UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2019 |
or
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the transition period from _______________________to____________________________ |
Commission File No. 000-53591
Ridgewood Energy X Fund, LLC
(Exact name of registrant as specified in its charter)
|
Delaware (State or other jurisdiction of incorporation or organization) |
26-0870318 (I.R.S. Employer Identification No.) |
14 Philips Parkway, Montvale, NJ 07645
(Address of principal executive offices) (Zip code)
(800) 942-5550
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ¨ | Accelerated filer | ¨ |
|
Non-accelerated filer
|
x |
Smaller reporting company Emerging growth company |
x ¨ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of November 5, 2019, there were 477.8874 shares of LLC Membership Interest outstanding.
| PAGE | |||
| PART I - FINANCIAL INFORMATION | |||
| Item 1. | Financial Statements | 1 | |
| Unaudited Condensed Balance Sheets as of September 30, 2019 and December 31, 2018 | 1 | ||
| 2 | |||
| 3 | |||
|
Unaudited Condensed Statements of Cash Flows for the nine months ended |
4 | ||
| Notes to Unaudited Condensed Financial Statements | 5 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 9 | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 15 | |
| Item 4. | Controls and Procedures | 15 | |
| PART II - OTHER INFORMATION | |||
| Item 1. | Legal Proceedings | 15 | |
| Item 1A. | Risk Factors | 15 | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 15 | |
| Item 3. | Defaults Upon Senior Securities | 15 | |
| Item 4. | Mine Safety Disclosures | 15 | |
| Item 5. | Other Information | 15 | |
| Item 6. | Exhibits | 16 | |
| SIGNATURES | 16 | ||
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNAUDITED CONDENSED BALANCE SHEETS
(in thousands, except share data)
| September 30, 2019 | December 31, 2018 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 9,456 | $ | 9,836 | ||||
| Production receivable | 759 | 560 | ||||||
| Other current assets | 25 | 196 | ||||||
| Total current assets | 10,240 | 10,592 | ||||||
| Salvage fund | 1,643 | 1,611 | ||||||
| Investment in Delta House | 119 | 119 | ||||||
| Oil and gas properties: | ||||||||
| Proved properties | 17,317 | 16,746 | ||||||
| Less: accumulated depletion and amortization | (13,856 | ) | (13,271 | ) | ||||
| Total oil and gas properties, net | 3,461 | 3,475 | ||||||
| Total assets | $ | 15,463 | $ | 15,797 | ||||
| Liabilities and Members' Capital | ||||||||
| Current liabilities: | ||||||||
| Due to operators | $ | 748 | $ | 360 | ||||
| Accrued expenses | 79 | 46 | ||||||
| Total current liabilities | 827 | 406 | ||||||
| Asset retirement obligations | 1,042 | 1,037 | ||||||
| Total liabilities | 1,869 | 1,443 | ||||||
| Commitments and contingencies (Note 3) | ||||||||
| Members' capital: | ||||||||
| Manager: | ||||||||
| Distributions | (6,525 | ) | (6,205 | ) | ||||
| Retained earnings | 5,680 | 5,405 | ||||||
| Manager's total | (845 | ) | (800 | ) | ||||
| Shareholders: | ||||||||
| Capital contributions (500 shares authorized; | ||||||||
| 477.8874 issued and outstanding) | 94,698 | 94,698 | ||||||
| Syndication costs | (11,080 | ) | (11,080 | ) | ||||
| Distributions | (39,150 | ) | (37,335 | ) | ||||
| Accumulated deficit | (30,029 | ) | (31,129 | ) | ||||
| Shareholders' total | 14,439 | 15,154 | ||||||
| Total members' capital | 13,594 | 14,354 | ||||||
| Total liabilities and members' capital | $ | 15,463 | $ | 15,797 | ||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 1 |
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Revenue | ||||||||||||||||
| Oil and gas revenue | $ | 1,584 | $ | 2,571 | $ | 4,493 | $ | 5,765 | ||||||||
| Expenses | ||||||||||||||||
| Depletion and amortization | 237 | 334 | 524 | 847 | ||||||||||||
| Operating expenses | 502 | 423 | 1,691 | 1,081 | ||||||||||||
| Management fees to affiliate (Note 2) | 266 | 266 | 799 | 799 | ||||||||||||
| General and administrative expenses | 64 | 44 | 173 | 137 | ||||||||||||
| Total expenses | 1,069 | 1,067 | 3,187 | 2,864 | ||||||||||||
| Income from operations | 515 | 1,504 | 1,306 | 2,901 | ||||||||||||
| Other income | ||||||||||||||||
| Dividend income | 8 | 4 | 26 | 10 | ||||||||||||
| Interest income | 20 | 8 | 43 | 16 | ||||||||||||
| Total other income | 28 | 12 | 69 | 26 | ||||||||||||
| Net income | $ | 543 | $ | 1,516 | $ | 1,375 | $ | 2,927 | ||||||||
