# **UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION****Washington, D.C. 20549**

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## **FORM10-Q**

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

# **For thequarterly period ended June 30, 2006**

# **CommissionFile Number: 333-93399-04**

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**REEF GLOBALENERGY IV, L.P.**(Exact name of registrantas specified 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** |   |                                  |
| **Richardson,  Texas 75080**               |   | **(972)  437-6792**                   |
| (Address of  principal executive offices,  |   | (Registrant’s  telephone number, |
| including zip  code)                       |   | including area  code)                 |

 

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Indicate by checkmark whether the registrant (1) has filed all reports required to be filedby Section 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  x    No  o

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer, or a non-accelerated filer. Seedefinition of “accelerated filer and large accelerated filer” in Rule 12b-2 ofthe Exchange Act

Large accelerated filer  o                              Acceleratedfiler  o                              Non-acceleratedfiler  x

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o    No  x

**As of August 14, 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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**ReefGlobal 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**                                                                                          |   |   |

 

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# **PART IFINANCIAL INFORMATION**

## **Item1. Financial Statements**

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

**Condensed Balance Sheets**
| ** **                                              | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|---------------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                              | ** ** | **2006**          | ** ** | **2005**              | ** ** |
| ** **                                              | ** ** | **(Unaudited)**   | ** ** | ** **            | ** ** |
| **Assets**                                              |       |              |       |                  |       |
| **Current  assets:**                                    |       |              |       |                  |       |
| Cash and cash  equivalents                              | ** ** | $                 | 155,425    | ** **            | $          | 757,983 |   |
| Accounts  receivable from affiliates                    |       | 65,178            |       | 10,446                |       |
| Accrued interest  receivable                            |       | 356               |       | 356                   |       |
| **Total  current assets**                               |       | 220,959           |       | 768,785               |       |
| ** **                                              |       |              |       |                  |       |
| **Property  and equipment:**                            |       |              |       |                  |       |
| Oil and gas  properties, full cost method of accounting |       | 8,411,611         |       | 7,928,747             |       |
| Drilling in  progress                                   |       | —            |       | 188,745               |       |
| Accumulated  depreciation and depletion                 |       | (8,032,037        | )          | (5,404,092            | )          |
| **Net  property and equipment**                         |       | 379,574           |       | 2,713,400             |       |
| ** **                                              | ** ** | ** **        | ** ** | ** **            | ** ** |
| **Total assets**                                        | ** ** | $                 | 600,533    | ** **            | $          | 3,482,185 |   |
| ** **                                              |       |              |       |                  |       |
| **Liabilities and partners’  equity**              |       |              |       |                  |       |
| **Current  liabilities:**                               |       |              |       |                  |       |
| Accounts payable                                        | ** ** | $                 | —     | ** **            | $          | 32,908 |   |
| Accounts payable  to affiliates                         |       | 3,009             |       | 235,993               |       |
| **Total  current liabilities**                          |       | 3,009             |       | 268,901               |       |
| ** **                                              |       |              |       |                  |       |
| **Non-current  liabilities:**                           |       |              |       |                  |       |
| Asset retirement  obligation                            |       | 91,748            |       | 87,725                |       |
| ** **                                              |       |              |       |                  |       |
| **Partners’  equity:**                             |       |              |       |                  |       |
| General partners                                        |       | 130,810           |       | 779,731               |       |
| Limited partners                                        |       | 366,238           |       | 2,183,072             |       |
| Managing general  partner                               |       | 8,728             |       | 162,756               |       |
| **Total  partners’ equity**                        |       | 505,776           |       | 3,125,559             |       |
| ** **                                              | ** ** | ** **        | ** ** | ** **            | ** ** |
| **Total liabilities and partners’ equity**         | ** ** | $                 | 600,533    | ** **            | $          | 3,482,185 |   |

 

