**UNITEDSTATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

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**FORM 10-Q**

 

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**QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF**

**THESECURITIES EXCHANGE ACT OF 1934**

 

**For the quarterly period endedJune 30, 2005**

 

**Commission File Number: 333-93399-04**

 

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**REEF GLOBALENERGY IV, L.P.**

(Exact name of registrant asspecified in its charter)

 

| **Nevada**                                                           | ** ** | **20-1654113**                                           |
|----------------------------------------------------------------------|------------|----------------------------------------------------------|
| (State or other jurisdiction of  incorporation or organization)      | ** ** | (I.R.S. employeridentification no.)                      |
|                                                                 |       |                                                     |
| **1901 N. Central Expressway, Suite 300****Richardson, Texas 75080** | ** ** | **(972) 437-6792**                                       |
| (Address of principal executive offices,  including zip code)        | ** ** | (Registrant’s telephone number,including area code) |

 

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Indicate by ýwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes ý       No o

 

Indicate by ýwhether the registrant is an accelerated filer (as defined in Rule 12b-2 of theExchange Act). Yes o     No ý

 

**As ofAugust 15, 2005, the registrant had**25.027956 units held by the managing general partner, 125.00 units ofadditional general partner interest and 349.972044units of limited partner interestoutstanding.

** **

** **

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** **

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

**Index**

 
| **PART I — FINANCIAL INFORMATION**                                                                 |       |
|---------------------------------------------------------------------------------------------------------|------------|
|                                                                                                    |       |
| **ITEM  1. FINANCIAL STATEMENTS (Unaudited)**                                                           |       |
| *Condensed  Balance Sheets*                                                                             |       |
| *Condensed  Statement of Operations*                                                                    |       |
| *Condensed  Statement of Cash Flows*                                                                    |       |
| *Notes to Condensed Financial  Statements*                                                              |       |
|                                                                                                    |       |
| **ITEM 2. MANAGEMENT’S DISCUSSION  AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** |       |
|                                                                                                    |       |
| **ITEM 3. QUANTITATIVE AND  QUALITATIVE DISCLOSURES ABOUT MARKET RISK**                                 |       |
|                                                                                                    |       |
| **ITEM  4. CONTROLS AND PROCEDURES**                                                                    |       |
|                                                                                                    |       |
| **PART II — OTHER INFORMATION**                                                                    |       |
|                                                                                                    |       |
| **ITEM 1.  LEGAL PROCEEDINGS**                                                                          |       |
|                                                                                                    |       |
| **ITEM 2. UNREGISTERED SALES  OF EQUITY SECURITIES AND USE OF PROCEEDS**                                |       |
|                                                                                                    |       |
| **ITEM 3. DEFAULTS UPON SENIOR  SECURITIES**                                                            |       |
|                                                                                                    |       |
| **ITEM 4. SUBMISSION OF  MATTERS TO A VOTE OF SECURITY HOLDERS**                                        |       |
|                                                                                                    |       |
| **ITEM 5.  OTHER INFORMATION**                                                                          |       |
|                                                                                                    |       |
| **ITEM 6.  EXHIBITS**                                                                                   |       |
|                                                                                                    |       |
| **SIGNATURES**                                                                                          |       |
|                                                                                                    |       |
| **EXHIBITS  INDEX**                                                                                     | ** ** |

 

i

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# **PART I FINANCIAL INFORMATION**

 

## **Item 1. FinancialStatements**

 

