o☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the transition period from _______________________to____________________________ |
Commission File No. 000-53895
Ridgewood Energy A-1 Fund, LLC
(Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation or organization) | | 01-0921132 (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)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x☒ No o☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x☒ No o☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | o☐ | Accelerated filer | o☐ |
Non-accelerated filer (Do not check if a smaller reporting company) | o☐ | Smaller reporting company | x☒ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o☐ No x☒
As of October 29, 2015November 8, 2016 the Fund had 207.7026 shares of LLC Membership Interest outstanding.
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PART I - FINANCIAL INFORMATION | |
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PART II - OTHER INFORMATION | |
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PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RIDGEWOOD ENERGY A-1 FUND, LLC
(in thousands, except share data)
| | September 30, 2015 | | | December 31, 2014 | | | September 30, 2016 | | | December 31, 2015 | |
Assets | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 3,998 | | | $ | 5,045 | | | $ | 743 | | | $ | 1,444 | |
Salvage fund | | | 474 | | | | - | | | | 474 | | | | 474 | |
Production receivable | | | 20 | | | | 98 | | | | 124 | | | | 7 | |
Other current assets | | | - | | | | 21 | | | | 70 | | | | - | |
Total current assets | | | 4,492 | | | | 5,164 | | | | 1,411 | | | | 1,925 | |
Salvage fund | | | 1,309 | | | | 1,780 | | | | 1,314 | | | | 1,310 | |
Other assets | | | 274 | | | | 366 | | |
Oil and gas properties: | | | | | | | | | | | | | | | | |
Proved properties | | | 13,715 | | | | 14,697 | | | | 17,604 | | | | 15,754 | |
Less: accumulated depletion and amortization | | | (2,955 | ) | | | (6,318 | ) | | | (3,156 | ) | | | (2,958 | ) |
Total oil and gas properties, net | | | 10,760 | | | | 8,379 | | | | 14,448 | | | | 12,796 | |
Total assets | | $ | 16,835 | | | $ | 15,689 | | | $ | 17,173 | | | $ | 16,031 | |
| | | | | | | | | | | | | | | | |
Liabilities and Members' Capital | | | | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | | | | |
Due to operators | | $ | 979 | | | $ | 914 | | | $ | 294 | | | $ | 153 | |
Accrued expenses | | | 202 | | | | 33 | | | | 555 | | | | 215 | |
Current portion of long-term borrowings | | | | 435 | | | | - | |
Asset retirement obligations | | | 474 | | | | - | | | | 474 | | | | 474 | |
Total current liabilities | | | 1,655 | | | | 947 | | | | 1,758 | | | | 842 | |
Long-term borrowings | | | 2,900 | | | | 1,800 | | | | 3,432 | | | | 2,656 | |
Asset retirement obligations | | | 1,242 | | | | 965 | | | | 1,645 | | | | 1,645 | |
Other liabilities | | | 103 | | | | 48 | | | | - | | | | 127 | |
Total liabilities | | | 5,900 | | | | 3,760 | | | | 6,835 | | | | 5,270 | |
Commitments and contingencies (Note 5) | | | | | | | | | |
Commitments and contingencies (Note 4) | | | | | | | | | |
Members' capital: | | | | | | | | | | | | | | | | |
Manager: | | | | | | | | | | | | | | | | |
Distributions | | | (5,058 | ) | | | (5,045 | ) | | | (5,058 | ) | | | (5,058 | ) |
Retained earnings | | | 5,124 | | | | 5,152 | | | | 5,077 | | | | 5,097 | |
Manager's total | | | 66 | | | | 107 | | | | 19 | | | | 39 | |
Shareholders: | | | | | | | | | | | | | | | | |
Capital contributions (250 shares authorized; | | | | | | | | | | | | | | | | |
207.7026 issued and outstanding) | | | 41,143 | | | | 41,143 | | | | 41,143 | | | | 41,143 | |
Syndication costs | | | (4,804 | ) | | | (4,804 | ) | | | (4,804 | ) | | | (4,804 | ) |
Distributions | | | (35,427 | ) | | | (35,351 | ) | | | (35,427 | ) | | | (35,427 | ) |
Retained earnings | | | 9,954 | | | | 10,830 | | | | 9,403 | | | | 9,807 | |
Shareholders' total | | | 10,866 | | | | 11,818 | | | | 10,315 | | | | 10,719 | |
Accumulated other comprehensive income | | | 3 | | | | 4 | | | | 4 | | | | 3 | |
Total members' capital | | | 10,935 | | | | 11,929 | | | | 10,338 | | | | 10,761 | |
Total liabilities and members' capital | | $ | 16,835 | | | $ | 15,689 | | | $ | 17,173 | | | $ | 16,031 | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
RIDGEWOOD ENERGY A-1 FUND, LLC
AND COMPREHENSIVE (LOSS) INCOMELOSS
(in thousands, except per share data)
| | Three months ended September 30, | | | Nine months ended September 30, | |
| | 2015 | | | 2014 | | | 2015 | | | 2014 | |
Revenue | | | | | | | | | | | | |
Oil and gas revenue | | $ | 132 | | | $ | 793 | | | $ | 471 | | | $ | 2,593 | |
| | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | |
Depletion and amortization | | | 42 | | | | 261 | | | | 675 | | | | 904 | |
Management fees to affiliate (Note 3) | | | 95 | | | | 157 | | | | 285 | | | | 474 | |
