ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2013
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from _______________________to____________________________
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Delaware
(State or other jurisdiction of
incorporation or organization)
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11-3719724
(I.R.S. Employer
Identification No.)
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Large accelerated filer
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o |
Accelerated filer
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o |
Non-accelerated filer
(Do not check if a smaller reporting company)
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o |
Smaller reporting company
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x |
PAGE
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PART I - FINANCIAL INFORMATION
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1 | |||
1 | |||
2 | |||
3 | |||
4 | |||
8 | |||
12 | |||
12 | |||
PART II - OTHER INFORMATION | |||
Item 1. | Legal Proceedings | 12 | |
Item 1A. | Risk Factors | 12 | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 12 | |
Item 3. | Defaults Upon Senior Securities | 12 | |
Item 4. | Mine Safety Disclosures | 12 | |
Item 5. | Other Information | 12 | |
Item 6. | Exhibits | 13 | |
SIGNATURES | 13 |
March 31, 2013
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December 31, 2012
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|||||||
Assets
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||||||||
Current assets:
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||||||||
Cash and cash equivalents
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$ | 212 | $ | 85 | ||||
Salvage fund
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- | 60 | ||||||
Production receivable
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112 | 98 | ||||||
Other current assets
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14 | 25 | ||||||
Total current assets
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338 | 268 | ||||||
Salvage fund
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794 | 955 | ||||||
Oil and gas properties:
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||||||||
Proved properties
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9,802 | 9,785 | ||||||
Less: accumulated depletion and amortization
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(7,525 | ) | (7,419 | ) | ||||
Total oil and gas properties, net
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2,277 | 2,366 | ||||||
Total assets
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$ | 3,409 | $ | 3,589 | ||||
Liabilities and Members' Capital
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||||||||
Current liabilities:
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||||||||
Accrued expenses
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$ | 140 | $ | 127 | ||||
Asset retirement obligations
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- | 60 | ||||||
Total current liabilities
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140 | 187 | ||||||
Asset retirement obligations
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516 | 516 | ||||||
Total liabilities
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656 | 703 | ||||||
Commitments and contingencies (Note 3)
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||||||||
Members' capital:
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||||||||
Manager:
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||||||||
Distributions
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(2,453 | ) | (2,453 | ) | ||||
Retained earnings
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2,014 | 1,994 | ||||||
Manager's total
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(439 | ) | (459 | ) | ||||
Shareholders:
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||||||||
Capital contributions (670 shares authorized;
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||||||||
350.1081 issued and outstanding)
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51,401 | 51,401 | ||||||
Syndication costs
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(5,502 | ) | (5,502 | ) | ||||
Distributions
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(16,660 | ) | (16,491 | ) | ||||
Accumulated deficit
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(26,047 | ) | (26,063 | ) | ||||
Shareholders' total
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3,192 | 3,345 | ||||||
Total members' capital
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2,753 | 2,886 | ||||||
Total liabilities and members' capital
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$ | 3,409 | $ | 3,589 |
Three months ended March 31,
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||||||||
2013
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2012
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|||||||
Revenue
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||||||||
Oil and gas revenue
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$ | 235 | $ | 321 | ||||
Expenses
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Depletion and amortization
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106 | 164 | ||||||
Operating expenses
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48 | 80 | ||||||
General and administrative expenses
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50 | 44 | ||||||
Total expenses
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204 | 288 | ||||||
Income from operations
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31 | 33 | ||||||
Interest income
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5 | 4 | ||||||
Net income
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$ | 36 | $ | 37 | ||||
Manager Interest
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||||||||
Net income
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$ | 20 | $ | 28 | ||||
Shareholder Interest
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||||||||
Net income
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$ | 16 | $ | 9 | ||||
Net income per share
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$ | 47 | $ | 25 |
Three months ended March 31,
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2013
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2012
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|||||||
Cash flows from operating activities
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||||||||
Net income
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$ | 36 | $ | 37 | ||||
Adjustments to reconcile net income to net cash
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||||||||
provided by operating activities:
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||||||||
Depletion and amortization
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106 | 164 | ||||||
Changes in assets and liabilities:
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(Increase) decrease in production receivable
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(14 | ) | 52 | |||||
Decrease in other current assets
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11 | 46 | ||||||
(Decrease) increase in accrued expenses
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(7 | ) | 19 | |||||
Settlements of asset retirement obligations
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(60 | ) | - | |||||
Net cash provided by operating activities
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72 | 318 | ||||||
Cash flows from investing activities
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||||||||
Credits (expenditures) for capital investment properties
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3 | (12 | ) | |||||
Proceeds from (investments in) salvage fund, net
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221 | (4 | ) | |||||
Net cash provided by (used in) investing activities
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224 | (16 | ) | |||||
Cash flows from financing activities
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||||||||
Distributions
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(169 | ) | (299 | ) | ||||
Net cash used in financing activities
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(169 | ) | (299 | ) | ||||
Net increase in cash and cash equivalents
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127 | 3 | ||||||
Cash and cash equivalents, beginning of period
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85 | 229 | ||||||
Cash and cash equivalents, end of period
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$ | 212 | $ | 232 |
2013
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2012
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|||||||
(in thousands)
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||||||||
Balance, beginning of period
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$ | 576 | $ | 661 | ||||
Liabilities settled
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(60 | ) | (85 | ) | ||||
Accretion expense
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- | 8 | ||||||
Revisions in estimated cash flows
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- | (8 | ) | |||||
Balance, end of period
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$ | 516 | $ | 576 |
Total Spent
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Total
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||||||||
Working
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through
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Fund
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|||||||
Project
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Interest
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March 31, 2013
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Budget
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Status
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|||||
(in thousands)
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|||||||||
Producing Properties
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Emerald Project well #1
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2.5%
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$ 1,654
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$ 1,654
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Production commenced in 2009.
