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Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q

 

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

 

For the Quarterly Period Ended September 30, 2012

 

or

 

o         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Transition Period from                  to                

 

Commission File Number: 333-122935-01

 


 

REEF GLOBAL ENERGY VI, L.P.

(Exact name of registrant as specified in its charter)

 

Nevada

(State or other jurisdiction of

incorporation or organization)

 

20-3170768

(I.R.S. employer

identification no.)

 

 

 

1901 N. Central Expressway, Suite 300

Richardson, Texas

(Address of principal executive offices)

 

75080-3610

(Zip code)

 

(972)-437-6792

Registrant’s telephone number, including area code

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

 

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

 

Large accelerated filer o

 

Accelerated filer o

 

 

 

Non-accelerated filer o

 

Smaller reporting company x

 

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

 

As of November 9, 2012, the registrant had 75.363 units of general partner interest held by the managing general partner, and 1,431.897 units of limited partner interest outstanding.

 

 

 



Table of Contents

 

Reef Global Energy VI, L.P.

Form 10-Q Index

 

PART I — FINANCIAL INFORMATION

 

 

ITEM 1.

Financial Statements (Unaudited)

 

Condensed Balance Sheets

 

Condensed Statements of Operations

 

Condensed Statements of Cash Flows

 

Notes to Condensed Financial Statements

 

 

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

 

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

 

 

ITEM 4.

Controls and Procedures

 

 

PART II — OTHER INFORMATION

 

 

ITEM 1.

Legal Proceedings

 

 

ITEM 1A.

Risk Factors

 

 

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

 

ITEM 3.

Default Upon Senior Securities

 

 

ITEM 4.

Mine Safety Disclosures

 

 

ITEM 5.

Other Information

 

 

ITEM 6.

Exhibits

 

 

Signatures

 

 

i



Table of Contents

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Reef Global Energy VI, L.P.

Condensed Balance Sheets

 

 

 

September 30,
2012

 

December 31,
2011

 

 

 

(unaudited)

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

156,403

 

$

215,623

 

Accounts receivable from affiliates

 

99,941

 

445,003

 

Total current assets

 

256,344

 

660,626

 

 

 

 

 

 

 

Oil and gas properties, full cost method of accounting:

 

 

 

 

 

Proved properties, net of accumulated depletion of $32,552,149 and $32,337,616

 

1,037,758

 

1,252,291

 

Net oil and gas properties

 

1,037,758

 

1,252,291

 

 

 

 

 

 

 

Total assets

 

$

1,294,102

 

$

1,912,917

 

 

 

 

 

 

 

Liabilities and partnership equity

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

46,469

 

$

61,136

 

Accounts payable to affiliates

 

857

 

25,000

 

Total current liabilities

 

47,326

 

86,136

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

Asset retirement obligation

 

444,885

 

394,823

 

Total long-term liabilities

 

444,885

 

394,823

 

 

 

 

 

 

 

Partnership equity:

 

 

 

 

 

Limited partners

 

685,148

 

1,254,470

 

Managing general partner

 

116,743

 

177,488

 

Partnership equity

 

801,891

 

1,431,958

 

 

 

 

 

 

 

Total liabilities and partnership equity

 

$

1,294,102

 

$

1,912,917

 

 

See accompanying notes to condensed financial statements (unaudited).

 

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Table of Contents

 

Reef Global Energy VI, L.P.

Condensed Statements of Operations

(Unaudited)

 

 

 

For the three months ended
September 30,

 

For the nine months ended
September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Oil, gas and NGL sales

 

$

257,505

 

$

955,564

 

$

1,189,920

 

$

3,108,213

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Lease operating expenses

 

108,195

 

83,720

 

269,798

 

294,029

 

Production taxes

 

21,239

 

65,367

 

79,410

 

236,201

 

Depreciation, depletion and amortization

 

61,330

 

194,482

 

214,533

 

612,840

 

Accretion of asset retirement obligation

 

4,803

 

3,874

 

50,062

 

11,380

 

General and administrative

 

144,995

 

111,384

 

375,832

 

370,703

 

Total costs and expenses

 

340,562

 

458,827

 

989,635

 

1,525,153

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

(83,057

)

496,737

 

200,285

 

1,583,060

 

 

 

 

 

 

 

 

 

 

 

Other income:

 

 

 

 

 

 

 

 

 

Interest income

 

 

64

 

11

 

214

 

Miscellaneous income

 

 

 

1,230

 

 

Total other income

 

 

64

 

1,241

 

214

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(83,057

)

$

496,801

 

$

201,526

 

$

1,583,274

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per limited partner unit

 

$

(52.98

)

$

280.84

 

$

105.22

 

$

895.47

 

Net income (loss) per managing general partner unit

 

$

(95.41

)

$

1,256.15

 

$

675.01

 

$

3,994.70

 

 

See accompanying notes to condensed financial statements (unaudited).

 

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Table of Contents

 

Reef Global Energy VI, L.P.

Condensed Statements of Cash Flows

(Unaudited)

 

 

 

For the nine months ended
September 30,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

Net income

 

$

201,526

 

$

1,583,274

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Plugging and abandonment costs paid from asset retirement obligation

 

 

(2,533

)

Adjustments for non-cash transactions:

 

 

 

 

 

Depreciation, depletion and amortization

 

214,533

 

612,840

 

Accretion of asset retirement obligation

 

50,062

 

11,380

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

 

(749

)

Accounts receivable from affiliates

 

345,062

 

(1,881

)

Accounts payable

 

(14,667

)

26,735

 

Accounts payable to affiliates

 

(24,143

)

(196,460

)

Net cash provided by operating activities

 

772,373

 

2,032,606

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Property acquisition and development

 

 

(13,876

)

Net cash used in investing activities

 

 

(13,876

)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Partner distributions

 

(831,593

)

(2,018,561

)

Net cash used in financing activities

 

(831,593

)

(2,018,561

)

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

(59,220

)

169

 

Cash and cash equivalents at beginning of period

 

215,623

 

182,919

 

Cash and cash equivalents at end of period

 

$

156,403

 

$

183,088

 

 

See accompanying notes to condensed financial statements (unaudited).

