UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 10-Q


ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017March 31, 2021

or

☐oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from _______________________to____________________________


Commission File No. 000-53591


Ridgewood Energy X Fund, LLC

(Exact name of registrant as specified in its charter)


Delaware

(State or other jurisdiction of

incorporation or organization)

 

26-0870318

(I.R.S. Employer

Identification No.)


14 Philips Parkway, Montvale, NJ  07645

(Address of principal executive offices) (Zip code)


(800) 942-5550

(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act: None

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 ☒    xNo ☐


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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”,filer,” “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934.


Act.

Large accelerated filer☐oAccelerated filer☐o

Non-accelerated filer

(Do not check if a smaller reporting company)

☐x

Smaller reporting company

Emerging growth company

☒
☐

x

o


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Exchange Act of 1934. ☐


Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934)Act). Yes ☐    oNo ☒


x

As of November 7, 2017May 13, 2020, there were 477.8874 shares of LLC Membership Interest outstanding.

 

Table of Contents


  PAGE
PART I - FINANCIAL INFORMATION 
Item 1.
Financial Statements
1
    
Unaudited Condensed Balance Sheets as of September 30, 2017March 31, 2021 and December 31, 20162020
1
    

Unaudited Condensed Statements of Operations for the three and nine months ended
September 30, 2017

March 31, 2021 and 20162020

2
  
Unaudited Condensed Statements of Changes in Members’ Capital for the three months ended
March 31, 2021 and 2020
3

Unaudited Condensed Statements of Cash Flows for the ninethree months ended
September 30, 2017

March 31, 2021 and 20162020

34
    
Notes to Unaudited Condensed Financial Statements
45
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
810
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
1417
Item 4.
Controls and Procedures
1417
   
PART II - OTHER INFORMATION 
Item 1.
Legal Proceedings
1518
Item 1A.
Risk Factors
1518
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
1518
Item 3.
Defaults Upon Senior Securities
1518
Item 4.
Mine Safety Disclosures
1518
Item 5.
Other Information
1518
Item 6.
Exhibits
1518
   
  
SIGNATURES
1619

Table of Contents
Table of Contents

PART I – FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS


RIDGEWOOD ENERGY X FUND, LLC

UNAUDITED CONDENSED BALANCE SHEETS

(in thousands, except share data)



      September 30, 2017  December 31, 2016 
Assets      
Current assets:      
Cash and cash equivalents $7,817  $7,337 
Salvage fund  211   664 
Production receivable  546   419 
Other current assets  54   108 
Total current assets  8,628   8,528 
Salvage fund  3,222   2,881 
Investment in Delta House  119   119 
Oil and gas properties:        
Proved properties  16,969   17,031 
Less:  accumulated depletion and amortization  (11,885)  (10,541)
Total oil and gas properties, net  5,084   6,490 
Total assets $17,053  $18,018 
         
Liabilities And Members' Capital        
Current liabilities:        
Due to operators $262  $348 
Accrued expenses  82   82 
Asset retirement obligations  211   664 
Total current liabilities  555   1,094 
Asset retirement obligations  1,365   1,373 
Total liabilities  1,920   2,467 
Commitments and contingencies (Note 3)        
Members' capital:        
Manager:        
Distributions  (5,383)  (5,066)
Retained earnings  4,510   4,106 
Manager's total  (873)  (960)
Shareholders:        
Capital contributions (500 shares authorized;        
477.8874 issued and outstanding)  94,698   94,698 
Syndication costs  (11,080)  (11,080)
Distributions  (32,680)  (30,884)
Accumulated deficit  (34,932)  (36,223)
Shareholders' total  16,006   16,511 
Total members' capital  15,133   15,551 
Total liabilities and members' capital $17,053  $18,018 

  March 31, 2021  December 31, 2020 
Assets        
Current assets:        
Cash and cash equivalents $9,061  $8,980 
Salvage fund  267   912 
Production receivable  409   376 
Other current assets  143   18 
Total current assets  9,880   10,286 
Salvage fund  813   772 
Investment in Delta House  119   119 
Oil and gas properties:        
Proved properties  9,465   9,448 
Less:  accumulated depletion and amortization  (6,843)  (6,681)
Total oil and gas properties, net  2,622   2,767 
Total assets $13,434  $13,944 
         
Liabilities and Members' Capital        
Current liabilities:        
Due to operators $109  $120 
Accrued expenses  42   47 
Asset retirement obligations  267   912 
Total current liabilities  418   1,079 
Asset retirement obligations  297   293 
Total liabilities  715   1,372 
Commitments and contingencies (Note 3)        
Members' capital:        
Manager:        
Distributions  (6,939)  (6,861)
Retained earnings  6,107   6,001 
Manager's total  (832)  (860)
Shareholders:        
Capital contributions (500 shares authorized;        
477.8874 issued and outstanding)  94,698   94,698 
Syndication costs  (11,080)  (11,080)
Distributions  (41,494)  (41,053)
Accumulated deficit  (28,573)  (29,133)
Shareholders' total  13,551   13,432 
Total members' capital  12,719   12,572 
Total liabilities and members' capital $13,434  $13,944 

The accompanying notes are an integral part of these unaudited condensed financial statements.

1
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1

RIDGEWOOD ENERGY X FUND, LLC

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except per share data)



    Three months ended September 30,  Nine months ended September 30, 
  2017  2016  2017  2016 
Revenue            
Oil and gas revenue $1,582  $1,421  $4,914  $3,734 
Expenses                
Depletion and amortization  441   514   1,028   1,761 
Management fees to affiliate (Note 2)  266   270   800   812 
Operating expenses  396   625   1,288   2,200 
General and administrative expenses  43   42   132   114 
Total expenses  1,146   1,451   3,248   4,887 
Income (loss) from operations  436   (30)  1,666   (1,153)
Other income (loss)                
Loss on investment in Delta House  -   (110)  -   (110)
Dividend income  7   58   19   181 
Interest income  4   2   10   6 
Total other income (loss)  11   (50)  29   77 
Net income (loss) $447  $(80) $1,695  $(1,076)
                 
Manager Interest                
Net income $131  $75  $404  $97 
                 
Shareholder Interest                
Net income (loss) $316  $(155) $1,291  $(1,173)
Net income (loss) per share $662  $(325) $2,702  $(2,454)

  Three months ended March 31, 
  2021  2020 
Revenue      
Oil and gas revenue $1,116  $1,317 
Expenses        
Depletion and amortization  40   226 
Operating expenses  199   370 
Management fees to affiliate (Note 2)  184   243 
General and administrative expenses  37   43 
Total expenses  460   882 
Income from operations  656   435 
Other income        
Dividend income  10   8 
Interest income  -   14 
Total other income  10   22 
Net income $666  $457 
         
Manager Interest        
Net income $106  $98 
         
Shareholder Interest        
Net income $560  $359 
Net income per share $1,172  $751 

The accompanying notes are an integral part of these unaudited condensed financial statements.

