# **UNITED STATES**

**SECURITIES AND EXCHANGECOMMISSION**

# **Washington, D.C. 20549**

 

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# **FORM 10-Q**

 

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# **QUARTERLY REPORT PURSUANT TOSECTION 13 OR 15(d) OF**

# **THE SECURITIES EXCHANGE ACT OF1934**

 

# **For the quarterly period ended September 30, 2005**

 

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

 

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# **REEF GLOBAL ENERGY IV, L.P.**

(Exact name of registrant asspecified in its charter)

 

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

 

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

 

**As of November14, 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 Statements 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**                                                                                          | ** ** | ** ** | ** ** |

 

 

i

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# **PARTI FINANCIAL INFORMATION**

 

## **Item 1. FinancialStatements**

 

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

**CondensedBalance Sheets**

 
| ** **                                              | ** ** | **September 30,** | ** **    | **December 31,** | ** ** |
|---------------------------------------------------------|------------|-------------------|---------------|------------------|------------|
| ** **                                              | ** ** | **2005**          | ** **    | **2004**         | ** ** |
| ** **                                              | ** ** | **(Unaudited)**   | ** **    | ** **       | ** ** |
| **Assets**                                              | ** ** | ** **        | ** **    | ** **       | ** ** |
| **Current  assets:**                                    |       |              |          |             |       |
| Cash and cash  equivalents                              |       | $                 | 1,075,927     |             | $          | 5,002,892 |   |
| Accounts  receivable                                    |       | 43,767            |          | —           |       |
| Accounts  receivable from affiliates                    |       | 25,454            |          | 425,475          |       |
| Accrued interest  receivable                            |       | —            |          | 305              |       |
| **Total  current assets**                               | ** ** | **1,145,148**     |          | **5,428,672**    | ** ** |
|                                                    |       |              |          |             |       |
| **Property  and equipment:**                            |       |              |          |             |       |
| Oil and gas  properties, full cost method of accounting |       | 7,062,028         |          | 815,519          |       |
| Prepaid drilling  costs                                 |       | 492,479           |          | 2,919,405        |       |
| Accumulated  depreciation and depletion                 |       | (4,060,091        | )             | **—-**      | ** ** |
| **Net  property and equipment**                         | ** ** | **3,494,416**     |          | **3,734,924**    | ** ** |
| ** **                                              | ** ** | ** **        |          | ** **       | ** ** |
| **Total assets**                                        | ** ** | **$**             | **4,639,564** |             | **$**      | **9,163,596** | ** ** |
|                                                    |       |              |          |             |       |
| **Liabilities and partners’ equity**               |       |              |          |             |       |
| **Current  liabilities:**                               |       |              |          |             |       |
| Accounts payable                                        |       | $                 | 19,131        |             | $          | 1,106 |   |
| Accounts payable  to affiliates                         |       | 55,439            |          | 653,616          |       |
| **Total  current liabilities**                          | ** ** | **74,570**        |          | **654,722**      | ** ** |
|                                                    |       |              |          |             |       |
| **Non-current  liabilities:**                           |       |              |          |             |       |
| Asset retirement  obligation                            | ** ** | **75,404**        |          | **—-**      | ** ** |
|                                                    |       |              |          |             |       |
| **Partners’  equity:**                             |       |              |          |             |       |
| General partners                                        |       | 1,121,561         |          | 2,127,535        |       |
| Limited partners                                        |       | 3,140,121         |          | 5,956,620        |       |
| Managing general  partner                               |       | 227,908           |          | 424,719          |       |
| **Total  partners’ equity**                        | ** ** | **4,489,590**     |          | **8,508,874**    | ** ** |
| ** **                                              | ** ** | ** **        |          | ** **       | ** ** |
| **Total liabilities and partners’ equity**         | ** ** | **$**             | **4,639,564** |             | **$**      | **9,163,596** | ** ** |

 

*See accompanying notes to condensed financialstatements.*

 