Operating expenses | | | 103 | | | | 229 | | | | 314 | | | | 682 | |
General and administrative expenses | | | 39 | | | | 36 | | | | 109 | | | | 110 | |
Total expenses | | | 279 | | | | 683 | | | | 1,383 | | | | 2,170 | |
(Loss) gain on sale of oil and gas properties | | | - | | | | (12 | ) | | | - | | | | 10,396 | |
(Loss) income from operations | | | (147 | ) | | | 98 | | | | (912 | ) | | | 10,819 | |
Interest income | | | 2 | | | | 5 | | | | 8 | | | | 13 | |
Net (loss) income | | | (145 | ) | | | 103 | | | | (904 | ) | | | 10,832 | |
Other comprehensive income (loss) | | | | | | | | | | | | | | | | |
Unrealized gain (loss) on marketable securities | | | - | | | | 1 | | | | (1 | ) | | | 5 | |
Total comprehensive (loss) income | | $ | (145 | ) | | $ | 104 | | | $ | (905 | ) | | $ | 10,837 | |
| | | | | | | | | | | | | | | | |
Manager Interest | | | | | | | | | | | | | | | | |
Net (loss) income | | $ | (15 | ) | | $ | 57 | | | $ | (28 | ) | | $ | 298 | |
| | | | | | | | | | | | | | | | |
Shareholder Interest | | | | | | | | | | | | | | | | |
Net (loss) income | | $ | (130 | ) | | $ | 46 | | | $ | (876 | ) | | $ | 10,534 | |
Net (loss) income per share | | $ | (627 | ) | | $ | 220 | | | $ | (4,218 | ) | | $ | 50,716 | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
RIDGEWOOD ENERGY A-1 FUND, LLC
(in thousands)
| | Nine months ended September 30, | |
| | 2015 | | | 2014 | |
| | | | | | |
Cash flows from operating activities | | | | | | |
Net (loss) income | | $ | (904 | ) | | $ | 10,832 | |
Adjustments to reconcile net (loss) income to net cash | | | | | | | | |
(used in) provided by operating activities: | | | | | | | | |
Depletion and amortization | | | 675 | | | | 904 | |
Gain on sale of oil and gas properties | | | - | | | | (10,396 | ) |
Accretion expense | | | 83 | | | | - | |
Changes in assets and liabilities: | | | | | | | | |
Decrease in production receivable | | | 78 | | | | 720 | |
Decrease in other current assets | | | 21 | | | | 40 | |
Decrease in due to operators | | | (91 | ) | | | (282 | ) |
Increase (decrease) in accrued expenses | | | 61 | | | | (7 | ) |
Net cash (used in) provided by operating activities | | | (77 | ) | | | 1,811 | |
| | | | | | | | |
Cash flows from investing activities | | | | | | | | |
Proceeds from sale of oil and gas properties | | | - | | | | 10,978 | |
Capital expenditures for oil and gas properties | | | (1,977 | ) | | | (3,082 | ) |
Investments in salvage fund | | | (4 | ) | | | (7 | ) |
Net cash (used in) provided by investing activities | | | (1,981 | ) | | | 7,889 | |
| | | | | | | | |
Cash flows from financing activities | | | | | | | | |
Long-term borrowings | | | 1,100 | | | | 800 | |
Distributions | | | (89 | ) | | | (10,109 | ) |
Net cash provided by (used in) financing activities | | | 1,011 | | | | (9,309 | ) |
| | | | | | | | |
Net (decrease) increase in cash and cash equivalents | | | (1,047 | ) | | | 391 | |
Cash and cash equivalents, beginning of period | | | 5,045 | | | | 4,690 | |
Cash and cash equivalents, end of period | | $ | 3,998 | | | $ | 5,081 | |
| | | | | | | | |
Supplemental schedule of non-cash investing activities | | | | | | | | |
Advances used for capital expenditures in oil and gas properties reclassified to proved properties | | $ | - | | | $ | 68 | |
| | Three months ended September 30, | | | Nine months ended September 30, | |
| | 2016 | | | 2015 | | | 2016 | | | 2015 | |
Revenue | | | | | | | | | | | | |
Oil and gas revenue | | $ | 220 | | | $ | 132 | | | $ | 376 | | | $ | 471 | |
Expenses | | | | | | | | | | | | | | | | |
Depletion and amortization | | | 167 | | | | 42 | | | | 198 | | | | 675 | |
Management fees to affiliate (Note 2) | | | 64 | | | | 95 | | | | 254 | | | | 285 | |
Operating expenses | | | 91 | | | | 103 | | | | 134 | | | | 314 | |
General and administrative expenses | | | 41 | | | | 39 | | | | 114 | | | | 109 | |
Total expenses | | | 363 | | | | 279 | | | | 700 | | | | 1,383 | |
Loss from operations | | | (143 | ) | | | (147 | ) | | | (324 | ) | | | (912 | ) |
Interest (expense) income, net | | | (103 | ) | | | 2 | | | | (100 | ) | | | 8 | |
Net loss | | | (246 | ) | | | (145 | ) | | | (424 | ) | | | (904 | ) |
Other comprehensive income (loss) | | | | | | | | | | | | | | | | |
Unrealized gain (loss) on marketable securities | | | - | | | | - | | | | 1 | | | | (1 | ) |
Total comprehensive loss | | $ | (246 | ) | | $ | (145 | ) | | $ | (423 | ) | | $ | (905 | ) |
| | | | | | | | | | | | | | | | |
Manager Interest | | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 2 | | | $ | (15 | ) | | $ | (20 | ) | | $ | (28 | ) |
| | | | | | | | | | | | | | | | |
Shareholder Interest | | | | | | | | | | | | | | | | |
Net loss | | $ | (248 | ) | | $ | (130 | ) | | $ | (404 | ) | | $ | (876 | ) |
Net loss per share | | $ | (1,194 | ) | | $ | (627 | ) | | $ | (1,944 | ) | | $ | (4,218 | ) |
The accompanying notes are an integral part of these unaudited condensed financial statements.