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RIDGEWOOD ENERGY X FUND, LLC

UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS

CHANGES

IN MEMBERS’ CAPITAL

(in thousands)


     Nine months ended September 30, 
  2017  2016 
       
Cash flows from operating activities      
Net income (loss) $1,695  $(1,076)
Adjustments to reconcile net income (loss) to net cash        
provided by operating activities:        
Depletion and amortization  1,028   1,761 
Accretion expense  49   - 
Loss on investment in Delta House  -   110 
Changes in assets and liabilities:        
Increase in production receivable  (127)  (128)
Decrease (increase) in other current assets  54   (22)
(Decrease) increase in due to operators  (86)  26 
Increase in accrued expenses  -   13 
Settlement of asset retirement obligation  (205)  - 
Net cash provided by operating activities  2,408   684 
         
Cash flows from investing activities        
Credits for oil and gas properties  73   11 
Decrease (increase) in salvage fund  112   (202)
Net cash provided by (used in) investing activities  185   (191)
         
Cash flows from financing activities        
Distributions  (2,113)  (469)
Net cash used in financing activities  (2,113)  (469)
         
Net increase in cash and cash equivalents  480   24 
Cash and cash equivalents, beginning of period  7,337   6,950 
Cash and cash equivalents, end of period $7,817  $6,974 

thousands, except share data) 

  Three months ended March 31, 2021 
  # of Shares ��Manager  Shareholders  Total 
Balances, December 31, 2020  477.8874  $(860) $13,432  $12,572 
Distributions  -   (78)  (441)  (519)
Net income  -   106   560   666 
Balances, March 31, 2021  477.8874  $(832) $13,551  $12,719 

  Three months ended March 31, 2020 
  # of Shares  Manager  Shareholders  Total 
Balances, December 31, 2019  477.8874  $(842) $14,267  $13,425 
Distributions  -   (135)  (764)  (899)
Net income  -   98   359   457 
Balances, March 31, 2020  477.8874  $(879) $13,862  $12,983 

The accompanying notes are an integral part of these unaudited condensed financial statements.

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RIDGEWOOD ENERGY X FUND, LLC

UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS

(in thousands)

  Three months ended March 31, 
  2021  2020 
       
Cash flows from operating activities        
Net income $666  $457 
Adjustments to reconcile net income to net cash        
   provided by operating activities:        
Depletion and amortization  40   226 
Accretion expense  4   4 
Changes in assets and liabilities:        
(Increase) decrease in production receivable  (33)  396 
(Increase) decrease in other current assets  (125)  8 
Decrease in due to operators  (11)  (39)
Decrease in accrued expenses  (5)  (2)
Settlement of asset retirement obligations  (523)  - 
Net cash provided by operating activities  13   1,050 
         
Cash flows from investing activities        
Capital expenditures for oil and gas properties  (17)  (91)
Proceeds from salvage fund  657   - 
Increase in salvage fund  (53)  (10)
Net cash provided by (used in) investing activities  587   (101)
         
Cash flows from financing activities        
Distributions  (519)  (899)
Net cash used in financing activities  (519)  (899)
         
Net increase in cash and cash equivalents  81   50 
Cash and cash equivalents, beginning of period  8,980   8,953 
Cash and cash equivalents, end of period $9,061  $9,003 
         
Supplemental disclosure of non-cash investing activities        
Due to operators for accrued capital expenditures for
oil and gas properties		 $-  $85 

The accompanying notes are an integral part of these unaudited condensed financial statements.

4
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RIDGEWOOD ENERGY X FUND, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS


1.Organization and Summary of Significant Accounting Policies

Organization

The Ridgewood Energy X Fund, LLC (the “Fund”), a Delaware limited liability company, was formed on August 30, 2007 and operates pursuant to a limited liability company agreement (the “LLC Agreement”) dated as of January 2, 2008 by and among Ridgewood Energy Corporation (the “Manager”) and the shareholders of the Fund, which addresses matters such as the authority and voting rights of the Manager and shareholders, capitalization, transferability of membership interests, participation in costs and revenues, distribution of assets and dissolution and winding up. The Fund was organized to primarily acquire interests in oil and gas properties located in the United States offshore waters of Texas, Louisiana and Alabama in the Gulf of Mexico.


The Manager has direct and exclusive control over the management of the Fund’s operations. The Manager performs, or arranges for the performance of, the management, advisory and administrative services required for Fundthe Fund’s operations. Such services include, without limitation, the administration of shareholder accounts, shareholder relations, the preparation, review and dissemination of tax and other financial information and the management of the Fund’s investments in projects. In addition, the Manager provides office space, equipment and facilities and other services necessary for Fundthe Fund’s operations. The Manager also engages and manages contractual relations with unaffiliated custodians, depositories, accountants, attorneys, corporate fiduciaries, insurers, banks and others as required. See Notes 2 and 3.


Basis of Presentation

These unaudited interim condensed financial statements have been prepared by the Fund’s management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in the opinion of management, contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Fund’s financial position, results of operations, changes in members’ capital and cash flows for the periods presented. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted in these unaudited interim condensed financial statements. The financial position, results of operations, financial position,changes in members’ capital and cash flows for the periods presented herein are not necessarily indicative of future financial results. These unaudited interim condensed financial statements should be read in conjunction with the Fund’s December 31, 20162020 financial statements and notes thereto included in the Fund’s Annual Report on Form 10-K (“20162020 Annual Report”) filed with the Securities and Exchange Commission (“SEC”). The year-end condensed balance sheet data was derived from audited financial statements for the year ended December 31, 2016,2020, but does not include all annual disclosures required by GAAP.


Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expense during the reporting period. On an ongoing basis, the Managermanagement reviews its estimates, including those related to the fair value of financial instruments, depletion and amortization, determination of proved reserves, impairment of long-lived assets and asset retirement obligations. Actual results may differ from those estimates.


Summary of Significant Accounting Policies

The Fund has provided discussion of significant accounting policies in Note 1 of “Notes to Financial Statements” – “Organization and Summary of Significant Accounting Policies” contained in Item 8. “Financial Statements and Supplementary Data” within its 20162020 Annual Report. There have been no significant changes to the Fund’s significant accounting policies during the three and nine months ended September 30, 2017.March 31, 2021.

Fair Value Measurements

The Fund follows the accounting guidance for fair value measurement for measuring fair value of assets and liabilities in its financial statements. The Fund’s financial assets and liabilities consist of cash and cash equivalents, salvage fund, production receivable, other current assets, investment in Delta House, due to operators and accrued expenses. Except for investment in Delta House, the carrying amounts of these financial assets and liabilities approximate fair value due to their short-term nature.

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The Fund’s investment in Delta House is valued using the measurement alternative for investment in other entities (see Investment in Delta House

below for additional information). The Fund also applies the provisions of the fair value measurement accounting guidance to its non-financial assets and liabilities, such as oil and gas properties and asset retirement obligations, on a non-recurring basis.

Investment in Delta House

The Fund has investments in Delta House Oil and Gas Lateral, LLC and Delta House FPS, LLC (collectively “Delta House”), legal entities that own interests in a deepwater floating production system operated by LLOGMurphy Exploration Company.& Production Company - USA. The investment in Delta House is valued using the measurement alternative to record the investment at cost, less impairment and plus or minus subsequent adjustments for observable price changes with change in basis reported in current earnings. At each reporting period, the Fund accounts forreviews its investment in Delta House usingto evaluate whether the cost method of accounting for investments as it does not have the ability to exercise significant influence over such investment.  Under the cost method, the Fund recognizes an investment in the equity of an investee at cost.   The Fund reviews its cost method investment for impairment at each reporting period and when an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment. Losses on cost method investments including impairments that are deemed to be other than temporary are classified as non-operating losses in the Fund’s statements of operations.is impaired. During the three and nine months ended September 30, 2017,March 31, 2021 and 2020, there were no such events or changes in circumstances that indicate thatimpairments of the Fund’s investment in Delta House is impaired.