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

**CondensedStatements of Operations**

*** ***
| ** **                                 | ** ** | **Three months**       | ** **     | **Nine months**        | ** ** |
|--------------------------------------------|------------|------------------------|----------------|------------------------|------------|
| ** **                                 | ** ** | **Ended**              | ** **     | **Ended**              | ** ** |
| ** **                                 | ** ** | **September 30, 2005** | ** **     | **September 30, 2005** | ** ** |
| ** **                                 | ** ** | **(Unaudited)**        | ** **     | **(Unaudited)**        | ** ** |
| **Revenues:**                              | ** ** | ** **             | ** **     | ** **             | ** ** |
| Oil and gas  sales                         |       | $                      | 51,572         |                   | $          | 76,053 |   |
| Interest income                            |       | 9,957                  |           | 48,616                 |       |
| **Total revenues**                         | ** ** | **61,529**             | ** **     | **124,669**            | ** ** |
|                                       |       |                   |           |                   |       |
| **Costs and expenses:**                    |       |                   |           |                   |       |
| Lease operating  expenses                  |       | 7,107                  |           | 7,367                  |       |
| Production taxes                           |       | 1,642                  |           | 2,751                  |       |
| General and  administrative                |       | 13,798                 |           | 79,240                 |       |
| Accretion of  asset retirement obligation  |       | 1,199                  |           | 1,250                  |       |
| Depreciation and  depletion                |       | 111,967                |           | 125,699                |       |
| Property  impairment                       |       | 1,983,392              |           | 3,934,392              |       |
| **Total costs and expenses**               | ** ** | **2,119,105**          | ** **     | **4,150,699**          | ** ** |
|                                       |       |                   |           |                   |       |
| **Net loss**                               | ** ** | **$**                  | **(2,057,576** | **)**                  | **$**      | **(4,026,030** | ** ** |
|                                       |       |                   |           |                   |       |
| Net loss per general partner unit          |       | $                      | (4,079.23      | )                      | $          | (7,967.51 | ) |
| Net loss per limited partner unit          |       | $                      | (4,079.23      | )                      | $          | (7,967.51 | ) |
| Net loss per managing general partner unit |       | $                      | (4,796.96      | )                      | $          | (9,656.70 | ) |

 

*See accompanying notes to condensed financialstatements.*

 

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

**CondensedStatement of Cash Flows**

 
| ** **                                                                       | ** ** | **September 30,** | ** **     |
|----------------------------------------------------------------------------------|------------|-------------------|----------------|
| ** **                                                                       | ** ** | **2005**          | ** **     |
| ** **                                                                       | ** ** | **(Unaudited)**   | ** **     |
| Operating Activities                                                             | ** ** | ** **        | ** **     |
| **Net  loss**                                                                    | ** ** | **$**             | **(4,026,030** | **)** |
| Adjustments for  non-cash transactions:                                          |       |              |           |
| Depreciation and  depletion                                                      |       | 125,699           |           |
| Property  impairment                                                             |       | 3,934,392         |           |
| Accretion of  asset retirement obligation                                        |       | 1,250             |           |
| Adjustments to  reconcile net loss to net cash provided by operating activities: |       |              |           |
| **Changes  in operating assets and liabilities:**                                |       |              |           |
| Accounts  receivable                                                             |       | (43,462           | )              |
| Accounts  receivable from affiliates                                             |       | (25,454           | )              |
| Accounts payable                                                                 |       | 17,058            |           |
| Accounts payable  to affiliates                                                  |       | 2,754             |           |
| **Net  cash used in operating activities**                                       | ** ** | **(13,793**       | **)**          |
| ** **                                                                       | ** ** | ** **        | ** **     |
| **Investing Activities**                                                         |       |              |           |
| Property  acquisition and development                                            |       | (4,345,393        | )              |
| **Net  cash used in investing activities**                                       | ** ** | **(4,345,393**    | **)**          |
|                                                                             |       |              |           |
| **Financing Activities**                                                         |       |              |           |
| Partner capital  contributions                                                   |       | 477,321           |           |
| Distributions to  partners                                                       |       | (45,100           | )              |
| **Net  cash provided by financing activities**                                   | ** ** | **432,221**       | ** **     |
| ** **                                                                       | ** ** | ** **        | ** **     |
| **Net decrease in cash and cash equivalents**                                    | ** ** | **(3,926,965**    | **)**          |
| Cash and cash equivalents at December 31, 2004                                   |       | 5,002,892         |           |
| **Cash and cash equivalents at September 30, 2005**                              | ** ** | **$**             | **1,075,927**  | ** ** |
| ** **                                                                       | ** ** | ** **        | ** **     |
| **Non-cash investing transactions:**                                             | ** ** | ** **        | ** **     |
| Additions  included in accounts payable to affiliates                            | ** ** | **(600,931**      | **)**          |
| Additions to  property included in accounts payable                              | ** ** | **967**           | ** **     |
| Additions to  asset retirement obligation                                        | ** ** | **74,154**        | ** **     |
| **Total non-cash investing transactions**                                        | ** ** | **$**             | **(525,810**   | **)** |
| **Non-cash financing transactions:**                                             | ** ** | ** **        | ** **     |
| Partner  contributions included in accounts receivable                           | ** ** | **$**             | **425,475**    | ** ** |

