##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 000-50394
 Rio Vista Energy Partners L.P.
  Delaware
    
    20-0153267(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)1313 E. Alton Gloor Blvd., Suite J, Brownsville, Texas
    
    78526(Address of Principal Executive Offices)
    
    (Zip Code)
 (956) 831-0886
 þ o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company þ
 o þ




---



##### 



RIO VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 TABLE OF CONTENTS
 PAGE NO.PART I FINANCIAL INFORMATIONITEM1. Financial StatementsReport of Independent Registered Public Accounting Firm
    
    
    3Consolidated Balance Sheets as of December 31, 2007 and
June 30, 2008 (unaudited)
    
    
    4-5Unaudited Consolidated Statements of Operations for the three months and
six months ended June 30, 2007 and 2008
    
    
    6Unaudited Consolidated Statement of Partners Capital for the six months
ended June 30, 2008
    
    
    7Unaudited Consolidated Statements of Cash Flows for the six months
ended June 30, 2007 and 2008
    
    
    8Notes to Consolidated Financial Statements (unaudited)
    
    
    9-302. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    32-453. Quantitative and Qualitative Disclosures About Market Risk
    
    
    454T. Controls and Procedures
    
    
    45PART II OTHER INFORMATION1. Legal Proceedings
    
    
    471A. Risk Factors
    
    
    472. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    473. Defaults Upon Senior Securities
    
    
    474. Submission of Matters to a Vote of Security Holders
    
    
    475. Other Information
    
    
    476. Exhibits
    
    
    48Signatures
    
    
    49Exhibit 15Exhibit 31.1Exhibit 31.2Exhibit 32
   2




---



##### Table of Contents



Part I
 FINANCIAL INFORMATION
 
 Item 1.
 
 Report of Independent Registered Public Accounting Firm
 
      /s/ BURTON McCUMBER & CORTEZ, L.L.P. 
  3




---



##### Table of Contents



Rio Vista Energy Partners L.P. and Subsidiaries
 
 CONSOLIDATED BALANCE SHEETS
 ASSETS
 December, 31
    
    
    June 30,2007
    
    
    2008(Unaudited)Current AssetsCash
    
    $
    3,450,000
    
    
    $
    577,000Restricted cash
    
    
    26,000
    
    
    
    26,000Trade accounts receivable (less allowance for
doubtful accounts of $0 at December 31, 2007
and June 30, 2008)
    
    
    1,446,000
    
    
    
    2,001,000Prepaid expenses and other current assets
    
    
    453,000
    
    
    
    405,000Total current assets
    
    
    5,375,000
    
    
    
    3,009,000Oil and gas properties and related equipment
(successful efforts method)  net
    
    
    26,197,000
    
    
    
    28,112,000Property,
plant and equipment  net
    
    
    12,762,000
    
    
    
    12,716,000Goodwill
    
    
    5,121,000
    
    
    
    5,121,000Total assets
    
    $
    49,455,000
    
    
    $
    48,958,000
   4




---



##### Table of Contents



Rio Vista Energy Partners L.P. and Subsidiaries
 CONSOLIDATED BALANCE SHEETS
 LIABILITIES AND PARTNERS CAPITAL
 December, 31
    
    
    June 30,2007
    
    
    2008(Unaudited)Current LiabilitiesCurrent maturities of long-term debt
    
    $
    3,361,000
    
    
    $
    24,158,000Short-term debt
    
    
    5,493,000
    
    
    
    5,844,000Due to Penn Octane Corporation, net
    
    
    347,000
    
    
    
    1,210,000Accounts payable
    
    
    2,101,000
    
    
    
    4,147,000Taxes payable
    
    
    618,000
    
    
    
    768,000Accrued liabilities
    
    
    1,585,000
    
    
    
    1,637,000Total current liabilities
    
    
    13,505,000
    
    
    
    37,764,000Commitments and contingencies
    
    
    
    
    
    
    Long-term debt, less current maturities
    
    
    21,250,000
    
    
    
    250,000Deferred income taxes
    
    
    3,238,000
    
    
    
    3,028,000Partners CapitalCommon units
    
    
    11,233,000
    
    
    
    7,758,000General Partners equity
    
    
    229,000
    
    
    
    158,000Total partners capital
    
    
    11,462,000
    
    
    
    7,916,000Total liabilities and partners capital
    
    $
    49,455,000
    
    
    $
    48,958,000
   5




---



##### Table of Contents



Rio Vista Energy Partners L.P. and Subsidiaries
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2007
    
    
    2008
    
    
    2007
    
    
    2008Revenues
    
    $
    436,000
    
    
    $
    4,010,000
    
    
    $
    1,115,000
    
    
    $
    7,104,000Cost of goods sold
    
    
    402,000
    
    
    
    3,271,000
    
    
    
    796,000
    
    
    
    5,684,000Gross profit
    
    
    34,000
    
    
    
    739,000
    
    
    
    319,000
    
    
    
    1,420,000Selling, general and administrative expenses and otherLegal and professional fees
    