As of September 30, 2016, the Fund invested a total of $0.6 million in Delta House and had received and recorded dividends totaling $0.3 million. During third quarter 2016, the Fund received an offer from a third party for the purchase of approximately 74% of its investment for $0.3 million in cash. The transaction closed pursuant to a unit purchase agreement with D-Day Offshore Holdings, LLC dated October 31, 2016. Certain other funds managed by the Manager were also parties to this unit purchase agreement. The Fund adjusted the carrying value of its investment in Delta House in third quarter 2016 to fair value, which was determined based on the third party sale and recorded a loss on investment during the three and nine months ended September 30, 2016 of $0.1 million. The loss was included on the Fund’s statement of operations within “Loss on investment in Delta House”. There was no such amount recorded during the three and nine months ended September 30, 2017.  Inputs used to estimate fair value of the investment in Delta House are categorized as Level 3 in the fair value hierarchy.

House.

Asset Retirement Obligations

For oil and gas properties, there are obligations to perform removal and remediation activities when the properties are retired. Upon the determination that a property is either proved or dry, a retirement obligation is incurred. The Fund recognizes the fair value of a liability for an asset retirement obligation in the period incurred.incurred based on expected future cash outflows required to satisfy the obligation discounted at the Fund’s credit-adjusted risk-free rate. Plug and abandonment costs associated with unsuccessful projects are expensed as dry-hole costs. At least bi-annually,Annually, or more frequently if an event occurs that would dictate a change in assumptions or estimates underlying the obligations, the Fund reassesses its asset retirement obligations to determine whether any revisions to the obligations are necessary. The Fund maintains a salvage fund to provide for the funding of future asset retirement obligations. The following table presents changes in asset retirement obligations duringfor the ninefollowing periods:

  Three months ended March 31, 
  2021  2020 
  (in thousands) 
Balance, beginning of period $1,205  $1,048 
Liabilities settled  (523)  - 
Accretion expense  4   4 
Revision of estimates  (122)  - 
Balance, end of period $564  $1,052 

During the three months ended September 30, 2017 and 2016.


  2017  2016 
  (in thousands) 
Balance, beginning of period $2,037  $2,525 
Liabilities settled  (205)  - 
Accretion expense  49   - 
Revision of estimates  (305)  - 
Balance, end of period $1,576  $2,525 
During the nine months ended September 30, 2017,March 31, 2021, the Fund recorded credits to depletion expense totaling $0.3$0.1 million, which related to an adjustment to the asset retirement obligation for a fully depleted property.

Revenue Recognition

Oil and gas revenues are recognized at the point when control of oil and natural gas is transferred to the customers. Natural gas liquid sales are included within gas sales. The Fund’s oil and natural gas generally are sold to its customers at prevailing market prices based on an index in which the prices are published, adjusted for pricing differentials, quality of oil and pipeline allowances. Under the Fund’s oil and natural gas contracts, each unit of oil and natural gas represents a separate performance obligation; therefore, future volumes are wholly unsatisfied and the transaction price related to the remaining performance obligations is the variable index-based price attributable to each unit of oil and natural gas that is transferred to the customer. The Fund maintainsinvoices customers once its performance obligations have been satisfied, at which point the payment is unconditional. Accordingly, the Fund’s oil and natural gas contracts do not give rise to contract assets or liabilities. The receivables related to the Fund’s oil and gas revenue are included within “Production receivable” on the Fund’s balance sheets.

The Fund also has an estimation process for revenue and related accruals, and any identified difference between its revenue estimates and actual revenue has not been significant. During the three months ended March 31, 2021 and 2020, revenue recognized from performance obligations satisfied in previous periods was not significant.

Allowance for Credit Losses

The Fund is exposed to credit losses through the sale of oil and natural gas to customers. However, the Fund only sells to a salvage fund to provide forsmall number of major oil and gas companies that have investment-grade credit ratings. Based on historical collection experience, current and future economic and market conditions and a review of the fundingcurrent status of asset retirement obligations.customers' production receivables, the Fund has not recorded an expected loss allowance as there are no past due receivable balances or projected credit losses. The Fund considered the current and expected future economic and market conditions surrounding the Coronavirus (“COVID-19”) pandemic and determined based on the composition of its customer base, there was no related credit loss impact.

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Impairment of Long-Lived Assets

The Fund reviews the carrying value of its oil and gas properties annually and when management determines thatfor impairment whenever events and circumstances indicate that the recorded carrying value of its oil and gas properties may not be recoverable. Impairments are determinedRecoverability is evaluated by comparing estimated future net undiscounted cash flows to the carrying value of the oil and gas properties at the time of the review. If the carrying value exceeds the estimated future net undiscounted cash flows, the carrying value of the assetoil and gas properties is impaired, and written down to fair value. Fair value which is determined using estimated future net discounted cash flows from the asset.valuation techniques that include both market and income approaches and use Level 3 inputs. The fair value determinations require considerable judgment and are sensitive to change. Different pricing assumptions, reserve estimates of oil and natural gas reserves and future development costs or discount rates could result in a different calculatedsignificant impact on the amount of impairment.  Given the volatility

There were no impairments of oil and natural gas prices, it is reasonably possible thatproperties during the Fund’s estimate of future net discounted cash flows from proved oilthree months ended March 31, 2021 and natural gas reserves could change in the near term.


2020. Fluctuations in oil and natural gas commodity prices may impact the fair value of the Fund’s oil and gas properties. IfIn addition, significant declines in oil and natural gas commodity prices decline, even if only for a short periodcould reduce the quantities of time, it is possiblereserves that impairments of oil and gas properties will occur.
are commercially recoverable, which could result in impairment. 

Recent Accounting Pronouncements

In January 2016, the Financial Accounting Standards Board (“FASB”) issued accounting guidance that requires, among other things, companies to measure investments in other entities, except those accounted for under the equity method, at fair value and recognize any changes in fair value in net income unless an election is made to record the investment at cost, less impairment and plus or minus subsequent adjustments for observable price changes with change in basis reported in current earnings. This pronouncement is effective for the Fund in the first quarter of 2018. Early adoption is not permitted.  The Fund does not expect the accounting guidance will have a material impact on its financial statements upon adoption.
In May 2014, the FASB issued accounting guidance on revenue recognition, which provides for a single five-step model to be applied to all revenue contracts with customers. In July 2015, the FASB issued a deferral of the effective date of the guidance to 2018, with early adoption permitted in 2017. In March 2016, the FASB issued accounting guidance, which clarifies the implementation guidance on principal versus agent considerations in the new revenue recognition standard. In April 2016, the FASB issued guidance on identifying performance obligations and licensing and in May 2016, the FASB issued final amendments which provided narrow scope improvements and practical expedients related to the implementation of the guidance.  The accounting guidance may be applied either retrospectively or through the use of a modified-retrospective method.