 

3



Table of Contents

 

Reef Global Energy VI, L.P.

Notes to Condensed Financial Statements (unaudited)

September 30, 3012

 

1. Organization and Basis of Presentation

 

The condensed financial statements of Reef Global Energy VI, L.P. (the “Partnership”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosure normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to those rules and regulations. We have recorded all transactions and adjustments necessary to fairly present the financial statements included in this Quarterly Report on Form 10-Q (this “Quarterly Report”). The adjustments are normal and recurring. The following notes describe only the material changes in accounting policies, account details, or financial statement notes during the first nine months of 2012. Therefore, please read these unaudited condensed financial statements and notes to unaudited condensed financial statements together with the audited financial statements and notes to financial statements contained in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2011 (the “Annual Report”). The results of operations for the three and nine month periods ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

 

Going Concern

 

The accompanying financial statements have been prepared assuming the Partnership is a going concern, which assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

 

The Partnership has two significant producing properties that currently account for approximately 74% of Partnership revenues. The production from each of these properties has declined significantly during the current fiscal year. These two properties have estimated remaining economic reserve lives of 13 and 27 months, respectively, utilizing current prices, costs, and projected production volumes at September 30, 2012. The Partnership has no plans to drill additional wells. The Partnership also has no plans to engage in commodity futures trading or hedging activities. Finally, the estimated economic reserve life of Partnership wells is computed based upon operating revenues and costs and does not consider Partnership general and administrative costs. Future cash flows generated from Partnership wells will be significantly impacted by actual prices received, and by actual production volumes from the Partnership’s most significant wells. While management believes that the Partnership will generate positive operating cash flows during the next 12 months, such operating cash flow may not be sufficient to also cover the Partnership’s general and administrative costs. Cash flows from operations will continue to decline as a result of natural production declines in the Partnership’s wells.  Cash flow, as measured by taking the Partnership net income (loss) shown on the Statement of Operations and adding back non cash expenditures (depreciation, depletion and amortization and accretion of asset retirement obligation), while positive for the nine months ended September 30, 2012, was a loss of $16,924 for the three month period ended September 30, 2012.  These conditions raise substantial doubt about the Partnership’s ability to continue as a going concern.  The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Partnership be unable to continue as a going concern. The managing general partner is considering several options related to the Partnership, including the possible sale of marketable assets, as a result of the declining cash flows.

 

2. Summary of Accounting Policies

 

Oil and Gas Properties

 

The Partnership follows the full cost method of accounting for oil and gas properties. Under this method, all direct costs and certain indirect costs associated with acquisition of properties and successful as well as unsuccessful exploration and development activities are capitalized. Depreciation, depletion, and amortization of capitalized oil and gas properties and estimated future development costs, excluding unproved properties, are based on the unit-of-

 

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Table of Contents

 

production method using estimated proved reserves, as determined by independent petroleum engineers.  Proved natural gas reserves are converted to equivalent barrels of crude oil at a rate of 6 Mcf to 1 Bbl.

 

In applying the full cost method, the Partnership performs a quarterly ceiling test on the capitalized costs of oil and gas properties, whereby the capitalized costs of oil and gas properties are limited to the sum of the estimated future net revenues from proved reserves using prices that are the 12-month un-weighted arithmetic average of the first-day-of-the-month price for crude oil and natural gas held constant and discounted at 10%, plus the lower of cost or estimated fair value of unproved properties, if any. If capitalized costs exceed the ceiling, an impairment loss is recognized for the amount by which the capitalized costs exceed the ceiling, and is shown as a reduction of oil and gas properties and as property impairment expense on the Partnership’s statements of operations. No gain or loss is recognized upon sale or disposition of oil and gas properties, unless such a sale would significantly alter the rate of depletion and amortization. During the three and nine month periods ended September 30, 2012 and 2011, the Partnership recognized no property impairment expense of proved properties.

 

Estimates of Proved Oil and Gas Reserves

 

Estimates of the Partnership’s proved reserves at September 30, 2012 and December 31, 2011 are prepared and presented in accordance with SEC rules and accounting standards which require SEC reporting entities to prepare their reserve estimates using pricing based upon the un-weighted arithmetic average of the first-day-of-the-month commodity prices over the preceding 12-month period and current costs. Future prices and costs may be materially higher or lower than these prices and costs, which would impact the estimate of reserves and future cash flows.

 

Reserves and their relation to estimated future net cash flows impact the Partnership’s depletion and impairment calculations. As a result, adjustments to depletion and impairment are made concurrently with changes to reserve estimates. If proved reserve estimates decline, the rate at which depletion expense is recorded increases, reducing net income. A decline in estimated proved reserves and future cash flows also reduces the capitalized cost ceiling and may result in increased impairment expense.

 

Restoration, Removal, and Environmental Liabilities

 

The Partnership is subject to extensive Federal, state and local environmental laws and regulations. These laws regulate the discharge of materials into the environment and may require the Partnership to remove or mitigate the environmental effects of the disposal or release of petroleum substances at various sites. Environmental expenditures are expensed or capitalized depending on their future economic benefit. Expenditures that relate to an existing condition caused by past operations and that have no future economic benefit are expensed.

 

Liabilities for expenditures of a non-capital nature are recorded when environmental assessments and/or remediation is probable, and the costs can be reasonably estimated. Such liabilities are generally undiscounted values unless the timing of cash payments for the liability or component is fixed or reliably determinable.

 

The Partnership has recognized an estimated liability for future plugging and abandonment costs. A liability for the estimated fair value of the future plugging and abandonment costs is recorded with a corresponding increase in the full cost pool at the time a new well is drilled or acquired.  Depreciation expense associated with estimated plugging and abandonment costs is recognized in accordance with the full cost methodology.

 

The Partnership estimates a liability for plugging and abandonment costs based on historical experience and estimated well life.  The liability is discounted using the credit-adjusted risk-free rate.  Revisions to the liability could occur due to changes in well plugging and abandonment costs or well useful lives, or if federal or state regulators enact new well restoration requirements. The Partnership recognizes accretion expense in connection with the discounted liability over the remaining life of the well.

