----

| Delaware                                       |   | 75-2332174               |
|------------------------------------------------|--------|--------------------------|
| (State      or other jurisdiction              |   | (I.R.S.      Employer    |
| of      incorporation or organization)         |   | Identification      No.) |
|                                           |   |                     |
| 6 Desta Drive, Suite 6500, Midland,      Texas |   | 79705                    |
| (Address      of principal executive office)   |   | (Zip      Code)          |

| Indicate      by check mark if the registrant is a well-known seasoned issuer, as      defined in Rule 405 of the Securities Act.                                                                                                                                                                                                                                                 |  ̈    Yes | x  No      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                              |          |       |
| Indicate      by check mark if the registrant is not required to file reports pursuant      to Section 13 or Section 15(d) of the Act.                                                                                                                                                                                                                                            |  ̈    Yes | x  No      |
|                                                                                                                                                                                                                                                                                                                                                                              |          |       |
| 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. | x    Yes      |  ̈  No |

| Indicate      by check mark if disclosure of delinquent filers pursuant to Item 405 of      Regulation S-K is not contained herein, and will not be contained, to the      best of registrant's knowledge, in definitive proxy or information      statements incorporated by reference in Part III of this Form 10-K or any      amendment to this Form 10-K.x |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Indicate      by check mark whether the registrant is a large accelerated filer, an      accelerated filer, or a non-accelerated filer.  See definition      of “accelerated filer and large accelerated filer” in Rule 12b-2 of the      Exchange Act. |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Large      accelerated filer  ̈                                                                                                                                                                                                                                           |   | Accelerated      filer  ̈ |   | Non-accelerated      filer  x |   | Smaller      reporting company ̈ |   |

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

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Page   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Part      I                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Business                                                                                                                                                     | 3      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      1A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Risk      Factors                                                                                                                                            | 7      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      1B.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Unresolved Staff      Comments                                                                                                                               | 8      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Properties                                                                                                                                                   | 9      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Legal      Proceedings                                                                                                                                       | 10     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      4.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Submission of Matters to a Vote of Security      Holders                                                                                                     | 10     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Part      II                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      5.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Market for Registrant's Common Equity,      Related                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Stockholder      Matters and Issuer Purchases of Equity Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 11     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      6.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Selected Financial      Data                                                                                                                                 | 12     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      7.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Management's Discussion and Analysis of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Financial      Condition and Results of      Operations                                                                                                                          | 13     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      7A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Quantitative and Qualitative Disclosures About Market      Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 15     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      8.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Financial Statements and Supplementary      Data                                                                                                             | 16     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      9.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Changes in and Disagreements with      Accountants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | on Accounting      and Financial      Disclosure                                                                                                                                 | 29     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      9A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Controls and      Procedures                                                                                                                                 | 29     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      9B.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Other      Information                                                                                                                                       | 30     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Part      III                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      10.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Directors, Executive Officers and Corporate      Governance                                                                                                  | 31     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      11.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Executive      Compensation                                                                                                                                  | 31     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      12.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Security Ownership of Certain Beneficial Owners and      Management and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Related      Stockholder      Matters                                                                                                                                            | 32     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      13.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Certain Relationships and Related Transactions, and      Director Independence                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 32     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      14.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Principal Accounting Fees and      Services                                                                                                                  | 32     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Part      IV                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Item      15.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Exhibits and Financial Statement      Schedules                                                                                                              | 33     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Glossary of Oil and Gas      Terms                                                                                                                   | 34                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
| Signatures                                                                                                                                           | 36                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

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Item

|                                    |   | Proved      Developed |    |   | Proved       |   |   | Total       |   |
|-----------------------------------------|--------|-----------------------|---------|--------|--------------|--------|--------|-------------|--------|
|                                    |   | Producing             |    |   | Nonproducing |   |   | Undeveloped |   |   | Proved |   |
| Oil      (Bbls)                         |   |                  | 101,000 |   |         |   | 3,000  |        |   |   | 19,000 |   |   |   | 123,000 |   |
| Gas      (Mcf)                          |   |                  | 267,000 |   |         |   | 9,000  |        |   |   | 98,000 |   |   |   | 374,000 |   |
| Total      (BOE)                        |   |                  | 146,000 |   |         |   | 5,000  |        |   |   | 35,000 |   |   |   | 186,000 |   |
|                                    |   |                  |    |   |         |   |   |        |   |   |   |   |   |   |   |   |
| Standardized      measure of discounted |   |                  |    |   |         |   |   |        |   |   |   |   |   |   |   |   |
| future net cash      flows              |   |                  |    |   |         |   |   |        |   |   |   |   |   | $ | 1,894,000 |   |

