----

| 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 |
|-------------------------------------------------------------------------------------------------------------------|---------------|-------|

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Page   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Part      I                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Business                                                                                                                                                     | 3      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      1A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Risk      Factors                                                                                                                                            | 7      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      1B.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Unresolved Staff      Comments                                                                                                                               | 9      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

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Item

|                                    |   | Proved      Developed |    |   | Proved       |   |   | Total       |   |
|-----------------------------------------|--------|-----------------------|---------|--------|--------------|--------|--------|-------------|--------|
|                                    |   | Producing             |    |   | Nonproducing |   |   | Undeveloped |   |   | Proved |   |
| Oil      (Bbls)                         |   |                  | 65,000  |   |         |   | -      |        |   |   | 1,000 |   |   |   | 66,000 |   |
| Gas      (Mcf)                          |   |                  | 195,000 |   |         |   | -      |        |   |   | 48,000 |   |   |   | 243,000 |   |
| Total      (BOE)                        |   |                  | 98,000  |   |         |   | -      |        |   |   | 9,000 |   |   |   | 107,000 |   |
|                                    |   |                  |    |   |         |   |   |        |   |   |   |   |   |   |   |   |
| Standardized      measure of discounted |   |                  |    |   |         |   |   |        |   |   |   |   |   |   |   |   |
| future net cash      flows              |   |                  |    |   |         |   |   |        |   |   |   |   |   | $ | 1,222,000 |   |

|       |   | Proved      Reserves |   |   |   |   |
|------------|--------|----------------------|--------|--------|--------|--------|
|       |   |                 |   |   |   |   |   | Total      Oil |   |   | Percent      of |   |
|       |   | Oil                  |   |   | Gas    |   |   | Equivalent |   |   | Total      Oil |   |
|       |   | (Bbls)               |   |   | (Mcf)  |   |   | (BOE) |   |   | Equivalent |   |
| Big Spring |   |                 | 38,000 |   |   |   | 8,000 |   |   |   | 39,000 |   |   |   | 36.4 | % |
| Puckett    |   |                 | -      |   |   |   | 78,000 |   |   |   | 13,000 |   |   |   | 12.1 | % |
| Keystone   |   |                 | 4,000  |   |   |   | 34,000 |   |   |   | 10,000 |   |   |   | 9.4 | % |
| Other      |   |                 | 24,000 |   |   |   | 123,000 |   |   |   | 45,000 |   |   |   | 42.1 | % |
| Total      |   |                 | 66,000 |   |   |   | 243,000 |   |   |   | 107,000 |   |   |   | 100.0 | % |

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Item

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| Item 5. | Market for      Registrant's Common Equity, Related Stockholder Matters and Issuer      Purchases of EquitySecurities |
|---------|-----------------------------------------------------------------------------------------------------------------------|

|                |   | Total      Number |   |   |               |   |
|---------------------|--------|-------------------|--------|--------|--------------------|--------|
|                |   | of      Units     |   |   | Average      Price |   |
| Period              |   | Purchased         |   |   | Paid      Per Unit |   |
| January      2008   |   |              | -      |   |               | $      | - |   |
| February      2008  |   |              | -      |   |               |   | - |   |
| March      2008     |   |              | 4      |   |               |   | 83.70 |   |
| April      2008     |   |              | -      |   |               |   | - |   |
| May      2008       |   |              | -      |   |               |   | - |   |
| June      2008      |   |              | 8      |   |               |   | 78.80 |   |
| July      2008      |   |              | -      |   |               |   | - |   |
| August      2008    |   |              | -      |   |               |   | - |   |
| September      2008 |   |              | 43     |   |               |   | 103.68 |   |
| October      2008   |   |              | -      |   |               |   | - |   |
| November      2008  |   |              | -      |   |               |   | - |   |
| December      2008  |   |              | 90     |   |               |   | 163.64 |   |
| TOTALS              |   |              | 145    |   |               | $      | 138.98 |   |