RIDGEWOOD ENERGY A-1 FUND, LLC
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS (in thousands)
| | Nine months ended September 30, | |
| | 2016 | | | 2015 | |
| | | | | | |
Cash flows from operating activities | | | | | | |
Net loss | | $ | (424 | ) | | $ | (904 | ) |
Adjustments to reconcile net loss to net cash | | | | | | | | |
used in operating activities: | | | | | | | | |
Depletion and amortization | | | 198 | | | | 675 | |
Accretion expense | | | - | | | | 83 | |
Amortization of debt discounts and deferred financing costs | | | 31 | | | | - | |
Changes in assets and liabilities: | | | | | | | | |
(Increase) decrease in production receivable | | | (137 | ) | | | 78 | |
(Increase) decrease in other current assets | | | (70 | ) | | | 21 | |
Decrease in due to operators | | | (6 | ) | | | (91 | ) |
Increase in accrued expenses | | | 107 | | | | 61 | |
Net cash used in operating activities | | | (301 | ) | | | (77 | ) |
| | | | | | | | |
Cash flows from investing activities | | | | | | | | |
Capital expenditures for oil and gas properties | | | (1,517 | ) | | | (1,977 | ) |
Investments in salvage fund | | | (3 | ) | | | (4 | ) |
Net cash used in investing activities | | | (1,520 | ) | | | (1,981 | ) |
| | | | | | | | |
Cash flows from financing activities | | | | | | | | |
Long-term borrowings | | | 1,120 | | | | 1,100 | |
Distributions | | | - | | | | (89 | ) |
Net cash provided by financing activities | | | 1,120 | | | | 1,011 | |
| | | | | | | | |
Net decrease in cash and cash equivalents | | | (701 | ) | | | (1,047 | ) |
Cash and cash equivalents, beginning of period | | | 1,444 | | | | 5,045 | |
Cash and cash equivalents, end of period | | $ | 743 | | | $ | 3,998 | |
The accompanying notes are an integral part of these unaudited condensed financial statements.
RIDGEWOOD ENERGY A-1 FUND, LLC
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1.Organization and Summary of Significant Accounting Policies
Organization
The Ridgewood Energy A-1 Fund, LLC (the "Fund"), a Delaware limited liability company, was formed on February 3, 2009 and operates pursuant to a limited liability company agreement (the “LLC Agreement") dated as of March 2, 2009 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. With respect to project investments, the Manager locates potential projects, conducts due diligence, and negotiates and completes the transactions in which the investments are made.transactions. The Manager performs, or arranges for the performance of, the management, advisory and administrative services required for Fund operations. Such services include, without limitation, the administration of shareholder accounts, shareholder relations and the preparation, review and dissemination of tax and other financial information. In addition, the Manager provides office space, equipment and facilities and other services necessary for Fund operations. The Manager also engages and manages the contractual relations with unaffiliated custodians, depositories, accountants, attorneys, broker-dealers, corporate fiduciaries, insurers, banks and others as required. See Notes 2, 3 4 and 5.4.
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 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 results of operations, financial position, 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, 20142015 financial statements and notes thereto included in the Fund’s Annual Report on Form 10-K 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, 2015, but does not include all 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 Manager reviews its estimates, including those related to the fair value of financial instruments, property balances,depletion and amortization, determination of proved reserves, impairmentsimpairment of long-lived assets and asset retirement obligations. Actual results may differ from those estimates.
Fair Value Measurements
The fair value measurement guidance provides a hierarchy that prioritizes and defines the types of inputs used to measure fair value. The fair value hierarchy gives the highest priority to Level 1 inputs, which consists of unadjusted quoted prices for identical instruments in active markets. Level 2 inputs consist of quoted prices for similar instruments. Level 3 valuationsinputs are derived fromunobservable inputs that are significant and unobservable;include situations where there is little, if any, market activity for the instrument; hence, these valuationsinputs have the lowest priority. Cash and cash equivalents approximate fair value based on Level 1 inputs. Mortgage-backed securities within the salvage fund are recorded based on Level 2 inputs, as such instruments trade in over-the-counter markets.
Cash and Cash Equivalents
All highly liquid investments with maturities, when purchased, of three months or less, are considered cash equivalents. These balances, as well as cash on hand, are included in “Cash and cash equivalents” on the balance sheet. As of September 30, 2016, the Fund had no cash equivalents. At times, deposits may be in excess of federally insured limits, which are $250 thousand per insured financial institution. AtAs of September 30, 2015,2016, the Fund’s bank balances were maintained in uninsured bank accounts at Wells Fargo Bank, N.A.