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Emerald Project well #2
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2.5%
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$ 398
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$ 398
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Production commenced in 2010. Well was recompleted in February 2013 at an estimated cost of $20 thousand.
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Main Pass 275
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10.0%
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$ 1,923
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$ 1,933
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Production commenced in 2007. Recompletion is planned for 2014 at an estimated cost of $10 thousand.
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South Marsh Island 111
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7.5%
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$ 2,366
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$ 2,366
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Production commenced in 2009.
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West Delta 68
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7.5%
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$ 1,777
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$ 1,800
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Production commenced in 2008. Recompletion is planned for 2013 at an estimated cost of $23 thousand.
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Three months ended March 31,
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2013
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2012
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(in thousands)
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||||||||
Revenue
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Oil and gas revenue
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$ | 235 | $ | 321 | ||||
Expenses
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Depletion and amortization
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106 | 164 | ||||||
Operating expenses
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48 | 80 | ||||||
General and administrative expenses
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50 | 44 | ||||||
Total expenses
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204 | 288 | ||||||
Income from operations
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31 | 33 | ||||||
Interest income
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5 | 4 | ||||||
Net income
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$ | 36 | $ | 37 |
Three months ended March 31,
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2013
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2012
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|||||||
Number of wells producing
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5 | 5 | ||||||
Total number of production days
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417 | 411 | ||||||
Oil sales (in barrels)
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550 | 1,144 | ||||||
Average oil price per barrel
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$ | 110 | $ | 112 | ||||
Gas sales (in thousands of mcfs)
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52 | 45 | ||||||
Average gas price per mcf
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$ | 3.41 | $ | 2.44 |
Three months ended March 31,
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2013
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2012
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|||||||
(in thousands)
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Lease operating expense
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$ | 40 | $ | 80 | ||||
Workover expense
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7 | - | ||||||
Dry-hole costs
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1 | - | ||||||
$ | 48 | $ | 80 |
Three months ended March 31,
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2013
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2012
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(in thousands)
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Accounting and professional fees
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$ | 30 | $ | 25 | ||||
Management reimbursement
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10 | 10 | ||||||
Insurance expense
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10 | 9 | ||||||
$ | 50 | $ | 44 |
ITEM 3.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 1.
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LEGAL PROCEEDINGS
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ITEM 4.
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MINE SAFETY DISCLOSURES |
EXHIBIT
NUMBER
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TITLE OF EXHIBIT
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METHOD OF FILING
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31.1
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Certification of Robert E. Swanson, Chief Executive Officer of
the Fund, pursuant to Exchange Act Rule 13a-14(a)
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Filed herewith
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31.2
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Certification of Kathleen P. McSherry, Executive Vice President
and Chief Financial Officer of the Fund, pursuant to Exchange
Act Rule 13a-14(a)
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Filed herewith
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32
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Certifications pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
signed by Robert E. Swanson, Chief Executive Officer of the
Fund and Kathleen P. McSherry, Executive Vice President and
Chief Financial Officer of the Fund
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Filed herewith
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101.INS
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XBRL Instance Document
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*
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101.SCH
|
XBRL Taxonomy Extension Schema
|
*
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
*
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
*
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
*
|
RIDGEWOOD ENERGY L FUND, LLC
|
||||||
Dated:
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May 6, 2013
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By:
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/s/
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ROBERT E. SWANSON
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||
Name:
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Robert E. Swanson
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|||||
Title:
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Chief Executive Officer
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|||||
(Principal Executive Officer)
|
||||||
Dated:
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May 6, 2013
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By:
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/s/
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KATHLEEN P. MCSHERRY
|
||
Name:
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Kathleen P. McSherry
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|||||
Title:
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Executive Vice President and Chief Financial Officer
|
|||||
(Principal Financial and Accounting Officer)
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Dated:
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May 6, 2013
|
||
/s/
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ROBERT E. SWANSON
|
||
Name:
|
Robert E. Swanson
|
||
Title:
|
Chief Executive Officer
|
||
(Principal Executive Officer)
|
Dated:
|
May 6, 2013
|
||
/s/
|
KATHLEEN P. MCSHERRY
|
||
Name:
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Kathleen P. McSherry
|
||
Title:
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Executive Vice President and Chief Financial Officer
|
||
(Principal Financial and Accounting Officer)
|
|
(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund.
