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~~March 31, ~~2011~~2012

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: 333-122935-02

REEF GLOBAL ENERGY VII, L.P.

(Exact name of registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization)		20-3963203 (I.R.S. employer identification no.)
Nevada		20-3963203
1901 N. Central Expressway, Suite 300 Richardson, Texas (Address of principal executive offices)		75080-3610 (Zip code)
(State or other jurisdiction of		(I.R.S. employer
incorporation or organization)		identification no.)

1901 N. Central Expressway, Suite 300
Richardson, Texas		75080-3610
(Address of principal executive offices)		(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 10~~May 11, ~~2011~~2012, the registrant had 48.620 units of general partner interest held by the managing general partner, and 923.783 units of limited partner interest outstanding.

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Reef Global Energy VII, L.P.

Form 10-Q Index

PART I — FINANCIAL INFORMATION
PART I -- FINANCIAL INFORMATION
ITEM 1.	Financial Statements (Unaudited)
	Condensed Balance Sheets
	Condensed Statements of Operations
	Condensed Statements of Cash Flows
	Notes to Condensed Financial Statements
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk
ITEM 4T.	Controls and Procedures
ITEM 4.	Controls and Procedures
PART II — OTHER INFORMATION
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.	~~(Removed~~Mine ~~and~~Safety ~~Reserved)~~Disclosures
ITEM 5.	Other Information
ITEM 6.	Exhibits
Signatures

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Reef Global Energy VII, L.P.

Condensed Balance Sheets

	September 30,		December 31,
	March 31,		December 31,
	2011		2010
	2012		2011
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	~~131~~164,~~988~~997	$	63124,~~713~~643
Accounts receivable from affiliates	194,979		214,208
Accounts receivable	—		18
Total current assets	326,967		277,921
Accounts receivable from affiliates	97,044		130,487
Total current assets	262,041		255,148
Oil and gas properties, full cost method of accounting:
Proved properties, net of accumulated depletion of $12,674,988 and $20,819,321	570,764		1,160,430
Proved properties, net of accumulated depletion of $12,803,691 and $12,745,522	442,424		500,593
Net oil and gas properties	~~570~~442,~~764~~424		1500,~~160,430~~593
Total assets	$	~~897~~704,~~731~~465	$	1755,~~438,351~~741
Liabilities and partnership equity
Current liabilities:
Accounts payable	$	5952,~~632~~622	$	1252,~~081~~289
Total current liabilities	5952,~~632~~622		1252,~~081~~289
Long-term liabilities:
Asset retirement obligation	~~117~~130,~~580~~940		~~312~~119,~~104~~260
Total long-term liabilities	~~117~~130,~~580~~940		~~312~~119,~~104~~260
Partnership equity:
Limited partners	~~579~~418,~~064~~710		~~966~~457,~~390~~284
Managing general partner	~~141~~102,~~455~~193		~~147~~126,~~776~~908
Partnership equity	~~720~~520,~~519~~903		1584,~~114,166~~192
Total liabilities and partnership equity	$	~~897~~704,~~731~~465	$	1755,~~438,351~~741

See accompanying notes to condensed financial statements (unaudited).

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Reef Global Energy VII, L.P.

Condensed Statements of Operations

(Unaudited)

	For the three months ended September 30,					For the nine months ended September 30,
	For the three months ended March 31,
	2011			2010		2011			2010
	2012			2011
Oil, gas and NGL sales	$	~~294~~129,~~047~~242		$	~~357~~349,~~456~~566	$	~~1,028,411~~		$	~~1,138,543~~
Costs and expenses:
Lease operating expenses	6035,~~907~~763			9977,~~776~~406		~~217,033~~			~~212,501~~
Production taxes	186,~~913~~530			2423,~~971~~013		~~71,934~~			~~19,473~~
Depreciation, depletion and amortization	9058,~~455~~169			~~145~~79,~~983~~776		~~242,602~~			~~442,284~~
Accretion of asset retirement obligation	111,~~676~~680			4,~~126~~375		~~10,502~~			~~12,170~~
General and administrative	4650,~~372~~998			4565,~~067~~179		~~185,965~~			~~211,798~~
Gain on sale of oil and gas properties	(4,262,418		)	—		(4,262,418		)	—
Total costs and expenses	163,140			249,749
Total costs and expenses	(4,044,095		)	319,923		(3,534,382		)	898,226
Income (loss) from operations	(33,898		)	99,817
Income from operations	4,338,142			37,533		4,562,793			240,317
Other income:
Other income:
Interest income	4			23
Interest income	22			46		67			171
Total other income	4			23
Total other income	22			46		67			171
Net income (loss)	$	(33,894	)	$	99,840
Net income	$	4,338,164		$	37,579	$	4,562,860		$	240,488
Net income (loss) per limited partner unit	$	(36.84	)	$	83.63
Net income per limited partner unit	$	3,926.33		$	20.18	$	4,117.20		$	177.32
Net income per managing general partner unit	$	2.82		$	464.55
Net income per managing general partner unit	$	14,625.30		$	389.43	$	15,620.28		$	1,577.09

See accompanying notes to condensed financial statements (unaudited).

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Reef Global Energy VII, L.P.