    
    235,000
    
    
    
    632,000
    
    
    
    522,000
    
    
    
    1,171,000Salaries and payroll related expenses
    
    
    160,000
    
    
    
    309,000
    
    
    
    292,000
    
    
    
    863,000Other
    
    
    297,000
    
    
    
    263,000
    
    
    
    597,000
    
    
    
    1,042,000692,000
    
    
    
    1,204,000
    
    
    
    1,411,000
    
    
    
    3,076,000Operating loss from operations
    
    
    (658,000
    )
    
    
    (465,000
    )
    
    
    (1,092,000
    )
    
    
    (1,656,000
    )Other income (expense)Interest expense
    
    
    (26,000
    )
    
    
    (967,000
    )
    
    
    (51,000
    )
    
    
    (1,843,000
    )Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,000Loss from operations before taxes
    
    
    (684,000
    )
    
    
    (1,432,000
    )
    
    
    (1,143,000
    )
    
    
    (3,492,000
    )Provision (benefit) for income taxes
    
    
    13,000
    
    
    
    (102,000
    )
    
    
    24,000
    
    
    
    (97,000
    )Net loss from continuing operations
    
    $
    (697,000
    )
    
    $
    (1,330,000
    )
    
    $
    (1,167,000
    )
    
    $
    (3,395,000
    )Loss on sale of discontinued operations
    
    
    
    
    
    
    343,000
    
    
    
    
    
    
    
    343,000Net loss
    
    $
    (697,000
    )
    
    $
    (1,673,000
    )
    
    $
    (1,167,000
    )
    
    $
    (3,738,000
    )Net loss allocable to the partners
    
    $
    (697,000
    )
    
    $
    (1,673,000
    )
    
    $
    (1,167,000
    )
    
    $
    (3,738,000
    )Less General Partners interest in net loss
    
    
    14,000
    
    
    
    33,000
    
    
    
    23,000
    
    
    
    74,000Net loss allocable to the common units
    
    $
    (683,000
    )
    
    $
    (1,640,000
    )
    
    $
    (1,144,000
    )
    
    $
    (3,664,000
    )Net loss from continuing operations per common unit
    
    $
    (0.36
    )
    
    $
    (0.52
    )
    
    $
    (0.60
    )
    
    $
    (1.34
    )Net loss from discontinued operations per common unit
    
    
    
    
    
    
    (0.13
    )
    
    
    
    
    
    
    (0.13
    )Net loss per common unit
    
    $
    (0.36
    )
    
    $
    (0.65
    )
    
    $
    (0.60
    )
    
    $
    (1.47
    )Weighted average common units outstanding
    
    
    1,910,656
    
    
    
    2,515,518
    
    
    
    1,910,656
    
    
    
    2,484,218
   6




---



##### Table of Contents



Rio Vista Energy Partners L.P. and Subsidiaries
 
 CONSOLIDATED STATEMENT OF PARTNERS CAPITAL
 (Unaudited)
 TotalCommon Units
    
    
    General
    
    
    PartnersUnits
    
    
    Amount
    
    
    Partner
    
    
    CapitalBalance as of December 31, 2007
    
    
    2,429,206
    
    
    $
    11,233,000
    
    
    $
    229,000
    
    
    $
    11,462,000Net loss
    
    
    
    
    
    
    (3,664,000
    )
    
    
    (74,000
    )
    
    
    (3,738,000
    )Exercise of options for cash
    
    
    61,875
    
    
    
    759,000
    
    
    
    15,000
    
    
    
    774,000Exercise of options in exchange for
severance package
    
    
    15,625
    
    
    

    217,000
    
    
    
    5,000
    
    
    
    222,000Units issued as bonus compensation
    
    
    8,812
    
    
    

    120,000
    
    
    
    3,000
    
    
    
    123,000Registration costs
    
    
    
    
    
    



    (205,000
    )
    
    
    (5,000
    )
    
    
    (210,000
    )Cash distribution to partners
    
    
    
    
    
    

    (1,236,000
    )
    
    
    (25,000
    )
    
    
    (1,261,000
    )Contribution from the General Partner
    
    
    
    
    
    




    116,000
    
    
    
    2,000
    
    
    
    118,000Unit-based compensation
    
    
    
    
    
    

    359,000
    
    
    
    7,000
    
    
    
    366,000Other
    
    
    
    
    
    
    59,000
    
    
    
    1,000
    
    
    
    60,000Balance as of June 30, 2008
    
    
    2,515,518
    
    
    $
    7,758,000
    
    
    $
    158,000
    
    
    $
    7,916,000
   7




---



##### Table of Contents



Rio Vista Energy Partners L.P. and Subsidiaries
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (1,167,000
    )
    
    $
    (3,738,000
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation, depletion and amortization
    
    
    287,000
    
    
    
    946,000Unit-based payment expense
    
    
    75,000
    
    
    
    484,000Amortization of loan discount
    
    
    
    
    
    
    36,000Beneficial conversion amortization
    
    
    
    
    
