PRC Williston 10-Q 8 Nov 13 2013 Q3 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Nov. 07, 2013
Document and Entity Information [Abstract]	'	'
Entity Registrant Name	'PRC Williston, LLC	'
Entity Central Index Key	'0001565640	'
Document Type	'10-Q	'
Document Period End Date	30-Sep-13	'
Amendment Flag	'false	'
Current Fiscal Year End Date	'--12-31	'
Entity Filer Category	'Smaller Reporting Company	'
Common Stock, Shares, Outstanding	'	0
Document Fiscal Year Focus	'2013	'
Document Fiscal Period Focus	'Q3	'

BALANCE_SHEETS

BALANCE SHEETS (USD $)	Sep. 30, 2013	Dec. 31, 2012
In Thousands, unless otherwise specified
CURRENT ASSETS	'	'
Accounts receivable	$1,234	$703
Prepaid expenses	31	0
Inventory	290	0
Total current assets	1,555	703
PROPERTY AND EQUIPMENT	'	'
Oil and natural gas properties, successful efforts method	33,636	33,800
Accumulated depletion and depreciation	-16,715	-15,543
Total oil and natural gas properties, net	16,921	18,257
Total Assets	18,476	18,960
CURRENT LIABILITIES	'	'
Accounts payable and accrued liabilities	1,962	1,403
Current portion of asset retirement obligation	962	889
Accounts payable due to Parent	61,314	58,965
Total current liabilities	64,238	61,257
NONCURRENT LIABILITIES	'	'
Asset retirement obligation	1,351	1,274
Total liabilities	65,589	62,531
MEMBER’S DEFICIT	-47,113	-43,571
Total Liabilities and Member’s Deficit	$18,476	$18,960

UNAUDITED_STATEMENTS_OF_OPERAT

UNAUDITED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
REVENUE	'	'	'	'
Oil and natural gas sales	$2,019	$1,876	$5,315	$6,065
Total revenue	2,019	1,876	5,315	6,065
OPERATING EXPENSES	'	'	'	'
Lease operating expenses	1,465	875	3,634	3,473
Severance taxes and marketing	120	121	321	308
Impairment of proved oil and gas property	0	0	1,231	0
Depletion, depreciation, and accretion	496	488	1,265	1,717
General and administrative	439	299	953	898
Total operating expenses	2,520	1,783	7,404	6,396
OPERATING INCOME (LOSS)	-501	93	-2,089	-331
INTEREST EXPENSE	-357	-565	-1,453	-1,527
NET LOSS	($858)	($472)	($3,542)	($1,858)

UNAUDITED_STATEMENT_OF_CHANGES

UNAUDITED STATEMENT OF CHANGES IN MEMBER'S DEFICIT (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Changes in Member's Deficit	'	'	'	'
Balance, January 1, 2013	'	'	($43,571)	'
Net loss	-858	-472	-3,542	-1,858
Balance, September 30, 2013	($47,113)	'	($47,113)	'

UNAUDITED_STATEMENTS_OF_CASH_F

UNAUDITED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES	'	'
Net loss	($3,542)	($1,858)
Adjustments to reconcile net loss to net cash used in operating activities:	'	'
Depletion, depreciation, and accretion	1,265	1,717
Asset impairment	1,231	0
Changes in operating assets and liabilities:	'	'
Accounts receivable	-531	1,234
Inventory	-290	0
Prepaid expenses and other current assets	-31	0
Accounts payable and accrued liabilities	431	1,069
Net used in operating activities:	-1,467	2,162
CASH FLOWS FROM INVESTING ACTIVITIES	'	'
Capital expenditures	-882	-48
Net cash used in investing activities	-882	-48
CASH FLOWS FROM FINANCING ACTIVITIES	'	'
(Repayments to) Advances from parent	2,349	-2,114
Net cash (used in)provided by financing activities	2,349	-2,114
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	0	0
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	0	0
CASH AND CASH EQUIVALENTS, END OF PERIOD	0	0
NON-CASH TRANSACTIONS	'	'
Change in accrued capital expenditures	129	43
Non-cash additions to asset retirement obligation	$129	$43