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Item

|                                |   | Years      ended December 31, |    |
|-------------------------------------|--------|-------------------------------|---------|
|                                |   | 2008                          |    |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
| Revenues                            |   | $                             | 848,172 |   |   | $ | 407,282 |   |   | $ | 633,164 |   |   | $ | 667,326 |   |   | $ | 559,030 |   |
|                                |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                     |   |                          | 690,122 |   |   |   | 250,013 |   |   |   | 499,831 |   |   |   | 559,694 |   |   |   | 445,367 |   |
|                                |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Partners'      share of net income: |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General      partners               |   |                          | 72,473  |   |   |   | 27,807 |   |   |   | 52,083 |   |   |   | 57,293 |   |   |   | 45,980 |   |
|                                |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Limited      partners               |   |                          | 617,649 |   |   |   | 222,206 |   |   |   | 447,748 |   |   |   | 502,401 |   |   |   | 399,387 |   |
|                                |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Limited      partners’ net    |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| income per unit                     |   |                          | 63.14   |   |   |   | 22.72 |   |   |   | 45.77 |   |   |   | 51.36 |   |   |   | 40.83 |   |
|                                |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Limited      partners' cash         |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| distributions      per unit         |   |                          | 64.45   |   |   |   | 30.94 |   |   |   | 50.29 |   |   |   | 55.20 |   |   |   | 43.41 |   |
|                                |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      assets                   |   | $                             | 539,311 |   |   | $ | 521,052 |   |   | $ | 615,472 |   |   | $ | 506,858 |   |   | $ | 489,848 |   |

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|                                           |   | Year      Ended December 31, |    |
|------------------------------------------------|--------|------------------------------|---------|
|                                           |   | 2008                         |    |   | 2007 |   |   | 2006 |   |
| Oil      production in barrels                 |   |                         | 10,424  |   |   |   | 9,756 |   |   |   | 10,503 |   |
| Gas      production in mcf                     |   |                         | 31,032  |   |   |   | 30,595 |   |   |   | 46,281 |   |
| Total      (BOE)                               |   |                         | 15,596  |   |   |   | 14,855 |   |   |   | 18,217 |   |
| Average      price per barrel of oil           |   | $                            | 99.88   |   |   | $ | 68.20 |   |   | $ | 63.25 |   |
| Average      price per mcf of gas              |   | $                            | 9.02    |   |   | $ | 7.11 |   |   | $ | 6.73 |   |
| Partnership      distributions                 |   | $                            | 700,648 |   |   | $ | 336,684 |   |   | $ | 547,166 |   |
| Limited      partner distributions             |   | $                            | 630,462 |   |   | $ | 302,676 |   |   | $ | 491,891 |   |
| Per      unit distribution to limited partners |   | $                            | 64.45   |   |   | $ | 30.94 |   |   | $ | 50.29 |   |
| Number      of limited partner units           |   |                         | 9,782   |   |   |   | 9,782 |   |   |   | 9,782 |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 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     |

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INDEPENDENT 

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Royalties 

|                                            |   | December      31, |      |
|-------------------------------------------------|--------|-------------------|-----------|
|                                            |   | 2008              |      |   | 2007 |   |
| Assets                                          |   |              |      |   |   |   |
|                                            |   |              |      |   |   |   |
| Current      assets:                            |   |              |      |   |   |   |
| Cash and cash      equivalents                  |   | $                 | 45,290    |   |   | $ | 50,934 |   |
| Receivable from Managing General      Partner   |   |              | 37,449    |   |   |   | - |   |
| New Mexico income tax      deposits             |   |              | 25,554    |   |   |   | 15,218 |   |
| Total current      assets                       |   |              | 108,293   |   |   |   | 66,152 |   |
|                                            |   |              |      |   |   |   |   |   |
| Oil      and gas properties - using the full-   |   |              |      |   |   |   |   |   |
| cost method of      accounting                  |   |              | 3,189,361 |   |   |   | 3,178,635 |   |
| Less accumulated      depreciation,             |   |              |      |   |   |   |   |   |
| depletion and      amortization                 |   |              | 2,758,343 |   |   |   | 2,723,735 |   |
| Net oil and gas      properties                 |   |              | 431,018   |   |   |   | 454,900 |   |
|                                            |   |              |      |   |   |   |   |   |
|                                            |   | $                 | 539,311   |   |   | $ | 521,052 |   |
| Liabilities and Partners' Equity      (Deficit) |   |              |      |   |   |   |   |   |
|                                            |   |              |      |   |   |   |   |   |
| Current      liability:                         |   |              |      |   |   |   |   |   |
| Payable to Managing General      Partner        |   | $                 | -         |   |   | $ | 6,060 |   |
|                                            |   |              |      |   |   |   |   |   |
| Asset      retirement obligation                |   |              | 424,384   |   |   |   | 389,539 |   |
|                                            |   |              |      |   |   |   |   |   |
| Partners'      equity (deficit):                |   |              |      |   |   |   |   |   |
| General partners                                |   |              | (75,903   | ) |   |   | (78,190 | ) |
| Limited partners                                |   |              | 190,830   |   |   |   | 203,643 |   |
|                                            |   |              |      |   |   |   |   |   |
| Total partners'      equity                     |   |              | 114,927   |   |   |   | 125,453 |   |
|                                            |   |              |      |   |   |   |   |   |
|                                            |   | $                 | 539,311   |   |   | $ | 521,052 |   |