The Fund has substantially completedconsidered recent accounting pronouncements issued and the evaluation of the accounting guidance and currently expects the adoption of the accounting guidanceFund has not identified new standards that it believes will not have a materialan impact on the Fund’s financial statements. Under the new accounting guidance, the revenue associated with the Fund’s existing contracts will be recognized in the period that control of the related commodity is transferred to the customer, which is generally consistent with its current revenue recognition model. The Fund will adopt the new accounting guidance using the modified retrospective method at the date of adoption, which is January 1, 2018.  Although the Fund has not identified changes to its revenue recognition that would result in a material cumulative effect adjustment to retained earnings on January 1, 2018, the Fund expects the adoption of the accounting guidance will result in enhanced disclosures related to revenue recognition policies, the Fund’s performance obligations and significant judgments used in applying the new revenue recognition accounting guidance.

2.Related Parties

Pursuant to the terms of the LLC Agreement, the Manager is entitled to receive an annual management fee, payable monthly, of 2.5% of total capital contributions, net of cumulative dry-hole and related well costs incurred by the Fund.  In addition, pursuant to the terms of the LLC Agreement,Fund and fully depleted project investments, however, the Manager is also permitted to waive all or a portion of the management fee at its own discretion. SuchTherefore, all or a portion of the management fee may be temporarily waived to accommodate the Fund’s short-term commitments. In addition, the Manager is permitted to reduce the management fee with capital commitments.in reserve for future capital expenditures. In first quarter 2020, the Fund reduced its management fee with capital in reserve for future capital expenditures until such time that the capital is attributed to a project. Management fees during each of the three and nine months ended September 30, 2017March 31, 2021 and 20162020 were $0.3 million and $0.8 million, respectively.


$0.2 million.

The Manager is also entitled to receive a 15% interest inof the cash distributions from operations made by the Fund. Distributions paid to the Manager during the three and nine months ended September 30, 2017 were $0.1 million and $0.3 million, respectively. Distributions paid to the Manager during each of the three and nine months ended September 30, 2016March 31, 2021 and 2020 were $0.1 million.


In 2016, the

The Fund entered into a master agreement withutilizes DH Sales and Transport, LLC, a wholly ownedwholly-owned subsidiary of the Manager, to facilitate the transportation and sale of oil and natural gas produced from the Diller and Marmalard projects. The Fund has provided discussion of this agreement in Note 2 of “Notes to Financial Statements” – “Related Parties” contained in Item 8. “Financial Statements and Supplementary Data” within its 2016 Annual Report.


At times, short-term payables and receivables, which do not bear interest, arise from transactions with affiliates in the ordinary course of business.


The Fund has working interest ownership in certain projects to acquire and develop oil and natural gas projects, which are also owned by other entities that are likewise managed by the Manager.


3.Commitments and Contingencies

Capital Commitments

As of September 30, 2017,March 31, 2021, the Fund’s estimated capital commitments related to its oil and gas properties were $5.6$3.2 million (which include asset retirement obligations for the Fund’s projects of $2.8$1.1 million), of which $0.2$0.4 million is expected to be spent during the next twelve months.

asset retirement obligations for certain of the Fund’s projects. Future results of operations and cash flows are dependent on the ongoing development of and revenues from production and sale of oil and gas from the Fund’s producing projects.

Based upon its current cash position, salvage fund and its current reserve estimates, the Fund expects cash flow from operations to be sufficient to cover its commitments and ongoing operations. Reserve estimates are projections based on engineering data that cannot be measured with precision, require substantial judgment, and are subject to frequent revision. However, if cash flow from operations is not sufficient to meet the Fund’s commitments, the Manager may temporarily waive all or a portion of the management fee to accommodate the Fund’s short-term commitments if needed.

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Impact from COVID-19

The extent of the impact of the COVID-19 pandemic on the Fund’s financial position, results of operations and cash flows will depend on future developments, including the duration and scope of the pandemic, related advisories and restrictions that have been and continue to be taken to combat virus transmission and the impact of the pandemic on oil and natural gas commodity prices, financial markets and the overall global economy, all of which are highly uncertain and cannot be predicted. Lower oil and gas prices may reduce the amount of oil and gas products which can be economically produced. Although the extent of the continued impact of the COVID-19 pandemic and resulting market disruption to the Fund’s operating results and cash flows is unknown, the period of low oil and natural gas commodity prices during 2020 negatively impacted cash flow generated by the Fund’s projects.  If the overall global economy, including financial markets therein, is further adversely impacted by the COVID-19 pandemic for a prolonged period, the Fund, its operators and other working interest partners’ financial performance results may be materially adversely affected, which could significantly affect the Fund’s liquidity, development of oil and gas and expected operating results. It is likely that estimates of oil and gas products that can be economically produced will be reduced, which increases the likelihood of future impairments and higher depletion rates.

Environmental and Governmental Regulations

Many aspects of the oil and gas industry are subject to federal, state and local environmental laws and regulations. The Manager and operators of the Fund’s properties are continually taking action they believe appropriate to satisfy applicable federal, state and local environmental regulations. However, due to the significant public and governmental interest in environmental matters related to those activities, the Manager cannot predict the effects of possible future legislation, rule changes, or governmental or private claims. As of September 30, 2017March 31, 2021 and December 31, 2016,2020, there were no known environmental contingencies that required adjustment to, or disclosure in, the Fund’s financial statements.


Oil and gas industry legislation and administrative regulations are periodically changed for a variety of political, economic, and other reasons. Any such future laws and regulations could result in increased compliance costs or additional operating restrictions, which could have a material adverse effect on the Fund’s operating results and cash flows. It is not possible at this time to predict whether such legislation or regulation, if proposed, will be adopted as initially written, if at all, or how legislation or new regulation that may be adopted would impact the Fund’s business.


BOEM Notice to Lessees on Supplemental Bonding

On July 14, 2016, the Bureau of Ocean Energy Management (“BOEM”) issued a Notice to Lessees (“NTL”NTL 2016-N01”) that discontinued and materially replaced existing policies and procedures regarding financial security (i.e. supplemental bonding) for decommissioning obligations of lessees of federal oil and gas leases and owners of pipeline rights-of-way, rights-of use and easements on the Outer Continental Shelf (“Lessees”). Generally, the new NTL 2016-N01 (i) ended the practice of excusing Lessees from providing such additional security where co-lessees had sufficient financial strength to meet such decommissioning obligations, (ii) established new criteria for determining financial strength and additional security requirements of such Lessees, (iii) provided acceptable forms of such additional security, and (iv) replaced the waiver system with one of self-insurance. The new rule became effective as of September 12, 2016; however, on January 6, 2017, the BOEM announced that it was suspending the implementation timeline for six months in certain circumstances. On May 1, 2017, the Secretary of the U.S. Department of the Interior (“Interior”) directed the BOEM to complete a review of NTL 2016-N01, to provide a report to certain Interior personnel describing the results of the review and options for revising or rescinding NTL 2016-N01, and to keep the implementation timeline extension in effect pending the completion of the review of NTL 2016-N01 by the identified Interior personnel. On June 22, 2017, the BOEM announced that the implementation timeline extension will remain in effect pending the completion of itsthe review of the new NTL. The Fund, as well as other industry participants, are working withNTL 2016-N01. As of March 31, 2021, the BOEM has not lifted its operators and working interest partners to determine and agree uponsuspension of the correct levelimplementation of decommissioning obligations to which they may be liable and the manner in which such obligations will be secured.NTL 2016-N01.  The impact of the NTL 2016-N01, if enforced without change or amendment, may require the Fund to fully secure all of its potential abandonment liabilities to the BOEM’s satisfaction using one or more of the enumerated methods for doing so.  Potentially this could increase costs to the Fund if the Fund is required to obtain additional supplemental bonding, fund escrow accounts or obtain letters of credit.

