Table of Contents

 

 

 

# **UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

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

# ** **

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## **FORM 10-Q**

 
| **x**      | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934**                                                                                                                                                                                           |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                                                                                                                                                                                              |
| ** ** | **For the Quarterly Period  Ended June 30, 2008**                                                                                                                                                                                                                                            |
|       |                                                                                                                                                                                                                                                                                              |
| **OR**     |
|       |                                                                                                                                                                                                                                                                                              |
| **o**      | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE  ACT OF 1934**                                                                                                                                                                                         |
|       |                                                                                                                                                                                                                                                                                              |
| ** ** | **For the Transition Period  from                     to                     ** |

 

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

 

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

(Exact name of registrant as specified in its charter)

 

| **Nevada**                                      | ** ** | **20-1654113**       |
|-------------------------------------------------|------------|----------------------|
| (State or other  jurisdiction of                | ** ** | (I.R.S. employer     |
| incorporation or  organization)                 |       | identification  no.) |
| ** **                                      | ** ** | ** **           |
| **1901 N.  Central Expressway, Suite 300** | ** ** |                 |
| **Richardson,  Texas 75080**                    |       | **75080-3609**       |
| (Address of  principal executive offices)       | ** ** | (Zip code)           |

** **

| Registrant’s  telephone number, including area code: | **(972)-437-6792** |
|-----------------------------------------------------------|--------------------|

 

Indicate by check mark whether theregistrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required tofile such reports), and (2) has been subject to such filing requirementsfor the past 90 days.  Yes  x     No  o

 

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

 
| Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting  company x |
|--------------------------------|--------------------------|------------------------------|-----------------------------------|

 

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

 

**As of June 30, 2008, the registrant had 25.028units of general partner interest held by the managing general partner, 125.000units of additional general partner interest and 349.972 units of limitedpartner interest outstanding.**

 

 

 

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**Table of Contents**

** **

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

**Form 10-QIndex**

 
| **PART I — FINANCIAL INFORMATION** |       |                                                                                            |
|----------------------------------------------|------------|-------------------------------------------------------------------------------------------------|
|                                         |       |                                                                                            |   |   |
| **ITEM  1.**                                 | ** ** | **Financial Statements (Unaudited)**                                                            |   |   |
|                                         |       | *Condensed Balance Sheets*                                                                      |   |   |
|                                         |       | *Condensed Statements of  Operations*                                                           |   |   |
|                                         |       | *Condensed Statements 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 4T.**                                 | ** ** | **Controls and  Procedures**                                                                    |   |   |
|                                         |       |                                                                                            |   |   |
| **PART II — OTHER  INFORMATION**   |       |                                                                                            |
|                                         |       |                                                                                            |   |   |
| **ITEM 1.**                                  | ** ** | **Legal Proceedings**                                                                           |   |   |
|                                         |       |                                                                                            |   |   |
| **ITEM 2.**                                  | ** ** | **Unregistered  Sales of Equity Securities and Use of Proceeds**                                |   |   |
|                                         |       |                                                                                            |   |   |
| **ITEM 3.**                                  | ** ** | **Default  Upon Senior Securities**                                                             |   |   |
|                                         |       |                                                                                            |   |   |
| **ITEM 4.**                                  | ** ** | **Submission  of Matters to a Vote of Security Holders**                                        |   |   |
|                                         |       |                                                                                            |   |   |
| **ITEM 5.**                                  | ** ** | **Other Information**                                                                           |   |   |
|                                         |       |                                                                                            |   |   |
| **ITEM  6.**                                 | ** ** | **Exhibits**                                                                                    |   |   |
|                                         |       |                                                                                            |   |   |
| **Signatures**                               |       |                                                                                            |   |   |

 

ii

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# **PART I FINANCIAL INFORMATION**

# ** **

**Item 1.Financial Statements**

 

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

**Condensed Balance Sheets**

** **
| ** **                                                                    | ** ** | **June 30,** | ** **  | **December 31,** | ** ** |
|-------------------------------------------------------------------------------|------------|-------------------|-------------|-----------------------|------------|
| ** **                                                                    | ** ** | **2008**          | ** **  | **2007**              | ** ** |
| ** **                                                                    | ** ** | **(Unaudited)**   | ** **  | ** **            | ** ** |
|                                                                          |       |              |        |                  |       |
| **Assets**                                                                    |       |              |        |                  |       |
|                                                                          |       |              |        |                  |       |
| **Current assets:**                                                           |       |              |        |                  |       |
| Cash  and cash equivalents                                                    |       | $                 | 9,132       |                  | $          | 75,764 | ** ** |
| Accounts  receivable from affiliates, net                                     |       | 92,384            |        | —                |       |
| **Total current assets**                                                      | ** ** | **101,516**       | ** **  | **75,764**            | ** ** |
|                                                                          |       |              |        |                  |       |
| **Oil and natural gas properties, full cost method  of accounting:**          |       |              |        |                  |       |
| Proved  properties, net of accumulated depletion of $8,432,624 and $8,393,271 |       | 268,551           |        | 152,562               |       |
| **Net oil and natural gas properties**                                        | ** ** | **268,551**       | ** **  | **152,562**           | ** ** |
| ** **                                                                    | ** ** | ** **        | ** **  | ** **            | ** ** |
| **Total assets**                                                              | ** ** | **$**             | **370,067** | ** **            | **$**      | **228,326** | ** ** |
|                                                                          |       |              |        |                  |       |
| **Liabilities and partnership equity**                                        |       |              |        |                  |       |
|                                                                          |       |              |        |                  |       |
| **Current liabilities:**                                                      |       |              |        |                  |       |
| Accounts  payable                                                             |       | $                 | 166         |                  | $          | 82 | ** ** |
| Accounts  payable to affiliates                                               |       | —            |        | 6,240                 |       |
| **Total current liabilities**                                                 | ** ** | **166**           | ** **  | **6,322**             | ** ** |
|                                                                          |       |              |        |                  |       |
| **Long-term liabilities:**                                                    |       |              |        |                  |       |
| Asset  retirement obligation                                                  |       | 128,142           |        | 137,757               |       |
| **Total long-term liabilities**                                               | ** ** | **128,142**       | ** **  | **137,757**           | ** ** |
|                                                                          |       |              |        |                  |       |
| **Partnership equity:**                                                       |       |              |        |                  |       |
| General  partners                                                             |       | 8,613             |        | 3,459                 |       |
| Limited  partners                                                             |       | 24,114            |        | 9,683                 |       |
| Managing  general partner                                                     |       | 209,032           |        | 71,105                |       |
| **Partnership equity**                                                        | ** ** | **241,759**       | ** **  | **84,247**            | ** ** |
| ** **                                                                    | ** ** | ** **        | ** **  | ** **            | ** ** |
| **Total liabilities and partnership equity**                                  | ** ** | **$**             | **370,067** | ** **            | **$**      | **228,326** | ** ** |