| Manager Interest | ||||||||||||||||
| Net income | $ | 112 | $ | 273 | $ | 275 | $ | 556 | ||||||||
| Shareholder Interest | ||||||||||||||||
| Net income | $ | 431 | $ | 1,243 | $ | 1,100 | $ | 2,371 | ||||||||
| Net income per share | $ | 901 | $ | 2,601 | $ | 2,301 | $ | 4,962 | ||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 2 |
UNAUDITED CONDENSED STATEMENTS OF CHANGES
IN MEMBERS’ CAPITAL
(in thousands, except share data)
| Nine months ended September 30, 2019 | ||||||||||||||||
| # of Shares | Manager | Shareholders | Total | |||||||||||||
| Balances, December 31, 2018 | 477.8874 | $ | (800 | ) | $ | 15,154 | $ | 14,354 | ||||||||
| Distributions | - | (140 | ) | (793 | ) | (933 | ) | |||||||||
| Net income | - | 60 | 235 | 295 | ||||||||||||
| Balances, March 31, 2019 | 477.8874 | (880 | ) | 14,596 | 13,716 | |||||||||||
| Distributions | - | (96 | ) | (544 | ) | (640 | ) | |||||||||
| Net income | - | 103 | 434 | 537 | ||||||||||||
| Balances, June 30, 2019 | 477.8874 | (873 | ) | 14,486 | 13,613 | |||||||||||
| Distributions | - | (84 | ) | (478 | ) | (562 | ) | |||||||||
| Net income | - | 112 | 431 | 543 | ||||||||||||
| Balances, September 30, 2019 | 477.8874 | $ | (845 | ) | $ | 14,439 | $ | 13,594 | ||||||||
| Nine months ended September 30, 2018 | ||||||||||||||||
| # of Shares | Manager | Shareholders | Total | |||||||||||||
| Balances, December 31, 2017 | 477.8874 | $ | (831 | ) | $ | 15,936 | $ | 15,105 | ||||||||
| Distributions | - | (167 | ) | (944 | ) | (1,111 | ) | |||||||||
| Net income | - | 186 | 712 | 898 | ||||||||||||
| Balances, March 31, 2018 | 477.8874 | (812 | ) | 15,704 | 14,892 | |||||||||||
| Distributions | - | (128 | ) | (728 | ) | (856 | ) | |||||||||
| Net income | - | 97 | 416 | 513 | ||||||||||||
| Balances, June 30, 2018 | 477.8874 | (843 | ) | 15,392 | 14,549 | |||||||||||
| Distributions | - | (160 | ) | (907 | ) | (1,067 | ) | |||||||||
| Net income | - | 273 | 1,243 | 1,516 | ||||||||||||
| Balances, September 30, 2018 | 477.8874 | $ | (730 | ) | $ | 15,728 | $ | 14,998 | ||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 3 |
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
| Nine months ended September 30, | ||||||||
| 2019 | 2018 | |||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 1,375 | $ | 2,927 | ||||
| Adjustments to reconcile net income to net cash | ||||||||
| provided by operating activities: | ||||||||
| Depletion and amortization | 524 | 847 | ||||||
| Accretion expense | 11 | 9 | ||||||
| Changes in assets and liabilities: | ||||||||
| Increase in production receivable | (199 | ) | (31 | ) | ||||
| Decrease in other current assets | 171 | 14 | ||||||
| Increase in due to operators | 197 | 20 | ||||||
| Increase (decrease) in accrued expenses | 33 | (6 | ) | |||||
| Settlement of asset retirement obligations | - | (33 | ) | |||||
| Net cash provided by operating activities | 2,112 | 3,747 | ||||||
| Cash flows from investing activities | ||||||||
| Capital expenditures for oil and gas properties | (325 | ) | (234 | ) | ||||
| (Increase) decrease in salvage fund | (32 | ) | 1,908 | |||||
| Net cash (used in) provided by investing activities | (357 | ) | 1,674 | |||||
| Cash flows from financing activities | ||||||||
| Distributions | (2,135 | ) | (3,034 | ) | ||||
| Net cash used in financing activities | (2,135 | ) | (3,034 | ) | ||||
| Net (decrease) increase in cash and cash equivalents | (380 | ) | 2,387 | |||||
| Cash and cash equivalents, beginning of period | 9,836 | 7,944 | ||||||
| Cash and cash equivalents, end of period | $ | 9,456 | $ | 10,331 | ||||
| Supplemental disclosure of non-cash investing activities | ||||||||
Due
to operators for accrued capital expenditures for | $ | 223 | $ | 34 | ||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 4 |
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
| 1. | Organization and Summary of Significant Accounting Policies |
Organization
The Ridgewood Energy X Fund, LLC (the “Fund”), a Delaware limited liability company, was formed on August 30, 2007 and operates pursuant to a limited liability company agreement (the “LLC Agreement”) dated as of January 2, 2008 by and among Ridgewood Energy Corporation (the “Manager”) and the shareholders of the Fund, which addresses matters such as the authority and voting rights of the Manager and shareholders, capitalization, transferability of membership interests, participation in costs and revenues, distribution of assets and dissolution and winding up. The Fund was organized to primarily acquire interests in oil and gas properties located in the United States offshore waters of Texas, Louisiana and Alabama in the Gulf of Mexico.
