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 |
or
TRANSITION 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, NJ07645
(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 ☐
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 ☐
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.
Large accelerated filer | Accelerated filer | ||
Non-accelerated filer | Smaller reporting company Emerging growth company | x ¨ |
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. ☐
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 ☐ ¨No ☒
As of November 7, 2017May 8, 2023, there were shares of LLC Membership Interest outstanding.
Table of Contents
PAGE | |||
PART I - FINANCIAL INFORMATION | |||
Item 1. | 1 | ||
1 | |||
2 | |||
3 | |||
Item 2. | |||
Item 3. | 14 | ||
Item 4. | 14 | ||
PART II - OTHER INFORMATION | |||
Item 1. | 15 | ||
Item 1A. | 15 | ||
Item 2. | 15 | ||
Item 3. | 15 | ||
Item 4. | 15 | ||
Item 5. | 15 | ||
Item 6. | 15 | ||
16 |
PART I – FINANCIAL INFORMATION
RIDGEWOOD ENERGY X FUND, LLC
(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, 2023 | December 31, 2022 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 8,203 | $ | 8,831 | ||||
Salvage fund | 100 | 100 | ||||||
Production receivable | 338 | 392 | ||||||
Other current assets | 10 | 20 | ||||||
Total current assets | 8,651 | 9,343 | ||||||
Salvage fund | 1,248 | 909 | ||||||
Investment in Delta House | 119 | 119 | ||||||
Oil and gas properties: | ||||||||
Proved properties | 9,530 | 9,508 | ||||||
Less: accumulated depletion and amortization | (7,625 | ) | (7,541 | ) | ||||
Total oil and gas properties, net | 1,905 | 1,967 | ||||||
Total assets | $ | 11,923 | $ | 12,338 | ||||
Liabilities and Members' Capital | ||||||||
Current liabilities: | ||||||||
Due to operators | $ | 99 | $ | 102 | ||||
Accrued expenses | 55 | 61 | ||||||
Asset retirement obligations | 100 | 100 | ||||||
Total current liabilities | 254 | 263 | ||||||
Asset retirement obligations | 355 | 350 | ||||||
Total liabilities | 609 | 613 | ||||||
Commitments and contingencies (Note 3) | ||||||||
Members' capital: | ||||||||
Manager: | ||||||||
Distributions | (7,850 | ) | (7,694 | ) | ||||
Retained earnings | 6,926 | 6,826 | ||||||
Manager's total | (924 | ) | (868 | ) | ||||
Shareholders: | ||||||||
Capital contributions ( issued and outstanding) | shares authorized;94,698 | 94,698 | ||||||
Syndication costs | (11,080 | ) | (11,080 | ) | ||||
Distributions | (46,657 | ) | (45,772 | ) | ||||
Accumulated deficit | (24,723 | ) | (25,253 | ) | ||||
Shareholders' total | 12,238 | 12,593 | ||||||
Total members' capital | 11,314 | 11,725 | ||||||
Total liabilities and members' capital | $ | 11,923 | $ | 12,338 |
The accompanying notes are an integral part of these unaudited condensed financial statements.
1 |
RIDGEWOOD ENERGY X FUND, LLC
(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, | ||||||||
2023 | 2022 | |||||||
Revenue | ||||||||
Oil and gas revenue | $ | 1,012 | $ | 934 | ||||
Expenses | ||||||||
Depletion and amortization | 77 | 79 | ||||||
Operating expenses | 129 | 146 | ||||||
Management fees to affiliate (Note 2) | 180 | 180 | ||||||
General and administrative expenses | 42 | 34 | ||||||
Total expenses | 428 | 439 | ||||||
Income from operations | 584 | 495 | ||||||
Other income | ||||||||
Dividend income | 6 | 7 | ||||||
Interest income | 40 | - | ||||||
Total other income | 46 | 7 | ||||||
Net income | $ | 630 | $ | 502 | ||||
Manager Interest | ||||||||
Net income | $ | 100 | $ | 86 | ||||
Shareholder Interest | ||||||||
Net income | $ | 530 | $ | 416 | ||||
Net income per share | $ | 1,108 | $ | 869 |
The accompanying notes are an integral part of these unaudited condensed financial statements.
