----

| Delaware                                       | 75-2274633               |
|------------------------------------------------|--------------------------|
| (State      or other jurisdiction              | (I.R.S.      Employer    |
| of      incorporation or organization)         | Identification      No.) |
|                                           |                     |
| 6 Desta Drive, Suite 6500, Midland,      Texas | 79705                    |
| (Address      of principal executive office)   | (Zip      Code)          |

| Indicate      by check mark if the registrant is a well-known seasoned issuer, as      defined in Rule 405 of the Securities Act.                                                                                                                                                                                                                                                 | ¨    Yes | x  No      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                              |          |       |
| Indicate      by check mark if the registrant is not required to file reports pursuant      to Section 13 or Section 15(d) of the Act.                                                                                                                                                                                                                                            | ¨    Yes | x  No      |
|                                                                                                                                                                                                                                                                                                                                                                              |          |       |
| Indicate      by check mark whether the registrant (1) has filed all reports required to      be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934      during the preceding 12 months (or for such shorter period that the      registrant was required to file such reports), and (2) has been subject to      such filing requirements for the past 90 days. | x    Yes      | ¨  No |

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

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

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

----

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

----

Part 

Item1.

----

----

----

----

Item1A

----

Item1B.     

----

Item2

|                                    |   | Proved      Developed |    |   | Proved       |   |   | Total       |   |
|-----------------------------------------|--------|-----------------------|---------|--------|--------------|--------|--------|-------------|--------|
|                                    |   | Producing             |    |   | Nonproducing |   |   | Undeveloped |   |   | Proved |   |
| Oil      (Bbls)                         |   |                  | 96,000  |   |         |   | 1,000  |        |   |   | 3,000 |   |   |   | 100,000 |   |
| Gas      (Mcf)                          |   |                  | 191,000 |   |         |   | 39,000 |        |   |   | 50,000 |   |   |   | 280,000 |   |
| Total      (BOE)                        |   |                  | 128,000 |   |         |   | 8,000  |        |   |   | 11,000 |   |   |   | 147,000 |   |
|                                    |   |                  |    |   |         |   |   |        |   |   |   |   |   |   |   |   |
| Standardized      measure of discounted |   |                  |    |   |         |   |   |        |   |   |   |   |   |   |   |   |
| future net cash      flows              |   |                  |    |   |         |   |   |        |   |   |   |   |   | $ | 3,569,000 |   |

|       |   | Proved      Reserves |    |   |   |   |
|------------|--------|----------------------|---------|--------|--------|--------|
|       |   |                 |    |   |   |   |   | Total      Oil |   |   | Percent      of |   |
|       |   | Oil                  |    |   | Gas    |   |   | Equivalent |   |   | Total      Oil |   |
|       |   | (Bbls)               |    |   | (Mcf)  |   |   | (BOE) |   |   | Equivalent |   |
| Big Spring |   |                 | 56,000  |   |   |   | 39,000 |   |   |   | 63,000 |   |   |   | 42.9 | % |
| Other      |   |                 | 44,000  |   |   |   | 241,000 |   |   |   | 84,000 |   |   |   | 57.1 | % |
| Total      |   |                 | 100,000 |   |   |   | 280,000 |   |   |   | 147,000 |   |   |   | 100.0 | % |

----

tem

Item4. 

----

Part II

Item 5

|                |   | Total      Number |   |   |               |   |
|---------------------|--------|-------------------|--------|--------|--------------------|--------|
|                |   | of      Units     |   |   | Average      Price |   |
| Period              |   | Purchased         |   |   | Paid      Per Unit |   |
| January      2007   |   |              | 14     |   |               | $      | 136.16 |   |
| February      2007  |   |              | -      |   |               |   | - |   |
| March      2007     |   |              | -      |   |               |   | - |   |
| April      2007     |   |              | 287    |   |               |   | 129.92 |   |
| May      2007       |   |              | -      |   |               |   | - |   |
| June      2007      |   |              | -      |   |               |   | - |   |
| July      2007      |   |              | 24     |   |               |   | 117.42 |   |
| August      2007    |   |              | -      |   |               |   | - |   |
| September      2007 |   |              | -      |   |               |   | - |   |
| October      2007   |   |              | -      |   |               |   | - |   |
| November      2007  |   |              | -      |   |               |   | - |   |
| December      2007  |   |              | 38     |   |               |   | 92.44 |   |
| TOTALS              |   |              | 363    |   |               | $      | 125.41 |   |

