**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE
      COMMISSION**





**Washington,
      D.C. 20549**





**FORM
      10-Q**




ý
              **QUARTERLY
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934**For
                  the quarterly period ended June 30, 2007
 or
 
 o
              **TRANSITION
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934**For
                  the transition period from





**Commission
      File Number 000-51268**








**RIDGEWOOD
      ENERGY M FUND, LLC**


(Exact
      name of registrant as specified in its charter)








**Delaware**
              (State
                or other jurisdiction of
              incorporation
                or organization)
            
            **13-4285167**
              (I.R.S.
                Employer
              Identification
                No.)








**1314
      King Street, Wilmington, Delaware 19801**


(Address
      of principal executive offices) (Zip code)





**(302)
      888-7444**


(Registrant’s
      telephone number, including area code)








Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
      during the preceding 12 months (or for such shorter period that the
      registrant was required to file such reports), and (2) has been subject to
      such filing requirements for the past 90 days.


Yes  ýNo  o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or non-accelerated filer.  See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the
      Exchange Act.  (Check one):




Large
                accelerated filer  o
            Accelerated
                filer  o
            Non-accelerated
                filer  ý





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





As
      of
      August 3, 2007 there were 535.6818 shares of membership interest of the
      registrant outstanding.










**Table
                  of Contents****Part
                  I - FINANCIAL INFORMATION**
              
              **Page**Item
                  1.  Financial Statements:Unaudited
                  Condensed Balance Sheets as of June 30, 2007 and December 31,
                  2006
              
              
              3Unaudited
                  Condensed Statements of Operations for the three and six months
                  ended
                June
                  30, 2007 and 2006
              
              
              4Unaudited
                  Condensed Statements of Cash Flows for the six months ended June
                  30, 2007
                  and 2006
              
              
              5Notes
                  to Unaudited Condensed Financial Statements
              
              
              6Item
                  2.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations
              
              
              11Item
                  3.  Quantitative and Qualitative Disclosures About Market
                  Risk
              
              
              17Item
                  4.  Controls and Procedures
              
              
              17**Part
                  II - OTHER INFORMATION**Item
                  1.  Legal Proceedings
              
              
              19Item
                  1A.  Risk Factors
              
              
              19Item
                  2.  Unregistered Sales of Equity Securities and Use of
                  Proceeds
              
              
              19Item
                  3.  Defaults Upon Senior Securities
              
              
              19Item
                  4.  Submissions of Matters to a Vote of Security
                  Holders
              
              
              19Item
                  5.  Other Information
              
              
              19Item
                  6.  Exhibits
              
              
              19SIGNATURES
              
              
              20





2




**RIDGEWOOD
        ENERGY M FUND, LLC** **UNAUDITED
          CONDENSED BALANCE SHEETS** **(in
            thousands, except number of shares)**


**June
                  30,**
              
              
              **December
                  31,****2007**
              
              
              **2006****Assets**Current
                  assets:Cash
                  and cash equivalents
              
              $
              9,521
              
              
              $
              7,508Short-term
                  investment in marketable securities
              
              
              8,915
              
              
              
              15,656Production
                  receivable
              
              
              432
              
              
              
              493Due
                  from operators
              
              
              46
              
              
              
              -Other
                  current assets
              
              
              73
              
              
              
              22Total
                  current assets
              
              
              18,987
              
              
              
              23,679Salvage
                  fund
              
              
              1,077
              
              
              
              1,060Oil
                  and gas properties:Proved
                  properties
              
              
              28,448
              
              
              
              22,163Unproved
                  properties
              
              
              2,194
              
              
              
              5,355Less:
                  accumulated depletion and amortization-proved properties
              
              
              (4,875
              )
              
              
              (4,100
              )Total
                  oil and gas properties, net
              
              
              25,767
              
              
              
              23,418Total
                  assets
              
              $
              45,831
              
              
              $
              48,157**Liabilities
                  and Members' Capital**Current
                  liabilities:Due
                  to operators
              
              $
              60
              
              
              $
              717Accrued
                  expenses payable
              
              
              102
              
              
              
              155Total
                  current liabilities
              
              
              162
              
              
              
              872Asset
                  retirement obligations
              
              
              276
              
              
              
              225Total
                  liabilities
              
              
              438
              
              
              
              1,097Commitments
                  and contingencies (Note 7)Members'
                  capital:Manager:Distributions
              
              
              (1,203
              )
              
              
              (837
              )Retained
                  earnings
              
              
              254
              
              
              
              105Manager's
                  total
              
              
              (949
              )
              
              
              (732
              )Shareholders:Capital
                  contributions (834 shares authorized;  535.6818 issued
                  and
                outstanding)
              
              
              78,887
              
              
              
              78,887Distributions
              
              
              (6,815
              )
              
              
              (4,742
              )Syndication
                  costs
              
              
              (8,597
              )
              
              
              (8,597
              )Accumulated
                  deficit
              
              
              (17,133
              )
              
              
              (17,756
              )Shareholders'
                  total
              
              
              46,342
              
              
              
              47,792Total
                  members' capital
              
              
              45,393
              
              
              
              47,060Total
                  liabilities and members' capital
              
              $
              45,831
              
              
              $
              48,157The
                  accompanying notes are an integral part of these unaudited condensed
                  financial statements.


3


**RIDGEWOOD
        ENERGY M FUND, LLC** **UNAUDITED
          CONDENSED STATEMENTS OF OPERATIONS** **(in
            thousands, except per share amounts)**





**For
                  the three months ended**
                **June
                  30,**
              
              
              **For
                  the six months ended**
                **June
                  30,****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006****Revenue**Oil
                  and gas revenues
              
              $
              1,175
              
              
              $
              2,311
              
              
              $
              2,553
              
              
              $
              2,311**Expenses**Dry-hole
                  costs
              
              
              (46
              )
              
              
              124
              
              
              
              (46
              )
              
              
              6,281Depletion
                  and amortization
              
              
              386
              
              
              
              1,277
              
              
              
              775
              
              
              
              1,277Lease
                  operating expenses
              
              
              216
              
              
              
              92
              
              
              
              604
              
              
              
              92Management
                  fees to affiliate (Note 5)
              
              
              322
              
              
              
              493
              
              
              
              645
              
              
              
              986Other
                  operating expenses
              
              
              19
              
              
              
              2
              
              
              
              24
              
              
              
              2General
                  and administrative expenses
              
              
              132
              
              
              
              171
              
              
              
              314
              
              
              
              218Total
                  expenses
              
              
              1,029
              
              
              
              2,159
              
              
              
              2,316
              
              
              
              8,856Income
                  (loss) from operations
              
              
              146
              
              
              
              152
              
              
              
              237
              
              
              
              (6,545
              )**Other
                  income**Interest
                  income
              
              
              256
              
              
              
              465
              
              
              
              535
              
              
              
              887**Net
                  income (loss)**
              
              $
              402
              
              
              $
              617
              
              
              $
              772
              
              
              $
              (5,658
              )**Manager
                  Interest**Net
                  income (loss)
              
              $
              76
              
              
              $
              225
              
              
              $
              149
              
              
              $
              87**Shareholder
                  Interest**Net
                  income (loss)
              
              $
              326
              
              
              $
              392
              
              
              $
              623
              
              
              $
              (5,745
              )Net
                  income (loss) per share
              
              $
              609
              
              
              $
              731
              
              
              $
              1,163
              
              
              $
              (10,725
              )The
                  accompanying notes are an integral part of these unaudited condensed
                  financial statements.