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Institutional 

|                                          |   | Years      ended December 31, |    |
|-----------------------------------------------|--------|-------------------------------|---------|
|                                          |   | 2008                          |    |   | 2007 |   |   | 2006 |   |
| Revenues                                      |   |                          |    |   |   |   |   |   |   |
|                                          |   |                          |    |   |   |   |   |   |   |
| Income from net profits      interests        |   | $                             | 847,626 |   |   | $ | 405,439 |   |   | $ | 631,108 |   |
| Interest income                               |   |                          | 546     |   |   |   | 1,745 |   |   |   | 2,056 |   |
| Other                                         |   |                          | -       |   |   |   | 98 |   |   |   | - |   |
|                                          |   |                          | 848,172 |   |   |   | 407,282 |   |   |   | 633,164 |   |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |
| Expenses                                      |   |                          |    |   |   |   |   |   |   |   |   |   |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |
| Depreciation, depletion and      amortization |   |                          | 34,608  |   |   |   | 28,056 |   |   |   | 20,996 |   |
| Accretionexpense                              |   |                          | 28,909  |   |   |   | 35,785 |   |   |   | 21,471 |   |
| General and      administrative               |   |                          | 94,533  |   |   |   | 93,428 |   |   |   | 90,866 |   |
|                                          |   |                          | 158,050 |   |   |   | 157,269 |   |   |   | 133,333 |   |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |
| Net      income                               |   | $                             | 690,122 |   |   | $ | 250,013 |   |   | $ | 499,831 |   |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |
| Net      income allocated to:                 |   |                          |    |   |   |   |   |   |   |   |   |   |
| Managing General      Partner                 |   | $                             | 65,226  |   |   | $ | 25,026 |   |   | $ | 46,875 |   |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |
| General Partner                               |   | $                             | 7,247   |   |   | $ | 2,781 |   |   | $ | 5,208 |   |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |
| Limited partners                              |   | $                             | 617,649 |   |   | $ | 222,206 |   |   | $ | 447,748 |   |
|                                          |   |                          |    |   |   |   |   |   |   |   |   |   |
| Per limited partner      unit                 |   | $                             | 63.14   |   |   | $ | 22.72 |   |   | $ | 45.77 |   |

----

Institutional 

|                              |   | General  |    |   | Limited  |   |     |   |   |
|-----------------------------------|--------|----------|---------|--------|----------|--------|----------|--------|--------|
|                              |   | Partners |    |   | Partners |   |     | Total  |   |
| 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 |   |
|                              |   |     |    |   |     |   |     |   |   |   |   |   |
| Net income                        |   |     | 72,473  |   |     |   | 617,649  |   |   |   | 690,122 |   |
|                              |   |     |    |   |     |   |     |   |   |   |   |   |
| Distributions                     |   |     | (70,186 | )      |     |   | (630,462 | )      |   |   | (700,648 | ) |
|                              |   |     |    |   |     |   |     |   |   |   |   |   |
| Balance      at December 31, 2008 |   | $        | (75,903 | )      |     | $      | 190,830  |   |   | $ | 114,927 |   |

