**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, 2007**                                                    |
| ** ** | ** ** | ** **                                                                                              |
|       |       | **or**                                                                                                  |
|       |       |                                                                                                    |
| **o**      | ** ** | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

 

**For the Transition period from              to               **

 

### **COMMISSION FILE NUMBER333-122935-01**

### ** **

**REEFGLOBAL ENERGY VI, L.P.**

(Exact name of registrant as specified in itscharter)

** **

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

 

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

(Address of principal executive offices includingzip code)

 

**(972)-437-6792**

(Registrant’s telephone number, includingarea code)

 

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

Securities registered pursuant to Section 12(g) ofthe Act:

 

**General and Limited Partnership Interests**

(Title of Class)

 

Indicate by check mark ifthe registrant is a well-known seasoned issuer, as defined in Rule 405 ofthe Securities Act.      Yes o No x

 

Indicate by check mark ifthe registrant is not required to file reports pursuant to Section 13 or Section 15(d) ofthe Act.  Yes  oNo x

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90 days.  Yes 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 ofthis Form 10-K or any amendment to this Form 10-K.  x

 

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

Large accelerated filer o      Accelerated filer o        Non-accelerated filer  o        Smallerreporting company  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, 2008, the registrant had 75.363units of general partner interest held by the managing general partner,1,190.561 units of additional general partner interest and 241.336 units oflimited partner interest outstanding.

 

Documents incorporated 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(T).      |       | Controls  and Procedures                                                                                            |
| Item  9B.         |       | Other  Information                                                                                                  |
|              |       |                                                                                                                |
| **PART III** |       |                                                                                                                |
|              |       |                                                                                                                |
| Item  10.         |       | Directors,  Executive Officers and Corporate Governance                                                             |
| Item  11.         |       | Executive  Compensation                                                                                             |
| Item  12.         |       | Security  Ownership of Certain Beneficial Owners and Management and Related Stockholder  Matters                    |
| Item 13.          |       | Certain Relationships and Related  Transactions, and Director Independence                                          |
| Item  14.         |       | Principal  Accounting Fees and Services                                                                             |
|              |       |                                                                                                                |
| **PART IV**  |       |                                                                                                                |
|              |       |                                                                                                                |
| Item 15.          |       | Exhibits and Financial Statement Schedules                                                                          |
|              |       | Signatures                                                                                                          |

 

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**PART I**

 
| **ITEM 1.** | ** ** | **BUSINESS** |
|-------------|------------|--------------|

 

**Introduction**

 

Reef Global Energy VI, L.P. (the “Partnership”) is the first in aseries of four Nevada limited partnerships comprising a program called ReefGlobal Energy Ventures II (the “Program”). The Partnership was formed in thestate of Nevada on July 18, 2005. The Partnership purchases working interests in oil and natural gasprospects and participates in the drilling of wells on those prospects. Theprimary objectives of the Partnership are to generate revenue from theproduction of oil and natural gas, distribute cash to the partners, and providetax benefits. Reef Oil & Gas Partners, L.P. (“Reef”) is the managinggeneral partner of the Partnership.

 

The Partnership was formed to drill, complete and own working interestsin oil and natural gas wells located onshore in the continental United Statesor in U.S. coastal waters in the Gulf of Mexico. The Partnership purchasedworking interests in twenty developmental prospects upon which it has drilledtwenty-seven wells. The Partnership purchased working interests in fourteenexploratory prospects upon which it has drilled fourteen exploratory and eightdevelopmental wells. These prospects are located onshore in Texas, Louisiana,Oklahoma, and New Mexico and in U.S. coastal waters in the Gulf of Mexico. At December 31,2007, forty-five wells had completed drilling operations, and the remainingfour wells completed drilling operations during the first quarter of 2008. ThePartnership has no plans to purchase additional prospects. Additional wells maybe drilled on the Partnership’s Sand Dunes prospect in Eddy County, New Mexico.

 

Other partnerships formed as a part of the Program also own workinginterests in some of the prospects owned by this Partnership. Reef has alsopurchased working interests in certain partnership prospects for some of theother partnerships it manages. In such cases where the percentage ownership ofthe Partnership and Reef-affiliated entities in a prospect has been largeenough, Reef Exploration, L.P. (“RELP”) or its predecessor OREI, Inc. (“OREI”)has served as operator of the prospect. During 2006, OREI transferred operatorstatus of all prospects operated by OREI to RELP. RELP serves as operator ofeight developmental and four exploratory Partnership prospects. RELP operatesone successful well located on one developmental prospect, operates twosuccessful wells located on two exploratory prospects, and operates eight wellson the Partnership’s Sand Dunes developmental prospect, four of which areundergoing extended testing and evaluation in order to determine theirpotential commercial productivity, and four of which are temporarily shut-in dueto the high cost associated with salt water disposal and generator rental.  In this Annual Report on Form 10-K (“AnnualReport”), we use the term “successful” to refer to wells that are drilled,tested, and either capable of or actually producing in commercial quantities.We use the term “unsuccessful” to refer to wells that do not meet one or moreof these criteria.

 

The attainment of the Partnership’s business objectives, including thegeneration of revenue from Partnership operations, the distribution of cash tothe partners and the provision of tax benefits, will depend upon many factors,including:

 
| · |   | Reef’s ability to select productive prospects;                                         |
|--------|--------|---------------------------------------------------------------------------------------------|
| · |   | the drilling and completion of wells in an economical manner;                               |
| · |   | the successful management of prospects;                                                     |
| · |   | the level of oil and natural gas prices in the future;                                      |
| · |   | the degree of governmental regulation over the production and sale of  oil and natural gas; |
| · |   | the future economic conditions in the United States and throughout  the world; and          |
| · |   | changes in the U.S. Internal Revenue Code of 1986 (the “Code”).                   |

 

Accordingly, there can be no assurance that the Partnership willachieve its business objectives.  Inaddition, distributions to partners will decrease over time because oil andnatural gas wells are depleting assets, and production rates will decline overthe life of an individual well.  Distributionlevels will also be highly dependent upon oil and natural gas prices.Distributions will be partially sheltered by the percentage depletionallowance.

 

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**Acquisition and Drilling of Undeveloped Prospects**

 

The Partnership purchased working interests in eight developmental andfour exploratory prospects internally sourced by RELP, and twelve developmentaland ten exploratory prospects generated by and purchased from third parties. A “prospect”is generally defined as a contiguous oil and gas leasehold estate, or lesserinterest in a leasehold estate, upon which drilling operations may beconducted. A prospect may be characterized as “exploratory” or “developmental”based upon the type of well to be drilled on the prospect.  A development well is a well drilled within aproved area of an oil or gas reservoir to the depth of a stratigraphic horizonknown to be productive. Generally an exploratory well is any well that is not adevelopment well, including wells drilled to find and produce oil or gas in anunproven area, wells drilled to find a new reservoir in a field previouslyfound to be productive of oil or gas, or wells drilled to extend a knownreservoir.

 

Prospects were evaluated utilizing data generated by RELP or providedby unaffiliated third parties to RELP. This data included well logs, productionrecords from other area wells, seismic, geological and geophysical information,and such other information available and considered useful. Prospects in whichthe Partnership purchased a working interest were evaluated by petroleumengineers, geophysicists, geologists, and other technical consultants employedby or retained by RELP on the Partnership’s behalf.

 

The Partnership prospects were acquired pursuant to an arrangement inwhich the Partnership purchased part of the working interest. A workinginterest bears a specified portion of the costs of development, operation andmaintenance of a prospect.  A working interestis subject to landowners’ royalty interests and may be subject to other royaltyinterests payable to unaffiliated third parties. Where the Partnership acquiredless than 100% of the working interest, costs were reduced proportionately. ThePartnership’s limited partnership agreement (the “Partnership Agreement”)prohibits Reef or any of its affiliates from retaining any overriding royaltyinterest, that is, any royalty interest that would be paid out of thePartnership’s working interest, in any working interest purchased by thePartnership. The Partnership is a non-operator working interest owner in allprospects purchased by the Partnership. RELP serves as operator for eightdevelopmental and four exploratory prospects purchased by the Partnership.

 

**Consulting Agreements for Prospect Acquisitions**

 

Reefentered into, and allowed to expire, three agreements (the “CMI Agreements”)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 Agreements provided Reef the opportunity to reviewand selectively participate in exploratory and developmental prospects eitheroriginated or previewed by CMI. Reef paid CMI for the geological andgeophysical services provided by CMI under the CMI Agreements. Two of theseagreements expired in January 2006, and one expired in November, 2006.

 

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

 

Prospectsapproved for acquisition by Reef under these agreements could be assigned tothis Partnership as well as other limited partnerships formed as part of theProgram. Each partnership formed as a part of the Program paid Reef, on a prorata basis, a portion of the fees paid by Reef under these agreements duringthe term of the Program. Total reimbursements to Reef by the partnershipsformed as a part of this Program were equal to the actual fees paid by Reefunder these agreements. The Partnership paid Reef $240,658 as its pro ratashare of these fees. This amount has been capitalized as geological andgeophysical costs in accordance with the full cost method of accounting for oiland gas properties.

 

**Drilling and Completion Phase of Operations**

 

RELP is currently the operator of eight developmental and fourexploratory prospects, and serves as operator of eleven wells in which thePartnership has a working interest. RELP also served as operator for eightunsuccessful

 

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Partnership wells. As a well operator, RELP receives operator feesduring the drilling and production phase of each well at the competitive ratein the geographical area where the prospect is located.  These fees are charged as a monthly fee perwell as agreed to in an operating agreement signed by the Partnership andparticipating third parties in the well. The wells are subject 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 contracted the drilling of all operated wells to an independentthird party, and the resulting costs of the wells to the Partnership weredetermined by the actual third party costs, plus RELP’s monthly charges forsupervision, engineering, geology, accounting and other services at thecompetitive rate for the geographical area where the wells are located.

 

Wells drilled that fail to result in the discovery of oil or naturalgas, or that are determined to be unable to produce oil or natural gas incommercial quantities, are plugged and abandoned in accordance with applicableregulations.

 

Of the eight Sand Dunes prospect wells, four wells are undergoingextended testing and evaluation in order to determine their potentialcommercial productivity. The Partnership estimates that it may take between 90and 120 days from the date of this Annual Report to finish the evaluation process.Following initial testing which confirmed the presence of oil and natural gas,the remaining four Sand Dunes prospect wells were temporarily shut in due tothe high cost associated with salt water disposal and generator rental.  

 

Currently, generators have been rented to power the four producing SandDunes prospect wells undergoing the evaluation process, and salt water producedis being trucked off-site by an independent vendor. In order to reduce overallcosts, installation of electric service to the well-site locations isproceeding, and a more cost effective method of salt water disposal is beingexplored. To date, RELP, the operator of these wells, has been unsuccessful inlocating a long-term economic solution for disposing of produced salt water;however, RELP is currently evaluating its options for salt water disposal, andestimates that it will be at least 90 to 120 days from the date of this AnnualReport for the Sand Dunes prospect to have electricity and efficient salt waterdisposal capability in place. 

 

**Production Phase of Operations**

 

For any well capable of producing quantities of oil and/or natural gasin commercial quantities, production operations commence once the well has beencompleted by installing all surface equipment necessary to control the flow ofproduction or to shut down the well, and by installing any storage facilities,gathering lines, or sales lines required to produce and sell the oil and/ornatural gas production from the well. The Partnership drilled fourteen successfuldevelopmental and seven successful exploratory wells. One of the developmentalwells and three of the exploratory wells have ceased production. Twelvedevelopmental and seven exploratory wells were dry holes and have been pluggedand abandoned. One additional successful developmental well finished drilling duringthe first quarter of 2008 and is expected to begin production during the secondquarter of 2008.

 

The Partnership sells oil and/or natural gas production from its wellsto refineries, industrial users, gas brokers, interstate pipelines or localutilities.  In many cases the Partnershiphas elected to sell its production under marketing arrangements entered into bythe operator of the well. The Partnership sells the oil and/or natural gasproduced from successful wells on a competitive basis at the best availableterms and prices.  Domestic sales of oilare at market prices. Generally, purchase contracts for the sale of oil arecancelable on 30 days’ notice, but purchase contracts for the sale of naturalgas may have a longer term.  ThePartnership sells 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 experienced significant price fluctuations. Pricesare impacted by local

 

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weather,supply in the area, availability and price of competitive fuels, seasonalvariations in local demand, limited transportation capacity to other regions,and the worldwide supply and demand balance for crude oil.

 

ThePartnership has not engaged in commodity futures trading or hedging activities,and has not entered into derivative financial instrument transactions fortrading or other speculative purposes. Accordingly, the Partnership is at riskfor the volatility in commodity prices inherent in the oil and gas industry,and the level of commodity prices has a significant impact on the Partnership’sresults of operations.  See “Item 7A.Quantitative and Qualitative Disclosures About Market Risk.”

 

The Partnership’s share of revenue from productive wells is burdened byand/or subject to royalties and overriding royalties, monthly operatingcharges, and other operating costs. These items of expenditure involve amounts payable solely out of, orexpenses incurred solely by reason of, production operations.  The Partnership deducts operating expensesfrom the production revenue for the corresponding period.

 

**Major Customers**

 

The Partnership sellscrude oil and natural gas on credit terms to refiners, pipelines, marketers,and other users of petroleum commodities. Revenues are received directly fromthese parties or, in certain circumstances, paid to the operator of theproperty who disburses to the Partnership its percentage share of the revenues.During the year ended December 31, 2007, one marketer and two operatorsaccounted for 53.9%, 23.0%, and 10.4% of the Partnership’s oil and natural gasrevenues, respectively. During the year ended December 31, 2006, fiveoperators accounted for 31.9%, 14.9%, 14.2%, 11.5%, and 11.2% of thePartnership’s oil and natural gas revenues. The Partnership had no oil andnatural gas production and, therefore, had no customers during 2005. 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**

 

The Partnership is a named insured under blowout, pollution, publicliability and workmen’s compensation insurance policies obtained by RELP. Suchinsurance, however, may not be sufficient to cover all liabilities.  Each unit held by general partners representsan open-ended security for unforeseen events including, without limitation,blowouts, lost circulation, and stuck drill pipe that may result in unanticipatedadditional liability materially in excess of a general partner’s initialinvestment in the Partnership.

 

The Partnership is a named insured under various insurance policies andintends to maintain such policies subject to its analysis of their premiumcosts, coverage and other factors.  Inthe exercise of Reef ‘s fiduciary duty as managing general partner, Reef hasobtained insurance on behalf of the Partnership to provide the Partnership withsuch coverage as Reef believes is sufficient to protect the partners other thanthe managing general partner ( the “investor partners”) against the foreseeablerisks of drilling and production.  Reefreviewed the Partnership insurance coverage prior to commencing drillingoperations and periodically evaluates the sufficiency of insurance. In no eventwill the Partnership maintain public liability insurance of less than two timesthe 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.

 

Reef will notify all investor general partners of the Partnership atleast 30 days prior to any material change in the amount of the Partnership’sinsurance coverage.  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 Certificate of Limited Partnershipof the Partnership and will file the amendment with the State of Nevada priorto the effective date of the change in insurance coverage.  This amendment to the Certificate of LimitedPartnership of the Partnership will effectuate the conversion of the interestof the former investor general partner to that of a limited partner.  Effecting conversion is subject to theexpress requirement that the conversion will not cause a termination of thePartnership for federal income tax purposes. Investor general

 

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partners will have limited liability as a limited partner for anyPartnership operations conducted after their conversion date, effective uponthe filing of an amendment to the Certificate of Limited Partnership of thePartnership. However, even after an election of conversion, the investorpartner will continue to have unlimited liability regarding partnershipactivities that occurred while he was an investor general partner.

 

**Competition**

 

There are thousands of oil and natural gas companies in the UnitedStates.  Competition is strong amongpersons and entities involved in the exploration for and production of oil andnatural gas.  Reef expects thePartnership to encounter strong competition at every phase of business.  The Partnership competes with entities havingfinancial resources and staffs substantially larger than those available to it.

 

The national supply of natural gas is widely diversified, with no oneentity controlling over 5% of the supply. As a result of deregulation of the natural gas industry enacted byCongress and FERC, natural gas prices are generally determined by competitivemarket forces.  Prices of crude oil,condensate and natural gas liquids are not currently regulated and aregenerally determined by competitive market forces.

 

There is competition among operators for drilling equipment, goods, anddrilling crews. Such competition may affect the ability of the Partnership todevelop prospects suitable for development by the Partnership once they areacquired.