 

*See accompanying notes to condensed financialstatements.*

 

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

**Notes to CondensedFinancial Statements (unaudited)**

**September30, 2005**

 

**1.  Organization and Basis of Presentation**

 

The financial statements for Reef Global Energy IV, L.P. (thePartnership) have been prepared in accordance with the instructions to Form10-Q and do not include all disclosures required by accounting principlesgenerally accepted in the United States. However, we have recorded alltransactions and adjustments necessary to fairly present the financialstatements included in this Form 10-Q. The adjustments are normal andrecurring. The following notes describe only the material changes in accountingpolicies, account details, or financial statement notes during the first ninemonths of 2005. Therefore, please read these condensed financial statements andnotes to condensed financial statements together with the audited financialstatements and notes to financial statements contained in the Partnership’sReport on Form 10-K for the period ended December 31, 2004 (the 2004 10-K). ThePartnership began oil and gas drilling activities in December 2004.  Because the future results of the Partnershipare dependent upon the success of drilling and completion operations which willoccur during the next three months, the results for the three and nine monthperiods ended September 30, 2005 cannot necessarily be used to project resultsfor the full year.

 

**2.  Summary of Accounting Policies**

 

# **Oil and GasProperties**

 

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 natural gasproperties, except in unusual circumstances. During the three month and ninemonth periods ended September 30, 2005, the Partnership recognized propertyimpairment expense of $1,983,392 and $3,934,392, respectively.

 

**Restoration, Removal, and EnvironmentalLiabilities**

 

In June 2001, the Financial Accounting Standards Board (FASB) issuedStatement of Financial Accounting Standards No. 143, “Accounting for RetirementObligations” (SFAS 143). SFAS 143 addresses accounting and reporting forobligations associated with the retirement of tangible long-lived assets andthe associated asset retirement costs. SFAS 143 requires that the fair value ofa liability for an asset’s retirement obligation be recorded in the period inwhich it is incurred and the corresponding cost capitalized by increasing thecarrying amount of the related long-lived asset. The liability is accreted toits then present value each period, and the capitalized cost is depreciatedover the useful life of the related asset. SFAS 143 is effective for thePartnership as of its inception date. During the three and nine-month periodsended September 30, 2005, the Partnership recognized $0 and $74,154,respectively, of asset retirement obligation and additional capitalized cost inconnection with the successful drilling of Partnership wells.

 

**3.  Transactions with Affiliates**

 

At September 30, 2005, the Partnership had six wells in various stagesof production, drilling or completion that are operated by Reef Exploration,Inc. (REI), an affiliate of Reef Oil & Gas Partners LLC (Reef). Reef servesas the Partnership’s managing general partner. The Partnership also had twounsuccessful wells drilled during 2005 which were operated by REI. Accountspayable to affiliates at September 30 consists primarily of the Partnership’sshare of drilling and completion costs billed to the Partnership by REI. ThePartnership has paid REI for these costs subsequent to September 30.