----

Item6.  

|                                |   | Years      ended December 31, |    |
|-------------------------------------|--------|-------------------------------|---------|
|                                |   | 2007                          |    |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
| Revenues                            |   | $                             | 407,282 |   |   | $ | 633,164 |   |   | $ | 667,326 |   |   | $ | 559,030 |   |   | $ | 474,370 |   |
|                                |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      before cumulative       |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| effect of accounting      change    |   |                          | 250,013 |   |   |   | 499,831 |   |   |   | 559,694 |   |   |   | 445,367 |   |   |   | 359,878 |   |
|                                |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                     |   |                          | 250,013 |   |   |   | 499,831 |   |   |   | 559,694 |   |   |   | 445,367 |   |   |   | 348,033 |   |
|                                |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Partners'      share of net income: |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General      partners               |   |                          | 27,807  |   |   |   | 52,083 |   |   |   | 57,293 |   |   |   | 45,980 |   |   |   | 36,703 |   |
|                                |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Limited      partners               |   |                          | 222,206 |   |   |   | 447,748 |   |   |   | 502,401 |   |   |   | 399,387 |   |   |   | 311,330 |   |
|                                |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Limited      partners' income       |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| per unit before      cumulative     |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| effect of accounting      change    |   |                          | 22.72   |   |   |   | 45.77 |   |   |   | 51.36 |   |   |   | 40.83 |   |   |   | 32.92 |   |
|                                |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Limited      partners’ net    |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| income per unit                     |   |                          | 22.72   |   |   |   | 45.77 |   |   |   | 51.36 |   |   |   | 40.83 |   |   |   | 31.83 |   |
|                                |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Limited      partners' cash         |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| distributions      per unit         |   |                          | 30.94   |   |   |   | 50.29 |   |   |   | 55.20 |   |   |   | 43.41 |   |   |   | 35.77 |   |
|                                |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      assets                   |   | $                             | 521,052 |   |   | $ | 615,472 |   |   | $ | 506,858 |   |   | $ | 489,848 |   |   | $ | 504,826 |   |

----

Item7.   

----

|                                           |   | Year      Ended December 31, |    |
|------------------------------------------------|--------|------------------------------|---------|
|                                           |   | 2007                         |    |   | 2006 |   |   | 2005 |   |
| Oil      production in barrels                 |   |                         | 9,756   |   |   |   | 10,503 |   |   |   | 11,681 |   |
| Gas      production in mcf                     |   |                         | 30,595  |   |   |   | 46,281 |   |   |   | 54,549 |   |
| Total      (BOE)                               |   |                         | 14,855  |   |   |   | 18,217 |   |   |   | 20,773 |   |
| Average      price per barrel of oil           |   | $                            | 68.20   |   |   | $ | 63.25 |   |   | $ | 52.27 |   |
| Average      price per mcf of gas              |   | $                            | 7.11    |   |   | $ | 6.73 |   |   | $ | 6.78 |   |
| Partnership      distributions                 |   | $                            | 336,684 |   |   | $ | 547,166 |   |   | $ | 600,000 |   |
| Limited      partner distributions             |   | $                            | 302,676 |   |   | $ | 491,891 |   |   | $ | 540,000 |   |
| Per      unit distribution to limited partners |   | $                            | 30.94   |   |   | $ | 50.29 |   |   | $ | 55.20 |   |
| Number      of limited partner units           |   |                         | 9,782   |   |   |   | 9,782 |   |   |   | 9,782 |   |

