices, and technology. Therefore, any changes infuture prices, costs, regulations, technology or other unforeseen factors couldmaterially increase or decrease the proved reserve estimates.
|                                         | ** ** | **Oil (BBL)** | ** ** | **Gas (MCF)** | ** ** |
|-----------------------------------------|------------|--------------------|------------|--------------------|------------|
| Net proved  reserves, December 31, 2005 |       | 1,046              |       | 29,002             |       |
| Net proved reserves,  December 31, 2006 |       | 69,253             |       | 1,597,089          |       |

 

Thestandardized measure of discounted future net cash flows as of December 31,2006 and 2005 is computed by applying the December 31, 2006 and 2005 oil(NYMEX) prices of $57.75 and $61.04 per barrel, respectively, and natural gas(Henry Hub) price of $5.635 and $10.08 per MMBtu, respectively, adjusted byproperty for energy content, quality and transportation costs, current costsand a discount factor of 10 percent to proved

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reserves. Thestandardized measure of discounted future net cash flows does not purport topresent the fair value of our oil and natural gas reserves.
|                                                                                   |   |   |      |
|-----------------------------------------------------------------------------------|--------|--------|-----------|
| Standardized measure of  discounted future net cash flows as of December 31, 2005 |   | $      | 267,642   |   |
| Standardized measure of  discounted future net cash flows as of December 31, 2006 |   | $      | 8,116,583 |   |

 

As of December 31, 2006,the net capitalized costs of oil and gas properties exceeded the standardizedmeasure of discounted cash flows. The Partnership has recorded propertyimpairment costs totaling $8,145,740 during 2006 in order to reduce thecapitalized costs of oil and gas properties to the standardized measure ofdiscounted future net cash flows as of December 31, 2006. The Partnership hadno property impairment costs for the period ended December 31, 2005.

**Title toProperties**

The Partnership'sinterests in producing and non-producing acreage will be in the form ofassigned direct interests in leases held by the Partnership or by Reef onbehalf of the Partnership. Such properties will be subject to customary royaltyinterests and could be subject to liens incident to operating agreements, liensfor current taxes and overriding royalty interests and other burdens.  The Partnership believes that none of theseburdens will materially interfere with the use of such properties in theoperation of the Partnership's business and that it will obtain satisfactorytitle to all of its leases. Title will be held by the Partnership or by Reef onbehalf of the Partnership.

**ITEM 3.****                           ****LEGAL PROCEEDINGS.**

The Partnership is not, and has not been, a party to anylegal proceedings.

**ITEM 4.****                           ****SUBMISSION OF MATTERS TO A VOTEOF SECURITY HOLDERS.**

None.

**PART II**

**ITEM 5.****                       ****MARKET FOR REGISTRANT'S COMMONEQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.**

As of December 31, 2006, the Partnership had onemanaging general partner, 217 investor limited partners, and 937 investorgeneral partners. Reef holds a total of 75.363 general partner units and thegeneral and limited investor partners hold 1,190.561 general partner units and241.336 limited partner units. No established trading market exists for theunits.

Cash which, in the sole judgement of the managinggeneral partner, is not required to meet the Partnership’s obligations will bedistributed to the partners at least quarterly in accordance with thePartnership Agreement.

Investor limitedand general partnership interests are transferable, subject to certainrestrictions contained in the Partnership Agreement; however, no assignee of aunit in the Partnership can become a substituted partner without the writtenconsent of both the transferor and Reef.

The Partnershiphas adopted a unit repurchase program. Under the terms of the program, themanaging general partner is obligated to purchase up to 5% of the units in thePartnership in the sixth through tenth years after the Partnership closesunless changes in oil and gas pricing meet certain criteria specified in theprospectus supplement, however, the managing general partner’s obligation topurchase units is limited to $500,000 per year in the aggregate for allpartnerships sponsored as a part of the Reef Global Energy Ventures II Program.The Partnership did not repurchase any units in 2006 or 2005.

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**Use of Proceeds**

In connection withthe Registration Statement filed on Form S-1 (No. 333-122935) and declaredeffective July 7, 2005, Reef filed a final prospectus for the Program and fileda prospectus supplement describing the Partnership on July 8, 2005. At suchtime Reef commenced the offering of units in the Partnership. All sales ofPartnership units were made through the Program's dealer-manager, ReefSecurities, Inc., and a number of soliciting dealers. The offering terminatedOctober 31, 2005. Under the terms of the offering, a minimum of 40 Partnershipunits at a price of $25,000 per unit were required to be sold in order to formthe Partnership. Upon meeting this requirement, the Partnership was formed onJuly 18, 2005.

During theoffering period that terminated on October 31, 2005, the Partnership sold1,431.897 units to investor partners, consisting of 241.336 units of limitedpartner interest and 1,190.561 units of general partner interest. Reefpurchased 75.363 general partner units, equaling 5.00% of the total Partnershipunits sold. Total offering proceeds were $37,398,898. Reef will also contribute1% of all leasehold, drilling, and completion costs as incurred. During theyear ended December 31, 2006 and the period from inception (July 18, 2005) toDecember 31, 2005, Reef contributed $113,853 and $7,263 to the Partnership inconnection with this obligation.

All units exceptthose purchased by Reef paid a 15% management fee to Reef to pay for thePartnership organization and offering costs, including sales commissions. Thesecosts totaled $5,369,615, leaving capital contributions of $32,150,399available for Partnership oil and gas operations. As of December 31, 2006, thePartnership had expended $20,802,492 on property acquisitions and prepaymentsand $138,302 on general and administrative expenses.

The Partnershipintends to utilize all available Partnership capital for oil and gas activitiesby the end of 2008.

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

The selectedfinancial data presented below has been derived from the audited financialstatements of the Partnership.
|                                                  | ** ** | **December 31,  2006** | ** ** | **Period from  Inception (July 18,  2005) to  December 31  2005** | ** ** |
|--------------------------------------------------|------------|-----------------------------|------------|--------------------------------------------------------------------------------------------|------------|
|                                             |       |                        |       |                                                                                       |       |
| Oil and gas  sales revenue                       |       | $                           | 552,572    |                                                                                       | —     |   |
| Interest income                                  |       | 836,045                     |       | 218,477                                                                                    |       |
| Costs and expenses                               |       | 8,877,529                   |       | 106,989                                                                                    |       |
| Partnership net  income (loss)                   |       | (7,488,912                  | )          | 111,488                                                                                    |       |
|                                             |       |                        |       |                                                                                       |       |
| Allocation of  net income (loss):                |       |                        |       |                                                                                       |       |
| Managing general  partner                        |       | (331,615                    | )          | (4,464                                                                                     | )          |
| General partner  units                           |       | (5,950,984                  | )          | 96,353                                                                                     |       |
| Limited partner  units                           |       | (1,206,313                  | )          | 19,599                                                                                     |       |
| Net loss per  managing partner unit              |       | (4,400.24                   | )          | (59.23                                                                                     | )          |
| Net income  (loss) per general partner unit      |       | (4,998.47                   | )          | 80.93                                                                                      |       |
| Net income  (loss) per limited partner unit      |       | (4,998.47                   | )          | 81.21                                                                                      |       |
|                                             |       |                        |       |                                                                                       |       |
| Total assets                                     |       | 28,061,160                  |       | 33,800,949                                                                                 |       |
| Distributions to  managing general partner       |       | (142,700                    | )          | (7,725                                                                                     | )          |
| Distributions to  investor partners              |       | (780,923                    | )          | (42,275                                                                                    | )          |
| Distributions  per general partner unit          |       | 545.38                      |       | 29.52                                                                                      |       |
| Distributions  per limited partner unit          |       | 545.38                      |       | 29.52                                                                                      |       |
| Distributions per  managing general partner unit |       | 1,893.50                    |       | 102.50                                                                                     |       |
|                                                  |            |                             |            |                                                                                            |            |  |

 

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**ITEM 7.****                       ****MANAGEMENT'S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.**

The followingdiscussion will assist you in understanding the Partnership’s financialposition, liquidity, and results of operations. The information should be readin conjunction with the audited financial statements and notes to financialstatements contained herein. The discussion contains historical andforward-looking information.

For a discussionof risk factors that could impact the Partnership’s financial results, pleasesee Item 1A of this Report on Form 10-K.

**CriticalAccounting Policies**

The preparation of financialstatements in conformity with accounting principles generally accepted in theUnited States requires us to make estimates and assumptions that can affect thereporting of assets, liabilities, equity, revenues, and expenses. We base ourestimates on historical experience and various other assumptions that arebelieved to be reasonable under the circumstances. Actual results may differfrom these estimates under different assumptions or conditions. We are alsorequired to select among alternative acceptable accounting policies. See Note 2to the financial statements for a complete list of significant accounting policies.

**Oil and Gas Properties**

The Partnership follows thefull cost method of accounting for crude oil and natural gas properties. Underthis method, all direct costs and certain indirect costs associated withacquisition of properties and successful as well as unsuccessful explorationand development activities are capitalized. Depreciation, depletion, andamortization of capitalized crude oil and natural gas properties and estimatedfuture development costs, excluding unproved properties, are based on the unit-of-productionmethod using proved reserves.  Proved gasreserves are converted to equivalent barrels at a rate of 6 Mcf to 1 Bbl. Netcapitalized costs of crude oil and natural gas properties, as adjusted for assetretirement obligations, are limited to the lower of unamortized cost or thecost ceiling, defined as the sum of the present value of estimated future netrevenues from proved reserves based on un-escalated prices discounted at 10percent, plus the cost of properties not being amortized, if any, plus thelower of cost or estimated fair value of unproved properties included in thecosts being amortized, if any. Excess costs are charged to property impairmentexpense. No gain or loss is recognized upon sale or disposition of crude oiland natural gas properties, except in unusual circumstances. During the yearended December 31, 2006 and the period from inception (July 18, 2005) toDecember 31, 2005, the Partnership recognized property impairment expense of$8,145,740 and $0, respectively.

The estimate of proved oil and gasreserves used to determine property impairment expense, and also utilized inthe Partnership’s disclosures of supplemental information regarding oil and gasproducing activities, including the standardized measure of discounted cashflows, is prepared by a petroleum engineer employed by RELP utilizing theperiod end prices and costs as promulgated by the SEC. Reserve engineering is asubjective and inexact process of estimating underground accumulations of oiland natural gas that cannot be measured in an exact manner. The accuracy of anyreserve estimate is a function of the quality of available data and ofengineering and geological interpretation and judgment. Accordingly, reserveestimates may be subject to upward or downward adjustments. Actualproduction, revenues and expenditures with respect to reserves will likely varyfrom estimates, and such variances could be material.

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The determination of depreciation,depletion and amortization expense recognized in the financial statements isalso dependent upon the estimates of proved oil and gas reserves and will becomputed using the units-of-production method based upon this estimate ofproved reserves. During the year ended December 31, 2006 and the period frominception (July 18, 2005) to December 31, 2005, the Partnership haddepreciation, depletion, and amortization expense totaling $552,848 and $0,respectively.