 

**Markets**

 

The marketing of oil and natural gas produced by the Partnership isaffected by a number of factors that are beyond the Partnership’s control andwhose exact effect cannot be accurately predicted.  These factors include:

 
| · |   | the amount of crude oil and natural gas imports;                                                                                                                      |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · |   | the availability, proximity and cost of adequate pipeline and other  transportation facilities;                                                                       |
| · |   | the success of efforts to market  competitive fuels, such as coal and nuclear energy and the growth and/or  success of alternative energy sources such as wind power; |
| · |   | the effect of United States and state regulation of production,  refining, transportation and sales;                                                                  |
| · |   | other matters affecting the availability of a ready market, such as  fluctuating supply and demand; and                                                               |
| · |   | general economic conditions in the United States and around the  world.                                                                                               |

 

The supply and demand balance of crude oil and natural gas in worldmarkets has caused significant variations in the prices of these products overrecent years.  The North American FreeTrade Agreement eliminated trade and investment barriers between the UnitedStates, Canada, and Mexico, resulting in increased foreign competition fordomestic natural gas production.  Newpipeline projects recently approved by, or presently pending before, FERC aswell as nondiscriminatory access requirements could further substantiallyincrease the availability of gas imports to certain U.S. markets.  Such imports could have an adverse effect onboth the price and volume of gas sales from Partnership wells.

 

Members of the Organization of Petroleum Exporting Countries (OPEC)establish prices and production quotas for petroleum products from time to timewith the intent of affecting the global supply of crude oil and reducing,increasing or maintaining certain price levels. Reef is unable to predict what effect, if any, such actions will have onthe amount of or the prices received for oil produced and sold from thePartnership’s wells.

 

In several initiatives, FERC has required pipelines to developelectronic communication and to provide standardized access via the Internet toinformation concerning capacity and prices on a nationwide basis, so as tocreate a national market.  Paralleldevelopments toward an electronic marketplace for electric power, mandated byFERC, are serving to create multi-national markets for energy productsgenerally.  These systems will allowrapid consummation of natural gas transactions. Although this system may initially lower prices due to increasedcompetition, it is anticipated to expand natural gas markets and to improvetheir reliability.

 

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**Regulation**

 

The Partnership’s operations will be affected from time to time invarying degrees by domestic and foreign political developments, and by federaland state laws and 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.*Various legislativeproposals are being considered in Congress and in the legislatures of variousstates, which, if enacted, may significantly and adversely affect the petroleumand natural gas industries. Such proposals involve, among other things, theimposition of price controls on all categories of natural gas production, theimposition of land use controls, such as prohibiting drilling activities oncertain federal and state lands in protected areas, as well as other measures.At the present time, it is impossible to predict what proposals, if any, willactually be enacted by Congress or the various state legislatures and whateffect, if any, such proposals will have on the Partnership’s operations.

 

**Employees**

 

The Partnership has no employees, and is managed by its managinggeneral partner, Reef. Through January 1, 2006, OREI employed a staffincluding geologists, petroleum engineers, landmen, and accounting personnelwho administered all of the Partnership’s operations. On January 2, 2006,the employees of OREI were transferred to RELP, a new Reef affiliate formedduring 2005. RELP now employs this staff of geologists, geophysicists,petroleum engineers, landmen and accounting personnel who administer all of thePartnership’s operations. The Partnership reimburses OREI and RELP fortechnical and administrative services at cost. See “Item 11. Executive Compensation.”

 

**FORWARD-LOOKINGSTATEMENTS**

 

This Annual Report contains forward-looking statements that involverisks and uncertainties.  You shouldexercise extreme caution with respect to all forward-looking statements made inthis Annual Report.  Specifically, thefollowing statements are forward-looking:

 
| · |   | statements regarding the Partnership’s overall  strategy for acquiring prospects, including its intent to diversify the  Partnership’s investments;                                                  |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · |   | statements estimating any number or  specific type or size of prospects the Partnership may acquire or size of the  interest the Partnership may acquire in such prospects;                                    |
| · |   | statements regarding the state of the oil  and gas industry and the opportunity to profit within the oil and gas  industry, competition, pricing, level of production, or the regulations that  may affect the |

 

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|   |   | Partnership;                                                                                                                                                                                                                                                            |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · |   | statements regarding the plans and  objectives of Reef for future operations, including, without limitation, the  uses of Partnership funds and the size and nature of the costs the  Partnership expects to incur and people and services the Partnership may  employ; |
| · |   | any statements using the words  “anticipate,” “believe,” “estimate,” “expect” and similar such phrases or  words; and                                                                                                           |
| · |   | any statements of other than historical  fact.                                                                                                                                                                                                                          |

 

Reef believes that it is important to communicate its futureexpectations to the partners. Forward-looking statements reflect the current view of management withrespect to future events and are subject to numerous risks, uncertainties andassumptions, including, without limitation, the risk factors listed in Item 1Aof this Annual Report captioned “RISK FACTORS.” Although Reef believes that theexpectations reflected in such forward-looking statements are reasonable, Reefcan give no assurance that such expectations will prove to have beencorrect.  Should any one or more of theseor other risks or uncertainties materialize or should any underlyingassumptions prove incorrect, actual results are likely to vary materially fromthose described herein.  There can be noassurance that the projected results will occur, that these judgments orassumptions will prove correct or that unforeseen developments will not occur.

 

Reef does not intend to update its forward-looking statements.  All subsequent written and oralforward-looking statements attributable to Reef or persons acting on its behalfare expressly qualified in their entirety by the applicable cautionarystatements.

 
| **ITEM 1A.** | ** ** | **RISK FACTORS** |
|--------------|------------|------------------|

** **

**Ourbusiness activities are subject to certain risks and hazards, including therisks discussed below. If any of these events should occur, it could materiallyand adversely affect our business, financial condition, cash flow, or resultsof operations. The risks below are not the only risks we face. We mayexperience additional risks and uncertainties not currently known to us or, asa result of developments occurring in the future, conditions that we currentlydeem to be immaterial may also materially and adversely affect our business,financial condition, cash flow, and results of operations.**

** **

**Oil and natural gas prices are volatile, and fluctuate due to a numberof factors outside of our control.**

 

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:

 
| · |   | the domestic and foreign supply of oil and  natural gas; consumer demand for oil and gas, and market expectations regarding  supply and demand; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|
| · |   | the ability of the members of OPEC to agree to and maintain oil price  and production controls;                                                 |
| · |   | domestic government regulations and taxes;                                                                                                      |
| · |   | the price and availability of foreign exports and alternative fuel  sources;                                                                    |
| · |   | weather conditions, including hurricanes and tropical storms in and  around the Gulf of Mexico;                                                 |
| · |   | political conditions in oil and natural gas producing regions,  including the Middle East, Nigeria, and Venezuela; and                          |
| · |   | domestic and worldwide economic 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.Approximately 75.2% of the Partnership’s estimated proved reserves at

 

10

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December 31,2007 were natural gas reserves, and, as a result, financial results are moresensitive to fluctuations in natural gas prices.

 

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.

 

**Oil andnatural gas well drilling is a speculative activity involving numerous risksand substantial and uncertain costs which could adversely affect thePartnership.**

 

Drillingoil and natural gas wells 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.

 

**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 maintainsinsurance coverage in amounts Reef deems appropriate, it is possible thatinsurance coverage may be insufficient. In that case Partnership assets mayhave to be sold to pay personal injury and property claims and the cost ofcontrolling blowouts or replacing damaged equipment rather than for drillingactivities.

 

**Continuedinability to dispose of produced salt water may limit production on our oil andnatural gas properties.**

 

Currently,the Partnership does not have an economically efficient manner in which todispose of the salt water produced from the eight Sand Dunes prospectwells.  The Partnership anticipates itwill be at least 90 to 120 days from the date of this Annual Report for theSand Dunes prospect to have efficient salt water disposal capabilities inplace.  The Partnership will be unable toobtain full production from each well until a long-term economic solution forthe disposing of produced salt water is determined and implemented.  If the Sand Dunes prospect wells aredetermined capable of producing in commercial quantities prior toimplementation of such long-term economic solution, there will be significantdelays in obtaining full production from each well and as well as significantdelays in the receipt of production distributions by the investor partners.

 

**Wecannot control activities on non-operated properties.**

 

ThePartnership has limited ability to exercise influence over and control therisks associated with operations on properties not operated by RELP. Thefailure of an operator of our wells to adequately perform operations, anoperator’s breach of the applicable agreements, or an operator’s failure to actin ways that are in our best interest could reduce our production and revenues.The success and timing of drilling and development activities on propertiesoperated by others depends upon a number of factors outside of our control,including the operator’s

 

11

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| · |   |   | timing  and amount of capital expenditures;             |
|--------|--------|--------|---------------------------------------------------------|
| · |   |   | expertise  and financial resources;                     |
| · |   |   | inclusion  of other participants in drilling wells; and |
| · |   |   | use  of 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.

 

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

 

Securitiesand Exchange Commission (SEC) rules require the Partnership to presentannual estimates 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.

 

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

 

**Reef and its affiliates havesponsored ventures in the past that have produced dry holes and abandonedwells.**

 

Reef Global Energy VenturesII is the second public drilling program sponsored by Reef as the managinggeneral partner, and Reef Global Energy VI, L.P. is the first limitedpartnership offered under that Program. Reef and its affiliate OREI havesponsored 68 ventures from 1996 to the present. Among these ventures, (i) eightwere dedicated almost exclusively to the purchase of interests in alreadyproducing reserves, (ii) one was dedicated primarily to the purchase ofinterests in already producing reserves but has the ability to use up to 20% ofcapital raised for development purposes, and (iii) three were dedicated toboth the purchase of interests in producing wells and the use of up to 50% ofcapital raised for development of proven reserves.  We refer to the programs described in clause (i) inthe preceding sentence as “income fund” ventures and to the programs describedin clauses (ii) and (iii) as “income and development fund” ventures.Reef and its affiliates have also sponsored 52 drilling ventures, three 3-Dseismic ventures, and one salt water disposal venture since 1996. Together,these ventures have drilled 132 wells (104 by drilling ventures and 28 byincome fund and income and development fund ventures). Of the wells drilled byReef and its affiliates’ ventures, 63 were exploratory wells and 69 weredevelopmental wells. Forty-nine of the wells drilled were dry holes, and threewells were completed but were non-commercial. Of the 80 wells that werecommercial, 60 are still owned by Reef or its affiliates’ ventures and arecurrently producing, eighteen have been plugged and abandoned or soldessentially for salvage value, one has been sold, and one is currently used asa salt water disposal well. Using this data, approximately 60.6% of the wellsdrilled by these ventures were completed as commercially producing and 39.4%were dry holes (including the three wells that were completed but failed tobecome commercial producers). Approximately 13.6% of the wells drilled by ourventures were subsequently abandoned or sold essentially for salvage valueprior to abandonment.

 

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

 

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:

 

12

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| · |   |   | Reef  determines in good faith that its action was in the best interest of the  Partnership; |
|--------|--------|--------|----------------------------------------------------------------------------------------------|
| · |   |   | Reef  was acting on behalf of or performing services for the Partnership; and                |
| · |   |   | Reef’s  actions did not constitute negligence or misconduct.                            |

 

**Drillingexploratory wells is riskier 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 working interests in fourteen exploratoryprospects upon which fourteen exploratory and eight developmental wells weredrilled. Seven exploratory wells were successful and seven exploratory wellswere unsuccessful. Seven developmental wells were successful and one wasunsuccessful. Three of the successful exploratory wells have ceased productionas of December 31, 2007.

 

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

 

Productionwill decline. It is not possible to predict the life and production of anywell. The actual life could differ from that which is anticipated. Sufficientoil or natural gas may not be produced for a partner to receive a profit oreven to recover 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.

 

**Extreme weather conditions mayadversely affect production operations and partner distributions.**

 

ThePartnership conducts operations in the Gulf of Mexico and in coastal regions ofLouisiana and Texas. This area is susceptible to extreme weather conditions,especially those associated with hurricanes. In the event of a hurricane andrelated storm activity, such as windstorms, storm surges, floods and tornados,Partnership operations in the region may be adversely affected. The occurrenceof a hurricane or other extreme weather may harm or delay the Partnership’soperations or distribution of revenues, if any.

 

**Our dependence on third parties for the processingand transportation of oil and gas may adversely affect the Partnership’srevenues and, consequently, the distribution of net cash flows to investorpartners*.***

 

We rely on third parties to process and transport the oil and gasproduced by the Partnership’s successful wells. In the event a third party uponwhom we rely is unable to provide transportation or processing services, andanother third party is unavailable to provide such services, the Partnershipmay have to temporarily shut-in successful wells, and revenues to thePartnership and distributions to investor partners related to those wells maybe delayed.

 

**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 within the energy industry.**

 

Theoil and gas industry is highly competitive. Competition is encountered in allaspects of Partnership operations, including the requisition of drilling andservice contractors. Many of our competitors are larger, well-establishedcompanies with substantially larger operating staffs and greater capitalresources than those of the Partnership, Reef 

 

13

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andits affiliates. We may not be able to conduct our operations successfully, obtaindrilling and service contractors, consummate transactions, and obtaintechnical, managerial and other professional personnel in this highlycompetitive environment. Specifically, larger competitors may be able to paymore for competent personnel than the Partnership, Reef and its affiliates. Inaddition, such competitors may be able to expend greater resources on theexisting and changing technologies that will be increasingly important tosuccess. Such competitors may also be in a better position to secure drillingand oilfield services, as well as equipment, more timely or on more favorableterms. Finally, oil and gas producers are increasingly facing competition fromproviders of non-fossil energy, and government policy may favor thosecompetitors in the future.

 

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

 

ThePartnership intends to utilize substantially all available capital for thedrilling and completion of wells and acquisition of the prospects. ThePartnership only has nominal funds available for partnership purposes untilthere are revenues from Partnership operations. The Partnership Agreement permits the Partnership to borrow money forfuture development of prospects drilled by the Partnership with the originalavailable Partnership capital.  Anyfuture requirement for additional funding will have to come, if at all, fromthe Partnership’s revenues or from borrowings. Reef cannot assure the partnersthat Partnership operations will be sufficient to provide the Partnership withnecessary additional funding.  Reefcannot assure the partners that the Partnership will be able to borrow fundsfrom third parties on commercially reasonable terms or at all.

 

**ThePartnership may be required to pay delay rentals to hold properties, which maydeplete Partnership capital.**

 

Oiland gas leases generally require that the property must be drilled upon by acertain date or additional funds known as delay rentals must be paid to keepthe lease in effect.  Delay rentalstypically must be paid within a year of the entry into the lease if noproduction or drilling activity has commenced. If delay rentals become due on any property the Partnership acquires,the Partnership will have to pay its share of such delay rentals or lose itslease on the property.  These delayrentals could equal or exceed the cost of the property.  Further, payment of these delay rentals couldseriously deplete the Partnership’s capital available to fund drillingactivities when they do commence.

 

**ThePartnership may incur liability 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.

 

**Other partnerships Reef sponsorswill compete with the Partnership for equipment, contractors, and personnel.**

 

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 sametime.  Due to competition among thepartnerships for equipment, contractors, and Reef’s personnel, the fact thatother partnerships organized by Reef and its affiliates may still be purchasingprospects and drilling and completing wells when the Partnership is attemptingto drill and complete wells on its prospects may make such activities of thePartnership more difficult.

** **

**ITEM 1B.               UNRESOLVED STAFF COMMENTS**

** **

**None.**

** **

**ITEM 2.                  PROPERTIES**

 

**Drilling Activities and Productive Wells**

 

Partnershipprospects are located onshore in Texas, Louisiana, Oklahoma, and New Mexico andoffshore in U.S. coastal waters in the Gulf of Mexico. The Partnershippurchased working interests in twenty developmental 

 

14

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prospects.The Partnership drilled eight successful developmental wells on eightdevelopmental prospects located in Acadia Parish, Louisiana, Pittsburg County,Oklahoma, and Palo Pinto, Jackson, Harris, Galveston, and Lavaca (2 prospects)County, Texas. One of the Lavaca County, Texas wells has ceased production. ThePartnership drilled eleven unsuccessful developmental wells on elevendevelopmental prospects located in West Baton Rouge, Acadia, Calcasieu, andCameron Parish, Louisiana, and in Hardin, Upton, Ector, Jefferson, Lavaca,Reeves, and Dawson County, Texas.

 

The Partnership has participated in the drilling of eight developmentalwells on the Sand Dunes developmental prospect in Eddy County, New Mexico. Of the eight Sand Dunes prospect wells,four wells are undergoing extended testing and evaluation in order to determinetheir potential commercial productivity. The Partnership estimates that it maytake between 90 and 120 days from the date of this Annual Report to finish theevaluation process. Following initial testing which confirmed the presence ofoil and natural gas, the remaining four Sand Dunes prospect wells weretemporarily shut in due to the high cost associated with salt water disposaland generator rental.  

 

Currently, generators have been rented to power the four producing SandDunes prospect wells undergoing the evaluation process, and salt water producedis being trucked off-site by an independent vendor. In order to reduce overallcosts, installation of electric service to the well-site locations isproceeding, and a more cost effective method of salt water disposal is beingexplored. To date, RELP, the operator of these wells, has been unsuccessful inlocating a long-term economic solution for disposing of produced salt water;however, RELP is currently evaluating its options for salt water disposal, andestimates that it will be at least 90 to 120 days from the date of this AnnualReport for the Sand Dunes prospect to have electricity and efficient salt waterdisposal capability in place. 

