Transactions with Affiliates	9 Months Ended
Transactions with Affiliates	Sep. 30, 2016
Transactions with Affiliates
Transactions with Affiliates	3. Transactions with Affiliates Reef initially purchased 1% of the total Partnership units (8.9697 units of general partner interest), and received an additional 10% general partner interest as compensation for forming the Partnership. This 10% interest is “carried” by the Investor Partners and Reef pays no drilling or completion expenses for this interest. In addition, Reef has purchased 1.30 units of Partnership interest from investor partners. Effective September 1, 2015 Reef receives 11.13% and investor partners receive 88.87% of total cash distributions. During the nine month periods ended September 30, 2016 and 2015, Reef received $131,349 and $1,965, respectively, in cash distributions related to its Partnership interest. The Partnership has no employees. RELP employs a staff including geologists, petroleum engineers, landmen and accounting personnel who administer all of the Partnership’s operations. RELP is entitled to receive drilling compensation in an amount equal to 15% of the total well costs paid by the Partnership for wells operated by RELP. RELP served as the operator of the Partnership’s Slaughter Field in Cochran County, Texas and the wells in which the Partnership held an interest thereon (the “Slaughter Dean Wells”) prior to their sale during the second quarter of 2015. RELP also receives drilling compensation in an amount equal to 5% of the total well costs paid by the Partnership for all non-operated wells. While the Partnership has not engaged in oil and gas drilling activities during 2016, total well costs also include the costs of all developmental activities on a well, such as reworking, working over, deepening, sidetracking, fracturing a producing well, installing pipeline for a well or any other activity incident to the operations of a well, excluding ordinary well operating costs after completion. Total well costs do not include costs relating to lease acquisitions. During the nine month period ended September 30, 2016 and the year ended December 31, 2015, RELP received $1,175 and $13,564, respectively, in drilling compensation. Drilling compensation payments are included in oil and gas properties in the financial statements. Additionally, Reef and its affiliates are reimbursed for direct costs and documented out-of-pocket expenses incurred on behalf of the Partnership. During the three and nine month periods ended September 30, 2016, the Partnership paid or accrued to Reef and its affiliates $20,583 and $44,595, respectively, for direct costs and paid or accrued to Reef and its affiliates $0 and $2,805, respectively, for out of pocket expenses. During the three and nine month periods ended September 30, 2015, the Partnership paid or accrued to Reef and its affiliates $17,895 and $67,963, respectively, for direct costs and paid or accrued to Reef and its affiliates $206 and $2,579, respectively, for out of pocket expenses. RELP allocates its general and administrative expenses as overhead to all of the partnerships to which it provides services, and this allocation is a significant portion of the Partnership’s general and administrative expenses. The allocation of RELP’s overhead to the partnerships to which it provides services 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. During the three and nine month periods ended September 30, 2016, the administrative overhead charged by RELP to the Partnership totaled $33,079 and $62,326, respectively. During the three and nine month periods ended September 30, 2015, the administrative overhead charged by RELP to the Partnership totaled $82,796 and $275,005, respectively. The administrative overhead charged by RELP is included in general and administrative expense in the accompanying condensed statements of operations. RELP’s general and administrative costs include all customary and routine expenses, accounting, office rent, telephone, secretarial, salaries and other incidental expenses incurred by RELP or its affiliates that are necessary to the conduct of the Partnership’s business, whether generated by RELP, its affiliates or third parties, but excluding direct and operating costs. RELP processes joint interest billings and revenue payments on behalf of the Partnership. At September 30, 2016, and December 31, 2015, RELP owed the Partnership $106,855 and $135,851, respectively, for net revenues processed in excess of joint interest, drilling compensation, direct costs, and out-of-pocket expenses. 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 an annual basis.

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

Reef Oil & Gas Income & Development Fund III LP 10-Q