4


**RIDGEWOOD
        ENERGY M FUND, LLC** **UNAUDITED
          CONDENSED STATEMENTS OF CASH FLOWS** **(in
            thousands)**


**For
                  the six months ended June 30,****2007**
              
              
              **2006****Cash
                  flows from operating activities**Net
                  income (loss)
              
              $
              772
              
              
              $
              (5,658
              )Adjustments
                  to reconcile net income (loss) to net cash
                provided by (used in) operating activities:Dry-hole
                  costs
              
              
              (46
              )
              
              
              6,281Depletion
                  and amortization
              
              
              775
              
              
              
              1,277Accretion
              
              
              6
              
              
              
              2Interest
                  earned on marketable securities
              
              
              (260
              )
              
              
              (268
              )Changes
                  in assets and liabilities:Decrease
                  (increase) in production receivable
              
              
              61
              
              
              
              (2,311
              )(Increase)
                  decrease in other current assets
              
              
              (51
              )
              
              
              21(Decrease)
                  increase in due to operators
              
              
              (88
              )
              
              
              92(Decrease)
                  increase in accrued expenses payable
              
              
              (53
              )
              
              
              110Net
                  cash provided by (used in) operating activities
              
              
              1,116
              
              
              
              (454
              )**Cash
                  flows from investing activities**Capital
                  expenditures for oil and gas properties
              
              
              (3,648
              )
              
              
              (2,931
              )Proceeds
                  from insurance receivable
              
              
              -
              
              
              
              1,235Interest
                  income reinvested - salvage fund
              
              
              (17
              )
              
              
              (21
              )Proceeds
                  from the maturity of investment
              
              
              15,740
              
              
              
              -Investment
                  in marketable securities
              
              
              (8,739
              )
              
              
              (15,000
              )Net
                  cash provided by (used in) investing activities
              
              
              3,336
              
              
              
              (16,717
              )**Cash
                  flows from financing activities**Distributions
                  paid
              
              
              (2,439
              )
              
              
              -Net
                  cash used in financing activities
              
              
              (2,439
              )
              
              
              -Net
                  increase (decrease) in cash and cash equivalents
              
              
              2,013
              
              
              
              (17,171
              )Cash
                  and cash equivalents, beginning of period
              
              
              7,508
              
              
              
              43,453Cash
                  and cash equivalents, end of period
              
              $
              9,521
              
              
              $
              26,282**Supplemental
                  schedule of non-cash investing activities**Advances
                  used for capital expenditures in oil and gas
                properties
                  reclassified to proved properties
              
              $
              -
              
              
              $
              4,366The
                  accompanying notes are an integral part of these unaudited condensed
                  financial statements.


5


**RIDGEWOOD
      ENERGY M FUND, LLC**


**NOTES
      TO UNAUDITED CONDENSED FINANCIAL STATEMENTS**








**1.**
            **Organization
                and Purpose**





The
      Ridgewood Energy M Fund, LLC (the “Fund”), a Delaware limited liability company,
      was formed on August 2, 2004 and operates pursuant to a limited liability
      company agreement (“Agreement”) dated as of September 7, 2004 by and among
      Ridgewood Energy Corporation (the “Manager”) and the shareholders of the
      Fund.  Although the date of formation is August 2, 2004, the Fund did
      not begin operations until September 7, 2004 when it began its private offering
      of shares.





The
      Fund
      was organized to acquire, drill, construct and develop oil and natural gas
      properties located in the United States offshore waters of Texas, Louisiana,
      and
      Alabama in the Gulf of Mexico.  The Fund has devoted most of its
      efforts to raising capital and oil and natural gas exploration
      activities.





The
      Manager performs (or arranges for the performance of) the management,
      administrative and advisory services required for Fund operations. Such services
      include, without limitation, the administration of shareholder accounts,
      shareholder relations and the preparation, review and dissemination of tax
      and
      other financial information.  In addition, the Manager provides office
      space, equipment and facilities and other services necessary for Fund
      operations.  The Manager also engages and manages the contractual
      relations with outside custodians, depositories, accountants, attorneys,
      broker-dealers, corporate fiduciaries, insurers, banks and others as required
      (Notes 2, 5 and 7).





**2.**
            **Summary
                of Significant Accounting
                Policies**





***Basis
      of presentation***


These
      unaudited interim condensed financial statements have been prepared by the
      Fund’s management, in accordance with accounting principles generally accepted
      in the United States of America (“GAAP”) and in the opinion of management,
      contain all adjustments (consisting of only normal recurring adjustments)
      necessary to present fairly the Fund’s financial position, results of operations
      and cash flows for the periods presented.  Certain information and
      note disclosures normally included in annual financial statements prepared
      in
      accordance with GAAP have been omitted in these unaudited interim condensed
      financial statements.  The results of operations, financial position,
      and cash flows for the periods presented herein are not necessarily indicative
      of future financial results.  These unaudited interim condensed
      financial statements should be read in conjunction with the annual financial
      statements and the notes thereto for the year ended December 31, 2006 included
      in the Fund’s Annual Report on Form 10-K filed with the Securities and Exchange
      Commission (“SEC”).





***Use
      of Estimates***


The
      preparation of financial statements in conformity with GAAP requires management
      to make estimates and assumptions that affect the reported amounts of assets
      and
      liabilities and disclosure of contingent assets and liabilities as of the date
      of the financial statements and the reported amounts of revenues and expenses
      during the reporting period.  On an ongoing basis, the Manager reviews
      its estimates, including those related to amounts advanced to and billed by
      operators, determination of proved reserves, impairments and environmental
      liabilities.  Actual results may differ from those
      estimates.





***Advances
      to Operators for Working Interests and Expenditures***


The
      Fund’s acquisition of a working interest in a well or a project requires it to
      make a payment to the seller for the Fund’s right, title and
      interest.  The Fund is required to advance its share of estimated cash
      expenditures for the succeeding month’s operation. The Fund accounts for such
      payments as advances to operators for working interests and
      expenditures.  As drilling costs are incurred, the advances are
      transferred to unproved properties.





***Oil
      and natural gas properties***


Investments
      in oil and natural gas properties are operated by unaffiliated entities
      (“Operators”) who are responsible for drilling, administering and producing
      activities pursuant to the terms of the applicable operating agreements with
      working interest owners.  The Fund's portion of exploration, drilling,
      operating and capital equipment expenditures relating to the wells are advanced
      and billed by Operators through authorization for expenditures.