The Manager has direct and exclusive control over the management of the Fund’s operations. The Manager performs, or arranges for the performance of, the management, advisory and administrative services required for the Fund’s operations. Such services include, without limitation, the administration of shareholder accounts, shareholder relations, the preparation, review and dissemination of tax and other financial information and the management of the Fund’s investments in projects. In addition, the Manager provides office space, equipment and facilities and other services necessary for the Fund’s operations. The Manager also engages and manages contractual relations with unaffiliated custodians, depositories, accountants, attorneys, corporate fiduciaries, insurers, banks and others as required. See Notes 2 and 3.
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, changes in members’ capital 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 financial position, results of operations, changes in members’ capital 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, 2018 financial statements and notes thereto included in the Fund’s Annual Report on Form 10-K (“2018 Annual Report”) filed with the Securities and Exchange Commission (“SEC”). The year-end condensed balance sheet data was derived from audited financial statements for the year ended December 31, 2018, but does not include all annual disclosures required by GAAP.
Use of Estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expense during the reporting period. On an ongoing basis, the Manager reviews its estimates, including those related to the fair value of financial instruments, depletion and amortization, determination of proved reserves, impairment of long-lived assets and asset retirement obligations. Actual results may differ from those estimates.
Summary of Significant Accounting Policies
The Fund has provided discussion of significant accounting policies in Note 1 of “Notes to Financial Statements” – “Organization and Summary of Significant Accounting Policies” contained in Item 8. “Financial Statements and Supplementary Data” within its 2018 Annual Report. There have been no significant changes to the Fund’s significant accounting policies during the three and nine months ended September 30, 2019.
Fair Value Measurements
The Fund follows the accounting guidance for fair value measurement for measuring fair value of assets and liabilities in its financial statements. The Fund’s financial instruments consist of cash and cash equivalents, production receivable, other current assets, salvage fund, investment in Delta House, due to operators and accrued expenses. Except for investment in Delta House, the carrying amounts of these instruments approximate fair value due to their short-term nature.
| 5 |
The Fund’s investment in Delta House is valued using the measurement alternative for investment in other entities (see Investment in Delta House below for additional information). The Fund also applies the provisions of the fair value measurement accounting guidance to its non-financial assets and liabilities, such as oil and gas properties and asset retirement obligations, on a non-recurring basis.
Investment in Delta House
The Fund has investments in Delta House Oil and Gas Lateral, LLC and Delta House FPS, LLC (collectively “Delta House”), legal entities that own interests in a deepwater floating production system operated by Murphy Exploration & Production Company - USA. The investment in Delta House is valued using the measurement alternative to record the investment at cost, less impairment and plus or minus subsequent adjustments for observable price changes with change in basis reported in current earnings. At each reporting period, the Fund reviews its investment in Delta House to evaluate whether the investment is impaired. Losses on investments, including impairments, are classified as non-operating losses in the Fund’s statements of operations. During each of the three and nine months ended September 30, 2019 and 2018, there were no impairments of the Fund’s investment in Delta House.