Salvage Fund
The Fund deposits in a separate interest-bearing account, or salvage fund, moneycash to provide for the dismantling and removal of production platforms and facilities and plugging and abandoning its wells at the end of their useful lives, in accordance with applicable federal and state laws and regulations. AtAs of September 30, 20152016 and December 31, 2014,2015, the Fund had investments in federal agency mortgage-backed securities as detailed in the following table, which are classified as available for sale. Available-for-sale securities are carried in the financial statements at fair value.
| | | | | Gross | | | | |
| | Amortized | | | Unrealized | | | Fair | |
| | Cost | | | Gains | | | Value | |
| | (in thousands) | |
Government National Mortgage Association security (GNMA July 2041) | | | | |
September 30, 2015 | | $ | 76 | | | $ | 3 | | | $ | 79 | |
December 31, 2014 | | $ | 84 | | | $ | 3 | | | $ | 87 | |
| | | | | | | | | | | | |
Federal National Mortgage Association security (FNMA January 2042) | | | | | |
September 30, 2015 | | $ | - | | | $ | - | | | $ | - | |
December 31, 2014 | | $ | 109 | | | $ | 1 | | | $ | 110 | |
| | | | | Gross | | | | |
| | Amortized | | | Unrealized | | | Fair | |
| | Cost | | | Gains | | | Value | |
| | (in thousands) | |
Government National Mortgage Association security (GNMA July 2041) | | | | |
September 30, 2016 | | $ | 74 | | | $ | 4 | | | $ | 78 | |
December 31, 2015 | | $ | 75 | | | $ | 3 | | | $ | 78 | |
The unrealized gains on the Fund's investments in federal agency mortgage-backed securities were the result of fluctuations in market interest rates. The contractual cash flows of those investments are guaranteed by an agency of the U.S. government. Unrealized gains or losses on available-for-sale securities are reported in other comprehensive income until realized. In July 2015, the Fund received all contractual principal and interest payments related to the FNMA January 2042 security and there was no realized gain or loss.
For all investments, interest income is accrued as earned and amortization of premium or discount, if any, is included in interest income. Interest earned on the account will become part of the salvage fund. There are no restrictions on withdrawals from the salvage fund.
Debt Discounts and Deferred Financing Costs
Debt discounts and deferred financing costs include lender fees and other costs of acquiring debt (see Note 4.3. “Credit Agreement – Beta Project Financing”) such as the conveyance of override royalty interests related to the Beta Project. These costs are deferred and amortized over the term of the debt period or until the redemption of the debt and are included on the balance sheet within “Other assets”. At September 30, 2015 and December 31, 2014, $0.3 million and $0.4 million, respectively, ofdebt. Unamortized debt discounts and deferred financing costs were unamortized. Amortization expense was $31 thousand for each$0.2 million as of the three months ended September 30, 2016 and December 31, 2015 and 2014. Amortization expense was $0.1 million for eachare presented as a reduction of “Long-term borrowings” on the nine months ended September 30, 2015balance sheets (see Note 1. “Organization and 2014. Summary of Significant Accounting Policies - Recent Accounting Pronouncements”).
During the period of asset construction, amortization expense, as a component of interest, is capitalized and included on the balance sheet within “Oil and gas properties”. Amortization expense of $0.1 million during the nine months ended September 30, 2016 and $31 thousand and $0.1 million during the three and nine months ended September 30, 2015, respectively, were capitalized and included on the balance sheet within “Oil and gas properties”. As a result of the Beta Project’s commencement of production in third quarter 2016, amortization expense during the three months ended September 30, 2016 of $31 thousand was expensed and is included on the statement of operations within “Interest (expense) income, net”.
Oil and Gas Properties
The Fund invests in oil and gas properties, which are operated by unaffiliated entities that are responsible for drilling, administering and producing activities pursuant to the terms of the applicable operating agreements with working interest owners. The Fund’s portion of exploration, drilling, operating and capital equipment expenditures is billed by operators.
Exploration, development and acquisition costs are accounted for using the successful efforts method. Costs of acquiring unproved and proved oil and natural gas leasehold acreage, including lease bonuses, brokers’ fees and other related costs are capitalized. Costs of drilling and equipping productive wells and related production facilities are capitalized. ExploratoryThe costs of exploratory wells are capitalized pending determination of whether proved reserves have been found. If proved commercial reserves are not found, exploratory well costs are expensed as dry-hole costs. At times, the Fund receives adjustments to certain wells from their respective operators upon review and audit of the wells’ costs. Interest costs related to the Credit Agreement (see Note 4.3. “Credit Agreement – Beta Project Financing”) are capitalized during the period of asset construction. Annual lease rentals and exploration expenses are expensed as incurred. All costs related to production activity, transportation expense and workover efforts are expensed as incurred. Insurance expense related to operating wells has been reclassified from “General and administrative expense” in prior year to “Operating expense” to correct prior period presentation.
Once a well has been determined to be fully depleted or upon the sale, retirement or abandonment of a property, the cost and related accumulated depletion and amortization, if any, is eliminated from the property accounts, and the resultant gain or loss is recognized.
AtAs of September 30, 20152016 and December 31, 2014,2015, amounts recorded in due to operators totaling $0.9$0.3 million and $0.8$0.1 million, respectively, related to capital expenditures for oil and gas properties.