6




The
      successful efforts method of accounting for oil and natural gas producing
      activities is followed. Acquisition costs are capitalized when
      incurred.  Other oil and natural gas exploration costs, excluding the
      costs of drilling exploratory wells, are charged to expense as
      incurred.  The costs of drilling exploratory wells are capitalized
      pending the determination of whether the wells have discovered proved commercial
      reserves.  If proved commercial reserves have not been found,
      exploratory drilling costs are expensed to dry-hole expense.  Costs to
      develop proved reserves, including the costs of all development wells and
      related facilities and equipment used in the production of crude oil and natural
      gas, are capitalized.  Expenditures for ongoing repairs and
      maintenance of producing properties are expensed as incurred.





Upon
      the
      sale or retirement of a proved property (i.e. a producing well), the cost and
      related accumulated depletion and amortization will be eliminated from the
      property accounts, and the resultant gain or loss is recognized.  On
      the sale or retirement of an unproved property, gain or loss on the sale is
      recognized. Currently, it is not the Manager’s intention to sell any of the
      Fund’s property interests.





Capitalized
      acquisition costs of producing oil and natural gas properties after recognizing
      estimated salvage values are depleted by the unit-of-production
      method.





As
      of
      June 30, 2007 and December 31, 2006, amounts recorded in due to operators
      totaling approximately $33 thousand and $0.6 million, respectively, related
      to
      the acquisition of oil and gas property and/or drilling costs.  The
      balance at December 31, 2006 in due to operators related to the acquisition
      of
      oil and gas properties was paid during the first quarter of 2007.





***Revenue
      Recognition and Production Receivable***


Oil
      and
      natural gas sales are recognized when delivery is made by the Operator to the
      purchaser and title is transferred (i.e. production has been delivered to a
      pipeline or transport vehicle).  At the time of transfer a production
      receivable is recorded.





The
      volume of oil and natural gas sold on the Fund’s behalf may differ from the
      volume of oil and natural gas to which the Fund is entitled.  The Fund
      will account for such oil and natural gas production imbalances by the
      entitlements method.  Under the entitlements method, the Fund will
      recognize a receivable from other working interest owners for volumes oversold
      by other working interest owners.  For volumes oversold by the Fund, a
      payable to other working interest owners will be recorded.  As of June
      30, 2007 and December 31, 2006, there were no material oil or natural gas
      balancing arrangements between the Fund and other working interest
      owners.





***Syndication
      Costs***


Direct
      costs associated with offering the Fund’s shares including professional fees;
      selling expenses and administrative costs payable to the Manager, an affiliate
      of the Manager and outside brokers are reflected as a reduction of shareholders’
capital.





***Asset
      Retirement Obligations***


For
      oil
      and natural gas properties, there are obligations to perform removal and
      remediation activities when the properties are retired.  When a
      project reaches drilling depth and is determined to be either proved or dry,
      an
      asset retirement obligation is recorded.  Plug and abandonment costs
      associated with unsuccessful projects are expensed as dry-hole
      costs.




**For
                  the six months**
                **ended
                  June 30, 2007**
              
              
              **For
                  the year ended**
                **December
                  31, 2006****(in
                  thousands)**Balance
                  - Beginning of period
              
              $
              225
              
              
              $
              23Liabilities
                  incurred
              
              
              45
              
              
              
              501Liabilities
                  settled
              
              
              -
              
              
              
              (307
              )Accretion
                  expense
              
              
              6
              
              
              
              8Balance
                  - End of period
              
              $
              276
              
              
              $
              225


7


***Impairment
      of Long-Lived Assets***


In
      accordance with the provisions of Statement of Financial Accounting Standards
      (“SFAS”) No. 144, “Accounting for the Impairment of Long-Lived Assets”,
      long-lived assets, such as oil and natural gas properties, are evaluated when
      events or changes in circumstances indicate the carrying value of such assets
      may not be recoverable.  The determination of whether impairment has
      occurred is made by comparing the carrying values of long-lived assets to
      the estimated future undiscounted cash flows attributable to the
      asset.  The impairment loss recognized is the excess of the carrying
      value over the future discounted cash flows attributable to the asset or the
      estimated fair value of the asset.  For the three and six months ended June
      30, 2007 and 2006, no impairments were recorded.





***Depletion
      and Amortization***


Depletion
      and amortization of the cost of proved oil and natural gas properties are
      calculated using the units of production method.  Proved developed
      reserves are used as the base for depleting the cost of successful exploratory
      drilling and development costs.  The sum of proved developed and
      proved undeveloped reserves is used as the base for depleting (or amortizing)
      leasehold acquisition costs, the costs to acquire proved properties and platform
      and pipeline costs.





***Income
      Taxes***


No
      provision is made for income taxes in the financial
      statements.  Because the Fund is a limited liability company (“LLC,”)
      the income or losses are passed through and included in the tax returns of
      the
      individual shareholders.





***Cash
      and cash equivalents***


All
      highly liquid investments with maturities when purchased of three months or
      less
      are considered as cash and cash equivalents. At times, bank deposits may be
      in
      excess of federal insured limits.  At June 30, 2007 and December 31,
      2006, bank balances exceeded federally insured limits by approximately $2.2
      million and $7.3 million, respectively.  The Fund maintains bank
      deposits with accredited financial institutions to mitigate such
      risk.





***Salvage
      Fund***


The
      Fund
      deposits in a separate interest-bearing account, or a salvage fund, money to
      provide for dismantling production platforms and facilities, plugging and
      abandoning the wells and removing the platforms, facilities and wells after
      their useful lives, in accordance with applicable federal and state laws and
      regulations.





Interest
      earned on the account will become part of the salvage fund, there are no legal
      restrictions on the withdrawal from the salvage fund.





***Income
      and Expense Allocation***


Profits
      and losses are to be allocated 85% to shareholders in proportion to their
      relative capital contributions and 15% to the Manager, except for certain
      expenses, such as dry-hole costs and fiduciary fees, and interest income which
      are allocated 99% to shareholders and 1% to the Manager.





***Short-term
      Investments in Marketable Securities***


At
      times
      the Fund may purchase short-term investments comprised of US Treasury Notes
      with
      maturities greater than three months and as such are considered held-to-maturity
      investments.  Held-to-maturity securities are those investments that
      the Fund has the ability and intent to hold until
      maturity.  Held-to-maturity investments are recorded at cost plus
      accrued income, adjusted for the amortization of premiums and discounts, which
      approximate fair value.  Interest income is accrued as
      earned.  Held-to-maturity investments at June 30, 2007 were $8.9
      million, maturing in August 2007.








**3.**
            **Unproved
                Properties - Capitalized Exploratory Well
                Costs**





Leasehold
      acquisition and exploratory drilling costs are capitalized pending determination
      of whether the well has found proved reserves.  Unproved properties
      are assessed on a quarterly basis by evaluating and monitoring if sufficient
      progress is made on assessing the reserves.  Capitalization costs are
      expensed as dry-hole costs in the event that reserves are not found or are
      not
      in sufficient quantities to complete the well and develop the
      field.  The following table reflects the net changes in unproved
      properties at June 30, 2007 and December 31, 2006.  At June 30, 2007,
      the Fund had no capitalized exploratory well costs greater than one
      year.