----

Royalties 

|                                                      |   | Years      ended December 31, |     |
|-----------------------------------------------------------|--------|-------------------------------|----------|
|                                                      |   | 2008                          |     |   | 2007 |   |   | 2006 |   |
| Cash      flows from operating activities:                |   |                          |     |   |   |   |   |   |   |
| Cash received from net profits      interests             |   | $                             | 795,051  |   |   | $ | 434,331 |   |   | $ | 620,110 |   |
| Cash paid for administrative      fees and general        |   |                          |     |   |   |   |   |   |   |   |   |   |
| and administrative      overhead                          |   |                          | (100,593 | ) |   |   | (87,368 | ) |   |   | (90,866 | ) |
| Interestreceived                                          |   |                          | 546      |   |   |   | 1,745 |   |   |   | 2,056 |   |
| Other                                                     |   |                          | -        |   |   |   | 98 |   |   |   | - |   |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Net cash provided by operating      activities            |   |                          | 695,004  |   |   |   | 348,806 |   |   |   | 531,300 |   |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                |   |                          |     |   |   |   |   |   |   |   |   |   |
| Distributions to      partners                            |   |                          | (700,648 | ) |   |   | (336,684 | ) |   |   | (547,166 | ) |
| Decrease in distribution      payable                     |   |                          | -        |   |   |   | - |   |   |   | (113 | ) |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Net cash used in financing      activities                |   |                          | (700,648 | ) |   |   | (336,684 | ) |   |   | (547,279 | ) |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Net      (decrease) increase in cash and cash equivalents |   |                          | (5,644   | ) |   |   | 12,122 |   |   |   | (15,979 | ) |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Beginning      of year                                    |   |                          | 50,934   |   |   |   | 38,812 |   |   |   | 54,791 |   |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| End      of year                                          |   | $                             | 45,290   |   |   | $ | 50,934 |   |   | $ | 38,812 |   |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Reconciliation      of net income to net cash             |   |                          |     |   |   |   |   |   |   |   |   |   |
| provided by operating      activities:                    |   |                          |     |   |   |   |   |   |   |   |   |   |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Net      income                                           |   | $                             | 690,122  |   |   | $ | 250,013 |   |   | $ | 499,831 |   |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Adjustments      to reconcile net income to net           |   |                          |     |   |   |   |   |   |   |   |   |   |
| cash provided by operating      activities:               |   |                          |     |   |   |   |   |   |   |   |   |   |
| Depreciation, depletion and      amortization             |   |                          | 34,608   |   |   |   | 28,056 |   |   |   | 20,996 |   |
| Accretionexpense                                          |   |                          | 28,909   |   |   |   | 35,785 |   |   |   | 21,471 |   |
| Settlement of asset retirement      obligations           |   |                          |     |   |   |   |   |   |   |   |   |   |
| for plugged and abandoned      wells                      |   |                          | (4,790   | ) |   |   | (49,346 | ) |   |   | - |   |
| (Increase) decrease in      receivables and deposits      |   |                          | (47,785  | ) |   |   | 78,238 |   |   |   | (10,998 | ) |
| (Decrease) increase in accounts      payable              |   |                          | (6,060   | ) |   |   | 6,060 |   |   |   | - |   |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Net      cash provided by operating activities            |   | $                             | 695,004  |   |   | $ | 348,806 |   |   | $ | 531,300 |   |
|                                                      |   |                          |     |   |   |   |   |   |   |   |   |   |
| Noncash      investing and financing activities:          |   |                          |     |   |   |   |   |   |   |   |   |   |
| Increase (decrease) in oil and gas      properties -      |   |                          |     |   |   |   |   |   |   |   |   |   |
| SFAS No. 143                                              |   | $                             | 10,726   |   |   | $ | (248 | ) |   | $ | 134,591 |   |

----

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 |
|----|------------------------------------------------------------|

|                                                             |   | 2008   |    |   | 2007   |   |
|------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Beginning      of year                                           |   | $      | 389,539 |   |   | $      | 403,348 |   |
| Reduction      of obligations due to wells plugged and abandoned |   |   | (4,790  | )      |   |   | (49,346 | ) |
| Reduction      of obligations due to farm-outs                   |   |   | (1,765  | )      |   |   | (248 | ) |
| Accretion      expense                                           |   |   | 28,909  |   |   |   | 35,785 |   |
| Revisions      of previous estimates                             |   |   | 12,392  |   |   |   | - |   |
| Additional      abandonment obligations from new wells           |   |   | 99      |   |   |   | - |   |
| End      of year                                                 |   | $      | 424,384 |   |   | $      | 389,539 |   |

----

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

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

----

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

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

|                                 |   | Oil      (bbls) |    |   | Gas      (mcf) |   |
|--------------------------------------|--------|-----------------|---------|--------|----------------|--------|
| Total      Proved -                  |   |            |    |   |           |   |
| January      1, 2006                 |   |            | 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 |   |
|                                 |   |            |    |   |           |   |   |   |
| Revisions of previous      estimates |   |            | (24,000 | )      |           |   | (6,000 | ) |
| Production                           |   |            | (10,000 | )      |           |   | (31,000 | ) |
| December      31, 2008               |   |            | 66,000  |   |           |   | 243,000 |   |
|                                 |   |            |    |   |           |   |   |   |
| Proved developed reserves      -     |   |            |    |   |           |   |   |   |
|                                 |   |            |    |   |           |   |   |   |
| December      31, 2006               |   |            | 122,000 |   |           |   | 387,000 |   |
| December      31, 2007               |   |            | 96,000  |   |           |   | 230,000 |   |
| December      31, 2008               |   |            | 65,000  |   |           |   | 195,000 |   |