2 |
RIDGEWOOD ENERGY X FUND, LLC
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 |
Three months ended March 31, 2023 | ||||||||||||||||
# of Shares | Manager | Shareholders | Total | |||||||||||||
Balances, December 31, 2022 | - | 477.8874 | $ | (868 | ) | $ | 12,593 | $ | 11,725 | |||||||
Distributions | - | (156 | ) | (885 | ) | (1,041 | ) | |||||||||
Net income | - | - | 100 | 530 | 630 | |||||||||||
Balances, March 31, 2023 | - | 477.8874 | $ | (924 | ) | $ | 12,238 | $ | 11,314 |
Three months ended March 31, 2022 | ||||||||||||||||
# of Shares | Manager | Shareholders | Total | |||||||||||||
Balances, December 31, 2021 | - | 477.8874 | $ | (899 | ) | $ | 12,750 | $ | 11,851 | |||||||
Distributions | - | (75 | ) | (427 | ) | (502 | ) | |||||||||
Net income | - | - | 86 | 416 | 502 | |||||||||||
Balances, March 31, 2022 | - | 477.8874 | $ | (888 | ) | $ | 12,739 | $ | 11,851 |
The accompanying notes are an integral part of these unaudited condensed financial statements.
3 |
RIDGEWOOD ENERGY X FUND, LLC
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
Three months ended March 31, | ||||||||
2023 | 2022 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 630 | $ | 502 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depletion and amortization | 77 | 79 | ||||||
Accretion expense | 5 | 2 | ||||||
Changes in assets and liabilities: | ||||||||
Decrease (increase) in production receivable | 54 | (183 | ) | |||||
Decrease (increase) in other current assets | 10 | (3 | ) | |||||
Decrease in due to operators | (3 | ) | (7 | ) | ||||
Decrease in accrued expenses | (6 | ) | (6 | ) | ||||
Credit from (settlement of) asset retirement obligations | 7 | (13 | ) | |||||
Net cash provided by operating activities | 774 | 371 | ||||||
Cash flows from investing activities | ||||||||
Capital expenditures for oil and gas properties | (22 | ) | (3 | ) | ||||
Proceeds from salvage fund | - | 13 | ||||||
Increase in salvage fund | (339 | ) | (7 | ) | ||||
Net cash (used in) provided by investing activities | (361 | ) | 3 | |||||
Cash flows from financing activities | ||||||||
Distributions | (1,041 | ) | (502 | ) | ||||
Net cash used in financing activities | (1,041 | ) | (502 | ) | ||||
Net decrease in cash and cash equivalents | (628 | ) | (128 | ) | ||||
Cash and cash equivalents, beginning of period | 8,831 | 8,738 | ||||||
Cash and cash equivalents, end of period | $ | 8,203 | $ | 8,610 |
The accompanying notes are an integral part of these unaudited condensed financial statements.
4 |
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, 20162022 financial statements and notes thereto included in the Fund’s Annual Report on Form 10-K (“20162022 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, 2016,2022, 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 20162022 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, 2023.
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.
5 |
The Fund’s investment in Delta House is valued using the measurement alternative for investment in other entities (see Investment in Delta House
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, 2023 and 2022, there were no such events or changes in circumstances that indicate thatimpairments of the Fund’s investment in Delta House is impaired.
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 following table presents changes in asset retirement obligations during the nine 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 |
Revenue Recognition
Oil and gas revenues from contracts with customers are recognized at the point when control of oil and natural gas is transferred to the customers in accordance with Accounting Standard Codification Topic 606, Revenue from Contracts with Customers. Revenues from the sale of natural gas liquid are included within gas revenues. 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 invoices 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 historically have not been significant. During the three months ended March 31, 2023 and 2022, 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 small 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 current status of customers' production receivables, the Fund has not recorded an expected loss allowance as there are no past due receivable balances or projected credit losses.
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 gas reserves and future development costs or discount rates could result in a different calculatedsignificant impact on the amount of impairment. Given the volatility
6 |
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, 2023 and natural gas reserves could change in the near term.