**ReefGlobal Energy IV, L.P.**

**CondensedBalance Sheets**

 
| ** **                                              | ** ** | **June 30,**    |          | **December 31,** | ** ** |
|---------------------------------------------------------|------------|-----------------|---------------|------------------|------------|
| ** **                                              | ** ** | **2005**        |          | **2004**         | ** ** |
| ** **                                              | ** ** | **(Unaudited)** |          | ** **       | ** ** |
| **Assets**                                              | ** ** | ** **      |          | ** **       | ** ** |
| **Current  assets:**                                    |       |            |          |             |       |
| Cash and cash  equivalents                              |       | $               | 3,197,879     |             | $          | 5,002,892 |   |
| Accounts  receivable                                    |       | 9,499           |          | —           |       |
| Accounts  receivable from affiliates                    |       | 293,140         |          | 425,475          |       |
| Accrued interest  receivable                            |       | —          |          | 305              |       |
| **Total  current assets**                               | ** ** | **3,500,518**   |          | **5,428,672**    | ** ** |
|                                                    |       |            |          |             |       |
| **Property  and equipment:**                            |       |            |          |             |       |
| Oil and gas  properties, full cost method of accounting |       | 5,782,397       |          | 815,519          |       |
| Prepaid drilling  costs                                 |       | 721,748         |          | 2,919,405        |       |
| Accumulated  depreciation and depletion                 |       | (1,964,732      | )             | **—**       | ** ** |
| **Net  property and equipment**                         | ** ** | **4,539,413**   |          | **3,734,924**    | ** ** |
| ** **                                              | ** ** | ** **      |          | ** **       | ** ** |
| **Total  assets**                                       | ** ** | **$**           | **8,039,931** |             | **$**      | **9,163,596** | ** ** |
|                                                    |       |            |          |             |       |
| **Liabilities  and partners’ equity**              |       |            |          |             |       |
| **Current  liabilities:**                               |       |            |          |             |       |
| Accounts payable                                        |       | $               | 6,557         |             | $          | 1,106 |   |
| Accounts payable  to affiliates                         |       | 1,403,553       |          | 653,616          |       |
| **Total  current liabilities**                          | ** ** | **1,410,110**   |          | **654,722**      | ** ** |
|                                                    |       |            |          |             |       |
| **Non-current  liabilities:**                           |       |            |          |             |       |
| Asset retirement  obligation                            | ** ** | **74,205**      |          | **—**       | ** ** |
|                                                    |       |            |          |             |       |
| **Partners’  equity:**                             |       |            |          |             |       |
| General partners                                        |       | 1,638,473       |          | 2,127,535        |       |
| Limited partners                                        |       | 4,587,359       |          | 5,956,620        |       |
| Managing general  partner                               |       | 329,784         |          | 424,719          |       |
| **Total  partners’ equity**                        | ** ** | **6,555,616**   |          | **8,508,874**    | ** ** |
| ** **                                              | ** ** | ** **      |          | ** **       | ** ** |
| **Total  liabilities and partners’ equity**        | ** ** | **$**           | **8,039,931** |             | **$**      | **9,163,596** | ** ** |

 

*See accompanying notes to condensed financialstatements.*

 

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

**Condensed Statement of Operations**

*** ***
| ** **                                  | ** ** | **Three months**  | ** **     | **Six months**    | ** ** |
|---------------------------------------------|------------|-------------------|----------------|-------------------|------------|
| ** **                                  | ** ** | **Ended**         | ** **     | **Ended**         | ** ** |
| ** **                                  | ** ** | **June 30, 2005** | ** **     | **June 30, 2005** | ** ** |
| ** **                                  | ** ** | **(Unaudited)**   | ** **     | **(Unaudited)**   | ** ** |
| **Revenues:**                               |       |              |           |              |       |
| Oil and gas  sales                          |       | $                 | 16,264         |              | $          | 24,481 |   |
| Interest income                             |       | 22,958            |           | 38,659            |       |
| **Total  revenues**                         | ** ** | **39,222**        | ** **     | **63,140**        | ** ** |
|                                        |       |              |           |              |       |
| **Costs  and expenses:**                    |       |              |           |              |       |
| Lease operating  expenses                   |       | 209               |           | 260               |       |
| Production taxes                            |       | 823               |           | 1,109             |       |
| General and administrative                  |       | 16,172            |           | 65,442            |       |
| Accretion of  asset retirement obligation   |       | 51                |           | 51                |       |
| Depreciation and  depletion                 |       | 10,675            |           | 13,732            |       |
| Property  impairment                        |       | 1,951,000         |           | 1,951,000         |       |
| **Total  costs and expenses**               | ** ** | **1,978,930**     | ** **     | **2,031,594**     | ** ** |
|                                        |       |              |           |              |       |
| **Net  loss**                               | ** ** | **$**             | **(1,939,708** | **)**             | **$**      | **(1,968,454** | **)** |
|                                        |       |              |           |              |       |
| Net loss per  general partner unit          |       | $                 | (3,840.19      | )                 | $          | (3,888.28 | ) |
| Net loss per  limited partner unit          |       | $                 | (3,840.19      | )                 | $          | (3,888.28 | ) |
| Net loss per  managing general partner unit |       | $                 | (4,623.77      | )                 | $          | (4,859.74 | ) |

 

*See accompanying notes tocondensed financial statements.*

 

