Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Jul. 31, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Energy 11, L.P. | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 18,973,474 | |
Amendment Flag | false | |
Entity Central Index Key | 1,581,552 | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Filer Category | Smaller Reporting Company | |
Entity Well-known Seasoned Issuer | No | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Assets | ||
Cash and cash equivalents | $ 3,727,298 | $ 86,800,596 |
Oil, natural gas and natural gas liquids revenue receivable | 5,500,050 | 2,718,296 |
Other current assets | 292,644 | 10,038,221 |
Total Current Assets | 9,519,992 | 99,557,113 |
Oil and natural gas properties, successful efforts method, net of accumulated depreciation, depletion and amortization; June 30, 2017, $17,118,619; December 31, 2016, $9,908,800 | 327,136,024 | 151,554,972 |
Total Assets | 336,656,016 | 251,112,085 |
Liabilities and Partners’ Equity | ||
Note payable | 8,500,000 | 0 |
Accounts payable and accrued expenses | 3,404,114 | 2,622,400 |
Total Current Liabilities | 11,904,114 | 2,622,400 |
Asset retirement obligations | 1,198,082 | 70,623 |
Total Liabilities | 13,102,196 | 2,693,023 |
Limited partners’ interest (18,973,474 common units and 14,582,963 units issued and outstanding at June 30, 2017 and December 31, 2016, respectively) | 323,555,547 | 248,420,789 |
General partners’ interest | (1,727) | (1,727) |
Class B Units (62,500 units issued and outstanding at June 30, 2017 and December 31, 2016, respectively) | 0 | 0 |
Total Partners’ Equity | 323,553,820 | 248,419,062 |
Total Liabilities and Partners’ Equity | $ 336,656,016 | $ 251,112,085 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Oil and natural gas properties, accumulated depreciation, depletion and amortization (in Dollars) | $ 17,118,619 | $ 9,908,800 |
Limited partners' interest, common units issued | 18,973,474 | 14,582,963 |
Limited partners' interest, common units outstanding | 18,973,474 | 14,582,963 |
Class B Units, units issued | 62,500 | 62,500 |
Class B Units, units outstanding | 62,500 | 62,500 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenue | ||||
Oil, natural gas and natural gas liquids revenues | $ 10,208,740 | $ 5,532,113 | $ 20,350,006 | $ 9,851,210 |
Operating costs and expenses | ||||
Production expenses | 2,835,463 | 1,146,722 | 5,567,317 | 2,501,842 |
Production taxes | 873,266 | 523,159 | 1,730,999 | 937,720 |
Management fees | 0 | 0 | 0 | 886,306 |
General and administrative expenses | 332,157 | 317,126 | 833,898 | 703,557 |
Depreciation, depletion, amortization and accretion | 3,980,331 | 2,420,440 | 7,236,589 | 5,093,262 |
Total operating costs and expenses | 8,021,217 | 4,407,447 | 15,368,803 | 10,122,687 |
Operating income (loss) | 2,187,523 | 1,124,666 | 4,981,203 | (271,477) |
Interest expense, net | (201,119) | (1,984,049) | (373,728) | (4,180,362) |
Net income (loss) | $ 1,986,404 | $ (859,383) | $ 4,607,475 | $ (4,451,839) |
Basic and diluted net income (loss) per common unit (in Dollars per share) | $ 0.11 | $ (0.14) | $ 0.27 | $ (0.81) |
Weighted average common units outstanding - basic and diluted (in Shares) | 18,650,582 | 5,995,051 | 17,237,933 | 5,464,063 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flow from operating activities: | ||
Net income (loss) | $ 4,607,475 | $ (4,451,839) |
Adjustments to reconcile net income (loss) to cash provided by operating activities: | ||
Depreciation, depletion, amortization and accretion | 7,236,589 | 5,093,262 |
Non-cash expenses, net | 47,158 | 2,455,936 |
Changes in operating assets and liabilities: | ||
Oil, natural gas and natural gas liquids revenue receivable | (2,781,754) | (2,609,476) |
Other current assets | 38,221 | (84,086) |
Accounts payable and accrued expenses | 438,238 | 804,013 |
Net cash flow provided by (used in) operating activities | 9,585,927 | 1,207,810 |
Cash flow from investing activities: | ||
Cash paid for acquisition of oil and natural gas properties | (98,236,644) | 0 |
Additions to oil and natural gas properties | (446,109) | (1,021,539) |
Net cash flow used in investing activities | (98,682,753) | (1,021,539) |
Cash flow from financing activities: | ||
Cash paid for deferred loan costs | 0 | (250,000) |
Net proceeds related to issuance of units | 82,511,695 | 40,864,941 |
Distributions paid to limited partners | (11,988,167) | (3,642,750) |
Payments on note payable | (64,500,000) | (36,917,833) |
Net cash flow provided by financing activities | 6,023,528 | 54,358 |
Increase (decrease) in cash and cash equivalents | (83,073,298) | 240,629 |
Cash and cash equivalents, beginning of period | 86,800,596 | 3,287,054 |
Cash and cash equivalents, end of period | 3,727,298 | 3,527,683 |
Interest paid | 346,575 | 1,683,868 |
Supplemental non-cash information: | ||
Increase in note payable, payment of contingent consideration | 0 | 5,000,000 |
Decrease in note payable, settlement of pre-close activity | 0 | 1,082,167 |
Acquisition No. 2 [Member] | ||
Supplemental non-cash information: | ||
Note payable assumed in Acquisition | 40,000,000 | 0 |
Acquisition No. 3 [Member] | ||
Supplemental non-cash information: | ||
Note payable assumed in Acquisition | $ 33,000,000 | $ 0 |
Partnership Organization