 

The following table summarizes the Partnership’s asset retirement obligation for the nine month period ended September 30, 2012 and the year ended December 31, 2011.

 

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Table of Contents

 

 

 

Nine months ended
September 30, 2012

 

Year Ended
December 31, 2011

 

Beginning asset retirement obligation

 

$

394,823

 

$

429,827

 

Accretion expense

 

50,062

 

15,300

 

Retirement related to property abandonment and restoration

 

 

(50,304

)

Ending asset retirement obligation

 

$

444,885

 

$

394,823

 

 

Fair Value of Financial Instruments

 

The estimated fair values for financial instruments have been determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The estimated fair value of cash, accounts receivable from affiliates, accounts payable, and accounts payable to affiliates approximates their carrying value due to their short-term nature.

 

3. Transactions with Affiliates

 

The Partnership has no employees. Reef Exploration, L.P. (“RELP”), an affiliate of Reef Oil & Gas Partners, L.P. (“Reef”), the managing general partner of the Partnership, employs a staff including geologists, petroleum engineers, landmen and accounting personnel who administer all of the Partnership’s operations. The Partnership reimburses RELP for technical and administrative services at cost. During the three and nine month periods ended September 30, 2012, the Partnership incurred administrative costs totaling $37,953 and $113,852, respectively. During the three and nine month periods ended September 30, 2011, the Partnership incurred administrative costs totaling $79,625 and $271,814, respectively. The Partnership incurred no technical services costs during the three and nine month periods ended September 30, 2012 and 2011. Administrative costs are included as general and administrative expenses on the condensed statements of operations.

 

RELP processes joint interest billings and revenue payments on behalf of the Partnership. At September 30, 2012 and December 31, 2011, RELP owed the Partnership $99,941 and $445,003, respectively, for net revenues processed in excess of joint interest and general and administrative charges. The cash associated with net revenues processed by RELP is normally received by RELP from oil and gas purchasers 30-60 days after the end of the month to which the revenues pertain. The Partnership settles its balances with Reef and RELP on at least a quarterly basis.

 

The Partnership reimbursed to Reef legal fees totaling $0 and $25,000, respectively, during the three month and nine month periods ended September 30, 2012 and $75,000 and $162,793, respectively, during the three and nine month periods ended September 30, 2011 pertaining to the settlement of a lawsuit brought against Reef by a partner in the Partnership.  Reef prevailed in the defense of this lawsuit and a judgment was entered that dismissed the plaintiff’s claims.  Although the Partnership was not formally named a defendant in the litigation, the partner who brought the lawsuit was a partner in several Reef affiliates, including the Partnership, and his claim involved his participation in these partnerships, including the Partnership.  Pursuant to the Partnership Agreement of the Partnership, Reef is indemnified against litigation such as this, and the associated legal fees are to be reimbursed by the Partnership.  The Partnership completed payment of the total amount owed to Reef for its share of the legal fees associated with this lawsuit during the first quarter of 2012.

 

The Partnership reimbursed to Reef legal fees totaling $27,949 and $58,244, respectively, during the three and nine month periods ended September 30, 2012 and $16,059 and $23,239, respectively, during the three and nine month periods ended September 30, 2011 pertaining to the ongoing “Stevenson” litigation matter described in Note 4 below.  The partners who brought the lawsuit are partners in several Reef affiliates, including the Partnership, and their claims involve their participation in these partnerships, including the Partnership.  Pursuant to the Partnership Agreement of the Partnership, Reef is indemnified against litigation such as this, and the associated legal fees are being reimbursed to Reef by each of the partnerships involved on a quarterly basis.

 

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4. Commitments and Contingencies

 

On August 26, 2010, Frank Stevenson (“Stevenson”) filed a lawsuit, styled Stevenson v. Wayne Kirk, Michael J. Mauceli, Reef Global Energy Ventures II, et al., Cause No. 10-10647, in the 191st Judicial District Court, Dallas County, Texas. The suit also names as defendants Reef Global Energy VI, L.P. and multiple other Reef-sponsored ventures and limited partnerships, as well as Reef Securities, Inc. and Paul Mauceli (collectively, “Defendants”).  On September 22, 2010, via Plaintiffs’ First Amended Original Petition, James and Carol Estle (the “Estles”) and Nancy Dykes Thurmond Antolic (“Antolic”) joined the suit as additional plaintiffs.  On January 27, 2011, Donna Stevenson (Frank Stevenson’s spouse) and Jaimie Davis (“Davis”) joined the suit as additional plaintiffs (Stevenson, Estles, Antolic, and Davis are collectively referred to as “Plaintiffs”) via Plaintiffs’ Second Amended Original Petition. On September 19, 2012, Robert C. Phalen filed an Original Petition in Intervention in the case, alleging the same claims as the other Plaintiffs. With respect to Davis’s and Phalen’s claims, specifically, Reef Securities, Inc. did not offer or sell the interests in the Reef program that either of them purchased.  Rather, they each purchased their interests through an unaffiliated broker/dealer.  On January 24, 2012, Plaintiffs filed their Sixth Amended Petition, by which Plaintiffs allege that, collectively, they are seeking in excess of $2.5 million in compensatory damages as well as exemplary damages, attorneys’ fees, pre- and post-judgment interest, and costs.  Plaintiffs assert claims of fraud, rescission under the Texas Securities Act (“TSA”), control person liability under the Texas Securities Act, breach of fiduciary duty, breach of contract, civil theft, negligent misrepresentation, and fraudulent concealment.  Defendants believe Plaintiffs’ claims are meritless, and with respect to many of the Reef programs named in the Petition, Defendants believe that the claims for fraud are barred by limitations, as are any claims for rescission or breach of fiduciary duty with respect to those programs.  In addition, with respect to all Reef programs in which Plaintiffs participated, each Plaintiff received offering documents that thoroughly disclosed all material facts and risks associated with participation in such programs, particularly the fact that no guarantees or promises could be made or relied upon.