The Partnership follows Statementof Financial Accounting Standards No. 143, “Accounting for Asset RetirementObligations,” for all productive oil and gas wells drilled by the Partnership.This statement requires the Partnership to estimate the fair value of assetretirement obligations (dismantlement and abandonment of oil and gas wells andsite restoration) in the period in which the asset is placed in service. Theliability recognized is offset by a corresponding increase in the carryingvalue of the asset. Each period the liability is accreted to its net presentvalue with a corresponding charge to accretion expense, and the additionalasset cost is amortized using the units-of-production method. Upon settlementof the obligation a gain or loss is recognized to the extent actual charges areless than or exceed the liability recorded. During the year ended December 31,2006 and the period from inception (July 18, 2005) to December 31, 2005, thePartnership recognized $199,253 and $1,982 of asset retirement obligations andadditional capitalized cost in connection with successful wells drilled by thePartnership.

**Recognitionof Revenue**

The Partnership has entered into sales contracts for dispositionof its share of oil and gas production from productive wells. Revenue isrecognized based upon the metered volumes delivered to those purchasers eachmonth.

Gas imbalances sometimes occur when certain working interestparties do not take their entitled share of gas production. The Partnershiputilizes the sales method of accounting for recording gas imbalances. Underthis method, the Partnership records as revenue all gas delivered for itsaccount. Any significant over or under balanced gas positions are disclosed inthe financial statements. As of December 31, 2006 and 2005, the Partnership hadno gas imbalance positions.

**Overview**

Reef Global Energy VI, L.P. is a Nevada limited partnership formed toexplore, develop, acquire and produce crude oil, natural gas, and natural gasliquids for the benefit of its investor partners. The Partnership's primarypurposes are to generate revenues from the production of oil and gas, distributecash flow to investors, and provide tax benefits to investors. The majority ofthe Partnership’s proceeds will be used to purchase prospects upon which thePartnership will conduct drilling operations.

The Partnership has purchased working interests in 31 prospects, 13 ofwhich are classified as exploratory. The Partnership has 19 prospects in Texas,10 in Louisiana, one in Oklahoma and one offshore in U.S. coastal waters in theGulf of Mexico. The Partnership expects to operate solely in the United States,and believes that the 40 wells expected to be drilled on these prospects willutilize all of the available Partnership capital. OREI, an affiliate of Reef,has expertise and has served as a well operator primarily in Texas andLouisiana since its inception in 1987. During 2006 OREI transferred itsemployees to RELP, and also transferred well operator status to RELP.  RELP currently serves as operator on ten ofthe Partnership prospects.

Many of the projects taken in Texas and Louisiana offer thepotential for both natural gas and condensate production, and the quality ofboth the natural gas and condensate often bring premium prices. The Partnershipfocuses on projects in Louisiana and Texas where OREI and RELP have expertise,where geologic factors are well known, and infrastructure is highly developed.

The Partnership does not operate in any other industry segment. Shouldany prospect in which the Partnership purchased an interest be determined towarrant additional development activity, the Partnership may pay for suchdevelopment with the original Partnership capital, or may borrow an amount upto 25% of the Partnership’s aggregate capital contributions without the consentof the investor partners, provided the lender agrees it will have no recourse againstindividual investor partners. The Partnership is prohibited from issuingadditional cash calls to investor partners. Borrowings for developmentalactivity in excess of 25% of the Partnership’s aggregate capital

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contributions require approval of the investor partners. The Partnershipis not allowed to borrow funds during the drilling phase of Partnershipoperations. Should the Partnership elect to borrow monies for additionaldevelopment activity on Partnership properties, it will be subject to the interestrate risk inherent in borrowing activities. The Partnership expects to drill atotal of nine developmental wells on two successful exploratory prospectsutilizing the original Partnership capital, and currently has no plans toborrow any money. The Partnership is permitted to but has not and does notexpect to engage in commodity futures trading or hedging activities, andtherefore is subject to commodity price risk.  See “Item 7A—Quantitative and Qualitative Disclosures About Market Risk.”

**Liquidityand Capital Resources**

The Partnershipwas funded with initial capital contributions totaling $37,398,898. Reefpurchased 75.363 units, or 5% of the total units sold, for $1,601,464. Investorpartners purchased 1,190.561 general partner units and 241.336 limited partnerunits for $35,797,434. As of December 31, 2006, Reef has also contributed$121,116 in connection with its obligation to pay 1% of all leasehold,drilling, and completion costs. Syndication and organization costs totaled$5,369,615, leaving capital contributions of $32,150,399 available forPartnership activities.

Because thePartnership is not allowed to borrow funds during the drilling phase ofoperations, the $32,150,399, plus any additional contributions made by Reef inconnection with the 1% obligation mentioned above, is the total amountavailable to the Partnership for drilling and administrative costs.  As of December 31, 2006, the Partnership hadexpended $20,802,492 on property acquisitions and prepayments and $138,302 ongeneral and administrative expenses. Please see Item 1A of this Report on Form10-K for a list of risk factors that could impact the Partnership. ThePartnership distributes to investors the interest income earned by thePartnership and the net cash flow from successful wells drilled by thePartnership. These funds are not available for drilling activities.

The Partnershiphad working capital of $12,614,903 at December 31, 2006.

The Partnershipexpects to utilize the available capital contributions for lease acquisitionand drilling activities during 2007 and 2008. The initial drilling of 31 wellson the 31 prospects purchased by the Partnership will be completed during 2007,however, it is expected that additional developmental drilling of nine wells onsuccessful prospects will not be completed until 2008. Drilling activities willbe conducted solely with the available capital contributions. The Partnershipexpects the drilling of these 40 wells to utilize all of the available capital.

Until initialdrilling operations are completed it is not known whether any borrowings willbe required for additional developmental activities.  The Partnership is prohibited from issuingadditional partner assessments. The Partnership currently expects to drill nineadditional developmental wells on successful Partnership prospects utilizingthe initial Partnership capital contributions.

**Resultsof Operations**

**Comparisonof Year Ended December 31, 2006 to the Period from Inception (July 18, 2005)thru December 31, 2005**

The Partnership beganoperations in July, 2005. During the period from inception (July 18, 2005) toDecember 31, 2005, the Partnership completed drilling operations on fourprospects and had one successful well. This well began production operationsduring January 2006; therefore the Partnership has no income or expenses fromproduction operations as of December 31, 2005. The 2005 net income of $111,488results from interest income totaling $218,477 earned on unspent partnercapital contributions, offset by $50,000 of organization expenses (a one timecharge) and $56,989 of general and administrative costs. These general andadministrative costs include $29,429 in administrative costs and servicesprovided by OREI, and $18,618 in legal, accounting and printing costs related toSEC filings.

During 2006, thefund drilled fourteen additional successful wells and thirteen unsuccessfulwells. Four of these successful wells did not begin production operations untilthe fourth quarter of 2006, and six of these successful wells did not beginproduction operations until  2007. Oneexploratory well drilled by the Partnership, to which the

17

 

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Partnershiporiginally assigned estimated net reserves in excess of 200,000 equivalentbarrels of oil (EBO) (natural gas is converted to oil at a rate of 6 Mcf to 1Bbl in computing EBO), appears to have been completed in a very high pressurebut limited reservoir, and ceased production after approximately 60 days. Thiswell accounted for approximately 32% of total Partnership revenue during 2006.This well has been shut-in until an offset well that is currently drilling isfinished and can be evaluated. The well could be sidetracked if the offset wellis successful. The sudden loss of production from this well resulted in areduction in estimated reserve value of approximately $9.5 million, and was themajor reason the Partnership recorded property impairment expense of $8,145,740during 2006, resulting in a net loss of $7,488,912.

The Partnershiphad two successful wells begin production during the first quarter of 2006, onesuccessful well begin production during the second quarter of 2006, twosuccessful wells begin production during the third quarter of 2006, includingthe well mentioned above, and four successful wells begin production during thefourth quarter of 2006. Five wells have begun production during the firstquarter of 2007 and one during the second quarter of 2007.  As wells have begun production operations,the Partnership has seen quarterly oil and gas sales income increase. During2006, oil and gas sales income by quarter totaled $16,478, $41,856, $141,350,and $352,888, for a total of $552,572. General and administrative expensestotaled $81,313. These general and administrative costs include $15,824 inadministrative costs and services provided by RELP and OREI, and $61,501 inlegal, accounting and printing costs related to SEC filings. Interest income,which totaled $836,045 during 2006, results from the investment of unspentcapital contributions.

During 2007, thePartnership expects quarterly revenues to continue to grow as a result of thewells placed in service during the fourth quarter of 2006 and the first quarterof 2007. Should the offset well mentioned above prove successful and allow thesidetrack of the shut-in exploration well, revenues could increasesignificantly by the third and fourth quarter of 2007. Interest income isexpected to decrease to less than half of the 2006 level as most of theremaining available capital is expected to be expended on the Partnership wellsexpected to be drilled during 2007. General and administrative costs will alsoincrease during 2007 with the increase in the number of successful wells thathave begun operations during the last quarter of 2006 and the first quarter of2007.

**Off-BalanceSheet Arrangements**

The Partnership does not participate in transactions that generaterelationships with unconsolidated entities or financial partnerships, such asentities often referred to as structure finance or special purpose entities(SPEs), which would have been established for the purpose of facilitatingoff-balance sheet arrangements or other contractually narrow or limitedpurposes.  As of December 31, 2006 and2005, the Partnership was not involved in any unconsolidated SPE transactions.

**ContractualObligations Table**

The 15% management fee due to Reef fororganization and syndication costs, including sales commissions, is payable intwo parts. Reef initially received an amount, not to exceed 13.5%, to recoveractual commissions and organization and syndication costs. As of December 31,2006 and 2005, the Partnership is obligated to pay Reef $804,789, representingthe portion of the management fee in excess of actual commissions andorganization and syndication costs, from the oil and gas cash flows availablefor partner distributions at a rate not to exceed $1 million per year. Thetiming of the payment of the additional management fee is solely at thediscretion of the managing general partner. To date, Reef has not recovered anyof the additional management fee.

**ITEM 7A.****                   ****QUANTITATIVE AND QUALITATIVEDISCLOSURES ABOUT MARKET RISK.**

**Interest Rate Risk**

The PartnershipAgreement allows borrowings from banks or other financial sources of an amountup to 25% of the aggregate capital contributions to the Partnership withoutinvestor approval, and allows borrowings in excess of 25% of the total capitalcontributions to the Partnership with the consent of investor partners.Borrowings are not allowed during the initial drilling phase of thePartnership, but only for additional development drilling and facilities costson Partnership prospects already drilled. Should the Partnership elect toborrow monies for additional development

18

 

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activity onPartnership properties, it will be subject to the interest rate risk inherentin borrowing activities. Changes in interest rates could significantly affectthe Partnership’s results of operations and the amount of net cash flowavailable for partner distributions. Also, to the extent that changes ininterest rates affect general economic conditions, the Partnership will beaffected by such changes.

**CommodityPrice Risk**

The Partnershipdoes not expect to engage in commodity futures trading or hedging activities orenter into derivative financial instrument transactions for trading or otherspeculative purposes.  The Partnershipexpects to sell a vast majority of its production from successful oil and gaswells on a month-to-month basis at current spot market prices. Accordingly, thePartnership is at risk for the volatility in commodity prices inherent in theoil and gas industry, and the level of commodity prices has a significantimpact on the Partnership's results of operations.