Partnership Organization | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure Text Block [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | Note 1. Partnership Organization Energy 11, L.P. (the “Partnership”) is a Delaware limited partnership formed to acquire producing and non-producing oil and natural gas properties onshore in the United States and to develop those properties. The initial capitalization of the Partnership of $1,000 occurred on July 9, 2013. The Partnership completed its best-efforts offering on April 24, 2017 with a total of approximately 19 million common units sold for gross proceeds of $374.2 million and proceeds net of offering costs of $349.6 million. As of June 30, 2017, the Partnership owns an approximate 26-27% non-operated working interest in 216 existing producing wells and approximately 253 future development sites in the Sanish field located in Mountrail County, North Dakota (collectively, the “Sanish Field Assets”), which is part of the Bakken shale formation in the Greater Williston Basin. Whiting Petroleum Corporation (“Whiting”), one of the largest producers in the basin, operates substantially all of the Sanish Field Assets. The general partner of the Partnership is Energy 11 GP, LLC (the “General Partner”). The General Partner manages and controls the business affairs of the Partnership. David Lerner Associates, Inc. (the “Dealer Manager”) was the dealer manager for the offering of common units. The Partnership’s fiscal year ends on December 31. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | Note 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with the instructions for Article 10 of SEC Regulation S-X. Accordingly, they do not include all of the information required by generally accepted accounting principles (“GAAP”) in the United States. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These unaudited financial statements should be read in conjunction with the Partnership’s audited consolidated financial statements included in its 2016 Annual Report on Form 10-K. Operating results for the three and six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the twelve-month period ending December 31, 2017. Offering Costs On April 24, 2017, the Partnership completed its best-efforts offering of common units by the Dealer Manager, which received a selling commission and a marketing expense allowance based on proceeds of the common units sold. Additionally, the Partnership incurred other offering costs including legal, accounting and reporting services. These offering costs were recorded by the Partnership as a reduction of partners’ equity. As of the conclusion of the offering, the Partnership had sold 19.0 million common units for gross proceeds of $374.2 million and proceeds net of offering costs of $349.6 million. Use of Estimates The preparation of financial statements in conformity with United States GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Reclassifications Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period presentation with no effect on previously reported net income, partners’ equity or cash flows. Net Income (Loss) Per Common Unit Basic net income (loss) per common unit is computed as net income (loss) divided by the weighted average number of common units outstanding during the period. Diluted net income (loss) per common unit is calculated after giving effect to all potential common units that were dilutive and outstanding for the period. There were no common units with a dilutive effect for the three and six months ended June 30, 2017 and 2016. As a result, basic and diluted outstanding common units were the same. The Class B units and Incentive Distribution Rights, as defined below, are not included in net income (loss) per common unit until such time that it is probable Payout (as discussed in Note 6) would occur. Recently Adopted Accounting Standards In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2017-01, Business Combinations (Topic 805), which amends the existing accounting standards to clarify the definition of a business and assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. For public entities, the guidance is effective for reporting periods beginning after December 15, 2017, including interim periods within those periods, and should be applied prospectively on or after the effective date. Early application is permitted for transactions that occur before the issuance or effective date of this amendment, provided the transaction has not been reported in financial statements that have been issued or made available for issuance. The Partnership adopted the standard effective January 1, 2017. The Partnership’s acquisitions prior to 2017 were accounted for as acquisitions of an existing business and therefore, all transaction costs were expensed as incurred. The Partnership’s acquisitions in the first quarter of 2017 were accounted for as asset purchases with acquisition costs, such as legal, title and accounting costs, being capitalized as part of the cost of the assets acquired. The Partnership will evaluate any future acquisition(s) of oil and gas properties under the revised standard and account for the acquisition as either an asset purchase or business combination depending on the particular facts and circumstances of the acquisition. |
Oil and Natural Gas Investments
Oil and Natural Gas Investments | 6 Months Ended |
Jun. 30, 2017 | |
Oil and Gas Property [Abstract] | |
Oil and Gas Properties [Text Block] | Note 3. Oil and Natural Gas Investments On December 18, 2015, the Partnership completed its purchase (“Acquisition No. 1”) of an approximate 11% non-operated working interest in the Sanish Field Assets for approximately $159.6 million. The Partnership accounted for Acquisition No. 1 as a business combination, and therefore expensed, as incurred, transaction costs associated with this acquisition. These costs included, but were not limited to, due diligence, reserve reports, legal and engineering services and site visits. On January 11, 2017, the Partnership completed its purchase (“Acquisition No. 2”) of an additional approximate 11% non-operated working interest in the Sanish Field Assets for approximately $128.5 million. In addition to using cash on hand and proceeds from the best-efforts offering, the Partnership partially funded Acquisition No. 2 with the delivery of a promissory note in favor of the sellers of $40.0 million, which was paid in full in February 2017. The Partnership accounted for Acquisition No. 2 as a purchase of a group of similar assets, and therefore capitalized transaction costs associated with this acquisition. Total transaction costs incurred during the six months ended June 30, 2017 were approximately $43,000. The Partnership also recorded an asset retirement obligation liability of approximately $0.8 million in conjunction with this acquisition. Acquisition No. 2 increased the Partnership’s non-operated working interest in