|     |   | Proved      Reserves |    |   |   |   |
|----------|--------|----------------------|---------|--------|--------|--------|
|     |   |                 |    |   |   |   |   | Total      Oil |   |   | Percent      of |   |
|     |   | Oil                  |    |   | Gas    |   |   | Equivalent |   |   | Total      Oil |   |
|     |   | (Bbls)               |    |   | (Mcf)  |   |   | (BOE) |   |   | Equivalent |   |
| Vacuum   |   |                 | 57,000  |   |   |   | 31,000 |   |   |   | 62,000 |   |   |   | 33.3 | % |
| Malaga   |   |                 | 12,000  |   |   |   | 141,000 |   |   |   | 36,000 |   |   |   | 19.4 | % |
| Brahaney |   |                 | 19,000  |   |   |   | 8,000 |   |   |   | 20,000 |   |   |   | 10.8 | % |
| Other    |   |                 | 35,000  |   |   |   | 194,000 |   |   |   | 68,000 |   |   |   | 36.5 | % |
| Total    |   |                 | 123,000 |   |   |   | 374,000 |   |   |   | 186,000 |   |   |   | 100.0 | % |

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Item

Item

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| Item 5. | Market for      Registrant's Common Equity, Related Stockholder Matters and Issuer      Purchases of EquitySecurities |
|---------|-----------------------------------------------------------------------------------------------------------------------|

|                |   | Total      Number |   |   |               |   |
|---------------------|--------|-------------------|--------|--------|--------------------|--------|
|                |   | of      Units     |   |   | Average      Price |   |
| Period              |   | Purchased         |   |   | Paid      Per Unit |   |
| January      2008   |   |              | -      |   |               | $      | - |   |
| February      2008  |   |              | -      |   |               |   | - |   |
| March      2008     |   |              | -      |   |               |   | - |   |
| April      2008     |   |              | -      |   |               |   | - |   |
| May      2008       |   |              | -      |   |               |   | - |   |
| June      2008      |   |              | 63     |   |               |   | 200.78 |   |
| July      2008      |   |              | -      |   |               |   | - |   |
| August      2008    |   |              | -      |   |               |   | - |   |
| September      2008 |   |              | 84     |   |               |   | 245.98 |   |
| October      2008   |   |              | -      |   |               |   | - |   |
| November      2008  |   |              | -      |   |               |   | - |   |
| December      2008  |   |              | 26     |   |               |   | 286.14 |   |
| TOTALS              |   |              | 173    |   |               | $      | 235.56 |   |

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Item

|                                |   | Years      ended December 31, |      |
|-------------------------------------|--------|-------------------------------|-----------|
|                                |   | 2008                          |      |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
| Revenues                            |   | $                             | 1,405,115 |   |   | $ | 1,046,768 |   |   | $ | 993,877 |   |   | $ | 850,896 |   |   | $ | 595,998 |   |
|                                |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                     |   |                          | 1,255,360 |   |   |   | 890,722 |   |   |   | 862,426 |   |   |   | 735,523 |   |   |   | 473,981 |   |
|                                |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Partners'      share of net income: |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General      partners               |   |                          | 128,009   |   |   |   | 91,521 |   |   |   | 88,248 |   |   |   | 75,335 |   |   |   | 49,449 |   |
|                                |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Limited      partners               |   |                          | 1,127,351 |   |   |   | 799,201 |   |   |   | 774,178 |   |   |   | 660,188 |   |   |   | 424,532 |   |
|                                |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Limited      partners'              |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| net income per    unit              |   |                          | 100.83    |   |   |   | 71.48 |   |   |   | 69.24 |   |   |   | 59.05 |   |   |   | 37.97 |   |
|                                |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Limited partners'      cash         |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| distributions per      unit         |   |                          | 113.57    |   |   |   | 70.40 |   |   |   | 70.79 |   |   |   | 58.36 |   |   |   | 30.06 |   |
|                                |   |                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      assets                   |   | $                             | 525,393   |   |   | $ | 692,176 |   |   | $ | 646,071 |   |   | $ | 543,699 |   |   | $ | 512,734 |   |