Condensed Statements of Cash Flows

(Unaudited)

	For the nine months ended September 30,
	For the three months ended March 31,
	2011			2010
	2012			2011
Cash flows from operating activities
Net income	$	4,562,860		$	240,488
Net income (loss)	$	(33,894	)	$	99,840
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Adjustments for non-cash transactions:
Depreciation, depletion and amortization	~~242~~58,~~602~~169			~~442~~79,~~284~~776
Accretion of asset retirement obligation	1011,~~502~~680			124,~~170~~375
Gain on sale of oil and gas properties	(4,262,418		)	—
Changes in operating assets and liabilities:
Accounts receivable	—18			~~3,471~~(28		)
Accounts receivable from affiliates	1933,~~229~~443			~~259~~7,~~204~~616
Accounts payable	~~47,551~~333			(47,~~501~~730		)
Accounts payable to affiliates	—			(140,041		)
Net cash provided by operating activities	69,749			199,309
Net cash provided by operating activities	620,326			813,075
Cash flows from investing activities
Proceeds from sale of oil and gas properties	4,437,795			—
Property acquisition and development	—			(21,442		)
Property acquisition and development	(33,339		)	(254,695		)
Net cash used in investing activities	—			(21,442		)
Net cash provided by (used in) investing activities	4,404,456			(254,695		)
Cash flows from financing activities
Partner distributions	(429,~~956,507~~395		)	(~~558~~166,~~370~~970		)
Net cash used in financing activities	(429,~~956,507~~395		)	(~~558~~166,~~370~~970		)
Net increase in cash and cash equivalents	6840,~~275~~354			10,897
Cash and cash equivalents at beginning of period	63124,~~713~~643			63,~~432~~713
Cash and cash equivalents at end of period	$	~~131~~164,~~988~~997		$	6374,~~442~~610
Supplemental disclosure of non-cash investing transactions
Property additions included in accounts payable to affiliates	$	—		$	(69,945	)
Asset retirement obligation reduction resulting from sale and disposition of proved properties	$	205,026		$	—

See accompanying notes to condensed financial statements (unaudited).

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Reef Global Energy VII, L.P.

Notes to Condensed Financial Statements (unaudited)

~~September 30~~March 31, ~~2011~~2012

1. Organization and Basis of Presentation

The condensed financial statements of Reef Global Energy VII, 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~~three months of ~~2011~~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 ~~period~~year ended December 31, ~~2010~~2011 (the “Annual Report”). The results of operations for the three months ended March 31, 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.

During 2011, the Partnership sold its interest in the Cole Ranch Properties (as defined below), which were comprised of eight productive wells. As a result of this sale, the Partnership has two significant producing properties that are expected to account for over 90% of future Partnership revenues. These two properties have estimated economic reserve lives of 66 and 10 months, respectively, utilizing current prices, costs, and projected production volumes at March 31, 2012. The Partnership distributed the proceeds from the sale of the Cole Ranch Properties to its partners, and 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 cash flows during 2012, variations in pricing and production volumes could lead to rapidly declining cash flows from operations and Partnership losses. These conditions raise substantial doubt about its 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.

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-production method using estimated proved reserves, as determined by independent petroleum engineers. ~~For~~Proved ~~these purposes, 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, 2011 and 2010, the Partnership recognized no property impairment expense of proved properties. During the three and nine month periods ended September 30, 2011, the Partnership recognized gain of $4,262,418 related to the Partnership’s sale and disposition of all rights, title, and interest in leases, lands, and wells located in Glasscock County, Texas (“Cole Ranch Properties”).

Estimates of Proved Oil and Gas Reserves

Estimates of the Partnership’s proved reserves at September 30, 2011 and December 31, 2010 have been 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.

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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 month periods ended March 31, 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 March 31, 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.

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.

~~Asset~~The ~~retirement~~Partnership ~~costs~~has ~~and~~recognized ~~liabilities~~an ~~associated~~estimated ~~with~~liability for future ~~site~~plugging ~~restoration~~ and abandonment ofcosts. ~~long-lived~~A ~~assets~~liability ~~are~~for ~~initially measured at fair value, which approximates~~ the ~~cost~~estimated ~~a third party would incur in performing the tasks necessary to retire such assets. The~~ fair value isof ~~recognized in~~ the ~~financial statements as the present value of expected~~ future ~~cash~~plugging ~~expenditures for site restoration~~ and abandonment. ~~Subsequent~~costs tois ~~the~~recorded ~~initial~~with ~~measurement,~~a ~~the~~corresponding ~~effect~~increase ofin the ~~passage~~full ofcost ~~time~~pool onat the ~~liability~~time ~~for~~a ~~the~~new ~~net~~well ~~asset~~is ~~retirement~~drilled. Depreciation ~~obligation (accretion~~ expense) ~~and~~associated ~~the~~with ~~amortization~~estimated ofplugging ~~the~~and ~~asset~~abandonment ~~retirement~~costs ~~cost~~is ~~are~~ recognized in accordance with the ~~results~~full ofcost ~~operations~~methodology.

The ~~following~~Partnership ~~table~~estimates ~~summarizes~~a ~~the~~liability ~~Partnership’s~~for ~~asset~~plugging ~~retirement~~and ~~obligation~~abandonment ~~for~~costs based on historical experience and estimated well life. The liability is discounted using the ~~nine~~credit-adjusted ~~month~~risk-free ~~period~~rate. Revisions ~~ended~~to ~~September 30,~~the ~~2011~~liability could occur due to changes in well plugging and ~~the~~abandonment ~~year~~costs ~~ended~~or ~~December 31~~well useful lives, ~~2010~~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.