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

**Condensed Statement of Cash Flows**

 
| ** **                                                                       | ** ** | **June 30,**    | ** **     |
|----------------------------------------------------------------------------------|------------|-----------------|----------------|
| ** **                                                                       | ** ** | **2005**        | ** **     |
| ** **                                                                       | ** ** | **(Unaudited)** | ** **     |
| **Operating  Activities**                                                        |       |            |           |
| **Net  loss**                                                                    | ** ** | **$**           | **(1,968,454** | **)** |
| Adjustments for  non-cash transactions:                                          |       |            |           |
| Depreciation and  depletion                                                      |       | 13,732          |           |
| Property  impairment                                                             |       | 1,951,000       |           |
| Accretion of  asset retirement obligation                                        |       | 51              |           |
| Adjustments to  reconcile net loss to net cash provided by operating activities: |       |            |           |
| **Changes  in operating assets and liabilities:**                                |       |            |           |
| Accounts  receivable                                                             |       | (9,194          | )              |
| Accounts  receivable from affiliates                                             |       | (293,140        | )              |
| Accounts payable                                                                 |       | 5,451           |           |
| Accounts payable  to affiliates                                                  |       | (1,906          | )              |
| **Net  cash used in operating activities**                                       | ** ** | **(302,460**    | **)**          |
| ** **                                                                       | ** ** | ** **      | ** **     |
| **Investing  Activities**                                                        |       |            |           |
| Property  acquisition and development                                            |       | (1,943,224      | )              |
| **Net  cash used in investing activities**                                       | ** ** | **(1,943,224**  | **)**          |
|                                                                             |       |            |           |
| **Financing  Activities**                                                        |       |            |           |
| Partner capital  contributions                                                   |       | 454,271         |           |
| Distributions to  partners                                                       |       | (13,600         | )              |
| **Net  cash provided by financing activities**                                   | ** ** | **440,671**     | ** **     |
| ** **                                                                       | ** ** | ** **      | ** **     |
| **Net  decrease in cash and cash equivalents**                                   | ** ** | **(1,805,013**  | **)**          |
| Cash and cash  equivalents at December 31, 2004                                  |       | 5,002,892       |           |
| **Cash  and cash equivalents at June 30, 2005**                                  | ** ** | **$**           | **3,197,879**  | ** ** |
| ** **                                                                       | ** ** | ** **      | ** **     |
| **Non-cash  investing transactions:**                                            | ** ** | ** **      | ** **     |
| Increase in  property additions included in accounts payable to affiliates       | ** ** | **751,843**     | ** **     |
| Additions to  asset retirement obligation                                        | ** ** | **74,154**      | ** **     |
| Prepaid drilling  costs transferred to oil and gas properties                    | ** ** | **2,197,657**   | ** **     |
| **Total  non-cash investing transactions**                                       | ** ** | **$**           | **3,023,654**  | ** ** |

 

*See accompanying notes tocondensed financial statements.*

 

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**ReefGlobal Energy IV, L.P.**

**Notes to Condensed FinancialStatements (unaudited)**

**June 30, 2005**

 

**1.  Organization and Basis of Presentation**

 

The financial statementsfor Reef Global Energy IV, L.P. (the Partnership) have been prepared inaccordance with the instructions to Form 10-Q and do not include alldisclosures required by accounting principles generally accepted in the UnitedStates. However, we have recorded all transactions and adjustments necessary tofairly present the financial statements included in this Form 10-Q. Theadjustments are normal and recurring. The following notes describe only thematerial changes in accounting policies, account details, or financialstatement notes during the first six months of 2005. Therefore, please readthese condensed financial statements and notes to condensed financialstatements together with the audited financial statements and notes to financialstatements contained in the Partnership’s Report on Form 10-K for the periodended December 31, 2004 (the 2004 10-K). The Partnership began oil and gasdrilling activities in December 2004. Because the future results of the Partnership are dependent upon thesuccess of drilling operations which will occur during the next six months, theresults for the three and six month periods ended June 30, 2005 cannotnecessarily be used to project results for the full year.

 

**2.  Summary of Accounting Policies**

 

# **Oil and Gas Properties**

 

ThePartnership follows the full cost method of accounting for crude oil andnatural gas properties. Under this method, all direct costs and certainindirect costs associated with acquisition of properties and successful as wellas unsuccessful exploration and development activities are capitalized.Depreciation, depletion, and amortization of capitalized crude oil and naturalgas properties and estimated future development costs, excluding unprovedproperties, are based on the unit-of-production method using provedreserves.  Proved gas reserves areconverted to equivalent barrels at a rate of 6 Mcf to 1 Bbl. Net capitalizedcosts of crude oil and natural gas properties, as adjusted for asset retirementobligations, are limited to the lower of unamortized cost or the cost ceiling,defined as the sum of the present value of estimated future net revenues fromproved reserves based on un-escalated prices discounted at 10 percent, plus thecost of properties not being amortized, if any, plus the lower of cost orestimated fair value of unproved properties included in the costs beingamortized, if any. Excess costs are charged to property impairment expense. Nogain or loss is recognized upon sale or disposition of crude oil and naturalgas properties, except in unusual circumstances. During the second quarter of2005, the Partnership recognized property impairment expense of $1,951,000.

 

**Restoration,Removal, and Environmental Liabilities**

 

In June 2001, theFinancial Accounting Standards Board (FASB) issued Statement of FinancialAccounting Standards No. 143, “Accounting for Retirement Obligations” (SFAS143). SFAS 143 addresses accounting and reporting for obligations associatedwith the retirement of tangible long-lived assets and the associated assetretirement costs. SFAS 143 requires that the fair value of a liability for anasset’s retirement obligation be recorded in the period in which it is incurredand the corresponding cost capitalized by increasing the carrying amount of therelated long-lived asset. The liability is accreted to its then present valueeach period, and the capitalized cost is depreciated over the useful life ofthe related asset. SFAS 143 is effective for the Partnership as of itsinception date. During the second quarter of 2005, the Partnership recognized$35,364 of asset retirement obligation and additional capitalized cost inconnection with the successful drilling of two Partnership wells.