 

4

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If an affiliate of Reef serves as operator of a Partnership prospect,then operator fees will be payable to the affiliate. Under such circumstances,such affiliate will receive fees at the competitive rate in the area during thedrilling and production phase of operations. Often these are charged as amonthly fee per well as agreed to in an operating agreement signed by thePartnership as well as outside third party working interests in the well. At September30, 2005 and December 31, 2004, there were eight and two wells, respectively,being drilled which are operated by REI. At September 30, 2005 and December 31,2004, the Partnership has capitalized as drilling costs $26,392 and $752 ofoperator fees, respectively, incurred in connection with the drilling of thesewells.

 

**4. Partnership Equity**

 

Information regarding the number of units outstanding and the net lossper type of Partnership unit for the three and nine months ended September 30,2005 is detailed below:

 

| ** **                     | ** ** | **For the three months ended September 30, 2005** | ** ** |
|--------------------------------|------------|---------------------------------------------------|------------|
| **Type of Unit**               | ** ** | **Number of  Units**                              | ** ** | **Net loss** | ** ** | **Net loss per  unit** | ** ** |
| Managing general partner units |       | 25.027956                                         |       | $ | (120,058 | ) | $ | (4,796.96 | ) |
| General partner units          |       | 125.000000                                        |       | (509,903 | ) | (4,079.23 | ) |
| Limited partner units          |       | 349.972044                                        |       | (1,427,615 | ) | (4,079.23 | ) |
| Total                          |       | 500.000000                                        |       | $ | (2,057,576 | ) |   |   |
|                                |            |                                                   |            |  |  |  |  |  |  |

 

| ** **                     | ** ** | **For the nine months ended September 30, 2005** | ** ** |
|--------------------------------|------------|--------------------------------------------------|------------|
| **Type of Unit**               | ** ** | **Number of  Units**                             | ** ** | **Net loss** | ** ** | **Net loss per  unit** | ** ** |
| Managing general partner units |       | 25.027956                                        |       | $ | (241,687 | ) | $ | (9,656.70 | ) |
| General partner units          |       | 125.000000                                       |       | (995,939 | ) | (7,967.51 | ) |
| Limited partner units          |       | 349.972044                                       |       | (2,788,404 | ) | (7,967.51 | ) |
| Total                          |       | 500.000000                                       |       | $ | (4,026,030 | ) |   |   |
|                                |            |                                                  |            |  |  |  |  |  |  |

 

**5.Subsequent Events**

 

The Partnership hascommitted funds to four exploratory and nine developmental wells. At September30, 2005, the Partnership had four dry holes, four productive wells, four wellsin various stages of completion and one well remaining to be drilled.

 

The Partnership’s wells experienced minimal damage from hurricanesKatrina and Rita, however, production activities have been curtailed as a resultof damages to pipelines and processing facilities to which production fromPartnership wells is delivered. As of November 14, 2005, two of the Partnership’sfour productive wells remain shut-in as a result of the hurricanes, andcompletion of another Partnership well was delayed until November as a resultof Hurricane Katrina. In addition, the Partnership owns a small royaltyinterest in two wells that currently remain shut-in as a result of thehurricanes. The Partnership expects the two shut-in wells to resume operationsduring the latter part of November and early part of December,respectively.  The Partnership currentlyestimates costs of approximately $15,000 to $20,000 in order to repairhurricane damages. The Partnership expects a significant impact on fourthquarter revenues as a result of the shut-in status of certain Partnershipwells.

 

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

 

The following discussion willassist you in understanding the Partnership’s financial position and results ofoperations. The information below should be read in conjunction with thecondensed financial statements and the related notes to the condensed financialstatements.

