**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

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**FORM 10-Q**

 

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**QUARTERLY REPORT PURSUANT TO SECTION 13OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934**

 

**For the quarterly period ended March 31, 2006**

 

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

 

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

(Exact name of registrant as specified in its charter)

 

| **Nevada**                                                              |       | **20-1654113**                                             |
|-------------------------------------------------------------------------|------------|------------------------------------------------------------|
| (State or other jurisdiction of  incorporation or organization)         |       | (I.R.S. employer  identification 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 check mark whether theregistrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required tofile such reports), and (2) has been subject to such filing requirementsfor the past 90 days. Yes  ý      No  o

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer. See definition of “accelerated filer and largeaccelerated filer” in Rule 12b-2 of the Exchange Act

Largeaccelerated filer o                                                                                                             Acceleratedfiler o                                                                                          Non-acceleratedfiler ý

 

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

 

**As of May 26, 2006, the registrant had 25.028units held by the managing general partner, 125.000 units of additional generalpartner interest and 349.972 units of limited partner interest outstanding.**

 

 

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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 1A. RISK FACTORS**                                                                               |   |
|                                                                                                    |   |
| **ITEM 2. UNREGISTERED SALES  OF EQUITY SECURITIES AND USE OF PROCEEDS**                                |   |
|                                                                                                    |   |
| **ITEM 3. DEFAULTS UPON SENIOR  SECURITIES**                                                            |   |
|                                                                                                    |   |
| **ITEM 4. SUBMISSION OF  MATTERS TO A VOTE OF SECURITY HOLDERS**                                        |   |
|                                                                                                    |   |
| **ITEM 5.  OTHER INFORMATION**                                                                          |   |
|                                                                                                    |   |
| **ITEM 6.  EXHIBITS**                                                                                   |   |
|                                                                                                    |   |
| **SIGNATURES**                                                                                          |   |

 

i

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# **PART I FINANCIAL INFORMATION**

 

## **Item1. Financial Statements**

 

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

**Condensed Balance Sheets**

 
| ** **                                              | ** ** | **March 31,  2006** | ** ** | **December 31,  2005** | ** ** |
|---------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                                              | ** ** | **(Unaudited)**          | ** ** | ** **                  | ** ** |
| **Assets**                                              |       |                     |       |                        |       |
| **Current assets:**                                     |       |                     |       |                        |       |
| Cash and cash equivalents                               | ** ** | $                        | 344,383    |                        | $          | 757,983 |   |
| Accounts receivable from affiliates                     |       | 10,223                   |       | 10,446                      |       |
| Accrued interest receivable                             |       | 356                      |       | 356                         |       |
| **Total current assets**                                |       | 354,962                  |       | 768,785                     |       |
|                                                    |       |                     |       |                        |       |
| **Property and equipment:**                             |       |                     |       |                        |       |
| Oil and gas properties, full cost method of  accounting |       | 8,331,319                |       | 7,928,747                   |       |
| Drilling in progress                                    |       | —                   |       | 188,745                     |       |
| Accumulated depreciation and depletion                  |       | (7,654,511               | )          | (5,404,092                  | )          |
| **Net property and equipment**                          |       | 676,808                  |       | 2,713,400                   |       |
| ** **                                              | ** ** |                     |       |                        |       |
| **Total assets**                                        | ** ** | $                        | 1,031,770  |                        | $          | 3,482,185 |   |
|                                                    |       |                     |       |                        |       |
| **Liabilities and partners’ equity**               |       |                     |       |                        |       |
| **Current liabilities:**                                |       |                     |       |                        |       |
| Accounts payable                                        | ** ** | $                        | —     |                        | $          | 32,908 |   |
| Accounts payable to affiliates                          |       | 52,554                   |       | 235,993                     |       |
| **Total current liabilities**                           |       | 52,554                   |       | 268,901                     |       |
|                                                    |       |                     |       |                        |       |
| **Non-current liabilities:**                            |       |                     |       |                        |       |
| Asset retirement obligation                             |       | 90,307                   |       | 87,725                      |       |
|                                                    |       |                     |       |                        |       |
| **Partners’ equity:**                              |       |                     |       |                        |       |
| General partners                                        |       | 225,402                  |       | 779,731                     |       |
| Limited partners                                        |       | 631,074                  |       | 2,183,072                   |       |
| Managing general partner                                |       | 32,433                   |       | 162,756                     |       |
| **Total partners’ equity**                         |       | 888,909                  |       | 3,125,559                   |       |
| ** **                                              | ** ** |                     |       |                        |       |
| **Total liabilities and partners’ equity**         | ** ** | $                        | 1,031,770  |                        | $          | 3,482,185 |   |