----

tem

----

Item8

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

----

 INDEPENDENT 

----

Royalties Institutional 

|                                            |   | December      31, |      |
|-------------------------------------------------|--------|-------------------|-----------|
|                                            |   | 2007              |      |   | 2006 |   |
| Assets                                          |   |              |      |   |   |   |
|                                            |   |              |      |   |   |   |
| Current      assets:                            |   |              |      |   |   |   |
| Cash and cash      equivalents                  |   | $                 | 50,934    |   |   | $ | 38,812 |   |
| Receivable from Managing General      Partner   |   |              | -         |   |   |   | 75,721 |   |
| New Mexico income tax      deposits             |   |              | 15,218    |   |   |   | 17,735 |   |
| Total current      assets                       |   |              | 66,152    |   |   |   | 132,268 |   |
|                                            |   |              |      |   |   |   |   |   |
| Oil      and gas properties - using the full-   |   |              |      |   |   |   |   |   |
| cost method of      accounting                  |   |              | 3,178,635 |   |   |   | 3,178,883 |   |
| Less accumulated      depreciation,             |   |              |      |   |   |   |   |   |
| depletion and      amortization                 |   |              | 2,723,735 |   |   |   | 2,695,679 |   |
| Net oil and gas      properties                 |   |              | 454,900   |   |   |   | 483,204 |   |
|                                            |   |              |      |   |   |   |   |   |
|                                            |   | $                 | 521,052   |   |   | $ | 615,472 |   |
| Liabilities and Partners' Equity      (Deficit) |   |              |      |   |   |   |   |   |
|                                            |   |              |      |   |   |   |   |   |
| Current      liability – Accounts payable |   | $                 | 6,060     |   |   | $ | - |   |
|                                            |   |              |      |   |   |   |   |   |
| Asset      retirement obligation                |   |              | 389,539   |   |   |   | 403,348 |   |
|                                            |   |              |      |   |   |   |   |   |
| Partners'      equity (deficit):                |   |              |      |   |   |   |   |   |
| General partners                                |   |              | (78,190   | ) |   |   | (71,989 | ) |
| Limited partners                                |   |              | 203,643   |   |   |   | 284,113 |   |
|                                            |   |              |      |   |   |   |   |   |
| Total partners'      equity                     |   |              | 125,453   |   |   |   | 212,124 |   |
|                                            |   |              |      |   |   |   |   |   |
|                                            |   | $                 | 521,052   |   |   | $ | 615,472 |   |

----

titu

|                                          |   | Years      ended December 31, |    |
|-----------------------------------------------|--------|-------------------------------|---------|
|                                          |   | 2007                          |    |   | 2006 |   |   | 2005 |   |
| Revenues                                      |   |                          |    |   |   |   |   |   |   |
|                                          |   |                          |    |   |   |   |   |   |   |
| Income from net profits      interests        |   | $                             | 405,439 |   |   | $ | 631,108 |   |   | $ | 665,923 |   |
| Interest income                               |   |                          | 1,745   |   |   |   | 2,056 |   |   |   | 1,403 |   |
| Other                                         |   |                          | 98      |   |   |   | - |   |   |   | - |   |
|                                          |   |                          | 407,282 |   |   |   | 633,164 |   |   |   | 667,326 |   |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |
| Expenses                                      |   |                          |    |   |   |   |   |   |   |   |   |   |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |
| Depreciation, depletion and      amortization |   |                          | 28,056  |   |   |   | 20,996 |   |   |   | 13,235 |   |
| Accretionexpense                              |   |                          | 35,785  |   |   |   | 21,471 |   |   |   | 13,346 |   |
| General and      administrative               |   |                          | 93,428  |   |   |   | 90,866 |   |   |   | 81,051 |   |
|                                          |   |                          | 157,269 |   |   |   | 133,333 |   |   |   | 107,632 |   |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |
| Net      income                               |   | $                             | 250,013 |   |   | $ | 499,831 |   |   | $ | 559,694 |   |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |
| Net      income allocated to:                 |   |                          |    |   |   |   |   |   |   |   |   |   |
| Managing General      Partner                 |   | $                             | 25,026  |   |   | $ | 46,875 |   |   | $ | 51,564 |   |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |
| General Partner                               |   | $                             | 2,781   |   |   | $ | 5,208 |   |   | $ | 5,729 |   |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |
| Limited partners                              |   | $                             | 222,206 |   |   | $ | 447,748 |   |   | $ | 502,401 |   |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |
| Per limited partner      unit                 |   | $                             | 22.72   |   |   | $ | 45.77 |   |   | $ | 51.36 |   |