Advances to Operators for Working Interests and Expenditures
The Fund may be required to advance its share of the estimated succeeding month’s expenditures to the operator for its oil and gas properties. The Fund accounts for such payments as advances to operators for working interests and expenditures. As the costs are incurred, the advances are reclassified to proved properties.
Asset Retirement Obligations
For oil and gas properties, there are obligations to perform removal and remediation activities when the properties are retired. WhenUpon the determination of a project reaches drilling depth and is determinedproperty to be either proved or dry, a retirement obligation is incurred. The Fund recognizes the fair value of a liability for an asset retirement obligation isin the period incurred. Plug and abandonment costs associated with unsuccessful projects are expensed as dry-hole costs. The following table presents changes in asset retirement obligations for the nine months ended September 30, 2015 and the year ended December 31, 2014.
| | 2015 | | | 2014 | |
| | (in thousands) | |
Balance, beginning of period | | $ | 965 | | | $ | 946 | |
Accretion expense | | | 83 | | | | 19 | |
Revisions in estimated cash flows | | | 668 | | | | - | |
Balance, end of period | | $ | 1,716 | | | $ | 965 | |
As indicated above, the Fund maintains a salvage fund to provide for the funding of future asset retirement obligations.
Syndication Costs
Syndication costs are direct costs incurred by the Fund in connection with the offering of the Fund’s shares, including professional fees, selling expenses and administrative costs payable to the Manager, an affiliate of the Manager and unaffiliated broker-dealers, which are reflected on the Fund’s balance sheet as a reduction of shareholders’ capital.
Revenue Recognition and Imbalances
Oil and gas revenues are recognized when oil and gas is sold to a purchaser at a fixed or determinable price, when delivery has occurred and title has transferred, and if collectability of the revenue is probable.reasonably assured. The Fund uses the sales method of accounting for gas production imbalances. The volumes of gas sold may differ from the volumes to which the Fund is entitled based on its interests in the properties. These differences create imbalances that are recognized as a liability only when the properties’ estimated remaining reserves net to the Fund will not be sufficient to enable the underproduced owner to recoup its entitled share through production. The Fund’s recorded liability, if any, would be reflected in other liabilities. No receivables are recorded for those wells where the Fund has taken less than its share of production.
Impairment of Long-Lived Assets
The Fund reviews the carrying value of its oil and gas properties wheneverannually and when management determines that events and circumstances indicate that the recorded carrying value of properties may not be recoverable. Impairments of proved properties are determined by comparing estimated future net undiscounted cash flows to the net bookcarrying value at the time of the review. If the net bookcarrying value exceeds the estimated future net undiscounted cash flows, the carrying value of the propertyasset is written down to fair value, which is determined using estimated future net discounted future cash flows from the property. The Fund provides for impairments on unproved properties when it determines that the property will not be developed or a permanent impairment in value has occurred.asset. The fair value determinations require considerable judgment and are sensitive to change. Different pricing assumptions, reserve estimates or discount rates could result in a different calculated impairment. Given the volatility of oil and natural gas prices, it is reasonably possible that the Fund’s estimate of discounted future net cash flows from proved oil and natural gas reserves could change in the near term.
Significant declines in oil and natural gas prices since fourth quarter 2014 have impacted the fair value of the Fund’s oil and gas properties. If oil and natural gas prices continue to decline, significantly, even if only for a short period of time, it is possible that write-downsimpairments of oil and gas properties couldwill occur.
Depletion and Amortization
Depletion and amortization of the cost of proved oil and gas properties are calculated using the units-of-production method. Proved developed reserves are used as the base for depleting capitalized costs associated with successful exploratory well costs, development costs and related facilities.facilities, other than offshore platforms. The sum of proved developed and proved undeveloped reserves is used as the base for depleting or amortizing leasehold acquisition costs and costs to construct offshore platform and associated asset retirement costs. During the nine months ended September 30, 2015, the Fund recorded $0.6 million of depletion expense related to adjustments to asset retirement obligations for fully depleted properties.
Income Taxes
No provision is made for income taxes in the financial statements. The Fund is a limited liability company, and as such, the Fund’s income or loss is passed through and included in the tax returns of the Fund’s shareholders. The Fund files U.S. Federal and State tax returns and the 2013 through 2015 tax returns remain open for examination by tax authorities.
Income and Expense Allocation
Profits and losses are allocated to shareholders and the Manager in accordance with the LLC Agreement.
Distributions
Distributions to shareholders are allocated in proportion to the number of shares held. The Manager determines whether available cash from operations, as defined in the LLC Agreement, will be distributed. Such distributions are allocated 85% to the shareholders and 15% to the Manager, as required by the LLC Agreement.
Available cash from dispositions, as defined in the LLC Agreement, will be paid 99% to shareholders and 1% to the Manager until the shareholders have received total distributions equal to their capital contributions. After shareholders have received distributions equal to their capital contributions, 85% of available cash from dispositions will be distributed to shareholders and 15% to the Manager. During the nine months ended September 30, 2014, the Fund made distributions of available cash from dispositions related to the sale of the Raven Project totaling $7.2 million. There were no such distributions during the three months ended September 30, 2014 and during the three and nine months ended September 30, 2015.