 

5

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This Report on Form 10-Q contains forward-looking statements thatinvolve risks and uncertainties.  You should exercise extreme caution withrespect to all forward-looking statements made in this Report. Specifically, the following statements are forward-looking:

 

•                                       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 is important to communicate its futureexpectations to the partners.  Forward-looking statements reflect thecurrent view of management with respect to future events and are subject tonumerous risks, uncertainties and assumptions, including, without limitation,the factors listed in the section captioned “RISK FACTORS” contained inthe 2004 10-K. Although Reef believes that the expectations reflected in suchforward-looking statements are reasonable, Reef can give no assurance that suchexpectations will prove to have been correct.  Should any one or more ofthese or other risks or uncertainties materialize or should any underlyingassumptions prove incorrect, actual results are likely to vary materially fromthose described herein.  There can be no assurance that the projectedresults will occur, that these judgments or assumptions will prove correct orthat unforeseen developments will not occur.

 

Reef does not intend to update its forward-looking statements. All subsequent written and oral forward-looking statements attributable to Reefor persons acting on its behalf are expressly qualified in their entirety bythe applicable cautionary statements.

 

**Overview**

 

Reef Global Energy IV, L.P. is a Nevada limited partnership formed toexplore, develop, acquire and produce crude oil, natural gas, and natural gasliquids for the benefit of its investor partners. The Partnership’s primarypurposes are to generate revenues from the production of oil and gas,distribute cash flow to investors, and provide tax benefits to investors. Whilethe majority of the partnership’s proceeds have been used to purchase prospectsupon which the Partnership will conduct drilling operations, a small portion ofcapital has be used to purchase existing reserves.

 

The Partnership operates solely in the United States. Reef Exploration,Inc. (REI), an affiliate of the managing general partner, has expertise and hasdrilled primarily in Texas and Louisiana since its inception in 1987, and all propertiesacquired by the Partnership are located in Texas and Louisiana. Many of theprojects taken in Texas and Louisiana offer the potential for both natural gasand condensate production, and the quality of both the natural gas andcondensate often bring premium prices. The Partnership has focused more heavilyon natural gas than oil prospects, due to its belief that costs of productionare generally lower for natural gas and that the price of natural gas is lessinfluenced than the price of oil by foreign factors such as the Organization ofPetroleum Exporting Countries (OPEC) production quotas. In addition, the areasin which the Partnership will focus its drilling have a highly developedpipeline system and a highly competitive market for sale of the Partnership’sproduction.

 

The Partnership will not operate in any other industry segment. Shouldany prospect in which the Partnership has an interest be determined to warrantadditional development activity, the Partnership may call for voluntaryadditional partner assessments of up to $20,000 per unit. The Partnership isnot allowed to borrow funds during the drilling phase of Partnershipoperations, and therefore will not be impacted by interest ratefluctuations.  In addition, the Partnership has not engaged in commodityfutures trading or hedging activities, and therefore is subject to commodityprice risk.   See “Item 3—Quantitative and Qualitative DisclosuresAbout Market Risk.”

 

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**Critical AccountingPolicies**

 

The preparation of financialstatements in conformity with accounting principles generally accepted in theUnited States requires us to make estimates and use assumptions that can affectthe reporting of assets, liabilities, equity, revenues, and expenses. We baseour estimates on historical experience and various other assumptions that arebelieved to be reasonable under the circumstances. Actual results may differfrom these estimates. We are also required to select among alternativeacceptable accounting policies. See Note 2 to the audited financial statementsin the Partnership’s 2004 10-K for a complete list of significant accountingpolicies.

 

**Off-Balance Sheet Arrangements**

 

The Partnership does not participate in transactions that generaterelationships with unconsolidated entities or financial partnerships, such asentities often referred to as structured finance or special purpose entities(SPEs), which would have been established for the purpose of facilitatingoff-balance sheet arrangements or other contractually narrow or limitedpurposes.  As of September 30, 2005, the Partnership was not involvedin any unconsolidated SPE transactions.

 

**Contractual Obligations Table**

 

The Partnership has no obligations under non-cancelable agreements at September 30,2005.