----

titution

|                              |   | General  |    |   | Limited  |   |     |   |   |
|-----------------------------------|--------|----------|---------|--------|----------|--------|----------|--------|--------|
|                              |   | Partners |    |   | Partners |   |     | Total  |   |
| Balance      at December 31, 2004 |   | $        | (66,090 | )      |     | $      | 365,855  |   |   | $ | 299,765 |   |
|                              |   |     |    |   |     |   |     |   |   |   |   |   |
| Net income                        |   |     | 57,293  |   |     |   | 502,401  |   |   |   | 559,694 |   |
|                              |   |     |    |   |     |   |     |   |   |   |   |   |
| Distributions                     |   |     | (60,000 | )      |     |   | (540,000 | )      |   |   | (600,000 | ) |
|                              |   |     |    |   |     |   |     |   |   |   |   |   |
| Balance      at December 31, 2005 |   |     | (68,797 | )      |     |   | 328,256  |   |   |   | 259,459 |   |
|                              |   |     |    |   |     |   |     |   |   |   |   |   |
| Net income                        |   |     | 52,083  |   |     |   | 447,748  |   |   |   | 499,831 |   |
|                              |   |     |    |   |     |   |     |   |   |   |   |   |
| Distributions                     |   |     | (55,275 | )      |     |   | (491,891 | )      |   |   | (547,166 | ) |
|                              |   |     |    |   |     |   |     |   |   |   |   |   |
| Balance      at December 31, 2006 |   |     | (71,989 | )      |     |   | 284,113  |   |   |   | 212,124 |   |
|                              |   |     |    |   |     |   |     |   |   |   |   |   |
| Net income                        |   |     | 27,807  |   |     |   | 222,206  |   |   |   | 250,013 |   |
|                              |   |     |    |   |     |   |     |   |   |   |   |   |
| Distributions                     |   |     | (34,008 | )      |     |   | (302,676 | )      |   |   | (336,684 | ) |
|                              |   |     |    |   |     |   |     |   |   |   |   |   |
| Balance      at December 31, 2007 |   | $        | (78,190 | )      |     | $      | 203,643  |   |   | $ | 125,453 |   |