 

ThePartnership purchased working interests in fourteen exploratory prospects, uponwhich a total of fourteen exploratory and eight developmental wells have beendrilled. The Partnership drilled seven successful exploratory wells, sevensuccessful developmental wells, and one unsuccessful developmental well onseven exploratory prospects located in Terrebonne and St. Martin Parish,Louisiana, Sterling, Jefferson (2 prospects) and Live Oak County, Texas, andoffshore in U.S. Coastal waters in the Gulf of Mexico. The Partnership drilledseven unsuccessful exploratory wells on seven exploratory prospects located inWest Baton Rouge, Beauregard, and Cameron Parish, Louisiana, Brazoria, Lavaca,and San Patricio County, Texas, and offshore in U.S. Coastal waters in the Gulfof Mexico. Of the fourteen successful wells, three wells located in St. Martinand Terrebonne Parish, Louisiana and in Live Oak County, Texas have ceasedproduction.

 

Theunproved properties owned by the Partnership at December 31, 2007 consistof un-drilled leasehold interests (11 potential drilling locations) in the SandDunes prospect. The Partnership does not have available capital to drill thesepotential locations. The Partnership may sell all or a part of these leaseholdinterests to third parties or other Partnerships managed by Reef.Alternatively, the Partnership is permitted to borrow funds or utilize cashflows from existing productive properties in order to conduct futuredevelopmental drilling on this prospect. Partner approval would not need to beobtained for borrowing activity, as the estimated additional cost is not inexcess of 25% of the Partnership’s original aggregate capital contributions.Until such time as the productive capability of the eight wells already drilledcan be fully analyzed (see Note 9 to the Partnership’s financial statements),it is unknown whether the Partnership will drill additional wells on the SandDunes prospect or sell all or a portion of the acreage. The estimated cost tothe Partnership of participating in future drilling operations at its currentworking interest ownership is approximately $150,000-$200,000 per location.

 

ThePartnership currently has seventeen successful productive wells, one successfulwell which is expected to begin production during the second quarter of 2008,four successful wells that have ceased production, and the Partnership iscontinuing its extended testing and evaluation of four Sand Dunes prospect wells.The remaining four Sand Dunes prospect wells are temporarily shut-in, due tothe high cost associated with salt water disposal and generator rental.

 

15

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**ProvedOil and Gas Reserves**

 

ThePartnership used an independent petroleum engineer to prepare its year endestimate of net proved oil and natural gas reserves. Net proved oil and naturalgas reserves as of December 31, 2007 have been estimated by GleasonEngineering, of Arlington, Texas.  Netproved oil and natural gas reserves as of December 31, 2006 and 2005 wereestimated by a petroleum engineer employed by RELP. The quantities of provedoil and gas reserves discussed in this section include only the amounts whichwe reasonably 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. The estimated netproved oil and natural gas reserves at December 31, 2007, 2006, and 2005are summarized below.

 
| ** **                                  | ** ** | **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          |       |
| Net proved reserves, December 31, 2007 |       | 186,993            |       | 3,401,162          |       |

 

Thestandardized measure of discounted future net cash flows as of December 31,2007, 2006 and 2005 is computed by applying year-end prices, costs, andlegislated tax rates and a discount factor of 10% to net proved 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  |   |
| Standardized measure of discounted future net cash flows as of  December 31, 2007 |   | $ | 23,341,108 |   |

 

Duringthe years ended December 31, 2007 and 2006, the Partnership recordedproperty impairment costs totaling $9,466,246 and $8,145,740 as a result of thenet capitalized costs of oil and gas properties exceeding the standardizedmeasure of discounted future net cash flows.

 

**Title to Properties**

 

ThePartnership’s interests in producing and non-producing acreage are in the formof assigned direct interests in leases held by the Partnership or by Reef onbehalf of the Partnership. Such properties are 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 has or will obtainsatisfactory title to all of its leases. Title will be held by the Partnershipor by Reef on behalf of the Partnership.

 

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

 

ThePartnership is not, and has not been, a party to any legal proceedings.

 

16

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

 

None.

 

**PART II**

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

 

As of December 31,2007, the Partnership had one managing general partner, 217 limited partners,and 937 additional general partners. Reef holds a total of 75.363 generalpartner units and the investor partners hold 1,190.561 general partner unitsand 241.336 limited partner units. No established trading market exists for theunits.

 

Cashwhich, in the sole judgment of the managing general partner, is not required tomeet the Partnership’s obligations is distributed to the partners at leastquarterly in accordance with the Partnership Agreement. The Partnership beganmaking monthly cash distributions to the partners of interest income and netoil and natural gas revenues in December 2005. The Partnership expectsthat interest income will decline in 2008. Cash distributions are distributed15.45% to the managing general partner (based upon the 11% interest notrepresented by units and the 4.45% interest represented by Partnership units)and 84.55% to investor partners.

 

Investor limited andgeneral partner interests are transferable, subject to certain restrictionscontained in the Partnership Agreement; however, no assignee of a unit in thePartnership can become a substituted partner without the written consent ofboth the transferor and Reef.

 

ThePartnership has adopted a unit repurchase program. Under the terms of theprogram, the managing general partner is obligated to purchase up to 5% of theunits in the Partnership per year during the period set forth in thePartnership Agreement unless changes in oil and gas pricing meet certaincriteria specified in the prospectus supplement, dated July 8, 2005.However, the managing general partner’s obligation to purchase units is limitedto $500,000 per year in the aggregate for all partnerships previously orsubsequently organized by the managing general partner or its affiliates. ThePartnership did not repurchase any units in 2007.

 

**Use of Proceeds**

 

Inconnection with the Registration Statement filed on form S-1 (No. 333-122935)and declared effective July 7, 2005, Reef filed a final prospectus for theProgram on July 8, 2005. On July 8, 2005, Reef filed a prospectussupplement describing the Partnership and commenced the offering of units inthe Partnership. All sales of Partnership units were made through the Program’sdealer-manager, Reef Securities, Inc., and a number of soliciting dealers.The offering terminated October 31, 2005. Under the terms of the offering,a minimum of 40 Partnership units at a price of $25,000 per unit were requiredto be sold in order to form the Partnership. Upon meeting this requirement, thePartnership was formed on July 18, 2005.

 

ThePartnership registered a total of 400 units of limited partner interests and1,600 units of general partner interests. The aggregate offering amountregistered was $50,000,000. During the offering period that terminated on October 31,2005, the Partnership sold 1,431.897 units to investor partners, consisting of241.336 units of limited partner interest and 1,190.561 units of additionalgeneral partner interest. Reef purchased 75.363 general partner units, equaling5.00% of the total Partnership units sold. The Partnership did not sell theremaining registered units. Total offering proceeds were $37,398,898. Reef alsois obligated to contribute 1% of all leasehold, drilling, and completion costsas incurred. At December 31, 2007, Reef had contributed $281,640 andaccrued $15,098 as a payable to the Partnership in connection with thisobligation.

 

17

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Allunits except those purchased by Reef paid a 15% management fee to Reef to payfor the Partnership organization and offering costs, including salescommissions. These costs totaled $5,369,615, leaving capital contributions of$32,326,021 available for Partnership oil and gas operations. As of December 31,2007, the Partnership had expended $31,896,882 on property acquisitions andprepayments and $138,317 on general and administrative expenses. ThePartnership will expend additional funds on the drilling and completion of fourwells during the first and second quarters of 2008, and may expend funds onsalt water disposal facilities for the wells located on the Sand Dunesprospect. Expenditures in excess of available capital, if any, will be deductedfrom Partnership distributions during 2008.

 

**ITEM 6.****                                                    ****SELECTEDFINANCIAL DATA**

 

Thefollowing table sets forth selected financial data. The selected financial datapresented below has been derived from the audited financial statements of thePartnership.

 
| ** **                                      | ** ** | **Year ended  December 31,** | ** ** | **Year ended  December 31,** | ** ** | **Period from  Inception (July  18, 2005) to  December 31** | ** ** |
|-------------------------------------------------|------------|----------------------------------------|------------|----------------------------------------|------------|--------------------------------------------------------------------------------------|------------|
| ** **                                      | ** ** | **2007**                               | ** ** | **2006**                               | ** ** | **2005**                                                                             | ** ** |
|                                            |       |                                   |       |                                   |       |                                                                                 |       |
| Oil and gas sales revenue                       |       | $                                      | 4,211,670  |                                   | $          | 552,572                                                                              |       | $ | — |   |
| Interest income                                 |       | 387,479                                |       | 836,045                                |       | 218,477                                                                              |       |
| Costs and expenses                              |       | (12,887,713                            | )          | (8,877,529                             | )          | (106,989                                                                             | )          |
| Partnership net income (loss)                   |       | (8,288,564                             | )          | (7,488,912                             | )          | 111,488                                                                              |       |
|                                            |       |                                   |       |                                   |       |                                                                                 |       |
| Allocation of net income (loss):                |       |                                   |       |                                   |       |                                                                                 |       |
| Managing general partner                        |       | (156,552                               | )          | (331,615                               | )          | (4,464                                                                               | )          |
| General partner units                           |       | (6,761,418                             | )          | (5,950,984                             | )          | 96,353                                                                               |       |
| Limited partner units                           |       | (1,370,594                             | )          | (1,206,313                             | )          | 19,599                                                                               |       |
| Net loss per managing partner unit              |       | (2,077.31                              | )          | (4,400.24                              | )          | (59.23                                                                               | )          |
| Net income (loss) per general partner unit      |       | (5,679.19                              | )          | (4,998.47                              | )          | 80.93                                                                                |       |
| Net income (loss) per limited partner unit      |       | (5,679.19                              | )          | (4,998.47                              | )          | 81.21                                                                                |       |
|                                            |       |                                   |       |                                   |       |                                                                                 |       |
| Total assets                                    |       | 13,913,337                             |       | 28,061,160                             |       | 33,800,949                                                                           |       |
| Distributions to managing general partner       |       | 453,728                                |       | 142,700                                |       | 7,725                                                                                |       |
| Distributions to investor partners              |       | 2,483,022                              |       | 780,923                                |       | 42,275                                                                               |       |
| Distributions per general partner unit          |       | 1,734.08                               |       | 545.38                                 |       | 29.52                                                                                |       |
| Distributions per limited partner unit          |       | 1,734.08                               |       | 545.38                                 |       | 29.52                                                                                |       |
| Distributions per managing general partner unit |       | 6,020.57                               |       | 1,893.50                               |       | 102.50                                                                               |       |
|                                            |       |                                   |       |                                   |       |                                                                                 |       |
| **Operating Data**                              |       |                                   |       |                                   |       |                                                                                 |       |
| Annual sales volume:                            |       |                                   |       |                                   |       |                                                                                 |       |
| Gas (MCF)                                       |       | 373,949                                |       | 69,088                                 |       | —                                                                               |       |
| Oil (BBL)                                       |       | 20,002                                 |       | 2,374                                  |       | —                                                                               |       |
|                                            |       |                                   |       |                                   |       |                                                                                 |       |
| Average sales price:                            |       |                                   |       |                                   |       |                                                                                 |       |
| Gas (per MCF)                                   |       | $                                      | 7.29       |                                   | $          | 5.99                                                                                 |       | $ | — |   |
| Oil (per BBL)                                   |       | $                                      | 74.20      |                                   | $          | 58.37                                                                                |       | $ | — |   |

 

18

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

 

The following discussion will assist you in understanding thePartnership’s financial position, liquidity, and results of operations. Theinformation should be read in conjunction with the audited financial statementsand notes to financial statements contained herein. The discussion containshistorical and forward-looking information.

 

For a discussion of risk factors that could impact the Partnership’sfinancial results, please see Item 1A of this Annual Report.

 

**Critical Accounting Policies**

 

The preparation of financial statements inconformity with accounting principles generally accepted in the United Statesrequires us to make estimates and assumptions that can affect the reporting ofassets, liabilities, equity, revenues, and expenses. We base our estimates onhistorical experience and various other assumptions that are believed to bereasonable under the circumstances. Actual results may differ from theseestimates under different assumptions or conditions. We are also required toselect among alternative acceptable accounting policies. See Note 2 to thefinancial statements for a complete list of significant accounting policies.

 

**Oil and Gas Properties**

 

ThePartnership follows the full cost method of accounting for crude oil andnatural gas properties. Under this method, all direct costs and certainindirect costs associated with acquisition of properties and successful as wellas unsuccessful exploration and development activities are capitalized. Depreciation,depletion, and amortization of capitalized crude oil and natural gas propertiesand estimated future development costs, excluding unproved properties, arebased on the unit-of-production method using estimated proved reserves.  Proved gas reserves are converted toequivalent barrels at a rate of 6 Mcf to 1 Bbl. Net capitalized costs of crudeoil and natural gas properties, as adjusted for asset retirement obligations,are limited to the lower of unamortized cost or the cost ceiling, defined as thesum of the present value of estimated future net revenues from proved reservesbased on prices in effect at the end of the period held constant and discountedat 10 percent, plus the lower of cost or estimated fair value of  unproved properties, if any. Pursuant to fullcost accounting rules, the Partnership performs a ceiling test quarterly as ofthe balance sheet date on its proved oil and natural gas properties. Excesscapitalized costs are charged to property impairment expense. No gain or lossis recognized upon sale or disposition of crude oil and natural gas properties,unless such a sale would significantly alter the rate of depletion andamortization. During the years ended December 31, 2007 and 2006, thePartnership recognized property impairment expense of proved propertiestotaling $9,466,246 and $8,145,740, respectively.

 

Unprovedproperties consist of undeveloped leasehold interest. Investments in unprovedproperties are not depleted pending determination of the existence of provedreserves. Unproved properties are assessed for impairment quarterly as of thebalance sheet date by considering the primary lease term, the holding period ofthe properties, geologic data obtained relating to the properties, and otherdrilling activity in the immediate area of the properties. Any impairmentresulting from this quarterly assessment is reported as property impairmentexpense in the current period, as appropriate. During the years ended December 31,2007 and 2006, and the period from inception (July 18, 2005) to December 31,2005, the Partnership recognized no impairment of unproved properties.

 

The estimate of proved oil and natural gas reserves used todetermine property impairment expense, and also utilized in the Partnership’sdisclosures of supplemental information regarding oil and natural gas producingactivities, including the standardized measure of discounted cash flows, hasbeen prepared by an independent petroleum engineer at December 31, 2007,and by a petroleum engineer employed by RELP at December 31, 2006 and2005, utilizing the period end prices and costs as promulgated by the SEC.Reservoir engineering is a subjective and inexact process of estimatingunderground accumulations of oil and natural gas that cannot be measured in anexact manner, and is based upon assumptions that may vary considerably fromactual results. Accordingly, reserve estimates may be subject to upward ordownward adjustments. Actual production, revenues andexpenditures with respect to reserves will likely vary from estimates, and suchvariances could be material.

 

The determination of depreciation,depletion and amortization expense recognized in the financial statements isalso dependent upon the estimates of proved oil and natural gas reserves andwill be computed using the units-of-production method based upon this estimateof proved reserves. During the years ended December 31, 2007 and 

 

19

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2006 and the period from inception (July 18,2005) to December 31, 2005, the Partnership had depreciation, depletion,and amortization expense totaling $2,468,104, $552,848, and $0, respectively.

 

The Partnership follows Statement ofFinancial Accounting Standards No. 143, “Accounting for Asset RetirementObligations,” for all productive oil and gas wells drilled by the Partnership. Assetretirement costs and liabilities associated with future site restoration andabandonment of long-lived assets are initially measured at fair value whichapproximates the cost a third party would incur in performing the tasksnecessary to retire such assets. The fair value is recognized in the financialstatements as the present value of expected future cash expenditures for siterestoration and abandonment. Subsequent to the initial measurement, the effectof the passage of time on the liability for the net asset retirement obligation(accretion expense) and the amortization of the asset retirement cost arerecognized in the results of operations. Uponsettlement of the obligation a gain or loss is recognized to the extent actualcharges are less than or exceed the liability recorded. During the years ended December 31,2007 and 2006 and the period from inception (July 18, 2005) to December 31,2005, the Partnership recognized $66,996, $199,253 and $1,982 of assetretirement obligations and additional capitalized cost in connection withsuccessful wells drilled by the Partnership.

 

**Recognitionof Revenue**

 

The Partnership has entered into salescontracts for disposition of its share of oil and natural gas production fromproductive wells. Revenue is recognized based upon the metered volumesdelivered to those purchasers each month. Any significant over or underbalanced gas positions are disclosed in the financial statements. As of December 31,2007, 2006 and 2005, the Partnership had no material gas imbalance positions.