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On October 16, 2020, BOEM and the Bureau of Safety and Environmental Enforcement published a proposed new rule at 85 FR 65904 on Risk, Management, Financial Assurance and Loss Prevention, addressing the streamlining of evaluation criteria when determining whether oil, gas and sulfur leases, right-of-use and easement grant holders, and pipeline right-of-way grant holders may be required to provide bonds or other security above the prescribed amounts for base bonds to ensure compliance with the Outer Continental Shelf obligations, primarily decommissioning obligations. The proposed rule was significantly less stringent with respect to financial assurance than NTL 2016-N01. To date, however, Interior has not issued a final rule. The Fund is not able to evaluate the impact of the proposed new rule on its operations or financial condition until the final rule is issued.

Insurance Coverage

The Fund is subject to all risks inherent in the oil and natural gas business. Insurance coverage as is customary for entities engaged in similar operations is maintained, but losses may occur from uninsurable risks or amounts in excess of existing insurance coverage. The occurrence of an event that is not insured or not fully insured could have a material adverse impact upon earnings and financial position. Moreover, insurance is obtained as a package covering all of the fundsentities managed by the Manager. Depending on the extent, nature and payment of claims made by the Fund or other fundsentities managed by the Manager, yearly insurance coverage may be exhausted and become insufficient to cover a claim by the Fund in a given year.

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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Cautionary Statement Regarding Forward-Looking Statements


Certain statements in this Quarterly Report on Form 10-Q (“Quarterly Report”) and the documents Ridgewood Energy X Fund, LLC (the “Fund”) has incorporated by reference into this Quarterly Report, other than purely historical information, including estimates, projections, statements relating to the Fund’s business plans, strategies, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that1995. Such forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially from the forward-looking statements. You are therefore cautioned against relying on any such forward-looking statements. Forward-looking statements can generally be identified by words such as “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “target,” “pursue,” “may,” “will,” “will likely result,” and similar expressions and references to future periods. Examples of events that could cause actual results to differ materially from historical results or those anticipated include the impact on the Fund’s business and operations of the ongoing Coronavirus (“COVID-19”) pandemic and any other future widespread health emergencies or public health crises such as pandemics and epidemics, weather conditions, such as hurricanes, changes in market and other conditions affecting the pricing, production and demand of oil and natural gas, the cost and availability of equipment, and changes in domestic and foreign governmental regulations. Examples of forward-looking statements made herein include statements regarding projects, investments, insurance, capital expenditures and liquidity. Forward-looking statements made in this document speak only as of the date on which they are made. The Fund undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.


Critical Accounting Policies and Estimates


There were no changes to the Fund’s critical accounting policies and estimates from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2016.


2020.

Overview of the Fund’s Business


The Fund was organized primarily to acquire interests in oil and natural gas properties located in the United States offshore waters of Texas, Louisiana and Alabama in the Gulf of Mexico. The Fund’s primary investment objective is to generate cash flow for distribution to its shareholders by generating returns across a portfolio of oil and natural gas projects. Distributions to shareholders are made in accordance with the Fund’s limited liability company agreement (the “LLC Agreement”).


Ridgewood Energy Corporation (the “Manager”) is the Manager, and as such, has direct and exclusive control over the management of the Fund’s operations. The Manager performs, or arranges for the performance of, the management, advisory and administrative services required for the Fund’s operations. As compensation for its services, the Manager is entitled to an annual management fee, payable monthly, equal to 2.5% of the total capital contributions made by the Fund’s shareholders, net of cumulative dry-hole and related well costs incurred by the Fund.Fund and fully depleted project investments. The Fund does not currently, nor is there any plan to, operate any project in which the Fund participates. The Manager enters into operating agreements with third-party operators for the management of all exploration, development and producing operations, as appropriate. The Manager also participates in distributions.

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Recent Developments

In March 2020, the World Health Organization categorized the outbreak of COVID-19 as a global pandemic, which resulted in a significant drop in oil demand caused by lockdown measures and industrial slowdown around the world. In addition, in March 2020, the failure of an alliance between the Saudi Arabia-led Organization of Petroleum Exporting Countries (“OPEC”) and Russia to reach an agreement on oil production volumes resulted in an oil “price war” and caused oil prices to collapse. On April 12, 2020, OPEC and Russia agreed to reduce production by approximately 9.7 million barrels per day in May and June 2020. Despite this agreement, oil prices decreased to their lowest level in April 2020 as compared to the past several years as a result of the initial oil price war and significant decreases in oil demand caused by world-wide government-ordered lock-downs. Since then, the oil market has stabilized and strengthened with oil prices gradually rising. On June 6, 2020, OPEC and Russia agreed to extend the production cut of approximately 9.7 million barrels per day through the end of July 2020 and maintain a production cut of 7.7 million barrels per day from August 2020 through the end of 2020. On December 3, 2020, OPEC and Russia agreed to reduce the production cut to 7.2 million barrels per day beginning in January 2021 and will then meet monthly to assess market conditions and decide on further production adjustments for the following month, with further monthly adjustments being no more than 0.5 million barrels per day. In accordance with this approach, OPEC and Russia have agreed to gradually reduce the production cut down to 5.759 million barrels per day by July 2021 while Saudi Arabia has maintained its additional voluntary production cut of 1.0 million barrels per day from February 2021 through April 2021.

Although the ultimate extent of the impact of the COVID-19 pandemic and resulting market disruption to the Fund’s operating results and cash flows is unknown, the period of low oil and natural gas commodity prices during 2020 negatively impacted cash flow generated by the Fund’s projects.  However, because the Fund owns its oil and gas properties with no debt and these projects are long-lived assets that are expected to produce over many years with relatively low operating costs, the Fund believes that it is positioned to weather this period of uncertainty and volatility from the COVID-19 pandemic. However, if oil and natural gas commodity prices and the overall economy continue to be impacted by the COVID-19 pandemic, the Fund, its operators and other working interest partners’ financial performance results may be adversely impacted, which could significantly affect the Fund’s liquidity and expected operating results.

Commodity Price Changes

Changes in oil and natural gas commodity prices may significantly affect liquidity and expected operating results. Declines in oil and natural gas commodity prices not only reduce revenues and profits but could also reduce the quantities of reserves that are commercially recoverable.  Significant declines in prices couldrecoverable and result in non-cash charges to earnings due to impairment.


Oil and natural gas commodity prices have been subject to significant fluctuations during the past several years. During first half of 2020, oil and natural gas commodity prices experienced significant volatility primarily attributable to the COVID-19 pandemic. The Fund anticipates price cyclicality in its planning and believes it is well positioned to withstand price volatility. The Fund continueswill continue to conserveclosely manage and coordinate its capital spending estimates within its expected cash flows to complete the ongoingprovide for future development costs of the Diller and Marmalardits producing projects, as budgeted. See “Results of Operations” under this Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report for more information on the average oil and natural gas prices received by the Fund during the three and nine months ended September 30, 2017March 31, 2021 and 20162020 and the effect of such average prices on the Fund’s results of operations. If oil and natural gas commodity prices decline, even if only for a short period of time,continue to be impacted by the COVID-19 pandemic, the Fund’s results of operations and liquidity will be adversely impacted.