 

*See accompanying notes tocondensed financial statements.*

 

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

**Condensed Statements ofOperations**

* *
| ** **                                           | ** ** | **For the three months ended  June 30 (unaudited)** | ** ** | **For the six months ended  June 30 (unaudited)** | ** ** |
|------------------------------------------------------|------------|-----------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------|------------|
| ** **                                           | ** ** | **2008**                                                                          | ** ** | **2007**                                                                        | ** ** | **2008** | ** ** | **2007** | ** ** |
| ** **                                           | ** ** | ** **                                                                        | ** ** | ** **                                                                      | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Revenues:**                                        |       |                                                                              |       |                                                                            |       |   |   |   |   |
| Oil  and natural gas income                          |       | $                                                                                 | 91,350     |                                                                            | $          | 75,061 |   | $ | 154,202 |   | $ | 111,597 | ** ** |
| **Total revenues**                                   | ** ** | **91,350**                                                                        | ** ** | **75,061**                                                                      | ** ** | **154,202** | ** ** | **111,597** | ** ** |
|                                                 |       |                                                                              |       |                                                                            |       |   |   |   |   |
| **Costs and expenses:**                              |       |                                                                              |       |                                                                            |       |   |   |   |   |
| Lease  operating expenses                            |       | 11,266                                                                            |       | 10,681                                                                          |       | 23,961 |   | 24,221 |   |
| Production  taxes                                    |       | 5,572                                                                             |       | 4,423                                                                           |       | 9,670 |   | 6,678 |   |
| General  and administrative                          |       | 45,940                                                                            |       | 44,805                                                                          |       | 55,048 |   | 53,831 |   |
| Accretion  of asset retirement obligation            |       | 1,219                                                                             |       | 1,615                                                                           |       | 2,489 |   | 35,769 |   |
| Depreciation,  depletion and amortization            |       | 13,882                                                                            |       | 7,463                                                                           |       | 27,935 |   | 22,455 |   |
| Property  impairment                                 |       | —                                                                            |       | —                                                                          |       | — |   | 56,256 |   |
| **Total costs and expenses**                         | ** ** | **77,879**                                                                        | ** ** | **68,987**                                                                      | ** ** | **119,103** | ** ** | **199,210** | ** ** |
|                                                 |       |                                                                              |       |                                                                            |       |   |   |   |   |
| **Income (loss) from operations**                    | ** ** | **13,471**                                                                        | ** ** | **6,074**                                                                       | ** ** | **35,099** | ** ** | **(87,613** | **)** |
|                                                 |       |                                                                              |       |                                                                            |       |   |   |   |   |
| **Other income:**                                    |       |                                                                              |       |                                                                            |       |   |   |   |   |
| Interest  income                                     |       | 66                                                                                |       | 268                                                                             |       | 297 |   | 602 |   |
| **Total other income**                               | ** ** | **66**                                                                            | ** ** | **268**                                                                         | ** ** | **297** | ** ** | **602** | ** ** |
|                                                 |       |                                                                              |       |                                                                            |       |   |   |   |   |
| **Net income (loss)**                                | ** ** | **$**                                                                             | **13,537** | ** **                                                                      | **$**      | **6,342** | ** ** | **$** | **35,396** | ** ** | **$** | **(87,011** | **)** |
|                                                 |       |                                                                              |       |                                                                            |       |   |   |   |   |
| Net  income (loss) per general partner unit          |       | $                                                                                 | 53.89      |                                                                            | $          | 12.55 |   | $ | 122.41 |   | $ | (172.29 | ) |
| Net  income (loss) per limited partner unit          |       | $                                                                                 | 53.89      |                                                                            | $          | 12.55 |   | $ | 122.41 |   | $ | (172.29 | ) |
| Net  income (loss) per managing general partner unit |       | $                                                                                 | (481.89    | )                                                                               | $          | 15.28 |   | $ | (908.86 | ) | $ | (206.89 | ) |

 

*See accompanying notes tocondensed financial statements.*

 