 

**Overview**

 

Reef Global Energy VI, L.P. is a Nevada limitedpartnership formed to explore, develop, acquire and produce crude oil, naturalgas, and natural gas liquids for the benefit of its investor partners. ThePartnership’s primary purposes are to generate revenues from the production ofoil and gas, distribute cash flow to investors, and provide tax benefits toinvestors. The majority of the Partnership’s proceeds have been used to purchaseprospects and drill oil and natural gas wells upon those prospects.

 

The Partnership raised capital from the sale ofPartnership units to investor partners and Reef, and has used those funds forthe purchase of working interests in prospects and for drilling operations andadministrative costs during its drilling phase of operations. The Partnershipdid not borrow funds during the drilling phase of operations, and interestincome and oil and gas revenues from successful wells, net of expenses, are beingdistributed to the partners. The Partnership is allowed to borrow funds inaccordance with the Partnership Agreement, or utilize cash flows fromsuccessful wells in order to drill additional development wells and constructfacilities on prospects where successful wells were drilled during the drillingphase of operations. The Partnership completed its drilling phase of operationsduring the first quarter of 2008.

 

The Partnership does not operate in any otherindustry segment. The Partnership has expended approximately $1,655,000 for thepurchase of working interests in twenty developmental prospects, which includesapproximately $173,000 for 11 un-drilled locations on its Sand Dunes prospect,and expended approximately $1,236,000 for the purchase of working interests infourteen exploratory prospects.  ThePartnership has twenty prospects in Texas, ten in Louisiana, one in Oklahoma,and one in New Mexico, all of which are located onshore, and two prospectslocated offshore in U.S. coastal waters in the Gulf of Mexico. The Partnershiphas drilled thirty-five developmental and fourteen exploratory wells on theseprospects, four of which were drilled during 2005, twenty-seven of which weredrilled during 2006, fourteen of which were drilled during 2007, and four ofwhich completed drilling during the first quarter of 2008. The Partnership hashad fifteen successful developmental wells, of which thirteen are currentlyproductive, one has ceased production, and one is expected to begin productionactivity during the second quarter of 2008. The Partnership has twelveunsuccessful developmental wells. The Partnership drilled seven successfulexploratory wells, of which three are still productive at December 31,2007 and one began production operations in January 2008. The Partnershipdrilled seven unsuccessful exploratory wells. The Partnership also has participatedin the drilling of eight wells on its Sand Dunes prospect.  Of the eight Sand Dunes prospect wells, fourwells are undergoing extended testing and evaluation in order to determinetheir potential commercial productivity. The Partnership estimates that it maytake between 90 and 120 days from the date of this Annual Report to finish theevaluation process. Following initial testing which confirmed the presence ofoil and natural gas, the remaining four Sand Dunes prospect wells weretemporarily shut in due to the high cost associated with salt water disposaland generator rental.

 

20

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Up to 11 additional wells may be drilled on the Sand Dunes prospect.

 

Should the Partnership elect to borrow moniesfor additional development activity on the Sand Dunes prospect, it will besubject to the interest rate risk inherent in borrowing activities. ThePartnership is permitted but is not expected to engage in commodity futurestrading or hedging activities, and therefore is subject to commodity pricerisk.   See “Item 7A - QUANTITATIVE ANDQUALITATIVE DISCLOSURES ABOUT MARKET RISK.”

 

During the fourth quarter of 2007, thePartnership completed the drilling of a successful offshore exploratory wellthat began production operations in January 2008. At December 31,drilling operations were in progress on the sidetracking of a Partnershipdevelopmental well that was unsuccessful earlier in 2007. The sidetrackingoperations were successfully completed during February 2008, and the wellis currently being completed and expected to begin production during the secondquarter of 2008. The Partnership completed drilling operations on five SandDunes prospect wells during the fourth quarter, and drilling operations thatwere in progress on three additional Sand Dunes wells at December 31, 2007were completed during the first quarter of 2008.

 

**Liquidity and Capital Resources**

 

The Partnership was funded with initial capital contributions totaling$37,398,898. Reef purchased 75.363 general partner units, or 5% of the totalunits sold, for $1,601,464. Investor partners purchased 1,190.561 generalpartner units and 241.336 limited partner units for $35,797,434. As of December 31,2007, Reef had also contributed $281,640 and accrued $15,098 in connection withits obligation to pay 1% of all leasehold, drilling, and completion costs.Organization and offering costs totaled $5,369,615, leaving capitalcontributions of $32,326,021 available for Partnership activities. ThePartnership was formed on July 18, 2005, and the last partner was admittedto the Partnership on October 31, 2005.

 

Unless the Partnership uses the net cash flow from successful wells orborrows additional funds in accordance with any limitations set forth in thePartnership Agreement, the $32,326,021, plus any additional contributions madeby Reef in connection with the 1% obligation mentioned above, is the totalamount available to the Partnership for the purchase of prospects and fordrilling and administrative costs. As of December 31, 2007, thePartnership had expended $31,896,881 on property acquisitions and prepaymentsand $138,317 on general and administrative expenses. The Partnership willexpend additional funds on the drilling and completion of four wells during thefirst and second quarters of 2008, and will also expend funds on salt waterdisposal facilities for the wells located on the Partnership’s Sand Dunesprospect during 2008.

 

Although the Partnership is permitted to use interest income and net cashflow from successful wells for the purchase of prospects and for drilling andadministrative costs, currently the Partnership distributes such income andcash flow to the holders of Partnership interests. However, should final costsexceed available Partnership capital contributions, the excess costs will bededucted from Partnership distributions during 2008.

 

Please see Item 1A of this Annual Report for a list of risk factorsthat could impact the Partnership.

 

The table below summarizes Partnership drilling expenditures during thedrilling phase of operations by type and classification of well:

 
| ** **              | ** ** | **Leasehold  Costs** | ** ** | **Drilling,  Completion,  and Facilities  Costs** | ** ** | **Total Costs** | ** ** |
|-------------------------|------------|----------------------|------------|--------------------------------------------------------|------------|----------------------|------------|
| Developmental wells     |       | $                    | 1,655,128  |                                                   | $          | 19,154,227           |       | $ | 20,809,355 |   |
| Exploratory wells       |       | 1,235,881            |       | 9,851,645                                              |       | 11,087,526           |       |
| Total                   |       | $                    | 2,891,009  |                                                   | $          | 29,005,872           |       | $ | 31,896,881 |   |
|                    |       |                 |       |                                                   |       |                 |       |
| Successful wells        |       | $                    | 1,181,365  |                                                   | $          | 15,383,090           |       | $ | 16,564,455 |   |
| Unsuccessful wells      |       | 1,444,714            |       | 12,416,111                                             |       | 13,860,825           |       |
| Wells under development |       | 92,000               |       | 1,206,671                                              |       | 1,298,671            |       |
| Unproved properties     |       | 172,930              |       | —                                                 |       | 172,930              |       |
| Total                   |       | $                    | 2,891,009  |                                                   | $          | 29,005,872           |       | $ | 31,896,881 |   |

 

21

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The Partnership had working capital of $1,717,490 at December 31,2007, which includes interest income and net revenues available fordistribution to partners, and $144,789 of deferred organization and offeringcosts.

 

The unproved properties owned by the Partnership at December 31,2007 consist of un-drilled leasehold interests (11 potential drillinglocations) in the Sand Dunes prospect. The Partnership does not have availablecapital to drill these potential locations. The Partnership may sell all or apart of these leasehold interests to third parties or other Partnershipsmanaged by Reef. However, the Partnership is permitted to borrow funds orutilize cash flows from existing productive properties in order to conductfuture developmental drilling on this prospect. Partner approval would not needto be obtained for borrowing activity, as the estimated additional cost is notin excess of 25% of the Partnership’s original aggregate capital contributions.Until such time as the productive capability of the eight wells already drilledcan be fully analyzed (see Note 9 to the Partnership’s financial statements),it is unknown whether the Partnership will drill additional wells on the SandDunes prospect or sell all or a portion of the acreage. The estimated cost tothe Partnership of participating in future drilling operations at its currentworking interest ownership is approximately $150,000-$200,000 per location.

 

**Results of Operations**

 

**Year Ended December 31, 2007 compared to Year Ended December 31,2006**

 

The Partnership incurred net losses for both 2006 and 2007, primarilydue to property impairment costs. The net loss for 2007 is $8,288,564, comparedto a net loss of $7,488,912 incurred in 2006.

 

The tables below show quarter by quarter comparisons of oil and naturalgas sales revenues and production expenses (lease operating expenses andproduction taxes) for the years ended December 31, 2007 and 2006. Alsoshown is the number of productive oil and natural gas wells as of the end ofeach quarter.

 
| ** **                                     | ** ** | **1st Quarter** | ** ** | **2nd Quarter** | ** ** | **3rd Quarter** | ** ** | **4th Quarter** | ** ** |
|------------------------------------------------|------------|----------------------|------------|----------------------|------------|----------------------|------------|----------------------|------------|
| 2007 Oil and Natural Gas Sales Revenues        |       | $                    | 509,731    |                 | $          | 862,040              |       | $                    | 1,151,705  |   | $ | 1,688,194 |   |
| 2007 Production expenses                       |       | $                    | 91,708     |                 | $          | 134,078              |       | $                    | 225,814    |   | $ | 240,098 |   |
| 2007 Barrels of Oil Equivalent (BOE) Sold *    |       | 11,511               |       | 17,439               |       | 23,050               |       | 30,327               |       |
| 2007 Production expenses per BOE               |       | $                    | 7.97       |                 | $          | 7.69                 |       | $                    | 9.80       |   | $ | 7.92 |   |
| Number of productive wells during the  quarter |       | 13                   |       | 16                   |       | 18                   |       | 17                   |       |

 

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* BOE (Barrels of oil equivalent (6 MCF ofnatural gas equals 1 BOE)

 
| ** **                                     | ** ** | **1st Quarter** | ** ** | **2nd Quarter** | ** ** | **3rd Quarter** | ** ** | **4th Quarter** | ** ** |
|------------------------------------------------|------------|----------------------|------------|----------------------|------------|----------------------|------------|----------------------|------------|
| 2006 Oil and Natural Gas Sales Revenues        |       | $                    | 16,478     |                 | $          | 41,856               |       | $                    | 141,350    |   | $ | 352,888 |   |
| 2006 Production expenses                       |       | $                    | 2,441      |                 | $          | 7,135                |       | $                    | 34,654     |   | $ | 50,830 |   |
| 2006 Barrels of Oil Equivalent (BOE) Sold *    |       | 329                  |       | 1,221                |       | 3,690                |       | 8,649                |       |
| 2006 Production expenses per BOE               |       | $                    | 7.42       |                 | $          | 5.84                 |       | $                    | 9.39       |   | $ | 5.88 |   |
| Number of productive wells during the  quarter |       | 1                    |       | 3                    |       | 4                    |       | 9                    |       |

 

The Partnership began its drilling phase of operations during the thirdquarter of 2005, and completed its drilling 

 

22

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phase of operations during the first quarter of 2008. Partnership oiland natural gas sales revenues totaled $4,211,670 during 2007 compared to$552,572 during 2006, and, as shown in the above tables, show a steady growthas successful wells drilled by the Partnership during its drilling phase ofoperations have been placed on production. The Partnership has one successfulexploratory well that began production operations in January 2008, and hasone successful developmental well expected to begin production operationsduring the 2nd quarter of 2008. The Partnership has participated inthe drilling of eight wells on the Sand Dunes prospect. Of the eight Sand Dunesprospect wells, four wells are undergoing extended testing and evaluation inorder to determine their potential commercial productivity. The Partnershipestimates that it may take between 90 and 120 days from the date of this AnnualReport to finish the evaluation process. Following initial testing whichconfirmed the presence of oil and natural gas, the remaining four Sand Dunesprospect wells were temporarily shut in due to the high cost associated withsalt water disposal and generator rental.

 

One exploratory well that both began and ceased production during 2006accounted for 32% of the 2006 oil and natural gas sales revenues. This well iscurrently shut-in and will be re-evaluated for a potential sidetrack during2008. The Partnership has one successful exploratory well that began productionin January 2007 and accounted for 30.2% of total 2007 oil and natural gassales, one successful development well that began production in September 2007and accounted for 21.1% of total 2007 oil and natural gas sales, and a fieldwith one successful exploratory and six successful developmental wells thatbegan production at various times during 2007 and accounted for 23.0% of total2007 oil and natural gas sales.

 

Production expenses are also analyzed by quarter in the above table,and totaled $691,698 in 2007 as compared to $95,060 in 2006. This increasereflects Partnership progress in placing successful wells on production during2007.

 

At December 31, 2006 the Partnership had drilled thirty-one wells,of which fifteen were successful and sixteen were unsuccessful. One successfulexploratory well ceased production during the fourth quarter, and sixsuccessful wells did not begin production operations until 2007.  During 2007, the Partnership drilled fourteenwells and had four wells in progress that completed drilling operations duringthe first quarter of 2008. Six wells were successful, three were unsuccessful,and five wells drilled on the Sand Dunes prospect are still under development.One of the successful wells began production in January 2008. One of thewells in progress at December 31, 2007 was successful, and three SandDunes wells are still under development.

 

Property impairment expense totaled $9,466,246 during 2007 compared to$8,145,740 during 2006. The sudden loss of production in October 2006 fromthe exploratory well which accounted for 32% of the Partnership’s 2006 revenuesresulted in a reduction in estimated reserve value of approximately $9.5million, and was the major reason the Partnership recorded property impairmentexpense of $8,145,740 during 2006. During the first half of 2007, thePartnership recorded property impairment expense of $9,466,246, primarilyresulting from large reductions in estimated reserves from four 2006Partnership wells as a result of production declines significantly in excess oforiginal estimates. As shown in the Partnership’s Quarterly Report on Form 10-Qfor the period ended June 30, 2007, estimated reserves declined from335,435 BOE to 172,111 BOE during the first half of 2007.  Subsequent to June 30, 2007, thePartnership had three major discoveries for which the discounted future netcash flows are estimated at approximately $16.3 million at December 31,2007, or approximately 70% of the total estimated discounted future net cashflows of 23.3 million at December 31, 2007. The Partnership is not allowedto reverse the impairment expense taken during the first half of 2007, eventhough the increase in the estimated discounted future net cash flows fromthese discoveries during the second half of 2007 exceeds the impairment takenduring the first half of 2007.

 

23

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Increases in general and administrative costsfrom $81,313 during 2006 to $227,249 are also a result of the increasedactivities of the Partnership during 2007. Of the $145,936 increase in costsduring 2007, $125,257 pertained to administrative costs paid to Reef foradministering Partnership operations. These costs rose from $15,824 in 2006 to$141,081 in 2007, primarily as a result of the overall increase in the numberof productive wells, and the increase in the number of productive wellsoperated by Reef from none during 2006 to three during 2007.

 

Partnership interest income comes from theshort-term investment of unexpended partner capital contributions, andtherefore deceases during the drilling phase of operations as partner capitalis expended to purchase working interests in prospects and to drill andcomplete wells. Interest income declined from $836,045 during 2006 to $387,479during 2007, and will significantly decline again during 2008 as thePartnership expends capital to complete its drilling phase of operations.

 

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

 

The Partnership began operations in July, 2005. During the period frominception (July 18, 2005) to December 31, 2005, the Partnershipcompleted drilling operations on four prospects and had one successful well.This well began production operations during January 2006; therefore thePartnership had no income or expenses from production operations as of December 31,2005. The 2005 net income of $111,488 resulted from interest income totaling$218,477 earned on unexpended partner capital contributions, offset by $50,000of organization expenses (a one time charge) and $56,989 of general andadministrative costs. These general and administrative costs included $29,429in administrative costs and services provided by OREI, and $18,618 in legal,accounting and printing costs related to SEC filings.

 

During 2006, the fund drilled fourteen successful wells and thirteenunsuccessful wells. Four of these successful wells did not begin productionoperations until the fourth quarter of 2006, and six of these successful wellsdid not begin production operations until 2007. One exploratory well drilled bythe Partnership, to which the Partnership originally assigned estimated netreserves in excess of 200,000 equivalent barrels of oil (EBO) (natural gas isconverted to oil at a rate of 6 Mcf to 1 Bbl in computing EBO), appears to havebeen completed in a very high pressure but limited reservoir, and ceasedproduction after approximately 60 days. This well accounted for approximately32% of total Partnership revenue during 2006. This well has been shut-in.During 2007 the Partnership drilled an unsuccessful development offset, butlater in 2007 re-entered the unsuccessful wellbore, sidetracked the well, andsuccessfully drilled an offset expected to begin production operations duringthe second quarter of 2008. This original well is being evaluated now for anpotential additional sidetracking operation. The sudden loss of production fromthis well in October 2006 resulted in a reduction in estimated reservevalue of approximately $9.5 million, and was the major reason the Partnershiprecorded property impairment expense of $8,145,740 during 2006, resulting in anet loss of $7,488,912.