8




**For
                    the six months**
                  **ended
                    June 30,**
                  ****2007****
              
              
              **For
                    the year ended**
                  **December
                    31,**
                  ****2006******(in
                  thousands)**Balance
                  - Beginning of the period
              
              $
              5,355
              
              
              $
              465Additions
                  to capitalized exploratory well costs pending the
                determination
                  of proved reserves
              
              
              2,797
              
              
              
              5,162Reclassification
                  to proved properties based on the
                determination
                  of proved reserves
              
              
              (5,958
              )
              
              
              -Capitalized
                  exploratory well costs charged to dry-hole costs
              
              
              -
              
              
              
              (272
              )Balance
                  - End of the period
              
              $
              2,194
              
              
              $
              5,355




Dry-hole
      costs are detailed in the table below for the three and six months ended June
      30, 2007 and 2006.




**For
                  the three months ended**
                **June
                  30,**
              
              
              **For
                  the six months ended**
                **June
                  30,****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006****(in
                  thousands)**East
                  Breaks 157
              
              $
              -
              
              
              $
              211
              
              
              $
              -
              
              
              $
              4,576Eugene
                  Island 357
              
              
              -
              
              
              
              (10
              )
              
              
              -
              
              
              
              1,705Main
                  Pass 155
              
              
              (46
              )
              
              
              (77
              )
              
              
              (46
              )
              
              
              -$
              (46
              )
              
              $
              124
              
              
              $
              (46
              )
              
              $
              6,281





**4.**
            **Distributions**





Distributions
      to shareholders are allocated in proportion to the number of shares
      held.





The
      Manager will determine whether available cash from operations, as defined in
      the
      Fund's LLC Agreement, is to be distributed. Such distribution would be allocated
      85% to the shareholders and 15% to the Manager, as defined in the Fund's LLC
      Agreement.





Available
      Cash from Dispositions, as defined in the Fund's LLC Agreement, will be paid
      99%
      to shareholders and 1% to the Manager until the shareholders have received
      total
      distributions equal to their capital contributions. After shareholders have
      received distributions equal to their capital contributions, 85% of Available
      Cash from Dispositions will be distributed to shareholders and 15% to the
      Manager.





The
      shareholders received distributions of approximately $2.1 million for the six
      months ended June 30, 2007.  There were no distributions paid for the
      six months ended June 30, 2006.





The
      Manager received distributions of approximately $0.4 million for the six months
      ended June 30, 2007.  There were no distributions paid for the six
      months ended June 30, 2006.








**5.**
            **Related
                Parties**





A
      management agreement provides that the Manager render management, administrative
      and advisory services.  For such services, the Manager originally
      received an annual management fee, payable monthly, of 2.5% of total capital
      contributions.  Commencing September 1, 2006, the management fee,
      payable monthly, is equal to 2.5% of the total shareholder capital
      contributions, net of dry-hole expenses incurred by the
      Fund.  Commencing January 1, 2007, the management fee was further
      reduced to 2.0% of the total shareholder capital contributions, net of dry-hole
      expenses incurred by the Fund. Management fees of approximately $0.3 million
      and
      $0.6 million were incurred for the three and six months ended June 30, 2007,
      respectively.  Management fees of approximately $0.5 million and $1.0
      million were incurred for the three and six months ended June 30, 2006,
      respectively.


9





From
      time
      to time, short-term payables and receivables, which do not bear interest, arise
      from transactions with affiliates in the ordinary course of business. As of
      June
      30, 2007 and December 31, 2006, there was no outstanding payables or receivables
      related to these transactions.





None
      of
      the compensation to be received by the Manager has been derived as a result
      of
      arm’s length negotiations.





The
      Fund
      has working interest ownership in certain projects to acquire and develop oil
      and natural gas projects with other entities that are likewise managed by the
      Manager.








**6.**
            **Fair
                Value of Financial
                Instruments**





At
      June
      30, 2007 and December 31, 2006, the carrying value of cash and cash equivalents,
      short term investments in marketable securities and salvage fund approximate
      fair value.








**7.**
            **Commitments
                and Contingencies**





***Environmental
      Considerations***


The
      exploration for and development of oil and natural gas involves the extraction,
      production and transportation of materials which, under certain conditions,
      can
      be hazardous or cause environmental pollution problems.  The Manager
      and the Operators are continually taking action they believe appropriate to
      satisfy applicable federal, state and local environmental regulations and do
      not
      currently anticipate that compliance with federal, state and local environmental
      regulations will have a material adverse effect upon capital expenditures,
      results of operations or the competitive position of the Fund in the oil and
      natural gas industry.  However, due to the significant public and
      governmental interest in environmental matters related to those activities,
      the
      Manager cannot predict the effects of possible future legislation, rule changes,
      or governmental or private claims.  At of June 30, 2007 and December
      31, 2006, there were no known environmental contingencies that required the
      Fund
      to record a liability.





***Insurance
      Coverage***


The
      Fund
      is subject to all risks inherent in the exploration for and development of
      oil
      and natural gas. Insurance coverage as is customary for entities engaged in
      similar operations is maintained, but losses may occur from uninsurable risks
      or
      amounts in excess of existing insurance coverage. The occurrence of an event
      which is not insured or not fully insured could have an adverse impact upon
      earnings and financial position.





***Eugene Island
      364***


The
      Fund
      has a 50% ownership in Eugene Island 364 operated by El Paso E&P Company
      which was determined to be a success.  The well produced for a short
      time in 2006 but has been shut-in since August 2006 due to mechanical
      problems.  As of August 3, 2007, the partners have not concluded as to
      the optimal method to develop the reserves and further seismic analysis and
      engineering studies are on-going.  Current estimates to correct this
      mechanical problem are approximately $6 million.  The Fund assesses
      its projects for impairment if impairment indicators are
      identified.  Based on current reserve projections and estimated costs,
      management’s analysis indicate that estimated future cash flows exceed the
      projected costs of the Eugene Island 364
      project.   Capitalized costs net of accumulated depletion and
      amortization related to the Eugene Island 364 project as of June 30, 2007
      approximate $11.2 million.




10


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





**Cautionary
      Statement Regarding Forward-Looking Statements**





This
      Quarterly Report on Form 10-Q, including all documents incorporated by
      reference, includes "forward-looking" statements within the meaning of Section
      27A of the Securities Act of 1933, as amended (the "Securities Act") and Section
      21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and
      the Private Securities Litigation Reform Act of 1995, and the "safe harbor"
      provisions thereof. These forward-looking statements are usually accompanied
      by
      the words "anticipates," "believes," "plan," "seek," "expects," "intends,"
      "estimates," "projects," "will likely result," "future" and similar terms and
      expressions or variations thereof.  The forward-looking statements in
      this Quarterly Report on Form 10-Q reflect the current views of management
      of
      the Fund with respect to future events and financial
      performance.  These forward-looking statements are subject to certain
      risks and uncertainties, including, among other things, the high-risk nature
      of
      oil and natural gas exploratory operations, the fact that our drilling
      activities are managed by third parties, the volatility of natural gas prices
      and extraction, and those other risks and uncertainties discussed in the Fund’s
      2006 Annual Report on Form 10-K filed with the Securities and Exchange
      Commission that could cause actual results to differ materially from historical
      results or those anticipated.  Readers are urged to carefully consider
      all such factors.