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

**Condensed Statements of CashFlows**

** **
| ** **                                                                                | ** ** | **For the six months ended  June 30, (unaudited)** | ** ** |
|-------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| ** **                                                                                | ** ** | **2008**                                                                         | ** ** | **2007** | ** ** |
| ** **                                                                                | ** ** | ** **                                                                       | ** ** | ** ** | ** ** |
| **Operating Activities**                                                                  |       |                                                                             |       |   |   |
| Net  income (loss)                                                                        |       | $                                                                                | 35,396     |   | $ | (87,011 | ) |
| Adjustments  for non-cash transactions:                                                   | ** ** | ** **                                                                       | ** ** | ** ** | ** ** |
| Depreciation,  depletion and amortization                                                 |       | 27,935                                                                           |       | 22,455 |   |
| Property  impairment                                                                      |       | —                                                                           |       | 56,256 |   |
| Accretion  of asset retirement obligation                                                 |       | 2,489                                                                            |       | 35,769 |   |
| Adjustments  to reconcile net income (loss) to net cash provided by operating activities: | ** ** | ** **                                                                       | ** ** | ** ** | ** ** |
| Changes  in operating assets and liabilities:                                             | ** ** | ** **                                                                       | ** ** | ** ** | ** ** |
| Accounts  receivable from affiliates                                                      |       | —                                                                           |       | (16,533 | ) |
| Accounts  payable                                                                         |       | 84                                                                               |       | (204 | ) |
| Accounts  payable to affiliates                                                           |       | (5,488                                                                           | )          | (59,343 | ) |
| **Net cash provided by (used in) operating activities**                                   | ** ** | **60,416**                                                                       | ** ** | **(48,611** | **)** |
| ** **                                                                                | ** ** | ** **                                                                       | ** ** | ** ** | ** ** |
| **Investing Activities**                                                                  | ** ** | ** **                                                                       | ** ** | ** ** | ** ** |
| Property  acquisition and development                                                     |       | (154,932                                                                         | )          | (53,910 | ) |
| Plugging  and abandonment costs paid from asset retirement obligation                     |       | (1,096                                                                           | )          | — |   |
| **Net cash used in investing activities**                                                 | ** ** | **(156,028**                                                                     | **)**      | **(53,910** | **)** |
| ** **                                                                                | ** ** | ** **                                                                       | ** ** | ** ** | ** ** |
| **Financing Activities**                                                                  | ** ** | ** **                                                                       | ** ** | ** ** | ** ** |
| Partner  capital contributions                                                            |       | 69,980                                                                           |       | 60,574 |   |
| Partner  distributions                                                                    |       | (41,000                                                                          | )          | (6,450 | ) |
| **Net cash provided by financing activities**                                             | ** ** | **28,980**                                                                       | ** ** | **54,124** | ** ** |
| ** **                                                                                | ** ** | ** **                                                                       | ** ** | ** ** | ** ** |
| **Net decrease in cash and cash equivalents**                                             | ** ** | **(66,632**                                                                      | **)**      | **(48,397** | **)** |
| Cash  and cash equivalents at beginning of period                                         |       | 75,764                                                                           |       | 83,061 |   |
| **Cash and cash equivalents at end of period**                                            | ** ** | **$**                                                                            | **9,132**  | ** ** | **$** | **34,664** | ** ** |
| ** **                                                                                | ** ** | ** **                                                                       | ** ** | ** ** | ** ** |
| **Supplemental disclosure of non-cash investing  transactions:**                          | ** ** | ** **                                                                       | ** ** | ** ** | ** ** |
| Property  additions and asset retirement obligation                                       |       | $                                                                                | 410        |   | $ | — | ** ** |
| Adjustment  to asset retirement obligation                                                |       | $                                                                                | 11,418     |   | $ | — | ** ** |
| **Supplemental disclosure of non-cash financing  transactions:**                          |       |                                                                             |       |   | ** ** |
| Managing  partner contributions included in accounts receivable from affiliates           |       | $                                                                                | 92,384     |   | $ | 20,692 | ** ** |

 

*See accompanying notes tocondensed financial statements.*

 

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

**Notes to Condensed Financial Statements(unaudited)**

**June 30, 2008**

 

**1.Organization and Basis of Presentation**

 

The financial statementsof Reef Global Energy IV, L.P. (the “Partnership”) have been prepared pursuantto the rules and regulations of the Securities and Exchange Commission(the “SEC”). Certain information and footnote disclosure normally included inannual financial statements prepared in accordance with accounting principlesgenerally accepted in the United States have been condensed or omitted pursuantto those rules and regulations. We have recorded all transactions andadjustments necessary to fairly present the financial statements included inthis Quarterly Report on Form 10-Q (this “Quarterly Report”). Theadjustments are normal and recurring. The following notes describe only thematerial changes in accounting policies, account details, or financialstatement notes during the first six months of 2008. Therefore, please readthese condensed financial statements and notes to condensed financialstatements together with the audited financial statements and notes tofinancial statements contained in the Partnership’s Annual Report on Form 10-Kfor the period ended December 31, 2007 (the “Annual Report”).

 

**2.Summary of Accounting Policies**

 

**Oil andNatural Gas Properties**

 

The Partnership followsthe full cost method of accounting for crude oil and natural gas properties.Under this method, all direct costs and certain indirect costs associated withacquisition of properties and successful as well as unsuccessful explorationand development activities are capitalized. Depreciation, depletion, andamortization of capitalized crude oil and natural gas properties are based onthe unit-of-production method using estimated proved reserves. For thesepurposes, proved natural gas reserves are converted to equivalent barrels ofcrude oil at a rate of 6 Mcf to 1 Bbl. Net capitalized costs of crude oil andnatural gas properties, as adjusted for asset retirement obligations, arelimited to the lower of unamortized cost or the cost ceiling, defined as thesum of the present value of estimated future net revenues from proved reservesbased on prices in effect at the end of the period held constant and discountedat 10 percent. Pursuant to full cost accounting rules, the Partnership performsa ceiling test quarterly as of the balance sheet date on its proved oil andnatural gas properties. Excess capitalized costs are charged to propertyimpairment expense. No gain or loss is recognized upon sale or disposition ofcrude oil and natural gas properties, unless such a sale would significantlyalter the rate of depletion and amortization. During the three and six monthperiods ended June 30, 2008, the Partnership recognized no propertyimpairment expense.