 

**3.  Transactions with Affiliates**

 

At June 30, 2005, thePartnership had eight wells in various stages of production, drilling orcompletion that are operated by Reef Exploration, Inc. (REI), an affiliate ofReef Oil & Gas Partners LLC (Reef). Accounts payable to affiliates at June30 consists primarily of the Partnership’s share of drilling and completioncosts billed to the Partnership by REI. The Partnership has paid REI for thesecosts subsequent to June 30.

 

4

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If an affiliate of Reefserves as operator of a Partnership prospect, then operator fees will bepayable to the affiliate. Under such circumstances, such affiliate will receivefees at the competitive rate in the area during the drilling and productionphase of operations. Often these are charged as a monthly fee per well as agreedto in an operating agreement signed by the Partnership as well as outside thirdparty working interests in the well. At June 30, 2005 and December 31, 2004,there were eight and two wells, respectively, being drilled which are operatedby REI. At June 30, 2005 and December 31, 2004, the Partnership has capitalizedas drilling costs $22,304 and $752 of operator fees, respectively, incurred inconnection with the drilling of these wells.

 

**4. Partnership Equity**

 

Information regarding thenumber of units outstanding and the net loss per type of Partnership unit forthe three and six months ended June 30, 2005 is detailed below:

 

For the three monthsended June 30, 2005

 
| **Type of Unit**                | ** ** | **Number of  Units** | ** ** | **Net loss** | ** ** | **Net loss per  unit** | ** ** |
|---------------------------------|------------|----------------------|------------|--------------|------------|------------------------|------------|
| Managing general  partner units |       | 25.027956            |       | $            | (115,723   | )                      | $          | (4,623.77 | ) |
| General partner  units          |       | 125.000000           |       | (480,025     | )          | (3,840.19              | )          |
| Limited partner  units          |       | 349.972044           |       | (1,343,960   | )          | (3,840.19              | )          |
| Total                           |       | 500.000000           |       | $            | (1,939,708 | )                      |       |   |
|                                 |            |                      |            |              |            |                        |            |  |  |  |

 

For the six months endedJune 30, 2005

 
| **Type of Unit**                | ** ** | **Number  of  Units** | ** ** | **Net loss** | ** ** | **Net loss  per  unit** | ** ** |
|---------------------------------|------------|-----------------------|------------|--------------|------------|-------------------------|------------|
| Managing general  partner units |       | 25.027956             |       | $            | (121,629   | )                       | $          | (4,859.74 | ) |
| General partner  units          |       | 125.000000            |       | (486,036     | )          | (3,888.28               | )          |
| Limited partner  units          |       | 349.972044            |       | (1,360,789   | )          | (3,888.28               | )          |
| Total                           |       | 500.000000            |       | $            | (1,968,454 | )                       |       |   |
|                                 |            |                       |            |              |            |                         |            |  |  |

 

**5. Subsequent Events**

 

The Partnership has committed funds to fourexploratory and nine developmental wells. At June 30, 2005, the Partnership hadthree dry holes, two productive wells, one drilling well, four wells in variousstages of completion and three wells remaining to be drilled.

 

Subsequent to June 30, 2005, the well whichwas drilling on June 30, 2005 was determined to be a dry hole, and completionoperations were finished on another Partnership well. In addition, drillingoperations commenced during July 2005 on one of the three remaining Partnershipwells.

 

As of August 15, 2005, the Partnership hascompleted drilling operations on all four of the exploratory wells. One of thewells has been completed with first production expected during the thirdquarter of 2005. Three other exploratory wells have been plugged and abandoned.

 

As of August 15, 2005 the Partnership hascompleted drilling operations on six of the nine developmental wells. One ofthe wells began production on April 8, 2005. The initial zone has depleted, andthe well is currently shut-in awaiting re-completion to a different productivezone.  A second well began production onJuly 8, 2005. Two of the wells are currently awaiting pipeline connections, andanother well is awaiting completion operations. One of the wells has beenplugged and abandoned.  One well iscurrently drilling and two additional developmental wells are expected to drillduring the third and fourth quarters of 2005.

 

**Item 2. Management’s Discussion and Analysis of Financial Condition and Resultsof Operations**

 

The following discussion will assist you in understanding thePartnership’s financial position and results of operations. The informationbelow should be read in conjunction with the condensed financial statements andthe related notes to the condensed financial statements.