 

Defendants filed motions for partial summary judgment with respect to certain claims of all Plaintiffs, with the exception of Jaimie Davis.  Defendants’ motions for partial summary judgment were granted in part and denied in part.  More specifically, all of Plaintiffs’ registration claims under Section 33A(1) of the TSA and all claims under Section 33F(1) for control person liability as related to Section 33A(1) were dismissed.  Additionally, certain of Plaintiffs’ claims against Defendants for violations of Section 33A(2) of the TSA for material misrepresentations or omissions and claims for Section 33F(2) control person liability as related thereto were also dismissed.

 

With respect to Plaintiff Davis, Defendants were aware that she was simultaneously pursuing a FINRA arbitration claim against the individual and broker-dealer from whom she purchased her interests in the only Reef program in which she participated and on which she is suing the Defendants in this litigation.  In March 2012, the FINRA panel found against Davis on all of her claims, including those that pertained to her Reef purchases in the sole Reef program in which she participated.  As of this time, the parties have begun exchanging written discovery, and trial is scheduled for April 29, 2013.  The Defendants intend to vigorously defend against these claims. No accrual has been recorded as of September 30, 2012 as a loss is not believed to be probable.  A reasonable estimate of a possible range of loss cannot be made. The Partnership is reimbursing Reef its share of the costs of defending this lawsuit as incurred and disclosed in Note 3 above.

 

On December 22, 2011, TEPCO, LLC, Kiawah Resources, LLC, Meritage Energy, LLC and Ralph S. O’Connor (the “Plaintiffs”) filed a lawsuit styled TEPCO, LLC, Kiawah Resources, LLC, Meritage Energy, LLC and Ralph S. O’Connor v. Reef Exploration, L.P., RCWI, L.P., El Paso E&P Company, L.P., and Anchor International of Texas LP, Cause No. 2011-76727, in the 127th Judicial District Court of Harris County, Texas.  On July 11, 2012, Plaintiffs filed a First Amended Petition whereby they added Reef Global Energy V, L.P., Reef Global Energy VI, L.P., and Reef Global Energy VII, L.P. as additional defendants. In their Petition, Plaintiffs assert claims for alleged breaches of contracts in regard to the drilling and operation of an oil and gas well located in Galveston County, Texas.  Plaintiffs seek compensatory damages in an unspecified amount as well as attorneys’ fees, pre- and post-judgment interest, and costs.  The Partnership owns an interest in the well in question, and if the Plaintiffs were successful, the Partnership would be required to contribute its pro rata share to any awards that Plaintiffs might receive.  The Defendants intend to vigorously defend the lawsuit.  As of this time, the parties are in the early stages of the discovery process.  No trial date has been set by the Court.  No accrual has been recorded as of September 30, 2012 as a loss is not believed to be probable.  A reasonable estimate of a possible range of loss cannot be made. The

 

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Partnership is expensing its share of the costs of defending this lawsuit as incurred, and has paid $35,217 and $109,143, respectively, during the three and nine month periods ended September 30, 2012.

 

5.  Partnership Equity

 

Information regarding the number of units outstanding and the net income (loss) per type of Partnership unit for the three and nine month periods ended September 30, 2012 is detailed below:

 

For the three months ended September 30, 2012

 

Type of Unit

 

Number of
Units

 

Net loss

 

Net loss per
unit

 

Managing general partner units

 

75.363

 

$

(7,190

)

$

(95.41

)

Limited partner units

 

1,431.897

 

(75,867

)

$

(52.98

)

Total

 

1,507.260

 

$

(83,057

)

 

 

 

For the nine months ended September 30, 2012

 

Type of Unit

 

Number of
Units

 

Net income

 

Net income
per unit

 

Managing general partner units

 

75.363

 

$

50,871

 

$

675.01

 

Limited partner units

 

1,431.897

 

150,655

 

$

105.22

 

Total

 

1,507.260

 

$

201,526

 

 

 

 

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

 

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

 

This Quarterly Report contains forward-looking statements that involve risks and uncertainties.  You should exercise extreme caution with respect to all forward-looking statements made in this Quarterly Report.  Specifically, the following statements are forward-looking:

 

·                                     statements regarding the state of the oil and gas industry and the opportunity to profit within the oil and gas industry, competition, pricing, level of production, or the regulations that may affect the Partnership;

 

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

 

·                                     any statements using the words “anticipate,” “believe,” “estimate,” “expect” and similar such phrases or words; and

 

·                                     any statements of other than historical fact.

 

Reef believes that it is important to communicate its future expectations to the partners.  Forward-looking statements reflect the current view of management with respect to future events and are subject to numerous risks, uncertainties and assumptions, including, without limitation, the risk factors listed in the section captioned “RISK FACTORS” contained in the Partnership’s Annual Report. Although Reef believes that the expectations reflected in such forward-looking statements are reasonable, Reef can give no assurance that such expectations will prove to have been correct.  Should any one or more of these or other risks or uncertainties materialize or should any underlying assumptions prove incorrect, actual results are likely to vary materially from those described herein.  There can be

 

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no assurance that the projected results will occur, that these judgments or assumptions will prove correct or that unforeseen developments will not occur.

 

Reef does not intend to update its forward-looking statements.  All subsequent written and oral forward-looking statements attributable to Reef or persons acting on its behalf are expressly qualified in their entirety by the applicable cautionary statements.

 

Overview

 

Reef Global Energy VI, L.P. is a Nevada limited partnership formed to acquire, explore, develop and produce crude oil, natural gas, and natural gas liquids for the benefit of its investor partners. The Partnership’s primary purposes are to generate revenues from the production of crude oil and natural gas, distribute cash flow to investors, and provide tax benefits to investors. The Partnership purchased working interests in twenty-one developmental prospects. The Partnership participated in the drilling of sixteen successful developmental wells and eleven unsuccessful developmental wells on these prospects.  Six of these successful wells have ceased production, the Partnership sold its interest in one well during 2010, four are currently shut-in, and one has been converted into a water disposal well.