*Seeaccompanying notes to condensed financial statements.*

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

**Condensed Statements of Operations**
| ** **                                  | ** ** | **For the three months ended  June 30 (unaudited)** | ** ** | **For the six months ended  June 30 (unaudited)** | ** ** |
|---------------------------------------------|------------|-----------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------|------------|
| ** **                                  | ** ** | **2006**                                                                          | ** ** | **2005**                                                                        | ** ** | **2006** | ** ** | **2005** | ** ** |
| ** **                                  |       |                                                                              |       |                                                                            |       |   |   |   |   |
| **Revenues:**                               |       |                                                                              |       |                                                                            |       |   |   |   |   |
| Oil and gas income                          | ** ** | $                                                                                 | 79,801     |                                                                            | $          | 16,264 |   | $ | 151,578 |   | $ | 24,481 |   |
| Interest income                             |       | 1,782                                                                             | ** ** | 22,958                                                                          |       | 5,240 |   | 38,659 | ** ** |
| **Total  revenues**                         |       | 81,583                                                                            |       | 39,222                                                                          |       | 156,818 |   | 63,140 |   |
| ** **                                  |       |                                                                              |       |                                                                            |       |   |   |   |   |
| **Costs  and expenses:**                    |       |                                                                              |       |                                                                            |       |   |   |   |   |
| Lease operating expenses                    |       | 17,181                                                                            | ** ** | 209                                                                             |       | 30,376 |   | 260 |   |
| Production taxes                            |       | 3,353                                                                             | ** ** | 823                                                                             |       | 5,342 |   | 1,109 |   |
| General and administrative                  |       | 32,019                                                                            | ** ** | 16,172                                                                          |       | 57,018 |   | 65,442 |   |
| Accretion of asset retirement obligation    |       | 1,441                                                                             | ** ** | 51                                                                              |       | 2,850 |   | 51 |   |
| Depreciation, depletion and amortization    |       | 377,526                                                                           | ** ** | 1,961,675                                                                       |       | 2,627,945 |   | 1,964,732 |   |
| **Total  costs and expenses**               |       | 431,520                                                                           |       | 1,978,930                                                                       |       | 2,723,531 |   | 2,031,594 |   |
|                                        |       |                                                                              |       |                                                                            |       |   |   |   |   |
| **Net  loss**                               | ** ** | $                                                                                 | (349,937   | )                                                                               | $          | (1,939,708 | ) | $ | (2,566,713 | ) | $ | (1,968,454 | ) |
|                                        |       |                                                                              |       |                                                                            |       |   |   |   |   |
| Net loss per  general partner unit          |       | $                                                                                 | (696.22    | )                                                                               | $          | (3,840.19 | ) | $ | (5,091.69 | ) | $ | (3,888.28 | ) |
| Net loss per  limited partner unit          |       | $                                                                                 | (696.22    | )                                                                               | $          | (3,840.19 | ) | $ | (5,091.69 | ) | $ | (3,888.28 | ) |
| Net loss per managing  general partner unit |       | $                                                                                 | (769.30    | )                                                                               | $          | (4,623.77 | ) | $ | (5,925.49 | ) | $ | (4,859.74 | ) |

 