	Nine months ended			Year Ended
	September 30, 2011			December 31, 2010
Beginning asset retirement obligation	$	312,104		$	289,494
Additions related to well conversion	—			6,162
Accretion expense	10,502			16,448
Retirement related to sale of proved properties	(205,026		)	—
Ending asset retirement obligation	$	117,580		$	312,104

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

	Three months ended		Year Ended
	March 31, 2012		December 31, 2011
Beginning asset retirement obligation	$	119,260	$	312,104
Accretion expense	11,680		12,182
Retirement related to sale of proved properties	—		(205,026		)
Ending asset retirement obligation	$	130,940	$	119,260

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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, accounts receivable from affiliates, and accounts payable 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~~March 3031, ~~2011,~~2012 ~~the Partnership incurred administrative costs totaling $24,579~~ and ~~$103~~2011,~~439,~~ ~~respectively. The~~the Partnership incurred no ~~technical services~~ costs ~~during~~for ~~the three and nine month periods ended September 30, 2011. During the three and nine month periods ended September 30, 2010, the Partnership incurred~~ technical services ~~costs of $5,443~~ and ~~$7,844,~~incurred ~~respectively, and~~ administrative costs oftotaling $3213,~~801~~235 and $~~136~~42,~~477~~521, respectively. ~~Technical services costs are capitalized as project costs on the condensed balance sheets.~~ Administrative costs are included as general and administrative expenses on the condensed statements of operations.

5RELP processes joint interest billings and revenue payments on behalf of the Partnership. At March 31, 2012 and December 31, 2011, RELP owed the Partnership $97,044 and $130,487, respectively, for net revenues processed in excess of joint interest and technical and administrative services 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.

~~Table~~The Partnership reimbursed to Reef legal fees totaling $1,797 and $0, respectively, during the three months periods ended March 31, 2012 and 2011 pertaining to the Stevenson litigation matter described in Note 4 below. The partners who brought the lawsuit are partners in several Reef affiliates, including this Partnership, and their claims involve their participation in these partnerships, including this Partnership. Pursuant to the Partnership Agreement of ~~Contents~~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.

Reef contributed 1% of all leasehold, drilling and completion costs when incurred during the drilling and completion phase of Partnership operations. Reef contributed $202,585 in connection with this obligation. Reef also purchased 5% of the Partnership units and paid 5% of the 99% of these costs paid by the unit holders (4.95%).

RELP processes joint interest billings and revenue payments on behalf of the Partnership. At September 30, 2011 and December 31, 2010, RELP owed the Partnership $194,979 and $214,208, respectively, for net revenues processed in excess of joint interest and technical and administrative services 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 $9,970 and $8,620, respectively, during the nine months ended September 30, 2011 and the year ended December 31, 2010 pertaining to the lawsuit described in Note 4 below. The partners who brought the lawsuit are partners in several Reef affiliates, including this Partnership, and their claims involve their participation in these partnerships, including this 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.

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 VII, L.P. and multiple other Reef-sponsored ventures and limited partnerships, as well as Reef Securities, Inc., among others (collectively, “Defendants”). On September 22, 2010, 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~~Jaime Davis (“Davis”) joined the suit as additional plaintiffs (Stevenson, Estles, Antolic, and Davis are collectively refeered to as “Plaintiffs”). With respect to Davis’s claims, specifically, Reef Securities, Inc. did not offer or sell the interests in the Reef program that Davis purchased. Rather, she purchased her interests through an unaffiliated broker/dealer. In the First Amended Petition, plaintiffs alleged that, collectively, they were seeking in excess of $1 million in compensatory damages as well as exemplary damages, attorneys’ fees, pre- and post-judgment interest, and costs. In the ~~Second~~Sixth Amended Petition, ~~plaintiffs seek an undisclosed, unspecified amount of damages.~~ Plaintiffs assert claims of ~~fraud,~~misrepresentations ~~rescission~~and omissions under the Texas Securities Act (“TSA”), control person and aider and abettor liability under the ~~Texas~~TSA, ~~Securities Act~~fraud, ~~and~~ breach of fiduciary duty, breach of contract, civil theft, negligent misrepresentation, and fraudulent concealment. Plaintiff Davis asserts against defendant Reef Oil & Gas Income and Development Fund, L.P. a claim for tortious interference with an existing contract. Defendants believe ~~plaintiffs~~Plaintiffs’ claims are meritless, ~~and with respect to many of the Reef programs named in the petition~~because, ~~defendants~~among ~~believe~~other ~~that the claims for fraud are barred by limitations~~things, asin ~~are~~connection ~~any claims for rescission or breach of fiduciary duty~~ with ~~respect~~each ~~to those programs. In addition, with respect to all~~ Reef ~~programs~~program in which ~~plaintiffs~~Plaintiffs participated, each ~~plaintiff~~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. Plaintiffs ~~Defendants~~also ~~(including~~claim ~~Reef~~that ~~Global~~Defendants ~~Energy~~misallocated ~~VII~~costs, ~~L.P.)~~expenses ~~intend to vigorously defend the lawsuit~~ and ~~may~~deductions ~~seek damages from plaintiffs based upon,~~ among ~~other~~unidentified things, breaches of representations and warranties made by them as well as the indemnification provisions of the documents executed by each of them. As of this time, no substantive discovery has been conducted, and no trial date has been set. The case has been stayed pending an arbitration by one of the plaintiffs against an unaffiliated brokerReef-~~dealer. The~~sponsored ~~Partnership~~ventures ~~is reimbursing to Reef its share of the costs of defending this lawsuit as incurred,~~ and ~~has~~limited ~~reimbursed $9,970 and $8,620, respectively, during the nine months ended September 30, 2011 and the year ended December 31, 2010~~partnerships.