 

General and administrative expenses totaled $81,313 during 2006compared to $56,989 during the period from inception (July 18, 2005) to December 31,2005, and are primarily the result of 2006 being the Partnership’s first fullyear of operations. The 2006 general and administrative costs included $15,824in administrative 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 compared to $218,477, is the result of theshort-term investment of unexpended partner capital contributions. The largeincrease during 2006 is due to the fact that during 2005 the Partnership didnot begin earning interest income until its formation date in July, and did nothave 100% of partner capital contributions until the closing date of October 31,2005.

 

**Off-Balance Sheet Arrangements**

 

The Partnership does not participate intransactions that generate relationships with unconsolidated entities orfinancial partnerships, such as entities often referred to as structure financeor special purpose entities (SPEs), which would have been established for thepurpose of facilitating off-balance sheet arrangements or other contractuallynarrow or limited purposes.  As of December 31,2007 and 2006, the Partnership was not involved in any unconsolidated SPEtransactions or any other off-balance sheet arrangements.

 

24

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**Contractual Obligations Table**

 
| ** **                   | ** ** | **Payment due by period** | ** ** |
|------------------------------|------------|------------------------------------------|------------|
| **Contractual  obligations** | ** ** | **Total**                                | ** ** | **Less than 1  Year** | ** ** | **1-3 Years** | ** ** | **3-5 years** | ** ** | **More than 5  Years** | ** ** |
| Purchase obligations *       |       | $                                        | 744,789    |   | $ | 600,000 |   | $ | 144,789 |   | — |   | — |   |
|                              |            |                                          |            |  |  |  |  |  |  |  |  |  |  |  |

 

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* The 15% management fee due Reeffor organization and offering costs, including sales commissions, is payable intwo parts. Reef initially received an amount, not to exceed 13.5%, to recoveractual commissions and organization and offering costs. As of December 31,2007, the Partnership is obligated to pay Reef $744,789, representingthe portion of the management fee in excess of actual commissions andorganization and offering costs, from the oil and gas cash flows available forpartner distributions at a rate not to exceed $1 million per year. ThePartnership began paying this balance at a rate of $50,000 per month beginningin January 2008.

** **
| **ITEM 7A.** |   | **QUANTITATIVE  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK** |
|--------------|--------|-----------------------------------------------------------------|

 

**Interest RateRisk**

 

The Partnership has not borrowed any funds to date. The PartnershipAgreement allows borrowings from banks or other financial sources of up to 25%of the aggregate capital contributions to the Partnership without investorapproval, provided the lender agrees it will have no recourse againstindividual investor partners, and allows borrowings in excess of 25% of theaggregate capital contributions to the Partnership with the consent of investorpartners. Should the Partnership elect to borrow monies for additionaldevelopment activity on Partnership properties, it will be subject to theinterest rate risk inherent in borrowing activities. Changes in interest ratescould significantly affect the Partnership’s results of operations and theamount of net cash flow available for partner distributions. Also, to theextent that changes in interest rates affect general economic conditions, thePartnership will be affected by such changes.

 

**CommodityPrice Risk**

 

The Partnership has not and does not expect to engage in commodityfutures trading or hedging activities or enter into derivative financialinstrument transactions for trading or other speculative purposes.  The Partnership sells a vast majority of itsproduction from successful oil and gas wells on a month-to-month basis atcurrent spot market prices. Accordingly, the Partnership is at risk for thevolatility in commodity prices inherent in the oil and gas industry, and thelevel of commodity prices has a significant impact on the Partnership’s resultsof operations.

 

Assuming the production levels we attainedduring the year ended December 31, 2007, a 10% change in the pricereceived for our crude oil would have had an approximate $148,000 impact on ouroil revenues, and a 10% change in the price received for our natural gas wouldhave had an approximate $273,000 impact on our natural gas revenues.

** **
| **ITEM 8.** |   | **FINANCIAL  STATEMENTS AND SUPPLEMENTARY DATA** |
|-------------|--------|--------------------------------------------------|

** **

The Partnership’s financial statements and supplementary data are setforth in a separate section to this Annual Report, beginning on page F-1.

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

** **

None.

 

25

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| **ITEM  9A(T).** |   | **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 Annual Report, as well as tosafeguard assets from unauthorized use or disposition. The Partnership, underthe supervision and with participation of its management, including theprincipal executive officer and principal financial officer of the Partnership’smanaging general partner, Reef Oil & Gas Partners, L.P., evaluated theeffectiveness of its “disclosure controls and procedures” as such term isdefined in Rule 13a-15(e) under the Securities Exchange Act of 1934,as amended (the “Exchange Act”), as of the end of the period covered by thisAnnual Report. Based on that evaluation, the principal executive officer andprincipal financial officer of our managing general partner have concluded thatthe Partnership’s disclosure controls and procedures are effective to ensurethat information required to be disclosed by the Partnership in reports that itfiles or submits under the Exchange Act is recorded, processed, summarized, andreported within the time periods specified in Securities and ExchangeCommission rules and forms, and includes controls and procedures designedto ensure that information required to be disclosed by us in such reports isaccumulated and communicated to our management, including the principalexecutive officer and principal financial officer of our managing generalpartner, as appropriate to allow timely decisions regarding financialdisclosure.

 

**Management Report on Internal Control OverFinancial Reporting**

 

Management ofthe Partnership is responsible for establishing and maintaining adequateinternal control over financial reporting, as such term is defined in ExchangeAct Rule 13a-15(f). Our management conducted an evaluation of the effectivenessof our internal control over financial reporting based on the framework inInternal Control - Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission. Based on this evaluation under theframework in Internal Control – Integrated Framework, management of thePartnership concluded that the Partnership’s internal control over financialreporting was effective as of December 31, 2007.

 

Thisannual report does not include an attestation report of the Partnership’sregistered public accounting firm regarding internal control over financialreporting. Management’s report was not subject to attestation by thePartnership’s registered public accounting firm pursuant to temporary rules ofthe SEC that permit the Partnership to provide only management’s report in thisannual report.

 

**Changes in Internal Controls**

 

Therehave not been any changes in the Partnership’s internal controls over financialreporting during the fiscal quarter ended December 31, 2007 that have materiallyaffected, or are reasonably likely to materially affect, the Partnership’sinternal control over financial reporting.

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

**** ****

****None.****

 

**PART III**

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

 

The Partnership has no directors or executive officers. Its managinggeneral partner is Reef Oil & Gas Partners, L.P.

 

26

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

 

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

** **
| **Name**                              | ** ** | **Age** | ** ** | **Positions  and Offices Held**                                                       |
|---------------------------------------|------------|---------|------------|---------------------------------------------------------------------------------------|
| Michael J. Mauceli                    |       | 51      |       | Manager of Reef Oil & Gas Partners GP, LLC; Chief Executive  Officer of RELP |
| Kellam  Colquitt                      |       | 60      |       | Chief Operating Officer of RELP                                                       |
| H. Walt  Dunagin                      |       | 50      |       | Vice President—Land Manager of RELP                                              |
| Lawrence J.  Harrison, Jr. Klein |       | 57      |       | Vice President – Business Development of  RELP                                   |
| Byron H. Dean                         |       | 58      |       | Manager of Acquisitions and Divestitures of  RELP                                     |
| Daniel C.  Sibley                     |       | 56      |       | Chief Financial Officer of Reef and of RELP                                           |
| David M. Tierney                      |       | 55      |       | Controller—Reef Global Energy Ventures II                                        |

 

**MichaelJ. Mauceli**is the Manager and a member of Reef Oil & Gas Partners, GP, LLC, whichis the general partner of Reef, as well as the Chief Executive Officer of RELP.Mr. Mauceli has been the principal executive officer of Reef since itsformation in February 1999. He has served in this position with RELP sinceJanuary 2006 and has served in this position with its predecessor entity,OREI, since 1987.  Mr. Mauceliattended the University of Mississippi where he majored in business managementand marketing as well as the University of Houston where he received his CommercialReal Estate License. He entered the oil and natural gas business in 1976 whenhe joined Tenneco Oil & Gas Company. Mr. Mauceli moved to Dallas in 1979, where he was independentlyemployed by several exploration and development firms in planning explorationand marketing feasibility of privately sponsored drilling programs.

 

**KellamColquitt**joinedRELP as Chief Operating Officer on February 14, 2006. Mr. Colquitthas over thirty-five years of experience in the oil and gas industry. Prior tojoining RELP, Mr. Colquitt served as Vice President-Exploration of VintagePetroleum, Inc. in Tulsa Oklahoma from 2001-2006. He also served as theGeneral Manager-Exploration of Vintage Petroleum, Inc. from 2000-2001.Prior to that, 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 1971 graduate ofTexas A&M University with a degree in geology. He is a member of theAmerican Association of Petroleum Geologists, the Houston Petroleum Club, theTulsa Geological Society, and the Houston Geological Society.

 

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

 

**LawrenceJ. Harrison, Jr.**is Vice President – BusinessDevelopment of RELP. He joined RELP in October 2006 following fourteenyears with The Oil & Gas Asset Clearinghouse, a leading acquisitionand divestiture advisory firm. Mr. Harrison has served as an independentlandman verifying title ownership and acquiring leases and other agreements insupport of clients drilling programs. He worked for Mobil Oil Corporation andseveral other companies before joining The Clearinghouse. Mr. Harrison isa 1972 graduate of the University of Southern Mississippi with a Bachelor ofScience degree in Communications. Mr. Harrison is a past president of theHouston Association of Professional Landmen and a past member of the AmericanAssociation of Professional Landmen Executive Committee. He is currently aDirector of the Louisiana Oil & Gas Association (LOGA) and a member ofthe ADAM Energy Forum and the Independent Petroleum Association of America.

 

**ByronH. (Howard) Dean**is Manager – Acquisitions and Divestitures of RELP and isresponsible for solicitation and technical evaluation of acquisition anddevelopment opportunities for Reef. A registered petroleum engineer, Mr. Deanhas over 30 years of industry experience with oil and natural gas operationsand reservoir engineering, both domestic onshore and offshore. Prior to joiningRELP, Mr. Dean was Senior Petroleum Engineer and Acquisition andDivestiture Specialist for PLS, Inc. and Noble Royalties, Inc. He isa 1974 graduate of the 

 

27

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University of Texasat Arlington with a Bachelor of Science degree in Civil Engineering. Mr. Deanis an active member of the Society of Petroleum Engineers, the Society ofPetroleum Evaluation Engineers, ADAM Energy Forum, and Texas IndependentProducer and Royalty Owners Association.

 

**DanielC. Sibley**becameChief Financial Officer of Reef in December 1999. He has served in thesame position for RELP since January 2006, and has served in this positionwith RELP’s predecessor entity, OREI, since 1998. Mr. Sibley was employedas a Certified Public Accountant with Grant Thornton from 1977 to 1980. From1980 to 1994, he was involved in the private practice of law. He received aB.B.A. in accounting from the University of North Texas in 1973, a law degree(J.D.) from the University of Texas in 1977, and a Master of Laws-Taxationdegree (L.L.M.) from Southern Methodist University in 1984.

** **

**DavidM. Tierney**has been employed by RELP since January 2006 and was previously with itspredecessor entity, OREI, since March 2001.  Mr. Tierney is the Controller of theReef Global Energy Ventures and Reef Global Energy Ventures II 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,and has worked in the oil and gas industry since 1979. From 1992 through 2000he served as controller/treasurer of an independent oil and gas explorationcompany.

 

**Audit Committee and Nominating Committee**

 

Because the Partnership has no directors, itdoes not have an audit committee, an audit committee financial expert or anominating committee.

 

**Code of Ethics**

 

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

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

 

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

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

 

Reef’s “partnership interest,” as described in the table above, refersonly to its interest as managing general partner and does not include theinterest Reef has as the result of its purchase of units in the Partnership, orthe 1% interest Reef has as the result of its payment of 1% of all leasehold, drilling,and completion costs.  Reef purchased5.00% of the outstanding Partnership units. Reef received a 10% interest asmanaging general partner of the Partnership and a 1% interest as a result ofReef’s payment of 1% of all leasehold, drilling, and completion costs for atotal of an 11% interest.  This 11%interest is not represented by partnership units.  Reef has a total interest in the Partnershipof 15.45%.

 

28

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Reef is entitled to receive a management fee equal to 15% of thePartnership subscriptions exclusive of the units purchased by Reef. From thisamount Reef pays all of the Partnership's organization and offering costs,including sales commissions. The management fee is payable to Reef in twoparts. Reef initially received an amount not to exceed 13.5% to cover actualsales commissions and actual organization and offering costs. The remainder ofthe management fee is paid to Reef from the net cash flow available for partnerdistributions, at a rate not to exceed $1 million per year. The totalmanagement fee owed Reef is $5,369,615. The Partnership recorded $5,319,615 ofthis amount as offering costs, and $50,000 as organization costs. Of thisamount, $4,564,826 has been paid to Reef to cover actual sales commissions andorganization and offering costs, $60,000 has been paid to Reef from net cashflow, and $744,789 has been accrued at December 31, 2007 as an account payableto be paid to Reef from future net cash flows of the Partnership.

 

Reef will be reimbursedfor direct costs and all documented out-of-pocket expenses incurred on behalfof the Partnership, including administrative costs. During the years endedDecember 31, 2007 and 2006 and the period from inception (July 18, 2005) toDecember 31, 2005, the Partnership reimbursed Reef $754,097, $571,112, and$211,176, respectively, for technical services costs which have beencapitalized as project costs, and $141,081, $15,824 and $29,429, respectively,for administrative costs included as general and administrative expenses.

 

During 2006, RELP assumed from OREI well operator status for all wellspreviously operated by OREI. As a well operator, RELP receives operator feesduring the drilling and production phase of each well at the competitive ratein the geographical area where the prospect is located.  These fees are charged as a monthly fee perwell as agreed to in an operating agreement signed by the Partnership and participatingthird parties in the well. During the years ended December 31, 2007 and 2006,and the period from inception (July 18, 2005) to December 31, 2005, thePartnership paid operator fees totaling $3,662, $8,791 and $3,463 to RELP andOREI. RELP (previously OREI) serves as operator for eleven Partnershipprospects upon which three successful wells and eight unsuccessful wells havebeen drilled, and for the Sand Dunes prospect, where the Partnership has participatedin the drilling of eight wells. Of the eight Sand Dunes prospect wells, four wellsare undergoing extended testing and evaluation in order to determine theirpotential commercial productivity. Following initial testing which confirmedthe presence of oil and natural gas, the remaining four Sand Dunes prospectwells were temporarily shut in due to the high cost associated with salt waterdisposal and generator rental.

 

**Compensation Committee**

** **

Because the Partnershiphas no directors, it does not have a compensation committee.

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

 

The followingtable sets forth information as of December 31, 2007 concerning all personsknown by Reef to own beneficially more than 5% of the interests in thePartnership. Unless expressly indicated otherwise, each partner exercises solevoting and investment power with respect to the 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                                                                      | %          |

 

----

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

 

Themanaging general partner received a 10% interest in the Partnership ascompensation for forming the Partnership, and also holds a 1% interest in thePartnership as a result of paying 1% of all leasehold, drilling and completioncosts. In addition to this 11% interest not represented by Partnership units,Reef purchased 5% of the

 

29

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1,507.260Partnership units and, therefore, holds 5% of the 89% interest in thePartnership (4.45%) held by the unit holders.

 

**ITEM 13.****               CERTAINRELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE**

** **

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

 

**ITEM 14.****               PRINCIPALACCOUNTING FEES AND SERVICES**

** **

The Partnership incurred professional audit and tax fees from itsprincipal auditor BDO Seidman, LLP, as disclosed in the table below:

 
| ** **          | ** ** | **2007** | ** ** | **2006** | ** ** |
|---------------------|------------|----------|------------|----------|------------|
| Audit fees          |       | $        | 36,430     |     | $          | 52,592 |   |
| Audit related  fees |       | —   |       | —   |       |
| Tax fees            |       | 866      |       | 615      |       |
| All other fees      |       | —   |       | —   |       |
|                     |            |          |            |          |            |  |  |

 

Fees for tax servicesare for review of the Partnership’s tax return.

 

As indicated in Item 10 above, the Partnership does not have anydirectors or an audit committee.

 

**PARTIV**

 

**ITEM 15.****               EXHIBITSAND FINANCIAL STATEMENT SCHEDULES**

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

 

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

 

30

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**SIGNATURES**

 

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

 
| Date:      | April 15, 2008 | **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)** |

 

31

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Pursuant to the requirements of the SecuritiesExchange Act of 1934, this report has been signed below by the following personson behalf of the registrant and in the capacities and on the dates indicated.

 
| **Signature**          | ** ** | **Title**                                                     | ** ** | **Date**       |
|------------------------|------------|---------------------------------------------------------------|------------|----------------|
|                   |       |                                                          |       |           |
| /s/ Michael J. Mauceli |       | Manager and Member of  the general partner of Reef            |       | April 15, 2008 |
| Michael J. Mauceli     |       | Oil & Gas Partners,  L.P. (*Principal Executive Officer*) |       |           |
|                   |       |                                                          |       |           |
| /s/ Daniel C. Sibley   |       | Chief Financial Officer  (*Principal Financial Officer*       |       | April 15, 2008 |
| Daniel C. Sibley       |       | *and Principal Accounting  Officer*)                          |       |           |

 

32

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Reef Global EnergyVI, L.P.