 

*See accompanying notes to condensed financialstatements.*

 

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

**CondensedStatements of Operations**

 
| ** **                                 | ** ** | **Three months ended March 31,** | ** ** |
|--------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                 | ** ** | **(unaudited)**                                      | ** ** |
| ** **                                 | ** ** | **2006**                                             | ** ** | **2005** | ** ** |
| **Revenues:**                              |       |                                                 |       |   |   |
| Oil and gas income                         | ** ** | $                                                    | 71,777     |   | $ | 8,217 |   |
| Interest income                            |       | 3,458                                                |       | 15,701 |   |
| **Total revenues**                         |       | 75,235                                               |       | 23,918 |   |
|                                       |       |                                                 |       |   |   |
| **Costs and expenses:**                    |       |                                                 |       |   |   |
| Lease operating expenses                   |       | 13,195                                               |       | 51 |   |
| Production taxes                           |       | 1,989                                                |       | 286 |   |
| General and administrative                 |       | 24,999                                               |       | 49,270 |   |
| Accretion of asset retirement obligation   |       | 1,409                                                |       | — |   |
| Depreciation, depletion and amortization   |       | 2,250,419                                            |       | 3,057 |   |
| **Total costs and expenses**               |       | 2,292,011                                            |       | 52,664 |   |
|                                       |       |                                                 |       |   |   |
| **Net loss**                               | ** ** | $                                                    | (2,216,776 | ) | $ | (28,746 | ) |
|                                       |       |                                                 |       |   |   |
| Net loss per general partner unit          |       | $                                                    | (4,395.47  | ) | $ | (48.09 | ) |
| Net loss per limited partner unit          |       | $                                                    | (4,395.47  | ) | $ | (48.09 | ) |
| Net loss per managing general partner unit |       | $                                                    | (5,156.19  | ) | $ | (235.97 | ) |

 

*Seeaccompanying notes to condensed financial statements.*

 