----

itutio

|                                                      |   | Years      ended December 31, |     |
|-----------------------------------------------------------|--------|-------------------------------|----------|
|                                                      |   | 2007                          |     |   | 2006 |   |   | 2005 |   |
| Cash      flows from operating activities:                |   |                          |     |   |   |   |   |   |   |
| Cash received from net profits      interests             |   | $                             | 434,331  |   |   | $ | 620,110 |   |   | $ | 660,337 |   |
| Cash paid for administrative      fees and general        |   |                          |     |   |   |   |   |   |   |   |   |   |
| and administrative      overhead                          |   |                          | (87,368  | ) |   |   | (90,866 | ) |   |   | (81,051 | ) |
| Interestreceived                                          |   |                          | 1,745    |   |   |   | 2,056 |   |   |   | 1,403 |   |
| Other                                                     |   |                          | 98       |   |   |   | - |   |   |   | - |   |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Net cash provided by operating      activities            |   |                          | 348,806  |   |   |   | 531,300 |   |   |   | 580,689 |   |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                |   |                          |     |   |   |   |   |   |   |   |   |   |
| Distributions to      partners                            |   |                          | (336,684 | ) |   |   | (547,166 | ) |   |   | (600,000 | ) |
| Decrease in distribution      payable                     |   |                          | -        |   |   |   | (113 | ) |   |   | (75 | ) |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Net cash flows used in      financing activities          |   |                          | (336,684 | ) |   |   | (547,279 | ) |   |   | (600,075 | ) |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents |   |                          | 12,122   |   |   |   | (15,979 | ) |   |   | (19,386 | ) |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Beginning      of year                                    |   |                          | 38,812   |   |   |   | 54,791 |   |   |   | 74,177 |   |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| End      of year                                          |   | $                             | 50,934   |   |   | $ | 38,812 |   |   | $ | 54,791 |   |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Reconciliation      of net income to net cash             |   |                          |     |   |   |   |   |   |   |   |   |   |
| provided by operating      activities:                    |   |                          |     |   |   |   |   |   |   |   |   |   |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Net      income                                           |   | $                             | 250,013  |   |   | $ | 499,831 |   |   | $ | 559,694 |   |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Adjustments      to reconcile net income to net           |   |                          |     |   |   |   |   |   |   |   |   |   |
| cash provided by operating      activities:               |   |                          |     |   |   |   |   |   |   |   |   |   |
| Depreciation, depletion and      amortization             |   |                          | 28,056   |   |   |   | 20,996 |   |   |   | 13,235 |   |
| Accretionexpense                                          |   |                          | 35,785   |   |   |   | 21,471 |   |   |   | 13,346 |   |
| Settlement of asset retirement      obligations           |   |                          |     |   |   |   |   |   |   |   |   |   |
| for plugged and abandoned      wells                      |   |                          | (49,346  | ) |   |   | - |   |   |   | - |   |
| Decrease (increase) in      receivables and deposits      |   |                          | 78,238   |   |   |   | (10,998 | ) |   |   | (5,586 | ) |
| Increase in accounts      payable                         |   |                          | 6,060    |   |   |   | - |   |   |   | - |   |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Net      cash provided by operating activities            |   | $                             | 348,806  |   |   | $ | 531,300 |   |   | $ | 580,689 |   |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Noncash      investing and financing activities:          |   |                          |     |   |   |   |   |   |   |   |   |   |
| (Decrease) increase in oil and gas      properties -      |   |                          |     |   |   |   |   |   |   |   |   |   |
| SFAS No. 143                                              |   | $                             | (248     | ) |   | $ | 134,591 |   |   | $ | 44,045 |   |

----

Southwest Royalties Institutional 

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

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

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

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

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

----

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

----

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

|                                                             |   | 2007   |    |   | 2006   |   |
|------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Beginning      of year                                           |   | $      | 403,348 |   |   | $      | 247,286 |   |
| Reduction      of obligations due to wells plugged and abandoned |   |   | (49,346 | )      |   |   | - |   |
| Reduction      of obligations due to farm-outs                   |   |   | (248    | )      |   |   | (522 | ) |
| Accretion      expense                                           |   |   | 35,785  |   |   |   | 21,471 |   |
| Revisions      of previous estimates                             |   |   | -       |   |   |   | 135,113 |   |
| End      of year                                                 |   | $      | 389,539 |   |   | $      | 403,348 |   |