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Item

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|                                           |   | Year      Ended December 31, |      |
|------------------------------------------------|--------|------------------------------|-----------|
|                                           |   | 2008                         |      |   | 2007 |   |   | 2006 |   |
| Oil      production in barrels                 |   |                         | 17,592    |   |   |   | 18,366 |   |   |   | 18,746 |   |
| Gas      production in mcf                     |   |                         | 47,179    |   |   |   | 54,506 |   |   |   | 55,514 |   |
| Total      (BOE)                               |   |                         | 25,455    |   |   |   | 27,450 |   |   |   | 27,998 |   |
| Average      price per barrel of oil           |   | $                            | 99.51     |   |   | $ | 71.09 |   |   | $ | 64.11 |   |
| Average      price per mcf of gas              |   | $                            | 9.02      |   |   | $ | 7.09 |   |   | $ | 6.57 |   |
| Partnership      distributions                 |   | $                            | 1,412,054 |   |   | $ | 875,576 |   |   | $ | 880,421 |   |
| Limited      partner distributions             |   | $                            | 1,269,785 |   |   | $ | 787,127 |   |   | $ | 791,476 |   |
| Per      unit distribution to limited partners |   | $                            | 113.57    |   |   | $ | 70.40 |   |   | $ | 70.79 |   |
| Number      of limited partner units           |   |                         | 11,181    |   |   |   | 11,181 |   |   |   | 11,181 |   |

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Item

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Page   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| Report of Independent Registered Public Accounting      Firm                                                                                                    |   | 17     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |
| Balance      Sheets                                                                                                                                             |   | 18     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |
| Statements of      Operations                                                                                                                                   |   | 19     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |
| Statements of Changes in Partners' Equity      (Deficit)                                                                                                        |   | 20     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |
| Statements of Cash      Flows                                                                                                                                   |   | 21     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |
| Notes to Financial      Statements                                                                                                                              |   | 22     |

----

REPORT 

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Royalties 

|                                            |   | December      31, |      |
|-------------------------------------------------|--------|-------------------|-----------|
|                                            |   | 2008              |      |   | 2007 |   |
| Assets                                          |   |              |      |   |   |   |
|                                            |   |              |      |   |   |   |
| Current      assets:                            |   |              |      |   |   |   |
| Cash and cash      equivalents                  |   | $                 | 75,536    |   |   | $ | 71,938 |   |
| Receivable from Managing General      Partner   |   |              | 72,678    |   |   |   | 206,820 |   |
| New Mexico income tax      deposits             |   |              | 52,740    |   |   |   | 40,456 |   |
| Total current      assets                       |   |              | 200,954   |   |   |   | 319,214 |   |
|                                            |   |              |      |   |   |   |   |   |
| Oil      and gas properties - using the full-   |   |              |      |   |   |   |   |   |
| cost method of      accounting                  |   |              | 4,028,306 |   |   |   | 4,052,100 |   |
| Less accumulated      depreciation,             |   |              |      |   |   |   |   |   |
| depletion and      amortization                 |   |              | 3,703,867 |   |   |   | 3,679,138 |   |
|                                            |   |              |      |   |   |   |   |   |
| Net oil and gas      properties                 |   |              | 324,439   |   |   |   | 372,962 |   |
|                                            |   |              |      |   |   |   |   |   |
|                                            |   | $                 | 525,393   |   |   | $ | 692,176 |   |
|                                            |   |              |      |   |   |   |   |   |
| Liabilities and Partners' Equity      (Deficit) |   |              |      |   |   |   |   |   |
|                                            |   |              |      |   |   |   |   |   |
| Asset      retirement obligation                |   | $                 | 379,347   |   |   | $ | 389,436 |   |
|                                            |   |              |      |   |   |   |   |   |
| Partners'      equity (deficit):                |   |              |      |   |   |   |   |   |
| General partners                                |   |              | (56,166   | ) |   |   | (41,906 | ) |
| Limited partners                                |   |              | 202,212   |   |   |   | 344,646 |   |
|                                            |   |              |      |   |   |   |   |   |
| Total partners'      equity                     |   |              | 146,046   |   |   |   | 302,740 |   |
|                                            |   |              |      |   |   |   |   |   |
|                                            |   | $                 | 525,393   |   |   | $ | 692,176 |   |