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

**CondensedStatements of Cash Flows**

 
| ** **                                                                       | ** ** | **Three months ended March 31,** | ** ** |
|----------------------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                                       | ** ** | **(unaudited)**                                      | ** ** |
| ** **                                                                       | ** ** | **2006**                                             | ** ** | **2005** | ** ** |
| **Operating Activities**                                                         |       |                                                 |       |   |   |
| **Net loss**                                                                     | ** ** | $                                                    | (2,216,776 | ) | $ | (28,746 | ) |
| Adjustments for non-cash transactions:                                           |       |                                                 |       |   |   |
| Depreciation, depletion and amortization                                         |       | 2,250,419                                            |       | 3,057 |   |
| Accretion of asset retirement obligation                                         |       | 1,409                                                |       | — |   |
| Adjustments to reconcile net loss to net cash  provided by operating activities: |       |                                                 |       |   |   |
| **Changes in operating assets and liabilities:**                                 |       |                                                 |       |   |   |
| Accounts receivable                                                              |       | —                                               |       | (7,626 | ) |
| Accounts receivable from affiliates                                              |       | (8,097                                               | )          | — |   |
| Accounts payable                                                                 |       | (15,896                                              | )          | 41,750 |   |
| Accounts payable to affiliates                                                   |       | (6,507                                               | )          | 6,396 |   |
| **Net cash provided by operating activities**                                    |       | 4,552                                                |       | 14,831 |   |
| ** **                                                                       | ** ** |                                                 |       |   |   |
| **Investing Activities**                                                         |       |                                                 |       |   |   |
| Property acquisition and development                                             |       | (406,598                                             | )          | (1,369,902 | ) |
| **Net cash used in investing activities**                                        |       | (406,598                                             | )          | (1,369,902 | ) |
|                                                                             |       |                                                 |       |   |   |
| **Financing Activities**                                                         |       |                                                 |       |   |   |
| Partner capital contributions                                                    |       | 10,446                                               |       | 433,631 |   |
| Syndication costs                                                                |       | —                                               |       | (13,600 | ) |
| Distributions to partners                                                        |       | (22,000                                              | )          |   |   |
| **Net cash provided by (used in) financing  activities**                         |       | (11,554                                              | )          | 420,031 |   |
| ** **                                                                       | ** ** |                                                 |       |   |   |
| **Net decrease in cash and cash equivalents**                                    |       | (413,600                                             | )          | (935,040 | ) |
|  Cash and cash  equivalents at December 31                             |       | 757,983                                              |       | 5,002,892 |   |
| **Cash and cash equivalents at March 31**                                   | ** ** | $                                                    | 344,383    |   | $ | 4,067,852 |   |
| ** **                                                                       | ** ** |                                                 |       |   |   |
| **Non-cash investing transactions:**                                             |       |                                                 |       |   |   |
| Increase in property additions included in accounts  payable                     | ** ** | $                                                    | —     |   | $ | 662 |   |
| Increase in property additions included in accounts  payable to affiliates       | ** ** | $                                                    | 48,487     |   | $ | 764,342 |   |
| Additions to property and asset retirement  obligation                           | ** ** | $                                                    | 1,173      |   | $ | 38,790 |   |
| **Non-cash financing transactions:**                                             | ** ** |                                                 |       |   |   |
| Managing partner contributions included in accounts  receivable from affiliates  | ** ** | $                                                    | 2,126      |   | — |   |

 

*Seeaccompanying notes to condensed financial statements.*

 

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

**Notes to Condensed FinancialStatements (unaudited)**

**March 31, 2006**

 

**1.Organization and Basis of Presentation**

 

Thefinancial statements for Reef Global Energy IV, L.P. (the Partnership) havebeen prepared pursuant to the rules and regulations of the Securities andExchange Commission (SEC). Certain information and footnote disclosure normallyincluded in annual financial statements prepared in accordance with accountingprinciples generally accepted in the United States have been condensed oromitted pursuant to those rules and regulations. 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 threemonths of 2006. 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, 2005 (the 200510-K).

 

**2.Summary of Accounting Policies**

 

**Oil andGas 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 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 three month periodended March 31, 2006, the Partnership recognized property impairmentexpense of $2,152,679.

 

**Asset Retirement Obligations**

 

Statement of Financial Accounting Standards No. 143,“Accounting for Retirement Obligations” (SFAS 143) addresses accounting andreporting for obligations associated with the retirement of tangible long-livedassets and the associated asset retirement costs. SFAS 143 requires that thefair value of a liability for an asset’s retirement obligation be recorded inthe period in which it is incurred and the corresponding cost capitalized byincreasing the carrying amount of the related long-lived asset. The liabilityis accreted to its then present value each period, and the capitalized cost isdepreciated over the useful life of the related asset. SFAS 143 is effectivefor the Partnership as of its inception date.