----

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

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

----

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

|                                 |   | Oil      (bbls) |    |   | Gas      (mcf) |   |
|--------------------------------------|--------|-----------------|---------|--------|----------------|--------|
| Total      Proved -                  |   |            |    |   |           |   |
| January      1, 2005                 |   |            | 216,000 |   |           |   | 1,004,000 |   |
|                                 |   |            |    |   |           |   |   |   |
| Revisions of previous      estimates |   |            | (18,000 | )      |           |   | (99,000 | ) |
| Production                           |   |            | (12,000 | )      |           |   | (55,000 | ) |
|                                 |   |            |    |   |           |   |   |   |
| December      31, 2005               |   |            | 186,000 |   |           |   | 850,000 |   |
|                                 |   |            |    |   |           |   |   |   |
| Revisions of previous      estimates |   |            | (49,000 | )      |           |   | (367,000 | ) |
| Production                           |   |            | (11,000 | )      |           |   | (46,000 | ) |
|                                 |   |            |    |   |           |   |   |   |
| December      31, 2006               |   |            | 126,000 |   |           |   | 437,000 |   |
|                                 |   |            |    |   |           |   |   |   |
| Revisions of previous      estimates |   |            | (16,000 | )      |           |   | (126,000 | ) |
| Production                           |   |            | (10,000 | )      |           |   | (31,000 | ) |
|                                 |   |            |    |   |           |   |   |   |
| December      31, 2007               |   |            | 100,000 |   |           |   | 280,000 |   |
|                                 |   |            |    |   |           |   |   |   |
| Proved developed reserves      -     |   |            |    |   |           |   |   |   |
|                                 |   |            |    |   |           |   |   |   |
| December      31, 2005               |   |            | 180,000 |   |           |   | 799,000 |   |
| December      31, 2006               |   |            | 122,000 |   |           |   | 387,000 |   |
| December      31, 2007               |   |            | 96,000  |   |           |   | 230,000 |   |

----

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

|                                               |   | 2007   |       |   | 2006   |   |      | 2005   |   |
|----------------------------------------------------|--------|--------|------------|--------|--------|--------|-----------|--------|--------|
| Future      cash inflows                           |   | $      | 11,256,000 |   |   | $      | 9,560,000 |   |   | $ | 19,922,000 |   |
| Production,      development and abandonment costs |   |   | 4,208,000  |   |   |   | 4,537,000 |   |   |   | 6,716,000 |   |
| Future      net cash flows                         |   |   | 7,048,000  |   |   |   | 5,023,000 |   |   |   | 13,206,000 |   |
| 10%      annual discount for                       |   |   |       |   |   |   |      |   |   |   |   |   |
| estimated timing of cash      flows                |   |   | 3,479,000  |   |   |   | 2,356,000 |   |   |   | 7,497,000 |   |
| Standardized      measure of                       |   |   |       |   |   |   |      |   |   |   |   |   |
| discounted future net cash      flows              |   | $      | 3,569,000  |   |   | $      | 2,667,000 |   |   | $ | 5,709,000 |   |

|                                                        |   | 2007   |      |   | 2006   |   |       | 2005   |   |
|-------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|------------|--------|--------|
| Sales      of oil and gas produced, net of production costs |   | $      | (403,000  | )      |   | $      | (631,000   | )      |   | $ | (666,000 | ) |
| Changes      in prices and production costs                 |   |   | 2,092,000 |   |   |   | (2,489,000 | )      |   |   | 2,821,000 |   |
| Changes      of production rates (timing) and others        |   |   | (154,000  | )      |   |   | 985,000    |   |   |   | (156,000 | ) |
| Revisions      of previous quantities estimates             |   |   | (900,000  | )      |   |   | (1,478,000 | )      |   |   | (601,000 | ) |
| Accretion      of discount                                  |   |   | 267,000   |   |   |   | 571,000    |   |   |   | 392,000 |   |
| Discounted      future net cash flows -                     |   |   |      |   |   |   |       |   |   |   |   |   |
| Beginning      of year                                      |   |   | 2,667,000 |   |   |   | 5,709,000  |   |   |   | 3,919,000 |   |
| End      of year                                            |   | $      | 3,569,000 |   |   | $      | 2,667,000  |   |   | $ | 5,709,000 |   |