----

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

|                                               |   | 2008   |      |   | 2007   |   |       | 2006   |   |
|----------------------------------------------------|--------|--------|-----------|--------|--------|--------|------------|--------|--------|
| Future      cash inflows                           |   | $      | 4,419,000 |   |   | $      | 11,256,000 |   |   | $ | 9,560,000 |   |
| Production,      development and abandonment costs |   |   | 2,451,000 |   |   |   | 4,208,000  |   |   |   | 4,537,000 |   |
| Future      net cash flows                         |   |   | 1,968,000 |   |   |   | 7,048,000  |   |   |   | 5,023,000 |   |
| 10%      annual discount for                       |   |   |      |   |   |   |       |   |   |   |   |   |
| estimated timing of cash      flows                |   |   | 746,000   |   |   |   | 3,479,000  |   |   |   | 2,356,000 |   |
| Standardized      measure of                       |   |   |      |   |   |   |       |   |   |   |   |   |
| discounted future net cash      flows              |   | $      | 1,222,000 |   |   | $      | 3,569,000  |   |   | $ | 2,667,000 |   |

----

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

|                                                        |   | 2008   |       |   | 2007   |   |      | 2006   |   |
|-------------------------------------------------------------|--------|--------|------------|--------|--------|--------|-----------|--------|--------|
| Sales      of oil and gas produced, net of production costs |   | $      | (848,000   | )      |   | $      | (403,000  | )      |   | $ | (631,000 | ) |
| Changes      in prices and production costs                 |   |   | (2,269,000 | )      |   |   | 2,092,000 |   |   |   | (2,489,000 | ) |
| Changes      of production rates (timing) and others        |   |   | 699,000    |   |   |   | (154,000  | )      |   |   | 985,000 |   |
| Revisions      of previous quantities estimates             |   |   | (286,000   | )      |   |   | (900,000  | )      |   |   | (1,478,000 | ) |
| Accretion      of discount                                  |   |   | 357,000    |   |   |   | 267,000   |   |   |   | 571,000 |   |
| Discounted      future net cash flows -                     |   |   |       |   |   |   |      |   |   |   |   |   |
| Beginning      of year                                      |   |   | 3,569,000  |   |   |   | 2,667,000 |   |   |   | 5,709,000 |   |
| End      of year                                            |   | $      | 1,222,000  |   |   | $      | 3,569,000 |   |   | $ | 2,667,000 |   |

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

|                                      |   | Quarter |    |
|-------------------------------------------|--------|---------|---------|
|                                      |   | First   |    |   | Second |   |   | Third |   |   | Fourth |   |
| 2008:                                     |   |    |    |   |   |   |   |   |   |   |   |   |
| Total revenues                            |   | $       | 262,697 |   |   | $ | 315,394 |   |   | $ | 219,361 |   |   | $ | 50,720 |   |
| Total expenses                            |   |    | 38,800  |   |   |   | 41,800 |   |   |   | 39,364 |   |   |   | 38,086 |   |
| Net income                                |   | $       | 223,897 |   |   | $ | 273,594 |   |   | $ | 179,997 |   |   | $ | 12,634 |   |
|                                      |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income per limited partners      unit |   | $       | 20.51   |   |   | $ | 25.09 |   |   | $ | 16.48 |   |   | $ | 1.06 |   |

|                                      |   | 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 |   |

----

Item

Item

----

Item

----

10

Item

----

Item

Item

Item

| For      the Year Ended December 31, |   | 2008   |   |   | 2007   |   |
|--------------------------------------|--------|--------|--------|--------|--------|--------|
| Audit      Fees                      |   | $      | 18,030 |   |   | $      | 16,932 |   |
| Audit      Related Fees              |   |   | -      |   |   |   | - |   |
| Tax      Fees                        |   |   | -      |   |   |   | - |   |
| All      Other Fees                  |   |   | -      |   |   |   | - |   |
|                                 |   |   |   |   |   |   |   |   |
| TOTAL                                |   | $      | 18,030 |   |   | $      | 16,932 |   |

----

Item

| (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                                                                |

----

Glossary

----

----

Signatures

|   | 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      27, 2009                                |

|                                                                                       |   |                                                                                       |
|--------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------|
| /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      27, 2009 |   | Date:           March      27, 2009 |
|                                                                                       |   |                                                                                       |
|                                                                                       |   |                                                                                       |
|                                                                                       |   |                                                                                       |
|                                                                                       |   |                                                                                       |
| /s/      Mel G. Riggs                                                                      |   |                                                                                       |
| Mel      G. Riggs, Vice President – Finance,                                         |   |                                                                                       |
| Treasurer      and a Director                                                              |   |                                                                                       |
|                                                                                       |   |                                                                                       |
| Date:           March      27, 2009 |   |                                                                                       |
|                                                                                       |   |                                                                                       |
|                                                                                       |   |                                                                                       |