Recent Accounting Pronouncements
In April 2015, the Financial Accounting Standards Board (“FASB”) issued accounting guidance related to the presentation of debt issuance costs inon the balance sheet as a direct reduction from the carrying amount of the debt liability, consistent with debt discounts, rather than as an asset. Amortization of debt issuance costs will continue to be reported as interest expense. Debt issuance costs related to revolving credit arrangements, however, will continue to be presented as an asset and amortized ratably over the term of the arrangement. In August 2015, the FASB issued accounting guidance related to the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements which clarifies that companies may continue to present unamortized debt issuance costs associated with line of credit arrangements as an asset. These pronouncements are effective for fiscal years, and interim periods within those years, beginning after December 15, 2015, with early adoption permitted. The Fund will not early adopt this newadopted the accounting guidance in first quarter 2016, resulting in a one-time reclassification of $0.2 million of unamortized debt discounts and it will not have a significant impactdeferred financing costs from "Other assets" to "Long-term borrowings" on the balance sheet as of December 31, 2015. The adoption of these pronouncements did not impact the Fund’s financial statements.
2. Oil and Gas Propertiesresults of operations or cash flows.
On January 17,In 2014, the Fund, alongFASB issued accounting guidance on revenue recognition, which provides for a single five-step model to be applied to all revenue contracts with its affiliates, entered intocustomers. In 2015, the FASB issued a purchase and sale agreement to sell its interest in the Raven Project, located in the state waters of Louisiana, to Castex Energy Partners, L.P. for cash consideration totaling $21.7 million. The closingdeferral of the sale transaction occurred on January 30, 2014. The Fund had a 25.0% working interest in the Raven Project and received $11.0 million in cash proceeds from the sale. The net carrying value for the Raven Project on theeffective date of the sale was $0.6 million, thereby resultingguidance to 2018, with early adoption permitted in a gain2017. In May 2016, the FASB issued final amendments which provided narrow scope improvements and practical expedients related to the implementation of the guidance. The Fund is currently evaluating the impact of $10.4 million, which was recognized during the nine months ended September 30, 2014. There was no such amount recorded during the three and nine months ended September 30, 2015.this guidance on its financial statements.
3.2. Related Parties
Pursuant to the terms of the LLC Agreement, the Manager renders management, administrative and advisory services to the Fund. For such services, the Manager is paidentitled to 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, the Manager is also permitted to waive the management fee at its own discretion. Such fee may be temporarily waived to accommodate the Fund’s short-term capital commitments. Management fees forduring each of the three and nine months ended September 30, 2016 and 2015 were $0.1 million and $0.3 million, respectively. Management fees for the three and nine months ended September 30, 2014 were $0.2 million and $0.5 million, respectively.
The Manager is entitled to receive a 15% interest in cash distributions from operations made by the Fund. The Fund did not pay distributions forduring the three and nine months ended September 30, 2016 and during the three months ended September 30, 2015. Distributions from operations paid to the Manager for the nine months ended September 30, 2015 were $13 thousand. Distributions from operations paid to the Manager for the three and nine months ended September 30, 2014 were $0.1 million and $0.5 million, respectively. In addition, the Manager is entitled to receive a 1% interest in cash distributions from dispositions. Distributions from the sale of the Raven project paid to the Manager during the nine months ended September 30, 20142015 were $0.1 million. There were$13 thousand.
None of the amounts paid to the Manager have been derived as a result of arm’s length negotiations.
In May 2015, Beta Sales & Transport, LLC (“Beta S&T”), a wholly-owned subsidiary of the Manager, was formed to act as an aggregator to and as an accommodation for the Fund and other funds managed by the Manager (the “Ridgewood Beta Funds”) to facilitate the transportation and sale of oil and gas produced from the Beta Project. On June 1, 2016, the Ridgewood Beta Funds entered into a master agreement (the “Agreement”) with Beta S&T in which Beta S&T will purchase from Ridgewood Beta Funds all of their interests in oil and gas produced at the Beta Project and sell such volumes to unrelated third party purchasers. Beta S&T is a pass-through entity such that it receives no such distributions duringbenefit or compensation for the three months ended September 30, 2014services provided under the Agreement or under any other agreements it enters into with regards to the oil and duringgas acquired from the threeRidgewood Beta Funds. The Ridgewood Beta Funds indemnify, defend and nine months ended September 30, 2015.hold harmless Beta S&T from and against all claims, liabilities, losses, causes of action, costs and expenses asserted against as a result of or arising from any act or omission, breach and claims for losses or damages arising out of Beta S&T’s dealing with third parties with respect to the transportation, processing or sale of oil and gas from the Beta Project. The revenues from the sale of oil and gas to third party purchasers are recorded as oil and gas revenue in the statements of operations and expenses are recorded as operating expenses in the statements of operations.
At times, short-term payables and receivables, which do not bear interest, arise from transactions with affiliates in the ordinary course of business.
None of the amounts paid to the Manager have been derived as a result of arm’s length negotiations.
The Fund has working interest ownership in certain projects to acquire and develop oil and natural gas projects with other entities that are likewise managed by the Manager.