 

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This Report on Form 10-Qcontains forward-looking statements that involve risks and uncertainties. You should exercise extreme caution with respect to all forward-lookingstatements made in this Report.  Specifically, the following statementsare forward-looking:

 

•                                     statementsregarding the Partnership’s overall strategy for acquiring prospects, includingits intent to co-invest with major independent oil companies and its intent todiversify the Partnership’s investments;

 

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

 

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

 

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

 

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

 

•                                     anystatements of other than historical fact.

 

Reef believes that it isimportant to communicate its future expectations to the partners. Forward-looking statements reflect the current view of management with respectto future events and are subject to numerous risks, uncertainties andassumptions, including, without limitation, the factors listed in thesection captioned “RISK FACTORS” contained in the 2004 10-K. Although Reefbelieves that the expectations reflected in such forward-looking statements arereasonable, Reef can give no assurance that such expectations will prove tohave been correct.  Should any one or more of these or other risks oruncertainties materialize or should any underlying assumptions prove incorrect,actual results are likely to vary materially from those described herein. There can be no assurance that the projected results will occur, that these judgmentsor assumptions will prove correct or that unforeseen developments will notoccur.

 

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

 

**Overview**

 

Reef Global Energy IV,L.P. is a Nevada limited partnership formed to explore, develop, acquire andproduce crude oil, natural gas, and natural gas liquids for the benefit of itsinvestor partners. The Partnership’s primary purposes are to generate revenuesfrom the production of oil and gas, distribute cash flow to investors, andprovide tax benefits to investors. While the majority of the partnership’sproceeds have been used to purchase prospects upon which the Partnership willconduct drilling operations, a small portion of capital has be used to purchaseexisting reserves.

 

The Partnership currentlyoperates solely in the United States, although there are no restrictionsregarding prospect locations. Reef Exploration, Inc. (REI), an affiliate of themanaging general partner, has expertise and has drilled primarily in Texas andLouisiana since its inception in 1987, and the Partnership has acquired propertiesprimarily in these areas to date. Many of the projects taken in Texas andLouisiana offer the potential for both natural gas and condensate production,and the quality of both the natural gas and condensate often bring premiumprices. The Partnership has focused more heavily on natural gas than oilprospects, due to its belief that costs of production are generally lower fornatural gas and that the price of natural gas is less influenced than the priceof oil by foreign

 

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factors such as theOrganization of Petroleum Exporting Countries (OPEC) production quotas. Inaddition, the areas in which the Partnership will focus its drilling have ahighly developed pipeline system and a highly competitive market for sale ofthe Partnership’s production.

 

The Partnership will notoperate in any other industry segment. Should any prospect in which thePartnership has an interest be determined to warrant additional developmentactivity, the Partnership may call for voluntary additional partner assessmentsof up to $20,000 per unit. The Partnership is not allowed to borrow fundsduring the drilling phase of Partnership operations, and therefore will not beimpacted by interest rate fluctuations.  In addition, the Partnership hasnot engaged in commodity futures trading or hedging activities, and thereforeis subject to commodity price risk.   See “Item 3—Quantitative andQualitative Disclosures About Market Risk.”

 

**CriticalAccounting Policies**

 

The preparation of financial statements in conformity withaccounting principles generally accepted in the United States requires us tomake estimates and use assumptions that can affect the reporting of assets,liabilities, equity, revenues, and expenses. We base our estimates on historicalexperience and various other assumptions that are believed to be reasonableunder the circumstances. Actual results may differ from these estimates underdifferent assumptions or conditions. We are also required to select amongalternative acceptable accounting policies. See Note 2 to the audited financialstatements in the Partnership’s 2004 10-K for a complete list of significantaccounting policies.

 

**Off-BalanceSheet Arrangements**

 

The Partnership does notparticipate in transactions that generate relationships with unconsolidatedentities or financial partnerships, such as entities often referred to asstructure finance or special purpose entities (SPEs), which would have beenestablished for the purpose of facilitating off-balance sheet arrangements orother contractually narrow or limited purposes.  As of June 30, 2005,the Partnership was not involved in any unconsolidated SPE transactions.

 

**ContractualObligations Table**

 

The Partnership has noobligations under non-cancelable agreements at June 30, 2005.

 

**Risksand Uncertainties**

 

Historically, the oil andgas market has experienced significant price fluctuations. Prices aresignificantly impacted by local weather, supply in the area, availability andprice of competitive fuels, seasonal variations in local demand, limitedtransportation capacity to other regions, and the worldwide supply and demandbalance for crude oil.

 

The Partnership has notengaged in commodity futures trading or hedging activities and has not enteredinto derivative financial instrument transactions for trading or otherspeculative purposes. Accordingly, the Partnership is at risk for thevolatility in commodity prices inherent in the oil and gas industry, and thelevel of commodity prices will have a significant impact on the Partnership’sresults of operations.