 

The Partnership also purchased working interests in fourteen exploratory prospects, and participated in the drilling of sixteen exploratory and eight developmental wells on those prospects. The Partnership participated in the drilling of eight successful exploratory wells, seven successful developmental wells, eight unsuccessful exploratory wells, and one unsuccessful developmental well on these prospects. Of the fifteen successful wells, four wells have ceased production, and eleven are currently productive.

 

Subsequent to completing its drilling phase of operations during the first quarter of 2008, the Partnership participated in drilling two additional wells on one of the Partnership’s exploratory prospects located in Live Oak County, Texas. One of these wells was successful and is currently productive, and the second well was unsuccessful. These wells are included in the summaries of wells in the preceding paragraphs. While there are currently no plans to drill any additional wells, the Partnership is allowed to borrow funds in accordance with the Partnership Agreement, or utilize cash flows from successful wells in order to conduct further development upon prospects initially purchased by and drilled upon by the Partnership during the drilling phase of operations.

 

In this Quarterly Report, we use the term “successful” to refer to wells that are drilled, tested, and either capable of or actually producing in commercial quantities. We use the term “unsuccessful” to refer to wells that do not meet one or more of these criteria.

 

Critical Accounting Policies

 

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

 

Liquidity and Capital Resources

 

The Partnership was funded with initial capital contributions totaling $37,398,898. Reef purchased 75.363 general partner units, or 5% of the total units sold, for $1,601,464. Investor partners purchased 1,190.561 units of general partner interest and 241.336 units of limited partner interest for $35,797,434. All units of general partner interest purchased by investor partners were converted to units of limited partner interest during 2008. Reef also contributed $316,361 in connection with its obligation to pay 1% of all leasehold, drilling, and completion costs. Organization and offering costs totaled $5,369,615, leaving capital contributions of $32,345,644 available for Partnership activities. The Partnership expended $33,101,838 on prospect and property acquisitions, drilling and completion costs in connection with its participation in the drilling of forty-nine wells and expended $138,317 on general and administrative expenses during its drilling and completion phase of operations.  The Partnership also expended $306,940 on the drilling of one successful exploratory well and one unsuccessful exploratory well subsequent to the completion of the Partnership’s drilling phase. Expenditures in excess of capital contributions were deducted from Partnership distributions. There are no plans to conduct any additional drilling on Partnership prospects at this time; however, additional drilling activity is permitted on the Partnership prospects at the discretion of the Partnership’s

 

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managing general partner. Any additional capital expenditures would need to be funded by Partnership cash flows, if any, and would reduce Partnership distributions. The most recent distribution of cash flows to investors occurred in September 2012. The Partnership does not operate in any other industry segment, and operates solely in the United States.

 

The Partnership has working capital of $209,018 at September 30, 2012. Subsequent to expending the initial available Partnership capital contributions on prospect acquisitions and drilling and completion costs of Partnership wells, the Partnership’s working capital consists primarily of cash flows from productive properties utilized to pay cash distributions to investors.

 

Results of Operations

 

The following is a comparative discussion of the results of operations for the periods indicated. It should be read in conjunction with the unaudited condensed financial statements and the related notes to the unaudited condensed financial statements included in this Quarterly Report.

 

The following table provides information about sales volumes and crude oil and natural gas prices for the periods indicated. Equivalent barrels of oil (“EBO”) are computed by converting 6 Mcf of natural gas to 1 barrel of crude oil.

 

 

 

For the three months

 

For the nine months

 

 

 

ended September 30,

 

ended September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

Sales volumes:

 

 

 

 

 

 

 

 

 

Oil (Barrels)

 

2,349

 

7,366

 

9,807

 

23,466

 

Natural gas (Mcf)

 

27,156

 

57,455

 

103,585

 

182,642

 

 

 

 

 

 

 

 

 

 

 

Average sales prices received:

 

 

 

 

 

 

 

 

 

Oil (Barrels)

 

$

74.00

 

$

88.99

 

$

85.64

 

$

90.31

 

Natural gas (Mcf)

 

$

3.08

 

$

5.22

 

$

3.38

 

$

5.42

 

 

The estimated net proved crude oil and natural gas reserves as of September 30, 2012 and 2011 are summarized below. The quantities of proved crude oil and natural gas reserves discussed in this section include only the amounts which the Partnership reasonably expects to recover in the future from known oil and gas reservoirs under the current economic and operating conditions. Proved reserves include only quantities that the Partnership expects to recover commercially using current prices, costs, existing regulatory practices, and technology. Therefore, any changes in future prices, costs, regulations, technology or other unforeseen factors could materially increase or decrease the proved reserve estimates.

 

Net proved reserves

 

Oil (Bbl)

 

Gas (Mcf)

 

September 30, 2012

 

16,040

 

602,170

 

September 30, 2011

 

32,867

 

534,550

 

 

Three months ended September 30, 2012 compared to the three months ended September 30, 2011

 

The Partnership had a net loss of $83,057 for the three month period ended September 30, 2012, compared to net income of $496,801 for the three month period ended September 30, 2011. The primary causes of this decrease in net income were declines in both production volumes and oil and gas prices.

 

Partnership crude oil and natural gas production volumes are declining due to natural production declines from existing wells, combined with the fact that the Partnership has not drilled any new productive wells since 2008 and has no plans to conduct additional drilling activity. The Partnership share of production volumes from the two most significant wells in which the Partnership owns a working interest, the Rob L RA SUA CL&F #1 (“Gumbo II”) and the HBR A Big Gas well (“HBR A”), totaled 6,871 barrels of crude oil and 41,398 Mcf of natural gas, or 93.3% and 72.1% of Partnership production volumes, during the three month period ended September 30, 2011. During the

 

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three month period ended September 30, 2012, the Partnership share of production volumes from these two wells totaled 2,158 barrels of crude oil and 16,130 Mcf of natural gas, or 91.9% and 59.4% of Partnership production volumes, a volume drop of approximately 64.8% on an EBO basis. Beginning in August 2011, as water volumes associated with the production of the crude oil and natural gas from the Gumbo II well began to increase, the actual production volumes of crude oil and natural gas from the well began to decrease. The HBR A well has also experienced production declines as water volumes have increased.  Production from existing Partnership wells will continue to decline in future quarters. The economic life of the Partnership is dependent upon the lives of the most significant wells in which it participates.  As a result of declining sales prices, declining production volumes, and increases in lease operating expenses associated with water disposal costs, the current economic reserve life of the Gumbo II well was reduced from approximately 42 months to 13 months during the third quarter of 2012 using prices prepared in accordance with SEC rules and accounting standards and current costs. The economic reserve life of the HBR A well was increased from 11 to 27 months, as production volumes have stabilized over the past six months.