    
    18,000Loss on sale of discontinued operations
    
    
    
    
    
    
    343,000Loss on sale of assets
    
    
    
    
    
    
    20,000Changes in current assets and liabilities:Trade accounts receivable
    
    
    161,000
    
    
    
    (555,000
    )Prepaid and other current assets
    
    
    (494,000
    )
    
    
    Trade accounts payable
    
    
    256,000
    
    
    
    2,046,000Due to Penn Octane Corporation, net
    
    
    2,424,000
    
    
    
    971,000Accrued liabilities and other accounts payable
    
    
    313,000
    
    
    
    (272,000
    )U.S. and foreign taxes payable
    
    
    26,000
    
    
    
    150,000Net cash provided by operating activities
    
    
    1,881,000
    
    
    
    449,000Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (3,020,000
    )Other non-current assets
    
    
    (3,000
    )
    
    
    Purchase
price adjustments  Oklahoma assets
    
    
    
    
    
    
    83,000Net cash used in investing activities
    
    
    (3,000
    )
    
    
    (2,937,000
    )Cash flows from financing activities:Loan origination fees related to RZB loan agreement
    
    
    (100,000
    )
    
    
    Proceeds from exercise of options
    
    
    
    
    
    
    774,000Registration costs
    
    
    
    
    
    
    (210,000
    )Cash distributions to partners
    
    
    (975,000
    )
    
    
    (1,261,000
    )Reduction of debt
    
    
    
    
    
    
    (381,000
    )Issuance of debt
    
    
    
    
    
    
    575,000Capital contribution
    
    
    
    
    
    
    118,000Net cash used in financing activities
    
    
    (1,075,000
    )
    
    
    (385,000
    )Net decrease in cash
    
    
    803,000
    
    
    
    (2,873,000
    )Cash at beginning of period
    
    
    3,896,000
    
    
    
    3,450,000Cash at end of period
    
    $
    4,699,000
    
    
    $
    577,000Supplemental disclosures of cash flow information:Cash paid during the year for:Interest
    
    $
    60,000
    
    
    $
    1,908,000U.S. and foreign taxes
    
    $
    
    
    
    $
    Supplemental disclosures of noncash transactions:Units and warrants issued and other
    
    $
    75,000
    
    
    $
    345,000Unit-based compensation
    
    $
    
    
    
    $
    413,000Exchange of assets for note reduction
    
    $
    
    
    
    $
    100,000
   8




---



##### Table of Contents



RIO
VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE
A  ORGANIZATION
 Liquidity and
Capital Resources 
Distributions of Available Cash)
      9




---



##### Table of Contents



RIO
VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE
A  ORGANIZATION  Continued
 Basis of Presentation
     NOTE
B  UNIT-BASED PAYMENT
   10




---



##### Table of Contents



RIO
VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE B  UNIT-BASED PAYMENT  Continued
  NOTE C   LOSS PER COMMON UNIT
  For the three months ended June 30, 2007Loss
    
    
    Units
    
    
    Per-Unit(Numerator)
    
    
    (Denominator)
    
    
    AmountNet loss from continuing operations
available to the common units
    
    $
    (683,000
    )Basic EPSNet loss available to the common units
    
    
    (683,000
    )
    
    
    1,910,656
    
    
    $
    (0.36
    )Effect of Dilutive SecuritiesWarrantsDiluted EPSNet loss available to the common units
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
  11




---



##### Table of Contents



RIO
VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE C   LOSS PER COMMON UNIT  Continued
 For the three months ended June 30, 2008Loss
    
    
    Units
    
    
    Per-Unit(Numerator)
    
    
    (Denominator)
    
    
    AmountNet loss from continuing operations
available to the common units
    
    $
    (1,303,000
    )Basic EPSNet loss available to the common units
    
    
    (1,303,000
    )
    
    
    2,515,518
    
    
    $
    (0.52
    )Effect of Dilutive SecuritiesWarrants
    
    
    
    
    
    
    Diluted EPSNet loss available to the common units
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
 For the six months ended June 30, 2007Loss
    
    
    Units
    
    
    Per-Unit(Numerator)
    
    
    (Denominator)
    
    
    AmountNet loss from continuing operations
available to the common units
    
    $
    (1,144,000
    )Basic EPSNet loss available to the common units
    
    
    (1,144,000
    )
    
    
    1,910,656
    
    
    $
    (0.60
    )Effect of Dilutive SecuritiesWarrantsDiluted EPSNet loss available to the common units
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
 For the six months ended June 30, 2008Loss
    
    
    Units
    
    
    Per-Unit(Numerator)
    
    
    (Denominator)
    
    
    AmountNet loss from continuing operations
available to the common units
    
    $
    (3,327,000
    )Basic EPSNet loss available to the common units
    
    
    (3,327,000
    )
    
    
    2,484,218
    
    
    $
    (1.34
    )Effect of Dilutive SecuritiesWarrants
    
    
    
    
    
    
    Diluted EPSNet loss available to the common units
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
  12