5. Partnership Equity

Information regarding the number of units outstanding and the net income per type of Partnership unit for the three and nine month periods ended September 30, 2011 is detailed below:

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~~For~~Plaintiffs seek approximately $2.2 million as actual damages, $620,000 as exemplary damages, as well as attorneys’ fees, pre- and post-judgment interest, and costs. Defendants (including Reef Global Energy VII, L.P.) intend to vigorously defend the lawsuit and may seek damages from plaintiffs based upon, among other things, breaches of representations and warranties made by them as well as the indemnification provisions of the documents executed by each of them. Defendants have filed Motions for Partial Summary Judgment seeking the dismissal of certain of Plaintiffs Stevenson, Estles, and Antolic’s claims, and the parties are currently awaiting the Court’s entry of an order on said Motions. However, following Defendants’ filing of their Motions for Summary Judgment, by filing their Sixth Amended Petition, Plaintiffs dismissed their claims for rescission under the TSA for failure of Defendants to register under the TSA, control person liability under the TSA in connections with such registration claims, and a majority of Plaintiffs’ fraud claims under the TSA. As of this time, discovery is ongoing, and trial has been set for December 10, 2012. The Partnership is reimbursing to Reef its share of the costs of defending this lawsuit as incurred, and has reimbursed $1,797 and $0, respectively, during the three months ended ~~September~~March 3031, 2012 and 2011.

Type of Unit	Number of Units	Net income		Net income per unit
Managing general partner units	48.620	$	711,082	$	14,625.30
Limited partner units	923.783	3,627,082		$	3,926.33
Total	972.403	$	4,338,164

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. 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. Through Reef Exploration, L.P. the Partnership owns an interest in the well in question, and if the Plaintiffs were successful, the Partnership (although it is not a named defendant in the lawsuit) 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. The Partnership is expensing its share of the costs of defending this lawsuit as incurred, and has paid $7,500 and $0, respectively, during the three months ended March 31, 2012 and 2011.

~~For~~5. ~~the~~Partnership ~~nine months ended September 30, 2011~~Equity

Type of Unit	Number of Units	Net income		Net income per unit
Managing general partner units	48.620	$	759,458	$	15,620.28
Limited partner units	923.783	3,803,402		$	4,117.20
Total	972.403	$	4,562,860

Information regarding the number of units outstanding and the net income (loss) per type of Partnership unit for the three month periods ended March 31, 2012 and 2011 is detailed below:

For the three months ended March 31, 2012

Type of Unit	Number of Units	Net income (loss)			Net income (loss) per unit
Managing general partner units	48.620	$	137		$	2.82
Limited partner units	923.783	(34,031		)	$	(36.84	)
Total	972.403	$	(33,894	)

For the three months ended March 31, 2011

Type of Unit	Number of Units	Net income		Net income per unit
Managing general partner units	48.620	$	22,586	$	464.55
Limited partner units	923.783	77,254		$	83.63
Total	972.403	$	99,840

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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 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.

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Overview

Reef Global Energy VII, 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 ~~five~~six developmental prospects and participated in the drilling of ~~ten~~eighteen successful developmental wells and three unsuccessful developmental wells on those prospects. The Partnership sold its interest in the ~~eight~~ Cole Ranch Properties (as defined below), which were comprised of eight productive wells, during the third quarter of 2011 (see below) and has ~~two~~six successful wells that are productive, atone ~~September 30,~~that ~~2011.~~has ~~The~~been ~~Partnership~~converted ~~purchased~~to a ~~working~~salt ~~interest~~water indisposal ~~the~~well, ~~Sand~~and ~~Dunes~~three ~~developmental~~that ~~prospect~~are shut-in ~~Eddy~~at ~~County~~March 31, ~~New Mexico, and has participated in the drilling of eight developmental wells on this prospect (see below)~~2012. The Partnership purchased working interests in seven exploratory prospects and participated in the drilling of one successful exploratory well, six unsuccessful exploratory wells, and one successful developmental well on those prospects. The successful exploratory well ceased production during 2007. The Partnership completed its drilling program during the second quarter of 2008, having participated in the drilling of twenty-nine wells using the original capital raised by the Partnership. Subsequent to initial drilling operations, the Partnership is permitted to conduct additional drilling on existing Partnership prospects. The Partnership has not participated in and currently has no plans for participating in additional drilling activities.

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.

The Partnership participated in the drilling of eight developmental wells on the Sand Dunes prospect located in Eddy County, New Mexico during the fourth quarter of 2007 and the first quarter of 2008. Initial testing confirmed the presence of crude oil and natural gas in all eight wells. However, the field was temporarily shut-in because of the lack of electric service and because of the high cost of trucking offsite the salt water volumes associated with the production of the crude oil and natural gas from the wells. Electrical service to the eight Sand Dunes wells was connected in September 2008. Based upon initial testing, larger bottom hole pumps were placed below the well perforations in three of the wells and testing was resumed in late September 2008 to determine the three wells’ commercial productivity. Water continued to be trucked offsite, and RELP applied for and received a permit which would allow for the conversion of one of the existing eight Sand Dunes wells into a water disposal well. RELP also explored the possibility of drilling a ninth well as a salt water disposal well for the field. Testing results on two of the three wells were positive, and salt water production volumes declined as a result of pumping off the wells using the larger bottom hole pumps. However, the price of crude oil also declined at a rapid rate while testing was being conducted. In late December 2008, two of the three testing wells were shut-in again. Crude oil prices continued declining to a level below $40 per barrel. In February 2009, following a mechanical failure in the third testing well, RELP, as operator, shut-in the field. The eight wells could not be commercially productive without efficient salt water disposal capabilities, and none of the options regarding salt water disposal were economically viable at first quarter 2009 commodity prices. As of December 31, 2008, the eight Sand Dunes wells were considered temporarily non-commercial until the conversion of one of the eight wells into a salt water disposal well was completed and commodity prices recovered.