ORGANIZATION_AND_NATURE_OF_OPE

ORGANIZATION AND NATURE OF OPERATIONS	9 Months Ended
	Sep. 30, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]	'
ORGANIZATION AND NATURE OF OPERATIONS	'
	ORGANIZATION AND NATURE OF OPERATIONS
	PRC Williston, LLC (the “Company" or “PRC Williston”) is a 87.5% - owned subsidiary of Magnum Hunter Resources Corporation, a Delaware corporation, operating directly and indirectly through its subsidiaries (“Magnum Hunter” or “Parent”), a Houston, Texas based independent exploration and production company engaged in the acquisition and development of producing properties and undeveloped acreage, the production of oil and natural gas, and certain midstream and oil field service activities in the United States ("U.S."). PRC Williston is engaged in secondary enhanced oil recovery projects in the U.S., and all of its properties are non-operated in the Williston Basin.
	The Company is a limited liability company (“LLC”). As an LLC, the amount of loss at risk for each individual member is limited to the amount of capital contributed to the LLC, and unless otherwise noted, the individual member’s liability for indebtedness of an LLC is limited to the member’s actual capital contribution. Magnum Hunter is the sole member of the Company; however, the Company has granted a 12.5% net profits interest to an unaffiliated third party. The net profits interest is functionally equivalent to a nonvoting class of membership interest in that it allows participation by the third party in any future distributions made by PRC Williston to the Parent on account of the Parent's equity interest.

SUMMARY_OF_SIGNIFICANT_ACCOUNT

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2013
Accounting Policies [Abstract]	'
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	'
	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	Basis of Presentation
	The accompanying unaudited interim consolidated financial statements of PRC Williston have been prepared in accordance with accounting principles generally accepted in the U.S. and the rules of the SEC, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the year ended December 31, 2012. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. The year-end balance sheet data were derived from audited financial statements, but do not include all disclosures required by accounting principles generally accepted in the U.S.
	Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements as reported in the 2012 annual report on Form 10-K for PRC Williston have been omitted.
	Oil and Gas Properties
	Capitalized Costs
	We follow the successful efforts method of accounting for our oil and gas producing activities. Costs to acquire mineral interests in oil and gas properties and to drill and equip development wells and related asset retirement costs are capitalized. Costs to drill exploratory wells are capitalized pending determination of whether the wells have proved reserves. If we determine that the wells do not have proved reserves, the costs are charged to expense. There were no costs capitalized for exploratory wells pending the determination of proved reserves at either September 30, 2013 or December 31, 2012. Geological and geophysical costs, including seismic studies and costs of carrying and retaining unproved properties are charged to expense as incurred. We capitalize interest on expenditures for significant exploration and development projects that last more than six months while activities are in progress to bring the assets to their intended use. No interest was capitalized during the periods presented.
	On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depreciation, depletion, and amortization are eliminated from the property accounts, and the resultant gain or loss is recognized. On the retirement or sale of a partial unit of proved property, the cost is charged to accumulated depreciation, depletion, and amortization with a resulting gain or loss recognized in income.
	Capitalized amounts attributable to proved oil and gas properties are depleted by the unit-of-production method over proved reserves using the unit conversion ratio of six Mcf of gas to one Bbl of oil and the ratio of forty-two Gal of natural gas liquids to one Bbl of oil. Well costs and related equipment are depleted over proved developed reserves, and leasehold costs are depleted over total proved reserves.
	Capitalized costs related to proved oil and gas properties, including wells and related equipment and facilities, are evaluated for impairment based on an analysis of undiscounted future net cash flows. If undiscounted cash flows are insufficient to recover the net capitalized costs related to proved properties, then we recognize an impairment charge in income from operations equal to the difference between the net capitalized costs related to proved properties and their estimated fair values based on the present value of the related future net cash flows. We recorded proved property impairment charge of $1.2 million in the three and nine months ended September 30, 2013, and no impairments for the three and nine months ended September 30, 2012.
	Unproved oil and gas properties that are individually significant are periodically assessed for impairment of value, and a loss is recognized at the time of impairment by providing an impairment allowance in the Company's statement of operations. We recorded no impairment charges to unproved properties during the three and nine months ended September 30, 2013 or 2012.
	Inventory
	Commodities inventories are carried at the lower of average cost or market, on a first-in, first-out basis. The Company’s commodities inventories consist of oil held in storage. Any valuation allowances of commodities inventories are recorded as reductions to the carrying values of the commodities inventories included in the Company’s balance sheets and as charges to lease operating expense in the statements of operations. The Company had $290,000 and $0 in commodities inventory as of September 30, 2013 and December 31, 2012, respectively.
	Income Taxes
	The Company is not subject to federal income taxes and does not have a tax sharing agreement or allocate taxes with its member. Therefore, no provision has been made for federal or state income taxes on the Company’s books. It is the responsibility of the member to report its share of taxable income or loss on its separate income tax return. Accordingly, no recognition has been given to federal or state income taxes in the accompanying financial statements.
	Based on management’s analysis, the Company did not have any uncertain tax positions as of September 30, 2013 or 2012. At September 30, 2013, and 2012, there were no material income tax interest or penalty items recorded in the statement of operations or as a liability on the balance sheet.