Asset Retirement Obligations
For oil and gas properties, there are obligations to perform removal and remediation activities when the properties are retired. Upon the determination that a property is either proved or dry, a retirement obligation is incurred. The Fund recognizes the fair value of a liability for an asset retirement obligation in the period incurred based on expected future cash outflows required to satisfy the obligation discounted at the Fund’s credit-adjusted risk-free rate. Plug and abandonment costs associated with unsuccessful projects are expensed as dry-hole costs. Annually, or more frequently if an event occurs that would dictate a change in assumptions or estimates underlying the obligations, the Fund reassesses its asset retirement obligations to determine whether any revisions to the obligations are necessary. The Fund maintains a salvage fund to provide for the funding of future asset retirement obligations.
Revenue Recognition
Oil and gas revenues are recognized at the point when control of oil and natural gas is transferred to the customers. Natural gas liquid sales are included within gas sales. The Fund’s oil and natural gas generally are sold to its customers at prevailing market prices based on an index in which the prices are published, adjusted for pricing differentials, quality of oil and pipeline allowances. Under the Fund’s oil and natural gas contracts, each unit of oil and natural gas represents a separate performance obligation; therefore, future volumes are wholly unsatisfied and the transaction price related to the remaining performance obligations is the variable index-based price attributable to each unit of oil and natural gas that is transferred to the customer. The Fund invoices customers once its performance obligations have been satisfied, at which point the payment is unconditional. Accordingly, the Fund’s oil and natural gas contracts do not give rise to contract assets or liabilities. The receivables related to the Fund’s oil and gas revenue are included within “Production receivable” on the Fund’s balance sheets.
The Fund also has an estimation process for revenue and related accruals, and any identified difference between its revenue estimates and actual revenue has not been significant. During each of the three and nine months ended September 30, 2019 and 2018, revenue recognized from performance obligations satisfied in previous periods was not significant.
Impairment of Long-Lived Assets
The Fund reviews the carrying value of its oil and gas properties for impairment whenever events and circumstances indicate that the recorded carrying value of the assets may not be recoverable. Impairments are determined by comparing estimated future net undiscounted cash flows to the carrying value of the assets at the time of the review. If the carrying value exceeds the estimated future net undiscounted cash flows, the carrying value of the asset is written down to fair value, which is determined using valuation techniques that include both market and income approaches and use Level 3 inputs. The fair value determinations require considerable judgment and are sensitive to change. Different pricing assumptions, reserve estimates or discount rates could result in a different calculated impairment.
There were no impairments of oil and gas properties during each of the three and nine months ended September 30, 2019 and 2018. Fluctuations in oil and natural gas commodity prices may impact the fair value of the Fund’s oil and gas properties. If oil and natural gas commodity prices decline, even if only for a short period of time, it is possible that impairments of oil and gas properties will occur.
Recent Accounting Pronouncements
In August 2018, the Financial Accounting Standards Board (“FASB”) issued accounting guidance on fair value measurement, which adds, among other things, disclosure requirements for the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This accounting guidance is effective for the Fund in the first quarter 2020 with early adoption permitted. The Fund does not expect this accounting guidance will have a material impact on its financial statements upon adoption.
| 6 |
In February 2016, the FASB issued accounting guidance on leases as amended on January 2018 and July 2018, which requires an entity to recognize all lease assets and liabilities with a term greater than one year on the balance sheet, disclose key quantitative and qualitative information about leasing arrangements, and permits an entity not to evaluate existing or expired land easements that were not previously assessed under the existing lease guidance. The accounting guidance does not apply to leases of mineral rights to explore for or use of oil and natural gas. The accounting guidance was effective for the Fund beginning January 1, 2019. Although the Fund, as a non-operator, does not enter into lease agreements to support its operations, the Fund completed its evaluation of existing contracts that may have a lease impact and embedded lease features to determine the contracts to which the new guidance applies. Based on this evaluation, the Fund determined its existing contracts did not meet the definition of leases under the new accounting guidance and therefore, did not qualify for lease accounting.
| 2. | Related Parties |
Pursuant to the terms of the LLC Agreement, the Manager is entitled to receive an annual management fee, payable monthly, of 2.5% of total capital contributions, net of cumulative dry-hole and related well costs incurred by the Fund, however, the Manager is permitted to waive the management fee at its own discretion. Therefore, the management fee may be temporarily waived to accommodate the Fund’s short-term commitments. Management fees during each of the three and nine months ended September 30, 2019 and 2018 were $0.3 million and $0.8 million, respectively.