 

The sales price for crude oil decreased by 16.8%, to an average price of $74.00 per Bbl for the three month period ended September 30, 2012, compared to an average price of $88.99 for the three month period ended September 30, 2011, and the sales price for natural gas decreased by 41.0% to an average price of $3.08 per Mcf for the three month period ended September 30, 2012, compared to an average price of $5.22 per Mcf for the three month period ended September 30, 2011.

 

The combination of declining production volumes and sales prices caused total sales revenues to decrease by $698,059, or 73.1%, on a comparative period-to-period basis. The Partnership has not and is currently not engaged in commodity futures trading, hedging activities, or derivative financial instrument transactions for trading or other speculative purposes.  The Partnership sells a majority of its production from successful oil and gas wells on a month-to-month basis at current spot market prices. Accordingly, the Partnership is at risk for the volatility in commodity prices inherent in the oil and gas industry, and the level of commodity prices has a significant impact on the Partnership’s results of operations. However, at current production volume levels, which are expected to continue to decline in future periods, revenues generated from crude oil and natural gas sales may not be sufficient to cover the Partnership’s lease operating expenses, production taxes, and general and administrative costs.

 

Lease operating costs increased from $83,720 during the three month period ended September 30, 2011 to $108,195 during the three month period ended September 30, 2012, due in part to non-recurring workover costs and pump repairs incurred on the Sugg Ranch 45 #1 well during the current quarter totaling approximately $12,000 and increased operating costs for the Gumbo II well of approximately $7,000 primarily due to increased water disposal charges. Production taxes decreased from $65,367 during the three months ended September, 2011 to $21,239 during the three month period ended September 30, 2012, due primarily to the decline in sales revenues.

 

The Partnership incurred $61,330 of depletion, depreciation, and amortization expense during the three month period ended September 30, 2012 compared to $194,482 of depletion, depreciation, and amortization expense during the three month period ended September 30, 2011.  Declining production rates between the comparative periods led to a reduced depletion rate applied to the Partnership’s depletable property basis.

 

General and administrative costs increased from $111,384 incurred during the three months ended September 30, 2011 to $144,995 incurred during the three months ended September 30, 2012. Legal fees reimbursed to RELP, including fees related to the two legal matters described in Note 4 of the unaudited Condensed Financial Statements reported in this Quarterly Report, increased from $20,203 for the three month period ended September 30, 2011 to $82,490 during the three month period ended September 30, 2012. Additionally, the Partnership incurred a non-recurring fee of approximately $9,700 with a third party vendor for assistance in complying with new SEC regulations. The allocation of RELP’s overhead to the Partnership is a significant portion of general and administrative expenses, and is based upon several factors, including the level of drilling activity, revenues, and capital and operating expenditures of each partnership managed by Reef compared to the total levels of all partnerships. The administrative overhead charge to the Partnership decreased from $77,316 for the three month period ended September 30, 2011 to $28,569 for the three month period ended September 30, 2012.

 

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Nine months ended September 30, 2012 compared to the nine months ended September 30, 2011

 

The Partnership had net income of $201,526 for the nine month period ended September 30, 2012, compared to net income of $1,583,274 for the nine month period ended September 30, 2011. The primary causes of this decrease in net income were declines in both production volumes and oil and gas prices.

 

Partnership crude oil and natural gas production volumes are declining due to natural production declines from existing wells, combined with the fact that the Partnership has not drilled any new productive wells since 2008 and has no plans to conduct additional drilling activity. The Partnership share of production volumes from the two most significant wells in which the Partnership owns a working interest, the Gumbo II and the HBR A, totaled 21,985 barrels of crude oil and 127,613 Mcf of natural gas, or 93.7% and 69.9% of Partnership production volumes, during the nine month period ended September 30, 2011. During the nine month period ended September 30, 2012, the Partnership share of production volumes from these two wells totaled 8,610 barrels of crude oil and 63,583 Mcf of natural gas, or 87.8% and 61.4% of Partnership production volumes, a volume drop of approximately 55.6% on an EBO basis. Beginning in August 2011, as water volumes associated with the production of the crude oil and natural gas from the Gumbo II well began to increase, the actual production volumes of crude oil and natural gas from the well began to decrease. The HBR A well has also experienced production declines as water volumes have increased.  Production from existing Partnership wells will continue to decline in future quarters. The economic life of the Partnership is dependent upon the lives of the most significant wells in which it participates.  As a result of declining sales prices, declining production volumes, and increases in lease operating expenses associated with water disposal costs, the current economic reserve life of the Gumbo II well was reduced from approximately 42 months to 13 months during the third quarter of 2012 using prices prepared in accordance with SEC rules and accounting standards and current costs. The economic reserve life of the HBR A well was increased from 11 to 27 months, as production volumes have stabilized over the past six months.

 

The sales price for crude oil decreased by 5.2%, to an average price of $85.64 per Bbl for the nine month period ended September 30, 2012, compared to an average price of $90.31 for the nine month period ended September 30, 2011, and the sales price for natural gas decreased by 37.6% to an average price of $3.38 per Mcf for the nine month period ended September 30, 2012, compared to an average price of $5.42 per Mcf for the nine month period ended September 30, 2011.

 

The combination of declining production volumes and sales prices caused revenues to decrease by $1,918,293, or 61.7%, on a comparative period-to-period basis. The Partnership has not and is currently not engaged in commodity futures trading, hedging activities, or derivative financial instrument transactions for trading or other speculative purposes.  The Partnership sells a majority of its production from successful oil and gas wells on a month-to-month basis at current spot market prices. Accordingly, the Partnership is at risk for the volatility in commodity prices inherent in the oil and gas industry, and the level of commodity prices has a significant impact on the Partnership’s results of operations. However, at current production volume levels, which are expected to continue to decline in future periods, revenues generated from crude oil and natural gas sales may not be sufficient to cover the Partnership’s lease operating expenses, production taxes, and general and administrative costs.

