| Organization and Summary of Significant Accounting Policies | 1. Organization and Summary of Significant Accounting Policies Organization The Ridgewood Energy Q Fund, LLC (the “Fund”),
a Delaware limited liability company, was formed on August 16, 2005 and operates pursuant to a limited liability company agreement (the
“LLC Agreement”) dated as of September 6, 2005 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 the 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 the 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. Use of Estimates The preparation of financial statements in accordance
with accounting principles generally accepted in the United States of America (“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, management
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. 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 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 consist of unadjusted quoted prices for identical instruments in active markets. Level 2 inputs consist
of quoted prices for similar instruments. Level 3 inputs are unobservable inputs and include situations where there is little, if any,
market activity for the instrument; hence, these inputs have the lowest priority. The Fund’s financial assets and liabilities
consist of cash and cash equivalents, salvage fund, production receivable, due from affiliate, other current assets, due to operators
and accrued expenses. The carrying amounts of these financial assets and liabilities approximate fair value due to their short-term nature.
The Fund also applies the provisions of the fair value measurement accounting guidance to its non-financial assets and liabilities, such
as oil and gas properties and asset retirement obligations, on a non-recurring basis. 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 December 31, 2022, the Fund had no cash equivalents. At times, deposits may be
in excess of federally insured limits, which are $ 250 Salvage Fund The Fund deposits cash in a separate interest-bearing
account, or salvage fund, 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. Interest earned on the
account will become part of the salvage fund. There are no restrictions on withdrawals from the salvage fund. 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. Acquisition, exploration and development 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. The 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. 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. Once a property 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. 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. As the costs are incurred, the
advances are reclassified to proved properties. Accrued Expenses Accrued expenses consist of the following:
December 31,
2022 2021
(in thousands)
Accrued royalty $ 77 $ -
Accrued accounting and legal fees 61 64
$ 138 $ 64 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 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. Annually, or more frequently
if an event occurs that would dictate a change in assumptions or estimates underlying the obligations, the Fund reassesses its asset retirement
obligations to determine whether any revisions to the obligations are necessary. The Fund maintains a salvage fund to provide for the
funding of future asset retirement obligations. The following table presents changes in asset retirement obligations during the years
ended December 31, 2022 and 2021: Schedule of Changes in Asset Retirement Obligations
December 31,
2022 2021
(in thousands)
Balance, beginning of year $ 486 $ 857
Liabilities settled (6 ) (339 )
Accretion expense 37 37
Revision of estimates 165 (69 )
Balance, end of year $ 682 $ 486 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 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 (“ASC 606”) ASC 606 Oil and Gas Revenue Generally, the Fund sells oil and natural gas
under two types of agreements, which are common in the oil and gas industry. Natural gas liquid (“NGL”) sales 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. In the first type of agreement, a netback agreement,
the Fund receives a price, net of pricing differentials as well as transportation expense incurred by the customer, and the Fund records
revenue at the wellhead at the net price received where control transfers to the customer. In the second type of agreement, the Fund delivers
oil and natural gas to the customer at a contractually agreed-upon delivery point where the customer takes control. The Fund pays a third-party
to transport the oil and natural gas and receives a specific market price from the customer net of pricing adjustments. The Fund records
the transportation expense within operating expenses in the statements of operations. Under the Fund’s natural gas processing
contracts, the Fund delivers natural gas to a midstream processing company at the inlet of the midstream processing company’s facility.
The midstream processing company gathers and processes the natural gas and remits the proceeds to the Fund for the sale of NGLs. In this
type of arrangement, the Fund evaluates whether it is the principal or agent in the transaction. The Fund concluded that it is the principal
and the ultimate third-party purchaser is the customer; therefore, the Fund recognizes revenue on a gross basis, with transportation,
gathering and processing fees recorded as an expense within operating expenses in the statements of operations. In certain instances, the Fund may elect to take
its residue gas and NGLs in-kind at the tailgate of the midstream company’s processing plant and subsequently market such volumes.