 

**Asset Retirement Obligations**

 

The Partnership accounts for itsasset retirement obligations in accordance with Statement of FinancialAccounting Standards (“SFAS”) No. 143, “Accounting for Asset RetirementObligations” (“SFAS No. 143”). Asset retirement costs and liabilitiesassociated with future site restoration and abandonment of long-lived assetsare initially measured at fair value which approximates the cost a third partywould incur in performing the tasks necessary to retire such assets. The fairvalue is recognized in the financial statements as the present value ofexpected future cash expenditures for site restoration and abandonment. Subsequentto the initial measurement, the effect of the passage of time on the liabilityof the net asset retirement obligation (accretion expense) and the amortizationof the asset retirement cost are recognized in the results of operations. Nogain or loss is recognized upon abandonment and restoration of crude oil andnatural gas properties, unless such abandonment and restoration wouldsignificantly alter the rate of depletion and amortization.

 

Thefollowing table summarizes the Partnership’s asset retirement obligation forthe six months ended June 30, 2008 and the year ended December 31,2007.

 
| ** **                                                  | ** ** | **Six months ended  June 30, 2008** | ** ** | **2007** | ** ** |
|-------------------------------------------------------------|------------|---------------------------------------------------------|------------|----------|------------|
| Beginning asset  retirement obligation                      |       | $                                                       | 137,757    |     | $          | 94,718 |   |
| Additions  related to new properties                        |       | 410                                                     |       | —   |       |
| Accretion expense                                           |       | 2,489                                                   |       | 43,039   |       |
| Retirement  related to property abandonment and restoration |       | (12,514                                                 | )          | —   |       |
| Ending asset  retirement obligation                         |       | $                                                       | 128,142    |     | $          | 137,757 |   |

 

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**3.Transactions with Affiliates**

 

The Partnership has noemployees. Reef Exploration, L.P. (“RELP”), an affiliate of Reef Oil &Gas Partners, L.P. (“Reef”), the managing general partner, employs a staff includinggeologists, petroleum engineers, landmen and accounting personnel whoadminister all of the Partnership’s operations. The Partnership reimburses RELPfor technical and administrative services at cost. During the three and sixmonth periods ended June 30, 2008, the Partnership incurred technicalservices and administrative costs totaling $9,169 and $11,811, respectively. Ofthese amounts, $1,791 and $3,164 represent technical services costs capitalizedas project costs, and $7,378 and $8,647 represent administrative costs includedas general and administrative expenses.

 

RELP processes jointinterest billings and revenues on behalf of the Partnership. In addition, Reefagreed to reimburse the Partnership 100% of the costs for the workover of aPartnership well which occurred during the first quarter of 2008, and 100% ofthe costs of drilling and completing a well in Terrebonne Parish, Louisiana.Accounts receivable from affiliates totaled $92,384 at June 30, 2008. Thebalance due consists of $122,006 due the Partnership from Reef for drilling,completion and workover costs, net of $29,622 due RELP for joint interest andtechnical and administrative costs in excess of revenues. The Partnershipsettles its balances with Reef and RELP on a quarterly basis.

 

Accounts payable toaffiliates totaled $6,240 at December 31, 2007. The Partnership owed RELP$5,488 in connection with joint interest and technical and administrativeservices charges in excess of net revenues processed by RELP on behalf of thePartnership. In addition, the Partnership owed Reef $752 for reimbursement ofan overpayment made by Reef in connection with Reef’s obligation to pay 1% ofall leasehold, drilling, and completion costs incurred by the Partnership.

 

**4.Partnership Equity**

 

Information regarding thenumber of units outstanding and the net income (loss) per type of Partnershipunit for the three and six month periods ended June 30, 2008 is detailedbelow:

 

For the three monthsended June 30, 2008

 
| **Type of Unit**      | ** ** | **Number of  Units** | ** ** | **Net income  (loss)** | ** ** | **Net income  (loss) per  unit** | ** ** |
|---------------------------------|------------|---------------------------|------------|-----------------------------|------------|--------------------------------------------|------------|
| Managing general  partner units |       | 25.028                    |       | $                           | (12,060    | )                                          | $          | (481.89 | ) |
| General partner  units          |       | 125.000                   |       | 6,737                       |       | 53.89                                      |       |
| Limited partner  units          |       | 349.972                   |       | 18,860                      |       | 53.89                                      |       |
| Total                           |       | 500.000                   |       | $                           | 13,537     |                                       |       |   |
|                                 |            |                           |            |                             |            |                                            |            |  |  |

 

For the six months ended June 30,2008

 
| **Type of Unit**      | ** ** | **Number of  Units** | ** ** | **Net income  (loss)** | ** ** | **Net income  (loss) per  unit** | ** ** |
|---------------------------------|------------|---------------------------|------------|-----------------------------|------------|--------------------------------------------|------------|
| Managing general  partner units |       | 25.028                    |       | $                           | (22,747    | )                                          | $          | (908.86 | ) |
| General partner  units          |       | 125.000                   |       | 15,302                      |       | 122.41                                     |       |
| Limited partner  units          |       | 349.972                   |       | 42,841                      |       | 122.41                                     |       |
| Total                           |       | 500.000                   |       | $                           | 35,396     |                                       |       |   |
|                                 |            |                           |            |                             |            |                                            |            |  |  |

 

**Item2.  Management’s Discussion and Analysisof Financial Condition and Results of Operations.**

 

The following is a discussion of the Partnership’s financialposition, results of operations, liquidity and capital resources. Thisdiscussion should be read in conjunction with our financial statements and therelated notes thereto, included in the Annual Report.