the Sanish Field Assets to approximately 22-23%. On March 31, 2017, the Partnership completed its purchase (“Acquisition No. 3”) of an additional approximate average 10.5% non-operated working interest in 82 of the Partnership’s 216 existing producing wells and 150 of the Partnership’s 253 future development locations in the Sanish Field Assets (“Additional Interest”) for approximately $53.0 million. During the second quarter of 2017, the Partnership and the sellers adjusted the purchase price in accordance with the closing conditions set forth in the purchase agreement. The net impact of the purchase price adjustments was a decrease to the purchase price of the asset of approximately $0.6 million. In addition to using cash on hand and proceeds from the best-efforts offering, the Partnership partially funded Acquisition No. 3 with a promissory note in favor of the sellers of $33.0 million, discussed further in Note 4. Notes Payable. The Partnership accounted for Acquisition No. 3 as a purchase of a group of similar assets, and therefore capitalized transaction costs associated with this acquisition. Total transaction costs incurred during the six months ended June 30, 2017 were approximately $80,000. The Partnership also recorded an asset retirement obligation liability of approximately $0.3 million in conjunction with this acquisition. Acquisition No. 3 increased the Partnership’s total non-operated working interest in the Sanish Field Assets to approximately 26-27%. In conjunction with the closing on the Additional Interest in Acquisition No. 3, the Partnership delivered a promissory note in favor of the seller of $33.0 million. See Note 4. Notes Payable for further discussion on this promissory note. The following unaudited pro forma financial information for the three- and six-month periods ended June 30, 2017 and 2016 have been prepared as if Acquisitions No. 2 and No. 3 of the Sanish Field Assets had occurred on January 1, 2016. The unaudited pro forma financial information was derived from the historical Statements of Operations of the Partnership and the historical information provided by the sellers. The unaudited pro forma financial information does not purport to be indicative of the results of operations that would have occurred had the acquisitions of the Sanish Field Assets and related financings occurred on the basis assumed above, nor is such information indicative of the Partnership’s expected future results of operations. Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016 Revenues $ 10,208,740 $ 12,904,856 $ 22,657,376 $ 22,980,088 Net income (loss) 1,785,988 1,814,351 4,691,135 (1,414,174 ) |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | Note 4. Notes Payable As part of the financing for Acquisition No. 2, as described above in Note 3. Oil and Natural Gas Investments, on January 11, 2017, the Partnership executed a note in favor of the sellers in the original principal amount of $40.0 million. The Partnership paid the $40.0 million promissory note, which bore interest at 5%, in full on February 23, 2017. As part of the financing for Acquisition No. 3, as described above in Note 3. Oil and Natural Gas Investments, on March 31, 2017, the Partnership executed a note (“Seller Note”) in favor of the sellers in the original principal amount of $33.0 million. On April 24, 2017, the Partnership made a principal payment of $24.5 million on the Seller Note. The outstanding balance on the Seller Note at June 30, 2017 was $8.5 million. In July 2017, the Partnership and the sellers executed a First Amendment to the Seller Note (“Amended Note”), which extended the maturity date to June 29, 2018 (“Maturity Date”) provided the Partnership meets certain terms and conditions of the Amended Note, including making a $2.0 million payment on the outstanding principal balance by July 31, 2017. The $2.0 million payment was made by the Partnership on July 31, 2017. The Amended Note continues to bear interest at 5% per annum with interest due on the last business day of each month until the Maturity Date. In addition to the $2.0 million payment and interest payments on the outstanding principal balance of the Seller Note, the Partnership is required to make principal payments of $100,000 on the last business day of each remaining month in 2017 (August through December), and principal payments of the lesser of $1,000,000 or the remaining balance on the last business day of each month in 2018 up to the Maturity Date (January through June). There is no penalty for prepayment of the Amended Note. Payment of the Amended Note continues to be secured by a mortgage and liens on the Additional Interest in the Sanish Field Assets in customary form. If the Partnership sells any of its owned property, the Partnership is required to make a principal payment equal to 100% of the net proceeds of such sale until the principal amount of the Seller Note is paid in full. As of June 30, 2017, the outstanding balance on the note of $8.5 million approximates its fair market value. The carrying value of all of the other financial instruments of the Partnership approximate fair value due to their short-term nature. The Partnership estimated the fair value of its note payable by discounting the future cash flows of each instrument at estimated market rates consistent with the maturity of a debt obligation with similar credit terms and credit characteristics, which are Level 3 inputs under the fair value hierarchy. The market rate, which approximated the Partnership’s interest rate for the Seller Note, takes into consideration general market conditions and maturity. |
Asset Retirement Obligations
Asset Retirement Obligations | 6 Months Ended |