Through its marketing process, the Fund delivers the residue gas and NGLs to the ultimate third-party customer at a contractually agreed-upon
delivery point and receives a specified market price from the customer. In this arrangement, the Fund recognizes revenue when control
transfers to the customer at the delivery point based on the market price received from the customer. The transportation, gathering and
processing fees are recorded as expense within operating expenses in the statements of operations. The Fund assesses the performance obligations
promised in its oil and natural gas contracts based on each unit of oil and natural gas that will be transferred to its customer because
each unit is capable of being distinct. The Fund satisfies its performance obligation when control transfers at a point in time when its
customer is able to direct the use of, and obtain substantially all of the benefits from, the oil and natural gas delivered. Under each
of the Fund’s oil and natural gas contracts, contract prices are variable and based on an index in which the prices are published,
which fluctuate as a result of related industry variables, adjusted for pricing differentials, quality of the oil and pipeline allowances.
The use of index-based pricing with predictable differentials reduces the level of uncertainty related to oil and natural gas prices.
Additionally, any variable consideration is not constrained. Payments are received in the month following the oil and natural gas production
month. Adjustments that occur after delivery are reflected in revenue in the month payments are received. Transaction Price Allocated to Remaining Performance
Obligations 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. Contract Balances 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. Other Revenue Other revenue is generated from the Fund’s
production handling, gathering and operating services agreement with affiliated entities and other third parties. The Fund earns a fee
for its services and recognizes these fees as revenue at the time its performance obligations are satisfied as the control of oil and
natural gas is never transferred to the Fund, thus there are no unsatisfied performance obligations. The Fund’s project operator
performs joint interest billing once the performance obligations have been satisfied, at which point the payment is unconditional. Accordingly,
the Fund’s production handling, gathering and operating services agreement with affiliated entities and other third parties does
not give rise to contract assets or liabilities. The receivables related to the Fund’s proportionate share of revenue from affiliates
are included within “Due from affiliate” on the Fund’s balance sheets. The receivables related to the Fund’s proportionate
share of revenue from third parties are presented as a reduction from “Due to operator” on the Fund’s balance sheets.
The receivables are settled by issuance of a non-cash credit from the Beta Project operator to the Fund when the operator performs the
joint interest billing of the lease operating expenses due from the Fund. However, if applying the joint interest billing credit results
in a net credit balance due to the Fund, the Beta Project operator remits such balance in cash to the Fund. Prior Period Performance Obligations The Fund records oil and gas revenue in the month
production is delivered to its customers. However, settlement statements for residue gas and NGLs sales may not be received for 30 to
60 days after the date production is delivered. As a result, the Fund is required to estimate the amount of production delivered to the
purchaser and the price that will be received for the sale of the residue gas and NGLs. The Fund records the differences between its estimates
and the actual amounts received in the month that the payment is received from the customer. The Fund 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 years ended December 31, 2022 and 2021, 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 for impairment whenever events and circumstances indicate that the recorded carrying value of its oil and gas properties
may not be recoverable. Recoverability 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 oil and gas properties is impaired, and written down to fair value. Fair value is determined using 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, estimates of oil and gas reserves and future development costs or discount
rates could result in a significant impact on the amount of impairment. There were no impairments of oil and gas properties
during the years ended December 31, 2022 and 2021. Fluctuations in oil and natural
gas commodity prices may impact the fair value of the Fund’s oil and gas properties. In addition, significant declines in oil and
natural gas commodity prices could reduce the quantities of reserves that are commercially recoverable, which could result in impairment 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, 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. 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 2019 through 2021 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. In general, profits and losses in any year are allocated 85 15 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% 1% 85% 15% Recent Accounting Pronouncements The Fund has considered recent accounting pronouncements
issued during the year ended December 31, 2022 and through the filing of this report, and the Fund has not identified new standards that
it believes will have an impact on the Fund’s financial statements. |