 

FinancialStatements

 

For theYears Ended December 31, 2007 and 2006, and the Period from

Inception(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    |

 

----

 

Report of Independent Registered Public AccountingFirm

 

The Partners

Reef Global Energy VI,L.P.

 

We have audited the accompanying balance sheets of Reef Global EnergyVI, L.P. as of December 31, 2007 and 2006, and the related statements ofoperations, partnership equity, and cash flows for the years ended December 31,2007 and 2006, and the period from inception (July 18, 2005) to December 31,2005. These financial statements are the responsibility of the Partnership’smanagement. Our responsibility is to express an opinion on these financialstatements based on our audits.

 

We conducted our auditsin accordance with the standards of the Public Company Accounting OversightBoard (United States). Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statements arefree of material misstatement. The Partnership is not required to have, norwere we engaged to perform, an audit of its internal control over financialreporting. An audit includes consideration of internal control over financialreporting as a basis for designing audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectivenessof the Partnership’s internal control over financial reporting. Accordingly, weexpress no such opinion. An audit also includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements,assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, thefinancial statements referred to above present fairly, in all materialrespects, the financial position of Reef Global Energy VI, L.P. at December 31,2007 and 2006, and the results of its operations and its cash flows for theyears ended December 31, 2007 and 2006, and the period from inception (July 18,2005) to December 31, 2005, in conformity with accounting principlesgenerally accepted in the United States of America.

 

/s/ BDO Seidman, LLP

 

Dallas, Texas

April 11, 2008

 

F-1

----

 

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

**Balance Sheets**

 
| **December 31,**                                                          | ** ** | **2007**       | ** **     | **2006**       | ** ** |
|--------------------------------------------------------------------------------|------------|----------------|----------------|----------------|------------|
|                                                                           |       |           |           |           |       |
| **Assets**                                                                     |       |           |           |           |       |
|                                                                           |       |           |           |           |       |
| **Current assets:**                                                            |       |           |           |           |       |
| Cash  and cash equivalents                                                     | ** ** | $              | 2,366,065      |           | $          | 15,641,945 | ** ** |
| Accounts  receivable from affiliates                                           |       | 15,098         |           | 111,508        |       |
| **Total current assets**                                                       | ** ** | **2,381,163**  | ** **     | **15,753,453** | ** ** |
|                                                                           |       |           |           |           |       |
| **Oil and gas properties, full cost method of  accounting:**                   |       |           |           |           |       |
| Proved  properties, net of accumulated depletion of $20,632,938 and $8,698,588 |       | 11,359,244     |           | 8,116,583      |       |
| Unproved  properties                                                           |       | 172,930        |           | 2,030,077      |       |
| **Net oil and gas properties**                                                 | ** ** | **11,532,174** | ** **     | **10,146,660** | ** ** |
| ** **                                                                     | ** ** | ** **     | ** **     | ** **     | ** ** |
| **Other assets**                                                               | ** ** | ** **     | ** **     | ** **     | ** ** |
| Prepaid  drilling costs                                                        | ** ** | **—**     |           | 2,161,047      |       |
| **Total other assets**                                                         | ** ** | **—**     | ** **     | **2,161,047**  | ** ** |
| ** **                                                                     | ** ** | ** **     | ** **     | ** **     | ** ** |
| **Total Assets**                                                               | ** ** | **$**          | **13,913,337** | ** **     | **$**      | **28,061,160** | ** ** |
|                                                                           |       |           |           |           |       |
| **Liabilities and partnership Equity**                                         |       |           |           |           |       |
|                                                                           |       |           |           |           |       |
| **Current liabilities:**                                                       |       |           |           |           |       |
| Accounts  payable                                                              | ** ** | **$**          | 1,981          |           | **$**      | 1,948 | ** ** |
| Accounts  payable to affiliates                                                |       | 661,692        |           | 3,136,602      |       |
| **Total current liabilities**                                                  | ** ** | **663,673**    | ** **     | **3,138,550**  | ** ** |
|                                                                           |       |           |           |           |       |
| **Long-term liabilities:**                                                     |       |           |           |           |       |
| Accounts  payable to affiliates                                                |       | 144,789        |           | 804,789        |       |
| Asset  retirement obligation                                                   |       | 305,215        |           | 203,803        |       |
| **Total long-term liabilities**                                                | ** ** | **450,004**    | ** **     | **1,008,592**  | ** ** |
|                                                                           |       |           |           |           |       |
| **Commitments and contingencies (Note 6)**                                     |       |           |           |           |       |
|                                                                           |       |           |           |           |       |
| **Partnership Equity**                                                         |       |           |           |           |       |
| General  partners                                                              |       | 9,975,966      |           | 18,801,910     |       |
| Limited  partners                                                              |       | 2,022,276      |           | 3,811,366      |       |
| Managing  general partner                                                      |       | 801,418        |           | 1,300,742      |       |
| **Partnership equity**                                                         | ** ** | **12,799,660** | ** **     | **23,914,018** | ** ** |
| ** **                                                                     | ** ** | ** **     | ** **     | ** **     | ** ** |
| **Total liabilities and partnership equity**                                   | ** ** | **$**          | **13,913,337** | ** **     | **$**      | **28,061,160** | ** ** |

 

*See accompanying notes tofinancial statements.*

 

F-2

----

 

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

**Statementsof Operations**

 
| ** **                                  | ** ** | **Year ended  December 31,  2007** | ** **     | **Year ended   December 31,  2006** | ** ** | **Period from  inception  (July 18,  2005) to  December 31,  2005** | ** ** |
|---------------------------------------------|------------|----------------------------------------------|----------------|----------------------------------------------------|------------|-----------------------------------------------------------------------------------------|------------|
| ** **                                  | ** ** | ** **                                   | ** **     | ** **                                         | ** ** | ** **                                                                              | ** ** |
| **Revenues**                                | ** ** | **$**                                        | **4,211,670**  | ** **                                         | **$**      | **552,572**                                                                             | ** ** | **$** | **—** | ** ** |
| ** **                                  | ** ** | ** **                                   | ** **     | ** **                                         | ** ** | ** **                                                                              | ** ** |
| **Costs and expenses:**                     | ** ** | ** **                                   | ** **     | ** **                                         | ** ** | ** **                                                                              | ** ** |
| Lease  operating expenses                   |       | 416,484                                      |           | 55,637                                             |       | —                                                                                  |       |
| Production  taxes                           |       | 275,214                                      |           | 39,423                                             |       | —                                                                                  |       |
| Depreciation,  depletion and amortization   |       | 2,468,104                                    |           | 552,848                                            |       | —                                                                                  |       |
| Property  impairment                        |       | 9,466,246                                    |           | 8,145,740                                          |       | —                                                                                  |       |
| Accretion  of asset retirement obligation   |       | 34,416                                       |           | 2,568                                              |       | —                                                                                  |       |
| General  and administrative                 |       | 227,249                                      |           | 81,313                                             |       | 56,989                                                                                  |       |
| Organization  expenses                      |       | —                                       |           | —                                             |       | 50,000                                                                                  |       |
| **Total costs and expenses**                | ** ** | **12,887,713**                               | ** **     | **8,877,529**                                      | ** ** | **106,989**                                                                             | ** ** |
| ** **                                  | ** ** | ** **                                   | ** **     | ** **                                         | ** ** | ** **                                                                              | ** ** |
| **Loss from operations**                    | ** ** | **(8,676,043**                               | **)**          | **(8,324,957**                                     | **)**      | **(106,989**                                                                            | **)**      |
| ** **                                  | ** ** | ** **                                   | ** **     | ** **                                         | ** ** | ** **                                                                              | ** ** |
| **Other income:**                           | ** ** | ** **                                   | ** **     | ** **                                         | ** ** | ** **                                                                              | ** ** |
| Interest  income                            |       | 387,479                                      |           | 836,045                                            |       | 218,477                                                                                 |       |
| **Total other income**                      | ** ** | **387,479**                                  | ** **     | **836,045**                                        | ** ** | **218,477**                                                                             | ** ** |
| ** **                                  | ** ** | ** **                                   | ** **     | ** **                                         | ** ** | ** **                                                                              | ** ** |
| **Net income (loss)**                       | ** ** | **$**                                        | **(8,288,564** | **)**                                              | **$**      | **(7,488,912**                                                                          | **)**      | **$** | **111,488** | ** ** |
| ** **                                  | ** ** | ** **                                   | ** **     | ** **                                         | ** ** | ** **                                                                              | ** ** |
| Net  income (loss) per general partner unit | ** ** | **$**                                        | **(5,679.19**  | **)**                                              | **$**      | **(4,998.47**                                                                           | **)**      | **$** | **80.93** | ** ** |
| Net  income (loss) per limited partner unit | ** ** | **$**                                        | **(5,679.19**  | **)**                                              | **$**      | **(4,998.47**                                                                           | **)**      | **$** | **81.21** | ** ** |
| Net  loss per managing general partner unit | ** ** | **$**                                        | **(2,077.31**  | **)**                                              | **$**      | **(4,400.24**                                                                           | **)**      | **$** | **(59.23** | **)** |
|                                        |       |                                         |           |                                               |       |                                                                                    |       |

 

*See accompanying notes tofinancial statements.*

 

F-3

----

 

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

**Statementsof Partnership Equity**

 
|                                          |   | **General partners** |   | **Limited partners** |   | **Managing general  partner** |   | **Total**  |   |
|-----------------------------------------------|--------|---------------------------|--------|---------------------------|--------|------------------------------------|--------|------------|--------|
|                                          |   | **Units**                 |   | **Amount**                |   | **Units**                          |   | **Amount** |   | **Units** |   | **Amount** |   | **Units** |   | **Amount** |   |
| Partner  contributions, net of offering costs |   | 1,190.561                 |   | $25,340,995               |   | 241.336                            |   | $5,136,824 |   | 75.363 |   | $1,636,774 |   | 1,507.260 |   | $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            |   | 1,190.561                 |   | 25,402,198                |   | 241.336                            |   | 5,149,298  |   | 75.363 |   | 1,624,585 |   | 1,507.260 |   | 32,176,081 |   |
|                                          |   |                      |   |                      |   |                               |   |       |   |   |   |   |   |   |   |   |   |
| Distribution  amount per partnership unit     |   |                      |   | 29.52                     |   |                               |   | 29.52      |   |   |   | 102.50 |   |   |   |   |   |
|                                          |   |                      |   |                      |   |                               |   |       |   |   |   |   |   |   |   |   |   |
| Balance  at December 31, 2005            |   | 1,190.561                 |   | 25,402,198                |   | 241.336                            |   | 5,149,298  |   | 75.363 |   | 1,624,585 |   | 1,507.260 |   | 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            |   | 1,190.561                 |   | 18,801,910                |   | 241.336                            |   | 3,811,366  |   | 75.363 |   | 1,300,742 |   | 1,507.260 |   | 23,914,018 |   |
|                                          |   |                      |   |                      |   |                               |   |       |   |   |   |   |   |   |   |   |   |
| Distribution  amount per partnership unit     |   |                      |   | 545.38                    |   |                               |   | 545.38     |   |   |   | 1,893.50 |   |   |   |   |   |
|                                          |   |                      |   |                      |   |                               |   |       |   |   |   |   |   |   |   |   |   |
| Balance  at December 31, 2006            |   | 1,190.561                 |   | 18,801,910                |   | 241.336                            |   | 3,811,366  |   | 75.363 |   | 1,300,742 |   | 1,507.260 |   | 23,914,018 |   |
| Partner  contributions                        |   | —                    |   | —                    |   | —                             |   | —     |   | — |   | 110,956 |   | — |   | 110,956 |   |
| Partner  distributions                        |   | —                    |   | (2,064,526                | )      | —                             |   | (418,496   | )      | — |   | (453,728 | ) | — |   | (2,936,750 | ) |
| Net  loss                                     |   | —                    |   | (6,761,418                | )      | —                             |   | (1,370,594 | )      | — |   | (156,552 | ) | — |   | (8,288,564 | ) |
| Balance  at December 31, 2007            |   | 1,190.561                 |   | $9,975,966                |   | 241.336                            |   | $2,022,276 |   | 75.363 |   | $801,418 |   | 1,507.260 |   | $12,799,660 |   |
|                                          |   |                      |   |                      |   |                               |   |       |   |   |   |   |   |   |   |   |   |
| Distribution  amount per partnership unit     |   |                      |   | $1,734.08                 |   |                               |   | $1,734.08  |   |   |   | $6,020.57 |   |   |   |   |   |

 

*See accompanying notes tofinancial statements.*

 

F-4

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

**Statements of Cash Flows**

 
| ** **                                                                                          | ** ** | **2007**        | ** **    | **2006**        | ** ** | **Period from  inception  (July 18,  2005) to  December 31,  2005** | ** ** |
|-----------------------------------------------------------------------------------------------------|------------|-----------------|---------------|-----------------|------------|-----------------------------------------------------------------------------------------|------------|
| **Operating Activities**                                                                            |       |            |          |            |       |                                                                                    |       |
| Net income (loss)                                                                                   |       | $               | (8,288,564    | )               | $          | (7,488,912                                                                              | )          | $ | 111,488 |   |
| Adjustments for non-cash transactions:                                                              |       |            |          |            |       |                                                                                    |       |
| Depreciation, depletion and amortization                                                            |       | 2,468,104       |          | 552,848         |       | —                                                                                  |       |
| Property impairment                                                                                 |       | 9,466,246       |          | 8,145,740       |       | —                                                                                  |       |
| Accretion of asset retirement obligation                                                            |       | 34,416          |          | 2,568           |       | —                                                                                  |       |
| Adjustments to reconcile net income (loss) to net cash provided by  (used in) operating activities: |       |            |          |            |       |                                                                                    |       |
| Changes in operating assets and liabilities:                                                        |       |            |          |            |       |                                                                                    |       |
| Accounts receivable from affiliates                                                                 |       | 46,842          |          | 327,206         |       | (374,048                                                                                | )          |
| Accounts payable                                                                                    |       | 33              |          | (5,457          | )          | 7,405                                                                                   |       |
| Accounts payable to affiliates                                                                      |       | —          |          | (27,567         | )          | 27,567                                                                                  |       |
| **Net cash provided by (used in) operating  activities**                                            | ** ** | **3,727,077**   | ** **    | **1,506,426**   | ** ** | **(227,588**                                                                            | **)**      |
| ** **                                                                                          | ** ** | ** **      | ** **    | ** **      | ** ** | ** **                                                                              | ** ** |
| **Investing Activities**                                                                            |       |            |          |            |       |                                                                                    |       |
| Property acquisition and development                                                                |       | (14,166,731     | )             | (10,704,780     | )          | (2,908,066                                                                              | )          |
| Prepaid drilling costs                                                                              |       |            |          |            |       | (4,055,612                                                                              | )          |
| **Net cash used in investing activities**                                                           | ** ** | **(14,166,731** | **)**         | **(10,704,780** | **)**      | **(6,963,678**                                                                          | **)**      |
| ** **                                                                                          | ** ** | ** **      | ** **    | ** **      | ** ** | ** **                                                                              | ** ** |
| **Financing Activities**                                                                            | ** ** | ** **      | ** **    | ** **      | ** ** | ** **                                                                              | ** ** |
| Partner capital contributions                                                                       |       | 160,524         |          | 113,853         |       | 37,406,161                                                                              |       |
| Offering costs                                                                                      |       | (60,000         | )             | (189,481        | )          | (4,325,345                                                                              | )          |
| Partner distributions                                                                               |       | (2,936,750      | )             | (923,623        | )          | (50,000                                                                                 | )          |
| **Net cash provided by (used in) financing  activities**                                            | ** ** | **(2,836,226**  | **)**         | **(999,251**    | **)**      | **33,030,816**                                                                          | ** ** |
| ** **                                                                                          | ** ** | ** **      | ** **    | ** **      | ** ** | ** **                                                                              | ** ** |
| **Net increase (decrease) in cash and cash  equivalents**                                           | ** ** | **(13,275,880** | **)**         | **(10,197,605** | **)**      | **25,839,550**                                                                          | ** ** |
| Cash and cash equivalents at beginning of period                                                    |       | 15,641,945      |          | 25,839,550      |       | —                                                                                  |       |
| **Cash and cash equivalents at end of period**                                                      | ** ** | **$**           | **2,366,065** | ** **      | **$**      | **15,641,945**                                                                          | ** ** | **$** | **25,839,550** | ** ** |
| ** **                                                                                          | ** ** | ** **      | ** **    | ** **      | ** ** | ** **                                                                              | ** ** |
| Non-cash investing transactions                                                                     |       |            |          |            |       |                                                                                    |       |
| Property additions included in accounts payable                                                     | ** ** | **$**           | —        |            | **$**      | —                                                                                  |       | **$** | 19,857 |   |
| Property additions included in accounts payable to affiliates                                       | ** ** | **$**           | 61,692        |            | **$**      | 3,136,602                                                                               |       | **$** | 573,787 |   |
| Property additions and asset retirement obligation                                                  | ** ** | **$**           | 66,966        |            | **$**      | 199,253                                                                                 |       | **$** | 1,982 |   |
| Non-cash financing transactions:                                                                    | ** ** |            | ** **    | ** **      | ** ** | ** **                                                                              | ** ** |
| Managing partner contributions included in accounts receivable from  affiliates                     | ** ** | **$**           | 15,098        |            | **$**      | 64,666                                                                                  |       | **$** | 28,047 |   |
| Offering costs included in accounts payable to affiliates                                           | ** ** | **$**           | 600,000       |            | **$**      | —                                                                                  |       | **$** | 189,481 |   |
| Offering costs included in non-current accounts payable to affiliates                               | ** ** | **$**           | 144,789       |            | **$**      | 804,789                                                                                 |       | **$** | 804,789 |   |

 

*Seeaccompanying notes to financial statements.*

 

F-5

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Reef Global Energy VI, L.P.