 

# **Oil and Gas Properties**

 

The Partnership followsthe full cost method of accounting for crude oil and natural gas properties.Under this method, all direct costs and certain indirect costs associated withacquisition of properties and successful as well as unsuccessful explorationand development activities are capitalized. Depreciation, depletion, andamortization of capitalized crude oil and natural gas properties and estimatedfuture development costs, excluding unproved properties, are based on theunit-of-production method using proved reserves.  Proved gas reserves are converted toequivalent barrels at a rate of 6 Mcf to 1 Bbl. Net capitalized costs of crudeoil and natural gas properties, as adjusted for asset retirement obligations,are limited to the lower of unamortized cost or the cost ceiling, defined asthe sum of the present value of estimated future net revenues from provedreserves based on un-escalated prices discounted at 10 percent, plus the cost ofproperties not being amortized, if any, plus the lower of cost or estimatedfair value of unproved properties included in

 

7

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the costs beingamortized, if any. Excess costs are charged to property impairment expense. Nogain or loss is recognized upon sale or disposition of crude oil and naturalgas properties, except in unusual circumstances. During the second quarter of 2005, thePartnership recognized property impairment expense of $1,951,000.

 

**Restoration,Removal, and Environmental Liabilities**

 

In June 2001, theFinancial Accounting Standards Board (FASB) issued Statement of FinancialAccounting Standards No. 143, “Accounting for Retirement Obligations” (SFAS143). SFAS 143 addresses accounting and reporting for obligations associatedwith the retirement of tangible long-lived assets and the associated assetretirement costs. SFAS 143 requires that the fair value of a liability for anasset’s retirement obligation be recorded in the period in which it is incurredand the corresponding cost capitalized by increasing the carrying amount of therelated long-lived asset. The liability is accreted to its then present valueeach period, and the capitalized cost is depreciated over the useful life ofthe related asset. SFAS 143 is effective for the Partnership as of itsinception date. During the second quarter of 2005, the Partnership recognized$35,364 of asset retirement obligation and additional capitalized cost inconnection with the successful drilling of two Partnership wells.

 

**Liquidity and Capital Resources**

 

The Partnership wasfunded with initial contributions totaling $9,924,916.  Reef purchased 25.027956 Partnership unitsfor a total of $425,475. Investor partners purchased 125 general partner unitsfor $2,500,000 and 349.972044 limited partner units for $6,999,441. Syndicationand organization costs of $1,424,916 were incurred leaving available cash of$8,500,000 for Partnership activities. The Partnership was formed on November 10, 2004 and the last partner wasadmitted to the Partnership on December 2, 2004, which was the date theoffering of Partnership units ended.

 

The Partnership alsoearned approximately $52,000 in interest income during the period frominception (November 10, 2004) thru June 30, 2005. Drilling operations began inDecember 2004 and are expected to continue through the end of 2005. During thisperiod, the Partnership expects to utilize the $8,500,000 plus interest incomeearned for lease acquisition, drilling activities, and general andadministrative expenses. The Partnership will pay 100% of general andadministrative costs and 99% of the lease acquisition, drilling and completioncosts from these funds. Reef, the managing general partner, will makeadditional capital contributions totaling 1% of all lease acquisition, drillingand completion costs incurred, in addition to the 4.95% share of costs it willpay for as a unit holder. The Partnership has acquired non-operated workinginterests in thirteen exploratory and development drilling projects. Drillingand other activities will be conducted solely with the funds raised plusinterest earned. The Partnership Agreement prohibits bank borrowings during thePartnership’s drilling phase of operations, and the Partnership expects to distributenet proceeds, if any, from successful oil and gas activities directly to thepartners.

 

The thirteen projects towhich the Partnership has currently committed funds have estimated expenditurestotaling $8,300,000. General and administrative costs, which consist primarilyof legal and accounting fees, as well as administrative time of REI personnel,are estimated at approximately $200,000 during the drilling phase ofoperations. There is no uncommitted capital as of June 30, 2005. At June 30, 2005,the Partnership had approximately $2,090,000 of working capital with which topay remaining budgeted and uncommitted expenditures.

 

The Partnership Agreementallows for the assessment of up to $20,000 per unit for subsequent operationsdeemed necessary to fully develop any of the initial Partnership prospects.Until initial drilling operations are completed it is not known whether anyadditional partner assessments will be made.

 

**Results of Operations**

 

Because the Partnershipwas formed on November 10, 2004, there is no comparable information for thethree and six month periods ended June 30, 2004.