 

**Risksand Uncertainties**

 

Historically, the oil and gas market has experienced significant pricefluctuations. Prices are significantly impacted by local weather, supply in thearea, availability and price of competitive fuels, seasonal variations in localdemand, limited transportation capacity to other regions, and the worldwidesupply and demand balance for crude oil.

 

The Partnership has not engaged in commodity futures trading or hedgingactivities and has not entered into derivative financial instrumenttransactions for trading or other speculative purposes. 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.

 

# **Oiland 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 costof properties not being amortized, if any, plus the lower of cost or estimatedfair value of unproved properties included in the costs being amortized, ifany. Excess costs are charged to property impairment expense. No gain or lossis recognized upon sale or disposition of crude oil and natural gas properties,except in unusual circumstances. During the three months and nine months ended September 30, 2005, thePartnership recognized property impairment expense of $1,983,392 and$3,934,392, respectively.

 

**Restoration, Removal, and EnvironmentalLiabilities**

 

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 asset retirementcosts. SFAS 143 requires that the fair value of a liability for an asset’sretirement obligation be recorded in the period in which it is incurred and thecorresponding cost capitalized by increasing the carrying amount of the relatedlong-lived asset. 

 

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The liability is accreted to its then present value each period, andthe capitalized cost is depreciated over the useful life of the related asset.SFAS 143 is effective for the Partnership as of its inception date. Thepartnership did not recognize any additional liability during the third quarterof 2005. During the nine month period ended September 30, 2005, the Partnershiphas recognized $74,154 of asset retirement obligation and additional capitalizedcost in connection with the successful drilling of Partnership wells.

 

**Liquidity and Capital Resources**

 

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

 

The Partnership also earned approximately $62,000 in interest incomeduring the period from inception (November 10, 2004) thru September 30, 2005.Drilling operations began in December 2004 and are expected to continue throughthe end of 2005. During this period, the Partnership expects to utilize the $8,500,000plus interest income earned for lease acquisition, drilling activities, andgeneral and administrative expenses. The Partnership will pay 100% of generaland administrative costs and 99% of the lease acquisition, drilling andcompletion costs from these funds. Reef, the managing general partner, willmake additional capital contributions totaling 1% of all lease acquisition,drilling and completion costs incurred, in addition to the 4.95% share of costsit will pay for as a unit holder. The Partnership has acquired non-operatedworking interests in thirteen exploratory and development drilling projects.Drilling and other activities will be conducted solely with the funds raisedplus interest earned. The Partnership Agreement prohibits bank borrowingsduring the Partnership’s drilling phase of operations, and the Partnershipexpects to distribute net proceeds, if any, from successful oil and gasactivities directly to the partners.

 

The thirteen projects to which the Partnership has currently committedfunds have estimated expenditures totaling $8,300,000. General andadministrative costs, which consist primarily of legal and accounting fees, aswell as administrative time of REI personnel, are estimated at approximately$200,000 during the drilling phase of operations. There is no uncommittedcapital as of September 30, 2005. At September 30, 2005, the Partnership had approximately$1,070,000 of working capital with which to pay remaining budgetedexpenditures.

 

The Partnership Agreement allows for the assessment of up to $20,000per unit for subsequent operations deemed necessary to fully develop any of theinitial Partnership prospects. Until initial drilling operations are completedit is not known whether any additional partner assessments will be made.

 

**Results of Operations**

 

Because the Partnership was formed on November 10, 2004, there is nocomparable information for the three and nine month periods ended September 30,2004.

 

**Nine Months Ended September 30, 2005**

 

The Partnership incurred a net loss of $4,026,030 for the nine monthsended September 30, 2005, which includes $3,934,392 of property impairmentexpense. Partnership expenditures on eleven of the planned thirteen drillingprojects were substantially completed during the quarter ended September 30,2005. The Partnership has seven wells it has completed or is completing, onewell awaiting a potential side-track operation, and four wells which are dryholes. Costs incurred to date are approximately $3,934,392 in excess of the presentvalue of estimated recoverable reserves based upon un-escalated September 30,2005 prices discounted at 10%, resulting in property impairment expense of $3,934,392at September 30, 2005. The Partnership has plugged and abandoned four wells,has four productive oil and gas wells, three wells expected to produce oil andgas which are in various stages of completion, and one well being evaluated fora side-track operation. In addition, the Partnership purchased a royaltyinterest in a field with two productive wells.