 

The following table summarizes the Partnership’sasset retirement obligation for the three months ended March 31, 2006 andthe year ended December 31, 2005.

 
| ** **                            | ** ** | **Three months  ended March  31, 2006** | ** ** | **2005** | ** ** |
|---------------------------------------|------------|--------------------------------------------------------|------------|----------|------------|
| Beginning asset retirement obligation | ** ** | $                                                      | 87,725     |     | $          | — |   |
| Additions related to new properties   |       | 1,173                                                  |       | 85,037   |       |
| Accretion expense                     |       | 1,409                                                  |       | 2,688    |       |
| Ending asset retirement obligation    | ** ** | $                                                      | 90,307     |     | $          | 87,725 |   |

 

4

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**3.Transactions with Affiliates**

 

ThePartnership has no employees. Reef Exploration, L.P. (RELP), an affiliate ofReef, employs a staff including geologists, petroleum engineers, landmen andaccounting personnel who administer all of the Partnership’s operations. ThePartnership reimburses RELP for direct and administrative services at cost.During the three months ended March 31, 2006, the Partnership incurred$4,067 of administrative costs.

 

RELPprocesses revenues and joint interest billings on behalf of the Partnership. AtMarch 31, 2006, the accounts payable to affiliates included $4,067 forfirst quarter administrative costs provided by RELP personnel, and $48,487representing joint interest invoices for drilling and operating costs, net ofrevenues, paid by RELP. The Partnership settles its balances with RELP on aquarterly basis.

 

ReefOil & Gas Partners, L.P. (Reef), the managing general partner,contributes 1% of all leasehold, drilling and completion costs when incurred,in addition to purchasing 5% of the Partnership units. During the first quarterof 2006, this 1% obligation totaled $2,126, which is shown as a receivable fromaffiliates. In addition, Reef also owes the Partnership $8,097 representing netrevenues processed by Reef on behalf of the Partnership. The Partnershipsettles its balances with Reef on a quarterly basis.

 

**4.Partnership Equity**

 

Informationregarding the number of units outstanding and the net loss per type ofPartnership unit for the three months ended March 31, 2006 is detailedbelow:

 
| **Type of Unit**     | ** ** | **Number of  Units** | ** ** | **Net loss** | ** ** | **Net loss per  unit** | ** ** |
|--------------------------------|------------|---------------------------|------------|-------------------|------------|----------------------------------|------------|
| Managing general partner units |       | 25.028                    |       | $                 | (129,049   | )                                | $          | (5,156.19 | ) |
| General partner units          |       | 125.000                   |       | (549,434          | )          | (4,395.47                        | )          |
| Limited partner units          |       | 349.972                   |       | (1,538,293        | )          | (4,395.47                        | )          |
| Total                          |       | 500.000                   |       | $                 | (2,216,776 | )                                |       |   |
|                                |            |                           |            |                   |            |                                  |            |  |  |

 

**5.Subsequent Events**

 

At year end, the Partnership had one productive welland three drilled wells which had operations disrupted by hurricanes whichstruck the Gulf Coast of the United States in August and September 2005.The productive well was repaired at a cost of approximately $19,000 andreturned to production in January 2006. Completion operations have resumedon two of the other wells, and they are expected to begin production in late May andearly June, respectively. Testing operations have resumed on the third well.

 

The Partnership’s final well was drilling at December 31,2005. Drilling and completion operations were finished during the first quarterof 2006. The well began production operations in May.

 

**Item 2. Management’sDiscussion and Analysis of Financial Condition and Results of Operations.**

 

The following is a discussion of thePartnership’s financial position, results of operations, liquidity and capitalresources. This discussion should be read in conjunction with our financialstatements and the related notes thereto, included in the 2005 10-K.

 

ThisReport on Form 10-Q contains forward-looking statements that involve risksand uncertainties. You should exercise extreme caution with respect to allforward-looking statements made in this Report. Specifically, the followingstatements are forward-looking:

 

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•                                     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;

 

•                                     any statementsusing the words “anticipate,” “believe,” “estimate,” “expect” and similar suchphrases or words; and

 

•                                     any statements ofother than historical fact.