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Market pricing for oil and natural gas is volatile and is likely to continue to be volatile in the future. This volatility is caused by numerous factors and market conditions that the Fund cannot control or influence. Therefore, it is impossible to predict the future price of oil and natural gas with any certainty. Factors affecting market pricing for oil and natural gas include:


·worldwide economic, political and social conditions impacting the global supply and demand for oil and natural gas, which may be driven by various risks, including war, terrorism, political unrest, or health epidemics (such as the global COVID-19 pandemic);
·continued social distancing and other measures implemented due to the COVID-19 pandemic, which results in a decrease in demand in oil and natural gas prices and operational decisions such as well shut-ins;
·weather conditions;
·economic conditions, including demand for petroleum-based products;
·actions by OPEC, the Organization of Petroleum Exporting Countries;
·political instability in the Middle East and other major oil and gas producing regions;
·governmental regulations, both domestic and foreign;
·domestic and foreign tax policy;
·the pace adopted by foreign governments for the exploration, development, and production of their national reserves;
·the supply and price of foreign oil and gas;
·the cost of exploring for, producing and delivering oil and gas;
·the discovery rate of new oil and gas reserves;
·the rate of decline of existing and new oil and gas reserves;
·available pipeline and other oil and gas transportation capacity;
·the ability of oil and gas companies to raise capital;
·the overall supply and demand for oil and gas; and
·the price and availability of alternate fuel sources.

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Business Update

Information regarding the Fund’s current projects, all of which are located in the United States offshore waters ofin the Gulf of Mexico, is provided in the following table. See “Liquidity Needs” under this Item 2. “Management’s“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report for information regarding the funding of the Fund’s capital commitments.

    Total Spent  Total   
  Working through  Fund   
Project Interest March 31, 2021  Budget  Status
    (in thousands)   
Producing Properties          
Diller Project 0.88% $3,748  $4,583  The Diller Project is expected to include the development of three wells.  Well #1 commenced production in 2015.  Well #2 commenced production in 2019. Well #3 is expected to commence production in third quarter 2022. During May 2020, production from the Diller Project was shut-in due to the low-price environment.  Production from the wells returned in June 2020 at production levels prior to shut-in.  During third quarter 2020, the project experienced several periods of mechanical downtime at the Delta House production facility. In addition, the project experienced several periods of storm-related safety shut-ins as a result of active storm systems passing through the Gulf of Mexico during second half of 2020.  The Fund expects to spend $0.5 million for additional development costs and $0.3 million for asset retirement obligations.
Marmalard Project 0.84% $5,621  $7,645  The Marmalard Project is expected to include the development of six wells.  Four wells commenced production in 2015.  Additional wells are expected to commence production in 2023.  During May 2020, production from the Marmalard Project was shut-in due to the low-price environment. Production from the wells returned in June 2020 at production levels prior to shut-in. During third quarter 2020, the project experienced several periods of mechanical downtime at the Delta House production facility. In addition, the project experienced several periods of storm-related safety shut-ins as a result of active storm systems passing through the Gulf of Mexico during second half of 2020. The Fund expects to spend $1.5 million for additional development costs and $0.5 million for asset retirement obligations.
Fully Depleted Properties            
Liberty Project 5.0% $8,034  $8,200  The Liberty Project, a single-well project, commenced production in 2010.  The well reached the end of its productive life in first quarter 2020. During first quarter 2021, the Fund spent $0.5 million related to the settlement of the project's asset retirement obligations. The Fund expects to spend an additional $0.2 million for asset retirement obligations.

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     Total Spent  Total  
   Working  through  Fund  
Project Interest  September 30, 2017  Budget Status
     (in thousands)  
Producing Properties             
Diller Project  0.88% $2,770  $3,865 The Diller Project is expected to include the development of two wells.  Well #1 commenced production in 2015.  Well #2 is expected to commence production in 2019. Well #1, which  was shut-in in late-2016 due to well hydrate remediation work, resumed production in mid-January 2017. The Fund expects to spend $0.7 million for additional development costs and $0.4 million for asset retirement obligations.
Liberty Project  5.0% $7,510  $8,612 The Liberty Project, a single-well project, commenced production in 2010.  After various shut-ins in late-2015 and early-2016, due to third-party facilities' repair and maintenance activities, the well resumed production in early-May 2016.  The well was shut-in again in late-June 2017 due to gas dehydration unit work, resuming production in late-September 2017. The operator is currently flowing the well's current zone together with the behind-pipe zone at no cost to the Fund.  The Fund expects to spend $1.1 million for asset retirement obligations.
Marmalard Project  0.88% $5,552  $8,753 The Marmalard Project is expected to include the development of six wells.  Four wells commenced production in 2015.  Additional wells are expected to commence production in 2019 and 2020.  The Fund expects to spend $2.1 million for additional development costs and $1.1 million for asset retirement obligations.

Results of Operations


The following table summarizes the Fund’s results of operations during the three and nine months ended September 30, 2017March 31, 2021 and 2016,2020, and should be read in conjunction with the Fund’s financial statements and notes thereto included within Item 1. “Financial Statements” in Part I of this Quarterly Report.


    Three months ended September 30,  Nine months ended September 30, 
  2017  2016  2017  2016 
    (in thousands) 
Revenue            
Oil and gas revenue $1,582  $1,421  $4,914  $3,734 
Expenses                
Depletion and amortization  441   514   1,028   1,761 
Management fees to affiliate  266   270   800   812 
Operating expenses  396   625   1,288   2,200 
General and administrative expenses  43   42   132   114 
Total expenses  1,146   1,451   3,248   4,887 
Income (loss) from operations  436   (30)  1,666   (1,153)
Other income (loss)                
Loss on investment in Delta House  -   (110)  -   (110)
Dividend income  7   58   19   181 
Interest income  4   2   10   6 
Total other income (loss)  11   (50)  29   77 
Net income (loss) $447  $(80) $1,695  $(1,076)

Overview.

  Three months ended March 31, 
  2021  2020 
  (in thousands) 
Revenue      
Oil and gas revenue $1,116  $1,317 
Expenses        
Depletion and amortization  40   226 
Operating expenses  199   370 
Management fees to affiliate  184   243 
General and administrative expenses  37   43 
Total expenses  460   882 
Income from operations  656   435 
Other income        
Dividend income  10   8 
Interest income  -   14 
Total other income  10   22 
Net income $666  $457 

Overview. The following table provides information related to the Fund’s oil and natural gas production and oil and gas revenue during the three and nine months ended September 30, 2017March 31, 2021 and 2016.2020. Natural gas liquid (“NGL”) sales are included within gas sales.