----

Southwest 

|                                          |   | Years      ended December 31, |      |
|-----------------------------------------------|--------|-------------------------------|-----------|
|                                          |   | 2008                          |      |   | 2007 |   |   | 2006 |   |
|                                          |   |                          |      |   |   |   |   |   |   |
| Revenues                                      |   |                          |      |   |   |   |   |   |   |
|                                          |   |                          |      |   |   |   |   |   |   |
| Income from net profits      interests        |   | $                             | 1,403,929 |   |   | $ | 1,042,829 |   |   | $ | 986,799 |   |
| Interest income                               |   |                          | 1,186     |   |   |   | 3,939 |   |   |   | 3,582 |   |
| Other                                         |   |                          | -         |   |   |   | - |   |   |   | 3,496 |   |
|                                          |   |                          | 1,405,115 |   |   |   | 1,046,768 |   |   |   | 993,877 |   |
| Expenses                                      |   |                          |      |   |   |   |   |   |   |   |   |   |
|                                          |   |                          |      |   |   |   |   |   |   |   |   |   |
| Depreciation, depletion and      amortization |   |                          | 24,729    |   |   |   | 24,484 |   |   |   | 20,057 |   |
| Accretionexpense                              |   |                          | 26,398    |   |   |   | 33,434 |   |   |   | 18,309 |   |
| General and      administrative               |   |                          | 98,628    |   |   |   | 98,128 |   |   |   | 93,085 |   |
|                                          |   |                          | 149,755   |   |   |   | 156,046 |   |   |   | 131,451 |   |
|                                          |   |                          |      |   |   |   |   |   |   |   |   |   |
| Net      income                               |   | $                             | 1,255,360 |   |   | $ | 890,722 |   |   | $ | 862,426 |   |
|                                          |   |                          |      |   |   |   |   |   |   |   |   |   |
| Net      income allocated to:                 |   |                          |      |   |   |   |   |   |   |   |   |   |
|                                          |   |                          |      |   |   |   |   |   |   |   |   |   |
| Managing General      Partner                 |   | $                             | 115,208   |   |   | $ | 82,369 |   |   | $ | 79,423 |   |
|                                          |   |                          |      |   |   |   |   |   |   |   |   |   |
| General Partner                               |   | $                             | 12,801    |   |   | $ | 9,152 |   |   | $ | 8,825 |   |
|                                          |   |                          |      |   |   |   |   |   |   |   |   |   |
| Limitedpartners                               |   | $                             | 1,127,351 |   |   | $ | 799,201 |   |   | $ | 774,178 |   |
|                                          |   |                          |      |   |   |   |   |   |   |   |   |   |
| Per limited partner      unit                 |   | $                             | 100.83    |   |   | $ | 71.48 |   |   | $ | 69.24 |   |

----

Royalties 

|                              |   | General  |     |   | Limited  |   |       |   |   |
|-----------------------------------|--------|----------|----------|--------|----------|--------|------------|--------|--------|
|                              |   | Partners |     |   | Partners |   |       | Total  |   |
| Balance      at December 31, 2005 |   | $        | (44,281  | )      |     | $      | 349,870    |   |   | $ | 305,589 |   |
|                              |   |     |     |   |     |   |       |   |   |   |   |   |
| Net income                        |   |     | 88,248   |   |     |   | 774,178    |   |   |   | 862,426 |   |
|                              |   |     |     |   |     |   |       |   |   |   |   |   |
| Distributions                     |   |     | (88,945  | )      |     |   | (791,476   | )      |   |   | (880,421 | ) |
|                              |   |     |     |   |     |   |       |   |   |   |   |   |
| Balance      at December 31, 2006 |   |     | (44,978  | )      |     |   | 332,572    |   |   |   | 287,594 |   |
|                              |   |     |     |   |     |   |       |   |   |   |   |   |
| Net income                        |   |     | 91,521   |   |     |   | 799,201    |   |   |   | 890,722 |   |
|                              |   |     |     |   |     |   |       |   |   |   |   |   |
| Distributions                     |   |     | (88,449  | )      |     |   | (787,127   | )      |   |   | (875,576 | ) |
|                              |   |     |     |   |     |   |       |   |   |   |   |   |
| Balance      at December 31, 2007 |   |     | (41,906  | )      |     |   | 344,646    |   |   |   | 302,740 |   |
|                              |   |     |     |   |     |   |       |   |   |   |   |   |
| Net income                        |   |     | 128,009  |   |     |   | 1,127,351  |   |   |   | 1,255,360 |   |
|                              |   |     |     |   |     |   |       |   |   |   |   |   |
| Distributions                     |   |     | (142,269 | )      |     |   | (1,269,785 | )      |   |   | (1,412,054 | ) |
|                              |   |     |     |   |     |   |       |   |   |   |   |   |
| Balance      at December 31, 2008 |   | $        | (56,166  | )      |     | $      | 202,212    |   |   | $ | 146,046 |   |