Recent Accounting Pronouncements
The Fund has substantially completedconsidered recent accounting pronouncements issued during the evaluationthree months ended March 31, 2023 and through the filing of this report, and 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 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, 2023 and 20162022 were $0.3 million and $0.8 million, respectively.
The Manager is also entitled to receive a 15% interest in of the cash distributions from operations made by the Fund. Distributions paid to the Manager during the three and nine months ended September 30, 2017March 31, 2023 and 2022 were $0.1$0.2 million and $0.3$0.1 million, respectively. Distributions paid to the Manager during each of the three and nine months ended September 30, 2016 were $0.1 million.
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, 2023, the Fund’s estimated capital commitments related to its oil and gas properties were $5.6$3.8 million (which include asset retirement obligations for the Fund’s projects of $2.8$1.3 million), of which $0.2$1.0 million is expected to be spent during the next twelve months.
Based upon its current cash position, salvage fund and its current reservereserves estimates, the Fund expects cash flow from operations to be sufficient to cover its commitments and ongoing operations. ReserveReserves estimates are projections based on engineering data that cannot be measured with precision, require substantial judgment, and are subject to frequent revision.
Impact from Market Conditions
Although oil and natural gas commodity prices have been steady compared to 2022, the outlook for the oil and gas market continues to be volatile. The biggest downside risk facing the oil market is the pullback in energy demand, which could result from global recession likely driven, in large part, by a prolonged high inflationary environment. In addition, ongoing geopolitical uncertainty will continue to dictate oil and natural gas commodity prices, including, among other things, the ongoing Russia-War conflict, production decisions by OPEC Plus and China’s evolving policies post-coronavirus pandemic. The impact of these matters on global financial and commodity markets and their corresponding effect on the Fund remains uncertain.
7 |
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, 2023 and December 31, 2016,2022, 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
In 2016, the Bureau of Ocean Energy Management (“BOEM”) issued a Notice to Lessees (“NTL”NTL 2016-N01”) that, which 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 (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,bonding requirements. To date, the BOEM announcedis not currently implementing NTL 2016-N01 and its status is uncertain, and the BOEM has indicated that it was suspendingis reviewing the implementation timeline for six months in certain circumstances. On June 22, 2017, theproposed rule. The BOEM announced that the implementation timeline extension will remain in effect pending the completion of its review of the new NTL. The Fund, as well as other industry participants, are working with the BOEM, its operators and working interest partners to determine and agree upon the correct level of decommissioning obligations to which they may be liable and the manner in which such obligations will be secured. The impact of the NTL, 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 thiswhich potentially could increase costs to the Fund if theFund. The Fund is requirednot able to obtain additional supplemental bonding, fund escrow accountsevaluate the impact of the proposed new rule on its operations or obtain letters of credit.
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.
8 |
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 any 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, the military conflict between Russia and Ukraine and the global response to such conflict, 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.
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 receive 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.
Market Conditions
Although oil and natural gas commodity prices have been steady compared to 2022, the outlook for the oil and gas market continues to be volatile. The biggest downside risk facing the oil market is the pullback in energy demand, which could result from global recession likely driven, in large part, by a prolonged high inflationary environment. In addition, ongoing geopolitical uncertainty will continue to dictate oil and natural gas commodity prices, including, among other things, the ongoing Russia-War conflict, production decisions by OPEC Plus and China’s evolving policies post-Coronavirus pandemic. Different outcomes of these issues would have different impacts on global economic growth and the performance of financial markets in 2023 and the Fund, its operators and other working interest partners’ financial performance results may be materially adversely affected, which could affect the Fund’s liquidity and expected operating results. 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 in the global oil and gas market.
9 |
Commodity Price Changes
Changes in oil and natural gas commodity prices may significantly affect liquidity and expected operating results. DeclinesSignificant 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 duringvolatility most recently due to the past several years.issues impacting market conditions described above. The Fund anticipates price cyclicality in its planning and believes it is well positioned to withstand price volatility.