*See accompanying notes tocondensed financial statements.*

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

**Condensed Statements of Cash Flows**
| ** **                                                                       | ** ** | **For the six months ended June 30,** | ** ** |
|----------------------------------------------------------------------------------|------------|---------------------------------------------------------------------|------------|
| ** **                                                                       | ** ** | **(unaudited)**                                                     | ** ** |
| ** **                                                                       | ** ** | **2006**                                                            | ** ** | **2005** | ** ** |
| **Operating  Activities**                                                        |       |                                                                |       |   |   |
| **Net loss**                                                                     |       | $                                                                   | (2,566,713 | ) | $ | (1,968,454 | ) |
| Adjustments for non-cash transactions:                                           |       |                                                                |       |   |   |
| Depreciation, depletion and amortization                                         |       | 2,627,945                                                           |       | 1,964,732 |   |
| Accretion of asset retirement obligation                                         |       | 2,850                                                               |       | 51 |   |
| Adjustments to reconcile net loss to net cash  provided by operating activities: |       |                                                                |       |   |   |
| **Changes in operating assets and liabilities:**                                 |       |                                                                |       |   |   |
| Accounts receivable                                                              |       | —                                                              |       | (9,194 | ) |
| Accounts receivable from affiliates                                              |       | (64,375                                                             | )          | (293,140 | ) |
| Accounts payable                                                                 |       | (15,896                                                             | )          | 5,451 |   |
| Accounts payable to affiliates                                                   |       | (7,565                                                              | )          | (1,906 | ) |
| **Net cash used in operating activities**                                        |       | (23,754                                                             | )          | (302,460 | ) |
| ** **                                                                       | ** ** | ** **                                                          | ** ** | ** ** | ** ** |
| **Investing  Activities**                                                        |       |                                                                |       |   |   |
| Property acquisition and development                                             |       | (535,377                                                            | )          | (1,943,224 | ) |
| **Net cash used in investing activities**                                        |       | (535,377                                                            | )          | (1,943,224 | ) |
| ** **                                                                       |       |                                                                |       |   |   |
| **Financing  Activities**                                                        |       |                                                                |       |   |   |
| Partner capital contributions                                                    |       | 12,573                                                              |       | 454,271 |   |
| Distributions to partners                                                        |       | (56,000                                                             | )          | (13,600 | ) |
| **Net cash provided by (used in) financing  activities**                         |       | (43,427                                                             | )          | 440,671 |   |
| ** **                                                                       | ** ** | ** **                                                          | ** ** | ** ** | ** ** |
| **Net  decrease in cash and cash equivalents**                                   |       | (602,558                                                            | )          | (1,805,013 | ) |
| Cash and cash equivalents at December 31                                         |       | 757,983                                                             |       | 5,002,892 |   |
| **Cash  and cash equivalents at March 31**                                       |       | $                                                                   | 155,425    |   | $ | 3,197,879 |   |
| ** **                                                                       | ** ** | ** **                                                          | ** ** | ** ** | ** ** |
| **Non-cash  investing transactions:**                                            | ** ** | ** **                                                          | ** ** |   |   |
| Increase in property additions included in accounts  payable to affiliates       |       | $                                                                   | —     |   | $ | 751,843 |   |
| Additions to property and asset retirement  obligation                           |       | $                                                                   | 1,173      |   | $ | 74,154 |   |
| **Non-cash  financing transactions:**                                            |       |                                                                |       |   | ** ** |
| Managing partner  contributions included in accounts receivable from affiliates  |       | $                                                                   | 803        |   | — | ** ** |

 

*See accompanying notes tocondensed financial statements.*

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

**Notes toCondensed Financial Statements (unaudited)**

**June 30, 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 sixmonths 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 2005 10-K).

**2.Summary of Accounting Policies**

**Oil andGas Properties**

The Partnership follows the full cost method of accounting for crudeoil and natural 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 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 and six month periods endedJune 30, 2006, the Partnership recognized property impairment expense of$158,607 and $2,311,286.

**Asset Retirement Obligations**

Statementof Financial Accounting Standards No. 143, “Accounting for Retirement Obligations”(SFAS 143) addresses accounting and reporting for obligations associated withthe retirement of tangible long-lived assets and the associated assetretirement costs. SFAS 143 requires that the fair value of a liability for anasset’s retirement obligation be recorded in the period in which it is incurredand the corresponding cost capitalized by increasing the carrying amount of therelated long-lived asset. The liability is accreted to its then present valueeach period, and the capitalized cost is depreciated over the useful life ofthe related asset. SFAS 143 is effective for the Partnership as of itsinception date.

Thefollowing table summarizes the Partnership’s asset retirement obligation forthe six months ended June 30, 2006 and the year ended December 31, 2005.

|                                        | ** ** | **Six months  ended June 30,  2006** | ** ** | **2005** | ** ** |
|----------------------------------------|------------|------------------------------------------------|------------|----------|------------|
| Beginning asset  retirement obligation | ** ** | $                                              | 87,725     |     | $          | — |   |
| Additions  related to new properties   |       | 1,173                                          |       | 85,037   |       |
| Accretion  expense                     |       | 2,850                                          |       | 2,688    |       |
| Ending asset retirement  obligation    | ** ** | $                                              | 91,748     |     | $          | 87,725 |   |

 

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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 and six month periods ended June 30, 2006, the Partnershipincurred $3,009 and $7,076 of administrative costs, respectively.