----

Institutional 

|                                                      |   | Years      ended December 31, |       |
|-----------------------------------------------------------|--------|-------------------------------|------------|
|                                                      |   | 2008                          |       |   | 2007 |   |   | 2006 |   |
| Cash      flows from operating activities:                |   |                          |       |   |   |   |   |   |   |
| Cash received from net profits      interests             |   | $                             | 1,513,094  |   |   | $ | 993,557 |   |   | $ | 914,466 |   |
| Cash paid for administrative      fees and general        |   |                          |       |   |   |   |   |   |   |   |   |   |
| and administrative      overhead                          |   |                          | (98,628    | ) |   |   | (98,128 | ) |   |   | (93,085 | ) |
| Interestreceived                                          |   |                          | 1,186      |   |   |   | 3,939 |   |   |   | 3,582 |   |
| Other                                                     |   |                          | -          |   |   |   | 3,456 |   |   |   | 40 |   |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| Net cash provided by operating      activities            |   |                          | 1,415,652  |   |   |   | 902,824 |   |   |   | 825,003 |   |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| Cash      flows used in financing activities:             |   |                          |       |   |   |   |   |   |   |   |   |   |
| Distributions to      partners                            |   |                          | (1,412,054 | ) |   |   | (875,576 | ) |   |   | (880,421 | ) |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents |   |                          | 3,598      |   |   |   | 27,248 |   |   |   | (55,418 | ) |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| Beginning      of year                                    |   |                          | 71,938     |   |   |   | 44,690 |   |   |   | 100,108 |   |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| End      of year                                          |   | $                             | 75,536     |   |   | $ | 71,938 |   |   | $ | 44,690 |   |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| Reconciliation      of net income to net cash             |   |                          |       |   |   |   |   |   |   |   |   |   |
| provided by operating      activities:                    |   |                          |       |   |   |   |   |   |   |   |   |   |
| Net      income                                           |   | $                             | 1,255,360  |   |   | $ | 890,722 |   |   | $ | 862,426 |   |
| Adjustments      to reconcile net income to net           |   |                          |       |   |   |   |   |   |   |   |   |   |
| cash provided by operating      activities:               |   |                          |       |   |   |   |   |   |   |   |   |   |
| Depreciation, depletion and      amortization             |   |                          | 24,729     |   |   |   | 24,484 |   |   |   | 20,057 |   |
| Accretionexpense                                          |   |                          | 26,398     |   |   |   | 33,434 |   |   |   | 18,309 |   |
| Settlement of asset retirement      obligations           |   |                          |       |   |   |   |   |   |   |   |   |   |
| for plugged and abandoned      wells                      |   |                          | (12,693    | ) |   |   | (3,120 | ) |   |   | (979 | ) |
| Decrease (increase) in      receivables and deposits      |   |                          | 121,858    |   |   |   | (42,696 | ) |   |   | (74,810 | ) |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| Net      cash provided by operating activities            |   | $                             | 1,415,652  |   |   | $ | 902,824 |   |   | $ | 825,003 |   |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| Noncash      investing and financing activities:          |   |                          |       |   |   |   |   |   |   |   |   |   |
|                                                      |   |                          |       |   |   |   |   |   |   |   |   |   |
| Increase (decrease) in oil and gas      properties -      |   |                          |       |   |   |   |   |   |   |   |   |   |
| SFAS No. 143                                              |   | $                             | (23,794    | ) |   | $ | 645 |   |   | $ | 103,037 |   |