**ITEM 8.****                            ****FINANCIAL STATEMENTS ANDSUPPLEMENTARY DATA.**

The Partnership'sfinancial statements and supplementary data are set forth in a separate sectionto this Report, beginning on page F-1.

**ITEM 9.****                       ****CHANGES IN AND DISAGREEMENTS WITHACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.**

None

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

**Evaluation of Disclosure Controls and Procedures**

As the Managing GeneralPartner of the Partnership, Reef maintains a system of controls and proceduresdesigned to provide reasonable assurance as to the reliability of the financialstatements and other disclosures included in this report, as well as tosafeguard assets from unauthorized use or disposition. As of the end of theperiod covered by this report, Reef's Principal Executive Officer and ChiefFinancial Officer have evaluated the effectiveness of the design and operationof the Partnership's disclosure controls and procedures (as defined in Rule13a-15(e) of the Securities and Exchange Act of 1934) with the assistance andparticipation of other members of management. Based upon that evaluation,Reef's Principal Executive Officer and Chief Financial Officer have concludedthat as of December 31, 2006, Reef’s disclosure controls and procedures wereeffective at a reasonable assurance level for gathering, analyzing anddisclosing the information the Partnership is required to disclose in thereports it files under the Securities Exchange Act of 1934 within the timeperiods specified in the SEC's rules and forms.

**Changesin Internal Controls**

There have been nochanges in Reef's internal controls over financial reporting that occurred duringour last fiscal quarter that have materially affected or are reasonably likelyto materially affect our internal control over financial reporting.

****ITEM 9B.********                   ********OTHER INFORMATION.****

****None.****

**PART III**

**ITEM 10.****                     ****DIRECTORS AND EXECUTIVE OFFICERSOF THE REGISTRANT.**

The Partnershiphas no directors or executive officers; it is managed by Reef Oil & GasPartners, L.P.

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

The Manager, officers and key personnel of the managinggeneral partner, their ages, current positions with the managing generalpartner and/or RELP, and certain additional information are set forth below:
| **Name**               | ** ** | **Age** | ** ** | **Positions and Offices Held**                                                   |
|------------------------|------------|---------|------------|----------------------------------------------------------------------------------|
| Michael J.  Mauceli    |       | 50      |       | Manager of Reef Oil & Gas Partners GP, LLC;  Chief Executive Officer of RELP |
| Kellam Colquitt        |       | 59      |       | Chief Operating Officer of RELP                                                  |
| H. Walt Dunagin        |       | 49      |       | Executive Vice President—Land Manager of RELP                               |
| Laura S. Klein.  Klein |       | 47      |       | Drilling Engineering Manager of RELP                                             |
| John M. Dees           |       | 53      |       | Vice President—Operations and Engineering of RELP                           |
| Daniel C. Sibley       |       | 55      |       | Chief Financial Officer of Reef and of RELP                                      |
| David M. Tierney       |       | 54      |       | Controller—Reef Global Energy Ventures                                      |

 

**Michael J. Mauceli** is the Manager and a memberof Reef Oil & Gas Partners, GP, LLC, which is the general partner of Reef,and he also serves as the Chief Executive Officer of RELP. Mr. Mauceli has beenthe principal executive officer of Reef since its formation in February 1999.He has served in this position with RELP since January 2, 2006 and previouslyserved in this position with its predecessor entity, OREI, since 1987.  Mr. Mauceli attended the University ofMississippi where he majored in business management and marketing as well asthe University of Houston where he received his Commercial Real Estate License.He entered the oil and gas business in 1976 when he joined Tenneco Oil &Gas Company.  Mr. Mauceli moved to Dallasin 1979, where he was independently employed by several exploration anddevelopment firms in planning exploration and marketing feasibility ofprivately sponsored drilling programs.

**Kellam Colquitt**joined RELP as ChiefOperating Officer on February 14, 2006. Mr. Colquitt has over thirty-five yearsof experience in the oil and gas industry. He is a 1971 graduate of Texas A&M University with a degree in geology.Prior to joining RELP, Mr. Colquitt served as Vice President-Exploration ofVintage Petroleum, Inc. in Tulsa Oklahoma from 2001-2006. He also served as theGeneral Manager-Exploration of Vintage Petroleum, Inc. from 2000-2001. Prior tothat, Mr. Colquitt was employed from 1995-2000, first as VicePresident-International Exploration Western Hemisphere and later as VicePresident-U.S. Operations for Ranger Oil Limited.  He is a member of the American Association ofPetroleum Geologists, the Houston Petroleum Club, the Tulsa Geological Society,and the Houston Geological Society.

**H. Walt Dunagin** is Executive VicePresident—Land Manager of RELP. He has held this position with RELP sinceJanuary 2, 2006 and previously served in the same position with its predecessorentity, OREI, since 1990. He is a 1979 graduate of the University ofMississippi. Mr. Dunagin began his career doing independent land work for ExxonCo. U.S.A.  Since that time he hasperformed land work in Alabama, Mississippi, Louisiana, North Dakota, Montana,Oklahoma and Texas. For six years prior to joining OREI, he was directlyinvolved in the sale of producing properties for Mobil, Texaco, Oryx Energy andAmerican Exploration Company. He has been a Certified Professional Landmansince 1986 and is a member of the American Association of Petroleum Landmen,Dallas Association of Petroleum Landmen and the International Association ofPetroleum Negotiators.

**Laura S. Klein** is Drilling EngineeringManager of RELP.  She has held thisposition with RELP since January 2, 2006 and previously served in the sameposition with its predecessor entity, OREI, since 2000. She is a 1981 graduateof the Colorado School of Mines with a Bachelor's degree in PetroleumEngineering. Since receiving her degree, Ms. Klein has accumulated 25 years ofexperience as a drilling/completion engineer and as a worldwide rig operationssupervisor. From 1996 until joining OREI, she held the position of Senior StaffDrilling Engineer with Mobil's International Drilling Services Unit and oversawprojects in Russia, China, Italy and the North Sea. Ms. Klein also managedrecruiting and training for Mobil's worldwide drilling organization. Ms.Klein's professional affiliations include the Society of Petroleum Engineers,the American Association of Drilling Engineers and the American Society ofTraining and Development.

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**John M. Dees, P.E.** is VicePresident-Operations and Engineering of RELP. From 1994 to 2004, Mr. Deesserved as a petroleum engineering consultant with Dees Well Completions. Mr.Dees has over 30 years of industry experience. Mr. Dees has conducted wellcompletion engineering and production operations for RELP since January 2,2006, and was previously with RELP's predecessor entity, OREI, since 2003, whenhe joined it in a consulting capacity. He holds a Bachelor of Science degree inChemistry from Southwestern Oklahoma State University and a Masters inPetroleum Engineering from the University of Oklahoma. Prior to consulting forReef, Mr. Dees worked for Halliburton Services in fracturing fluids, fracturingresearch engineering, and field operations engineering, as well as for numerousoil and gas companies, including Getty Oil, Sun E&P, and Oryx Energy. Mr.Dees has published several peer-reviewed technical papers and was the inventorof several U.S. and international patents on extreme overbalancing perforatingstimulation and resin formation sand control. Mr. Dees is a member of theAmerican Chemical Society and the Society of Petroleum Engineers.

**Daniel C. Sibley**became Chief FinancialOfficer of Reef in December 1999. He has served in the same position for RELPsince January 2, 2006 and has served in this position with RELP’s predecessorentity, OREI, since 1998. Mr. Sibley was employed as a Certified PublicAccountant with Grant Thornton from 1977 to 1980. From 1980 to 1998, he wasinvolved in the private practice of law. He received a B.B.A. in accountingfrom the University of North Texas in 1973, a law degree (J.D.) from theUniversity of Texas in 1977, and a Master of Laws-Taxation degree (L.L.M.) fromSouthern Methodist University in 1984.

**David M. Tierney** has been employed by RELPsince January 2, 2006 and was previously with its predecessor entity, OREI,since March 2001.  Mr. Tierney is theController of the Reef Global Energy Ventures partnerships. Mr. Tierneyreceived a Bachelor's degree from Davidson College in 1974, a Masters ofBusiness Administration from Tulane University in 1976, and is a TexasCertified Public Accountant. Mr. Tierney has worked in public accounting, andhas worked in the oil and gas industry since 1979. From 1992 through 2000 heserved as controller/treasurer of an independent oil and gas explorationcompany.

**Audit Committee and Nominating Committee**

Because the Partnership has no directors, it doesnot have an audit committee, an audit committee financial expert or anominating committee.

**Code of Ethics**

Because the Partnership has no employees, it doesnot have a code of ethics.  Employees ofthe Partnership's managing general partner, Reef, must comply with Reef's Codeof Ethics, a copy of which will be provided to investor partners, withoutcharge, upon request made to Reef Oil and Gas Partners, L.P., 1901 N. CentralExpressway, Suite 300, Richardson, Texas 75080, Attention: Daniel C. Sibley.

**ITEM 11.****                      EXECUTIVECOMPENSATION.**

The following table summarizes the items of compensationto be received by Reef as the managing general partner from the Partnership.
| **Recipient**                               | ** ** | **Form of Compensation**                                                                             | ** ** | **Amount**                 |
|---------------------------------------------|------------|------------------------------------------------------------------------------------------------------|------------|----------------------------|
| Managing General Partner                    |       | Partnership interest (excluding any partnership  interest resulting from the purchase of units) |       | 10% interest               |
| Managing General Partner                    |       | Management fee                                                                                       |       | 15% of subscriptions       |
| Managing General Partner and its Affiliates |       | Direct and administrative costs                                                                      |       | Reimbursement at cost      |
| Affiliate of the Managing General Partner   |       | Operator's per-well charges                                                                          |       | Competitive prices         |
| Managing General Partner and its Affiliates |       | Payment for equipment, supplies, marketing, and  other services                                      |       | Cost or competitive prices |

 

 

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Reef’s“partnership interest,” as described in the table above, refers only to itsinterest as managing general partner and does not include the interest Reef hasas the result of its purchase of units in the Partnership, nor the 1% interestReef has as the result of its payment of 1% of all lease costs, intangibledrilling and development costs, and well completion costs.  Reef purchased 5.00% of the outstandingPartnership units. Reef received a 10% interest as managing general partner ofthe Partnership and a 1% interest as a result of Reef’s payment of 1% of alllease costs, intangible drilling and development costs, and well completioncosts for a total of an 11% interest. This 11% interest is not represented by partnership units.  Reef has a total interest in the Partnershipof 15.45%.

Reefwill receive a management fee equal to 15% of the Partnership subscriptionsexclusive of the units purchased by Reef. From this amount Reef pays all of thePartnership’s organization and offering costs, including sales commissions. Themanagement fee is payable to Reef in two parts. Reef initially received anamount not to exceed 13.5% to cover actual sales commissions and actualorganization and syndication costs. The remainder of the management fee is paidto Reef from the net cash flow available for partner distributions, at a ratenot to exceed $1 million per year. The total management fee owed Reef is$5,369,615. Of this amount, $4,564,826 has been paid to Reef to cover actualsales commissions and organization and syndication costs, and $804,789 has beenaccrued as an account payable to be paid to Reef from net cash flow of thePartnership. The Partnership recorded $5,319,615 of this amount as syndicationcosts, and $50,000 as organization costs.