Jun. 30, 2017 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Asset Retirement Obligation Disclosure [Text Block] | Note 5. Asset Retirement Obligations The Partnership records an asset retirement obligation (“ARO”) and capitalizes the asset retirement costs in oil and natural gas properties in the period in which the asset retirement obligation is incurred based upon the fair value of an obligation to perform site reclamation, dismantle facilities or plug and abandon wells. After recording these amounts, the ARO is accreted to its future estimated value using an assumed cost of funds and the additional capitalized costs are depreciated on a unit-of-production basis. Inherent in the present value calculation are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement and changes in the legal, regulatory, environmental and political environments. To the extent future revisions of these assumptions impact the present value of the existing asset retirement obligation, a corresponding adjustment is made to the oil and natural gas property balance. The changes in the aggregate ARO are as follows: 2017 2016 Balance as of January 1 $ 70,623 $ 105,459 Liabilities incurred - Acquisition No. 2 781,628 - Liabilities incurred - Acquisition No. 3 289,827 - Revisions 28,866 (32,351 ) Accretion expense 27,138 9,049 Balance as of June 30 $ 1,198,082 $ 82,157 |
Capital Contribution and Partne
Capital Contribution and Partners' Equity | 6 Months Ended |
Jun. 30, 2017 | |
Partners' Capital Notes [Abstract] | |
Partners' Capital Notes Disclosure [Text Block] | Note 6. Capital Contribution and Partners’ Equity At inception, the General Partner and organizational limited partner made initial capital contributions totaling $1,000 to the Partnership. Upon closing of the minimum offering, the organizational limited partner withdrew its initial capital contribution of $990, the General Partner received Incentive Distribution Rights (defined below), and was reimbursed for its documented third party out-of-pocket expenses incurred in organizing the Partnership and offering the common units. The Partnership completed its best-efforts offering of common units on April 24, 2017. As of the conclusion of the offering on April 24, 2017, the Partnership had completed the sale of approximately 19.0 million common units for total gross proceeds of $374.2 million and proceeds net of offerings costs of $349.6 million. Under the agreement with the Dealer Manager, the Dealer Manager received a total of 6% in selling commissions and a marketing expense allowance based on gross proceeds of the common units sold. The Dealer Manager will also be paid a contingent incentive fee, which is a cash payment of up to an amount equal to 4% of gross proceeds of the common units sold based on the performance of the Partnership. Based on the common units sold through the best-efforts offering, the total contingent fee is a maximum of approximately $15.0 million. Prior to “Payout,” which is defined below, all of the distributions made by the Partnership, if any, will be paid to the holders of common units. Accordingly, the Partnership will not make any distributions with respect to the Incentive Distribution Rights or with respect to Class B units and will not make the contingent, incentive payments to the Dealer Manager, until Payout occurs. The Partnership Agreement provides that Payout occurs on the day when the aggregate amount distributed with respect to each of the common units equals $20.00 plus the Payout Accrual. The Partnership Agreement defines “Payout Accrual” as 7% per annum simple interest accrued monthly until paid on the Net Investment Amount outstanding from time to time. The Partnership Agreement defines Net Investment Amount initially as $20.00 per unit, regardless of the amount paid for the unit. If at any time the Partnership distributes to holders of common units more than the Payout Accrual, the amount the Partnership distributes in excess of the Payout Accrual will reduce the Net Investment Amount. All distributions made by the Partnership after Payout, which may include all or a portion of the proceeds of the sale of all or substantially all of the Partnership’s assets, will be made as follows: · First, (i) to the Record Holders of the Incentive Distribution Rights, 35%; (ii) to the Record Holders of the Outstanding Class B units, pro rata based on the number of Class B units owned, 35% multiplied by a fraction, the numerator of which is the number of Class B units outstanding and the denominator of which is 100,000 (currently, there are 62,500 Class B units outstanding; therefore, Class B units could receive 21.875%); (iii) to the Dealer Manager, as the Dealer Manager contingent incentive fee paid under the Dealer Manager Agreement, 30%, and (iv) the remaining amount, if any (currently 13.125%), to the Record Holders of outstanding common units, pro rata based on their percentage interest until such time as the Dealer Manager receives the full amount of the Dealer Manager contingent incentive fee under the Dealer Manager Agreement; · Thereafter, (i) to the Record Holders of the Incentive Distribution Rights, 35%; (ii) to the Record Holders of the Outstanding Class B units, pro rata based on the number of Class B units owned, 35% multiplied by a fraction, the numerator of which is the number of Class B units outstanding and the denominator of which is 100,000 (currently, there are 62,500 Class B units outstanding; therefore, Class B units could receive 21.875%); (iii) the remaining amount to the Record Holders of outstanding common units, pro rata based on their percentage interest (currently 43.125%). For the three and six months ended June 30, 2017, the Partnership paid distributions of $0.349041 and $0.698082 per common unit, or $6.5 million and $12.0 million, respectively. For the three and six months ended June 30, 2016, the Partnership paid distributions of $0.349041 and $0.675068 per common unit, or $2.1 million and $3.6 million, respectively. |
Related Parties