Beginning with March 2009, oil prices increased from levels below $40 per barrel to between $60 and $70 per barrel by the third quarter of 2009. As a result of this increase in prices, in October 2009, Reef approved the conversion of one of the eight wells on the Sand Dunes development prospect located in Eddy County, New Mexico to a salt water disposal well. The conversion work on the well began in March 2010 and was completed during April 2010. Upon completion of the disposal facilities, the new disposal well became operational during August 2010. Based on the disposal capacity of the converted well, all of the remaining seven Sand Dunes wells were placed into production as of December 31, 2010. The cost of the well conversion to this Partnership was approximately $191,152. This cost was paid for by the Partnership by retaining a portion of the funds normally paid out in distributions to the partners. As of December 31, 2010, there were 2,350 BBL of crude oil and 2,650 Mcf of natural gas reserves net to the Partnership’s interest for the wells placed on full time production during 2010.

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AsIn ofthis ~~September 30,~~Quarterly ~~2011~~Report, ~~two~~we ofuse the ~~Sand~~term ~~Dunes~~“successful” ~~wells~~to ~~were~~refer ~~shut-in. Repair~~to ~~and~~wells ~~maintenance~~that ~~work~~are ~~was~~drilled, ~~performed~~tested, ~~on one shut-in well~~ and iteither ~~has~~capable ~~been returned to production during the fourth quarter~~ of ~~2011. Repair~~or ~~and~~actually ~~maintenance~~producing ~~work to return the remaining shut-~~in ~~well~~commercial ~~to production has been approved during the fourth quarter of 2011~~quantities. To ~~date,~~We ~~performance~~use of the ~~Sand~~term ~~Dunes~~“unsuccessful” ~~wells~~to ~~has~~refer ~~fallen short of Reef’s expectations, due~~ to ~~lower production volumes and higher repair and maintenance costs than were originally anticipated. While the~~ wells ~~have~~that ~~only~~do ~~been on line for a short time, Reef does~~ not ~~believe~~meet ~~they~~one ~~will~~or ~~achieve~~more ~~the level~~ of ~~production~~these ~~originally forecast when considering the conversion of the new salt water disposal well~~criteria.

On August 24, 2011, the Partnership completed the sale of certain assets in accordance with a Purchase and Sale Agreement (“Agreement”) between the Partnership, Reef Exploration, L.P., Reef Global Energy VIII, L.P., and Reef Global Energy IX, L.P., affiliates of the Partnership, as sellers (collectively, the “Sellers”), and with Energen Resources Corporation (“Energen”) as buyer. The Agreement included the sale of all rights, title, and interest in leases, lands, and wells owned by the Sellers located in Glasscock County, Texas (the “Cole Ranch Properties”) for an aggregate purchase price to the Sellers of $10,000,000, subject to certain purchase price adjustments. The Partnership received approximately $4,438,400 of the purchase price, prior to purchase price adjustments. The Cole Ranch Properties were assigned directly to Energen at closing pursuant to an Assignment, Conveyance and Bill of Sale ~~effective~~as of July 1, 2011.

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 $24,127,769. Reef purchased 48.620 general partner units, or 5% of the total units sold, for $1,033,179. Investor partners purchased 741.001 units of general partner interest and 182.783 units of limited partner interest for $23,094,590. All units of general partner interest purchased by investor partners were converted to units of limited partner interest during 2008. Reef also contributed $202,585 in connection with its obligation to pay 1% of all leasehold, drilling, and completion costs. Organization and offering costs totaled $3,464,188, leaving capital contributions of $20,866,166 available for Partnership activities. The Partnership expended $21,574,409 on prospect and property acquisitions, drilling and completion costs in connection with its participation in the drilling of twenty-nine wells and expended $137,512 on general and administrative expenses during its drilling and completion phase of operations. Expenditures in excess of ~~available~~ Partnership capital were deducted from Partnership distributions. There are no plans to conduct any additional drilling on Partnership prospects at his time; however, additional drilling activity is permitted on the Partnership prospects at the discretion of the Partnership’s managing general partner. Any additional capital expenditures will also be recovered from cash flow by reducing Partnership distributions. The Partnership does not operate in any other industry segment, and operates solely in the United States.

The Partnership has working capital of $~~267~~209,~~335~~419 at ~~September~~March 3031, ~~2011~~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.

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	For the three months ended September 30,				For the nine months ended September 30,
	For the three months ended March 31,
	2011		2010		2011		2010
	2012		2011
Sales volumes:
Crude oil (Barrels)	21,~~861~~224		3,~~414~~044		~~9,003~~		~~10,370~~
Natural gas (Mcf)	117,~~746~~840		2316,~~707~~860		~~40,868~~		~~76,316~~
Average sales prices received:
Crude oil (Barrels)	$	8489.0462	$	7086.1343	$	~~90.60~~	$	~~71.54~~
Natural gas (Mcf)	$	42.5749	$	45.9813	$	~~5.20~~	$	~~5.20~~

The estimated net proved crude oil and natural gas reserves as of ~~September~~March 3031, ~~2011~~2012 and ~~2010~~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, 2011	7,847	92,885
March 31, 2012	6,000	79,530
September 30, 2010	38,607	146,678
March 31, 2011	45,642	211,486

Three months ended ~~September~~March 3031, ~~2011~~2012 compared to the three months ended ~~September~~March 3031, ~~2010~~2011

The Partnership ~~had~~incurred a net ~~income~~loss of $433,~~338,164~~894 for the three month period ended ~~September~~March 3031, ~~2011~~2012, compared to net income of $3799,~~579~~840 for the three month period ended ~~September~~March 3031, ~~2010~~2011. ~~Gain~~The onprimary ~~the~~cause ~~sale~~ of ~~the~~this ~~Cole~~decrease ~~Ranch~~in ~~properties~~net ~~was~~income ~~the~~is ~~primary~~decreased ~~cause~~sales ofvolumes ~~the~~and ~~increase~~revenues inas ~~net~~discussed ~~income~~below.