Reefwill be reimbursed for direct costs and all documented out-of-pocket expensesincurred on behalf of the Partnership, including administrative costs. Duringthe year ended December 31, 2006 and the period from inception (July 18, 2005)to December 31, 2005, the Partnership reimbursed Reef $571,112 and $211,176,respectively, for technical services costs which have been capitalized asproject costs, and $15,824 and $29,429, respectively, for administrative costsincluded as general and administrative expenses.

During2006, RELP assumed from OREI well operator status for all wells previouslyoperated by OREI. Operator fees will be payable only if RELP or another Reefaffiliate serves as operator of a Partnership prospect. Under suchcircumstances, such affiliate will receive fees at the competitive rate in thearea during the drilling and production phase of operations. Often these arecharged as a monthly fee per well. During the year ended December 31, 2006 andthe period from inception (July 18, 2005) to December 31, 2005, the Partnershippaid operator fees totaling $8,791 and $3,463 to RELP and OREI. RELP(previously OREI) serves as operator for ten Partnership prospects upon whichtwo successful and seven unsuccessful wells have been drilled to date.

**ITEM 12.**                      SECURITY OWNERSHIP OF CERTAIN BENEFICIALOWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table setsforth information as of December 31, 2006 concerning all persons known by Reefto own beneficially more than 5% of the interests in the Partnership. Unlessexpressly indicated otherwise, each partner exercises sole voting andinvestment power with respect to the units beneficially owned.
| Person or Group              | ** ** | **Number of Units  Beneficially  Owned** | ** ** | **Percent of Total  Partnership Units  Outstanding** | ** ** | **Percentage of  Total Partnership  Interests  Beneficially  Owned** | ** ** |
|----------------------------------------|------------|----------------------------------------------------|------------|---------------------------------------------------------------------|------------|--------------------------------------------------------------------------------|------------|
| Reef Oil &  Gas Partners, L.P. (1) |       | 75.363                                             |       | 5.00                                                                | %          | 4.45                                                                           | %          |
| Reef Oil & Gas  Partners, L.P. (1) |       | —                                             |       | —                                                              |       | 11.00                                                                          | %          |

 

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

The managing general partner receives a 10% interestin the Partnership as compensation for forming the Partnership, and also holdsa 1% interest in the Partnership as a result of paying 1% of all leasehold,drilling and completion costs. In addition to this 11% interest not representedby Partnership units, Reef purchased 5% of the 1,507.260 Partnership units and,therefore, holds 5% of the 89% interest in the Partnership (4.45%) held by theunit holders.

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**ITEM 13.**                      CERTAIN RELATIONSHIPS AND RELATEDTRANSACTIONS.

Reefis the managing general partner of the Partnership.  Along with its affiliates, Reef has enteredinto agreements with, and received compensation from, the Partnership forservices it performs for the Partnership. See Item 11. – ExecutiveCompensation.

**ITEM 14.**                      PRINCIPAL ACCOUNTING FEES AND SERVICES.

ThePartnership incurred professional audit and tax fees from its principal auditorBDO Seidman, LLP, as disclosed in the table below:
|            | ** ** | **2006** | ** ** | **2005** | ** ** |
|------------|------------|----------|------------|----------|------------|
| Audit fees |       | $        | 44,225     |     | $          | 38,367 |   |
| Tax fees   |       | $        | 615        |     | $          | 2,540 |   |

 

Fees fortax services are for review of the Partnership’s tax return.

**PARTIV**

**ITEM 15.**                      EXHIBITS, FINANCIAL STATEMENT SCHEDULESAND REPORTS ON FORM 8-K.
| (a)    | 1. Financial Statements                                  |   |
|--------|----------------------------------------------------------|--------|
|   |                                                     |   |
|   | Report of Independent Registered Public Accounting  Firm | F-1    |
|   | Balance Sheets                                           | F-2    |
|   | Statements of Operations                                 | F-3    |
|   | Statements of Partnership Equity                         | F-4    |
|   | Statements of Cash Flows                                 | F-5    |
|   | Notes to Financial Statements                            | F-6    |
|   |                                                     |   |
|   |                                                     |   |
|   | 2. Financial Statement Schedules                         | None   |
|   |                                                     |   |
|   | 3. Exhibits                                              |   |

 

Alist of the exhibits filed or furnished with this report on Form 10-K (orincorporated by reference to exhibits previously filed or furnished by us) isprovided in the Exhibit Index in this report. Those exhibits incorporated by reference herein are indicated as such bythe information supplied in the parenthetical thereafter. Otherwise, theexhibits are filed herewith.

 

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**SIGNATURES**

Pursuantto the requirements of Section 13 or 15(d) of the Securities Exchange Act of1934, the Registrant has duly caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized.
| Date:   April  16, 2007 |   | **REEF GLOBAL ENERGY VI, L.P.**   |
|-----------------------------------|--------|-----------------------------------|
|                              |   | ** **                        |
| ** **                        |   |                              |
|                              |   | Reef Oil & Gas Partners, L.P. |
|                              |   | Managing General Partner          |
|                              |   |                              |
|                              |   | By:                               | Reef Oil & Gas Partners, GP, LLC |
|                              |   |                              |   |
|                              |   | By:                               | /s/ Michael J. Mauceli |   |
|                              |   |                              | Michael J. Mauceli |
|                              |   |                              | Manager (principal executive officer) |

 

24

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Pursuant to the requirements of the SecuritiesExchange Act of 1934, this report has been signed below by the followingpersons on behalf of the Registrant and in the capacities and on the datesindicated.
| Signature              | ** ** | **Title**                                                   | ** ** | **Date**       |
|------------------------|------------|-------------------------------------------------------------|------------|----------------|
|                   |       | * *                                                    |       |           |
| /s/ Michael J. Mauceli |       | Manager and Member of the general partner of Reef           |       | April 16, 2007 |
| Michael J. Mauceli     |       | Oil & Gas Partners, L.P.*(Principal Executive Officer)* |       |           |
|                   |       | * *                                                    |       |           |
| /s/ Daniel C. Sibley   |       | Chief Financial Officer*(Principal Financial Officer*       |       | April 16, 2007 |
| Daniel C. Sibley       |       | *and Principal Accounting Officer)*                         |       |           |

 

 

25

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Reef Global EnergyVI, L.P.

FinancialStatements

For the Year Ended December 31, 2006 and the Period fromInception (July 18, 2005) to December 31, 2005

**Contents**
| Report of Independent  Registered Public Accounting Firm |   | F-1    |
|----------------------------------------------------------|--------|--------|
|                                                     |   |   |
| Audited Financial Statements                             |   |   |
|                                                     |   |   |
| Balance Sheets                                           |   | F-2    |
| Statements of  Operations                                |   | F-3    |
| Statements of  Partnership Equity                        |   | F-4    |
| Statements of  Cash Flows                                |   | F-5    |
| Notes to Financial  Statements                           |   | F-6    |

 

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**Report of Independent Registered Public AccountingFirm**

The PartnersReef Global Energy VI, L.P.

We have auditedthe accompanying balance sheets of Reef Global Energy VI, L.P. as of December31, 2006 and 2005, and the related statements of operations, partnershipequity, and cash flows for the year ended December 31, 2006 and the period frominception (July 18, 2005) to December 31, 2005. These financial statements arethe responsibility of the Partnership’s management. Our responsibility is toexpress an opinion on these financial statements based on our audits.

We conducted ouraudits in accordance with the standards of the Public Company AccountingOversight Board (United States). Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. The Partnership is not requiredto have, nor were we engaged to perform, an audit of its internal control overfinancial reporting. An audit includes consideration of internal control overfinancial reporting as a basis for designing audit procedures that areappropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the Partnership’s internal control overfinancial reporting. Accordingly, we express no such opinion. An audit alsoincludes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements, assessing the accounting principlesused and significant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our audits provide areasonable basis for our opinion.

In our opinion,the financial statements referred to above present fairly, in all materialrespects, the financial position of Reef Global Energy VI, L.P. at December 31,2006 and 2005, and the results of its operations and its cash flows for theyear ended December 31, 2006 and the period from inception (July 18, 2005) toDecember 31, 2005, in conformity with accounting principles generally acceptedin the United States of America.

BDO Seidman, LLP

Dallas, TexasApril 6, 2007

F-1

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**Reef Global Energy VI, L.P.****Balance Sheets**
| **December 31,**                                   | ** ** | **2006**       | ** **     | **2005**       | ** ** |
|---------------------------------------------------------|------------|----------------|----------------|----------------|------------|
| ** **                                              |       |           |           |           |       |
| **Assets**                                              |       |           |           |           |       |
| ** **                                              |       |           |           |           |       |
| **Current  assets:**                                    |       |           |           |           |       |
| Cash and cash equivalents                               |       | **$**          | 15,641,945     |           | **$**      | 25,839,550 |   |
| Accounts receivable from affiliates                     |       | 111,508        |           | 402,095        |       |
| **Total  current assets**                               | ** ** | **15,753,453** | ** **     | **26,241,645** | ** ** |
|                                                    |       |           |           |           |       |
| **Property  and equipment:**                            |       |           |           |           |       |
| Oil and gas properties, full cost method of  accounting |       | 16,815,171     |           | 1,411,666      |       |
| Drilling in progress                                    |       | 2,030,077      |           | 2,092,026      |       |
| Prepaid drilling costs                                  |       | 2,161,047      |           | 4,055,612      |       |
| Accumulated depreciation and depletion                  |       | (8,698,588     | )              | —         |       |
| **Net  property and equipment**                         | ** ** | **12,307,707** | ** **     | **7,559,304**  | ** ** |
| ** **                                              | ** ** | ** **     | ** **     | ** **     | ** ** |
| **Total  assets**                                       | ** ** | **$**          | **28,061,160** | ** **     | **$**      | **33,800,949** | ** ** |
| ** **                                              |       |           |           |           |       |
| **Liabilities  and partnership Equity**                 |       |           |           |           |       |
|                                                    |       |           |           |           |       |
| **Current  liabilities:**                               |       |           |           |           |       |
| Accounts payable                                        |       | **$**          | 1,948          |           | **$**      | 27,262 |   |
| Accounts payable to affiliates                          |       | 3,136,602      |           | 790,835        |       |
| **Total  current liabilities**                          | ** ** | **3,138,550**  | ** **     | **818,097**    | ** ** |
|                                                    |       |           |           |           |       |
| **Noncurrent  liabilities:**                            |       |           |           |           |       |
| Accounts payable to affiliates                          |       | 804,789        |           | 804,789        |       |
| Asset retirement obligation                             |       | 203,803        |           | 1,982          |       |
| **Total  non-current liabilities**                      | ** ** | **1,008,592**  | ** **     | **806,771**    | ** ** |
| ** **                                              |       |           |           |           |       |
| **Partnership  Equity**                                 |       |           |           |           |       |
| General partners                                        |       | 18,801,910     |           | 25,402,198     |       |
| Limited partners                                        |       | 3,811,366      |           | 5,149,298      |       |
| Managing general partner                                |       | 1,300,742      |           | 1,624,585      |       |
| **Partnership  equity**                                 | ** ** | **23,914,018** | ** **     | **32,176,081** | ** ** |
| ** **                                              | ** ** | ** **     | ** **     | ** **     | ** ** |
| **Total liabilities and  partnership equity**           | ** ** | **$**          | **28,061,160** | ** **     | **$**      | **33,800,949** | ** ** |