The Manager is also entitled to receive 15% of the cash distributions from operations made by the Fund. Distributions paid to the Manager during the three and nine months ended September 30, 2019 were $0.1 million and $0.3 million, respectively. Distributions paid to the Manager during the three and nine months ended September 30, 2018 were $0.2 million and $0.5 million, respectively.
The Fund utilizes DH Sales and Transport, LLC, a wholly-owned subsidiary of the Manager, to facilitate the transportation and sale of oil and natural gas produced from the Diller and Marmalard projects.
At times, short-term payables and receivables, which do not bear interest, arise from transactions with affiliates in the ordinary course of business.
The Fund has working interest ownership in certain oil and natural gas projects, which are also owned by other entities that are likewise managed by the Manager.
| 3. | Commitments and Contingencies |
Capital Commitments
As of September 30, 2019, the Fund’s estimated capital commitments related to its oil and gas properties were $4.1 million (which include asset retirement obligations for the Fund’s projects of $1.6 million), of which $1.3 million is expected to be spent during the next twelve months. Based upon its current cash position and its current reserve estimates, the Fund expects cash flow from operations to be sufficient to cover its commitments and ongoing operations. Reserve estimates are projections based on engineering data that cannot be measured with precision, require substantial judgment, and are subject to frequent revision.
Environmental and Governmental Regulations
Many aspects of the oil and gas industry are subject to federal, state and local environmental laws and regulations. The Manager and operators of the Fund’s properties are continually taking action they believe appropriate to satisfy applicable federal, state and local environmental regulations. However, due to the significant public and governmental interest in environmental matters related to those activities, the Manager cannot predict the effects of possible future legislation, rule changes, or governmental or private claims. As of September 30, 2019 and December 31, 2018, there were no known environmental contingencies that required adjustment to, or disclosure in, the Fund’s financial statements.
Oil and gas industry legislation and administrative regulations are periodically changed for a variety of political, economic, and other reasons. Any such future laws and regulations could result in increased compliance costs or additional operating restrictions, which could have a material adverse effect on the Fund’s operating results and cash flows. It is not possible at this time to predict whether such legislation or regulation, if proposed, will be adopted as initially written, if at all, or how legislation or new regulation that may be adopted would impact the Fund’s business.
| 7 |
BOEM Notice to Lessees on Supplemental Bonding
On July 14, 2016, the Bureau of Ocean Energy Management (“BOEM”) issued a Notice to Lessees (“NTL”) that discontinued and materially replaced existing policies and procedures regarding financial security (i.e. supplemental bonding) for decommissioning obligations of lessees of federal oil and gas leases and owners of pipeline rights-of-way, rights-of use and easements on the Outer Continental Shelf (“Lessees”). Generally, the NTL (i) ended the practice of excusing Lessees from providing such additional security where co-lessees had sufficient financial strength to meet such decommissioning obligations, (ii) established new criteria for determining financial strength and additional security requirements of such Lessees, (iii) provided acceptable forms of such additional security and (iv) replaced the waiver system with one of self-insurance. The rule became effective as of September 12, 2016; however on January 6, 2017, the BOEM announced that it was suspending the implementation timeline for six months in certain circumstances. On June 22, 2017, the BOEM announced that the implementation timeline extension will remain in effect pending the completion of its review of the NTL. As of September 30, 2019, the BOEM has not completed its review nor has the NTL been enforced. The impact of the NTL, if enforced without change or amendment, may require the Fund to fully secure all of its potential abandonment liabilities to the BOEM’s satisfaction using one or more of the enumerated methods for doing so. Potentially this could increase costs to the Fund if the Fund is required to obtain additional supplemental bonding, fund escrow accounts or obtain letters of credit.
Insurance Coverage
The Fund is subject to all risks inherent in the oil and natural gas business. Insurance coverage as is customary for entities engaged in similar operations is maintained, but losses may occur from uninsurable risks or amounts in excess of existing insurance coverage. The occurrence of an event that is not insured or not fully insured could have a material adverse impact upon earnings and financial position. Moreover, insurance is obtained as a package covering all of the entities managed by the Manager. Depending on the extent, nature and payment of claims made by the Fund or other entities managed by the Manager, yearly insurance coverage may be exhausted and become insufficient to cover a claim by the Fund in a given year.