OnPartnership ~~August 24,~~crude ~~2011~~oil and natural gas sales volumes are declining due to natural production declines from existing Partnership wells, the fact that the Partnership ~~completed~~has not drilled any new productive wells since 2008 and has no plans to conduct additional drilling activity, and as a result of the sale of eight producing wells on the Cole Ranch Properties tosold ~~Energen,~~during ~~effective~~the ~~July 1,~~third quarter of 2011. The ~~Partnership~~Cole ~~recognized~~Ranch aProperties ~~gain~~accounted ~~related~~for to31.6% ~~this~~and ~~transaction~~18.9% of $4crude oil and natural gas sales volumes,~~262~~ respectively,~~418~~ during the ~~three~~period ~~month~~ended March 31, 2011 and accounted for 35.8% of the Partnership’s sales revenues during the period ended ~~September~~March 3031, 2011. In ~~addition,~~There ~~revenues~~are ~~and~~no ~~lease~~sales ~~operating~~volumes ~~expenses~~or ~~for~~revenues ~~these~~from ~~properties~~the ~~decreased~~Cole ~~during~~Ranch Properties included in the ~~period~~results ~~due~~of tooperations for the ~~sale~~period ended March 31, 2012.

Partnership oil and gas sales volumes are declining due to natural production declines from existing Partnership wells, the sale of its eight producing Cole Ranch wells during the third quarter of 2011, and the fact that the Partnership is not drilling and has no plans to conduct additional drilling activity. The ~~HBR A well experienced a 76.5% decline in gas volumes with the~~ Partnership’s share of gas volumes declining from approximately 10,563 Mcf during the three month period ended September 30, 2010 to approximately 2,478 Mcf during the three month period ended September 30, 2011. The Partnership’s share of sales volumes from the two most significant wells in which the Partnership has an interest, the Rob L RA SUA CL&F #1 (“Gumbo II”) and the HBR A Big Gas (“HBR A”), totaled 1,~~788~~142 barrels of crude oil and 107,~~933~~730 Mcf of natural gas, or 6293.53% and 9398.16% of sales volumes for the three month period ended ~~September~~March 3031, ~~2011~~2012, respectively. During the three month period ended ~~September~~March 3031, ~~2010~~2011, the Partnership’s share of sales volumes from these two wells totaled 2,~~242~~000 barrels of crude oil and 1913,~~911~~520 Mcf of natural gas, or 65.7% and 8480.02% of the Partnership’s total sales volumes, respectively. In addition, sales volumes from the eight Cole Ranch wells declined due to the sale of the Partnership’s interests in these wells as of August 24, 2011. The eight Cole Ranch wells provided approximately 34.1% of the Partnership’s oil volumes and 20.5% of the Partnership’s gas volumes during the first half of 2011. Production from existing Partnership wells will continue to decline in future quarters, and combined with the loss of production from the Cole Ranch ~~wells~~Properties will lead to continuing declines in sales volumes in future periods. The economic life of the Partnership is dependent upon the lives of the most significant wells in which it participates. The current estimated reserve lives of the Gumbo II and HBR A wells are estimated to be approximately 5166 and 2710 months, respectively, using current prices and costs.

While the sales prices for crude oil rose by 3.7%, to an average price of $89.62 per Bbl for the three month period ended March 31, 2012 , compared to an average price of $86.43 for the three month period ended March 31, 2011, the sales price for natural gas fell by 51.5%, to an average price of $2.49 per Mcf for the three month period ended March 31, 2012, compared to an average price of $5.13 per Mcf for the three month period ended March 31, 2011. Total sales revenues decreased by $220,324, or 63.0% on a comparative period-to-period basis. The Partnership has

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~~Sales~~not ~~prices~~and ~~for~~is ~~crude~~currently ~~oil~~not ~~rose~~engaged byin ~~19.8%,~~commodity tofutures antrading, ~~average~~hedging ~~price~~activities, ofor ~~$84.04~~derivative ~~per~~financial ~~Bbl~~instrument transactions for ~~the~~trading ~~three~~or ~~month~~other ~~period~~speculative ~~ended~~purposes. The ~~September 30,~~Partnership ~~2011,~~sells ~~compared~~a tovast anmajority ~~average price~~ of ~~$70.13~~its ~~for~~production ~~the~~from ~~three~~successful ~~month~~oil ~~period~~and ~~ended September 30, 2010. Sales prices for natural~~ gas ~~decreased~~wells byon ~~8.2%,~~a month-to-month anbasis ~~average~~at ~~price~~current ofspot $4market prices.57 ~~per~~Accordingly, ~~Mcf during~~ the ~~three~~Partnership ~~month~~is ~~period~~at ~~ended~~risk ~~September 30,~~for ~~2011,~~the ~~compared~~volatility toin ancommodity ~~average~~prices ~~price~~inherent ofin ~~$4.98 received for during~~ the ~~three~~oil ~~month~~and ~~period~~gas ~~ended September 30~~industry, ~~2010.~~and Asthe alevel ~~result~~ of ~~the~~commodity ~~decreased~~prices ~~sales~~has ~~volumes,~~a ~~sales~~significant ~~revenues~~impact ~~decreased by approximately $63,400, or 17.7%~~ on ~~a comparative basis, despite~~ the ~~increase~~Partnership’s inresults ~~average~~of ~~oil sales prices~~operations. ~~There~~The ~~has~~Partnership ~~been~~anticipates acontinued ~~drop~~weakening in ~~prices for both crude oil and~~ natural gas prices during the ~~third~~second quarter, ~~and~~of ~~fourth~~2012. ~~quarter~~Natural ~~average~~gas sales ~~prices~~revenues accounted for ~~both~~15.1% ~~crude~~of ~~oil~~first ~~and~~quarter ~~natural~~2012 ~~gas~~overall ~~are~~sales ~~expected~~revenues, compared to be24.7% ~~below~~of ~~the~~first ~~third~~ quarter ~~averages~~2011 overall sales revenues.