---



##### Table of Contents



RIO
VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE D  A FORMER OFFICER OF PENN OCTANE NOTE
  NOTE E  PROPERTY, PLANT AND EQUIPMENT
  December 31,
    
    
    June 30,2007
    
    
    2008Oklahoma:Pipelines and equipment
    
    $
    6,756,000
    
    
    $
    7,230,000Regional:Land
    
    
    237,000
    
    
    
    237,000Terminal and improvements
    
    
    3,825,000
    
    
    
    4,029,000Automotive equipment
    
    
    2,438,000
    
    
    
    2,438,0006,500,000
    
    
    
    6,704,00013,256,000
    
    
    
    13,934,000Less: accumulated depreciation and amortization
    
    
    (494,000
    )
    
    
    (1,218,000
    )$
    12,762,000
    
    
    $
    12,716,000
    13




---



##### Table of Contents



RIO VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE F  OIL AND GAS PROPERTIES AND RELATED EQUIPMENT, NET
 Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development Activities
  Development costs of leased properties:
    
    $
    2,054,000Capitalized pipeline infrastructure costs:
    
    $
    424,000
   NOTE G  DEBT OBLIGATIONS
  December 31,
    
    
    June 30,2007
    
    
    2008RZB Note
    
    $
    5,000,000
    
    
    $
    5,000,000Moores Note
    
    
    493,000
    
    
    
    300,000Richter Note Payable (see note D)
    
    
    
    
    
    
    544,000$
    5,493,000
    
    
    $
    5,844,000Long-term debt obligations were as follows:TCW Credit Facility
    
    $
    23,689,000
    
    
    $
    23,700,000Sellers Note  Regional
    
    
    922,000
    
    
    
    708,00024,611,000
    
    
    
    24,408,000Less current portion
    
    
    3,361,000
    
    
    
    24,158,000$
    21,250,000
    
    
    $
    250,000
 RZB Amendment
   14




---



##### Table of Contents



RIO
VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE G  DEBT OBLIGATIONS  Continued
 Moores Note
  Sellers Note  Regional
  TCW Credit Facility
   15




---



##### Table of Contents



RIO VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE G  DEBT OBLIGATIONS  Continued
 TCW Credit Facility  Continued
    Beneficial Conversion Features
  NOTE H  PARTNERS CAPITAL
 Common Units
   16




---



##### Table of Contents



RIO VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE H  PARTNERS CAPITAL  Continued
 Private Placement of Common Units
       17




---



##### Table of Contents



RIO VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE H  PARTNERS CAPITAL  Continued
 Private Placement of Common Units  Continued
   Distributions of Available Cash
    18




---



##### Table of Contents



RIO VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE H  PARTNERS CAPITAL  Continued
 Distributions of Available Cash  Continued
  Amounts PaidQuarter
    
    Payment
    
    
    Distribution
    
    
    Common
    
    
    GeneralEnded
    
    Date
    
    
    Per Unit
    
    
    Units
    
    
    PartnerDecember 2007
    
    
    02/14/08
    
    
    $
    0.25
    
    
    $
    607,000
    
    
    $
    12,000March 2008
    
    
    05/16/08
    
    
    $
    0.25
    
    
    $
    629,000
    
    
    $
    13,000June 2008
    
    
    08/14/08
    
    
    $
    0.25
    
    
    $
    679,000
    
    
    $
    14,000
 NOTE I  UNIT WARRANTS
 Options and Warrants
  Equity Incentive Plan
     19




---



##### Table of Contents



RIO VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE J  COMMITMENTS AND CONTINGENCIES
 Legal Proceedings
   Lesly Camacho by Her Mother Dora Adame as Next Friend, et al. vs. Penn
Octane International LLC, et al th
 Faustino Izaguirre Gonzalez, et al. vs. Penn Octane Corporation,
et al. th
  20




---



##### Table of Contents



RIO VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE J  COMMITMENTS AND CONTINGENCIES   Continued
 Legal Proceedings   Continued
   Nolte v. Regional Enterprizes,
Inc. CV-0478-PJM).
    21




---



##### Table of Contents



RIO
VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE J  COMMITMENTS AND CONTINGENCIES   Continued
 Credit Facility, Letters of Credit and Other
      Leases
 Norfolk Southern Leases
   22




---



##### Table of Contents



RIO VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE J  COMMITMENTS AND CONTINGENCIES  Continued
 Leases  Continued
 Norfolk Southern Leases
   Consulting Agreement
  CEOcast
   23




---



##### Table of Contents



RIO VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE J  COMMITMENTS AND CONTINGENCIES  Continued
 Strategic Growth International
  Concentrations of Credit Risk
  Tax obligations of Penn Octane resulting from the Spin-Off
    24




---



##### Table of Contents



RIO VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE J  COMMITMENTS AND CONTINGENCIES   Continued
 Partnership Tax Treatment and Regional and MV Income Taxes
        25




---



##### Table of Contents



RIO
VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE
K  OIL AND GAS SALES CONTRACT
   Date
    