In
      light
      of these risks and uncertainties, there can be no assurance that the
      forward-looking information contained in this Quarterly Report on Form 10-Q
      will
      in fact occur or prove to be accurate.  Readers should not place undue
      reliance on the forward-looking statements contained herein, which speak only
      as
      of the date of this filing.  The Fund undertakes no obligation to
      publicly revise these forward-looking statements to reflect events or
      circumstances that may arise after the date of the filing.  All
      subsequent written or oral forward-looking statements attributable to the
      Fund or persons acting on the Fund's behalf are expressly qualified in
      their entirety by this section.





**Critical
      Accounting Policies and Estimates**





The
      following discussion and analysis of the Fund's financial condition
      and operating results is based on the Fund's financial
      statements.  The preparation of this Quarterly Report on Form 10-Q
      requires the Fund to make estimates and assumptions that affect the
      reported amount of assets and liabilities, disclosure of contingent assets
      and
      liabilities at the date of the Fund's financial statements, and the
      reported amount of revenue and expenses during the reporting period. Actual
      results may differ from those estimates and assumptions.  See “Notes
      to Unaudited Condensed Financial Statements” in Part I of this Quarterly Report
      on Form 10-Q for a presentation of the Fund’s significant accounting
      principles.   No changes have been made to the
      Fund's critical accounting policies and estimates since the filing of the
      2006 Annual Report on Form 10-K.





**Overview
      of the Fund's Business**





The
      Fund
      is an independent oil and natural gas producer.  The Fund’s primary
      investment objective is to generate cash flow for distribution to its
      shareholders through participation in oil and natural gas exploration and
      development projects in the Gulf of Mexico.





The
      Manager performs certain duties on the Fund’s behalf including the evaluation of
      potential projects for investment and ongoing administrative and advisory
      services associated with these projects.  The Fund does not currently,
      nor is there any plan, to operate any project in which the Fund
      participates.  The Manager enters into operating agreements with
      third-party operators for the management of all exploration, development and
      producing operations, as appropriate.  As compensation for the above
      duties, the Manager is paid an annual management fee (effective January 1,
      2007,
      2.0% of capital contributions, net of dry-hole costs), payable monthly, for
      ongoing administrative and advisory duties as well as reimbursement of expenses.
      The Manager also participates in distributions.





**Business
      Update**





As
      of
      June 30, 2007 the Fund has participated in the drilling of ten wells, of which
      one well is currently producing and five wells were determined to have natural
      gas and oil reserves in commercial quantities such that these properties are
      in
      the process of being completed or recompleted to facilitate
      production.  Four of the Fund’s projects were
      deemed dry-holes and plugged and abandoned in prior years.  In
      addition, the Fund has working interests in two new projects (see “Recent
      Developments” below) expected to be drilled over the next six months and
      anticipates drilling a second well in the West Cameron 77 project within the
      next two years.


11




**Recent
      Developments**





***LLOG
      Projects***


In
      October 2006, the Fund acquired a working interest in six exploratory wells
      to
      be drilled by LLOG Exploration Company (“LLOG”) off the coast of
      Louisiana.  During the first quarter of 2007, the Fund decided not to
      participate in the Galveston 248 project with LLOG due to
      economics.  Each of the projects is viewed as lower risk projects as
      they are being drilled in relatively shallow depths ranging from 10,000 to
      13,000 feet and the projects reveal three dimensional seismic data indicative
      of
      producing fields in close proximity to the drilling
      sites.   Since the projects are not very deep, they can be
      drilled and completed quickly.  Construction of minimal facilities in
      order to tie the well to nearby production platforms also facilitates turning
      the project to production quickly. During the first half of 2007, three of
      the projects operated by LLOG were determined to have successful discoveries.
      The Fund plans to participate in the remaining two LLOG projects with drilling
      expected within the next three months.  Below is a summary of the
      wells operated by LLOG:





**Well
                  Name**
              **Operator**
              **Offshore**
              
              **Working**
                **Interest
                  %**
              
              **Drilling
                  Risk**
                **(in
                  thousands)**
              **Status**South
                  Marsh Island 111
              LLOG
              LA
              
              
              8.75%
              
              
              n/a
              
              Successful
                  - production
                expected
                  2nd quarter 2008Vermilion
                  344
              LLOG
              LA
              
              
              8.75%
              
              
              n/a
              
              Successful
                  - production
                expected
                  1st quarter 2008West
                  Delta 68
              LLOG
              LA
              
              
              8.75%
              
              
              n/a
              
              Successful
                  - production
                expected
                  1st quarter 2008Ship
                  Shoal 81
              LLOG
              LA
              
              
              8.75%
              
              $
              600
              
              3rd
                  quarter 2007 drilling dateWest
                  Delta 67
              LLOG
              LA
              
              
              8.75%
              
              $
              800
              
              3rd
                  quarter 2007 drilling date





***Eugene Island
      337***


The
      Fund
      has a  20% ownership in Eugene Island 337, operated by Devon
      Energy Corporation (“Devon”), which was determined to be a commercial success in
      July 2006.  The well has been completed and production is anticipated
      to begin in the third quarter of 2007.





***Eugene Island
      364***


The
      Fund
      has a 50% ownership in Eugene Island 364 operated by El Paso E&P Company
      which was determined to be a success.  The well produced for a short
      time in 2006 but has been shut-in since August 2006 due to mechanical
      problems.  As of August 3, 2007, the partners have not concluded as to
      the optimal method to develop the reserves and further seismic analysis and
      engineering studies are on-going.  Current estimates to correct this
      mechanical problem total approximately $6.0 million.   Based on
      current reserve projections and estimated costs, management’s analysis indicate
      that estimated future cash flows exceed the total projected costs of the
      Eugene Island 364 project.  If future projected costs exceed
      current estimates, the Fund will reassess Eugene Island 364 for impairment
      based
      on those revised estimates.  Capitalized costs net of accumulated depletion
      and amortization related to the Eugene Island 364 project as of June 30,
      2007 approximate $11.2 million.





**Producing
      Properties**





***West
      Cameron 77 Mustang***


The
      Fund
      has a 14.54% ownership in the West Cameron 77 #2 project operated by BHP
      Billiton Petroleum.  The well began production in May 2006 and
      continued to produce at expected production levels through the second
      quarter.  Average gross production per day approximated 13.5 million
      cubic feet equivalent for June 2007.  The Fund plans to drill an
      additional well on the West Cameron 77 leaseblock within the next two
      years.