Lease operating expenses decreased from $9977,~~776~~406 during the three month period ended ~~September~~March 3031, ~~2010~~2011 to $6035,~~907~~763 during the three month period ended ~~September~~March 3031, ~~2011~~2012, primarily due to the sale of the Partnership’s interest in the ~~eight~~ Cole Ranch ~~wells~~Properties. Operating costs of the Partnership’s Sand Dunes wells increased slightly during the three month period ended ~~September~~March 3031, ~~2011~~2012 compared to the three month period ended ~~September~~March 3031, ~~2010~~2011 ~~because~~due ~~the~~to ~~converted~~increased ~~Sand~~workover ~~Dunes~~expenses ~~salt~~for ~~water~~repairs ~~disposal~~of ~~well,~~parted ~~which~~rods ~~was~~on ~~completed~~three ~~during~~of ~~August 2010,~~the ~~allowed seven~~ Sand Dunes wells. Production totaxes ~~return~~decreased tofrom ~~producing~~$23,013 ~~status~~during the three months ended March 31, 2011 to $6,530 during the ~~third~~three ~~and~~months ~~fourth~~ended ~~quarters~~March 31, of2012 ~~2010~~due primarily to declining production.

The Partnership incurred $9058,~~455~~169 of depletion, depreciation, and amortization expense during the three month period ended ~~September~~March 3031, ~~2011~~2012 compared to $~~145~~79,~~983~~776 of depletion, depreciation, and amortization expense during the three month period ended ~~September~~March 3031, ~~2010~~2011. This decrease is due to the reduced depletable basis of the Partnership and the combination of declining production rates and rising oil prices between the comparative periods, which have led to a reduced depletion rate applied to the remaining basis. The Partnership recognized $11,680 of accretion expense during the three month period ended March 31, 2012 compared to $4,375 of accretion expense during the comparable period during 2011, as the Partnership revised the estimated asset retirement date of the Gumbo II well due to its recent declining production and shortened estimated reserve life.

General and administrative costs ~~increased~~decreased from $4565,~~067~~179 incurred during the three ~~month~~months ~~period~~ ended ~~September~~March 3031, ~~2010~~2011 to $4650,~~372~~998 incurred during the three ~~month~~months ~~period~~ ended ~~September~~March 3031, ~~2011~~2012, primarily due to decreased overhead charges from RELP. ~~Increased~~Legal ~~legal~~fees ~~and~~increased ~~professional~~by ~~fees~~approximately ~~were~~$9,000 ~~offset~~as bythe ~~decreased~~Partnership reimbursed Reef for legal expenses incurred, but the administrative overhead ~~charges~~charge to the Partnership decreased from ~~RELP~~$35,503 for the three months ended March 31, 2011 to $9,269 for the three months ended March 31, 2012. The allocation of RELP’s overhead to partnerships is ~~the~~a ~~largest~~significant factor in 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 compared to the total levels of all partnerships. ~~The administrative overhead charge to the Partnership decreased from $32,657 for the three month period ended September 30, 2010 to $20,718 for the three month period ended September 30, 2011.~~

Nine months ended September 30, 2011 compared to the nine months ended September 30, 2010

The Partnership had net income of $4,562,860 for the nine month period ended September 30, 2011, compared to net income of $240,488 for the nine month period ended September 30, 2010. Gain on the sale of the Cole Ranch properties was the primary cause of the increase in net income.

On August 24, 2011, the Partnership completed the sale of the Cole Ranch Properties to Energen, effective July 1, 2011. The Partnership recognized a gain related to this transaction of $4,262,418 during the nine month period ended September 30, 2011. In addition, revenues and lease operating expenses for these properties decreased during the period due to the sale.

Partnership oil and gas sales volumes are declining due to natural production declines from existing Partnership wells, the sale of the eight Cole Ranch wells during the third quarter of 2011, and the fact that the Partnership is not drilling and has no plans to conduct additional drilling activity. The HBR A well experienced a 79.1% decline in gas volumes with the Partnership’s share of gas volumes declining from approximately 37,434 Mcf during the nine month period ended September 30, 2010 to approximately 7,834 Mcf during the nine month period ended September 30, 2011. The Partnership’s share of sales volumes from the two most significant wells in which the Partnership has an interest, the Rob L RA SUA CL&F #1 (“Gumbo II”) and the HBR A, totaled 5,722 barrels of crude oil and 33,720 Mcf of natural gas, or 63.6% and 82.5% of sales volumes for the nine month period ended September 30, 2011, respectively. During the nine month period ended September 30, 2010, the Partnership’s share of sales volumes from these two wells totaled 6,330 barrels of crude oil and 65,485 Mcf of natural gas, or 61.0% and 85.8% of the Partnership’s total sales volumes, respectively. In addition, sales volumes from the eight Cole Ranch wells declined due to the sale of the Partnership’s interests in these wells as of August 24, 2011. The eight Cole Ranch wells provided approximately 34.1% of the Partnership’s oil volumes and 20.5% of the Partnership’s gas volumes during the first half of 2011. Production from existing Partnership wells will continue to decline in future quarters, and combined with the loss of production from the Cole Ranch wells will lead to continuing declines in sales volumes in future periods. The economic life of the Partnership is dependent upon the lives of the most significant wells in which it participates. The current estimated reserve lives of the Gumbo II and HBR A wells are estimated to be approximately 51 and 27 months, respectively, using current prices and costs.