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:
· |
· | weather conditions; |
· | economic conditions, including the impact of continued inflation and associated changes in monetary policy and demand for petroleum-based products; |
· | actions by OPEC, the Organization of the Petroleum Exporting Countries; |
· | political instability in the Middle East and other major oil and gas producing regions; |
· | governmental regulations (inclusive of impacts of climate change), 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 | 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. |
Total Spent | Total | |||||||||||
Working | through | Fund | ||||||||||
Project | Interest | March 31, 2023 | Budget | Status | ||||||||
(in thousands) | ||||||||||||
Diller Project | 0.88% | $ | 3,742 | $ | 4,057 | The Diller Project includes the development of two wells. Well #1 commenced production in 2015. Well #2 commenced production in 2019. The Fund expects to spend $18 thousand for additional development costs and $0.3 million for asset retirement obligations. | ||||||
Marmalard Project | 0.84% | $ | 5,669 | $ | 8,909 | 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 2024 and 2025. The Fund expects to spend $2.4 million for additional development costs and $0.8 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, 2023 and 2016,2022, 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 March 31, | ||||||||
2023 | 2022 | |||||||
(in thousands) | ||||||||
Revenue | ||||||||
Oil and gas revenue | $ | 1,012 | $ | 934 | ||||
Expenses | ||||||||
Depletion and amortization | 77 | 79 | ||||||
Operating expenses | 129 | 146 | ||||||
Management fees to affiliate | 180 | 180 | ||||||
General and administrative expenses | 42 | 34 | ||||||
Total expenses | 428 | 439 | ||||||
Income from operations | 584 | 495 | ||||||
Other income | ||||||||
Dividend income | 6 | 7 | ||||||
Interest income | 40 | - | ||||||
Total other income | 46 | 7 | ||||||
Net income | $ | 630 | $ | 502 |
11 |
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
. The following table provides information related to the Fund’s oil and natural gas production and oil and gas revenue during the threeThree 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, | ||||||||
2023 | 2022 | |||||||
Number of wells producing | 6 | 6 | ||||||
Total number of production days | 532 | 432 | ||||||
Oil sales (in thousands of barrels) | 12 | 9 | ||||||
Average oil price per barrel | $ | 74 | $ | 97 | ||||
Gas sales (in thousands of mcfs) | 24 | 15 | ||||||
Average gas price per mcf | $ | 3.33 | $ | 5.67 |
The production related increases noted in the table above table were primarily related to one well in the DillerMarmalard Project, which was shut-in in late 2016, partially offset by the Liberty Project, which was shut-in duringfor the majority of thirdfirst quarter 2017. In addition, the increases in gas sales were also attributable to the Marmalard Project, which did not produce NGLs during the third quarter of 20162022 due to third-party facilities’ repair and maintenance activities.a mechanical issue. The well returned to production in early-March 2022. See additional discussion in “Business Update” section above.
Oil and Gas Revenue
.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 endedSee “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 reserve estimates provided annually by the Fund’s independent petroleum engineers.
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, | ||||||||
2023 | 2022 | |||||||
(in thousands) | ||||||||
Lease operating expense | $ | 85 | $ | 68 | ||||
Transportation and processing expense | 28 | 50 | ||||||
Insurance expense | 10 | 11 | ||||||
Accretion expense | 5 | 2 | ||||||
Workover expense | 1 | 15 | ||||||
$ | 129 | $ | 146 |
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.
Production costs, which includesinclude lease operating expense, transportation and processing expense and insurance expense, was $9.90were $0.1 million ($7.50 per barrel of oil equivalent (“BOE”or “BOE”) and $9.60during the three months ended March 31, 2023, compared to $0.1 million ($11.25 per BOE) during the three months ended March 31, 2022.
12 |
Production costs were relatively consistent during the three months ended March 31, 2023 compared to the three months ended March 31, 2022. The decrease in production costs per BOE during the three and nine months ended September 30, 2017, respectively,March 31, 2023 compared to $15.56 per BOE and $19.01 per BOE during the three and nine months ended September 30, 2016, respectively. The decreases wereMarch 31, 2022 was primarily attributable to the Diller and Marmalard projects which had lower cost per BOE in 2017 as a result of a reduction in production handlingthe termination of the fixed lateral fees from $15.50 per BOE to $4.50 per BOE effective December 2016.August 2022 through the end of the projects' productive lives. The production handlingfixed lateral fees, which were contractually payable for the Diller and Marmalard projects decline over time as certainuse of the facility terminated in August 2022, seven years from the date all anchor producers had delivered first production hurdles are met in accordance with their production handling agreement relating to the Delta House production facility.