4.3. Credit Agreement – Beta Project Financing
In November 2012, the Fund entered into a credit agreement (the(as amended on September 30, 2016, the “Credit Agreement”) with Rahr Energy Investments LLC, as Administrative Agent and Lender (and any other banks or financial institutions that may in the future become a party thereto, collectively “Lenders”) that provides for an aggregate loan commitment to the Fund of approximately $8.3 million (“Loan”), to provide capital toward the funding of the Fund’s share of development costs on the Beta Project. Except in cases of fraud and breach of certain representations, the Loan is non-recourse to the Fund’s other assets and secured solely by the Fund’s interests in the Beta Project. Certain other funds managed by Ridgewood (“Ridgewood Funds”, and when used with the Fund the “Ridgewood Participating Funds”) have also executed the Credit Agreement. Pursuant to the Credit Agreement, each Ridgewood Participating Fund has a separate loan commitment from the Lenders and amounts borrowed are not joint and several obligations. Each of the Ridgewood Participating Funds’ borrowings is secured solely by its separate interest in the Beta Project. Therefore, the Fund is liable for the repayment of its Loan and is not liable to the Lenders to repay any loan made to any other Ridgewood Funds. The Manager serves as the manager for each of the Ridgewood Participating Funds.
The Fund anticipates it will borrow approximately $8.3 million over the development period of the Beta Project. The Loan bears interest at 8% compounded annually and accrues only on Loan proceeds as they are drawn. Principal and interest will not be payable until such time that initial production has commenced for the Beta Project, which is currently expected in 2016. At that time, if certain revenue production levels are met, principal and interest will be repaid at a monthly rate of 1.25% of the Fund’s total principal outstanding at the date the Beta Project commences productionas of July 31, 2016 for the first seven months of production,beginning October 2016, and increases to a monthly rate of 4.5% of the Fund’s total principal outstanding at the date the Beta Project commences production thereafter until the Loan is repaid in full, in no event later than December 31, 2020. The Loan may be prepaid by the Fund without premium or penalty.
As of September 30, 20152016 and December 31, 2014,2015, the Fund had borrowings of $2.9$4.0 million and $1.8$2.9 million, respectively, under the Credit Agreement. The unamortized debt discounts and deferred financing costs of $0.2 million as of September 30, 2016 and December 31, 2015 are presented as a reduction of “Long-term borrowings” on the balance sheets (see Note 1. “Organization and Summary of Significant Accounting Policies - Recent Accounting Pronouncements”).
As of September 30, 20152016 and December 31, 2014,2015, interest costs of $0.2$0.4 million and $48 thousand,$0.3 million, respectively, were capitalized and included on the balance sheet within “Oil and gas properties”. Such amounts were accrued on the balance sheet within “Accrued expenses” as of September 30, 2016 and “Accrued expenses” and “Other liabilities” as of December 31, 2015. As a result of the Beta Project’s commencement of production in third quarter 2016, interest costs during the three months ended September 30, 2016 of $0.1 million were expensed and are included on the statement of operations within “Interest (expense) income, net”. Such amounts are accrued on the balance sheet within “Accrued expenses”.
and “Other liabilities” at September 30, 2015 and “Other liabilities” at December 31, 2014.8
As additional consideration to the Lenders, the Fund has agreed to convey an overriding royalty interest (“ORRI”) in its working interest in the Beta Project to the Lenders. The Credit Agreement contains customary covenants, for which the Fund believes it was in compliance atas of September 30, 20152016 and December 31, 2014.2015.
5.4. Commitments and Contingencies
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. Currently, the Fund has one non-producing property, the Beta Project, for which additional development costs must be incurred in order to commence production. The Fund currently anticipates such development will include a four-well development with related platform and pipeline infrastructure.
As of September 30, 2015,2016, the Fund’s estimated capital commitments related to its oil and gas properties were $9.3$5.6 million (which include asset retirement obligations for the Fund’s projects of $2.7 million and projected interest costs of $0.3 million for the Beta Project)million), of which $4.6$3.4 million is expected to be spent during the next twelve months. These expected capital commitments exceed available working capital and salvage fund by $4.7$4.2 million atas of September 30, 2015.2016. The Fund has entered into a credit agreementthe Credit Agreement to provide capital for funding of the Beta Project. See Note 4.3. “Credit Agreement – Beta Project Financing” for additional information.
Based upon its current cash position, and its current reserve estimates and its current development plan of the Beta Project, the Fund expects cash flow from operations and borrowings to be sufficient to cover its commitments, borrowing repayments, as well as 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.
Environmental Considerations
The exploration for and development of oil and natural gas involves the extraction, production and transportation of materials which, under certain conditions, can be hazardous or cause environmental pollution problems. 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 and do not currently anticipate that compliance with federal, state and local environmental regulations will have a material adverse effect upon capital expenditures, results of operations or the competitive position of the Fund in the oil and gas industry. 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. AtAs of September 30, 20152016 and December 31, 2014,2015, there were no known environmental contingencies that required adjustment to, or disclosure in, the Fund to record a liability.Fund’s financial statements.
During the past several years, the United States Congress, as well as certain regulatory agencies with jurisdiction over the Fund’s business, have considered or proposed legislation or regulation relating to the upstream oil and gas industry both onshore and offshore. If any such proposals were to be enacted or adopted they could potentially materially impact the Fund’s operations. 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. 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.
Insurance Coverage
The Fund is subject to all risks inherent in the exploration for and development of oil and natural gas. 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 funds managed by the Manager. Claims made by other funds managed by the Manager can reduce or eliminate insurance for the Fund.