    Terms-
April 2008  October 2008:
    
    1.0 MMcf/d @ $6.35/Mcf (MV Pipeline production)-
April 2008  October 2008:
    
    0.5 MMcf/d @ $7.97/Mcf (Brooken Pipeline production)- November 2008  March 2009:
    
    1.0 MMcf/d @ $8.61/Mcf (MV Pipeline production)- November 2008  March 2009:
    
    0.5 MMcf/d @ $8.61/Mcf (Brooken Pipeline production)
  NOTE
L  RELATED PARTY TRANSACTIONS
   Sale
 Purchase of Rio Vista Common Units
   26




---



##### Table of Contents



RIO
VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE
L  RELATED PARTY TRANSACTIONS  Continued
 Loans To Rio Vista
    Omnibus Agreement
    27




---



##### Table of Contents



RIO VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE
L  RELATED PARTY TRANSACTIONS  Continued
 Omnibus Agreement  Continued
   NOTE M  401K
  NOTE
N  REALIZATION OF ASSETS
    28




---



##### Table of Contents



RIO VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE
N  REALIZATION OF ASSETS  Continued
     29




---



##### Table of Contents



RIO
VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE O    SEGMENT INFORMATION
    Transportation andTerminalling
    
    
    Oil and Gas
    
    
    TotalsRevenues from external customers
    
    
    2,153,000
    
    
    
    1,857,000
    
    
    
    4,010,000Interest expense
    
    
    293,000
    
    
    
    659,000
    
    
    
    952,000Interest income
    
    
    
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    258,000
    
    
    
    214,000
    
    
    
    472,000Segment gross profit
    
    
    545,000
    
    
    
    194,000
    
    
    
    739,000Segment assets
    
    
    12,297,000
    
    
    
    36,409,000
    
    
    
    48,706,000Segment liabilities
    
    
    4,378,000
    
    
    
    27,292,000
    
    
    
    31,670,000Expenditure for segment assets
    
    
    32,000
    
    
    
    2,137,000
    
    
    
    2,169,000Reconciliation to Consolidated Amounts:RevenuesTotal revenues for reportable segments
    
    
    
    
    
    
    
    
    
    $
    4,617,000Elimination of intersegment revenues
    
    
    
    
    
    
    
    
    
    
    (607,000
    )Total consolidated revenues
    
    
    
    
    
    
    
    
    
    $
    4,010,000Profit (loss)Total gross profit for reportable Segments
    
    
    
    
    
    
    
    
    
    
    739,000Other gross profit
    
    
    
    
    
    
    
    
    
    
    Selling, general and administrative expense
    
    
    
    
    
    
    
    
    
    
    (1,204,000
    )Interest and Fuel Products financing expense
    
    
    
    
    
    
    
    
    
    
    (967,000
    )Interest income
    
    
    
    
    
    
    
    
    
    
    Elimination of intersegment profits
    
    
    
    
    
    
    
    
    
    
    Unallocated amountsCorporate headquarters expense
    
    
    
    
    
    
    
    
    
    
    Other expenses
    
    
    
    
    
    
    
    
    
    
    Consolidated income from continuing
operations before income tax
    
    
    
    
    
    
    
    
    
    $
    (1,432,000
    )AssetsTotal assets for reportable segments
    
    
    
    
    
    
    
    
    
    
    48,706,000Other assets
    
    
    
    
    
    
    
    
    
    
    252,000Corporate headquarters
    
    
    
    
    
    
    
    
    
    
    Other unallocated amounts
    
    
    
    
    
    
    
    
    
    
    Total consolidated assets
    
    
    
    
    
    
    
    
    
    $
    48,958,000
  30




---



##### Table of Contents



RIO
VISTA ENERGY PARTNERS L.P. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE O    SEGMENT INFORMATION  Continued
  Transportation andTerminalling
    
    
    Oil and Gas
    
    
    TotalsRevenues from external customers
    
    
    4,260,000
    
    
    
    2,844,000
    
    
    
    7,104,000Interest expense
    
    
    514,000
    
    
    
    1,297,000
    
    
    
    1,811,000Interest income
    
    
    
    
    
    
    7,000
    
    
    
    7,000Depreciation and amortization
    
    
    540,000
    
    
    
    406,000
    
    
    
    946,000Segment gross profit
    
    
    901,000
    
    
    
    519,000
    
    
    
    1,420,000Segment assets
    
    
    12,297,000
    
    
    
    36,409,000
    
    
    
    48,706,000Segment liabilities
    
    
    4,378,000
    
    
    
    27,292,000
    
    
    
    31,670,000Expenditure for segment assets
    
    
    200,000
    
    
    
    2,820,000
    
    
    
    3,020,000Reconciliation to Consolidated Amounts:RevenuesTotal revenues for reportable segments
    
    
    
    
    
    
    
    
    
    $
    8,661,000Elimination of intersegment revenues
    
    
    
    
    
    
    
    
    
    
    (1,557,000
    )Total consolidated revenues
    
    
    
    
    
    
    
