Supplemental Information on Oil & Natural Gas Exploration and Production Activities (unaudited)

12 Months Ended

Dec. 31, 2011

Supplemental Information on Oil & Natural Gas Exploration and Production Activities (unaudited)

Supplemental Information on Oil & Natural Gas Exploration and Production Activities (unaudited)

7. Supplemental Information on Oil & Natural Gas Exploration and Production Activities (unaudited)

Capitalized Costs

The following table presents the Partnership’s aggregate capitalized costs relating to oil and gas activities at the end of each of the years indicated:

December 31,	2011			2010			2009

Oil and gas properties:
Proved properties	$	33,589,907		$	33,596,816		$	33,539,249
	33,589,907			33,596,816			33,539,249
Less:
Accumulated depreciation, depletion and amortization	(10,095,942		)	(9,356,540		)	(7,696,715		)
Property impairment	(22,241,674		)	(22,241,674		)	(22,241,674		)
Total	$	1,252,291		$	1,998,602		$	3,600,860

Costs Incurred

The following table sets forth costs incurred in oil and gas exploration and development activities during the years ended December 31, 2011, 2010, and 2009:

	2011		2010		2009

Oil and gas properties:
Exploration	$	150	$	1,394	$	308,523
Development	15,120		56,177		2,612
Total	$	15,270	$	57,571	$	311,135

Results of Operations

The following table sets forth results of operations from oil and gas producing activities for the years ended December 31, 2011, 2010, and 2009:

	2011			2010			2009

Oil and gas producing activities:
Crude oil sales	$	2,619,211		$	2,410,743		$	1,977,788
Natural gas sales	1,189,909			2,016,472			2,741,607
Production expenses	(724,884		)	(542,507		)	(967,985		)
Accretion of asset retirement obligation	(15,300		)	(68,979		)	(22,310		)
Depreciation, depletion and amortization	(713,792		)	(1,725,156		)	(2,343,937		)
Property impairment expense	—			—			(4,629,688		)
Results of producing activities	$	2,355,144		$	2,090,573		$	(3,244,525	)

Depletion rate per BOE	$	10.41		$	17.05		$	15.45

BOE = Barrels of Oil Equivalent (6 MCF equals 1 BOE)

Crude Oil and Natural Gas Reserves

Net Proved Developed Reserve Summary

The reserve information presented below is based upon estimates of net proved reserves that were prepared by the independent petroleum engineering firms Forrest A. Garb & Associates, Inc., as of December 31, 2011, 2010, and 2009. A copy of the Forrest A. Garb & Associates summary reserve report is included as Exhibit 99.1 to this Annual Report. Proved crude oil and natural gas reserves are the estimated quantities of crude oil and natural gas which geological and engineering data demonstrate with reasonable certainty to be economically recoverable in future years from known reservoirs under existing economic conditions, operating methods and governmental regulations (i.e. prices and costs as of the date the estimate is made). Proved developed reserves are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. At December 31, 2011, all of the Partnership’s reserves are classified as proved developed reserves. All of the Partnership’s reserves are located in the United States.

The following sets forth changes in estimated net proved developed crude oil and natural gas reserves for the years ended December 31, 2011, 2010, and 2009.

	Oil (BBL) (1)		Gas (mcf)		BOE (2)
Net proved reserves for properties owned by the Partnership:
Reserves at December 31, 2008	99,980		2,232,028		471,985
Revisions of previous estimates	(6,911	)	(798,079	)	(139,924	)
Production	(37,439	)	(685,359	)	(151,666	)
Reserves at December 31, 2009	55,630		748,590		180,395

Reserves sold	—		(62,099	)	(10,350	)
Revisions of previous estimates	27,814		505,438		112,053
Production	(34,584	)	(399,549	)	(101,175	)
Reserves at December 31, 2010	48,860		792,380		180,923

Revisions of previous estimates	15,391		323,155		69,250
Production	(29,111	)	(236,655	)	(68,553	)
Reserves at December 31, 2011	35,140		878,880		181,620

(1) Oil includes both crude oil and gas liquids

(2) BOE (barrels of oil equivalent) is calculated by converting 6 MCF of natural gas to 1 BBL of crude oil. A BBL (barrel) of crude oil is one stock tank barrel, or 42 U.S. gallons liquid volume, of crude oil or other liquid hydrocarbons.

Standardized Measure of Discounted Future Net Cash Flows

Certain information concerning the assumptions used in computing the valuation of proved reserves and their inherent limitations are discussed below. The Partnership believes such information is essential for a proper understanding and assessment of the data presented.

For the years ended December 31, 2011, 2010, and 2009, calculations were made using average prices of $95.84, $79.79, and $61.08 per barrel of crude oil, respectively, and $4.15, $4.39, and $3.83 per MCF of natural gas, respectively. Prices and costs are held constant for the life of the wells; however, prices are adjusted by well in accordance with sales contracts, energy content quality, transportation, compression and gathering fees, and regional price differentials.

These assumptions used to compute estimated future cash inflows do not necessarily reflect Reef’s expectations of the Partnership’s actual revenues or costs, nor the present worth of the properties. Further, actual future net cash flows will be affected by factors such as the amount and timing of actual production, supply and demand for crude oil and natural gas, and changes in governmental regulations and tax rates. Sales prices of both crude oil and natural gas have fluctuated significantly in recent years. Reef, as managing general partner, does not rely upon the following information in making investment and operating decisions for the Partnership.

Future development and production costs are computed by estimating the expenditures to be incurred in developing and producing the proved crude oil and natural gas reserves at the end of the year, based on year-end costs and assuming continuation of existing economic conditions.

A 10% annual discount rate is used to reflect the timing of the future net cash flows relating to proved reserves.

December 31,	2011			2010			2009
Oil and gas properties owned by the Partnership:
Future cash inflows	$	8,912,250		$	7,919,740		$	6,293,210
Future production costs	(2,922,130		)	(2,274,580		)	(2,111,280		)
Future development costs	—			—			(79,290		)
Future net cash flows	5,990,120			5,645,160			4,102,640
Effect of discounting net cash flows at 10%	(1,846,390		)	(755,050		)	(501,780		)
Discounted future net cash flows	$	4,143,730		$	4,890,110		$	3,600,860

Changes in the Standardized Measure of Discounted Future Net Cash flows Relating to Proved Crude Oil and Natural Gas Reserves

December 31,	2011			2010			2009
Oil and gas properties owned by the Partnership:
Standardized measure at beginning of period	$	4,890,110		$	3,600,860		$	10,651,949
Extensions and discoveries	—			—			—
Net change in sales price, net of production costs	626,903			1,553,809			(1,825,180		)
Revisions of quantity estimates	1,579,965			2,979,546			(2,847,002		)
Net changes in estimated future development costs	—			—			(69,592		)
Changes in production timing rates	(373,323		)	346,489			354,590
Accretion of discount	489,011			360,086			1,065,195
Sales net of production costs	(3,068,936		)	(3,815,729		)	(3,729,100		)
Sales of minerals in place	—			(134,951		)	—
Net increase (decrease)	(746,380		)	1,289,250			(7,051,089		)
Standardized measure at end of year	$	4,143,730		$	4,890,110		$	3,600,860

Reef Global Energy VI, L.P. 10-K