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 A-1 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 US Private Securities Litigation Reform Act of 1995 that 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 weather conditions, such as hurricanes, changes in market conditions affecting the pricing and production of oil and natural gas, the cost and availability of equipment, and changes in 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
The discussion and analysis of the Fund’s financial condition and results of operations are based upon the Fund’s financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). In preparing these financial statements, the Fund is required to make certain estimates, judgments and assumptions. These estimates, judgments and assumptions affect the reported amounts of the Fund’s assets and liabilities, including the disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of its revenues and expenses during the periods presented. The Fund evaluates these estimates and assumptions on an ongoing basis. The Fund bases its estimates and assumptions on historical experience and on various other factors that the Fund believes to be reasonable at the time the estimates and assumptions are made. However, future events and actual results may differ from these estimates and assumptions and such differences may have a material impact on the results of operations, financial position or cash flows. 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 presentationdiscussion of the Fund’s significant accounting policies. No changes have been made to the Fund’s critical accounting policies and estimates disclosed in its 20142015 Annual Report on Form 10-K.
Overview of the Fund’s Business
The Fund is a Delaware limited liability company formed on February 3, 2009 to primarily 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 exploratory or development oil and natural gas projects. However, the Fund is not required to make distributionsDistributions to shareholders except as providedare made in accordance with the Fund’s limited liability company agreement (the “LLC Agreement”). The Fund does not expect in the future to investigate or invest in any additional projects other than those in which it currently has a working interest. The Fund’s remaining capital has been fully allocated to complete such projects.
Ridgewood Energy Corporation (the “Manager” or “Ridgewood Energy”) is the Manager, and as such, has direct and exclusive control over the management of the Fund’s operations. The Manager performs certain duties onor arranges for the performance of, the management, advisory and administrative services required for Fund’s behalf including the evaluation of projects, including ongoing management, administrative and advisory services. For theseoperations. As compensation for its services, the Manager receivesis 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, payable monthly.Fund. 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.
Update on Regulations
RevenuesOn July 14, 2016, the U.S. Department of the Interior Bureau of Ocean Energy Management (“BOEM”) issued a Notice to Lessees (“NTL”) that discontinued and materially replaced existing policies and procedures regarding financial security (i.e. supplemental bonding) for decommissioning obligations. Generally, the new NTL ended the practice of excusing for lessees of federal oil and gas leases, and owners of pipeline rights-of-way and rights-of use and easement on the Outer Continental Shelf (“Lessees”) from providing such additional security where co-lessees had sufficient financial strength to meet such decommissioning obligations, established new criteria for determining financial strength and additional security requirements of such Lessees, provided acceptable forms of such additional security and replaced the waiver system with one of self-insurance. The new rule became effective as of September 12, 2016 and the Fund, as well as most industry participants, are subjectworking with the BOEM, their operators and working interest partners to marketdetermine 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.
Commodity Price Changes
Changes in commodity prices may significantly affect liquidity and expected operating results. Reductions in oil and gas prices not only reduce revenues and profits, but could also reduce the quantities of reserves that are commercially recoverable. Significant declines in prices could result in non-cash charges to earnings due to impairment.
Since fourth quarter 2014, there has been a significant decline in oil and natural gas prices. 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, 2016 and 2015 and the effect of such decreased average prices on the Fund’s results of operations. If oil and natural gas prices continue to decline, even if only for a short period of time, the Fund’s results of operations and liquidity will continue to be adversely impacted.
Market pricing for oil and natural gas which has beenis 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. Low commodity prices could have an adverse effect on the Fund’s future profitability. Factors affecting market pricing for oil and natural gas include:
| · | 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 price of foreign imports of 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 availability of alternate fuel sources. |
Business Update
Information regarding the Fund’s current projects, all of which are located in the offshore waters of the Gulf of Mexico, is provided in the following table. The budgetSee “Liquidity Needs” under this Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report for each project is inclusiveinformation regarding the funding of estimated asset retirement obligations.
| | | | Total Spent | | | Total | | |
| | Working | | through | | | Fund | | |
Project | | Interest | | September 30, 2015 | | | Budget | | Status |
| | | | (in thousands) | | |
Non-producing Properties | | | | | | | | | |
Beta Project | | 2.0% | | $ | 10,652 | | | $ | 18,155 | | Well deemed to be a discovery in 2012. Completion efforts are ongoing and production is expected to commence in 2016. |
Producing Properties | | | | | | | | | | | |
Liberty Project | | 2.0% | | $ | 3,006 | | | $ | 3,467 | | Production commenced in 2010. Well is currently shut-in due to pipeline maintenance activities and is expected to resume production in November 2015. Recompletion is planned for 2016. |
Fully Depleted Properties | | | | | | | | | | | |
Alpha Project | | 3.75% | | $ | 6,607 | | | $ | 7,470 | | Production commenced in 2012. Well reached the end of its productive life in fourth quarter 2014. |
Carrera Project | | 2.0% | | $ | 3,246 | | | $ | 3,711 | | Production commenced in 2011. Well reached the end of its productive life in fourth quarter 2014. |
Sold Properties | | | | | | | | | | | |
Raven Project wells #1 & #2 | | 25.0% | | $ | 11,452 | | | $ | 11,452 | | In January 2014, the Fund sold its interest in the Raven Project. See "Raven Sale" below for additional information. |
the Fund’s capital commitments.