ASSET_RETIREMENT_OBLIGATION

ASSET RETIREMENT OBLIGATION	9 Months Ended
	Sep. 30, 2013
Asset Retirement Obligation Disclosure [Abstract]	'
ASSET RETIREMENT OBLIGATION	'
	ASSET RETIREMENT OBLIGATIONS
	The Company accounts for asset retirement obligations based on the guidance of ASC 410 which addresses accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. ASC 410 requires that the fair value of a liability for an asset’s retirement obligation be recorded in the period in which it is incurred and the corresponding cost capitalized by increasing the carrying amount of the related long-lived asset. The liability is accreted to its present value each period, and the capitalized cost is depreciated over the estimated useful life of the related asset. Both the accretion of the liability and the depreciation of the asset are included in DD&A. We have included estimated future costs of abandonment and dismantlement in our successful efforts oil and gas properties base and deplete these costs as a component of our DD&A expense in the accompanying financial statements.
	The following table summarizes the Company’s asset retirement obligation transactions during the nine months ended September 30:
		Nine Months Ended September 30, 2013
		(in thousands)
	Asset retirement obligation at beginning of period	$	2,163
	Accretion expense	95
	Revisions in estimated liabilities	48
	Liabilities incurred	7
	Asset retirement obligation at end of period	2,313
	Less: current portion	(962		)
	Asset retirement obligation at end of period	$	1,351

RELATED_PARTY_TRANSACTIONS

RELATED PARTY TRANSACTIONS	9 Months Ended
	Sep. 30, 2013
Related Party Transactions [Abstract]	'
RELATED PARTY TRANSACTIONS	'
	RELATED PARTY TRANSACTIONS
	The Company and its parent, Magnum Hunter, have an arrangement whereby Magnum Hunter provides funding to the Company for costs of developing oil and gas properties and Magnum Hunter allocates interest expense and general and administrative expenses to the Company. The allocation of interest expense is based on the amount funded to the Company multiplied by the interest rate applicable to the MHR Senior Revolving Credit Facility. General and administrative expenses are allocated to the Company from Magnum Hunter on a pro rata basis relating to the Company's revenues in proportion to the consolidated oil and gas sales of Magnum Hunter and all its subsidiaries.
	The following table sets forth the Company’s related-party expenses during the three and nine month periods ended September 30, 2013 and 2012:
		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2013		2012		2013		2012
		(in thousands)
	Interest expense	$	357	$	565	$	1,453	$	1,527
	General and administrative	$	439	$	299	$	953	$	898
	Accumulated interest and general and administrative expense allocated to PRC Williston are included in accounts payable due to Parent. At September 30, 2013, the balance due to Magnum Hunter was $61.3 million, and $59.0 million at December 31, 2012.