 

Reefbelieves that it is important to communicate its future expectations to thepartners. Forward-looking statements reflect the current view of managementwith respect to future events and are subject to numerous risks, uncertaintiesand assumptions, including, without limitation, the factors listed in the section captioned“RISK FACTORS” contained in the Program’s prospectus and prospectus supplementdated September 21, 2004. Although Reef believes that the expectationsreflected in such forward-looking statements are reasonable, Reef can give noassurance that such expectations will prove to have been correct. Should anyone or more of these or other risks or uncertainties materialize or should anyunderlying assumptions prove incorrect, actual results are likely to varymaterially from those described herein. There can be no assurance that theprojected results will occur, that these judgments or assumptions will provecorrect or that unforeseen developments will not occur.

 

Reefdoes not intend to update its forward-looking statements. All subsequentwritten and oral forward-looking statements attributable to Reef or personsacting on its behalf are expressly qualified in their entirety by theapplicable cautionary statements.

 

**Overview**

 

ReefGlobal Energy IV, L.P. is a Nevada limited partnership formed to explore,develop, acquire and produce crude oil, natural gas, and natural gas liquidsfor the benefit of its investor partners. The Partnership’s primary purposesare to generate revenues from the production of oil and gas, distribute cashflow to investors, and provide tax benefits to investors. While the majority ofthe Partnership’s proceeds have been used to purchase thirteen prospects uponwhich the Partnership has conducted drilling operations, a small portion of capitalhas been used to purchase existing reserves.

 

ThePartnership operates solely in the United States. OREI, Inc., an affiliateof the managing general partner, has expertise and has drilled and operatedwells primarily in Texas and Louisiana since its inception in 1987. Thethirteen prospects purchased by the Partnership are located in Texas, Louisianaand in United States coastal waters in the Gulf of Mexico.

 

ThePartnership does not operate in any other industry segment. Should any prospectin which the Partnership has an interest be determined to warrant additionaldevelopment activity, the Partnership may call for voluntary additionalpartner assessments of up to $20,000 per Partnership unit. The Partnership hascompleted drilling activities as of March 31, 2006 and currently has noplans to issue any voluntary assessments. The Partnership is permitted but isnot expected to engage in commodity futures trading or hedging activities, andtherefore is subject to commodity price risk.  See “Item 3—Quantitative and QualitativeDisclosures About Market Risk.”

 

**Critical Accounting Policies**

 

There have been no changes from theCritical Accounting Policies described in the 2005 10-K.

 

**Liquidity and Capital Resources**

 

ThePartnership was funded with initial capital contributions totaling $9,924,916.Reef purchased 25.028 units (5.01%) for $425,475, and investor partnerspurchased 125 general partner units for $2,500,000 and 349.972

 

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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. ThePartnership was formed on November 10, 2004 and the last partner wasadmitted to the Partnership on December 2, 2004, which was the date theoffering of the Partnership units ended. As of March 31, 2006, thePartnership has also received $74,339 in additional capital contributions fromReef representing its obligation to pay for 1% of all leasehold, drilling, andcompletion costs, and has received $72,043 in interest income from theinvestment of partner capital contributions, resulting in total funds availableof approximately $8.646 million. These funds are the sole funds available tothe Partnership for prospect acquisition, drilling and completion of wells, andoperational expenses during the drilling phase of operations.

 

ThePartnership purchased interests in thirteen prospects upon which thirteen wellshave been drilled. The final Partnership well completed drilling operations in February 2006and began production operations in May. Two additional wells which completeddrilling operations during 2005 but which had completion operations suspendeddue to hurricanes during 2005 are currently undergoing completion operationsand are expected to begin production operations before the end of the secondquarter. The Partnership expects to fully expend its available funds on thesethirteen prospects prior to June 30, 2006. As of March 31, 2006 thePartnership has expended approximately $8.357 million of these funds. ThePartnership has expended approximately $3.084 million in connection with fiveunsuccessful wells drilled, approximately $2.222 million on four wellscompleted as productive wells in 2005, $0.523 million on the purchase of aroyalty interest in a field in Louisiana, approximately $1.513 million on threewells being completed during 2006, approximately $0.903 million on a well currentlyundergoing testing operations, and $0.112 million in general and administrativeexpenses.

 

ThePartnership had working capital of $302,408 at March 31, 2006, from whichto pay additional drilling and operations costs.