 

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The first Partnership well began production operations in April 2005,but the initial reservoir was limited and production ceased in May 2005. Anunsuccessful recompletion to a second productive zone was attempted during thethird quarter, and two additional zones remain to be tested. Two additionalPartnership wells began production during July and August 2005. The Partnershipis de-watering a fourth well completed during July 2005. Completion activities areexpected to be finished on four additional Partnership wells during the fourthquarter of 2005. The Partnership currently has two of its four productive wellsshut-in as a result of Hurricane Rita. Both wells are expected to beginproduction operations by December 31, 2005.  During the nine month period ended September30, 2005, the Partnership had $48,616 of interest income earned from investmentof Partnership capital contributions and $76,053 of oil and gas revenue fromthe two productive royalty interest wells purchased in January 2005 and fromthe four Partnership wells that have begun production operations. General andadministrative charges totaled $79,240, primarily related to accounting, legal,and printing costs associated with quarterly SEC filings. Administrative timecharged by REI personnel totaled approximately $7,000. The Partnership expects legaland accounting fees to remain close to third quarter levels during the finalquarter of the year, but expects general and administrative costs charged byREI personnel 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 expects that completion operations on three additionalPartnership wells will be completed by December 31, 2005. Work on one of thesewells was significantly delayed by Hurricane Katrina. Hurricanes Katrina andRita have shut-in the Partnership’s two royalty interest wells as well as thePartnership’s largest producing well for part of the third quarter and much ofthe fourth quarter. As a result, the Partnership does not expect to see anysignificant improvements in its results of operations until the first quarterof 2006.

 

 

**Three Months Ended September 30, 2005**

 

The Partnership incurred a net loss of $2,057,576 during the threemonth period ended September 30, 2005, which includes $1,983,392 of propertyimpairment expense. During the period, the Partnership substantially completedexpenditures on two of the thirteen planned drilling projects, bringing totwelve the number of projects which are substantially complete. One of theseprojects was a dry hole and the second project resulted in a successful wellwhich is currently being completed as a producer. Costs incurred to date onthose projects are approximately $3,934,392 in excess of the present value ofestimated recoverable reserves based upon un-escalated September 30, 2005prices discounted at 10%, resulting in the $1,983,392 third quarter charge toproperty impairment expense. The Partnership has plugged and abandoned fourwells, has four productive oil and gas wells, three wells expected to produceoil and gas which are in various stages of completion, and another well beingevaluated for side-track operations.

 

For the three month period ended September 30, 2005, the Partnershiphad $9,957 of interest income earned from investment of Partnership capitalcontributions and $51,572 of oil and gas revenues from the two productiveroyalty interest wells purchased in January 2005 and from the four Partnershipwells that have begun production operations. General and administrative chargestotaled $13,798 during the third quarter, primarily related to accounting,legal, and printing costs associated with quarterly SEC filings. Administrativetime charged by REI personnel totaled approximately $2,500. The Partnershipexpects legal and accounting fees to remain close to third quarter levelsduring the remainder of the year, but expects general and administrative costscharged by REI personnel administering fund operations to gradually increase asproductive wells 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 expects that completion operations on three additionalPartnership wells will be completed by December 31, 2005. Work on one of thesewells was significantly delayed by Hurricane Katrina. Hurricanes Katrina andRita have shut-in the Partnership’s two royalty interest wells as well as thePartnership’s largest producing well for part of the third quarter and much ofthe fourth quarter. As a result, the Partnership does not expect to see anysignificant improvements in its results of operations until the first quarterof 2006.

 

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

 

*InterestRate Risk*

 

The Partnership Agreement prohibits bank borrowings during thePartnership’s drilling phase of operations. However, to the extent that changesin interest rates affect general economic conditions, the Partnership will beaffected by such changes.