RELPprocesses revenues and joint interest billings on behalf of the Partnership. AtJune 30, 2006, the Partnership had net revenues of $56,278 due from RELP. ThePartnership owed RELP $3,009 for administrative costs provided by RELP. ThePartnership settles its balances with RELP on a quarterly basis.

ReefOil & Gas Partners, L.P. (Reef), the managing general partner, contributes1% of all leasehold, drilling and completion costs when incurred, in additionto purchasing 5% of the Partnership units. During the three and six monthperiods ended June 30, 2006, this 1% obligation totaled $803 and $2,929. The$803 due for the second quarter is shown as a receivable from affiliates. Inaddition, Reef also owes the Partnership $8,097 representing net revenuesprocessed by Reef on behalf of the Partnership. These amounts have beenreceived by the Partnership during August 2006.

**4. Partnership Equity**

Information regarding the number of units outstandingand the net loss per type of Partnership unit for the three and six monthperiods ended June 30, 2006 is detailed below:

Forthe three months ended June 30, 2006

| Type of Unit          | ** ** | **Number of  Units** | ** ** | **Net loss** | ** ** | **Net loss per  unit** | ** ** |
|---------------------------------|------------|---------------------------|------------|-------------------|------------|----------------------------------|------------|
| Managing general  partner units |       | 25.028                    |       | $                 | (19,254    | )                                | $          | (769.30 | ) |
| General partner  units          |       | 125.000                   |       | (87,027           | )          | (696.22                          | )          |
| Limited partner  units          |       | 349.972                   |       | (243,656          | )          | (696.22                          | )          |
| Total                           |       | 500.000                   |       | $                 | (349,937   | )                                |       |   |
|                                 |            |                           |            |                   |            |                                  |            |  |  |

 

Forthe six months ended June 30, 2006

| Type of Unit          | ** ** | **Number of  Units** | ** ** | **Net loss** | ** ** | **Net loss per  unit** | ** ** |
|---------------------------------|------------|---------------------------|------------|-------------------|------------|----------------------------------|------------|
| Managing general  partner units |       | 25.028                    |       | $                 | (148,303   | )                                | $          | (5,925.49 | ) |
| General partner  units          |       | 125.000                   |       | (636,461          | )          | (5,091.69                        | )          |
| Limited partner  units          |       | 349.972                   |       | (1,781,949        | )          | (5,091.69                        | )          |
|                            |       |                      |       |              |       |                             |       |
| Total                           |       | 1,507.260                 |       | $                 | (2,566,713 | )                                |       |   |
|                                 |            |                           |            |                   |            |                                  |            |  |  |

 

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

This Report onForm 10-Q contains forward-looking statements that involve risks anduncertainties. You should exercise extreme caution with respect to allforward-looking statements made in this Report.  Specifically, thefollowing 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;

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·                                     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.

Reefbelieves that it is important to communicate its future expectations to thepartners.  Forward-looking statements reflect the current view ofmanagement with respect to future events and are subject to numerous risks,uncertainties and assumptions, including, without limitation, the factorslisted in the section captioned “RISK FACTORS” contained in the Program’sprospectus and prospectus supplement dated September 21, 2004. Although Reefbelieves that the expectations reflected in such forward-looking statements arereasonable, Reef can give no assurance that such expectations will prove tohave been correct.  Should any one or more of these or other risks oruncertainties materialize or should any underlying assumptions prove incorrect,actual results are likely to vary materially from those described herein. There can be no assurance that the projected results will occur, that thesejudgments or assumptions will prove correct or that unforeseen developmentswill 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 ofcapital has been used to purchase existing reserves.

ThePartnership operates solely in the United States. RELP, an affiliate of themanaging general partner, and its predecessor entity OREI, Inc. have expertiseand have drilled and operated wells primarily in Texas and Louisiana since1987. The thirteen prospects purchased by the Partnership are located in Texas,Louisiana and in United States Coastal waters in the Gulf of Mexico.

ThePartnership does not operate in any other industry segment. The Partnership ispermitted but has not and is not expected to engage in commodity futurestrading or hedging activities, and therefore is subject to commodity pricerisk.   See “Item 3—Quantitative and Qualitative Disclosures AboutMarket Risk.”