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Sales prices for crude oil rose by 26.6%, to an average price of $90.60 per Bbl for the nine month period ended September 30, 2011, compared to an average price of $71.54 for the nine month period ended September 30, 2010. Sales prices for natural gas remained consistent at an average price of $5.20 per Mcf. As a result of the decreased sales volumes, sales revenues decreased by approximately $110,100, or 9.7% on a comparative basis, despite the increase in average oil sales prices. 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 vast 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. There has been a drop in prices for both crude oil and natural gas during the third quarter, and fourth quarter average sales prices for both crude oil and natural gas are expected to be below the third quarter averages.

Lease operating expenses increased from $212,501 during the nine month period ended September 30, 2010 to $217,033 during the nine month period ended September 30, 2011. Decreased expenses related to the sale of the Partnership’s interest in the eight Cole Ranch wells were offset by increased marketing and gathering expenses on the Gumbo II well. In addition, operating costs also increased as a result of returning seven Sand Dunes wells to production during the third and fourth quarters of 2010, following conversion of one of the Sand Dunes wells to a salt water disposal well that began disposal operations in August 2010.

Production taxes increased during the nine month period ended September 30, 2011 compared to the nine month period ended September 30, 2010 due to a one time severance tax adjustment received from the operator of the Gumbo II well. During the second quarter of 2010, the Partnership received a large severance tax credit from the operator of the Gumbo II well, because the well obtained a severance tax exemption from the State of Louisiana for the period from inception through February 2010. This one time tax adjustment resulted in the Partnership showing a negative amount for severance taxes during the second quarter of 2010, and skewed the production tax expense shown for the nine month period ended September 30, 2010.

The Partnership incurred $242,602 of depletion, depreciation, and amortization expense during the nine month period ended September 30, 2011 compared to $442,284 of depletion, depreciation, and amortization expense during the nine month period ended September 30, 2010. This decrease is due to the reduced depletable basis of the Partnership and the combination of declining production and rising oil prices between the comparative periods, which have led to a reduced depletion rate applied to the remaining basis.

General and administrative costs decreased from $211,798 incurred during the nine month period ended September 30, 2010 to $185,965 incurred during the nine month period ended September 30, 2011, primarily due to decreased overhead charges from RELP. The allocation of RELP’s overhead to partnerships is the largest factor in 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 compared to the total levels of all partnerships. The administrative overhead charge to the Partnership decreased from $129,029 for the nine month period ended September 30, 2010 to $89,208 for the nine month period ended September 30, 2011.

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.

12Item 4. Controls and Procedures

~~Table~~Evaluation of ~~Contents~~Disclosure Controls and Procedures

~~Item~~As 4Tthe 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. ~~Controls~~The Partnership, under the supervision and ~~Procedures~~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

~~Evaluation of Disclosure Controls and Procedures~~11

AsTable ~~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.Contents

~~Changes~~communicated into ~~Internal~~our ~~Controls~~management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding financial disclosure.

~~There~~Changes ~~have not been any changes~~ in ~~the~~Internal Partnership’s internal controls over financial reporting during the fiscal quarter ended September 30, 2011 that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.Controls

~~PART~~There have not been any changes in the Partnership’s internal controls over financial reporting during the fiscal quarter ended March II31, —2012 ~~OTHER~~that ~~INFORMATION~~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

13Plaintiffs seek approximately $2.2 million as actual damages, $620,000 as exemplary damages, as well as attorneys’ fees, pre- and post-judgment interest, and costs. Defendants (including Reef Global Energy VII, L.P.) intend to vigorously defend the lawsuit and may seek damages from plaintiffs based upon, among other things, breaches of representations and warranties made by them as well as the indemnification provisions of the documents executed by each of them. Defendants have filed Motions for Partial Summary Judgment seeking the dismissal of certain of Plaintiffs Stevenson, Estles, and Antolic’s claims, and the parties are currently awaiting the Court’s entry of an order on said Motions. However, following Defendants’ filing of their Motions for Summary Judgment, by filing their Sixth Amended Petition, Plaintiffs dismissed their claims for rescission under the TSA for failure of Defendants to register under the TSA, control person liability under the TSA in connections with such registration claims, and a majority of Plaintiffs’ fraud claims under the TSA. As of this time, discovery is ongoing, and trial has been set for December 10, 2012. The Partnership is reimbursing to Reef its share of the costs of defending this lawsuit as incurred, and has reimbursed $1,797 and $0, respectively, during the three months ended March 31, 2012 and 2011.

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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. The Partnership is expensing its share of the costs of defending this lawsuit as incurred, and has paid $7,500 and $0, respectively, during the three months ended March 31, 2012 and 2011.

Item 1A. Risk Factors

There were no 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. ~~(Removed~~Mine ~~and~~Safety ~~Reserved)~~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

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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 VII, L.P.
	By:	Reef Oil & Gas Partners, L.P.
		Managing General Partner
	By:	Reef Oil & Gas Partners, GP, LLC,
		its general partner
Dated: November 10, 2011	By:	/s/ Michael J. Mauceli
Dated: May 11, 2012	By:	/s/ Michael J. Mauceli
		Michael J. Mauceli
		Manager and Member
		(Principal Executive Officer)
Dated: November 10, 2011	By:	/s/ Daniel C. Sibley
Dated: May 11, 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)

1514

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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

1615

Filing Compare · Reef Global Energy VII, L.P.