 

Lease operating costs decreased from $294,029 during the nine month period ended September 30, 2011 to $269,798 during the nine month period ended September 30, 2012, primarily due to decreases in ad valorem taxes. Higher water disposal charges associated with the Gumbo II well have been offset by decreasing gas marketing and gathering expenses.  Production taxes decreased from $236,201 during the nine month period ended September 30, 2011 to $79,410 during the nine month period ended September 30, 2012 due primarily to declining production.

 

The Partnership incurred $214,533 of depletion, depreciation, and amortization expense during the nine month period ended September 30, 2012, compared to $612,840 of depletion, depreciation, and amortization expense during the nine month period ended September 30, 2011.  Declining production rates between the comparative periods led to a reduced depletion rate applied to the Partnership’s depletable property basis.

 

General and administrative costs increased from $370,703 incurred during the nine months ended September 30, 2011 to $375,832 incurred during the nine months ended September 30, 2012. Legal fees reimbursed to RELP, including fees related to the two legal matters described in Note 4 of the unaudited Condensed Financial Statements

 

12



Table of Contents

 

reported in this Quarterly Report, increased from $31,016 during the nine month period ended September 30, 2011 to $190,846 during the nine month period ended September 30, 2012. The increase in legal fees was partially offset by a reduction in the administrative overhead charge to the Partnership. The administrative overhead charge to the Partnership decreased from $255,976 for the nine month period ended September 30, 2011 to $93,732 for the nine month period ended September 30, 2012.  The allocation of RELP’s overhead to the Partnership is a significant portion of general and administrative expenses, and is based upon several factors, including the level of drilling activity, revenues, and capital and operating expenditures of each partnership managed by Reef compared to the total levels of all partnerships.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

The Partnership is a “smaller reporting company” as defined by Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as such, is not required to provide the information required under this Item.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

As the managing general partner of the Partnership, Reef maintains a system of controls and procedures designed to provide reasonable assurance as to the reliability of the financial statements and other disclosures included in this report, as well as to safeguard assets from unauthorized use or disposition. The Partnership, under the supervision and with participation of its management, including the principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of its “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) promulgated under the Exchange Act, as of the end of the period covered by this Quarterly Report. Based on that evaluation, the principal executive officer and principal financial officer have concluded that the Partnership’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Partnership in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and includes controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding financial disclosure.

 

Changes in Internal Controls

 

There have not been any changes in the Partnership’s internal controls over financial reporting during the fiscal quarter ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

 

PART II — OTHER INFORMATION

 

Item 1.  Legal Proceedings

 

On August 26, 2010, Frank Stevenson (“Stevenson”) filed a lawsuit, styled Stevenson v. Wayne Kirk, Michael J. Mauceli, Reef Global Energy Ventures II, et al., Cause No. 10-10647, in the 191st Judicial District Court, Dallas County, Texas. The suit also names as defendants Reef Global Energy VI, L.P. and multiple other Reef-sponsored ventures and limited partnerships, as well as Reef Securities, Inc. and Paul Mauceli (collectively, “Defendants”).  On September 22, 2010, via Plaintiffs’ First Amended Original Petition, James and Carol Estle (the “Estles”) and Nancy Dykes Thurmond Antolic (“Antolic”) joined the suit as additional plaintiffs.  On January 27, 2011, Donna Stevenson (Frank Stevenson’s spouse) and Jaimie Davis (“Davis”) joined the suit as additional plaintiffs (Stevenson, Estles, Antolic, and Davis are collectively referred to as “Plaintiffs”) via Plaintiffs’ Second Amended Original Petition. On September 19, 2012, Robert C. Phalen filed an Original Petition in Intervention in the case, alleging the same claims as the other Plaintiffs. With respect to Davis’s and Phalen’s claims, specifically, Reef Securities, Inc. did not offer or sell the interests in the Reef program that either of them purchased.  Rather, they each purchased their interests through an unaffiliated broker/dealer.  On January 24, 2012, Plaintiffs filed their Sixth Amended Petition, by which Plaintiffs allege that, collectively, they are seeking in excess of $2.5 million in compensatory damages as well as

 

13



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exemplary damages, attorneys’ fees, pre- and post-judgment interest, and costs.  Plaintiffs assert claims of fraud, rescission under the Texas Securities Act (“TSA”), control person liability under the Texas Securities Act, breach of fiduciary duty, breach of contract, civil theft, negligent misrepresentation, and fraudulent concealment.  Defendants believe Plaintiffs’ claims are meritless, and with respect to many of the Reef programs named in the Petition, Defendants believe that the claims for fraud are barred by limitations, as are any claims for rescission or breach of fiduciary duty with respect to those programs.  In addition, with respect to all Reef programs in which Plaintiffs participated, each Plaintiff received offering documents that thoroughly disclosed all material facts and risks associated with participation in such programs, particularly the fact that no guarantees or promises could be made or relied upon.

 

Defendants filed motions for partial summary judgment with respect to certain claims of all Plaintiffs, with the exception of Jaimie Davis.  Defendants’ motions for partial summary judgment were granted in part and denied in part.  More specifically, all of Plaintiffs’ registration claims under Section 33A(1) of the TSA and all claims under Section 33F(1) for control person liability as related to Section 33A(1) were dismissed.  Additionally, certain of Plaintiffs’ claims against Defendants for violations of Section 33A(2) of the TSA for material misrepresentations or omissions and claims for Section 33F(2) control person liability as related thereto were also dismissed.