**Critical Accounting Policies**

There have been no changes from the Critical Accounting Policiesdescribed in the 2005 10-K.

**Liquidity and Capital Resources**

ThePartnership has working capital of $217,950 at June 30, 2006, from which to payadditional drilling and operations costs. Should any prospect in which thePartnership has an interest be determined to warrant additional developmentactivity, the Partnership may issue voluntary partner cash calls of up to$20,000 per Partnership unit. The Partnership completed drilling activities duringthe first quarter of 2006 and currently has no plans to issue any voluntarycash calls.

Thetotal capital initially available to the Partnership, net of organization andsyndication costs, was $8,500,000. As of June 30, 2006, the Partnership hasalso received $76,465 in additional capital contributions from Reefrepresenting its obligation to pay for 1% of all leasehold, drilling, andcompletion costs, and has received

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$73,825 ininterest income from the investment of partner capital contributions, resultingin total funds available of approximately $8.650 million.

ThePartnership purchased interests in thirteen prospects upon which thirteen wellshave been drilled. The final Partnership well completed drilling operations inFebruary 2006 and began production operations in May. Two additional wellswhich completed drilling operations during 2005 but which had completionoperations suspended due to hurricanes during 2005 were completed and beganproduction operations in June and July of 2006. As of June 30, 2006 thePartnership has expended approximately $8.438 million of these funds, includingamounts in accounts payable at June 30, 2006. The Partnership expects to have afinal accounting of expended funds by September 30, 2006. The Partnership hasexpended approximately $3.091 million in connection with five unsuccessfulwells drilled, approximately $2.223 million on four wells completed asproductive wells in 2005, $0.523 million on the purchase of a royalty interestin a field in Louisiana, approximately $1.586 million on three wells completedduring 2006, approximately $0.903 million on a well completed during 2006 andtemporarily shut-in for further geologic evaluation, and $0.112 million ingeneral and administrative expenses.

**Results of Operations**

**Threemonths ended June 30, 2006 and 2005**

ThePartnership incurred a net loss of $349,937 during the three month period endedJune 30, 2006. The Partnership had two wells begin production operations duringthe second quarter and one well which began production operations in July, andnow has six productive working interest wells and one productive royaltyinterest well. However, the estimated value of reserves from these newlycompleted wells was not sufficient to cover the cost of the wells, and, afterrecording depletion expense of $208,050 for the quarter, the Partnershiprecorded additional leasehold impairment expense of $158,607. Oil and gasrevenues increased only slightly from $71,777 in the first quarter to $79,801in the second quarter, primarily as a result of the Partnership’s historicallymost productive well being shut-in since early June. Workover operations toreduce water production from the well were performed in late July and the wellwas returned to production in early August. Initial results have beenencouraging, with increased gas production and decreased water production. Theresults of the workover should have an impact on the results of operationsduring the second half of 2006. General and administrative charges totaled$32,019 during the second quarter, which included approximately $11,000 forprofessional fees related to the audit of the 2005 financial statements. ThePartnership expects a reduction in general and administrative costs during thesecond half of the year as there will be no additional 2005 audit fees. Duringthe comparable quarter in 2005, the Partnership had only one productive workinginterest well, compared to five wells which were productive during the secondquarter of 2006. The net loss of $1,939,708 incurred during the quarter endedJune 30, 2005 was primarily the result of the Partnership drilling fourunsuccessful wells during the quarter, which resulted in leasehold impairmentexpense of $1,951,000.

**Sixmonths ended June 30, 2006 and 2005**

Duringthe six month period ended June 30, 2006, the Partnership incurred a net lossof $2,566,713, compared to a loss of $1,968,454 incurred for the six monthsended June 30, 2005. The Partnership drilled five unsuccessful wells and oneadditional well which has been shut-in for further geologic evaluation. Four ofthose unsuccessful wells were drilled in the quarter ending June 30, 2005, andthe Partnership recorded impairment expense of $1,951,000 during the quarter.During the six months ended June 30, 2006, the Partnership has recordedimpairment expense totaling $2,311,286. The additional impairment has resultedfrom two primary factors. First, the performance levels of the Partnership’ssuccessful wells have not met initial expectations, leading to reductions fromthe initial reserve estimates. The reduction in reserve estimates has beencompounded by the fact that reserve values are estimated based upon prices atthe end of the quarter. At June 30, 2006, gas prices had fallen byapproximately 39.5% from levels at December 31, 2006.