| 8 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this Quarterly Report on Form 10-Q (“Quarterly Report”) and the documents Ridgewood Energy X Fund, LLC (the “Fund”) has incorporated by reference into this Quarterly Report, other than purely historical information, including estimates, projections, statements relating to the Fund’s business plans, strategies, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that are based on current expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially from the forward-looking statements. You are therefore cautioned against relying on any such forward-looking statements. Forward-looking statements can generally be identified by words such as “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “target,” “pursue,” “may,” “will,” “will likely result,” and similar expressions and references to future periods. Examples of events that could cause actual results to differ materially from historical results or those anticipated include weather conditions, such as hurricanes, changes in market and other conditions affecting the pricing, production and demand of oil and natural gas, the cost and availability of equipment, and changes in domestic and foreign governmental regulations. Examples of forward-looking statements made herein include statements regarding projects, investments, insurance, capital expenditures and liquidity. Forward-looking statements made in this document speak only as of the date on which they are made. The Fund undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Critical Accounting Policies and Estimates
There were no changes to the Fund’s critical accounting policies and estimates from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2018.
Overview of the Fund’s Business
The Fund was organized primarily to acquire interests in oil and natural gas properties located in the United States offshore waters of Texas, Louisiana and Alabama in the Gulf of Mexico. The Fund’s primary investment objective is to generate cash flow for distribution to its shareholders by generating returns across a portfolio of oil and natural gas projects. Distributions to shareholders are made in accordance with the Fund’s limited liability company agreement (the “LLC Agreement”).
Ridgewood Energy Corporation (the “Manager”) is the Manager, and as such, has direct and exclusive control over the management of the Fund’s operations. The Manager performs, or arranges for the performance of, the management, advisory and administrative services required for the Fund’s operations. As compensation for its services, the Manager is entitled to an annual management fee, payable monthly, equal to 2.5% of the total capital contributions made by the Fund’s shareholders, net of cumulative dry-hole and related well costs incurred by the Fund. The Fund does not currently, nor is there any plan to, operate any project in which the Fund participates. The Manager enters into operating agreements with third-party operators for the management of all exploration, development and producing operations, as appropriate. The Manager also participates in distributions.
Commodity Price Changes
Changes in oil and natural gas commodity prices may significantly affect liquidity and expected operating results. Declines in oil and natural gas commodity prices not only reduce revenues and profits but could also reduce the quantities of reserves that are commercially recoverable and result in non-cash charges to earnings due to impairment.
| 9 |
Oil and natural gas commodity prices have been subject to significant fluctuations during the past several years. The Fund anticipates price cyclicality in its planning and believes it is well positioned to withstand price volatility. The Fund will continue to closely manage and coordinate its capital spending estimates within its expected cash flows to provide for future development costs of its producing projects, as budgeted. See “Results of Operations” under this Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report for more information on the average oil and natural gas prices received by the Fund during the three and nine months ended September 30, 2019 and 2018 and the effect of such average prices on the Fund’s results of operations. If oil and natural gas commodity prices decline, even if only for a short period of time, the Fund’s results of operations and liquidity will be adversely impacted.
Market pricing for oil and natural gas is volatile and is likely to continue to be volatile in the future. This volatility is caused by numerous factors and market conditions that the Fund cannot control or influence. Therefore, it is impossible to predict the future price of oil and natural gas with any certainty. Factors affecting market pricing for oil and natural gas include:
| · | weather conditions; |
| · | economic conditions, including demand for petroleum-based products; |
| · | actions by OPEC, the Organization of Petroleum Exporting Countries; |
| · | political instability in the Middle East and other major oil and gas producing regions; |
| · | governmental regulations, both domestic and foreign; |
| · | domestic and foreign tax policy; |
| · | the pace adopted by foreign governments for the exploration, development, and production of their national reserves; |
| · | the supply and price of foreign oil and gas; |
| · | the cost of exploring for, producing and delivering oil and gas; |
| · | the discovery rate of new oil and gas reserves; |
| · | the rate of decline of existing and new oil and gas reserves; |
| · | available pipeline and other oil and gas transportation capacity; |
| · | the ability of oil and gas companies to raise capital; |
| · | the overall supply and demand for oil and gas; and |
| · | the price and availability of alternate fuel sources. |
| 10 |
Business Update
Information regarding the Fund’s current projects, all of which are located in the United States offshore waters in the Gulf of Mexico, is provided in the following table. See “Liquidity Needs” under this Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report for information regarding the funding of the Fund’s capital commitments.