 

*See accompanying notes tofinancial statements.*

F-2

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**Reef Global Energy VI, L.P.****Statements of Operations**
| ** **                                  | ** ** | **Year ended  December 31,   2006** | ** **     | **Period from   inception (July   18, 2005) to   December 31,   2005** | ** ** |
|---------------------------------------------|------------|----------------------------------------------------|----------------|---------------------------------------------------------------------------------------------------------------------|------------|
|                                        | ** ** | ** **                                         | ** **     | ** **                                                                                                          | ** ** |
| **Revenues:**                               | ** ** | ** **                                         | ** **     | ** **                                                                                                          | ** ** |
| Oil and gas sales                           |       | **$**                                              | 552,572        |                                                                                                                | **$**      | — |   |
| **Total  revenues**                         | ** ** | **552,572**                                        | ** **     | **—**                                                                                                          | ** ** |
|                                        | ** ** | ** **                                         | ** **     | ** **                                                                                                          | ** ** |
| **Costs  and expenses:**                    | ** ** | ** **                                         | ** **     | ** **                                                                                                          | ** ** |
| Lease operating expenses                    |       | 55,637                                             |           | —                                                                                                              |       |
| Production taxes                            |       | 39,423                                             |           | —                                                                                                              |       |
| General and administrative expenses         |       | 81,313                                             |           | 56,989                                                                                                              |       |
| Organization expenses                       |       | —                                             |           | 50,000                                                                                                              |       |
| Accretion of asset retirement obligation    |       | 2,568                                              |           | —                                                                                                              |       |
| Depreciation, depletion and amortization    |       | 552,848                                            |           | —                                                                                                              |       |
| Property impairment                         |       | 8,145,740                                          |           | —                                                                                                              |       |
| **Total  costs and expenses**               | ** ** | **8,877,529**                                      | ** **     | **106,989**                                                                                                         | ** ** |
|                                        | ** ** | ** **                                         | ** **     | ** **                                                                                                          | ** ** |
| **Loss  from operations**                   | ** ** | **(8,324,957**                                     | **)**          | **(106,989**                                                                                                        | **)**      |
| ** **                                  | ** ** | ** **                                         | ** **     | ** **                                                                                                          | ** ** |
| **Other  income:**                          | ** ** | ** **                                         | ** **     | ** **                                                                                                          | ** ** |
| Interest income                             |       | 836,045                                            |           | 218,477                                                                                                             |       |
| **Total  other income**                     | ** ** | **836,045**                                        | ** **     | **218,477**                                                                                                         | ** ** |
| ** **                                  | ** ** | ** **                                         | ** **     | ** **                                                                                                          | ** ** |
| **Net  income (loss)**                      | ** ** | **$**                                              | **(7,488,912** | **)**                                                                                                               | **$**      | **111,488** | ** ** |
|                                        | ** ** | ** **                                         | ** **     | ** **                                                                                                          | ** ** |
| Net income  (loss) per general partner unit | ** ** | **$**                                              | **(4,998.47**  | **)**                                                                                                               | **$**      | **80.93** | ** ** |
| Net income  (loss) per limited partner unit | ** ** | **$**                                              | **(4,998.47**  | **)**                                                                                                               | **$**      | **81.21** | ** ** |
| Net loss per  managing general partner unit | ** ** | **$**                                              | **(4,400.24**  | **)**                                                                                                               | **$**      | **(59.23** | **)** |

 

*See accompanying notes tofinancial statements.*

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**Reef Global Energy VI, L.P.****Statements of Partnership Equity****For the Year Ended December 31, 2006 and thePeriod****from Inception (July 18, 2005) to December 31,2005**
| ** **                                       | ** ** | **General partners** | ** ** | **Limited partners** | ** ** | **Managing general   partner** | ** ** | **Total**  | ** ** |
|--------------------------------------------------|------------|---------------------------|------------|---------------------------|------------|------------------------------------------|------------|------------|------------|
| ** **                                       | ** ** | **Units**                 | ** ** | **Amount**                | ** ** | **Units**                                | ** ** | **Amount** | ** ** | **Units** | ** ** | **Amount** | ** ** | **Units** | ** ** | **Amount** | ** ** |
| Partner  contributions, net of syndication costs |       | 1190.561                  |       | $                         | 25,340,995 |                                     | 241.336    |       | $          | 5,136,824 |   | 75.363 |   | $ | 1,636,774 |   | 1507.260 |   | $ | 32,114,593 |   |
| Partner  distributions                           |       | —                    |       | (35,150                   | )          | —                                   |       | (7,125     | )          | — |   | (7,725 | ) | — |   | (50,000 | ) |
| Net income (loss)                                |       | —                    |       | 96,353                    |       | —                                   |       | 19,599     |       | — |   | (4,464 | ) | — |   | 111,488 |   |
| Balance at  December 31, 2005                    |       | 1190.561                  |       | $                         | 25,402,198 |                                     | 241.336    |       | $          | 5,149,298 |   | 75.363 |   | $ | 1,624,585 |   | 1507.260 |   | $ | 32,176,081 |   |
|                                             |       |                      |       |                      |       |                                     |       |       |       |   |   |   |   |   |   |   |   |
| Distribution  amount per partnership unit        |       |                      |       | $                         | 29.52      |                                     |       |       | $          | 29.52 |   |   |   | $ | 102.50 |   |   |   |   |   |
|                                             |       |                      |       |                      |       |                                     |       |       |       |   |   |   |   |   |   |   |   |
| Balance at  December 31, 2005                    |       | 1190.561                  |       | $                         | 25,402,198 |                                     | 241.336    |       | $          | 5,149,298 |   | 75.363 |   | $ | 1,624,585 |   | 1507.260 |   | $ | 32,176,081 |   |
| Partner  contributions                           |       | —                    |       | —                    |       | —                                   |       | —     |       | — |   | 150,472 |   | — |   | 150,472 |   |
| Partner  distributions                           |       | —                    |       | (649,304                  | )          | —                                   |       | (131,619   | )          | — |   | (142,700 | ) | — |   | (923,623 | ) |
| Net loss                                         |       | —                    |       | (5,950,984                | )          | —                                   |       | (1,206,313 | )          | — |   | (331,615 | ) | — |   | (7,488,912 | ) |
| Balance at  December 31, 2006                    |       | 1190.561                  |       | $                         | 18,801,910 |                                     | 241.336    |       | 3,811,366  |   | 75.363 |   | $ | 1,300,742 |   | 1507.260 |   | $ | 23,914,018 |   |
|                                             |       |                      |       |                      |       |                                     |       |       |       |   |   |   |   |   |   |   |   |
| Distribution amount per  partnership unit        | ** ** | ** **                | ** ** | **$**                     | 545.38     | ** **                               | ** ** |       | **$**      | 545.38 |   |   |   | **$** | 1,893.50 |   |   |   |   |   |

 

*See accompanying notes tofinancial statements.*

F-4

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**Reef Global Energy VI, L.P.****Statements of Cash Flows**
| ** **                                                                         | ** ** | **2006**        | ** **     | **Period from   inception   (July 18,   2005) to   December 31,   2005** | ** ** |
|------------------------------------------------------------------------------------|------------|-----------------|----------------|-----------------------------------------------------------------------------------------------------------------------|------------|
| **Operating  Activities**                                                          |       |            |           |                                                                                                                  |       |
| Net income  (loss)                                                                 |       | $               | (7,488,912     | )                                                                                                                     | $          | 111,488 |   |
| Adjustments for  non-cash transactions:                                            |       |            |           |                                                                                                                  |       |
| Depreciation, depletion and amortization                                           |       | 552,848         |           | —                                                                                                                |       |
| Property impairment                                                                |       | 8,145,740       |           | —                                                                                                                |       |
| Accretion of asset retirement obligation                                           |       | 2,568           |           | —                                                                                                                |       |
| Adjustments to  reconcile net income to net cash provided by operating activities: |       |            |           |                                                                                                                  |       |
| Changes in operating assets and liabilities:                                       |       |            |           |                                                                                                                  |       |
| Accounts receivable from affiliates                                                |       | 327,206         |           | (374,048                                                                                                              | )          |
| Accounts payable                                                                   |       | (5,457          | )              | 7,405                                                                                                                 |       |
| Accounts payable to affiliates                                                     |       | (27,567         | )              | 27,567                                                                                                                |       |
| **Net  cash provided by (used in) operating activities**                           | ** ** | **1,506,426**   | ** **     | **(227,588**                                                                                                          | **)**      |
|                                                                               | ** ** | ** **      | ** **     | ** **                                                                                                            | ** ** |
| **Investing  Activities**                                                          | ** ** | ** **      | ** **     | ** **                                                                                                            | ** ** |
| Property acquisition and development                                               |       | (10,704,780     | )              | (6,963,678                                                                                                            | )          |
| **Net  cash used in investing activities**                                         | ** ** | **(10,704,780** | **)**          | **(6,963,678**                                                                                                        | **)**      |
|                                                                               | ** ** | ** **      | ** **     | ** **                                                                                                            | ** ** |
| **Financing  Activities**                                                          | ** ** | ** **      | ** **     | ** **                                                                                                            | ** ** |
| Partner capital contributions                                                      |       | 113,853         |           | 37,406,161                                                                                                            |       |
| Syndication costs                                                                  |       | (189,481        | )              | (4,325,345                                                                                                            | )          |
| Partner distributions                                                              |       | (923,623        | )              | (50,000                                                                                                               | )          |
| **Net  cash provided by (used in) financing activities**                           | ** ** | **(999,251**    | **)**          | **33,030,816**                                                                                                        | ** ** |
|                                                                               | ** ** | ** **      | ** **     | ** **                                                                                                            | ** ** |
| **Net  increase (decrease) in cash and cash equivalents**                          | ** ** | **(10,197,605** | **)**          | **25,839,550**                                                                                                        | ** ** |
| Cash and cash  equivalents at beginning of period                                  |       | 25,839,550      |           | —                                                                                                                |       |
| **Cash  and cash equivalents at end of period**                                    | ** ** | **$**           | **15,641,945** | ** **                                                                                                            | **$**      | **25,839,550** | ** ** |
|                                                                               | ** ** | ** **      | ** **     | ** **                                                                                                            | ** ** |
| Non-cash  financing transactions:                                                  | ** ** | ** **      | ** **     | ** **                                                                                                            | ** ** |
| Managing partner  contributions included in accounts receivable from affiliates    | ** ** | **$**           | 64,666         |                                                                                                                  | **$**      | 28,047 | ** ** |
| Syndication  costs included in accounts payable to affiliates                      | ** ** | **$**           | —         |                                                                                                                  | **$**      | 189,481 | ** ** |
| Syndication  costs included in non-current accounts payable to affiliates          | ** ** | **$**           | —         |                                                                                                                  | **$**      | 804,789 | ** ** |
| Non-cash  investing transactions                                                   |       |            |           |                                                                                                                  |       |
| Property  additions included in accounts payable                                   | ** ** | **$**           | —         |                                                                                                                  | **$**      | 19,857 | ** ** |
| Property  additions included in accounts payable to affiliates                     | ** ** | **$**           | 3,136,602      |                                                                                                                  | **$**      | 573,787 | ** ** |
| Property additions and  asset retirement obligation                                | ** ** | **$**           | 199,253        |                                                                                                                  | **$**      | 1,982 | ** ** |