 

With respect to Plaintiff Davis, Defendants were aware that she was simultaneously pursuing a FINRA arbitration claim against the individual and broker-dealer from whom she purchased her interests in the only Reef program in which she participated and on which she is suing the Defendants in this litigation.  In March 2012, the FINRA panel found against Davis on all of her claims, including those that pertained to her Reef purchases in the sole Reef program in which she participated.  As of this time, the parties have begun exchanging written discovery, and trial is scheduled for April 29, 2013.  The Defendants intend to vigorously defend against these claims. No accrual has been recorded as of September 30, 2012 as a loss is not believed to be probable.  A reasonable estimate of a possible range of loss cannot be made. The Partnership is reimbursing Reef its share of the costs of defending this lawsuit as incurred and disclosed in Note 3 of the unaudited Condensed Financial Statements reported in this Quarterly Report, and has reimbursed $27,949 and $58,244, respectively, during the three and nine month periods ended September 30, 2012 and $16,059 and $23,239, respectively, during the three and nine month periods ended September 30, 2011.

 

On December 22, 2011, TEPCO, LLC, Kiawah Resources, LLC, Meritage Energy, LLC and Ralph S. O’Connor (the “Plaintiffs”) filed a lawsuit styled TEPCO, LLC, Kiawah Resources, LLC, Meritage Energy, LLC and Ralph S. O’Connor v. Reef Exploration, L.P., RCWI, L.P., El Paso E&P Company, L.P., and Anchor International of Texas LP, Cause No. 2011-76727, in the 127th Judicial District Court of Harris County, Texas.  On July 11, 2012, Plaintiffs filed a First Amended Petition whereby they added Reef Global Energy V, L.P., Reef Global Energy VI, L.P., and Reef Energy Global VII, L.P. as additional defendants. In their Petition, Plaintiffs assert claims for alleged breaches of contracts in regard to the drilling and operation of an oil and gas well located in Galveston County, Texas.  Plaintiffs seek compensatory damages in an unspecified amount as well as attorneys’ fees, pre- and post-judgment interest, and costs.  The Partnership owns an interest in the well in question, and if the Plaintiffs were successful, the Partnership would be required to contribute its pro rata share to any awards that Plaintiffs might receive.  The Defendants intend to vigorously defend the lawsuit.  As of this time, the parties are in the early stages of the discovery process.  No trial date has been set by the Court.  No accrual has been recorded as of September 30, 2012 as a loss is not believed to be probable.  A reasonable estimate of a possible range of loss cannot be made. The Partnership is expensing its share of the costs of defending this lawsuit as incurred, and has paid $35,217 and $109,143, respectively, during the three and nine month periods ended September 30, 2012.

 

Item 1A.  Risk Factors

 

In addition to the Risk Factors set forth in the Annual Report, Reef believes the following risk is applicable to the Partnership.

 

The Partnership does not intend, and is not expected, to continue as a going concern.

 

The original business plan for the Partnership was to use its initial capital to purchase working interests in oil and gas prospects, participate in the drilling of oil and gas wells on those prospects, retain ownership of successful wells until they were either sold or ceased operations, and distribute all operating cash flows and sales proceeds to the

 

14



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investor partners.  It was not expected that operating revenues would be reinvested in the business other than such funds as would be necessary to maintain operation of the original wells drilled by the Partnership.

 

The Partnership has two significant producing properties that currently account for approximately 74% of Partnership revenues and which have declined significantly during the past year. These two properties have estimated remaining economic reserve lives of 13 and 27 months, respectively, utilizing current prices, costs, and projected production volumes at September 30, 2012. The Partnership has no plans to drill additional wells. The Partnership also has no plans to engage in commodity futures trading or hedging activities. Finally, the estimated economic reserve life of Partnership wells is computed based upon operating revenues and costs and does not consider Partnership general and administrative costs. Future cash flows generated from Partnership wells will be significantly impacted by actual prices received, and by actual production volumes from the Partnership’s most significant wells. While management believes that the Partnership will generate positive operating cash flows during the next 12 months, such operating cash flow may not be sufficient to also cover the Partnership’s general and administrative costs. Cash flows from operations will continue to decline as a result of natural production declines in the Partnership’s wells.  Our notes to the unaudited condensed financial statements as of September 30, 2012 include explanatory paragraphs indicating substantial doubt about our ability to continue as a going concern.

 

There were no other material changes in the Risk Factors applicable to the Partnership as set forth in the Annual Report.

 

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3.  Default Upon Senior Securities

 

None.

 

Item 4.  Mine Safety Disclosures

 

Not applicable.

 

Item 5.  Other Information

 

None.

 

Item 6.  Exhibits

 

Exhibits

 

 

 

 

 

31.1

 

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

31.2

 

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

32.1

 

Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

32.2

 

Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

101.INS

 

XBRL Instance Document

 

 

 

101.SCH

 

XBRL Taxonomy Extension Schema Document

 

 

 

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document

 

 

 

101.LAB

 

XBRL Taxonomy Extension Labels Linkbase Document

 

 

 

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document

 

 

 

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document

 

15



Table of Contents

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

REEF GLOBAL ENERGY VI, L.P.

 

 

 

 

 

By:

Reef Oil & Gas Partners, L.P.

 

 

 

Managing General Partner

 

 

 

 

 

 

By:

Reef Oil & Gas Partners, GP, LLC,

 

 

 

its general partner

 

 

 

 

 

 

 

 

Dated:

November 9, 2012

By:

/s/ Michael J. Mauceli

 

 

 

Michael J. Mauceli

 

 

 

Manager and Member

 

 

 

(Principal Executive Officer)

 

 

 

 

 

 

 

 

Dated:

November 9, 2012

By:

/s/ Daniel C. Sibley

 

 

 

Daniel C. Sibley

 

 

 

Chief Financial Officer and General Counsel of

 

 

 

Reef Exploration, L.P.

 

 

 

(Principal Financial and Accounting Officer)

 

16



Table of Contents

 

EXHIBIT INDEX

 

Exhibits

 

 

 

 

 

31.1

 

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

31.2

 

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

32.1

 

Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

32.2

 

Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

101.INS

 

XBRL Instance Document

 

 

 

101.SCH

 

XBRL Taxonomy Extension Schema Document

 

 

 

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document

 

 

 

101.LAB

 

XBRL Taxonomy Extension Labels Linkbase Document

 

 

 

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document

 

 

 

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document

 

17