Related Parties | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | Note 7. Related Parties The Partnership has, and is expected to continue to engage in, significant transactions with related parties. These transactions cannot be construed to be at arm’s length and the results of the Partnership’s operations may be different than if conducted with non-related parties. The General Partner’s Board of Directors oversees and reviews the Partnership’s related party relationships and is required to approve any significant modifications to any existing related party transactions, as well as any new significant related party transactions. On July 1, 2016, the Partnership entered into a one-year lease agreement with an affiliate of the General Partner for office space in Oklahoma City, Oklahoma. Under the terms of the agreement, the Partnership made twelve monthly payments of $8,537. For the three and six months ended June 30, 2017, the Partnership paid $25,611 and $51,222 to the affiliate of the General Partner. The terms of the agreement will continue on a month-to-month basis at the same monthly rate for the remainder of 2017. For the three and six months ended June 30, 2017, approximately $88,000 and $170,000 of general and administrative costs were incurred by a member of the General Partner and have been or will be reimbursed by the Partnership. At June 30, 2017, approximately $87,000 was due to a member of the General Partner. For the three and six months ended June 30, 2016, approximately $105,000 and $117,000 of general and administrative costs were incurred by a member of the General Partner and have been reimbursed by the Partnership. The members of the General Partner are affiliates of Glade M. Knight, Chairman and Chief Executive Officer, David S. McKenney, Chief Financial Officer, Anthony F. Keating, III, Co-Chief Operating Officer and Michael J. Mallick, Co-Chief Operating Officer. Mr. Knight and Mr. McKenney are also affiliated with Energy Resources 12, L.P. Energy Resources 12, L.P. is not affiliated with the Partnership other than through Mr. Knight and Mr. McKenney. Mr. Mallick and Mr. Keating have no relationship with Energy Resources 12, L.P. The Partnership’s accounting and administrative functions are shared by both partnerships and the associated costs are allocated between the entities for cost sharing purposes. The Partnership’s remaining resources provide no services to Energy Resources 12, L.P. Accordingly, the Partnership disclaims any and all matters or activities in any manner related to Energy Resources 12, L.P. E11 Incentive Holdings, LLC (“Incentive Holdings”) was the owner of all Class B units outstanding (62,500) as of March 31, 2017. During the second quarter of 2017, Incentive Holdings transferred substantially all of its assets; on April 5, 2017, Incentive Holdings transferred 18,125 of the 62,500 Class B units to E11 Incentive Carry Vehicle, LLC, an affiliate of Incentive Holdings, for de minimis consideration. On April 6, 2017, the remaining 44,375 Class B units were acquired by Regional Energy Incentives, LP in exchange for approximately $98,000. Regional Energy Incentives, LP is owned by entities that are controlled by Anthony F. Keating, III, Co-Chief Operating Officer of the General Partner, Michael J. Mallick, Co-Chief Operating Officer of the General Partner, and David S. McKenney, Chief Financial Officer of the General Partner. The Class B units entitle the holder to certain distribution rights after Payout, as described in Note 6. Capital Contribution and Partners’ Equity. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Note 8. Subsequent Events In July 2017, the Partnership and the sellers of the interests transferred in Acquisition No. 3 executed a First Amendment to the Seller Note issued at the closing of Acquisition No. 3. The amendment extended the maturity date to June 29, 2018, provided the Partnership meets certain terms and conditions of the amendment. In accordance with the terms of the Amended Note, the Partnership made a $2.0 million payment on the outstanding principal balance on July 31, 2017. As of July 31, 2017, the outstanding principal balance on the note was $6.2 million. See Note 4. Note Payable for more information. In July 2017, the Partnership declared and paid $2.0 million, or $0.107397 per outstanding common unit, in distributions to its holders of common units. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with the instructions for Article 10 of SEC Regulation S-X. Accordingly, they do not include all of the information required by generally accepted accounting principles (“GAAP”) in the United States. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These unaudited financial statements should be read in conjunction with the Partnership’s audited consolidated financial statements included in its 2016 Annual Report on Form 10-K. Operating results for the three and six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the twelve-month period ending December 31, 2017. |
Offering Costs, Policy [Policy Text Block] | Offering Costs On April 24, 2017, the Partnership completed its best-efforts offering of common units by the Dealer Manager, which received a selling commission and a marketing expense allowance based on proceeds of the common units sold. Additionally, the Partnership incurred other offering costs including legal, accounting and reporting services. These offering costs were recorded by the Partnership as a reduction of partners’ equity. As of the conclusion of the offering, the Partnership had sold 19.0 million common units for gross proceeds of $374.2 million and proceeds net of offering costs of $349.6 million. |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of financial statements in conformity with United States GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Reclassification, Policy [Policy Text Block] | Reclassifications Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period presentation with no effect on previously reported net income, partners’ equity or cash flows. |