 

*Commodity Price Risk*

 

The Partnership has not engaged in commodity futures trading or hedgingactivities and has not entered into derivative financial instrumenttransactions for trading or other speculative purposes.  The Partnership expects to sell a vastmajority of its production from successful oil and gas wells on amonth-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 currently has not committed funds to any foreignprojects and has no income from foreign sources or operations in foreigncountries that would subject it to currency exchange rate risk.

 

**Item 4. Controls and Procedures**

 

As the Managing General Partner of the Partnership, Reef maintains asystem of controls and procedures designed to provide reasonable assurance asto the reliability of the financial statements and other disclosures includedin this report, as well as to safeguard assets from unauthorized use ordisposition. As of the end of the period covered by this report, Reef’s ChiefExecutive Officer and Chief Financial Officer have evaluated the effectivenessof the design and operation of the Partnership’s disclosure controls andprocedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of1934) with the assistance and participation of other members of management.Based upon that evaluation, Reef’s Chief Executive Officer and Chief FinancialOfficer concluded that our disclosure controls and procedures are effective. Duringour fiscal quarter ended September 30, 2005, no change occurred in our internalcontrol over financial reporting (as defined in Rule 13a-15(f) under theSecurities Exchange Act of 1934) that has materially affected, or is reasonablylikely to materially affect, our internal control over financial reporting.

 

**PART II — OTHER INFORMATION**

 

**Item 1. Legal Proceedings**

 

None

 

**Item2.  Unregistered Sales of Equity Securitiesand Use of Proceeds**

 

*Use of Proceeds*

 

On January 10, 2002Reef filed a final prospectus and commenced the offering of units in the ReefGlobal Energy Ventures (the “Program”). All sales of Partnership units weremade through the Program’s dealer-manager, Reef Securities, Inc., and a numberof soliciting dealers. The Program filed a prospectus supplement describingReef Global Energy IV, L.P. on September 21, 2004 and commenced offeringunits. The offering period ended on December 2, 2004, at which time all500 allowable units had been sold. Under the terms of the offering, a minimumof 50 Partnership units at a price of $20,000 per unit were required to be soldin order to form the Partnership. The maximum Partnership units offered were375 units of limited partner interest and 125 units of general partnerinterest.

 

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The Partnership sold 500units of partnership interest, consisting of 375 units of limited partnerinterest and 125 units of additional general partner interest. Reef purchased25.027956 limited partner units, equaling 5.01% of the total Partnership unitssold. Total offering proceeds were $9,924,916.

 

All units except thosepurchased by Reef paid a 15% management fee to Reef to pay for the Partnershiporganization and offering costs, including sales commissions. These coststotaled $1,424,916, leaving capital contributions of $8,500,000 available forPartnership oil & gas operations. As of September 30, 2005, the Partnershiphad expended $7,072,005 on oil and gas operations, including amounts inaccounts payable at September 30, 2005, had made prepayments of intangibledrilling costs totaling $492,749, and had capitalized $74,154 as assetretirement cost. The Partnership intends to utilize all available Partnershipcapital during 2005.

 

**Item3.  Defaults Upon Senior Securities**

 

None

 

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

 

None

 

**Item5.  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:     | November 14, 2005 | By:                          | /s/ Michael J. Mauceli |
| ** ** |              |                         | **Michael J. Mauceli** |
|       |              |                         | Manager and Member |
|       |              |                         | (*Principal  Executive Officer)* |
|       |              |                         |   |
| Dated:     | November 14, 2005 | By:                          | /s/ Daniel C. Sibley |
| ** ** |              |                         | **Daniel C. Sibley** |
|       |              |                         | Chief Financial Officer |
|       |              |                         | (*Principal Financial and  Accounting Officer)* |

 

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**Exhibit Index**

 

31.1                           Certificationof Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) pursuant toSection 302 of the Sarbanes-Oxley Act of 2002.

 

31.2                           Certificationof Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) pursuant toSection 302 of the Sarbanes-Oxley Act of 2002.

 

32                                    Certificationof 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 of2002.

 

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