 

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This Quarterly Reportcontains forward-looking statements that involve risks and uncertainties. Youshould exercise extreme caution with respect to all forward-looking statementsmade in this Quarterly Report.  Specifically, the following statements areforward-looking:

 

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

 

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

 

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

 

·      anystatements of other than historical fact.

 

Reef believes that it isimportant to communicate its future expectations to the partners. Forward-looking statements reflect the current view of management with respectto future events and are subject to numerous risks, uncertainties andassumptions, including, without limitation, the factors listed in thesection captioned “RISK FACTORS” contained in the Reef Global VenturesDrilling Program’s (the “Program”) prospectus dated January 10, 2002 andprospectus supplement dated September 21, 2004. Although Reef believesthat 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.

 

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

 

Reef, as managing generalpartner, initially received a 10% interest in the Partnership as compensationfor forming the Partnership, and also received a 1% interest in the Partnershipas a result of paying 1% of all leasehold, drilling and completion costs. This 11%interest was not represented by Partnership units. In addition, Reef purchased 5.01% of thePartnership units and, therefore, held 5.01% of the 89% interest in thePartnership (4.46%) held by the unit holders. Effective August 1, 2006,Reef reduced the interest it received as compensation for forming thePartnership from 10% to 5%, and effective November 1, 2006 it reduced thisinterest from 5% to 0%. Therefore, effective November 1, 2006, Reef holdsa 1% interest in the Partnership as a result of paying 1% of all leasehold,drilling and completion costs. This 1% interest is not represented byPartnership units. Effective November 1, 2006 Reef holds 5.01% of the 99%interest in the Partnership (4.96%) held by the unit holders.

 

**Overview**

 

Reef Global Energy IV,L.P. is a Nevada limited partnership formed to acquire, explore, develop, andproduce crude oil, natural gas, and natural gas liquids for the benefit of itsinvestor partners. The Partnership’s primary purposes are to generate revenuesfrom the production of oil and gas, distribute cash flow to investors, andprovide tax benefits to investors. The Partnership purchased working interestsin eight developmental prospects located in Live Oak (2 prospects) and NuecesCounty, Texas and Jefferson, St. Charles, Cameron, and Acadia (2 prospects)Parish, Louisiana and participated in the drilling of eight developmental wellson those prospects. The Partnership purchased working interests in fiveexploratory prospects located in Galveston (2 prospects) County, Texas,Jefferson and Plaquemines Parish, Louisiana, and in United States coastalwaters in the Gulf of Mexico, and participated in the drilling of fiveexploratory wells on those prospects.  A “prospect”is generally defined as a contiguous oil and gas leasehold estate, or lesserinterest in a leasehold estate, upon which drilling operations may beconducted. A prospect may be characterized as “exploratory” or “developmental”based upon the type of well to

 

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be drilled on theprospect. A development well is a well drilled within a proved area of an oilor gas reservoir to the depth of a stratigraphic horizon known to beproductive. Generally an exploratory is any well that is not a developmentwell, including wells drilled to find and produce oil or gas in an unprovenarea, wells drilled to find a new reservoir in a field previously found to beproductive of oil or gas, or wells drilled to extend a known reservoir. ThePartnership also purchased a royalty interest in a field in Louisiana withthree productive wells, one of which is still producing as of the date of thisreport. Drilling operations on these thirteen prospects were completed during February 2006.Six developmental wells were successful, of which two are still productive, andtwo developmental wells were unsuccessful. One exploratory well was successfuland is still productive, and four exploratory wells were unsuccessful. In thisQuarterly Report, we use the term “successful” to refer to wells that aredrilled, tested, and either capable of or actually producing in commercialquantities. We use the tern “unsuccessful” to refer to wells that do not meetone or more of these criteria. The Partnership incurred $8,035,610 of propertyimpairment associated with drilling operations during 2005, 2006, and 2007, andcash flows from successful wells have not been sufficient to providesignificant returns to investor partners.

 

The managing generalpartner has reduced its interest in the Partnership as indicated above, and, inaddition, agreed to fund 100% of the cost of two projects. In August 2006the managing general partner agreed to pay 100% of the costs for a workinginterest in a developmental well located in Terrebonne Parish, Louisiana. Thewell completed drilling operations in May 2007 and was unsuccessful,however, after reviewing the well logs and other geologic data, the wellborewas re-entered during the fourth quarter of 2007 and successfully sidetracked.Drilling operations were finished during February 2008, and the well beganproducing in commercial quantities on May 2, 2008. Reef paid 100% of thecosts associated with the drilling of the unsuccessful well and the subsequentdrilling of the successful sidetrack of this well. Reef also agreed to pay 100%of the cost of a workover attempt performed during February 2008 on one ofthe Partnership’s developmental wells that had ceased production as a result ofhigh water volumes associated with the natural gas production from the well.This workover was unsuccessful in its attempt to shut-off the water production,and the well will be plugged and abandoned.