|
Dated:
|
May 6, 2013
|
|||
/s/
|
ROBERT E. SWANSON
|
|||
Name:
|
Robert E. Swanson
|
|||
Title:
|
Chief Executive Officer
|
|||
(Principal Executive Officer)
|
||||
Dated:
|
May 6, 2013
|
|||
/s/
|
KATHLEEN P. MCSHERRY
|
|||
Name:
|
Kathleen P. McSherry
|
|||
Title:
|
Executive Vice President and Chief Financial Officer
|
|||
(Principal Financial and Accounting Officer)
|
||||
Organization and Summary of Significant Accounting Policies (Policy)
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2013
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation These unaudited interim condensed financial statements have been prepared by the Fund's management in accordance with accounting principles generally accepted in the United States of America ("GAAP") and in the opinion of management, contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Fund's financial position, results of operations and cash flows for the periods presented. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted in these unaudited interim condensed financial statements. The results of operations, financial position, and cash flows for the periods presented herein are not necessarily indicative of future financial results. These unaudited interim condensed financial statements should be read in conjunction with the Fund's December 31, 2012 financial statements and notes thereto included in the Fund's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"). The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. |
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Use of Estimates | Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expense during the reporting period. On an ongoing basis, the Manager reviews its estimates, including those related to the fair value of financial instruments, property balances, determination of proved reserves, impairments and asset retirement obligations. Actual results may differ from those estimates. |
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Fair Value Measurements | Fair Value Measurements The fair value measurement guidance provides a hierarchy that prioritizes and defines the types of inputs used to measure fair value. The fair value hierarchy gives the highest priority to Level 1 inputs, which consists of unadjusted quoted prices for identical instruments in active markets. Level 2 inputs consist of quoted prices for similar instruments. Level 3 valuations are derived from inputs that are significant and unobservable; hence, these valuations have the lowest priority. Cash and cash equivalents and held-to-maturity investments approximate fair value based on Level 1 inputs. The fair value of the Fund's mortgage-backed securities within the salvage fund are recorded based on Level 2 inputs, as such instruments trade in over-the-counter markets. |
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Cash and Cash Equivalents | Cash and Cash Equivalents All highly liquid investments with maturities, when purchased, of three months or less, are considered cash and cash equivalents. At times, deposits may be in excess of federally insured limits, which are $250 thousand per insured financial institution. At March 31, 2013, the Fund's bank balances exceeded federally insured limits by $0.1 million, all of which was invested in money market accounts that invest solely in U.S. Treasury bills and notes. |
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Salvage Fund | Salvage Fund The Fund deposits in a separate interest-bearing account, or salvage fund, money 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. At March 31, 2013 and December 31, 2012, the Fund had investments in federal agency mortgage-backed securities within its salvage fund that are classified as available-for-sale of $0.6 million and $0.7 million, respectively, which mature in January 2042. Available-for-sale securities are carried in the financial statements at fair value. At March 31, 2013 and December 31, 2012, there was no unrealized gain or loss related to the Fund's available-for-sale investments. At March 31, 2013 and December 31, 2012, the Fund had investments in U.S. Treasury securities within its salvage fund that are classified as held-to-maturity of $0.1 million, which mature in June 2013. Held-to-maturity investments are those securities that the Fund has the ability and intent to hold until maturity, and are recorded at cost plus accrued income, adjusted for the amortization of premiums and discounts, which approximates fair value. For all investments, interest income is accrued as earned and amortization of premium or discount, if any, is included in interest income. Interest earned on the account will become part of the salvage fund. There are no restrictions on withdrawals from the salvage fund. |
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Oil and Gas Properties | Oil and Gas Properties The Fund invests in oil and gas properties, which are operated by unaffiliated entities that are responsible for drilling, administering and producing activities pursuant to the terms of the applicable operating agreements with working interest owners. The Fund's portion of exploration, drilling, operating and capital equipment expenditures is billed by operators. Exploration, development and acquisition costs are accounted for using the successful efforts method. Costs of acquiring unproved and proved oil and natural gas leasehold acreage, including lease bonuses, brokers' fees and other related costs are capitalized. Costs of drilling and equipping productive wells and related production facilities are capitalized. Exploratory costs are capitalized pending determination of whether proved reserves have been found. If proved commercial reserves are not found, exploratory drilling costs are expensed as dry-hole costs. Annual lease rentals and exploration expenses are expensed as incurred. All costs related to production activity and workover efforts are expensed as incurred. Upon the sale, retirement or abandonment of a property, the cost and related accumulated depletion and amortization, if any, will be eliminated from the property accounts, and the resultant gain or loss is recognized. At March 31, 2013 and December 31, 2012, amounts recorded in accrued expenses totaling $60 thousand and $40 thousand, respectively, related to capital expenditures for oil and gas properties. |