GUARANTEE

GUARANTEE	9 Months Ended
	Sep. 30, 2013
Guarantees [Abstract]	'
GUARANTEE	'
	GUARANTEE
	On May 16, 2012, the Company was named a guarantor subsidiary to the Senior Notes issued by the Parent, which are due May 15, 2020. The Senior Notes were issued by the Parent pursuant to an indenture entered into on May 16, 2012, as supplemented, among the Parent, the subsidiary guarantors party thereto , Wilmington Trust, National Association, as the trustee, and Citibank, N.A., as the paying agent, registrar and authenticating agent.  The terms of the Senior Notes are governed by the indenture, which contains affirmative and restrictive covenants that, among other things, limit the Parent's and the guarantors' ability to incur or guarantee additional indebtedness or issue certain preferred stock; pay dividends on capital stock or redeem, repurchase or retire capital stock or subordinated indebtedness or make certain other restricted payments; transfer or sell assets; make loans and other investments; create or permit to exist certain liens; enter into agreements that restrict dividends or other payments from restricted subsidiaries to the Company; consolidate, merge or transfer all or substantially all of their assets; engage in transactions with affiliates; and create unrestricted subsidiaries.
	The indenture also contains events of default.  Upon the occurrence of events of default arising from certain events of bankruptcy or insolvency, the Senior Notes shall become due and payable immediately without any declaration or other act of the trustee or the holders of the Senior Notes.  Upon the occurrence of certain other events of default, the trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Senior Notes may declare all outstanding Senior Notes to be due and payable immediately.
	The Parent had $600.0 million in principal outstanding under the Senior Notes as of September 30, 2013. The Company shares joint and several liability with other guaranteeing subsidiaries of the Parent, and the Company does not expect the default provisions to require recourse to the lenders. As such, the Company cannot estimate any potential loss as a result of the guarantee of indebtedness of the Parent. As of September 30, 2013, the Parent was in compliance with Senior Note debt covenants as described in Magnum Hunter's Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, in "Note 7 - Long-Term Debt."

SUMMARY_OF_SIGNIFICANT_ACCOUNT1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2013
Accounting Policies [Abstract]	'
Basis of Presentation	'
	Basis of Presentation
	The accompanying unaudited interim consolidated financial statements of PRC Williston have been prepared in accordance with accounting principles generally accepted in the U.S. and the rules of the SEC, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the year ended December 31, 2012. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. The year-end balance sheet data were derived from audited financial statements, but do not include all disclosures required by accounting principles generally accepted in the U.S.
	Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements as reported in the 2012 annual report on Form 10-K for PRC Williston have been omitted.
Oil and Gas Properties	'
	Oil and Gas Properties
	Capitalized Costs
	We follow the successful efforts method of accounting for our oil and gas producing activities. Costs to acquire mineral interests in oil and gas properties and to drill and equip development wells and related asset retirement costs are capitalized. Costs to drill exploratory wells are capitalized pending determination of whether the wells have proved reserves. If we determine that the wells do not have proved reserves, the costs are charged to expense. There were no costs capitalized for exploratory wells pending the determination of proved reserves at either September 30, 2013 or December 31, 2012. Geological and geophysical costs, including seismic studies and costs of carrying and retaining unproved properties are charged to expense as incurred. We capitalize interest on expenditures for significant exploration and development projects that last more than six months while activities are in progress to bring the assets to their intended use. No interest was capitalized during the periods presented.
	On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depreciation, depletion, and amortization are eliminated from the property accounts, and the resultant gain or loss is recognized. On the retirement or sale of a partial unit of proved property, the cost is charged to accumulated depreciation, depletion, and amortization with a resulting gain or loss recognized in income.
	Capitalized amounts attributable to proved oil and gas properties are depleted by the unit-of-production method over proved reserves using the unit conversion ratio of six Mcf of gas to one Bbl of oil and the ratio of forty-two Gal of natural gas liquids to one Bbl of oil. Well costs and related equipment are depleted over proved developed reserves, and leasehold costs are depleted over total proved reserves.
	Capitalized costs related to proved oil and gas properties, including wells and related equipment and facilities, are evaluated for impairment based on an analysis of undiscounted future net cash flows. If undiscounted cash flows are insufficient to recover the net capitalized costs related to proved properties, then we recognize an impairment charge in income from operations equal to the difference between the net capitalized costs related to proved properties and their estimated fair values based on the present value of the related future net cash flows. We recorded proved property impairment charge of $1.2 million in the three and nine months ended September 30, 2013, and no impairments for the three and nine months ended September 30, 2012.
	Unproved oil and gas properties that are individually significant are periodically assessed for impairment of value, and a loss is recognized at the time of impairment by providing an impairment allowance in the Company's statement of operations.
Inventory	'
	Inventory
	Commodities inventories are carried at the lower of average cost or market, on a first-in, first-out basis. The Company’s commodities inventories consist of oil held in storage. Any valuation allowances of commodities inventories are recorded as reductions to the carrying values of the commodities inventories included in the Company’s balance sheets and as charges to lease operating expense in the statements of operations.
Income Taxes	'
	Income Taxes
	The Company is not subject to federal income taxes and does not have a tax sharing agreement or allocate taxes with its member. Therefore, no provision has been made for federal or state income taxes on the Company’s books. It is the responsibility of the member to report its share of taxable income or loss on its separate income tax return. Accordingly, no recognition has been given to federal or state income taxes in the accompanying financial statements.