| Total Spent | Total | |||||||||
| Working | through | Fund | ||||||||
| Project | Interest | September 30, 2019 | Budget | Status | ||||||
| (in thousands) | ||||||||||
| Diller Project | 0.88% | $ | 3,561 | $ | 4,670 | The Diller Project is expected to include the development of three wells. Well #1 commenced production in 2015. Well #2, which completed drilling in third quarter 2018, is expected to commence production in first quarter 2020. Well #3 is expected to commence production in third quarter 2020. The Fund expects to spend $0.8 million for additional development costs and $0.3 million for asset retirement obligations. | ||||
| Liberty Project | 5.0% | $ | 7,510 | $ | 8,171 | The Liberty Project, a single-well project, commenced production in 2010. The Fund expects to spend $0.7 million for asset retirement obligations. | ||||
| Marmalard Project | 0.84% | $ | 5,621 | $ | 7,804 | The Marmalard Project is expected to include the development of six wells. Four wells commenced production in 2015. Additional wells are expected to commence production in 2020 and 2021. Two wells, which were shut-in during early-December 2017 due to replacement of well jumpers, resumed production in third quarter 2018. One well, which had been shut-in since late-February 2019 due to remediation work for downhole mechanical issues, resumed production in third quarter 2019. The Fund expects to spend $1.7 million for additional development costs and $0.5 million for asset retirement obligations. | ||||
| 11 |
Results of Operations
The following table summarizes the Fund’s results of operations during the three and nine months ended September 30, 2019 and 2018, and should be read in conjunction with the Fund’s financial statements and notes thereto included within Item 1. “Financial Statements” in Part I of this Quarterly Report.
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Revenue | ||||||||||||||||
| Oil and gas revenue | $ | 1,584 | $ | 2,571 | $ | 4,493 | $ | 5,765 | ||||||||
| Expenses | ||||||||||||||||
| Depletion and amortization | 237 | 334 | 524 | 847 | ||||||||||||
| Operating expenses | 502 | 423 | 1,691 | 1,081 | ||||||||||||
| Management fees to affiliate | 266 | 266 | 799 | 799 | ||||||||||||
| General and administrative expenses | 64 | 44 | 173 | 137 | ||||||||||||
| Total expenses | 1,069 | 1,067 | 3,187 | 2,864 | ||||||||||||
| Income from operations | 515 | 1,504 | 1,306 | 2,901 | ||||||||||||
| Other income | ||||||||||||||||
| Dividend income | 8 | 4 | 26 | 10 | ||||||||||||
| Interest income | 20 | 8 | 43 | 16 | ||||||||||||
| Total other income | 28 | 12 | 69 | 26 | ||||||||||||
| Net income | $ | 543 | $ | 1,516 | $ | 1,375 | $ | 2,927 | ||||||||
Overview. The following table provides information related to the Fund’s oil and natural gas production and oil and gas revenue during the three and nine months ended September 30, 2019 and 2018. Natural gas liquid sales are included within gas sales.
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Number of wells producing | 6 | 6 | 6 | 6 | ||||||||||||
| Total number of production days | 487 | 507 | 1,252 | 1,118 | ||||||||||||
| Oil sales (in thousands of barrels) | 25 | 31 | 67 | 74 | ||||||||||||
| Average oil price per barrel | $ | 61 | $ | 72 | $ | 62 | $ | 68 | ||||||||
| Gas sales (in thousands of mcfs) | 62 | 82 | 157 | 204 | ||||||||||||
| Average gas price per mcf | $ | 2.02 | $ | 3.76 | $ | 2.42 | $ | 3.41 | ||||||||
The production-related decreases in the above table were primarily related to the Marmalard and Liberty projects, which experienced shut-ins during 2019 due to mechanical issues. The increase in the production days during the nine months ended September 30, 2019 was primarily related to two wells in the Marmalard Project, which were shut-in during first half of 2018 due to replacement of well jumpers. See additional discussion in “Business Update” section above.
Oil and Gas Revenue. Oil and gas revenue during the three months ended September 30, 2019 was $1.6 million, a decrease of $1.0 million from the three months ended September 30, 2018. The decrease was attributable to decreased sales volume totaling $0.5 million coupled with decreased oil and gas prices totaling $0.4 million.
Oil and gas revenue during the nine months ended September 30, 2019 was $4.5 million, a decrease of $1.3 million from the nine months ended September 30, 2018. The decrease was attributable to decreased sales volume totaling $0.7 million coupled with decreased oil and gas prices totaling $0.6 million.