----

Royalties 

| 1. | Organization |
|----|--------------|

|                                          | Limited  |   | General  |
|-----------------------------------------------|----------|--------|----------|
|                                          | Partners |   | Partners |
| Interest      income on capital contributions | 100%     |   | -        |
| Oil      and gas sales                        | 90%      |   | 10%      |
| All      other revenues                       | 90%      |   | 10%      |
| Organization      and offering costs (1)      | 100%     |   | -        |
| Amortization      of organization costs       | 100%     |   | -        |
| Property      acquisition costs               | 100%     |   | -        |
| Gain/loss      on property disposition        | 90%      |   | 10%      |
| Operating      and administrative costs (2)   | 90%      |   | 10%      |
| Depreciation,      depletion and amortization |     |   |     |
|  of      oil and gas properties          | 100%     |   | -        |
| All      other costs                          | 90%      |   | 10%      |

|   | (1) | All      organization costs in excess of 3% of initial capital contributions will      be paid by the Managing General Partner and will be treated as a capital      contribution.  The Partnership paid the Managing General Partner      an amount equal to 3% of initial capital contributions for such      organization costs. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Administrative      costs in any year, which exceed 2% of capital contributions shall be paid      by the Managing General Partner and will be treated as a capital      contribution. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | Summary of Significant      Accounting Policies |
|----|-------------------------------------------------|

----

| 2. | Summary of Significant      Accounting Policies -continued |
|----|------------------------------------------------------------|

----

| 2. | Summary of Significant      Accounting Policies -continued |
|----|------------------------------------------------------------|

|                                                             |   | 2008   |    |   | 2007   |   |
|------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Beginning      of year                                           |   | $      | 389,436 |   |   | $      | 358,477 |   |
| Additional      abandonment obligations from new wells           |   |   | 120     |   |   |   | 952 |   |
| Reduction      of obligations due to wells plugged and abandoned |   |   | (12,693 | )      |   |   | (3,120 | ) |
| Reduction      of obligations due to farm-outs                   |   |   | -       |   |   |   | (307 | ) |
| Accretion      expense                                           |   |   | 26,398  |   |   |   | 33,434 |   |
| Revisions      of previous estimates                             |   |   | (23,914 | )      |   |   | - |   |
| End      of year                                                 |   | $      | 379,347 |   |   | $      | 389,436 |   |

----

| 4. | Commitments and      Contingent Liabilities |
|----|---------------------------------------------|

| 5. | Related Party      Transactions |
|----|---------------------------------|

----

| 6. | Oil and Gas Reserves      Information (unaudited) |
|----|---------------------------------------------------|

|                                 |   | Oil      (bbls) |    |   | Gas      (mcf) |   |
|--------------------------------------|--------|-----------------|---------|--------|----------------|--------|
| Total      Proved -                  |   |            |    |   |           |   |
|                                 |   |            |    |   |           |   |
| January      1, 2006                 |   |            | 229,000 |   |           |   | 642,000 |   |
|                                 |   |            |    |   |           |   |   |   |
| Revisions      of previous estimates |   |            | (17,000 | )      |           |   | (80,000 | ) |
| Production                           |   |            | (19,000 | )      |           |   | (56,000 | ) |
|                                 |   |            |    |   |           |   |   |   |
| December      31, 2006               |   |            | 193,000 |   |           |   | 506,000 |   |
|                                 |   |            |    |   |           |   |   |   |
| Revisions      of previous estimates |   |            | 59,000  |   |           |   | 157,000 |   |
| Production                           |   |            | (18,000 | )      |           |   | (55,000 | ) |
|                                 |   |            |    |   |           |   |   |   |
| December      31, 2007               |   |            | 234,000 |   |           |   | 608,000 |   |
|                                 |   |            |    |   |           |   |   |   |
| Revisions      of previous estimates |   |            | (93,000 | )      |           |   | (187,000 | ) |
| Production                           |   |            | (18,000 | )      |           |   | (47,000 | ) |
| December      31, 2008               |   |            | 123,000 |   |           |   | 374,000 |   |
|                                 |   |            |    |   |           |   |   |   |
| Proved developed reserves      -     |   |            |    |   |           |   |   |   |
| December      31, 2006               |   |            | 166,000 |   |           |   | 391,000 |   |
| December      31, 2007               |   |            | 207,000 |   |           |   | 483,000 |   |
| December      31, 2008               |   |            | 104,000 |   |           |   | 276,000 |   |