 

**Resultsof Operations**

 

**Threemonths ended March 31, 2005**

 

ThePartnership incurred a net loss of $28,746 during the three month period ended March 31,2005. The initial successful well drilled by the Partnership did not beginproduction until April 2005. During these three months the Partnership’soil and gas income of $8,217 came from royalty interests in two productive wellspurchased in January 2005. The Partnership earned $15,701 of interestincome from the investment of Partnership capital contributions. General andadministrative charges totaled $49,270, of which approximately $43,000represented professional fees incurred in connection with the Partnership’sannual audit and reporting requirements and $1,900 represented direct andadministrative costs billed by Reef Exploration, Inc. (REI), an affiliateof the Partnership. For 2006 these administrative services are now provided byRELP, an affiliate of the managing general partner formed in December 2005.

 

**Threemonths ended March 31, 2006**

 

Duringthe three month period ended March 31, 2006, the Partnership incurred anet loss of $2,216,776. The loss was primarily due to impairment expense forthe quarter which totaled $2,152,679. The impairment expense was the result oftwo main factors. First, the performance levels of the fund’s seven productivewells drilled caused a reduction in the estimate of proved reserves expected tobe recovered from the wells. This reduction was compounded by the fact thatreserve estimates are based upon the closing price on the last day of thequarter, and gas prices fell by approximately 29% during the first quarter.

 

Netproved oil and gas reserves at March 31, 2006 and December 31, 2005are presented below. The estimated proved reserves of the Partnership includeonly those quantities which are reasonably expected to be recovered from knownoil and gas reservoirs under current economic and operating conditions. Provedreserves include only quantities we expect to recover commercially usingcurrent prices, costs, existing regulatory practices, and technology.Therefore, any changes in future prices, costs, regulations, technology orother unforeseen factors could materially increase or decrease the estimate ofproved reserves. The estimates of proved reserves at March 31, 2006 useclosing NYMEX prices of $66.63 per barrel and $7.21 per MMBTU, compared to December 31prices of $61.04 per barrel and $10.08 per MMBTU.

 

7

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| **Net proved reserves** | ** ** | **Oil (BBL)** | ** ** | **Gas (MCF)** | ** ** |
|-----------------------------------|------------|--------------------|------------|--------------------|------------|
| December 31, 2005            |       | 4,537              |       | 401,480            |       |
| March 31, 2006               |       | 3,170              |       | 222,591            |       |

 

Thestandardized measure of discounted cash flows is computed by applying the abovequarter end prices, adjusted on a property by property basis for energycontent, quality and transportation costs, and a discount factor of 10% toproved reserves. The standardized measure of discounted cash flows does not purportto present the fair value of our oil and natural gas reserves.

 
| **Standardized measure of discounted cash  flows** | ** ** | ** ** | ** ** |
|------------------------------------------------------------------------|------------|------------|------------|
| December 31, 2005                                                 |       | $          | 2,524,655  |   |
| March 31, 2006                                                    |       | $          | 676,808    |   |

 

At March 31,2006, the net capitalized costs of oil and gas properties exceeded thestandardized measure of discounted cash flows. The Partnership recordedproperty impairment expense of $2,152,679 in order to write off these excesscapitalized costs.

 

Of theseven productive wells drilled by the Partnership, three were producing duringthe quarter ended March 31, 2006. One well has ceased production, andthree wells are expected to begin production during the second quarter of 2006.The addition of three new productive wells is expected to marginally improvethe performance of the Partnership in the third and fourth quarters of 2006.

 

**Item 3. Quantitativeand Qualitative Disclosures about Market Risk.**

 

**InterestRate Risk**

 

The Partnership currently has no borrowings. Thepartnership agreement prohibited bank borrowings during the Partnership’sdrilling phase of operations. The Partnership is permitted to borrow monies orassess partners for developmental activities on the prospects it has drilled,however, at this time the Partnership has no plans to conduct additionalactivities on any of these prospects. The Partnership is subject to interestrate risk solely to the extent that changes in interest rates affect generaleconomic conditions.