 

*See accompanying notes tofinancial statements.*

F-5

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**ReefGlobal Energy VI, L.P.**

**Notes toFinancial Statements**

**December 31, 2006**

**1. Organization and Basis of Presentation**

Reef Global Energy VI, L.P. (the Partnership) is the first in a seriesof Nevada limited partnerships comprising a program called Reef Global EnergyVentures II (the Program), pursuant to an S-1 Registration Statement declaredeffective by the Securities and Exchange Commission (the SEC) on July 7, 2005.In order to be formed, each partnership is required to sell a minimum of 40partnership units at $25,000 per unit, including units purchased by themanaging general partner. Each partnership to be formed as a part of theprogram will offer a minimum of 1,000 and a maximum of 2,000 units for sale.The Program is authorized to sell up to 1,600 limited partner units and 6,400general partner units during the period beginning July 8, 2005 thru July 7,2007. Reef Global Energy VI, L.P. offered 2,000 units for sale ($50,000,000),consisting of up to 400 limited partner units and up to 1,600 general partnerunits. Investor funds are held in escrow and are subject to reimbursement withinterest if the minimum number of units is not sold. The Program filed aprospectus supplement with the SEC on July 8, 2005 describing the Partnership,and commenced offering units in the Partnership. Upon reaching the minimumsubscription level, the Partnership was formed on July 18, 2005. ThePartnership offering closed October 31, 2005, with sales to outside investorstotaling 241.336 limited partner units and 1,190.561 general partner units.

The Partnership is a Nevada limited partnership formed under the NevadaUniform Limited Partnership Act. Reef Oil & Gas Partners, L.P. (Reef)serves as the Partnership’s managing general partner. Partnership interests areheld by the managing general partner and investor partners who are general andlimited partners (investor partners). The managing general partner received a10% interest in the Partnership as compensation for forming the Partnership,and also holds a 1% interest in the Partnership as a result of paying 1% of allleasehold, drilling and completion costs. This 11% interest is not representedby Partnership units. In addition, Reef purchased 5% of the Partnership unitsand, therefore, holds 5% of the 89% interest in the Partnership (4.45%) held bythe unit holders. The Partnership purchases working interests in exploratoryand developmental drilling prospects and drills oil and gas wells locatedprimarily onshore in the continental United States and in U.S. coastal watersin the Gulf of Mexico. Other partnerships formed as a part of this Program, aswell as other private drilling partnerships managed by Reef may also owninterests in the wells purchased by this Partnership. In instances where Reefaffiliated entities own a majority interest in a well, the well may be operatedby OREI, Inc. (OREI) or Reef Exploration, L.P. (RELP), affiliates of themanaging general partner. The Partnership began drilling activities during July2005. As of December 31, 2006, the Partnership had purchased working interestsin thirty-one prospects upon which forty wells in total are expected to bedrilled. The Partnership expects drilling operations to continue through 2007,and developmental activities on certain prospects may continue beyond December31, 2007.

During the year following completion of the drilling phase of thePartnership, all investor general partner units will be converted into limitedpartner units. Limited partners do not have any rights to convert their unitsto general partner units.

F-6

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Under the terms of the partnership agreement, certain expense items areallocated differently between the managing general partner and the investorpartners. Cash distributions to partners of the net cash flow from interestincome and oil and gas sales revenues, less operating, general andadministrative, and other costs are distributed 15.45% to the managing generalpartner (based upon the 11% interest not represented by units and the 4.45%interest represented by Partnership units) and 84.55% to investor partners.

**2. Summary of Accounting Policies**

**Use of Estimates**

The preparation of financial statements in conformity with accountingprinciples generally accepted in the United States of America requiresmanagement to make estimates and assumptions that affect the amounts reportedin the financial statements and accompanying notes. Actual results could differfrom these estimates.

**Cash and Cash Equivalents**

The Partnership considers all highly liquid investments with maturitydates of no more than three months from the purchase date to be cashequivalents. Cash and cash equivalents consist of demand deposits and moneymarket investments invested with a major national bank. The carrying value ofthe Partnership’s cash equivalents approximates fair value.

**Risks and Uncertainties**

Historically, the oil and gas market has experienced significant pricefluctuations. Prices are impacted by local weather, supply in the area,availability and price of competitive fuels, seasonal variations in localdemand, limited transportation capacity to other regions, and the worldwidesupply and demand balance for crude oil.

The Partnership has not engaged in commodity futures trading or hedgingactivities and has not entered into derivative financial instrument transactionsfor trading or other speculative purposes. Accordingly, the Partnership is atrisk for the volatility in commodity prices inherent in the oil and gasindustry, and the level of commodity prices has a significant impact on thePartnership’s results of operations.

**Organization and Syndication Costs**

Organization and syndication costs total 15% of investor capitalcontributions, except for units purchased by the managing general partner,which are purchased net of the 15% cost. Partnership organization coststotaling $50,000 have been expensed in the financial statements for the periodfrom inception (July 18, 2005) to December 31, 2005. Syndication costsrepresent costs incurred in conjunction with the offering of partnership units.These costs, totaling $5,319,615 during 2005, have been recorded as a reductionof the proceeds of the offering.

F-7

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# **Oil and GasProperties**

The Partnership follows the full cost method of accounting for crudeoil and natural gas properties. Under this method, all direct costs and certainindirect costs associated with acquisition of properties and successful as wellas unsuccessful exploration and development activities are capitalized.Depreciation, depletion, and amortization of capitalized crude oil and naturalgas properties and estimated future development costs, excluding unprovedproperties, are based on the unit-of-production method using provedreserves.  Proved gas reserves areconverted to equivalent barrels at a rate of 6 Mcf to 1 Bbl. Net capitalizedcosts of crude oil and natural gas properties, as adjusted for asset retirementobligations, are limited to the lower of unamortized cost or the cost ceiling,defined as the sum of the present value of estimated future net revenues fromproved reserves based on un-escalated prices discounted at 10 percent, plus thecost of properties not being amortized, if any, plus the lower of cost orestimated fair value of unproved properties included in the costs beingamortized, if any. Excess costs are charged to property impairment expense. Nogain or loss is recognized upon sale or disposition of crude oil and naturalgas properties, except in unusual circumstances. During the year ended December31, 2006 and period from inception (July 18, 2005) to December 31, 2005, thePartnership recognized property impairment costs totaling $8,145,740 and $0,respectively.

# **Restoration, Removal, andEnvironmental Liabilities**

The Partnership is subject to extensive Federal, state and localenvironmental laws and regulations. These laws regulate the discharge ofmaterials into the environment and may require the Partnership to remove ormitigate the environmental effects of the disposal or release of petroleumsubstances at various sites. Environmental expenditures are expensed orcapitalized depending on their future economic benefit. Expenditures thatrelate to an existing condition caused by past operations and that have nofuture economic benefit are expensed.

Liabilities for expenditures of a non-capital nature are recorded whenenvironmental assessments and/or remediation is probable, and the costs can bereasonably estimated. Such liabilities are generally undiscounted values unlessthe timing of cash payments for the liability or component is fixed or reliablydeterminable.

Statement of Financial Accounting Standards No. 143, “Accounting forRetirement Obligations” (SFAS 143) addresses accounting and reporting forobligations associated with the retirement of tangible long-lived assets andthe associated asset retirement costs. SFAS 143 requires that the fair value ofa liability for an asset’s retirement obligation be recorded in the period inwhich it is incurred and the corresponding cost capitalized by increasing thecarrying amount of the related long-lived asset. The liability is accreted toits then present value each period, and the capitalized cost is depreciatedover the useful life of the related asset. SFAS 143 is effective for thePartnership as of its inception date.

F-8

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The following table summarizes the Partnership’s asset retirement obligationfor the year ended December 31, 2006 and the period from inception (July 18,2005) to December 31, 2005.
|                                        | ** ** | **2006** | ** ** | **2005** | ** ** |
|----------------------------------------|------------|----------|------------|----------|------------|
| Beginning asset  retirement obligation |       | $        | 1,982      |     | $          | — |   |
| Additions  related to new properties   |       | 199,253  |       | 1,982    |       |
| Accretion  expense                     |       | 2,568    |       | —   |       |
| Ending asset retirement  obligation    |       | $        | 203,803    |     | $          | 1,982 |   |

 

**Recognition of Revenue**

The Partnership enters into sales contracts for disposition of itsshare of oil and gas production from productive wells. Revenues are recognizedbased upon the Partnership’s share of metered volumes delivered to itspurchasers each month.

Gas imbalances sometimes occur when certain working interest parties donot take their entitled share of gas production. The Partnership utilizes thesales method of accounting for recording imbalances. Under this method, thePartnership records as revenue all gas delivered for its account. Anysignificant over or under balanced gas positions are recorded in the financialstatements. As of December 31, 2006 and 2005, the Partnership had no gasimbalance positions.

**Income Taxes**

The Partnership’s net income or loss flows directly through to itspartners, who are responsible for the payment of Federal taxes on theirrespective share of any income or loss. Therefore, there is no provision forfederal income taxes in the accompanying financial statements.

As of December 31, 2006, the financial reporting basis of thePartnership’s assets exceeds the tax basis of the assets by approximately $9.81million, primarily due to the difference between property impairment costsdeducted for financial reporting purposes and intangible drilling costsdeducted for income tax purposes.

**Reclassifications**

Certain information provided for prior years has beenreclassified to conform to the current year presentation adopted as of December31, 2006.

**New Accounting Pronouncements**

In September 2006, the FASB issued Statement of Financial AccountingStandards No. 157, “Fair Value Measurements” (“SFAS No. 157). This standardclarifies the principal that fair value should be based on the assumptions thatmarket participants would use when pricing an asset or liability. Additionally,it establishes a fair value hierarchy that prioritizes the information used todevelop those assumptions. We have not yet determined the impact that theimplementation of

F-9

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SFAS No. 157 will have on our results of operations or financialcondition, if any. SFAS No. 157 is effective for financial statements issuedfor fiscal years beginning after November 15, 2007.

**3. Transactions with Affiliates**

The Partnership has no employees. RELP, an affiliate of Reef formed in2005, employs a staff including geologists, petroleum engineers, landmen andaccounting personnel who administer all of the Partnership’s operations. Priorto January 2, 2006, OREI, another Reef affiliate, employed this staff ofemployees. On January 2, 2006, the employees of OREI were transferred to RELP.In addition, during 2006 RELP assumed from OREI well operator status for allwells previously operated by OREI. The Partnership reimburses RELP and OREI fortechnical and administrative services at cost. During the year ended December31, 2006 and the period from inception (July 18, 2005) to December 31, 2005,the Partnership incurred technical services and administrative costs totaling$586,936 and $240,605, respectively. Of these amounts, $571,112 and $211,176represent technical services costs capitalized as project costs, and $15,824and $29,429 represent administrative costs included as general and administrativeexpenses.