----

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

|                                      |   | Quarter |    |
|-------------------------------------------|--------|---------|---------|
|                                      |   | First   |    |   | Second |   |   | Third |   |   | Fourth |   |
| 2007:                                     |   |    |    |   |   |   |   |   |   |   |   |   |
| Total revenues                            |   | $       | 115,842 |   |   | $ | 132,320 |   |   | $ | 74,830 |   |   | $ | 84,290 |   |
| Total expenses                            |   |    | 31,441  |   |   |   | 42,238 |   |   |   | 40,242 |   |   |   | 43,348 |   |
| Net income                                |   | $       | 84,401  |   |   | $ | 90,082 |   |   | $ | 34,588 |   |   | $ | 40,942 |   |
|                                      |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income per limited partners      unit |   | $       | 7.70    |   |   | $ | 8.22 |   |   | $ | 3.12 |   |   | $ | 3.68 |   |

|                                      |   | Quarter |    |
|-------------------------------------------|--------|---------|---------|
|                                      |   | First   |    |   | Second |   |   | Third |   |   | Fourth |   |
| 2006:                                     |   |    |    |   |   |   |   |   |   |   |   |   |
| Total revenues                            |   | $       | 184,346 |   |   | $ | 145,214 |   |   | $ | 196,278 |   |   | $ | 107,326 |   |
| Total expenses                            |   |    | 31,564  |   |   |   | 36,288 |   |   |   | 32,592 |   |   |   | 32,889 |   |
| Net income                                |   | $       | 152,782 |   |   | $ | 108,926 |   |   | $ | 163,686 |   |   | $ | 74,437 |   |
|                                      |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income per limited partners      unit |   | $       | 14.01   |   |   | $ | 9.99 |   |   | $ | 15.01 |   |   | $ | 6.76 |   |

----

em

Item9A

----

tem

----

Part III

Item

Item11

----

em

Item13

Item14.  

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

----

Part IV

Item15

| (a)    | (1)    | Financial      Statements:                                                                                                                                                                                          |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                |
|   |   | Included in Part II of this      report                                                                                                                                                                             |
|   |   |                                                                                                                                                                                                                |
|   |   | Report of Independent Registered      Public Accounting Firm                                                                                                                                                        |
|   |   | Balance Sheets                                                                                                                                                                                                      |
|   |   | Statements of      Operations                                                                                                                                                                                       |
|   |   | Statements of Changes in      Partners' Equity (Deficit)                                                                                                                                                            |
|   |   | Statements of Cash      Flows                                                                                                                                                                                       |
|   |   | Notes to Financial      Statements                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                |
|   | (2)    | Schedules      required by Article 12 of Regulation S-X are either omitted because they      are not applicable or because the required information is shown in the      financial statements or the notes thereto. |
|   |   |                                                                                                                                                                                                                |
|   | (3)    | Exhibits:                                                                                                                                                                                                           |

| 4      | (a)    | Certificate      of Limited Partnership of Southwest Royalties Institutional Income Fund      IX-B, L.P., dated March 9, 1989.  (Incorporated by reference      from Partnership's Form 10-K for the fiscal year ended December 31,      1989.)   |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                        |
|   | (b)    | Agreement      of Limited Partnership of Southwest Royalties Institutional Income Fund      IX-B, L.P. dated September 26, 1989.  (Incorporated by reference      from Partnership's Form 10-K for the fiscal year ended December 31,      1989.) |
|   |   |                                                                                                                                                                                                                                                        |
|   | 31.1   | Rule      13a-14(a)/15d-14(a) Certification                                                                                                                                                                                                                 |
|   | 31.2   | Rule      13a-14(a)/15d-14(a) Certification                                                                                                                                                                                                                 |
|   | 32.1   | Certification      of Chief Executive Officer and Chief Financial Officer Pursuant to 18      U.S.C. Section 1350, as adopted Pursuant to Section 906 of the      Sarbanes-Oxley Act of 2002                                                                |

----

sary

----

----

gnat

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

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