  Three months ended September 30,  Nine months ended September 30, 
  2017  2016  2017  2016 
Number of wells producing  6   6   6   6 
Total number of production days  469   472   1,441   1,372 
Oil sales (in thousands of barrels)  27   29   85   82 
Average oil price per barrel $49  $43  $50  $39 
Gas sales (in thousands of mcfs)  70   67   219   201 
Average gas price per mcf $3.41  $2.58  $3.16  $2.25 

  Three months ended March 31, 
  2021  2020 
Number of wells producing  6   7 
Total number of production days  540   602 
Oil sales (in thousands of barrels)  17   25 
Average oil price per barrel $58  $48 
Gas sales (in thousands of mcfs)  35   52 
Average gas price per mcf $3.79  $1.76 

The increasesdecrease in the number of wells producing noted in the above table were primarilyabove related to the Diller Project, which was shut-in in late 2016, partially offset by the Liberty Project, which was shut-inreached the end of its productive life during first quarter 2020. The decreases in oil and gas sales volumes noted in the majority of third quarter 2017.table above were primarily attributable to natural declines in production from the Diller and Marmalard projects. In addition, the increases in gas salesdecreases were also attributable to the MarmalardLiberty Project, which did not produce NGLsreached the end of its productive life during the thirdfirst quarter of 2016 due to third-party facilities’ repair and maintenance activities.2020. See additional discussion in “Business Update” section above.


Oil and Gas Revenue. Generally, the Fund sells oil, gas and NGLs under two types of agreements, which are common in the oil and gas industry. In a netback agreement, the Fund receives a price, net of transportation expense incurred by the purchaser, and the Fund records revenue at the net price received. In the second type of agreement, the Fund pays transportation expense directly, and transportation expense is included within operating expenses in the statements of operations.


Oil and gas revenue during the three months ended September 30, 2017March 31, 2021 was $1.6$1.1 million, an increasea decrease of $0.2 million from the three months ended September 30, 2016.March 31, 2020. The increasedecrease was primarily attributable to increased oil and gas prices.

Oil and gas revenue during the nine months ended September 30, 2017 was $4.9decreased sales volume totaling $0.4 million, an increase of $1.2 million from the nine months ended September 30, 2016.  The increase was attributable topartially offset by increased oil and gas prices totaling $1.1 million coupled with increased sales volume totaling $0.2 million.

See “Overview” above for factors that impact the oil and gas revenue volume and rate variances.

Depletion and Amortization. Depletion and amortization during the three months ended September 30, 2017March 31, 2021 was $0.4 million,$40 thousand, a decrease of $0.1$0.2 million from the three months ended September 30, 2016.March 31, 2020. The decrease was primarily attributable to a decrease in the average depletion rate.  The decrease in the average depletion rate was primarily attributable to the Liberty Project, which was shut-in during the majority of third quarter 2017.

Depletion and amortization during the nine months ended September 30, 2017 was $1.0 million, a decrease of $0.7 million from the nine months ended September 30, 2016.  The decrease was attributable to a decrease in the average depletion rate totaling $0.5 million coupled with an adjustment to the asset retirement obligation related to a fully depleted property totaling $0.3$0.1 million partially offset by an increase in production volumes totaling $0.1 million.  The decrease induring the average depletion rate was primarily attributable to the lower cost of reserves from the Diller and Marmalard projects.three months ended March 31, 2021.

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See “Overview” above for certain factors that impact the depletion and amortization volume and rate variances. Depletion and amortization rates may also be impacted by changes in reservereserves estimates provided annually by the Fund’s independent petroleum engineers.

Management Fees to Affiliate.  An annual management fee, totaling 2.5% of total capital contributions, net of cumulative dry-hole Reserves estimates may also be impacted by significant declines in oil and related well costs incurred by the Fund, is paid monthlynatural gas commodity prices due to the Manager. Such fee may be temporarily waived by the Manager to accommodate the Fund’s short-term capital commitments.

COVID-19 pandemic, which could result in higher depletion rates.

Operating Expenses. Operating expenses represent costs specifically identifiable or allocable to the Fund’s wells, as detailed in the following table.


  Three months ended September 30,  Nine months ended September 30, 
  2017  2016  2017  2016 
  (in thousands) 
Lease operating expense $277  $516  $812  $1,896 
Transportation and processing expense  96   82   309   251 
Workover expense  (7)  -   74   27 
Insurance expense  12   23   42   42 
Accretion expense and other  18   4   51   (16)
  $396  $625  $1,288  $2,200 

  Three months ended March 31, 
  2021  2020 
  (in thousands) 
Lease operating expense $111  $276 
Transportation and processing expense  71   85 
Insurance expense  12   11 
Accretion expense  4   4 
Workover expense  1   (6)
  $199  $370 

Lease operating expense and transportation and processing expense relatesrelate to the Fund’s producing properties. Workover expense, which represents costs to restore or stimulate production of existing reserves, primarily relates to the Diller and Marmalard projects. Insurance expense represents premiums related to the Fund’s properties,projects, which vary depending upon the number of wells producing or drilling. Accretion expense relates to the asset retirement obligations established for the Fund’s provedoil and gas properties.

The average Workover expense represents costs to restore or stimulate production cost,of existing reserves.

Production costs, which includesinclude lease operating expense, transportation and processing expense and insurance expense, was $9.90were $0.2 million ($8.53 per barrel of oil equivalent (“BOE”or “BOE”) during the three months ended March 31, 2021, compared to $0.4 million ($10.94 per BOE) during the three months ended March 31, 2020.

The decreases in production costs and $9.60production costs per BOE during the three and nine months ended September 30, 2017, respectively,March 31, 2021 compared to $15.56 per BOE and $19.01 per BOE during the three and nine months ended September 30, 2016, respectively.  The decreasesMarch 31, 2020 were primarily attributable to decreased oil and natural gas production as a result of natural declines in production from the Diller and Marmalard projects which had lower cost per BOE in 2017 as a result ofcoupled with a reduction in the Diller and Marmalard projects’ production handling fees from $15.50$4.50 per BOE to $4.50$1.50 per BOE effective December 2016.June 2020 through the end of the wells’ productive lives. The production handling fees for the Diller and Marmalard projects declinedeclined over time as certain production hurdles arewere met in accordance with their production handling agreement relating to the Delta House production facility.

In addition, the decreases were also attributable to the Liberty Project, which reached the end of its productive life during first quarter 2020.

See “Overview” above for factors that impact oil and natural gas production.

Management Fees to Affiliate. An annual management fee, totaling 2.5% of total capital contributions, net of cumulative dry-hole well costs incurred by the Fund and fully depleted project investments, is paid monthly to the Manager. All or a portion of such fee may be temporarily waived by the Manager to accommodate the Fund’s short-term commitments.

General and Administrative Expenses. General and administrative expenses represent costs specifically identifiable or allocable to the Fund, such as accounting and professional fees and insurance expenses.


Loss on Investment in Delta House. During the three and nine months ended September 30, 2016, the Fund recognized a loss on investment of $0.1 million related to its investment in Delta House.  See Note 1 of “Notes to Unaudited Condensed Financial Statements” - “Organization and Summary of Significant Accounting Policies” contained in Item 1. “Financial Statements” within Part I of this Quarterly Report for more information regarding the Investment in Delta House. There were no such amounts recorded during the three and nine months ended September 30, 2017.

Dividend Income.  Dividend income is related to the Fund’s investment in Delta House.

Interest Income. Interest income is comprised of interest earned on cash and cash equivalents and salvage fund.


Capital Resources and Liquidity


Operating Cash Flows

Cash flows provided by operating activities during the ninethree months ended September 30, 2017March 31, 2021 were $2.4 million,$13 thousand, primarily related to revenue received of $4.8$1.1 million, partially offset by the settlement of asset retirement obligations of $0.5 million, operating expenses of $1.3$0.3 million and management fees of $0.8 million, the settlement of an asset retirement obligation of $0.2 million and general and administrative expenses of $0.1 million.