 

The Partnership has noplans for additional drilling activities. The Partnership does not operate inany other business segment, and operates solely in the United States. Note 1 tothe audited financial statements included in the Partnership’s Annual Reportincluded a section regarding the ability of the Partnership to continue as agoing concern, due to recurring losses from operations. The managing generalpartner continues to consider several options for the Partnership, includingthe possible sale of marketable assets. The final Partnership well began producingon May 2, 2008. The well operator slowly increased production levelsduring the first 30-60 days of operation, and based upon current productionlevels, which have stabilized, and current prices, the well is expected togenerate net cash flow to the Partnership of $10,000-$15,000 per month.Management expects that the addition of this well will provide the Partnershipwith net income and positive cash flow for 2008.

 

The table belowsummarizes Partnership drilling expenditures as of June 30, 2008 byclassification of well. Drilling, completion, and facilities costs include$86,620 capitalized as asset retirement cost.

 
| ** **                     | ** ** | **Leasehold  Costs** | ** ** | **Drilling,  Completion,  and Facilities  Costs** | ** ** | **Total Costs** | ** ** |
|--------------------------------|------------|----------------------|------------|--------------------------------------------------------|------------|----------------------|------------|
| Developmental  wells           |       | $                    | 464,915    |                                                   | $          | 4,682,521            |       | $ | 5,147,436 |   |
| Exploratory  wells             |       | 139,396              |       | 2,901,352                                              |       | 3,040,748            |       |
| Purchase of  royalty interests |       | 523,554              |       | —                                                 |       | 523,554              |       |
| Total                          |       | $                    | 1,127,865  |                                                   | $          | 7,583,873            |       | $ | 8,711,738 |   |

 

**Critical Accounting Policies**

 

There have been no changes from the Critical Accounting Policiesdescribed in the Annual Report.

 

**Liquidity and Capital Resources**

 

The Partnership wasfunded with initial capital contributions totaling $9,924,916. Reef purchased25.028 limited partner units, or 5.01% of the total units sold, for $425,475.Investor partners purchased 125.000 units of general

 

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partner interest and349.972 units of limited partner interest for $9,499,441. The Partnership held$68,585 of interest earned during 2004 and 2005 for use in drilling operations.As of June 30, 2008, Reef has also contributed or accrued $245,059 inconnection with its obligation to pay 1% of all leasehold, drilling, andcompletion costs, and to reimburse the Partnership for 100% of the drilling andsidetracking costs of a well in Louisiana for which Reef is paying 100% of thecosts. Organization and offering costs totaled $1,424,916, leaving capitalcontributions of $8,813,644 available for drilling operations andpre-production administrative costs. The Partnership expended $8,625,118 on drilling operations and thepurchase of royalty interests, and $112,843 on pre-production administrativecosts in connection with the thirteen wells and the royalty purchase describedabove, and the well for which Reef paid 100% of the cost. Drilling operationswere completed in February 2006 on the thirteen wells drilled with thecapital raised by the Partnership, and drilling operations were completed in February 2008on the additional well and sidetrack for which Reef paid 100% of the costs.

 

During this quarter,completion operations were finished on the sidetrack of the developmental welllocated in Terrebonne Parish, Louisiana for which the managing general partnerpaid 100% of the costs. The well began production operations on May 2,2008 and is currently productive.

 

The Partnership hasworking capital of $101,350 at June 30, 2008. Subsequent to expending theinitial available partner capital contributions on drilling and completion ofwells and related facilities, the Partnership has minimal working capital,primarily consisting of cash and accounts receivable from RELP related to oiland gas sales processed by RELP, which the Partnership uses to pay monthly cashdistributions to investors.

 

**Resultsof Operations**

 

The following is acomparative discussion of the results of operations for the periods indicated.It should be read in conjunction with the condensed financial statements andthe related notes to the condensed financial statements included in thisQuarterly Report.

 

The following tableprovides information about sales volumes and oil and natural gas prices for theperiods indicated.

 
| ** **                      | ** ** | **For the three months  ended June 30** | ** ** | **For the six months  ended June 30** | ** ** |
|---------------------------------|------------|------------------------------------------------------------------|------------|----------------------------------------------------------------|------------|
| ** **                      | ** ** | **2008**                                                         | ** ** | **2007**                                                       | ** ** | **2008** | ** ** | **2007** | ** ** |
| Sales volumes:                  |       |                                                             |       |                                                           |       |   |   |   |   |
| Oil (Barrels)                   |       | 328                                                              |       | 195                                                            |       | 525 |   | 355 |   |
| Natural gas  (Mcf)              |       | 3,651                                                            |       | 7,529                                                          |       | 8,788 |   | 11,217 |   |
|                            |       |                                                             |       |                                                           |       |   |   |   |   |
| Average sales  prices received: |       |                                                             |       |                                                           |       |   |   |   |   |
| Oil (Barrels)                   |       | $                                                                | 124.53     |                                                           | $          | 62.91 |   | $ | 112.61 |   | $ | 59.97 |   |
| Natural gas  (Mcf)              |       | $                                                                | 13.82      |                                                           | $          | 8.34 |   | $ | 10.82 |   | $ | 8.05 |   |

 

The Partnership had sixproductive wells during the second quarter of 2007, and five productive wellsduring the second quarter of 2008. The Mermentau Minerals #1 gas well, whichceased production in June 2007, accounted for approximately 28% of secondquarter 2007 gas production and 18.5% of gas production for the first sixmonths of 2007. The well has no production subsequent to June 2007. Aworkover attempt in February 2008 on the well was unsuccessful. TheTerrebonne Parish, Louisiana well which began production May 2008accounted for approximately 30% of second quarter 2008 oil production volumesand 26% of second quarter gas volumes. Because production volumes from the wellwere slowly increased by the operator during the first 30-45 days ofproduction, and because the well was not productive during the entire quarter,the Partnership expects that third quarter 2008 volumes will increase fromthose experienced during the second quarter.