12




**Results
      of Operations**





The
      following review of operations for the three and six months ended June 30,
      2007
      and 2006 should be read in conjunction with the Fund’s financial statements and
      the notes thereto.  The following table summarizes the Fund’s results
      of operations (in thousands):





**For
                  the three months ended**
                **June
                  30,**
              
              
              **For
                  the six months ended**
                **June
                  30,****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006****Revenue**Oil
                  and gas revenues
              
              $
              1,175
              
              
              $
              2,311
              
              
              $
              2,553
              
              
              $
              2,311**Expenses**Dry-hole
                  costs
              
              
              (46
              )
              
              
              124
              
              
              
              (46
              )
              
              
              6,281Depletion
                  and amortization
              
              
              386
              
              
              
              1,277
              
              
              
              775
              
              
              
              1,277Lease
                  operating expenses
              
              
              216
              
              
              
              92
              
              
              
              604
              
              
              
              92Management
                  fees to affiliate
              
              
              322
              
              
              
              493
              
              
              
              645
              
              
              
              986Other
                  operating expenses
              
              
              19
              
              
              
              2
              
              
              
              24
              
              
              
              2General
                  and administrative expenses
              
              
              132
              
              
              
              171
              
              
              
              314
              
              
              
              218Total expenses
              
              
              1,029
              
              
              
              2,159
              
              
              
              2,316
              
              
              
              8,856Income (loss) from operations
              
              
              146
              
              
              
              152
              
              
              
              237
              
              
              
              (6,545
              )**Other
                  income**Interest
                  income
              
              
              256
              
              
              
              465
              
              
              
              535
              
              
              
              887**Net income (loss)**
              
              $
              402
              
              
              $
              617
              
              
              $
              772
              
              
              $
              (5,658
              )





***Operating
      Revenue.*******Oil and gas revenue for the three
      and six months ended June 30, 2007 were approximately $1.2 million and $2.6
      million, respectively.  Oil and gas revenue for both the three and six
      months ended June 30, 2006 were approximately $2.3 million.





The
      Fund
      had no producing projects prior to May 2006.  Revenue for the three
      and six months ended June 30, 2006 represents the initial month’s of production
      for West Cameron 77 Mustang (May 2006) and Eugene Island 364 (June
      2006).  Oil and gas revenue for the three and six months ended June
      30, 2007 primarily represents production from the West Cameron 77 Mustang well
      only as the Eugene Island 364 well has not produced during 2007 (see recent
      developments). Although the Fund has experienced a decline in production volumes
      for the West Cameron 77 Mustang well from the initial production volumes in
      May
      and June 2006, 2007 production volumes are on target with projected reserve
      estimates.





Natural
      gas prices increased during the second quarter of 2007 as compared to the second
      quarter of 2006, from approximately $6.55 to $8.07 per million cubic
      feet. Oil prices during the second quarter of 2007 averaged approximately
      $67 per barrel as compared to approximately $68 per barrel for the second
      quarter of 2006.





**Operating
      and Other Expenses**





***Dry-hole
      Costs.*******Dry-hole costs are those costs
      incurred to drill and develop a well that is ultimately found to be incapable
      of
      producing either oil or natural gas in sufficient quantities to justify
      completion of the well. The following table summarizes dry-hole costs inclusive
      of plug and abandonment costs for the three and six months ended June 30, 2007
      and 2006.


13


**For
                  the three months ended**
                **June
                  30,**
              
              
              **For
                  the six months ended**
                **June
                  30,****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006****(in
                  thousands)**East
                  Breaks 157
              
              $
              -
              
              
              $
              211
              
              
              $
              -
              
              
              $
              4,576Eugene
                  Island 357
              
              
              -
              
              
              
              (10
              )
              
              
              -
              
              
              
              1,705Main
                  Pass 155
              
              
              (46
              )
              
              
              (77
              )
              
              
              (46
              )
              
              
              -$
              (46
              )
              
              $
              124
              
              
              $
              (46
              )
              
              $
              6,281





***Depletion
      and Amortization.***  Depletion and amortization for the
      three and six months ended June 30, 2007 was approximately $0.4 million and
      $0.8
      million, respectively, related to production of the West Cameron 77 Mustang
      property.  Depletion and amortization for both the three and six
      months ended June 30, 2006 was approximately $1.3 million related to initial
      production volumes from the West Cameron 77 Mustang and Eugene Island 364
      properties.  The decrease in depletion and amortization is a result of
      an overall decline in West Cameron 77 Mustang production volumes and the shut-in
      of the Eugene Island 364 property which has not been depleted in
      2007.





***Lease
      Operating Expenses.***  Lease operating expenses represent
      the day to day cost of operating and maintaining wells and related facilities.
      For the three and six months ended June 30, 2007, lease operating expenses
      were
      approximately $0.2 million and $0.6 million, respectively, resulting from
      production in 2007.  For both the three and six months ended June 30,
      2006, lease operating expenses were approximately $0.1 million.  The
      significant increase in lease operating expenses is a result of approximately
      $0.5 million of workover expenses incurred in 2007 related to the Eugene Island
      364 project, as well as six months of production for the Fund in 2007 as
      compared to only two months of production in 2006.





***Management
      Fee*****.**The Manager originally received
      an annual management fee, payable monthly, of 2.5% of total capital
      contributions.  Management fees are charged to cover expenses
      associated with overhead incurred by the Manager for its ongoing management,
      administrative and advisory services.  Such overhead expenses include
      but are not limited to rent, payroll and benefits for employees of the Manager,
      and other administrative costs. Commencing September 1, 2006, the management
      fee, payable monthly, was equal to 2.5% of the total shareholder capital
      contributions, net of dry-hole expenses incurred by the
      Fund.  Commencing January 1, 2007, the management fee was further
      reduced to 2.0% of the total shareholder capital contributions, net of dry-hole
      expenses incurred by the Fund.  For the three and six months ended
      June 30, 2007, management fees were approximately $0.3 million and $0.6 million,
      respectively.  For the three and six months ended June 30, 2006,
      management fees were approximately $0.5 million and $1.0 million,
      respectively.





***General
      and Administrative Expenses.***Accounting, legal,
      fiduciary fees and insurance expenses represent costs specifically identifiable
      or allocable to the Fund. Accounting and legal fees represent annual audit
      and
      tax preparation fees, quarterly reviews and filing fees of the
      Fund.  Fiduciary fees represent bank fees associated with the
      management of the Fund’s short-term investment portfolio in US Treasury Notes.
      Insurance expense represents premiums related to well control insurance,
      production insurance and the directors and officers’ liability
      policy.  The directors and officers’ liability policy is allocated by
      the Manager to the Fund based on capital raised by the Fund to total capital
      raised by all oil and natural gas funds managed by the Manager.  The
      significant increase in insurance expense for the six months ended June 30,
      2007
      primarily relates to the increased drilling activities of the Fund for the
      LLOG
      projects, which primarily occurred in the first quarter of 2007.  For
      the three and six months ended June 30, 2006 insurance expense primarily relates
      to drilling insurance on the Eugene Island 364 project which was all incurred
      during the quarter ended June 30, 2006.  Decreased drilling activity
      in the quarter ended June 30, 2007as compared to the quarter ended June 30,
      2006
      resulted in decreased insurance expense in the current quarter.




14


The
      following table summarizes general and administrative expenses for the three
      and
      six months ended June 30, 2007 and 2006.