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Advances to Operators for Working Interests and Expenditures | Advances to Operators for Working Interests and Expenditures The Fund's acquisition of a working interest in a well or a project requires it to make a payment to the seller for the Fund's rights, title and interest. The Fund may be required to advance its share of estimated cash expenditures for the succeeding month's operation. The Fund accounts for such payments as advances to operators for working interests and expenditures. As drilling costs are incurred, the advances are reclassified to unproved or proved properties. |
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Asset Retirement Obligations | Asset Retirement Obligations For oil and gas properties, there are obligations to perform removal and remediation activities when the properties are retired. When a project reaches drilling depth and is determined to be either proved or dry, an asset retirement obligation is incurred. Plug and abandonment costs associated with unsuccessful projects are expensed as dry-hole costs. The following table presents changes in asset retirement obligations for the three months ended March 31, 2013 and the year ended December 31, 2012.
As indicated above, the Fund maintains a salvage fund to provide for the funding of future asset retirement obligations. |
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Syndication Costs | Syndication Costs Syndication costs are direct costs incurred by the Fund in connection with the offering of the Fund's shares, including professional fees, selling expenses and administrative costs payable to the Manager, an affiliate of the Manager and unaffiliated broker-dealers, which are reflected on the Fund's balance sheet as a reduction of shareholders' capital. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition and Imbalances | Revenue Recognition and Imbalances Oil and gas revenues are recognized when oil and gas is sold to a purchaser at a fixed or determinable price, when delivery has occurred and title has transferred, and if collectability of the revenue is probable. The Fund uses the sales method of accounting for gas production imbalances. The volumes of gas sold may differ from the volumes to which the Fund is entitled based on its interests in the properties. These differences create imbalances that are recognized as a liability only when the properties' estimated remaining reserves net to the Fund will not be sufficient to enable the underproduced owner to recoup its entitled share through production. The Fund's recorded liability, if any, would be reflected in other liabilities. No receivables are recorded for those wells where the Fund has taken less than its share of production. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Fund reviews the value of its oil and gas properties whenever management determines that events and circumstances indicate that the recorded carrying value of properties may not be recoverable. Impairments of proved properties are determined by comparing future net undiscounted cash flows to the net book value at the time of the review. If the net book value exceeds the future net undiscounted cash flows, the carrying value of the property is written down to fair value, which is determined using net discounted future cash flows from the property. The Fund provides for impairments on unproved properties when it determines that the property will not be developed or a permanent impairment in value has occurred. The fair value determinations require considerable judgment and are sensitive to change. Different pricing assumptions, reserve estimates or discount rates could result in a different calculated impairment. Given the volatility of oil and natural gas prices, it is reasonably possible that the Fund's estimate of discounted future net cash flows from proved oil and natural gas reserves could change in the near term. If oil and natural gas prices decline significantly, even if only for a short period of time, it is possible that write-downs of oil and gas properties could occur. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depletion and Amortization | 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. The sum of proved developed and proved undeveloped reserves is used as the base for depleting or amortizing leasehold acquisition costs. |
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Income Taxes | 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. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income and Expense Allocation | Income and Expense Allocation Profits and losses are allocated to shareholders and the Manager in accordance with the LLC agreement. |
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Distributions | Distributions Distributions to shareholders are allocated in proportion to the number of shares held. The Manager determines whether available cash from operations, as defined in the LLC Agreement, will be distributed. Such distributions are allocated 85% to the shareholders and 15% to the Manager, as required by the LLC Agreement. Available cash from dispositions, as defined in the LLC Agreement, will be paid 99% to shareholders and 1% to the Manager until the shareholders have received total distributions equal to their capital contributions. After shareholders have received distributions equal to their capital contributions, 85% of available cash from dispositions will be distributed to shareholders and 15% to the Manager. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements The Fund has considered recent accounting pronouncements and believes that these recent pronouncements will not have a material effect on the Fund's financial statements. |