----

| 6. | Oil and Gas Reserves      Information (unaudited) -continued |
|----|--------------------------------------------------------------|

|                                               |   | 2008   |      |   | 2007   |   |       | 2006   |   |
|----------------------------------------------------|--------|--------|-----------|--------|--------|--------|------------|--------|--------|
| Future      cash inflows                           |   | $      | 7,518,000 |   |   | $      | 25,822,000 |   |   | $ | 13,681,000 |   |
| Production,      development and abandonment costs |   |   | 4,570,000 |   |   |   | 9,913,000  |   |   |   | 6,293,000 |   |
| Future      net cash flows                         |   |   | 2,948,000 |   |   |   | 15,909,000 |   |   |   | 7,388,000 |   |
| 10%      annual discount for                       |   |   |      |   |   |   |       |   |   |   |   |   |
| estimated timing of cash      flows                |   |   | 1,054,000 |   |   |   | 7,310,000  |   |   |   | 3,103,000 |   |
| Standardized      measure of                       |   |   |      |   |   |   |       |   |   |   |   |   |
| discounted future net cash      flows              |   | $      | 1,894,000 |   |   | $      | 8,599,000  |   |   | $ | 4,285,000 |   |

|                                                        |   | 2008   |       |   | 2007   |   |       | 2006   |   |
|-------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
| Sales      of oil and gas produced, net of production costs |   | $      | (1,404,000 | )      |   | $      | (1,043,000 | )      |   | $ | (986,000 | ) |
| Changes      in prices and production costs                 |   |   | (5,781,000 | )      |   |   | 3,017,000  |   |   |   | (1,692,000 | ) |
| Changes      of production rates (timing) and others        |   |   | 889,000    |   |   |   | (272,000   | )      |   |   | 615,000 |   |
| Revisions      of previous quantities estimates             |   |   | (1,269,000 | )      |   |   | 2,184,000  |   |   |   | (469,000 | ) |
| Accretion      of discount                                  |   |   | 860,000    |   |   |   | 428,000    |   |   |   | 620,000 |   |
| Discounted      future net cash flows -                     |   |   |       |   |   |   |       |   |   |   |   |   |
| Beginning      of year                                      |   |   | 8,599,000  |   |   |   | 4,285,000  |   |   |   | 6,197,000 |   |
|                                                        |   |   |       |   |   |   |       |   |   |   |   |   |
| End      of year                                            |   | $      | 1,894,000  |   |   | $      | 8,599,000  |   |   | $ | 4,285,000 |   |

----

| 7. | Selected Quarterly      Financial Results –(unaudited) |
|----|--------------------------------------------------------------|

|                                      |   | Quarter |    |
|-------------------------------------------|--------|---------|---------|
|                                      |   | First   |    |   | Second |   |   | Third |   |   | Fourth |   |
| 2008:                                     |   |    |    |   |   |   |   |   |   |   |   |   |
| Total revenues                            |   | $       | 414,540 |   |   | $ | 480,670 |   |   | $ | 472,726 |   |   | $ | 37,179 |   |
| Total expenses                            |   |    | 35,994  |   |   |   | 40,107 |   |   |   | 37,873 |   |   |   | 35,781 |   |
| Net income                                |   | $       | 378,546 |   |   | $ | 440,563 |   |   | $ | 434,853 |   |   | $ | 1,398 |   |
|                                      |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income per limited partners      unit |   | $       | 30.42   |   |   | $ | 35.42 |   |   | $ | 34.95 |   |   | $ | .04 |   |

|                                      |   | Quarter |    |
|-------------------------------------------|--------|---------|---------|
|                                      |   | First   |    |   | Second |   |   | Third |   |   | Fourth |   |
| 2007:                                     |   |    |    |   |   |   |   |   |   |   |   |   |
| Total revenues                            |   | $       | 163,774 |   |   | $ | 266,474 |   |   | $ | 375,466 |   |   | $ | 241,054 |   |
| Total expenses                            |   |    | 30,178  |   |   |   | 43,548 |   |   |   | 40,335 |   |   |   | 41,985 |   |
| Net income                                |   | $       | 133,596 |   |   | $ | 222,926 |   |   | $ | 335,131 |   |   | $ | 199,069 |   |
|                                      |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income per limited partners      unit |   | $       | 10.70   |   |   | $ | 17.89 |   |   | $ | 26.91 |   |   | $ | 15.98 |   |