Earnings Per Share, Policy [Policy Text Block] | Net Income (Loss) Per Common Unit Basic net income (loss) per common unit is computed as net income (loss) divided by the weighted average number of common units outstanding during the period. Diluted net income (loss) per common unit is calculated after giving effect to all potential common units that were dilutive and outstanding for the period. There were no common units with a dilutive effect for the three and six months ended June 30, 2017 and 2016. As a result, basic and diluted outstanding common units were the same. The Class B units and Incentive Distribution Rights, as defined below, are not included in net income (loss) per common unit until such time that it is probable Payout (as discussed in Note 6) would occur. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recently Adopted Accounting Standards In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2017-01, Business Combinations (Topic 805), which amends the existing accounting standards to clarify the definition of a business and assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. For public entities, the guidance is effective for reporting periods beginning after December 15, 2017, including interim periods within those periods, and should be applied prospectively on or after the effective date. Early application is permitted for transactions that occur before the issuance or effective date of this amendment, provided the transaction has not been reported in financial statements that have been issued or made available for issuance. The Partnership adopted the standard effective January 1, 2017. The Partnership’s acquisitions prior to 2017 were accounted for as acquisitions of an existing business and therefore, all transaction costs were expensed as incurred. The Partnership’s acquisitions in the first quarter of 2017 were accounted for as asset purchases with acquisition costs, such as legal, title and accounting costs, being capitalized as part of the cost of the assets acquired. The Partnership will evaluate any future acquisition(s) of oil and gas properties under the revised standard and account for the acquisition as either an asset purchase or business combination depending on the particular facts and circumstances of the acquisition. |
Oil and Natural Gas Investmen15
Oil and Natural Gas Investments (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Oil and Gas Property [Abstract] | |
Business Acquisition, Pro Forma Information [Table Text Block] | The following unaudited pro forma financial information for the three- and six-month periods ended June 30, 2017 and 2016 have been prepared as if Acquisitions No. 2 and No. 3 of the Sanish Field Assets had occurred on January 1, 2016. The unaudited pro forma financial information was derived from the historical Statements of Operations of the Partnership and the historical information provided by the sellers. The unaudited pro forma financial information does not purport to be indicative of the results of operations that would have occurred had the acquisitions of the Sanish Field Assets and related financings occurred on the basis assumed above, nor is such information indicative of the Partnership’s expected future results of operations. Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016 Revenues $ 10,208,740 $ 12,904,856 $ 22,657,376 $ 22,980,088 Net income (loss) 1,785,988 1,814,351 4,691,135 (1,414,174 ) |
Asset Retirement Obligations (T
Asset Retirement Obligations (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Schedule of Asset Retirement Obligations [Table Text Block] | The changes in the aggregate ARO are as follows: 2017 2016 Balance as of January 1 $ 70,623 $ 105,459 Liabilities incurred - Acquisition No. 2 781,628 - Liabilities incurred - Acquisition No. 3 289,827 - Revisions 28,866 (32,351 ) Accretion expense 27,138 9,049 Balance as of June 30 $ 1,198,082 $ 82,157 |
Partnership Organization (Detai
Partnership Organization (Details) shares in Millions | Jul. 09, 2013USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Apr. 24, 2017USD ($)shares |
Partnership Organization (Details) [Line Items] | ||||
Limited Liability Company or Limited Partnership, Business, Formation State | Delaware | |||
Partners' Capital Account, Contributions (in Dollars) | $ 1,000 | |||
Proceeds, Net of Offering Costs, from Issuance of Common Limited Partners Units (in Dollars) | $ 82,511,695 | $ 40,864,941 | ||
Best-Efforts Offering [Member] | ||||
Partnership Organization (Details) [Line Items] | ||||
Partners' Capital Account, Units, Sale of Units (in Shares) | shares | 19 | |||
Proceeds from Issuance of Common Limited Partners Units (in Dollars) | $ 374,200,000 | |||
Proceeds, Net of Offering Costs, from Issuance of Common Limited Partners Units (in Dollars) | $ 349,600,000 | |||
Sanish Field Located in Mountrail County, North Dakota [Member] | ||||
Partnership Organization (Details) [Line Items] | ||||
Productive Oil Wells, Number of Wells, Net | 216 | |||
Gas and Oil Area Undeveloped, Net | 253 | |||
Minimum [Member] | Sanish Field Located in Mountrail County, North Dakota [Member] | ||||
Partnership Organization (Details) [Line Items] | ||||
Gas and Oil Area Developed, Net | 26.00% | |||
Maximum [Member] | Sanish Field Located in Mountrail County, North Dakota [Member] | ||||
Partnership Organization (Details) [Line Items] | ||||
Gas and Oil Area Developed, Net | 27.00% |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Details) - USD ($) shares in Millions | 6 Months Ended | 46 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | Apr. 24, 2017 | |
Summary of Significant Accounting Policies (Details) [Line Items] | |||
Proceeds, Net of Offering Costs, from Issuance of Common Limited Partners Units | $ 82,511,695 | $ 40,864,941 | |
Best-Efforts Offering [Member] | |||
Summary of Significant Accounting Policies (Details) [Line Items] | |||
Partners' Capital Account, Units, Sale of Units (in Shares) | 19 | ||
Proceeds from Issuance of Common Limited Partners Units | $ 374,200,000 | ||
Proceeds, Net of Offering Costs, from Issuance of Common Limited Partners Units | $ 349,600,000 |
Oil and Natural Gas Investmen19
Oil and Natural Gas Investments (Details) | Mar. 31, 2017USD ($) | Jan. 11, 2017USD ($) | Dec. 18, 2015USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) |
Acquisition No. 1 [Member] | Sanish Field Located in Mountrail County, North Dakota [Member] | |||||||
Oil and Natural Gas Investments (Details) [Line Items] | |||||||
Gas and Oil Area Developed, Net | 11.00% | ||||||
Business Combination, Consideration Transferred (in Dollars) | $ 159,600,000 | ||||||
Acquisition No. 2 [Member] | |||||||