Cash flows provided by operating activities during the ninethree months ended September 30, 2016March 31, 2020 were $0.7$1.1 million, primarily related to revenue received of $3.6 million and dividend income received of $0.2$1.7 million, partially offset by operating expenses of $2.2$0.4 million and management fees of $0.8 million and general and administrative expenses of $0.1$0.2 million.

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Investing Cash Flows

Cash flows provided by investing activities during the ninethree months ended September 30, 2017March 31, 2021 were $0.2$0.6 million, primarily related to proceeds from the salvage fund.


fund of $0.7 million, partially offset by investments in salvage fund of $0.1 million.

Cash flows used in investing activities during the ninethree months ended September 30, 2016March 31, 2020 were $0.2$0.1 million, primarily related to investments in salvage fund.


capital expenditures for oil and gas properties.

Financing Cash Flows

Cash flows used in financing activities during the ninethree months ended September 30, 2017 were $2.1 million, related to manager and shareholder distributions.


Cash flows used in financing activities during the nine months ended September 30, 2016March 31, 2021 were $0.5 million, related to manager and shareholder distributions.

Cash flows used in financing activities during the three months ended March 31, 2020 were $0.9 million, related to manager and shareholder distributions.

Estimated Capital Expenditures


Capital Commitments
The Fund has entered into multiple agreements for the acquisition, drilling and development of its oil and gas properties. The estimated capital expenditures associated with these agreements vary depending on the stage of development on a property-by-property basis.  See “Business Update” under this Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report for information regarding the Fund’s current projects. See “Liquidity Needs” below for additional information.

Capital expenditures for oil and gas properties have been funded with the capital raised by the Fund in its private placement offering. The Fund’s remaining capital has been fully allocated to complete its projects. As a result, the Fund will not invest in any new projects and will limit its investment activities, if any, to those projects in which it currently has a working interest.


See “Business Update” under this Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report for information regarding the Fund’s current projects. See “Liquidity Needs” below for additional information.

Liquidity Needs


The Fund’s primary short-term liquidity needs are to fund its operations and capital expenditures for its oil and gas properties. Such needs are funded utilizing operating income and existing cash on-hand. 

As of September 30, 2017,March 31, 2021, the Fund’s estimated capital commitments related to its oil and gas properties were $5.6$3.2 million (which include asset retirement obligations for the Fund’s projects of $2.8$1.1 million), of which $0.2$0.4 million is expected to be spent during the next twelve months. months primarily related to the settlement of asset retirement obligations for certain of the Fund’s projects. Future results of operations and cash flows are dependent on the ongoing development of and revenues from production and sale of oil and gas from the Fund’s producing projects.

Based upon its current cash position, salvage fund and its current reserve estimates, the Fund expects cash flow from operations to be sufficient to cover its commitments as well asand ongoing operations. Reserve estimates are projections based on engineering data that cannot be measured with precision, require substantial judgment, and are subject to frequent revision.

However, if cash flow from operations is not sufficient to meet the Fund’s commitments, the Manager may temporarily waive all or a portion of the management fee to accommodate the Fund’s short-term commitments if needed.

The Manager is entitled to receive an annual management fee from the Fund regardless of the Fund’s profitability in that year. However, pursuant to the terms of the LLC Agreement, the Manager is also permitted to waive all or a portion of the management fee at its own discretion.

Distributions, if any, are funded from available cash from operations, as defined in the LLC Agreement, and the frequency and amount are within the Manager’s discretion. Due to the future capital required to develop the Diller and Marmalard projects,However, distributions may be impacted by amounts reserved to provideof future capital required for theirthe ongoing development costsof the Diller and Marmalard projects and funding their estimated asset retirement obligations.


Distributions may also be impacted by fluctuations in oil and natural gas commodity prices.

Off-Balance Sheet Arrangements


The Fund had no off-balance sheet arrangements as of September 30, 2017March 31, 2021 and December 31, 20162020 and does not anticipate the use of such arrangements in the future.

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Contractual Obligations


The Fund enters into participation and joint operating agreements with operators. On behalf of the Fund, an operator enters into various contractual commitments pertaining to exploration, development and production activities. The Fund does not negotiate such contracts. No contractual obligations exist as of September 30, 2017March 31, 2021 and December 31, 2016,2020, other than those discussed in “Estimated Capital Expenditures” above.


Recent Accounting Pronouncements


See Note 1 of “Notes to Unaudited Condensed Financial Statements” - “Organization and Summary of Significant Accounting Policies” contained in Item 1. “Financial Statements” within Part I of this Quarterly Report for a discussion of recent accounting pronouncements.


ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.


ITEM 4.CONTROLS AND PROCEDURES

In accordance with Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Fund’s management, including its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Fund’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Fund’s disclosure controls and procedures were effective as of September 30, 2017.


March 31, 2021.

There has been no change in the Fund’s internal control over financial reporting that occurred during the three months ended September 30, 2017March 31, 2021 that has materially affected, or is reasonably likely to materially affect, the Fund’s internal control over financial reporting. The Fund has not experienced any material impact to internal control over financial reporting due to the COVID-19 pandemic.

17
Table of Contents

PART II – OTHER INFORMATION


ITEM 1.LEGAL PROCEEDINGS

None.


ITEM 1A.RISK FACTORS

Not required.


ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.


ITEM 3.DEFAULTS UPON SENIOR SECURITIES

None.


ITEM 4.MINE SAFETY DISCLOSURES

None.


ITEM 5.OTHER INFORMATION

None.


ITEM 6.EXHIBITS

EXHIBIT

NUMBER

TITLE OF EXHIBIT
METHOD OF FILING
   
31.1
Certification of Robert E. Swanson, Chief Executive Officer of

the Fund, pursuant to Exchange Act Rule 13a-14(a)

Filed herewith
   
31.2

Certification of Kathleen P. McSherry, Executive Vice President

and Chief Financial Officer of the Fund, pursuant to Exchange

Act Rule 13a-14(a)

Filed herewith
   
32

Certifications pursuant to 18 U.S.C. Section 1350, as adopted

pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,

signed by Robert E. Swanson, Chief Executive Officer of the

Fund and Kathleen P. McSherry, Executive Vice President and

Chief Financial Officer of the Fund

Filed herewith
   
101.INSXBRL Instance DocumentFiled herewith
   
101.SCHXBRL Taxonomy Extension SchemaFiled herewith
   
101.CALXBRL Taxonomy Extension Calculation LinkbaseFiled herewith
   
101.DEFXBRL Taxonomy Extension Definition Linkbase Document

Filed herewith

101.LABXBRL Taxonomy Extension Label LinkbaseFiled herewith
   
101.PREXBRL Taxonomy Extension Presentation LinkbaseFiled herewith

18

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.



      

RIDGEWOOD ENERGY X FUND, LLC

Dated:November 7, 2017May 10, 2021By:/s/  ROBERT E. SWANSON
   Name:  Robert E. Swanson
   Title:  Chief Executive Officer
      (Principal Executive Officer)
       
       
Dated:November 7, 2017May 10, 2021By:/s/  KATHLEEN P. MCSHERRY
   Name:  Kathleen P. McSherry
   Title:  Executive Vice President and Chief Financial Officer
      
(Principal Financial and Accounting Officer)

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