ASSET_RETIREMENT_OBLIGATION_Ta

ASSET RETIREMENT OBLIGATION (Tables)	9 Months Ended
	Sep. 30, 2013
Asset Retirement Obligation Disclosure [Abstract]	'
Schedule of Change in Asset Retirement Obligation	'
	The following table summarizes the Company’s asset retirement obligation transactions during the nine months ended September 30:
		Nine Months Ended September 30, 2013
		(in thousands)
	Asset retirement obligation at beginning of period	$	2,163
	Accretion expense	95
	Revisions in estimated liabilities	48
	Liabilities incurred	7
	Asset retirement obligation at end of period	2,313
	Less: current portion	(962		)
	Asset retirement obligation at end of period	$	1,351

RELATED_PARTY_TRANSACTIONS_REL

RELATED PARTY TRANSACTIONS RELATED PARTY TRANSACTIONS (Tables)	9 Months Ended
	Sep. 30, 2013
Related Party Transactions [Abstract]	'
Schedule of Related Party Transactions	'
	The following table sets forth the Company’s related-party expenses during the three and nine month periods ended September 30, 2013 and 2012:
		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2013		2012		2013		2012
		(in thousands)
	Interest expense	$	357	$	565	$	1,453	$	1,527
	General and administrative	$	439	$	299	$	953	$	898

ORGANIZATION_AND_NATURE_OF_OPE1

ORGANIZATION AND NATURE OF OPERATIONS (Details)	Sep. 30, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]	'
Net profit interest percentage granted	12.50%

SUMMARY_OF_SIGNIFICANT_ACCOUNT2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $)	9 Months Ended			3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Sep. 30, 2013	Sep. 30, 2013	Sep. 30, 2013	Sep. 30, 2012
				Proved Properties	Proved Properties	Unproved Properties	Unproved Properties
Oil and Gas Properties	'	'	'	'	'	'	'
Depletion, unit conversion ratio (Mcf per Bbl)	6	'	'	'	'	'	'
Depletion, unit conversion ratio (Gal per Bbl)	42	'	'	'	'	'	'
Asset impairment	$1,231,000	$0	'	$1,200,000	$1,200,000	$0	$0
Inventory	$290,000	'	$0	'	'	'	'

ASSET_RETIREMENT_OBLIGATION_De

ASSET RETIREMENT OBLIGATION (Details) (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Asset Retirement Obligation, Roll Forward Analysis	'	'
Asset retirement obligation at beginning of period	$2,163	'
Accretion expense	95	'
Revisions in estimated liabilities	48	'
Liabilities incurred	7	'
Asset retirement obligation at end of period	2,313	'
Less: current portion	-962	-889
Asset retirement obligation at end of period	$1,351	$1,274

RELATED_PARTY_TRANSACTIONS_Det

RELATED PARTY TRANSACTIONS (Details) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Related Party Transaction [Line Items]	'	'	'	'	'
Accounts payable due to Parent	$61,314	'	$61,314	'	$58,965
Magnum Hunter	'	'	'	'	'
Related Party Transaction [Line Items]	'	'	'	'	'
Related party, interest expense	357	565	1,453	1,527	'
Related party, selling, general and administrative expense	439	299	953	898	'
Accounts payable due to Parent	$61,300	'	$61,300	'	$59,000

GUARANTEE_Details

GUARANTEE (Details) (Indirect Guarantee of Indebtedness, Magnum Hunter, Senior Notes, USD $)	Sep. 30, 2013	Dec. 31, 2012
Guarantor Obligations	'	'
Debt principal amount	$600,000,000	$600,000,000
Minimum	'	'
Guarantor Obligations	'	'
Debt, trustee or holders percentage of principal able to decrease debt due or payable immediately	25.00%	'