----

Item

9A

----

Item

----

Item

Item

----

Item

Item

Item

| For      the Year Ended December 31, |   | 2008   |   |   | 2007   |   |
|--------------------------------------|--------|--------|--------|--------|--------|--------|
| Audit      Fees                      |   | $      | 18,030 |   |   | $      | 16,932 |   |
| Audit      Related Fees              |   |   | -      |   |   |   | - |   |
| Tax      Fees                        |   |   | -      |   |   |   | - |   |
| All      Other Fees                  |   |   | -      |   |   |   | - |   |
|                                 |   |   |   |   |   |   |   |   |
| TOTAL                                |   | $      | 18,030 |   |   | $      | 16,932 |   |

----

Item

| (a)    | (1)    | Financial      Statements:                                                                                                                                                                                          |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                |
|   |   | Included in Part II of this      report                                                                                                                                                                             |
|   |   |                                                                                                                                                                                                                |
|   |   | Report of Independent Registered      Public Accounting Firm                                                                                                                                                        |
|   |   | Balance Sheets                                                                                                                                                                                                      |
|   |   | Statements of      Operations                                                                                                                                                                                       |
|   |   | Statements of Changes in      Partners' Equity (Deficit)                                                                                                                                                            |
|   |   | Statements of Cash      Flows                                                                                                                                                                                       |
|   |   | Notes to Financial      Statements                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                |
|   | (2)    | Schedules      required by Article 12 of Regulation S-X are either omitted because they      are not applicable or because the required information is shown in the      financial statements or the notes thereto. |
|   |   |                                                                                                                                                                                                                |
|   | (3)    | Exhibits:                                                                                                                                                                                                           |

| 4      | (a)    | Certificate      of Limited Partnership of Southwest Royalties Institutional Income Fund      X-B, L.P., dated November 27, 1990.  (Incorporated by reference      from Partnership's Form 10-K for the fiscal year ended December 31,      1990.) |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                         |
|   | (b)    | Agreement      of Limited Partnership of Southwest Royalties Institutional Income Fund      X-B, L.P. dated November 27, 1990.  (Incorporated by reference      from Partnership's Form 10-K for the fiscal year ended December 31,      1991.)    |
|   |   |                                                                                                                                                                                                                                                         |
|   | 31.1   | Rule      13a-14(a)/15d-14(a) Certification                                                                                                                                                                                                                  |
|   | 31.2   | Rule      13a-14(a)/15d-14(a) Certification                                                                                                                                                                                                                  |
|   | 32.1   | Certification      of Chief Executive Officer and Chief Financial Officer Pursuant to 18      U.S.C. Section 1350, as adopted Pursuant to Section 906 of the      Sarbanes-Oxley Act of 2002                                                                 |

----

Glossary

----

----

Signatures

|   | Southwest      Royalties Institutional Income Fund |
|--------|----------------------------------------------------|
|   | X-B,      L.P., a Delaware limited partnership     |
|   |                                               |
| By:    | Southwest      Royalties, Inc., Managing           |
|   | General      Partner                               |
|   |                                               |
|   |                                               |
| By:    | /s/      L. Paul Latham                            |
|   | L.      Paul Latham                                |
|   | President      and Chief Executive Officer         |
|   |                                               |
| Date:  | March      27, 2009                                |

|                                                                                       |   |                                                                                       |
|--------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------|
| /s/      Clayton W Williams                                                                |   | /s/      L. Paul Latham                                                                    |
| Clayton      W. Williams, Chairman of the Board                                            |   | L.      Paul Latham, President and a Director                                              |
| and      a Director                                                                        |   |                                                                                       |
|                                                                                       |   |                                                                                       |
| Date:           March      27, 2009 |   | Date:           March      27, 2009 |
|                                                                                       |   |                                                                                       |
|                                                                                       |   |                                                                                       |
|                                                                                       |   |                                                                                       |
|                                                                                       |   |                                                                                       |
| /s/      Mel G. Riggs                                                                      |   |                                                                                       |
| Mel      G. Riggs, Vice President – Finance,                                         |   |                                                                                       |
| Treasurer      and a Director                                                              |   |                                                                                       |
|                                                                                       |   |                                                                                       |
| Date:           March      27, 2009 |   |                                                                                       |
|                                                                                       |   |                                                                                       |
|                                                                                       |   |                                                                                       |