Notes to Financial Statements

December 31, 2007

 

**1.Organization and Basis of Presentation**

 

ReefGlobal Energy VI, L.P. (the “Partnership”) is the first in a series of fourNevada limited partnerships comprising a program called Reef Global EnergyVentures II (the “Program”), pursuant to an S-1 Registration Statement declaredeffective by the Securities and Exchange Commission (the “SEC”) on July 7,2005. In order to be formed, each partnership was required to sell a minimum of40 partnership units at $25,000 per unit, including units purchased by themanaging general partner. Each partnership formed as a part of the programoffered a minimum of 1,000 and a maximum of 2,000 units for sale. The Programwas authorized to sell up to 1,600 limited partner units and 6,400 generalpartner units during the period beginning July 8, 2005 through July 7,2007. The Partnership offered 2,000 units for sale ($50,000,000), consisting ofup to 400 limited partner units and up to 1,600 general partner units. Investorfunds were held in escrow and were subject to reimbursement with interest ifthe minimum number of units was not sold. The Program filed a prospectussupplement with the SEC on July 8, 2005 describing the Partnership, andcommenced 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 outsideinvestors totaling 1,190.561 general partner units and 241.336 limited partnerunits, and sales to the managing general partner totaling 75.363 generalpartner units.

 

ThePartnership is a Nevada limited partnership formed under the Nevada UniformLimited Partnership Act. Reef Oil & Gas Partners, L.P. (“Reef”) servesas the Partnership’s managing general partner. Partnership interests are heldby the managing general partner and investor partners who are general 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 purchased working interests in exploratoryand developmental drilling prospects and drilled 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 partnerships managed by Reef also own interests in some of theprospects purchased by this Partnership. In instances where Reef-affiliated entitiesown a majority working interest in a prospect, wells drilled on that prospectmay be operated by Reef Exploration, L.P. (“RELP”), an affiliate of Reef.

 

Duringthe year following completion of the drilling phase of the Partnership, allinvestor general partner units will be converted into limited partner units.Limited partners do not have any rights to convert their units to generalpartner units.

 

Underthe terms of the partnership agreement, certain income and expense items areallocated differently between the managing general partner and the investorpartners.  Allocations of 

 

F-6

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Reef Global Energy VI, L.P.

Notes to Financial Statements (continued)

 

incomeand expense to the managing general partner and investor partners are madequarterly based upon the number and type of partnership units held at the endof the quarter.

 

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

 

**2.Summary of Accounting Policies**

 

**Use ofEstimates**

 

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

 

**Cashand Cash Equivalents**

 

ThePartnership considers all highly liquid investments with maturity dates of nomore than three months from the purchase date to be cash equivalents. Cash andcash equivalents consist of demand deposits and money market investmentsinvested with a major national bank. The carrying value of the Partnership’scash equivalents approximates fair value.

 

**Risks and Uncertainties**

 

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

 

ThePartnership has not engaged in commodity futures trading or hedging activitiesand has not entered into derivative financial instrument transactions fortrading or other speculative purposes. Accordingly, the Partnership is at riskfor the volatility in commodity prices inherent in the oil and gas industry,and the level of commodity prices has a significant impact on the Partnership’sresults of operations.

 

F-7

----

 

Reef Global Energy VI, L.P.

Notes to Financial Statements (continued)

 

**Organization and Offering Costs**

 

Organization and offering costs total 15% ofinvestor capital contributions, except for units purchased by the managinggeneral partner, which are purchased net of the 15% cost. Partnershiporganization costs totaling $50,000 have been expensed in the financialstatements for the period from inception (July 18, 2005) to December 31,2005. Offering costs represent costs incurred in conjunction with the offeringof partnership units. These costs, totaling $5,319,615 during 2005, have beenrecorded as a reduction of the proceeds of the offering.

 

# **Oil and Natural Gas Properties**

# ** **

ThePartnership follows the full cost method of accounting for crude oil andnatural gas properties. Under this method, all direct costs and certainindirect costs associated with acquisition of properties and successful as wellas unsuccessful exploration and development activities are capitalized.Depreciation, depletion, and amortization of capitalized crude oil and naturalgas properties and estimated future development costs, excluding unprovedproperties, are based on the unit-of-production method using estimated provedreserves. For these purposes, proved gas reserves are converted to equivalentbarrels at a rate of 6 Mcf to 1 Bbl. Net capitalized costs of crude oil andnatural gas properties, as adjusted for asset retirement obligations, arelimited to the lower of unamortized cost or the cost ceiling, defined as thesum of the present value of estimated future net revenues from proved reservesbased on prices in effect at the end of the period held constant and discountedat 10 percent, plus the lower of cost or estimated fair value of unprovedproperties, if any. Pursuant to full cost accounting rules, the Partnershipperforms a ceiling test quarterly as of the balance sheet date on its provedoil and natural gas properties. Excess capitalized costs are charged toproperty impairment expense. No gain or loss is recognized upon sale ordisposition of crude oil and natural gas properties, unless such a sale wouldsignificantly alter the rate of depletion and amortization. During the years endedDecember 31, 2007 and 2006, the Partnership recognized property impairmentexpense of proved properties totaling $9,466,246 and $8,145,740, respectively.

 

Unprovedproperties consist of undeveloped leasehold interest. Investments in unprovedproperties are not depleted pending determination of the existence of provedreserves. Unproved properties are assessed for impairment quarterly as of thebalance sheet date by considering the primary lease term, the holding period ofthe properties, geologic data obtained relating to the properties, and otherdrilling activity in the immediate area of the properties. Any impairmentresulting from this quarterly assessment is reported as property impairmentexpense in the current period, as appropriate. During the years ended December 31,2007 and 2006, and the period from inception (July 18, 2005) to December 31,2005, the Partnership recognized no impairment of unproved properties.

 

# **Restoration, Removal, andEnvironmental Liabilities**

# ** **

ThePartnership is subject to extensive Federal, state and local environmental lawsand regulations. These laws regulate the discharge of materials into theenvironment and may require the Partnership to remove or mitigate theenvironmental effects of the disposal or release of

 

F-8

----

 

Reef Global Energy VI, L.P.

Notes to Financial Statements (continued)

 

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.

 

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

 

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

 

Thefollowing table summarizes the Partnership’s asset retirement obligation forthe years ended December 31, 2007 and 2006.

 
| ** **                            | ** ** | **2007** | ** ** | **2006**   | ** ** |
|---------------------------------------|------------|----------|------------|------------|------------|
| Beginning asset retirement obligation | ** ** | **$**    | 203,803    | ** ** | **$**      | 1,982 | ** ** |
| Additions related to new properties   |       | 66,996   |       | 199,253    |       |
| Accretion expense                     |       | 34,416   |       | 2,568      |       |
| Ending asset retirement obligation    | ** ** | **$**    | 305,215    |       | **$**      | 203,803 | ** ** |

 

**Recognition of Revenue**

 

The Partnership enters into sales contractsfor disposition of its share of oil and natural gas production from productivewells. Revenues are recognized based upon the Partnership’s share of meteredvolumes delivered to its purchasers each month. The Partnership had no materialgas imbalances at December 31, 2007, 2006, and 2005.

 

**Income Taxes**

 

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

 

Asof December 31, 2007, the financial reporting basis of the Partnership’sassets exceeds the tax basis of the assets by approximately $840,000, primarilydue to the difference between property

 

F-9

----

 

Reef Global Energy VI, L.P.

Notes to Financial Statements (continued)

 

impairmentcosts deducted for financial reporting purposes and intangible drilling costsdeducted for income tax purposes.

 

**FairValue of Financial Instruments**

 

Thecarrying amounts of the Partnership’s short-term financial instruments,including cash equivalents, accounts receivable and accounts payable,approximate their fair values based on the short maturities of thoseinstruments.

 

**Reclassifications**

 

Certain information providedfor prior years has been reclassified to conform to the current yearpresentation adopted as of December 31, 2007.

 

**3.Transactions with Affiliates**

 

ThePartnership settles its balances with Reef and RELP on a quarterly basis.

 

Reef,as managing general partner, contributes 1% of all leasehold, drilling, andcompletion costs when incurred. In addition, Reef purchased 5% of the units andpays 5% of the 99% of these costs paid by the unit holders (4.95%). Inconnection with the 1% obligation, Reef owed the Partnership $15,098 and$64,666 at December 31, 2007 and 2006, respectively. At December 31,2006, the Partnership also had a receivable of $46,842 due from Reef forreimbursement of consulting fees (see below).

 

ThePartnership has no employees. RELP employs a staff including geologists,petroleum engineers, landmen and accounting personnel who administer all of thePartnership’s operations. The Partnership reimburses RELP for technical andadministrative services at cost. During the years ended December 31, 2007and 2006, the Partnership incurred technical services and administrative coststotaling $895,178 and $586,936, respectively. Of these amounts $754,097 and$571,112 represent technical services costs capitalized as project costs, and$141,081 and $15,824 represent administrative costs included as general andadministrative expenses. At December 31, 2007 and 2006, the Partnershipowed RELP $140,694 and $567,232, respectively, for technical and administrativeservices.

 

RELPprocesses joint interest billings and revenue payments on behalf of thePartnership. At December 31, 2007, Reef owed the Partnership $79,002 fornet revenues processed in excess of joint interest charges. This amount hasbeen netted against the $140,694 balance due RELP for technical andadministrative services. At December 31, 2006, the Partnership owed RELP$2,569,370 in connection with drilling and operating invoices in excess ofrevenues processed by RELP.

 

Accountspayable to affiliates as of December 31, 2007 and 2006 also includes$744,789 and $804,789, respectively, for the unpaid portion of the 15%management fee due Reef for

 

F-10

----

 

Reef Global Energy VI, L.P.

Notes to Financial Statements (continued)

 

organizationand offering costs, including sales commissions. The management fee is payablein two parts. Reef initially received an amount not to exceed 13.5% to recoveractual commissions and organization and offering costs. The $804,789 due Reefat December 31, 2006 represents the portion of the management fee inexcess of actual commissions and organization and offering costs, and will bepaid to Reef from the oil and gas cash flows available for partnerdistributions, at a rate not to exceed $1 million per year. During 2007 thePartnership reimbursed $60,000 of this amount to Reef, leaving a payablebalance of $744,789 at December 31, 2007. The Partnership is reimbursingthis amount to Reef at a rate of $50,000 per month beginning in January 2008.As such, $600,000 of this amount has been classified as a current liability,and the remaining $144,789 has been classified as a long term liability toaffiliates at December 31, 2007.

 

Reefentered into, and allowed to expire, three agreements (the “CMI Agreements”) withChallenger 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 Agreementsprovided 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. Two of these agreements expired in January 2006, andone expired in November 2006.

 

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

 

Prospectsapproved for acquisition by Reef under these agreements could be assigned tothis Partnership as well as other limited partnerships formed as part of theProgram. Each partnership formed as a part of the Program paid Reef, on a prorata basis, a portion of the fees paid by Reef under these agreements duringthe term of the Program. Total reimbursements to Reef by the partnershipsformed as a part of this Program were equal to the actual fees paid by Reefunder these agreements. The Partnership made an estimated reimbursement paymentof $287,500 to Reef during 2005. The Partnership recorded a receivable of$46,842 due from Reef at December 31, 2006 in connection with the pro rataallocation of fees paid by Reef under these agreements. The net payment amountof $240,658 has been capitalized as geological and geophysical costs inaccordance with the full cost method of accounting for oil and natural gasproperties.

 

Ifan affiliate of Reef serves as operator of a Partnership prospect, thenoperator fees will be payable to the affiliate. Under such circumstances, suchaffiliate will receive fees at the competitive rate in the geographical areawhere the prospect is located during the drilling and production phase ofoperations. These fees are charged as a monthly fee per well as agreed to in anoperating agreement signed by the Partnership and other participating workinginterest owners in the well. During the years ended December 31, 2007 and2006, and the period from inception (July 18, 2005) to December 31,2005, the Partnership paid drilling overhead fees totaling

 

F-11

----

 

Reef Global Energy VI, L.P.

Notes to Financial Statements (continued)

 

$2,149,$8,791 and $3,463 to RELP and its predecessor, OREI, Inc. During the yearended December 31, 2007, the Partnership paid operating overhead feestotaling $1,513 to RELP.

 

**4.Prepaid Drilling Costs**

 

AtDecember 31, 2006, the Partnership had prepaid $2,161,047 in connectionwith intangible drilling costs to be incurred on wells in which the Partnershipowns a working interest and which were drilling at December 31, 2006 ordrilled during the first quarter of 2007.

 

**5.Major Customers**

 

The Partnership sells crude oil and naturalgas on credit terms to refiners, pipelines, marketers, and other users ofpetroleum commodities. Revenues are received directly from these parties or, incertain circumstances, paid to the operator of the property who disburses tothe Partnership its percentage share of the revenues. During the year ended December 31,2007, one marketer and two operators accounted for 53.9%, 23.0%, and 10.4% ofthe Partnership’s oil and natural gas revenues, respectively. During the yearended December 31, 2006, five operators accounted for 31.9%, 14.9%, 14.2%,11.5%, and 11.2% of the Partnership’s oil and natural gas revenues. ThePartnership had no oil and natural gas production and, therefore, had nocustomers during 2005. Due to the competitive nature of the market for purchaseof crude oil and natural gas, the Partnership does not believe that the loss ofany particular purchaser would have a material adverse impact on thePartnership.

 

**6. Commitments and Contingencies**

 

ThePartnership is not currently involved in any legal proceedings.

 

**7.  Partnership Equity**

 

Salesof Partnership units began on July 8, 2005. Proceeds received were placedinto an interest bearing escrow account until the Partnership reached theminimum subscription level of 40 units. The Partnership was formed on July 18,2005, and the sale of Partnership units was closed on October 31, 2005.The Partnership raised $35,797,434 from the sale of 1,431.897 Partnership unitsto investor partners. Reef purchased 75.363 units (5%) for $1,601,464. Reefalso contributes 1% of all leasehold, drilling, and completion costs whenincurred, in addition to paying its pro rata share (4.95%) of the leasehold,drilling, and completion costs paid by the Partnership. In connection with thisobligation, Reef paid $160,524, $113,853, and $7,263 during the years ended December 31,2007 and 2006, and the period from inception (July 18, 2005) to December 31,2005, respectively, and has accrued an additional $15,098 at December 31,2007, which was paid to the Partnership during the first quarter of 2008.

 

Allunits, except those purchased by Reef, paid a 15% management fee to Reef to payfor Partnership organization and offering costs, including sales commissions.These costs totaled $5,369,615, leaving net capital contributions of$32,326,021 available for Partnership oil & gas

 

F-12

----

 

Reef Global Energy VI, L.P.

Notes to Financial Statements (continued)

 

activities.Of the $5,369,615 management fee, offering costs were $5,319,615 andorganization costs were $50,000. The Partnership has drilled forty-five wellsat December 31, 2007 and has four wells where drilling is in progress atDecember 31, 2007. The Partnership will substantially complete its drillingoperations during the first quarter of 2008.

 

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

 

**8.Partnership Prospects**

 

Asof December 31, 2007, the Partnership owns working interests in twentydevelopmental prospects and fourteen exploratory prospects, upon which a totalof forty-five wells have been drilled and four wells are drilling. All four ofthe wells drilling at December 31, 2007 completed drilling operationsduring the first quarter of 2008. Three of these wells, located on thePartnership’s Sand Dunes prospect, are currently shut-in (see Note 9), and thefourth well, located on another prospect, is undergoing completion operationsand is expected to begin production operations during the second quarter of2008.