ThePartnership had five productive working interest wells and one productiveroyalty interest well during the first half of 2006, as compared to only oneproductive working interest well and two productive royalty interest wellsduring the first half of 2005. The Partnership shut-in the fund’s historicallymost productive well in early June. Workover operations to reduce waterproduction from the well were performed in late July and the well was returnedto production in early August. Initial results have been encouraging, withincreased gas production and

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decreased waterproduction. The results of the workover should have an impact on the results ofoperations during the second half of 2006.

Netproved oil and gas reserves at June 30, 2006 and December 31, 2005 arepresented below. The estimated proved reserves of the Partnership include onlythose quantities which are reasonably expected to be recovered from known oiland gas reservoirs under current economic and operating conditions. Proved reservesinclude only quantities we expect to recover commercially using current prices,costs, existing regulatory practices, and technology. Therefore, any changes infuture prices, costs, regulations, technology or other unforeseen factors couldmaterially increase or decrease the estimate of proved reserves. The estimatesof proved reserves at June 30, 2006 use closing NYMEX prices of $73.93 perbarrel and $6.10 per MMBTU, compared to December 31 prices of $61.04 per barreland $10.08 per MMBTU.

| Net proved reserves | ** ** | **Oil (BBL)** | ** ** | **Gas (MCF)** | ** ** |
|-------------------------------|------------|--------------------|------------|--------------------|------------|
| December 31,  2005            |       | 4,537              |       | 401,480            |       |
| March 31, 2006                |       | 2,748              |       | 137,233            |       |

 

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 notpurport to present the fair value of our oil and natural gas reserves.

| Standardized measure of discounted cash flows | ** ** | ** ** | ** ** |
|------------------------------------------------------------------------|------------|------------|------------|
| December 31,  2005                                                     |       | $          | 2,524,655  |   |
| June 30, 2006                                                          |       | $          | 379,574    |   |

 

AtJune 30, 2006, the net capitalized costs of oil and gas properties exceeded thestandardized measure of discounted cash flows. The Partnership recordedproperty impairment expense of $158,607 in order to write off these excesscapitalized costs.

Ofthe seven productive wells drilled by the Partnership, five were producing asof June 30, 2006. One well has ceased production, and one well began productionduring July. The addition of three producing wells during the second and thirdquarters, along with the successful return to production of the Partnershipwell which underwent workover operations in July, is expected to increasePartnership revenues and cash flows during the second half of 2006.

**Item 3. Quantitative and 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 a vast majority of itsproduction from successful oil and gas wells on a month-to-month basis atcurrent spot market prices. Accordingly, the Partnership is at risk for thevolatility in commodity prices inherent in the oil and gas industry, and thelevel of commodity prices has a significant impact on the Partnership’s resultsof operations.

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**Item 4.Controls and Procedures**

As the ManagingGeneral Partner of the Partnership, Reef maintains a system of controls andprocedures designed to provide reasonable assurance as to the reliability ofthe financial statements and other disclosures included in this report, as wellas to safeguard assets from unauthorized use or disposition. As of the end ofthe period covered by this report, Reef’s Principal Executive Officer and ChiefFinancial Officer have evaluated the effectiveness of the design and operationof the Partnership’s disclosure controls and procedures (as defined in Rule13a-15(e) under the Securities Exchange Act of 1934) with the assistance andparticipation of other members of management. Based upon that evaluation, Reef’sPrincipal Executive Officer and Chief Financial Officer concluded that ourdisclosure controls and procedures are effective at a reasonable assurancelevel for gathering, analyzing and disclosing the information the Partnershipis required to disclose in the reports it files under the Securities ExchangeAct of 1934 within the time periods specified in the SEC’s rules and forms.During our fiscal quarter ended June 30, 2006, no change occurred in ourinternal control over financial reporting (as defined in Rule 13a-15(f) underthe Securities Exchange Act of 1934) that has materially affected, or isreasonably likely to materially affect, our internal control over financialreporting.