 

**Six Months Ended June 30, 2005**

 

The Partnership incurreda net loss of $1,968,454 for the six months ended June 30, 2005, which includes$1,951,000 of property impairment expense. Partnership expenditures on ten ofthe planned thirteen drilling projects

 

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were substantiallycompleted during the quarter ended June 30, 2005. The Partnership has six wellsit has completed or is completing, and four wells which are dry holes. Costsincurred to date are approximately $1,951,000 in excess of the present value ofestimated recoverable reserves based upon un-escalated June 30, 2005 pricesdiscounted at 10%, resulting in property impairment expense of $1,951,000 atJune 30, 2005. The Partnership has plugged and abandoned four wells, has oneproductive oil and gas well, a second productive well awaiting recompletion,and four wells expected to produce oil and gas which are in various stages ofcompletion. In addition, the Partnership purchased a royalty interest in afield with two productive wells and a third well awaiting a recompletion.

 

The first Partnershipdrilling well began production operations in April 2005, but the initialreservoir was limited and production ceased in May 2005. A recompletion to asecond productive zone will be attempted during the third quarter. A secondPartnership well began production during July 2005. A third well was completedduring July 2005 and is expected to begin gas production during the thirdquarter. Completion activities continue on two wells, and a completion rig willmove onto another Partnership well in mid-August. During the six month periodended June 30, 2005, the Partnership had $38,659 of interest income earned frominvestment of Partnership capital contributions and $24,481 of oil and gasrevenue from the two productive royalty interest wells purchased in January2005 and from the one Partnership drilling well that began productionoperations during April 2005. General and administrative charges totaled$65,442, primarily related to accounting, legal, and printing costs associatedwith quarterly SEC filings. Administrative time charged by REI personneltotaled approximately $4,500. The Partnership expects legal and accounting feesto remain close to second quarter levels during the final two quarters of theyear, but expects general and administrative costs charged by REI personneladministering fund operations to gradually increase as productive wells areplaced in service. The primary components of general and administrative costswill continue to be third party legal and accounting costs associated withreview of financial statements and required SEC filings, and direct and administrativecosts for personnel provided by REI.

 

The Partnership expectsthat up to six drilled wells will be placed into production prior to September30, 2005. The Partnership expects results of operations for the third andfourth quarter to show improvement due to the increased revenues resulting fromproduction activities from these wells.

 

**Three Months Ended June 30, 2005**

 

The Partnership incurreda net loss of $1,939,708 during the three month period ended June 30, 2005,which includes $1,951,000 of property impairment expense. During the period,the Partnership substantially completed expenditures on ten of the thirteenplanned drilling projects. Costs incurred to date on those projects areapproximately $1,951,000 in excess of the present value of estimatedrecoverable reserves based upon un-escalated June 30, 2005 prices discounted at10%, resulting in the $1,951,000 second quarter charge to property impairmentexpense. The Partnership has plugged and abandoned four wells, has oneproductive oil and gas well, a second productive well awaiting recompletion,and four wells expected to produce oil and gas which are in various stages ofcompletion.

 

For the three monthperiod ended June 30, 2005, the Partnership had $22,958 of interest incomeearned from investment of Partnership capital contributions and $16,264 of oiland gas revenue from the two productive royalty interest wells purchased inJanuary 2005 and from the one Partnership drilling well that began productionoperations during April 2005. General and administrative charges totaled$16,172 during the second quarter, primarily related to accounting, legal, andprinting costs associated with quarterly SEC filings. Administrative timecharged by REI personnel totaled approximately $2,600. The Partnership expectslegal and accounting fees to remain close to second quarter levels during thenext two quarters, but expects general and administrative costs charged by REIpersonnel administering fund operations to gradually increase as productivewells are placed in service. The primary components of general andadministrative costs will continue to be third party legal and accounting costsassociated with review of financial statements and required SEC filings, anddirect and administrative costs for personnel provided by REI.

 

The Partnership expectsthat up to six drilled wells will be placed into production prior to September30, 2005. The Partnership expects results of operations for the third andfourth quarter to show improvement due to the increased revenues resulting fromproduction activities from these wells.

 

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**Item 3.  Quantitative and Qualitative Disclosuresabout Market Risk**

 

*InterestRate Risk*

 

The Partnership Agreementprohibits bank borrowings during the Partnership’s drilling phase ofoperations. However, to the extent that changes in interest rates affectgeneral economic conditions, the Partnership will be affected by such changes.

 

*CommodityPrice Risk*

 

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

 

*Exchange Rate Risk*

 

The Partnership currentlyhas not committed funds to any foreign projects and has no income from foreignsources or operations in foreign countries that would subject it to currencyexchange rate risk.