 

**CommodityPrice Risk**

 

ThePartnership has not and does not expect to engage in commodity futures tradingor hedging activities or enter into derivative financial instrumenttransactions for trading or other speculative purposes. The Partnership sells avast majority 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 has a significantimpact on the Partnership’s results of operations.

 

**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 Rule 13a-15(e) underthe Securities Exchange Act of 1934) with the assistance and participation ofother members of management. Based upon that evaluation, Reef’s Chief ExecutiveOfficer and Chief Financial Officer concluded that our disclosure controls andprocedures are effective for gathering, analyzing and disclosing theinformation the Partnership is required to disclose in the reports it filesunder the Securities Exchange Act of 1934 within the time periods specified inthe SEC’s rules and forms. During our fiscal quarter ended March 31,2006, no change occurred in our internal control over financial reporting (asdefined in Rule 13a-15(f) under the Securities Exchange Act of 1934) thathas materially affected, or is reasonably likely to materially affect, ourinternal control over financial reporting.

 

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**PART II – OTHER INFORMATION**

 

**Item 1. Legal Proceedings**

 

None

 

**Item 1A. RISK FACTORS**

** **

In addition to the other information set forth in thisreport, you should carefully consider the risk factors discussed in Part I,Item 1A in the 2005 10-K, which could materially affect our business, financialcondition or future results. The risks described in our 2005 10-K are not theonly risks facing the Partnership. Additional risks and uncertainties notcurrently known to us or that we currently deem to be immaterial also maymaterially adversely affect our business, financial condition and/or operatingresults. There have been no material changes from the risks factors previouslydisclosed in the 2005 10-K.

 

**Item 2. UnregisteredSales of Equity Securities 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 amendmentto the 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 numberof soliciting dealers. The Program filed a prospectus supplement describingReef Global Energy IV, L.P. on September 21, 2004 and commenced offeringunits. Under the terms of the offering, a minimum of 50 Partnership units at aprice of $20,000 per unit were required to be sold in order to form thePartnership. The Partnership offering consisted of 375 units of limited partnerinterest and 125 units of general partner interest. The offering period endedon December 2, 2004, at which time all 500 allowable units had been sold.Investor partners purchased 349.972 limited partner units and 125 generalpartner units. Reef purchased 25.028 limited partner units, equaling 5.01% ofthe total Partnership 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. Inaddition, the Partnership has available $72,043 of interest income and $74,339of additional capital contributions from Reef in connection with its obligationto pay 1% of all leasehold, drilling and completion costs, for a total of$8.646 million. As of March 31, 2006 the Partnership had expended $8.357million on oil and gas operations, including amounts in accounts payable at March 31,2006. The Partnership expects to utilize the remaining $0.289 million duringthe second quarter of 2006.

 

**Item 3. DefaultsUpon Senior Securities**

 

None

 

**Item 4. Submissionof Matters to a Vote of Security Holders**

 

None

 

**Item 5. Other Information**

 

None

 

**Item 6. 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. |
|     |   |   |
| 32.1     |   | Certification of  Chief Executive 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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| 32.2 |   | Certification of  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, L.P. |
|       |                         | Managing General  Partner |
|       |                         |   |
|       | By:                          | Reef Oil &  Gas Partners, GP, LLC |
|       |                         |
|       |                         |
| Dated:     | May 30,  2006           | By: | /s/ Michael J.  Mauceli |   |
| ** ** | ** **                   | **Michael  J. Mauceli** |
|       |                         | Manager and  Member |
|       |                         | (p*rincipal executive officer)* |
|       |                         |   |
|       |                         |   |
| Dated:     | May 30,  2006           | By: | /s/ Daniel C.  Sibley |   |
| ** ** | ** **                   | **Daniel  C. Sibley** |
|       |                         | Chief Financial  Officer |
|       |                         | (p*rincipal financial and accounting officer)* |

 

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