 

Net proved oil andnatural gas reserves of the Partnership at June 30, 2008 and 2007 aredetailed below. Net proved oil and natural gas reserves at June 30, 2008and 2007 include only those quantities that we expect to recover commerciallyusing current prices, costs, existing regulatory practices, and technology asof the date indicated. Therefore, any changes in future prices, costs,regulations, technology or other unforeseen factors could materially increaseor decrease the proved reserve estimates. No additional development costs arerequired to recover these

 

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proved reserves at June 30,2008. At June 30, 2008, all of the Partnership’s proved reserves areclassified as proved producing reserves. All of the Partnership’s reserves arelocated in the United States.

 
| **Net proved reserves** | ** ** | **Oil (BBL)** | ** ** | **Gas (MCF)** | ** ** |
|-----------------------------------|------------|--------------------|------------|--------------------|------------|
| June 30,  2008               |       | 3,930              |       | 79,376             |       |
| June 30,  2007               |       | 2,328              |       | 63,726             |       |

 

**Threemonths ended June 30, 2008 compared to the three months ended June 30,2007**

 

The Partnership had netincome of $13,537 for the three month period ended June 30, 2008, comparedto net income of $6,342 for the three month period ended June 30, 2007.

 

Equivalent barrels of oil(EBO) sold (based upon a conversion of 6 Mcf to 1 Bbl) were 1,450 EBO duringthe three months ended June 30, 2007 as compared to 937 EBO during thethree months ended June 30, 2008. The decline is the result of naturalproduction decline rates, as well as the loss of production from the MermentauMinerals #1 and JM Watson #1 wells. The Mermentau Minerals #1 well ceasedproducing in June 2007, and the JM Watson #1 well ceased producing in January 2008.These two wells had sales of 515 EBO during the three month period ended June 30,2007. The well in Terrebonne Parish, Louisiana that began production in May 2008accounted for sales of 259 EBO during the second quarter of 2008. Despite the declinein EBO sales volumes by 36%, sales revenues increased by approximately 21% to$91,350 during the second quarter as a direct result of increased pricesreceived for both oil and natural gas. Oil sales prices climbed during thequarter to a new high of approximately $133 per barrel received during June,and averaged $124.53 per barrel for the second quarter of 2008. Natural gasprices received averaged $13.82 per MCF, an increase of approximately 65%compared to an average price of $8.34 per MCF received during the secondquarter of 2007. The resulting differential in second quarter sales revenues of$91,350 in 2008 compared to $75,061 in 2007 (a difference of $16,289) was theprimary contributor to the increase in net income by $7,195, from $6,342 to $13,537.EBO sold are expected to increase during the third quarter of 2008 as a resultof having a full quarter of production from the new producing well.

 

Overall costs andexpenses incurred by the Partnership during the second quarter of 2008 were$74,452, compared to $68,987 during the second quarter of 2007. New capitalizedcosts associated with the Terrebonne Parish well led to depreciation,depletion, and amortization charges increasing from $7,463 in 2007 to $10,455in 2008.

 

General and administrativecosts for the second quarter of 2008 are $45,940 compared to $44,805 in 2007.Effective April 1, 2008 Reef increased overhead charges to the Partnershipin order to recover its increased overhead costs. The impact to the Partnershipduring the second quarter of 2008 was an increase of $5,116 over the amountcharged during the second quarter of 2007. This increase was partially offset by a reduction in legal, audit,printing, and other consulting costs incurred during the comparable period of2008 as compared to 2007.  Because annualaudit fees of approximately $20,000 are included in the second quarter results,we expect an overall decline in general and administrative costs during thethird and fourth quarters of 2008.

 

**Sixmonths ended June 30, 2008 compared to the three months ended June 30,2007**

 

The Partnership has netincome of $35,396 for the six month period ended June 30, 2008, comparedto a net loss of $87,011 for the six month period ended June 30, 2007.

 

Equivalent barrels of oil(EBO) sold (based upon a conversion of 6 Mcf to 1 Bbl) were 2,225 EBO duringthe first six months of 2007 as compared to 1,990 EBO during the first sixmonths of 2008. The decline is the result of natural production decline rates,as well as the loss of production from the Mermentau Minerals #1 and JM Watson#1 wells. The Mermentau Minerals #1 well ceased producing in June 2007,and the JM Watson #1 well ceased producing in January 2008. These twowells had sales of 685 EBO during the first six months of 2007 and only 146 EBOof sales during the first six months of 2008. The well in Terrebonne Parish,Louisiana that began production in May 2008 accounted for sales of 259 EBOduring the first six months of 2008. Despite the decline in sales volumes,sales revenues increased by approximately 38% to $154,202 as a direct result ofincreased prices received for both oil and natural gas. Natural gas pricesincreased by approximately 34% to $10.82 per MCF compared to an average priceof $8.05 per MCF received during the first half of 2007, and oil pricesincreased by approximately 88% from

 

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$59.97 per barrel to$112.61 per barrel for the same period. EBO sold are expected to increaseduring the third quarter of 2008 as a result of having a full quarter ofproduction from the new producing well.