    
    
    $
    7,104,000Profit (loss)Total gross profit for reportable Segments
    
    
    
    
    
    
    
    
    
    
    1,420,000Other gross profit
    
    
    
    
    
    
    
    
    
    
    Selling, general and administrative expense
    
    
    
    
    
    
    
    
    
    
    (3,076,000
    )Interest and Fuel Products financing expense
    
    
    
    
    
    
    
    
    
    
    (1,843,000
    )Interest income
    
    
    
    
    
    
    
    
    
    
    7,000Elimination of intersegment profits
    
    
    
    
    
    
    
    
    
    
    Unallocated amountsCorporate headquarters expense
    
    
    
    
    
    
    
    
    
    
    Other expenses
    
    
    
    
    
    
    
    
    
    
    Consolidated income from continuing
operations before income tax
    
    
    
    
    
    
    
    
    
    $
    (3,492,000
    )AssetsTotal assets for reportable segments
    
    
    
    
    
    
    
    
    
    
    48,706,000Other assets
    
    
    
    
    
    
    
    
    
    
    252,000Corporate headquarters
    
    
    
    
    
    
    
    
    
    
    Other unallocated amounts
    
    
    
    
    
    
    
    
    
    
    Total consolidated assets
    
    
    
    
    
    
    
    
    
    $
    48,958,000
  31




---



##### Table of Contents



Item 2 Managements Discussion and Analysis of Financial Condition and
Results of Operations
 Rio Vista Energy Partners L.P. and its consolidated subsidiaries are collectively hereinafter
referred to as Rio Vista.
 The following discussion of Rio Vistas liquidity and capital resources should be read in
conjunction with the unaudited consolidated financial statements of Rio Vista and related notes
thereto appearing elsewhere herein. References to specific years preceeded by fiscal (e.g.
fiscal 2008) refer to Rio Vistas fiscal year ending December 31.
   
    
    the volatility of realized natural gas prices;
    
    the discovery, estimation, development and replacement of oil and natural gas reserves;
    
    our business and financial strategy;
    
    our drilling locations;
    
    technology;
    
    our cash flow, liquidity and financial position;
    
    our production volumes;
    
    our lease operating expenses, general and administrative costs and finding and
development costs;
    
    the availability of drilling and production equipment, labor and other services;
    
    our future operating results;
    
    our prospect development and property acquisitions;
    
    the marketing of oil and natural gas;
    
    competition in the oil and natural gas industry and the transportation and terminalling
business;
    
    the impact of weather and the occurrence of natural disasters such as fires, floods,
hurricanes, earthquakes and other catastrophic events and natural disasters;
    
    governmental regulation of the oil and natural gas industry and the transportation and
terminalling business;
    
    required capital expenditures;
    
    cash distributions and qualified income;
    
    developments in oil producing and natural gas producing countries; and
    
    our strategic plans, objectives, expectations and intentions for future operations.
  forward-looking
  32




---



##### Table of Contents



Overview
 Historical Assets and Operations
   Current Assets and Operations
   Liquidity and Capital Resources
 General
   33




---



##### Table of Contents



Distributions of Available Cash
    Amounts PaidQuarter
    
    Payment
    
    
    Distribution
    
    
    Common
    
    
    GeneralEnded
    
    Date
    
    
    Per Unit
    
    
    Units
    
    
    PartnerDecember 2007
    
    
    02/14/08
    
    
    $
    0.25
    
    
    $
    607,000
    
    
    $
    12,000March 2008
    
    
    05/16/08
    
    
    $
    0.25
    
    
    $
    629,000
    
    
    $
    13,000June 2008
    
    
    08/14/08
    
    
    $
    0.25
    
    
    $
    679,000
    
    
    $
    14,000
  34




---



##### Table of Contents



Debt Obligations
 RZB Loan Agreement
  TCW Credit Facility
  RZB Credit Facility Guarantee
   35




---



##### Table of Contents



Moores Note
  Sellers Note  Regional
  A Former Officer of Penn Octane Note
   36




---



##### Table of Contents



Leases
 Norfolk Southern Leases.
    CEOcast Agreement
   37




---



##### Table of Contents



Strategic Growth International
  Related Party Transactions
      38




---



##### Table of Contents



Realization of Assets
    39




---



##### Table of Contents



Results of Operations
   40




---



##### Table of Contents



Three months ended June 30, 2008 Compared With Three months ended June 30, 2007
 THREE MONTHS ENDED JUNE 30, 2008Oklahoma
    
    
    Regional
    
    
    LPG
    
    
    Corporate/Assets (a)
    
    
    Enterprises (b)
    
    
    Transportation (c)
    
    
    Other
    
    
    TotalRevenues
    
    
    1,857,000
    
    
    
    2,153,000
    
    
    
    
    
    
    
    
    
    
    
    4,010,000Cost Of Goods Sold
    
    
    1,663,000
    
    
    
    1,608,000
    
    
    
    
    
    
    
    
    
    
    
    3,271,000Gross Profit
    
    
    194,000
    
    
    