**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. Except for the additional risk factor provided below, there have beenno material changes from the risk factors previously disclosed in the 200510-K.

*Our dependence on third parties for the processingand transportation of oil and gas may adversely affect the Partnership’srevenues and, consequently, the distribution of net cash flows to investorpartners.* We rely on third parties to process and transportthe oil and gas produced by the Partnership’s successful wells. In the event athird party upon whom we rely is unable to provide transportation or processingservices, and another third party is unavailable to provide such services, thePartnership may have to temporarily shut-in successful wells, and revenues tothe Partnership and distributions to investor partners related to those wellsmay be delayed.

**Item 2.  Unregistered Sales of Equity Securities andUse of Proceeds**

**Use of Proceeds**

Inconnection with the Registration Statement filed on form S-1 (No. 333-93399)and declared effective May 31, 2001, Reef filed a post-effective amendment tothe Registration Statement on behalf of the Program on September 14, 2001. OnJanuary 10, 2002 Reef filed a final prospectus and commenced the offering ofunits in the Program. All sales of Partnership units were made through theProgram’s dealer-manager, Reef Securities, Inc., and a number of solicitingdealers. The Program filed a prospectus supplement describing Reef GlobalEnergy IV, L.P. on September 21, 2004 and commenced offering units. Theoffering period ended on December 2, 2004.

During the offering period, the Partnership sold474.972 units to investor partners, consisting of 349.972 limited partner unitsand 125 general partner units. Reef purchased 25.028 limited partner units,equaling 5.01% of the total Partnership units sold. Total offering proceedswere $9,924,916. All units except those purchased by Reef paid a 15% managementfee to Reef to pay for the Partnership organization and offering costs,including sales commissions. These costs totaled $1,424,916, leaving capitalcontributions of $8,500,000 available for Partnership oil & gas operations.In addition, the Partnership has available $73,825 of interest income and$76,465 of additional capital contributions from Reef in connection with itsobligation to pay 1% of all leasehold, drilling and completion

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costs,for a total of $8.650 million. As of June 30, 2006 the Partnership had expended$8.438 million on oil and gas operations, including amounts in accounts payableat June 30, 2006. The Partnership expects to have a final accounting of fundsexpended during the drilling phase of operations at September 30, 2006.

**Item 3.  Defaults Upon Senior Securities**

None

**Item 4.  Submission of Matters to a Vote of SecurityHolders**

None

**Item 5.  Other Information**

None

**Item6.  Exhibits**

| Exhibits   | ** ** | ** **                                                                                                                                          |
|------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** | ** ** | ** **                                                                                                                                          |
| 31.1       |       | Certification of Chief Executive Officer required by  Rule 13a-14(a)/15d-14(a) pursuant to Section 302 of the Sarbanes-Oxley Act of  2002.          |
|       |       |                                                                                                                                                |
| 31.2       |       | Certification of Chief Financial Officer required by  Rule 13a-14(a)/15d-14(a) pursuant to Section 302 of the Sarbanes-Oxley Act of  2002.          |
|       |       |                                                                                                                                                |
| 32.1       |       | 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. |
|       |       |                                                                                                                                                |
| 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:     |       | August 14, 2006 | By:                         |   | /s/ Michael J. Mauceli |
| ** ** | ** ** | ** **      |                        |   | **Michael J. Mauceli** |
|       |       |            |                        |   | Manager and  Member |
| * *   |       |            |                        |   | *(principal  executive officer)* |
| * *   |       |            |                        |   | * * |
| * *   |       |            |                        |   | * * |
| Dated:     |       | August 14, 2006 | By:                         |   | /s/ Daniel C. Sibley |
| ** ** | ** ** | ** **      |                        |   | **Daniel C. Sibley** |
|       |       |            |                        |   | Chief Financial  Officer |
| * *   |       |            |                        |   | *(principal  financial and accounting officer)* |

 

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