Oil and Natural Gas Investments (Details) [Line Items] | |||||||
Asset Retirement Obligation, Liabilities Incurred (in Dollars) | $ 781,628 | $ 0 | |||||
Acquisition No. 2 [Member] | Sanish Field Located in Mountrail County, North Dakota [Member] | |||||||
Oil and Natural Gas Investments (Details) [Line Items] | |||||||
Gas and Oil Area Developed, Net | 11.00% | ||||||
Business Combination, Consideration Transferred (in Dollars) | $ 128,500,000 | ||||||
Debt Instrument, Face Amount (in Dollars) | 40,000,000 | ||||||
Acquisition Costs, Period Cost (in Dollars) | 43,000 | ||||||
Asset Retirement Obligation, Liabilities Incurred (in Dollars) | $ 800,000 | ||||||
Acquisition No. 2 [Member] | Minimum [Member] | Sanish Field Located in Mountrail County, North Dakota [Member] | |||||||
Oil and Natural Gas Investments (Details) [Line Items] | |||||||
Working Interest | 22.00% | ||||||
Acquisition No. 2 [Member] | Maximum [Member] | Sanish Field Located in Mountrail County, North Dakota [Member] | |||||||
Oil and Natural Gas Investments (Details) [Line Items] | |||||||
Working Interest | 23.00% | ||||||
Acquisition No. 3 [Member] | |||||||
Oil and Natural Gas Investments (Details) [Line Items] | |||||||
Asset Retirement Obligation, Liabilities Incurred (in Dollars) | 289,827 | $ 0 | |||||
Acquisition No. 3 [Member] | Sanish Field Located in Mountrail County, North Dakota [Member] | |||||||
Oil and Natural Gas Investments (Details) [Line Items] | |||||||
Gas and Oil Area Developed, Net | 10.50% | ||||||
Business Combination, Consideration Transferred (in Dollars) | $ 53,000,000 | ||||||
Debt Instrument, Face Amount (in Dollars) | $ 33,000,000 | $ 33,000,000 | |||||
Acquisition Costs, Period Cost (in Dollars) | $ 80,000 | ||||||
Asset Retirement Obligation, Liabilities Incurred (in Dollars) | $ 300,000 | ||||||
Number of Producing Partnership Wells Acquired | 82 | ||||||
Productive Oil Wells, Number of Wells, Net | 216 | 216 | |||||
Number of Future Development Partnership Locations Acquired | 150 | ||||||
Gas and Oil Area Undeveloped, Net | 253 | 253 | |||||
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustments Related to Previous Period (in Dollars) | $ (600,000) | ||||||
Acquisition No. 3 [Member] | Minimum [Member] | Sanish Field Located in Mountrail County, North Dakota [Member] | |||||||
Oil and Natural Gas Investments (Details) [Line Items] | |||||||
Working Interest | 26.00% | 26.00% | |||||
Acquisition No. 3 [Member] | Maximum [Member] | Sanish Field Located in Mountrail County, North Dakota [Member] | |||||||
Oil and Natural Gas Investments (Details) [Line Items] | |||||||
Working Interest | 27.00% | 27.00% |
Oil and Natural Gas Investmen20
Oil and Natural Gas Investments (Details) - Business Acquisition, Pro Forma Information - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Business Acquisition, Pro Forma Information [Abstract] | ||||
Revenues | $ 10,208,740 | $ 12,904,856 | $ 22,657,376 | $ 22,980,088 |
Net income (loss) | $ 1,785,988 | $ 1,814,351 | $ 4,691,135 | $ (1,414,174) |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | Mar. 31, 2017 | Feb. 23, 2017 | Jul. 31, 2017 | Apr. 30, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Jan. 11, 2017 |
Notes Payable (Details) [Line Items] | |||||||
Repayments of Debt | $ 64,500,000 | $ 36,917,833 | |||||
Acquisition No. 2 [Member] | Notes Payable, Other Payables [Member] | |||||||
Notes Payable (Details) [Line Items] | |||||||
Debt Instrument, Face Amount | $ 40,000,000 | ||||||
Repayments of Debt | $ 40,000,000 | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.00% | ||||||
Acquisition No. 3 [Member] | Notes Payable, Other Payables [Member] | |||||||
Notes Payable (Details) [Line Items] | |||||||
Debt Instrument, Face Amount | $ 33,000,000 | ||||||
Repayments of Debt | $ 24,500,000 | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.00% | ||||||
Debt Instrument, Maturity Date | Aug. 1, 2017 | ||||||
Debt Instrument, Payment Terms | In addition to the $2.0 million payment and interest payments on the outstanding principal balance of the Seller Note, the Partnership is required to make principal payments of $100,000 on the last business day of each remaining month in 2017 (August through December), and principal payments of the lesser of $1,000,000 or the remaining balance on the last business day of each month in 2018 up to the Maturity Date (January through June). | ||||||
Debt Instrument, Description | If the Partnership sells any of its owned property, the Partnership is required to make a principal payment equal to 100% of the net proceeds of such sale until the principal amount of the Seller Note is paid in full. | ||||||
Notes Payable | $ 8,500,000 | ||||||
Subsequent Event [Member] | Acquisition No. 3 [Member] | Notes Payable, Other Payables [Member] | |||||||
Notes Payable (Details) [Line Items] | |||||||
Repayments of Debt | $ 2,000,000 | ||||||
Debt Instrument, Maturity Date | Jun. 29, 2018 | ||||||
Debt Instrument, Periodic Payment | $ 2,000,000 | ||||||
Notes Payable | $ 6,200,000 |
Asset Retirement Obligations (D
Asset Retirement Obligations (Details) - Schedule of Asset Retirement Obligations - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Asset Retirement Obligations (Details) - Schedule of Asset Retirement Obligations [Line Items] | ||
Balance | $ 70,623 | $ 105,459 |
Revisions | 28,866 | (32,351) |
Accretion expense | 27,138 | 9,049 |
Balance | 1,198,082 | 82,157 |
Acquisition No. 2 [Member] | ||
Asset Retirement Obligations (Details) - Schedule of Asset Retirement Obligations [Line Items] | ||
Liabilities incurred | 781,628 | 0 |
Acquisition No. 3 [Member] | ||
Asset Retirement Obligations (Details) - Schedule of Asset Retirement Obligations [Line Items] | ||
Liabilities incurred | $ 289,827 | $ 0 |
Capital Contribution and Part23
Capital Contribution and Partners' Equity (Details) - USD ($) $ / shares in Units, shares in Millions | Jul. 09, 2013 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Apr. 24, 2017 |
Capital Contribution and Partners' Equity (Details) [Line Items] | ||||||
Partners' Capital Account, Contributions | $ 1,000 | |||||