**For
                  the three months ended**
                **June
                  30,**
              
              
              **For
                  the six months ended**
                **June
                  30,****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006****(in
                  thousands)**Accounting
                  and legal fees
              
              $
              67
              
              
              $
              50
              
              
              $
              112
              
              
              $
              85Insurance
              
              
              56
              
              
              
              113
              
              
              
              184
              
              
              
              123Trust
                  fees
              
              
              9
              
              
              
              8
              
              
              
              17
              
              
              
              10Other
              
              
              -
              
              
              
              -
              
              
              
              1
              
              
              
              -$
              132
              
              
              $
              171
              
              
              $
              314
              
              
              $
              218





***Interest
      Income.***  Interest income for the three and six months
      ended June 30, 2007 was approximately $0.3 million and $0.5 million,
      respectively.  Interest income for the three and six months ended June
      30, 2006 was approximately $0.5 million and $0.9 million,
      respectively.  Increased interest rates during the six months ended
      June 30, 2007 were offset by a decrease in average outstanding balances earning
      interest.





**Capital
      Resources and Liquidity**





***Operating
      Cash Flows***


Cash
      flows provided by operating activities for the six months ended June 30, 2007
      were approximately $1.1 million, primarily related to production revenue and
      interest income, partially offset by management fees, lease operating expenses
      and other general and administrative expenses.





Cash
      flows used in operating activities for the six months ended June 30, 2006 were
      approximately $0.5 million, primarily related to cash expenditures for
      management fees, insurance expense and accounting and legal expenses partially
      offset by interest income.   As the Fund had just started
      generating oil and gas production, it had not collected any oil and gas revenue
      through June 30, 2006.





***Investing
      Cash Flows***


Cash
      flows provided by investing activities for the six months ended June 30, 2007
      were approximately $3.3 million, primarily related to proceeds from the maturity
      of investments, offset by capital expenditures for oil and gas properties and
      investments in marketable securities.





Cash
      flows used in investing activities for the six months ended June 30, 2006 were
      approximately $16.7 million, primarily related to capital expenditures for
      oil
      and gas properties and investments in marketable securities, partially offset
      by
      proceeds from insurance.





***Financing
      Cash Flows***


Cash
      flows used in financing activities for the six months ended June 30, 2007 were
      approximately $2.4 million related to distributions paid to the Manager and
      to
      the Shareholders.





There
      were no cash flows related to financing activities for the six months ended
      June
      30, 2006.





**Estimated
      Capital Expenditures**





The
      Fund
      has entered into multiple offshore operating agreements for the drilling and
      development of its investment properties.  The estimated capital
      expenditures associated with these agreements can vary depending on the stage
      of
      development on a property-by-property basis.  As of June 30, 2007,
      such estimated capital expenditures approximate $18.2 million, $12.6 million
      of
      which is expected to be paid out of unspent cash within the following 12 months,
      the remaining $5.6 million is expected to be spent in the following two to
      three
      years.





The
      table
      below presents exploration and development capital expenditures incurred to
      date
      for projects currently drilling or expected to be drilled in the near future
      as
      well as their estimated budgeted amounts for future
      periods.  Remaining unspent cash will be reallocated to one or more
      new unspecified projects.


15




**Estimated
                    Capital Expenditures:****As
                    of June 30, 2007****Spent
                    through**
                  **June
                    30, 2007**
                
                
                **To
                    be Spent Next**
                  **12
                    Months**
                
                
                **To
                    be Spent**
                  **Years
                    2-3****(in
                    thousands)**West
                    Cameron 77 Mustang (i)
                
                $
                8,990
                
                
                $
                -
                
                
                $
                5,644Eugene
                    Island 364 (ii)
                
                
                13,227
                
                
                
                6,323
                
                
                
                -Eugene
                    Island 337 (iii)
                
                
                5,969
                
                
                
                391
                
                
                
                -Ship
                    Shoal 81(iv)
                
                
                50
                
                
                
                1,591
                
                
                
                -South
                    Marsh Island 111 (vi)
                
                
                505
                
                
                
                1,429
                
                
                
                -Vermilion
                    344 (v)
                
                
                744
                
                
                
                1,172
                
                
                
                -West
                    Delta 67 (iv)
                
                
                -
                
                
                
                1,281
                
                
                
                -West
                    Delta 68 (v)
                
                
                893
                
                
                
                432
                
                
                
                -$
                30,378
                
                
                $
                12,619
                
                
                $
                5,644
 
 (i)
              
              West
                  Cameron 77 Mustang well #2 began production in May 2006, unspent
                  capital
                  at June 30, 2007 relates to the addition of a second
                  well.(ii)
              
              Eugene
                  Island 364 began production in June 2006 and is currently shut-in
                  due to
                  mechanical problems, unspent capital represents estimated costs
                  to
                  sidetrack the well.(iii)
              
              Eugene
                  Island 337 discovery in July 2006, production expected in August
                  2007.(iv)
              
              Drilling
                  expected 3rd quarter 2007.(v)
              
              Project
                  successful, production expected in 1st quarter 2008.(vi)
              
              Project
                  successful, production expected in 2nd quarter
                  2008.





**Liquidity
      Needs**





The
      Fund’s primary short-term liquidity needs are to fund its 2007 operations,
      including management fees and capital expenditures, with existing cash on-hand
      and income earned from its short-term investments and cash and cash
      equivalents.  The Manager is entitled to receive an annual management
      fee from the Fund regardless of whether the Fund is profitable in that year.
      Effective January 1, 2007, the Manager has changed its policy regarding the
      annual management fee.  Commencing in January 2007, the management fee
      payable will be equal to 2.0% of the total shareholder capital contributions,
      net of dry-hole expenses incurred by the Fund.  For the Fund, the
      management fee is reduced from approximately $1.9 million for 2006 to
      approximately $1.3 million for 2007, or approximately $47 thousand per month
      based on cumulative dry-hole expenses as of June 30, 2007.




Distributions,
        if any, are funded from cash flow from operations, and the frequency and
        amount
        are within the Manager’s discretion subject to available cash from operations,
        reserve requirements and Fund operations.





The
      capital raised by the Fund in its private placement is more than likely all
      the
      capital it will be able to obtain for investments in projects. The number of
      projects in which the Fund can invest will naturally be limited and each
      unsuccessful project the Fund experiences, if any, will not only reduce its
      ability to generate revenue, but also exhaust its limited supply of capital.
      Typically, the Manager seeks an investment portfolio that combines high and
      low
      risk exploratory projects.





When
      the
      Manager makes a decision for participation in a particular project, it assumes
      that the well will be successful and allocates enough capital to budget for
      the
      completion of that well and the additional development wells that are
      anticipated to be drilled. If the exploratory well is deemed a dry-hole or
      if it
      is un-economical, the capital allocated to the completion of that well and
      to
      the development of additional wells is then reallocated to a new project or
      used
      to make additional investments.


16


**Off-Balance
      Sheet Arrangements**





The
      Fund
      had no off-balance sheet arrangements as of June 30, 2007 and December 31,
      2006
      and does not anticipate the use of such arrangements in the future.