Accounts payable to affiliates totaled $3,136,602 and $790,835 as ofDecember 31, 2006 and 2005, respectively. RELP currently processes jointinterest billings on behalf of the Partnership, and OREI processed certainjoint interest charges prior to 2006. As of December 31, 2006 the Partnershipowed RELP $2,569,370 in connection with drilling and operating invoices paid byRELP on behalf of the Partnership. As of December 31, 2005 the Partnership owedOREI $505,269 in connection with drilling invoices paid by OREI on behalf ofthe Partnership.

Accounts payable to affiliates as of December 31, 2006 and 2005 alsoincludes $567,232 and $75,557, respectively, due RELP and OREI for technicaland administrative services provided by RELP and OREI. The December 31, 2005balance also includes $189,481 due Reef for the unpaid portion of the 15%management fee paid for organization and syndication costs, including salescommissions (see note 7), $11,427 due as reimbursement for property and administrativeexpenses paid by Reef, and $9,101 for expense reimbursements due OREIpersonnel. The Partnership settles its balances with RELP and OREI on aquarterly basis.

Non-current accounts payable to affiliates as ofDecember 31, 2006 and 2005 total $804,789, representing the unpaidportion of the 15% management fee due Reef for organization and syndicationcosts, including sales commissions. The management fee is payable in two parts.Reef initially receives an amount not to exceed 13.5% to recover actual commissionsand organization and syndication costs. The $804,789 represents the portion ofthe management fee in excess of actual commissions and organization andsyndication costs, and will be paid to Reef from the oil and gas cash flowsavailable for partner distributions, at a rate not to exceed $1 million peryear. The timing of the recovery is solely at the discretion of the managinggeneral partner. The Partnershiphas not yet begun the recovery of the unpaid portion of the management fee. Theliability has been classified as non-current on the balance sheets presentedbecause the initial date and timing of repayment is currently unknown.

F-10

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If an affiliate of Reef serves as operator of a Partnership prospect,then operator fees will be payable to the affiliate. Under such circumstances,such affiliate will receive fees at the competitive rate in the area during thedrilling and production phase of operations. Often these are charged as amonthly fee per well as agreed to in an operating agreement signed by thePartnership as well as outside third party working interests in the well.During the year ended December 31, 2006 and the period from inception (July 18,2005) to December 31, 2005, the Partnership paid operator fees of $8,791 and$3,463 to RELP and OREI, respectively, in connection with this obligation.

Accounts receivable from affiliates totals $111,508 and $402,095 as ofDecember 31, 2006 and 2005, respectively. The balance includes $64,666 and$28,047 due from Reef as of December 31, 2006 and 2005 in connection withReef’s obligation to pay 1% of all leasehold, drilling, and completion costs asincurred. Reef is required to pay this 1% of costs in addition to the 4.95% ofthese costs it pays related to its ownership of units. At December 31, 2006,the Partnership also had a receivable of $46,842 due from Reef forreimbursement of estimated consulting fees (see below). At December 31, 2005,the Partnership had a receivable of $374,048 due from OREI for reimbursement ofproject costs paid by the Partnership on projects operated by OREI. ThePartnership settles its balances with Reef and OREI on a quarterly basis.

Reef entered into, and allowed to expire, three agreements (the CMIAgreements) with Challenger Minerals, Inc. (CMI), a subsidiary of GlobalSantaFeCorporation and a screener of oil and gas prospects in the Gulf of Mexico andNorth Sea regions.  The CMI Agreementsallowed Reef the opportunity to review and selectively participate inexploratory and developmental prospects either originated or previewed by CMI.Reef paid CMI for the geological and geophysical services provided by CMI underthe CMI Agreements. Reef has also entered into an agreement with AccessExploration Corp. (AEC), also a screener of domestic oil and gas prospects bothonshore and in the Gulf of Mexico. This agreement allows Reef the opportunityto review and selectively participate in exploratory and developmentalprospects previewed by AEC. Reef pays AEC for the geological and geophysicalservices provided by AEC under this agreement. Reef may enter into additionalagreements with other third parties to screen exploratory and developmentalprospects.

Prospects approved for acquisition by Reef under these agreements areassigned to this Partnership as well as other limited partnerships formed aspart of the Program. Each partnership formed as a part of the Program pays Reefan estimated payment as reimbursement, on a pro rata basis, of the fees paid byReef under these agreements. When the Program’s offering is completed, the actualfees to be reimbursed by each partnership formed as a part of the Program willbe calculated based upon each partnership’s total capital contributions, andeach partnership formed will either receive an additional assessment or refundof fees. Total reimbursement to Reef by the partnerships formed as a part ofthis Program will not exceed the actual fees paid by Reef under theseagreements. This Partnership made an estimated reimbursement payment of$287,500 to Reef during 2005. The fees paid to CMI by Reef through thetermination dates of the CMI Agreements in 2006 have been allocated only topartnerships in this Program formed

F-11

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during 2005 and 2006, and this Partnership has a receivable of $46,842due from Reef as of December 31, 2006 in connection with the allocation of feespaid to CMI. The net payment amount of $240,658 has been capitalized asgeological and geophysical costs in accordance with the full cost method ofaccounting for oil and gas properties.

**4. Prepaid Drilling Costs**

As of December 31, 2006 and 2005, the Partnership has prepaid$2,161,047 and $4,055,612 in connection with intangible drilling costs to beincurred on wells in which the Partnership has a working interest and which aredrilling at year-end or expected to drill during the subsequent year.

**5. Major Customers**

The Partnership sells crude oil and natural gas on credit terms torefiners, pipelines, marketers, and other users of petroleum commodities.Revenues are received directly from these parties or, in certain circumstances,paid to the operator of the property who disburses to the Partnership itspercentage share of the revenues. During 2006, five operators accounted for31.9%, 14.9%, 14.2%, 11.5%, and 11.2% of the Partnership’s oil and gasrevenues. As of December 31, 2005, the Partnership had no oil and gasproduction and, therefore, had no customers. Due to the competitive nature ofthe market for purchase of crude oil and natural gas, the Partnership does notbelieve that the loss of any particular purchaser would have a material adverseimpact on the Partnership.

**6. Commitments and Contingencies**

The Partnership is not currently involved in any legal proceedings. SeeNote 8 for a summary of the Partnership’s drilling and development plans.

**7. Partnership Equity**

Sales of Partnership units began on July 8, 2005.Proceeds received were placed into an interest bearing escrow account until thePartnership reached the minimum subscription level of 40 units. The Partnershipwas formed on July 18, 2005, and the sale of Partnership units was closed onOctober 31, 2005. The Partnership raised $35,797,434 from the sale of 1,431.897Partnership units to investor partners. Reef purchased 75.363 units (5%) for$1,601,464. Reef will also contribute 1% of all leasehold, drilling, and completioncosts when incurred, in addition to paying its pro rata share (4.95%) of theleasehold, drilling, and completion costs paid by the Partnership. Inconnection with this obligation, Reef paid $113,853 and $7,263 during the yearended December 31, 2006 and the period from inception (July 18, 2005) toDecember 31, 2005, respectively.

F-12

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The Partnership has $32,150,399 available for Partnership oil and gasoperations, net of the 15% management fee of $5,369,615. Of the $5,369,615management fee, syndication costs were $5,319,615 and organization costs were$50,000.

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

**8. Partnership Projects**

As of December 31, 2006, the Partnership owns working interests inthirteen exploratory prospects and eighteen developmental prospects on which itexpects to drill forty total wells. As of December 31, 2006, the Partnershiphad completed the drilling of thirteen wells on thirteen exploration prospects.Six of the wells were successful and seven of the wells were unsuccessful. Oneof the successful wells is currently shut-in. On one of the successfulexploratory prospects the Partnership expects to drill six additionaldevelopment wells, of which two additional successful wells have been drilledas of December 31, 2006. On another exploratory prospect, the Partnershipexpects to drill up to three additional development wells, the first of whichis in progress at December 31. As of December 31, 2006, the Partnership hadcompleted the drilling of sixteen wells on sixteen developmental prospects, andhad two wells on two developmental prospects in progress. Seven wells were successfuland nine were unsuccessful. 

Of the fifteen successful wells drilled by the Partnership, eight wereproducing as of December 31, one was shut-in due to mechanical problems, andsix were awaiting or undergoing completion operations.

Six budgeted developmental wells on two of the Partnership’s successfulexploratory prospects remain to be drilled.

RELP assumed operator status of all wells previously operated by OREIduring 2006. RELP serves as operator for ten wells drilled by the Partnership.As of December 31, 2006, six of these wells were unsuccessful, two weresuccessful, and two were in progress.

**9. Subsequent Events**

Subsequent to December 31, 2006, the Partnership completed the drillingof one well in progress at year-end. The well was unsuccessful. One of thewells in progress at December 31, 2006 continues drilling, and the third iscurrently being tested.

F-13

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**10.Supplemental Information on Oil & Gas Exploration and Production Activities(Unaudited)**

**Capitalized Costs**

The capitalized costs ofoil and gas properties are as follows:
| December 31,                                   | ** ** | **2006**       | ** **     | **2005**      | ** ** |
|-----------------------------------------------------|------------|----------------|----------------|---------------|------------|
| ** **                                          | ** ** | ** **     | ** **     | ** **    | ** ** |
| **Oil and gas properties:**                         | ** ** | ** **     | ** **     | ** **    | ** ** |
| Full cost pool                                      |       | **$**          | 16,815,171     |          | **$**      | 1,411,666 |   |
| Drilling in  progress                               |       | 4,191,124      |           | 6,147,638     |       |
| **Total oil and gas properties**                    | ** ** | **21,006,295** | ** **     | **7,559,304** | ** ** |
| Accumulated  depreciation, depletion and impairment |       | (8,698,588     | )              | —        |       |
| **Net oil and gas property**                        | ** ** | **$**          | **12,307,707** | ** **    | **$**      | **7,559,304** | ** ** |

 

**Costs Incurred**

Costs incurred in property acquisition,exploration, development, and production activities consisted of the following:
|                              | ** ** | **2006**   | ** **     | **2005**   | ** ** |
|------------------------------|------------|------------|----------------|------------|------------|
| ** **                   | ** ** | ** ** |           |       |       |
| **Oil and gas properties:**  | ** ** | ** ** |           |       |       |
| Exploration  costs           |       | **$**      | 7,161,011      |       | **$**      | 2,428,922 |   |
| Development  costs           |       | 6,086,727  |           | 5,128,400  |       |
| Asset retirement  obligation |       | 199,253    |           | 1,982      |       |
| Production costs             |       | 95,060     |           | —     |       |
| **Total costs incurred**     | ** ** | **$**      | **13,542,051** | ** ** | **$**      | **7,559,304** | ** ** |

 