Distributions to organizational limited partner | $ 990 | |||||
Managing Dealer, Selling Commissions, Percentage | 6.00% | |||||
Managing Dealer, Maximum Contingent Incentive Fee on Gross Proceeds, Percentage | 4.00% | |||||
Maximum Contingent Offering Costs, Selling Commissions and Marketing Expenses | $ 15,000,000 | |||||
Key Provisions of Operating or Partnership Agreement, Description | The Partnership Agreement provides that Payout occurs on the day when the aggregate amount distributed with respect to each of the common units equals $20.00 plus the Payout Accrual. The Partnership Agreement defines “Payout Accrual” as 7% per annum simple interest accrued monthly until paid on the Net Investment Amount outstanding from time to time. The Partnership Agreement defines Net Investment Amount initially as $20.00 per unit, regardless of the amount paid for the unit. If at any time the Partnership distributes to holders of common units more than the Payout Accrual, the amount the Partnership distributes in excess of the Payout Accrual will reduce the Net Investment Amount.All distributions made by the Partnership after Payout, which may include all or a portion of the proceeds of the sale of all or substantially all of the Partnership’s assets, will be made as follows:·First, (i) to the Record Holders of the Incentive Distribution Rights, 35%; (ii) to the Record Holders of the Outstanding Class B units, pro rata based on the number of Class B units owned, 35% multiplied by a fraction, the numerator of which is the number of Class B units outstanding and the denominator of which is 100,000 (currently, there are 62,500 Class B units outstanding; therefore, Class B units could receive 21.875%); (iii) to the Dealer Manager, as the Dealer Manager contingent incentive fee paid under the Dealer Manager Agreement, 30%, and (iv) the remaining amount, if any (currently 13.125%), to the Record Holders of outstanding common units, pro rata based on their percentage interest until such time as the Dealer Manager receives the full amount of the Dealer Manager contingent incentive fee under the Dealer Manager Agreement;·Thereafter, (i) to the Record Holders of the Incentive Distribution Rights, 35%; (ii) to the Record Holders of the Outstanding Class B units, pro rata based on the number of Class B units owned, 35% multiplied by a fraction, the numerator of which is the number of Class B units outstanding and the denominator of which is 100,000 (currently, there are 62,500 Class B units outstanding; therefore, Class B units could receive 21.875%); (iii) the remaining amount to the Record Holders of outstanding common units, pro rata based on their percentage interest (currently 43.125%). | |||||
Distribution Made to Limited Partner, Distributions Paid, Per Unit (in Dollars per share) | $ 0.349041 | $ 0.349041 | $ 0.698082 | $ 0.675068 | ||
Distribution Made to Limited Partner, Cash Distributions Paid | $ 6,500,000 | $ 2,100,000 | $ 11,988,167 | $ 3,642,750 | ||
Best-Efforts Offering [Member] | ||||||
Capital Contribution and Partners' Equity (Details) [Line Items] | ||||||
Partners' Capital Account, Units, Sale of Units (in Shares) | 19 | |||||
Proceeds from Issuance of Common Limited Partners Units | $ 374,200,000 | |||||
Proceeds, Net of Selling Commissions and Marketing Expenses, from Issuance of Common Limited Partners Units | $ 349,600,000 |
Related Parties (Details)
Related Parties (Details) - USD ($) | Apr. 06, 2017 | Apr. 05, 2017 | Jul. 01, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Mar. 31, 2017 | Dec. 31, 2016 |
Related Parties (Details) [Line Items] | |||||||||
Class B Units, units outstanding (in Shares) | 62,500 | 62,500 | 62,500 | ||||||
E11 Incentive Holdings [Member] | |||||||||
Related Parties (Details) [Line Items] | |||||||||
Class B Units, units outstanding (in Shares) | 62,500 | ||||||||
E11 Incentive Holdings [Member] | Units transferred to E11 Incentive Carry Vehicle, LP for Minimis Consideration [Member] | |||||||||
Related Parties (Details) [Line Items] | |||||||||
Class B Units, Transferred (in Shares) | 18,125 | ||||||||
E11 Incentive Holdings [Member] | Units Sold to Regional Energy Incentives, LP [Member] | |||||||||
Related Parties (Details) [Line Items] | |||||||||
Class B Units, Units Sold (in Shares) | 44,375 | ||||||||
Class B Units, Total Sales Price for Sale of Capital Units | $ 98,000 | ||||||||
Affiliated Entity [Member] | |||||||||
Related Parties (Details) [Line Items] | |||||||||
Operating Leases, Rent Expense, Minimum Rentals | $ 8,537 | ||||||||
Operating Leases, Rent Expense | $ 25,611 | $ 51,222 | |||||||
General Partner [Member] | |||||||||
Related Parties (Details) [Line Items] | |||||||||
Related Party Transaction, Selling, General and Administrative Expenses from Transactions with Related Party | 88,000 | $ 105,000 | 170,000 | $ 117,000 | |||||
Due to Related Parties, Current | $ 87,000 | $ 87,000 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Jul. 31, 2017 | Apr. 30, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Subsequent Events (Details) [Line Items] | ||||||
Repayments of Debt | $ 64,500,000 | $ 36,917,833 | ||||
Distribution Made to Limited Partner, Cash Distributions Paid | $ 6,500,000 | $ 2,100,000 | $ 11,988,167 | $ 3,642,750 | ||
Distribution Made to Limited Partner, Distributions Paid, Per Unit (in Dollars per share) | $ 0.349041 | $ 0.349041 | $ 0.698082 | $ 0.675068 | ||
Acquisition No. 3 [Member] | Notes Payable, Other Payables [Member] | ||||||
Subsequent Events (Details) [Line Items] | ||||||
Repayments of Debt | $ 24,500,000 | |||||
Notes Payable | $ 8,500,000 | $ 8,500,000 | ||||
Subsequent Event [Member] | ||||||
Subsequent Events (Details) [Line Items] | ||||||
Distribution Made to Limited Partner, Cash Distributions Paid | $ 2,000,000 | |||||
Distribution Made to Limited Partner, Distributions Paid, Per Unit (in Dollars per share) | $ 0.107397 | |||||
Subsequent Event [Member] | Acquisition No. 3 [Member] | Notes Payable, Other Payables [Member] | ||||||
Subsequent Events (Details) [Line Items] | ||||||
Repayments of Debt | $ 2,000,000 | |||||
Notes Payable | $ 6,200,000 |