**Contractual
      Obligations**





The
      Fund
      enters into operating agreements with operators.  On behalf of the
      Fund, an operator enters into various contractual commitments pertaining to
      exploration, development and production activities.  The Fund does not
      discuss or negotiate any such contracts.  No contractual obligations
      exist at June 30, 2007 and December 31, 2006.





**Item
      3.  Quantitative and Qualitative Disclosures about Market
      Risk**





Projects
      drilled may not have commercially productive oil and natural gas reservoirs.
      In
      such an event, the Fund’s revenue, future results of operations and financial
      condition would be adversely impacted.





The
      Fund
      does not have or use, any derivative instruments nor does it have any plans
      to
      enter into such derivative arrangements.  The Fund will generally invest
      cash in high-quality credit instruments consisting primarily of money market
      funds, bankers acceptance notes and government agency securities with maturities
      of six months or less.  The Fund does not expect any material loss from
      cash equivalents and therefore believes its potential interest rate exposure
      is
      not material.  The Fund has no plan to conduct any international activities
      and therefore believes it is not subject to foreign currency risk.





The
      principal market risks to which the Fund is exposed that may adversely impact
      the Fund's results of operations and financial position are changes in oil
      and
      natural gas prices.





Low
      commodity prices could have an adverse affect on the Fund’s future profitability
      and, in such an event the Fund may be required by accounting rules to write
      down
      the carrying value of the Fund’s projects.  Revenue to the Fund will
      be sensitive to changes in price to be received for oil and natural gas
      production.  Prevailing market prices fluctuate in response to many factors
      that are outside of the Fund's control such as the supply and demand for oil
      and
      natural gas.  Availability of alternative fuels as well as seasonal risks
      such as hurricanes can also impact the supply and demand.





High
      oil
      and natural gas prices have resulted in a strong demand for and a tight supply
      of drilling rigs necessary to drill new projects.  The increased cost in
      daily rig rates could have a negative impact on the return to shareholders
      in
      the Fund.  The shortage of drilling rigs could delay the application of
      capital to such projects and thus delay revenue from operations.





**Item
      4.  Controls and Procedures**





***Evaluation
      of Disclosure Controls and Procedures***


The
      Fund
      maintains "disclosure controls and procedures", as such term is defined under
      Securities and Exchange Act of 1934 (“Exchange Act”) Rule 13a-15(e), that
      are designed to ensure that information required to be disclosed in the Fund’s
      Exchange Act reports is recorded, processed, summarized and reported within
      the
      same time periods specified in the SEC's rules and forms, and that such
      information is accumulated and communicated to its management, including its
      Chief Executive Officer and Chief Financial Officer, as appropriate, to allow
      timely decisions regarding required disclosures.  In designing and
      evaluating the disclosure controls and procedures, the Fund’s management
      recognized that any controls and procedures, no matter how well designed and
      operated, can provide only reasonable assurance of achieving the desired control
      objectives and its management necessarily was required to apply its judgment
      in
      evaluating the cost-benefit relationship of possible controls and
      procedures.  The Fund has carried out an evaluation, as of June 30,
      2007, under the supervision and with the participation of its management,
      including its Chief Executive Officer and Chief Financial Officer, of the
      effectiveness of the design and operation of the Fund’s disclosure controls and
      procedures.  Based upon their evaluation and subject to the foregoing,
      such procedures were effective.


17


Because
      the Fund is not an “Accelerated Filer” as defined in Rule 12b-2 of the Exchange
      Act, the Fund is not presently required to file Management’s annual report on
      internal control over financial reporting and the Attestation report of the
      registered public accounting firm required by Item 308(a) and (b) of Regulation
      S-K promulgated under the Securities Act.  Under current rules,
      because the Fund is neither a “large accelerated filer” nor an “accelerated
      filer”, the Fund is not required to provide management’s report on internal
      control over financial reporting until the Fund files its annual report for
      2007
      and compliance with the auditor’s attestation report requirement is not required
      until the Fund files its annual report for 2008.  The Fund currently
      expects to comply with these requirements at such time as the Fund is required
      to do so.





***Changes
      in Internal Controls over Financial Reporting***


The
      Fund
      continually reviews its disclosure controls and procedures and makes changes
      as
      necessary, to ensure the quality of its financial reporting.  There
      were no changes in our internal control over financial reporting identified
      in
      connection with the evaluation required by paragraph (d) of Exchange Act Rules
      13a-15 or 15d-15 that occurred during the quarter ended June 30, 2007 that
      have
      materially affected, or are reasonably likely to materially affect, our internal
      control over financial reporting.








18


**Part
      II.  OTHER INFORMATION**





**Item
      1. LEGAL PROCEEDINGS**





There
      have been no changes to the legal proceedings disclosed in the Fund’s most
      recent Annual Report on Form 10-K.





**Item
      1A. RISK FACTORS**





For
      information regarding factors that could affect the Fund’s results of
      operations, financial condition and liquidity, see risk factors discussed under
      “Management’s Discussion and Analysis of Financial Condition and Results of
      Operations”  in Item 7 of the Fund’s 2006 Annual Report on Form
      10-K.  There have been no material changes from the risk factors
      previously disclosed in the Fund’s most recent Annual Report on Form
      10-K.





**Item
      2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS**





None.





**Item
      3.  DEFAULTS UPON SENIOR SECURITIES**





None.





**Item
      4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS**





None.





**Item
      5. OTHER INFORMATION**





None.





**Item
      6. EXHIBITS**




10.1
              
              Multi-Well
                Participation Agreement between LLOG Exploration Offshore, Inc. and
                Ridgewood Energy Corporation as Manager for Galveston 248, Ship Shoal
                81,
                South Marsh Island 111, Vermilion 344, West Delta 67 and West Delta
                68.
                (previously
                filed)10.2
              
              Participation
                Agreement between El Paso Production GOM, Inc. and Ridgewood Energy
                Corporation as Manager for Eugene Island 364. (previously
                filed)31.1
              
              Certification
                of Robert E. Swanson, Chief Executive Officer, pursuant to Securities
                Exchange Act Rule 13a-14(a).31.2
              
              Certification
                of Kathleen P. McSherry, Chief Financial Officer, pursuant to Securities
                Exchange Act Rule 13a-14(a).32
              
              Certifications
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                The Sarbanes-Oxley Act of 2002, signed by Robert E. Swanson, Chief
                Executive Officer of the Company and Kathleen P. McSherry, Chief
                Financial
                Officer of the Company.








19






**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      caused this Form 10-Q to be signed on its behalf by the undersigned, thereunto
      duly authorized.





Dated:
            August
                3, 2007
            
            
            
            RIDGEWOOD
                ENERGY M FUND, LLCBy:
            /s/
            
            ROBERT
                E. SWANSONName:
            
            Robert
                E. SwansonTitle:
            
            President
                and Chief Executive Officer(Principal
                Executive Officer)Dated:
            August
                3, 2007By:
            /s/
            
            KATHLEEN
                P. MCSHERRYName:
            
            Kathleen
                P. McSherryTitle:
            
            Senior
                Vice President and Chief Financial Officer(Principal
                Financial and Accounting Officer)









20