    545,000
    
    
    
    
    
    
    
    
    
    
    
    739,000Selling, General And
Administrative Expenses
    
    
    52,000
    
    
    
    197,000
    
    
    
    
    
    
    
    955,000
    
    
    
    1,204,000Operating Income (loss)
    
    
    142,000
    
    
    
    348,000
    
    
    
    
    
    
    
    (955,000
    )
    
    
    (465,000
    )Other Income (Expense)Interest Expense
    
    
    (659,000
    )
    
    
    (292,000
    )
    
    
    
    
    
    
    (16,000
    )
    
    
    (967,000
    )Interest Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss From OperationsBefore Taxes
    
    
    (517,000
    )
    
    
    56,000
    
    
    
    
    
    
    
    (971,000
    )
    
    
    (1,432,000
    )Provision (Benefit) for
Income Taxes
    
    
    (66,000
    )
    
    
    (36,000
    )
    
    
    
    
    
    
    
    
    
    
    (102,000
    )Loss on sale of
discontinued operations
    
    
    
    
    
    
    
    
    
    
    343,000
    
    
    
    
    
    
    
    343,000Net Income (Loss)
    
    
    (451,000
    )
    
    
    92,000
    
    
    
    (343,000
    )
    
    
    (971,000
    )
    
    
    (1,673,000
    )
  41




---



##### Table of Contents



THREE MONTHS ENDED JUNE 30, 2007Oklahoma
    
    
    Regional
    
    
    LPG
    
    
    Corporate/Assets (a)
    
    
    Enterprises (b)
    
    
    Transportation (c)
    
    
    Other
    
    
    TotalRevenues
    
    
    
    
    
    
    
    
    
    
    436,000
    
    
    
    
    
    
    
    436,000Cost Of Goods Sold
    
    
    
    
    
    
    
    
    
    
    402,000
    
    
    
    
    
    
    
    402,000Gross Profit
    
    
    
    
    
    
    
    
    
    
    34,000
    
    
    
    
    
    
    
    34,000Selling, General And
Administrative Expenses
    
    
    
    
    
    
    
    
    
    
    54,000
    
    
    
    638,000
    
    
    
    692,000Operating Income (loss)
    
    
    
    
    
    
    
    
    
    
    (20,000
    )
    
    
    (638,000
    )
    
    
    (658,000
    )Other ExpenseInterest Expense
    
    
    
    
    
    
    
    
    
    
    (26,000
    )
    
    
    
    
    
    
    (26,000
    )Income (Loss) FromOperations Before Taxes
    
    
    
    
    
    
    
    
    
    
    (46,000
    )
    
    
    (638,000
    )
    
    
    (684,000
    )Provision For Income
Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,000
    
    
    
    13,000Net Income (loss)
    
    
    
    
    
    
    
    
    
    
    (46,000
    )
    
    
    (651,000
    )
    
    
    (697,000
    )
 (a)
    
    Acquired during November 2007(b)
    
    Acquired during July 2007(c)
    
    Business commenced in August 2006 and sold December 31, 2007  42




---



##### Table of Contents



Six months ended June 30, 2008 Compared With Six months ended June 30, 2007
 SIX MONTHS ENDED JUNE 30, 2008Oklahoma
    
    
    Regional
    
    
    LPG
    
    
    Corporate/Assets (a)
    
    
    Enterprises (b)
    
    
    Transportation (c)
    
    
    Other
    
    
    TotalRevenues
    
    
    2,844,000
    
    
    
    4,260,000
    
    
    
    
    
    
    
    
    
    
    
    7,104,000Cost Of Goods Sold
    
    
    2,325,000
    
    
    
    3,370,000
    
    
    
    
    
    
    
    (11,000
    )
    
    
    5,684,000Gross Profit
    
    
    519,000
    
    
    
    890,000
    
    
    
    
    
    
    
    11,000
    
    
    
    1,420,000Selling, General And
Administrative Expenses
    
    
    81,000
    
    
    
    442,000
    
    
    
    
    
    
    
    2,553,000
    
    
    
    3,076,000Operating Income (loss)
    
    
    438,000
    
    
    
    448,000
    
    
    
    
    
    
    
    (2,542,000
    )
    
    
    (1,656,000
    )Other ExpenseInterest Expense
    
    
    (1,297,000
    )
    
    
    (514,000
    )
    
    
    
    
    
    
    (32,000
    )
    
    
    (1,843,000
    )Interest income
    
    
    7,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,000Income (Loss) FromOperations Before Taxes
    
    
    (852,000
    )
    
    
    (66,000
    )
    
    
    
    
    
    
    (2,574,000
    )
    
    
    (3,492,000
    )Provision (Benefit) For
Income Taxes
    
    
    (66,000
    )
    
    
    (31,000
    )
    
    
    
    
    
    
    
    
    
    
    (97,000
    )Loss on sale of
discontinued operations
    
    
    
    
    
    
    
    
    
    
    343,000
    
    
    
    
    
    
    