**Results of Operations**

**Thefollowing table summarizes for the periods indicated total revenues and costs,net sales volumes of oil (including condensate) and natural gas, the averageprice received per barrel (BBL) of oil sold, the average price received perthousand cubic feet (MCF) of natural gas sold and the production costs perbarrel of oil equivalent (BOE), using a conversion rate of 6 MCF per barrel ofoil.**
|                                           | ** ** | **2006**   | ** **     | **Period from  inception (July  18, 2005) to  December 31,  2005** | ** ** |
|-------------------------------------------|------------|------------|----------------|---------------------------------------------------------------------------------------------|------------|
| **Oil and gas properties:**               | ** ** | ** ** |           |                                                                                        |       |
| Oil sales                                 |       | **$**      | 138,576        |                                                                                        | **$**      | — |   |
| Gas sales                                 |       | 413,996    | ** **     | ** **                                                                                  | ** ** |
| Production costs                          |       | (95,060    | )              | **—**                                                                                  | ** ** |
| Depreciation,  depletion and impairment   |       | (8,698,588 | )              | **—**                                                                                  | ** ** |
| Accretion of  asset retirement obligation |       | (2,568     | )              | **—**                                                                                  | ** ** |
| **Results of producing activities**       | ** ** | **$**      | **(8,243,644** | **)**                                                                                       | **$**      | **—** | ** ** |
|                                      | ** ** | ** ** | ** **     | ** **                                                                                  | ** ** |
| Oil BBL sold                              |       | 2,374      |           | **—**                                                                                  |       |
| Gas MCF sold                              |       | 69,088     |           | **—**                                                                                  |       |
| Average sales  price per BBL sold         |       | **$**      | 58.37          |                                                                                        | **$**      | — |   |
| Average sales  price per MCF sold         |       | **$**      | 5.99           |                                                                                        | **$**      | — |   |
| Production cost  per BOE                  |       | **$**      | 6.84           |                                                                                        | **$**      | — |   |

 

F-14

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**Oil and Gas Reserves**

The following informationdescribes changes during the years and balances of proved oil and gas reservesas of December 31, 2006 and 2005. The definitions used are in accordancewith applicable SEC regulations.

Proved oil and gasreserves are the estimated quantities of crude oil, natural gas and natural gasliquids which geological and engineering data demonstrate with reasonablecertainty to be recoverable in future years from known reservoirs underexisting economic and operating conditions, i.e., prices and costs as of thedate the estimate is made. Prices include consideration of changes in existingprices provided by contractual arrangements, but not escalations based uponfuture conditions. The estimates for 2006 and for 2005 utilize the December 31oil (NYMEX) price of $57.75 and $61.04 per barrel, respectively, and naturalgas (Henry Hub) price of $5.635 and $10.08 per MMBtu, respectively, adjusted byproperty for energy content, quality and transportation costs. Additionaldevelopment costs required to recover these proved reserves are estimated atapproximately $108,059 and $10,000 as of December 31, 2006 and 2005,respectively. All of the Partnership’s reserves are located in the UnitedStates.

The reserves in the following table are reserves owned by thePartnership. The reserves stated below include royalty interests and exclude quantitiesdue others.

|                                                                         | ** ** | **Oil  (BBL) (1)** | ** ** | **Gas  (mcf)** | ** ** | **BOE (2)** | ** ** |
|-------------------------------------------------------------------------|------------|-------------------------|------------|----------------|------------|------------------|------------|
| Net proved developed  reserves for properties owned by the Partnership: |       |                    |       |           |       |             |       |
| Reserves at July 18,  2005                                              |       | —                  |       | —         |       | —           |       |
| New discoveries                                                         |       | 1,046                   |       | 29,002         |       | 5,880            |       |
| **Reserves at December 31, 2005**                                       | ** ** | **1,046**               | ** ** | **29,002**     | ** ** | **5,880**        | ** ** |
|                                                                    | ** ** | ** **              | ** ** | ** **     | ** ** | ** **       | ** ** |
| Revisions of  previous estimates                                        |       | (341                    | )          | (20,676        | )          | (3,787           | )          |
| New discoveries                                                         |       | 70,922                  |       | 1,657,851      |       | 347,230          |       |
| Production                                                              |       | (2,374                  | )          | (69,088        | )          | (13,889          | )          |
| **Reserves at December 31, 2006**                                       | ** ** | **69,253**              | ** ** | **1,597,089**  | ** ** | **335,434**      | ** ** |

 

----

**(1)****                                **Oil includes both oil and natural gas liquids

F-15

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**(2)****                                **BOE (barrels of oil equivalent) is calculatedby converting 6 MCF of natural gas to 1 BBL of oil. A BBL (barrel) of oilis one stock tank barrel, or 42 U.S. gallons liquid volume, of crude oil or otherliquid hydrocarbons.

**Standardized Measure ofDiscounted Cash Flows**

As required by theFASB, the standardized measure of discounted future net cash flows is computedby applying year-end prices, costs and legislated tax rates and a discountfactor of 10 percent to net proved reserves.

| December 31,                                 | ** ** | **2006**      | ** **    | **2005**    | ** ** |
|---------------------------------------------------|------------|---------------|---------------|-------------|------------|
| Oil and gas properties  owned by the Partnership: |       |          | ** **    | ** **  | ** ** |
| Future cash  inflows from sales of oil and gas    | ** ** | **$**         | 12,047,691    | ** **  | **$**      | 358,445 | ** ** |
| Future  production costs                          |       | (1,938,343    | )             | (41,589     | )          |
| Asset retirement  obligations                     |       | (306,917      | )             | (3,016      | )          |
| Future  development costs                         |       | (108,059      | )             | (10,000     | )          |
| Future net cash  flows                            | ** ** | **9,694,372** | ** **    | **303,840** | ** ** |
| Effect of  discounting net cash flows at 10%      |       | (1,577,789    | )             | (36,198     | )          |
| Discounted future net  cash flows                 | ** ** | **$**         | **8,116,583** | ** **  | **$**      | **267,642** | ** ** |

 

**Changes in Standardized Measure of Discounted FutureNet Cash flows Relating to Proved Oil and Gas Reserves**

| December 31,                                   | ** ** | **2006**  | ** **    | **2005**   | ** ** |
|-----------------------------------------------------|------------|-----------|---------------|------------|------------|
| Oil and gas properties  owned by the Partnership:   |       |      | ** **    | ** ** | ** ** |
| **Standardized measure at  beginning of year**      | ** ** | **$**     | **267,642**   | ** ** | **$**      | **—** | ** ** |
| Extensions and  discoveries                         |       | 8,510,878 |          | 267,642    |       |
| Net change in sales  price, net of production costs |       | (113,037  | )             | —     |       |
| Revisions of quantity  estimates                    |       | (76,130   | )             | —     |       |
| Changes in production  timing rates                 |       | (44,590   | )             |       |       |
| Accretion of discount                               |       | 26,764    |          | —     |       |
| Sales net of production  costs                      |       | (454,944  | )             | —     |       |
| Net increase                                        |       | 7,848,741 |          | 267,642    |       |
| **Standardized measure at end of  year**            | ** ** | **$**     | **8,116,583** | ** ** | **$**      | **267,642** | ** ** |

 

F-16

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**11. Supplementary QuarterlyFinancial Data (Unaudited)**
| Period from Inception (July  18, 2005) to December 31, 2005 | ** ** | **3rd Qtr** | ** ** | **4th Qtr** | ** ** | **Totals** | ** ** |
|-----------------------------------------------------------------------------------------------------|------------|------------------|------------|------------------|------------|------------|------------|
| Total oil and  gas sales                                                                            | ** ** | **$**            | **—** | ** **       | **$**      | **—** | ** ** | **$** | **—** | ** ** |
| Loss from  operations                                                                               |       | (63,028          | )          | (43,961          | )          | (106,989   | )          |
| Net income  (loss)                                                                                  |       | (13,839          | )          | 125,327          |       | 111,488    |       |
| Net loss per  managing general partner unit                                                         |       | (26.70           | )          | (32.53           | )          | (59.23     | )          |
| Net income  (loss) per general partner unit                                                         |       | (7.95            | )          | 88.88            |       | 80.93      |       |
| Net income (loss) per  limited partner unit                                                         |       | (9.79            | )          | 91.00            |       | 81.21      |       |
|                                                                                                     |            |                  |            |                  |            |            |            |  |  |  |

 
| **Year ended December 31,  2006**     | ** ** | **1st Qtr** | ** ** | **2nd Qtr** | ** ** | **3rd Qtr** | ** ** | **4th Qtr** | ** ** | **Totals** | ** ** |
|------------------------------------------------------|------------|------------------|------------|------------------|------------|------------------|------------|------------------|------------|------------|------------|
| Total oil and gas sales                              |       | **$**            | 16,478     |             | **$**      | 41,856           |       | **$**            | 141,350    |       | **$**      | 352,888 |   | **$** | 552,572 |   |
| Loss from operations                                 |       | (20,378          | )          | (35,015          | )          | (1,608,911       | )          | (6,660,653       | )          | (8,324,957 | )          |
| Net income (loss)                                    |       | 144,741          |       | 159,616          |       | (1,378,359       | )          | (6,414,910       | )          | (7,488,912 | )          |
| Net income (loss) per  managing general partner unit |       | 307.29           |       | 374.20           |       | (730.43          | )          | (4,351.30        | )          | (4,400.24  | )          |
| Net income (loss) per  general partner unit          |       | 84.91            |       | 91.78            |       | (924.17          | )          | (4,250.99        | )          | (4,998.47  | )          |
| Net income (loss) per limited partner unit           |       | 84.91            |       | 91.78            |       | (924.17          | )          | (4,250.99        | )          | (4,998.47  | )          |
|                                                      |            |                  |            |                  |            |                  |            |                  |            |            |            |  |  |  |  |  |

 

The third quarter lossfrom operations includes property impairment expense of $1,537,239. The fourthquarter loss from operations includes property impairment expense of$6,608,501.

F-17

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**EXHIBITINDEX**
| 3.1    | Certificate of Limited Partnership (incorporated by  reference to Exhibit 3.1 to Form 8-A, SEC File No. 000-52539, as filed with  the SEC on March 30, 2007).                                                                                       |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                     |
| 3.2    | Form of Limited Partnership Agreement (incorporated  by reference to Exhibit 3.1 to Form S-1, SEC File No. 333-122935, as filed  with the SEC on June 24, 2005).                                                                                         |
|   |                                                                                                                                                                                                                                                     |
| 10.1   | Letter Agreement, dated November 7, 2001, by and  between Reef Partners LLC and Challenger Minerals Inc. (incorporated by  reference to Exhibit 10.2 of the Report on Form 10-K of Reef Global Energy  Ventures as filed with the SEC on March 5, 2002). |
|   |                                                                                                                                                                                                                                                     |
| 31.1   | Certification of Chief Executive Officer Pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                     |
| 31.2   | Certification of Chief Financial Officer Pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                     |
| 32.1   | Certification of Chief Executive Officer Pursuant to  18 U.S.C. §1350.                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                     |
| 32.2   | Certification of Chief Financial Officer Pursuant to  18 U.S.C. §1350.                                                                                                                                                                              |

 

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