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.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, 2023 were $2.4$0.8 million, primarily related to revenue received of $4.8$1.1 million, partially offset by operating expenses of $1.3 million, management fees of $0.8 million, the settlement of an asset retirement obligation of $0.2 million and general and administrativeoperating expenses of $0.1 million.
Cash flows provided by operating activities during the ninethree months ended September 30, 2016March 31, 2022 were $0.7$0.4 million, primarily related to revenue received of $3.6 million and dividend income received of $0.2$0.8 million, partially offset by management fees of $0.2 million and operating expenses of $2.2 million, management fees of $0.8 million and general and administrative expenses of $0.1$0.2 million.
Investing Cash Flows
Cash flows used in investing activities during the three months ended March 31, 2023 were $0.4 million, primarily related to investments in salvage fund of $0.3 million.
Cash flows provided by investing activities during the ninethree months ended September 30, 2017March 31, 2022 were $0.2 million, primarily$3 thousand, related to proceeds from the salvage fund.
Financing Cash Flows
Cash flows used in financing activities during the ninethree months ended September 30, 2017March 31, 2023 were $2.1$1.0 million, related to manager and shareholder distributions.
Cash flows used in financing activities during the ninethree months ended September 30, 2016March 31, 2022 were $0.5 million, related to manager and shareholder distributions.
Capital Expenditures
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. Asinvested and 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. Such investment activities, which include estimated capital spending on planned well recompletions and ongoing development of the Fund’s producing projects, are expected to be funded from cash flows from operations and existing cash-on-hand and not from equity, debt or off-balance sheet financing arrangements.
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.
13 |
Liquidity Needs
The Fund’s primary short-term and long-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, 2023, the Fund’s estimated capital commitments related to its oil and gas properties were $5.6$3.8 million (which include asset retirement obligations for the Fund’s projects of $2.8$1.3 million), of which $0.2$1.0 million is expected to be spent during the next twelve months. Future results of operations and cash flows are dependent on the revenues from production and sale of oil and gas from the Fund’s producing projects. In addition, cash flow from operations may be impacted by fluctuations in oil and natural gas commodity prices. Based upon its current cash position, salvage fund and its current reservereserves estimates, the Fund expects cash flow from operations to be sufficient to cover its commitments as well asand ongoing operations. ReserveReserves estimates are projections based on engineering data that cannot be measured with precision, require substantial judgment, and are subject to frequent revision.
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 costs andof the Fund’s producing projects, as budgeted, as well as the funding theirof estimated asset retirement obligations.
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, 2023 and December 31, 2016,2022, other than those discussed in “Estimated Capital“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.
Not required.
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.
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, 2023 that has materially affected, or is reasonably likely to materially affect, the Fund’s internal control over financial reporting.
14 |
PART II – OTHER INFORMATION
None.
Not required.
None.
None.
None.
None.
EXHIBIT NUMBER | TITLE OF EXHIBIT | METHOD OF FILING |
31.1 | Filed herewith | |
31.2 | Filed herewith | |
32 | Filed herewith | |
101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | Filed herewith |
101.SCH | Inline XBRL Taxonomy Extension Schema | Filed herewith |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | Filed herewith |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith |
Inline XBRL Taxonomy Extension Label Linkbase | Filed herewith | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | Filed herewith |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | Filed herewith |
15 |
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: | May 8, 2023 | By: | /s/ | ROBERT E. SWANSON | ||
Name: | Robert E. Swanson | |||||
Title: | Chief Executive Officer | |||||
(Principal Executive Officer) | ||||||
Dated: | By: | /s/ | KATHLEEN P. MCSHERRY | |||
Name: | Kathleen P. McSherry | |||||
Title: | Executive Vice President, and Assistant Secretary | |||||
(Principal Financial and Accounting Officer) |
16