 

**Item 4. Controls and Procedures**

 

As the Managing GeneralPartner of the Partnership, Reef maintains a system of controls and proceduresdesigned to provide reasonable assurance as to the reliability of the financialstatements and other disclosures included in this report, as well as tosafeguard assets from unauthorized use or disposition. As of the end of theperiod covered by this report, Reef’s Chief Executive Officer and ChiefFinancial Officer have evaluated the effectiveness of the design and operationof the Partnership’s disclosure controls and procedures (as defined in Rule13a-15(e) under the Securities Exchange Act of 1934) with the assistance andparticipation of other members of management. Based upon that evaluation, Reef’sChief Executive Officer and Chief Financial Officer concluded that ourdisclosure controls and procedures are effective for gathering, analyzing anddisclosing the information the Partnership is required to disclose in thereports it files under the Securities Exchange Act of 1934 within the timeperiods specified in the SEC’s rules and forms. During our fiscal quarter endedJune 30, 2005, no change occurred in our internal control over financialreporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934)that has materially affected, or is reasonably likely to materially affect, ourinternal control over financial reporting.

 

**PART II – OTHER INFORMATION**

 

**Item 1. Legal Proceedings**

 

None

 

**Item2.  Unregistered Sales of EquitySecurities and Use of Proceeds**

 

*Use of Proceeds*

 

Inconnection with the Registration Statement filed on form S-1 (No. 333-93399)and declared effective May 31, 2001, Reef filed a post-effective amendment tothe Registration Statement on behalf of the Program on September 14, 2001.On January 10, 2002 Reef filed a final prospectus and commenced theoffering of units in the Program. All sales of Partnership units were madethrough the Program’s dealer-manager, Reef Securities, Inc., and a number ofsoliciting dealers. The Program filed a prospectus supplement describing ReefGlobal Energy IV, L.P. on September 21, 2004 and commenced offering units.The offering period ended on December 2, 2004, at which time all 500allowable units had been sold. Under the terms of the offering, a minimum of 50Partnership units at a price of $20,000 per unit were required to be sold inorder to form the Partnership. The maximum Partnership units offered were 375units of limited partner interest and 125 units of general partner interest.

 

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ThePartnership sold 500 units of partnership interest, consisting of 375 units oflimited partner interest and 125 units of additional general partner interest.Reef purchased 25.027956 limited partner units, equaling 5.01% of the totalPartnership units sold. Total offering proceeds were $9,924,916.

 

Allunits except those purchased by Reef paid a 15% management fee to Reef to payfor the Partnership organization and offering costs, including salescommissions. These costs totaled $1,424,916, leaving capital contributions of$8,500,000 available for Partnership oil & gas operations. As of June 30,2005, the Partnership had expended $5,708,243 on oil and gas operations,including amounts in accounts payable at June 30, 2005, had made prepayments ofintangible drilling costs totaling $721,748, and had capitalized $74,154 asasset retirement cost. The Partnership intends to utilize all availablePartnership capital during 2005.

 

**Item3.  Defaults Upon Senior Securities**

 

None

 

**Item4.  Submission of Matters to a Vote ofSecurity Holders**

 

None

 

**Item 5.  Other Information**

 

None

 

**Item6.  Exhibits**

 
| Exhibits |   |                                                                                                                                                                            |
|----------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |   |                                                                                                                                                                            |
| 31.1     |   | Certification of Chief  Executive Officer required by Rule 13a-14(a)/15d-14(a) pursuant to Section  302 of the Sarbanes-Oxley Act of 2002.                                      |
|     |   |                                                                                                                                                                            |
| 31.2     |   | Certification of Chief  Financial Officer required by Rule 13a-14(a)/15d-14(a) pursuant to Section  302 of the Sarbanes-Oxley Act of 2002.                                      |
|     |   |                                                                                                                                                                            |
| 32       |   | 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. |

 

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**SIGNATURES**

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

 
|       |            | REEF GLOBAL ENERGY IV,  L.P. |
|------------|-----------------|------------------------------|
|       |            |                         |   |
|       |            | By:                          | Reef Oil & Gas  Partners LLC, |
|       |            |                         | Managing General  Partner |
|       |            |                         |   |
|       |            |                         |   |
| Dated:     | August 17, 2005 | By:                          | /s/ Michael J. Mauceli |   |
| ** ** |            |                         | **Michael J. Mauceli** |
|       |            |                         | Manager and Member |
|       |            |                         | (*Principal  Executive Officer)* |
|       |            |                         |   |
|       |            |                         |   |
| Dated:     | August 17, 2005 | By:                          | /s/ Daniel C. Sibley |   |
| ** ** |            |                         | **Daniel C. Sibley** |
|       |            |                         | Chief Financial Officer |
|       |            |                         | (*Principal  Financial and Accounting Officer)* |

 

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**Exhibits Index**

 
| 31.1   |   | Certification of Chief  Executive Officer required by Rule 13a-14(a)/15d-14(a) pursuant to Section  302 of the Sarbanes-Oxley Act of 2002.                                      |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                            |
| 31.2   |   | Certification of Chief  Financial Officer required by Rule 13a-14(a)/15d-14(a) pursuant to Section  302 of the Sarbanes-Oxley Act of 2002.                                      |
|   |   |                                                                                                                                                                            |
| 32     |   | 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. |

 

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