 

ThePartnership has drilled fifteen successful developmental wells, including thewell currently being completed, and twelve unsuccessful developmental wells.The Partnership has drilled seven successful exploratory wells and sevenunsuccessful exploratory wells. One of the successful developmental wells andthree of the successful exploratory wells have ceased production. ThePartnership has also participated in the drilling of eight wells on its SandDunes prospect (see Note 9). Five wells located on the Partnership’s Sand Dunesprospect in Eddy County, New Mexico completed drilling operations during 2007,and three of the five tested for the presence of hydrocarbons in December 2007.Also, in December 2007, the Partnership began drilling three additionalwells on the Partnership’s Sand Dunes prospect, and completed drilling duringthe first quarter of 2008. The Partnership has expended substantially all ofits available capital in the drilling of these wells.

 

Theunproved properties owned by the Partnership at December 31, 2007 consistof un-drilled leasehold interests (11 potential drilling locations) in the SandDunes prospect. The Partnership does not have available capital to drill thesepotential locations. The Partnership may sell all or a part of these leaseholdinterests to third parties or other Partnerships managed by Reef. However, thePartnership is permitted to borrow funds or utilize cash flows from existingproductive properties in order to conduct future developmental drilling on thisprospect. Partner approval would not need to be obtained for borrowingactivity, as the estimated additional cost is not in excess of 25% of thePartnership’s original aggregate capital contributions. Until such time as theproductive capability of the eight wells already drilled can be fully analyzed(see Note 9), it is unknown whether the Partnership will drill additional wellson the Sand Dunes prospect or sell all or a portion of the acreage. Theestimated cost to the Partnership of participating in future drillingoperations at its current working interest ownership is approximately$150,000-$200,000 per location.

 

F-13

----

 

Reef GlobalEnergy VI, L.P.

Notes to Financial Statements (continued)

 

**9. Subsequent Events**

 

The Partnership has participated in the drilling of eight wells on theSand Dunes prospect located in Eddy County, New Mexico, five of which weredrilled during 2007 and three of which completed drilling operations during thefirst quarter of 2008. Three of the five Sand Dunes prospect wells drilled in2007 tested for the presence of hydrocarbons during short-term testing in2007.  The remaining five wells were completedand underwent short-term testing during the first quarter of 2008. All eightwells tested for the presence of hydrocarbons.

 

Of the eight Sand Dunes prospect wells, four wells are undergoingextended testing and evaluation in order to determine their potentialcommercial productivity. The Partnership estimates that it may take between 90and 120 days from the date of this Annual Report to finish the evaluationprocess. Following initial testing which confirmed the presence of oil andnatural gas, the remaining four Sand Dunes prospect wells were temporarily shutin due to the high cost associated with salt water disposal and generatorrental.  

 

Currently, generators have been rented to power the four producing SandDunes prospect wells undergoing the evaluation process, and salt water producedis being trucked off-site by an independent vendor. In order to reduce overallcosts, installation of electric service to the well-site locations isproceeding, and a more cost effective method of salt water disposal is beingexplored. To date, RELP, the operator of these wells, has been unsuccessful inlocating a long-term economic solution for disposing of produced salt water;however, RELP is currently evaluating its options for salt water disposal, andestimates that it will be at least 90 to 120 days from the date of this AnnualReport for the Sand Dunes prospect to have electricity and efficient salt waterdisposal capability in place.

 

In addition to the three Sand Dunes prospect wells drilling at December 31,2007, a fourth well on a different prospect was drilling at December 31,2007. The well finished drilling operations during February 2008, iscurrently being completed, and is expected to begin production during thesecond quarter of 2008.

 

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

 

**Capitalized Costs**

 

The following table presents the Partnership’s aggregate capitalizedcosts relating to oil and gas activities at the end of each of the years indicated:

 

F-14

----

** **

Reef Global Energy VI, L.P.

Notes to Financial Statements (continued)

** **
| **December 31,**                                 | ** ** | **2007**       | ** **     | **2006**       | ** ** | **2005**       | ** ** |
|-------------------------------------------------------|------------|----------------|----------------|----------------|------------|----------------|------------|
| ** **                                            | ** ** | ** **     | ** **     | ** **     | ** ** | ** **     | ** ** |
| **Oil and  natural gas properties:**                  | ** ** | ** **     | ** **     | ** **     | ** ** | ** **     | ** ** |
| Unproved properties                                   | ** ** | $              | 172,930        |           | $          | 2,030,077      |       | $ | — | ** ** |
| Proved properties                                     |       | 31,992,182     |           | 16,815,171     |       | 3,503,692      |       |
| ** **                                            | ** ** | **32,165,112** | ** **     | **18,845,248** | ** ** | **3,503,692**  | ** ** |
| Less:                                                 |       |           |           |           |       |           |       |
| Accumulated depreciation, depletion and  amortization |       | (3,020,952     | )              | (552,848       | )          | —         |       |
| Property impairment                                   |       | (17,611,986    | )              | (8,145,740     | )          | —         |       |
| **Total**                                             | ** ** | **$**          | **11,532,174** | ** **     | **$**      | **10,146,660** | ** ** | **$** | **3,503,692** | ** ** |

 

**Costs Incurred**

 

Thefollowing table sets forth costs incurred in oil and gas exploration anddevelopment activities during the years ended December 31, 2007 and 2006,and the period from inception (July 18, 2005) to December 31, 2005:

 
| ** **                           | ** ** | **2007**   | ** **     | **2006**   | ** ** | **2005**       | ** ** |
|--------------------------------------|------------|------------|----------------|------------|------------|----------------|------------|
| ** **                           | ** ** | ** ** | ** **     | ** ** | ** ** | ** **     | ** ** |
| **Oil and  natural gas properties:** | ** ** | ** ** | ** **     | ** ** | ** ** | ** **     | ** ** |
| Exploration                          | ** ** | $          | 1,980,078      |       | $          | 7,171,639      |       | $ | 2,024,822 | ** ** |
| Development                          |       | 11,339,786 |           | 8,169,917  |       | 1,478,870      |       |
| **Total**                            | ** ** | **$**      | **13,319,864** | ** ** | **$**      | **15,341,556** | ** ** | **$** | **3,503,692** | ** ** |

 

**Results of Operations**

 

**The following table sets forth results of operationsfrom oil and gas producing activities for the years ended December 31,2007 and 2006. There were no oil and gas producing activities during the periodfrom inception (July 18, 2005) to December 31, 2005.**

** **
| ** **                               | ** ** | **2007**   | ** **     | **2006**   | ** ** |
|------------------------------------------|------------|------------|----------------|------------|------------|
| ** **                               | ** ** | ** ** | ** **     | ** ** | ** ** |
| **Oil and  gas producing activities:**   |       |       |           |       |       |
| Oil sales                                | ** ** | $          | 1,484,188      |       | $          | 138,576 |   |
| Natural gas sales                        |       | 2,727,482  |           | 413,996    |       |
| Production expenses                      |       | (691,698   | )              | (95,060    | )          |
| Accretion of asset retirement obligation |       | (34,416    | )              | (2,568     | )          |
| Depreciation, depletion and amortization |       | (2,468,104 | )              | (552,848   | )          |
| Property impairment expense              |       | (9,466,246 | )              | (8,145,740 | )          |
| **Results  of producing activities**     | ** ** | **$**      | **(8,448,794** | **)**      | **$**      | **(8,243,644** | **)** |
| ** **                               | ** ** | ** ** | ** **     | ** ** | ** ** |
| Depletion rate per BOE                   | ** ** | $          | 29.98          |       | $          | 39.80 |   |

 

BOE = Barrels of Oil Equivalent (6 MCF equals 1 BOE)

 

F-15

----

 

Reef Global Energy VI, L.P.

Notes to Financial Statements (continued)

 

**Oil and Natural Gas Reserves**

 

The following information describes changes during the year andbalances of proved oil and natural gas reserves as of December 31, 2007,2006, and 2005. The definitions used are in accordance with applicableSecurities and Exchange Commission regulations.

 

Proved oil and natural gas reserves are the estimated quantities ofcrude oil, natural gas and natural gas liquids which geological and engineeringdata demonstrate with reasonable certainty to be recoverable in future yearsfrom known reservoirs under existing economic and operating conditions, thatis, prices and costs as of the date the estimate is made.

 

Prices include consideration of changes in existing prices provided bycontractual arrangements, but not escalations based upon future conditions.Additional development costs required to recover these proved reserves areestimated at approximately $362,920, $108,059 and $10,000 as of December 31,2007, 2006, and 2005, respectively. All of the Partnership’s reserves arelocated in the United States.

 
| ** **                                                    | ** ** | **Oil  (BBL) (1)** | ** ** | **Gas  (mcf)** | ** ** | **BOE (2)** | ** ** |
|---------------------------------------------------------------|------------|-------------------------|------------|----------------|------------|------------------|------------|
| Net proved reserves for properties owned by  the Partnership: |       |                    |       |           |       |             |       |
| Reserves at December 31, 2004                            |       | —                  |       | —         |       | —           |       |
| 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**      | ** ** |
|                                                          |       |                    |       |           |       |             |       |
| Revisions of previous estimates                               |       | (38,383                 | )          | (609,595       | )          | (139,982         | )          |
| New discoveries                                               |       | 176,125                 |       | 2,787,617      |       | 640,728          |       |
| Production                                                    |       | (20,002                 | )          | (373,949       | )          | (82,327          | )          |
| Reserves at December 31, 2007                            |       | 186,993                 |       | 3,401,162      |       | 753,853          |       |

 

----

**(1)****    **Oilincludes both oil and natural gas liquids

**(2)****    **BOE(barrels of oil equivalent) is calculated by converting 6 MCF of natural gas to1 BBL of oil. A BBL (barrel) of oil is one stock tank barrel, or 42 U.S.gallons liquid volume, of crude oil or other liquid hydrocarbons.

 

**Standardized Measure of Discounted Future NetCash Flows**

 

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

 

F-16

----

 

Reef Global Energy VI, L.P.

Notes to Financial Statements (continued)

 

Changes in the demand for oil and natural gas, inflation, and otherfactors make such estimates inherently imprecise and subject to substantialrevision. This table should not be construed to be an estimate of the currentmarket value of the Partnership’s proved reserves.

 
| **December 31,**                                     | ** ** | **2007**       | ** **     | **2006**      | ** ** | **2005**      | ** ** |
|-----------------------------------------------------------|------------|----------------|----------------|---------------|------------|---------------|------------|
| Oil and natural gas properties owned by the  Partnership: |       |           |           |          |       |          |       |
| Future cash inflows                                       | ** ** | $              | 40,242,582     |          | $          | 12,047,691    |       | $ | 358,445 | ** ** |
| Future production costs                                   |       | (8,306,872     | )              | (2,245,260    | )          | (44,605       | )          |
| Future development costs                                  |       | (362,920       | )              | (108,059      | )          | (10,000       | )          |
| Future net cash flows                                     | ** ** | **31,572,790** | ** **     | **9,694,372** | ** ** | **303,840**   | ** ** |
| Effect of discounting net cash flows at 10%               |       | (8,231,682     | )              | (1,577,789    | )          | (36,198       | )          |
| Discounted future net cash flows                          | ** ** | **$**          | **23,341,108** | ** **    | **$**      | **8,116,583** | ** ** | **$** | **267,642** | ** ** |

 

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

 
| **December 31,**                                     | ** ** | **2007**   | ** **     | **2006**   | ** ** | **2005**      | ** ** |
|-----------------------------------------------------------|------------|------------|----------------|------------|------------|---------------|------------|
| Oil and natural gas properties owned by the  Partnership: | ** ** | ** ** | ** **     | ** ** | ** ** | ** **    | ** ** |
| Standardized measure at beginning of period               |       | $          | 8,116,583      |       | $          | 267,642       |       | $ | — |   |
| Extensions and discoveries                                |       | 20,763,274 |           | 8,510,878  |       | 267,642       |       |
| Net change in sales price, net of  production costs       |       | 2,380,708  |           | (113,037   | )          | —        |       |
| Revisions of quantity estimates                           |       | (3,752,984 | )              | (76,130    | )          | —        |       |
| Net changes in estimated future development  costs        |       | 5,914      |           | —     |       | —        |       |
| Changes in production timing rates                        |       | (1,498,489 | )              | (44,590    | )          | —        |       |
| Accretion of discount                                     |       | 811,658    |           | 26,764     |       | —        |       |
| Sales net of production costs                             |       | (3,485,556 | )              | (454,944   | )          | —        |       |
| Net increase                                              |       | 15,224,525 |           | 7,848,741  |       | 267,642       |       |
| Standardized measure at end of year                       | ** ** | **$**      | **23,341,108** | ** ** | **$**      | **8,116,583** | ** ** | **$** | **267,642** | ** ** |

 

**11. Supplementary Quarterly Financial Data(Unaudited)**

** **
| **Period from Inception (July  18, 2005) to December 31, 2005** | ** ** | **3rd Qtr** | ** ** | **4th Qtr** | ** ** | **Totals** | ** ** |
|---------------------------------------------------------------------------------------------------------|------------|------------------|------------|------------------|------------|------------|------------|
| Total oil and natural 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      |       |
|                                                                                                         |            |                  |            |                  |            |            |            |  |  |  |

 

F-17

----

 

Reef Global Energy VI, L.P.

Notes to Financial Statements (continued)

 
| **Year ended December 31,  2006**     | ** ** | **1st Qtr** | ** ** | **2nd Qtr** | ** ** | **3rd Qtr** | ** ** | **4th Qtr** | ** ** | **Totals** | ** ** |
|------------------------------------------------------|------------|------------------|------------|------------------|------------|------------------|------------|------------------|------------|------------|------------|
| Total oil and gas natural 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 loss from operationsincludes property impairment expense of $1,537,239. The fourth quarter lossfrom operations includes property impairment expense of $6,608,501.

** **
| **Year ended December 31,  2007**     | ** ** | **1st Qtr** | ** ** | **2nd Qtr** | ** ** | **3rd Qtr** | ** ** | **4th Qtr** | ** ** | **Totals** | ** ** |
|------------------------------------------------------|------------|------------------|------------|------------------|------------|------------------|------------|------------------|------------|------------|------------|
| Total oil and natural gas sales                      | ** ** | **$**            | 509,731    |             | **$**      | 862,040          |       | **$**            | 1,151,705  |       | **$**      | 1,688,194 |   | **$** | 4,211,670 | ** ** |
| Income (loss) from operations                        |       | (6,669,195       | )          | (3,261,872       | )          | 353,342          |       | 901,682          |       | (8,676,043 | )          |
| Net income (loss)                                    |       | (6,511,990       | )          | (3,143,327       | )          | 427,035          |       | 939,718          |       | (8,288,564 | )          |
| Net income (loss) per managing general  partner unit |       | (4,469.70        | )          | (1,634.30        | )          | 1,513.19         |       | 2,513.50         |       | (2,077.31  | )          |
| Net income (loss) per general partner unit           |       | (4,312.56        | )          | (2,109.20        | )          | 218.59           |       | 523.98           |       | (5,679.19  | )          |
| Net income (loss) per limited partner unit           |       | (4,312.56        | )          | (2,109.20        | )          | 218.59           |       | 523.98           |       | (5,679.19  | )          |
|                                                      |            |                  |            |                  |            |                  |            |                  |            |            |            |  |  |  |  |  |

 

The first quarter loss from operationsincludes property impairment expense of $6,333,132. The second quarter lossfrom operations includes property impairment expense of $3,133,114.

 

F-18

----

 

**EXHIBIT INDEX**

** **
| 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 Annual Report on Form 10-K of Reef Global Energy Ventures as  filed with the SEC on March 5, 2002). |
|       |                                                                                                                                                                                                                                                                                 |
| 23.2       | Consent of Gleason Engineering.                                                                                                                                                                                                                                                      |
| ** ** | ** **                                                                                                                                                                                                                                                                           |
| 31.1       | Certification of Principal Executive Officer pursuant to  Rule 13a-14(a) under the Securities Exchange Act of 1934.                                                                                                                                                        |
| ** ** | ** **                                                                                                                                                                                                                                                                           |
| 31.2       | Certification of Principal Financial Officer pursuant to  Rule 13a-14(a) under the Securities Exchange Act of 1934.                                                                                                                                                        |
| ** ** | ** **                                                                                                                                                                                                                                                                           |
| 32.1       | Certification of Principal Executive Officer pursuant to 18 U.S.C.  §1350.                                                                                                                                                                                                      |
| ** ** | ** **                                                                                                                                                                                                                                                                           |
| 32.2       | Certification of Principal Financial Officer pursuant to 18 U.S.C.  §1350.                                                                                                                                                                                                      |
| ** ** | ** **                                                                                                                                                                                                                                                                           |

 

----