 

During 2007, thePartnership took an impairment charge of $56,256 because oil and gas reserve estimateswere reduced on producing properties where production levels were not meetingprior expectations. There is no impairment charge for 2008, based primarilyupon the discovery of new reserves associated with the Partnership’s workinginterest in the well drilled on its Gumbo II prospect in Terrebonne Parish,Louisiana, and upon increased sales prices. The impairment charge was a primarycontributing factor to the net loss incurred for the six month period ended June 30,2007.

 

General and administrativecosts for 2008 are slightly above those of 2007. Effective April 1, 2008Reef increased overhead charges to the Partnership in order to recover itsincreased overhead costs. The impact to the Partnership during the secondquarter of 2008 was an increase of $5,116 over the amount charged during thesecond quarter of 2007.  General andadministrative charges at June 30, 2008 include approximately $20,000 inaudit fees incurred in connection with the 2007 audit, and therefore we expecta decline in general and administrative costs for the second half of 2008.

 

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

 

Not Applicable

 

**Item 4T. Controls and Procedures**

 

**Evaluation of Disclosure Controls and Procedures**

 

As the managing generalpartner of the Partnership, Reef maintains a system of controls and proceduresdesigned to provide reasonable assurance as to the reliability of the financialstatements and other disclosures included in this report, as well as tosafeguard assets from unauthorized use or disposition. The Partnership, underthe supervision and with participation of its management, including itsprincipal executive officer and principal financial officer, evaluated theeffectiveness of its “disclosure controls and procedures” as such term isdefined in Rule 13a-15(e) under the Securities Exchange Act of 1934,as amended (the “Exchange Act”), as of the end of the period covered by thisQuarterly Report. Based on that evaluation, the principal executive officer andprincipal financial officer have concluded that the Partnership’s disclosurecontrols and procedures are effective to ensure that information required to bedisclosed by the Partnership in reports that it files or submits under theExchange Act is recorded, processed, summarized, and reported within the timeperiods specified in Securities and Exchange Commission rules and forms,and includes controls and procedures designed to ensure that informationrequired to be disclosed by us in such reports is accumulated and communicatedto our management, including the principal executive officer and principalfinancial officer of our general partner, as appropriate to allow timelydecisions regarding financial disclosure.

 

**Changesin Internal Controls**

 

Therehave not been any changes in the Partnership’s internal controls over financialreporting during the fiscal quarter ended June 30, 2008 that havematerially affected, or are reasonably likely to materially affect, thePartnership’s internal control over financial reporting.

 

**PART II – OTHER INFORMATION**

 

**Item 1. Legal Proceedings**

 

None

 

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**Item 2.  Unregistered Sales of Equity Securities and Useof Proceeds**

 

**Use of Proceeds**

 

In connection with theRegistration Statement filed on Form S-1 (No. 333-93399) and declaredeffective May 31, 2001, Reef filed a post-effective amendment to theRegistration Statement on behalf of the Program on September 14, 2001. On January 10,2002 Reef filed a final prospectus and commenced the offering of units in theProgram. All sales of Partnership units were made through the Program’sdealer-manager, Reef Securities, Inc., and a number of soliciting dealers.The Program filed a prospectus supplement describing the Partnership on September 21,2004 and commenced offering units. Under the terms of the offering, a minimumof 50 Partnership units at a price of $20,000 per unit were required to be soldin order to form the Partnership. Upon meeting this requirement, thePartnership was formed on November 10, 2004. The Partnership offeringconsisted of 375 units of limited partner interest and 125 units of generalpartner interest. The offering period ended on December 2, 2004, at whichtime all 500 allowable units had been sold.

 

During theoffering period, the Partnership sold 474.972 units to investor partners,consisting of 349.972 units of limited partner interest and 125 units ofgeneral partner interest. Reef purchased 25.028 limited partner units, equaling5.01% of the total Partnership units sold. Total offering proceeds were$9,924,916. All units except those purchased by Reef paid a 15% management feeto Reef to pay for the Partnership organization and offering costs, includingsales commissions. These costs totaled $1,424,916, leaving capitalcontributions of $8,500,000 available for Partnership oil & gasoperations. In addition, the Partnership had available $68,585 of interestincome and $245,059 of additional capital contributions from Reef in connectionwith its obligation to pay 1% of all leasehold, drilling and completion costs,and to reimburse the Partnership for 100% of the drilling costs of a well inLouisiana for which Reef is paying 100% of the costs, for a total of $8,813,644available for Partnership oil and gas operations. As of June 30, 2008 thePartnership had expended $8,625,118 on drilling operations and the purchase ofroyalty interests, and $112,843 on general and administrative expenses.

 

**Item 3.  Default 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  Principal Executive Officer pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002.     |
|         |                                                                                                               |
| 31.2         | Certification of  Principal Financial Officer pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002.     |
|         |                                                                                                               |
| 32.1         | Certification of the  Principal Executive Officer pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002. |
|         |                                                                                                               |
| 32.2         | Certification of the  Principal Financial Officer 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, thereuntoduly authorized.

 
|                                          |   | 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,  2008 |   | By:                          | /s/ Michael J.  Mauceli |
|                                          |   |                         | **Michael  J. Mauceli** |
|                                          |   |                         | Manager and  Member |
|                                          |   |                         | (P*rincipal Executive Officer)* |
|                                          |   |                         |   |
|                                          |   |                         |   |
| Dated:   August 14,  2008 |   | By:                          | /s/ David M.  Tierney |
|                                          |   |                         | **David  M. Tierney** |
|                                          |   |                         | Chief Accounting  Officer – Public Partnerships |
|                                          |   |                         | Reef  Exploration, L.P. |
|                                          |   |                         | (P*rincipal  Financial and Accounting Officer)* |

 

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