    343,000Net Income (loss)
    
    
    (786,000
    )
    
    
    (35,000
    )
    
    
    (343,000
    )
    
    
    (2,574,000
    )
    
    
    (3,738,000
    )
 (a)
    
    Acquired during November 2007(b)
    
    Acquired during July 2007(c)
    
    Business commenced in August 2006 and sold December 31, 2007  43




---



##### Table of Contents



SIX MONTHS ENDED JUNE 30, 2007Oklahoma
    
    
    Regional
    
    
    LPG
    
    
    Corporate/Assets (a)
    
    
    Enterprises (b)
    
    
    Transportation (c)
    
    
    Other
    
    
    TotalRevenues
    
    
    
    
    
    
    
    
    
    
    1,115,000
    
    
    
    
    
    
    
    1,115,000Cost Of Goods Sold
    
    
    
    
    
    
    
    
    
    
    796,000
    
    
    
    
    
    
    
    796,000Gross Profit
    
    
    
    
    
    
    
    
    
    
    319,000
    
    
    
    
    
    
    
    319,000Selling, General And
Administrative Expenses
    
    
    
    
    
    
    
    
    
    
    115,000
    
    
    
    1,296,000
    
    
    
    1,411,000Operating Income (loss)
    
    
    
    
    
    
    
    
    
    
    204,000
    
    
    
    (1,296,000
    )
    
    
    (1,092,000
    )Other ExpenseInterest Expense
    
    
    
    
    
    
    
    
    
    
    (51,000
    )
    
    
    
    
    
    
    (51,000
    )Income (Loss) FromOperations Before Taxes
    
    
    
    
    
    
    
    
    
    
    153,000
    
    
    
    (1,296,000
    )
    
    
    (1,143,000
    )Provision For Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,000
    
    
    
    24,000Net Income (loss)
    
    
    
    
    
    
    
    
    
    
    153,000
    
    
    
    (1,320,000
    )
    
    
    (1,167,000
    )
 (a)
    
    Acquired during November 2007(b)
    
    Acquired during July 2007(c)
    
    Business commenced in August 2006 and sold December 31, 2007 Off-Balance Sheet Arrangements
   44




---



##### Table of Contents



Statement by Management Concerning Review of Interim Information by An Independent Registered
Public Accounting Firm.
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4T. Controls and Procedures.
     
    
    In May 2008, our General Partner hired an assistant controller to provide additional
assistance with internal accounting responsibilities and financial reporting. The newly
hired assistant controller has previous oil and gas experience.
    
    In June 2008, our General Partner verbally agreed to hire a vice president, who will
primarily oversee the operations of our oil and gas properties. We are currently
negotiating the final terms of his contract.
    
    In June 2008, our General Partner began discussions with a potential Chief Executive
Officer candidate. This candidate has extensive oil and gas expertise. We are currently
negotiating with this candidate in an effort to have him accept the role as Chief Executive
Officer.
    
    In March 2008 and in connection with the acquisition of the Oklahoma operations, our
General Partner hired two employees who were previously engaged in accounting functions of
those businesses. We are currently training those employees.
  45




---



##### Table of Contents




    
    In May 2008, our General Partner engaged the services of a software consulting firm to
implement an Oracle ERP accounting software system. This system is intended to enhance
internal controls over the ability to enter transactions into the financial system and
financial reporting. This system will also provide for multiple user access, timely access
to accounting information and additional data security.
    
    Management is currently reviewing employee compensation and incentives to ensure that
it continues to attract and retain qualified employees.
     46




---



##### Table of Contents



Part
II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
 .
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   
 Item 3. Defaults upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
   47




---



##### Table of Contents



Item 6 Exhibits
 The following Exhibits are filed as part of this report:
 Exhibit No.15
    
    Accountants Acknowledgment.31.1
    
    Certification
Pursuant to Rule 13a-14(a) / 15d  14(a) of the Exchange Act31.2
    
    Certification Pursuant to Rule 13a-14(a) / 15d  14(a) of the Exchange Act32
    
    Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to
Section 906 of the Sarbanes  Oxley Act of 2002
 www.sec.gov
  48




---



##### Table of Contents



SIGNATURES
  RIO VISTA ENERGY PARTNERS L.P.By:
    
    Rio Vista GP LLC, its General PartnerAugust 19, 2008
    
    By:
    
    /s/ Ian T. BothwellIan T. Bothwell
Acting Chief Executive Officer, Acting
President,Vice-President, Chief Financial
Officer, Treasurerand Assistant Secretary
(Principal Executive,Financial and
Accounting Officer) of Rio Vista GP LLC,
general partner of Rio Vista Energy Partners
L.P.
  49




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    
    Description15
    
    Accountants Acknowledgment.31.1
    
    Certification Pursuant to Rule 13a-14(a) / 15d  14(a) of the Exchange Act31.2
    
    Certification Pursuant to Rule 13a-14(a) / 15d  14(a) of the Exchange Act32
    
    Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to
Section 906 of the Sarbanes  Oxley Act of 2002
  50