See “Overview” above for factors that impact the oil and gas revenue volume and rate variances.
| 12 |
Depletion and Amortization. Depletion and amortization during the three months ended September 30, 2019 was $0.2 million, a decrease of $0.1 million from the three months ended September 30, 2018. The decrease was primarily attributable to a decrease in production volumes.
Depletion and amortization during the nine months ended September 30, 2019 was $0.5 million, a decrease of $0.3 million from the nine months ended September 30, 2018. The decrease was attributable to a decrease in the average depletion rate totaling $0.1 million, a decrease in production volumes totaling $0.1 million and an adjustment to the asset retirement obligation related to a fully depleted property totaling $0.1 million. The decrease in the average depletion rate was primarily attributable to lower cost of reserves from the Liberty Project.
See “Overview” above for certain factors that impact the depletion and amortization volume and rate variances. Depletion and amortization rates may also be impacted by changes in reserve estimates provided annually by the Fund’s independent petroleum engineers.
Operating Expenses. Operating expenses represent costs specifically identifiable or allocable to the Fund’s wells, as detailed in the following table.
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Lease operating expense | $ | 273 | $ | 321 | $ | 731 | $ | 752 | ||||||||
| Workover expense | 146 | 1 | 692 | 49 | ||||||||||||
| Transportation and processing expense | 75 | 85 | 209 | 225 | ||||||||||||
| Insurance expense | 3 | 19 | 47 | 50 | ||||||||||||
| Accretion expense and other | 5 | (3 | ) | 12 | 5 | |||||||||||
| $ | 502 | $ | 423 | $ | 1,691 | $ | 1,081 | |||||||||
Lease operating expense and transportation and processing expense relate to the Fund’s producing projects. Workover expense represents costs to restore or stimulate production of existing reserves. During the three and nine months ended September 30, 2019, workover expense primarily related to remediation work for mechanical issues in the Marmalard Project. Insurance expense represents premiums related to the Fund’s projects, which vary depending upon the number of wells producing or drilling. Accretion expense relates to the asset retirement obligations established for the Fund’s oil and gas properties.
Production costs, which include lease operating expense, transportation and processing expense and insurance expense, were $0.4 million ($9.96 per barrel of oil equivalent or “BOE”) and $1.0 million ($10.64 per BOE) during the three and nine months ended September 30, 2019, respectively, compared to $0.4 million ($9.43 per BOE) and $1.0 million ($9.47 per BOE) during the three and nine months ended September 30, 2018, respectively. Production costs remained relatively consistent during the three and nine months ended September 30, 2019 compared to the three and nine months ended September 30, 2018.
The increase in production costs per BOE during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 was primarily attributable to certain fixed costs associated with the Diller and Marmalard projects, which were shut-in periodically during first half of 2019 due to mechanical issues. See “Overview” above for factors that impact oil and natural gas production.
Management Fees to Affiliate. An annual management fee, totaling 2.5% of total capital contributions, net of cumulative dry-hole and related well costs incurred by the Fund, is paid monthly to the Manager. Such fee may be temporarily waived by the Manager to accommodate the Fund’s short-term commitments.
General and Administrative Expenses. General and administrative expenses represent costs specifically identifiable or allocable to the Fund, such as accounting and professional fees and insurance expenses.
Dividend Income. Dividend income is related to the Fund’s investment in Delta House.
Interest Income. Interest income is comprised of interest earned on cash and cash equivalents and salvage fund.
| 13 |
Capital Resources and Liquidity
Operating Cash Flows
Cash flows provided by operating activities during the nine months ended September 30, 2019 were $2.1 million, primarily related to revenue received of $4.3 million, partially offset by operating expenses of $1.3 million, management fees of $0.8 million and general and administrative expenses of $0.1 million.
Cash flows provided by operating activities during the nine months ended September 30, 2018 were $3.7 million, primarily related to revenue received of $5.7 million, partially offset by operating expenses of $1.0 million, management fees of $0.8 million and general and administrative expenses of $0.1 million.
Investing Cash Flows
Cash flows used in investing activities during the nine months ended September 30, 2019 were $0.4 million, primarily related to capital expenditures for oil and gas properties.
Cash flows provided by investing activities during the nine months ended September 30, 2018 were $1.7 million, related to proceeds from salvage fund of $1.9 million, partially offset by capital expenditures for oil and gas properties of $0.2 million.
Financing Cash Flows
Cash flows used in financing activities during the nine months ended September 30, 2019 were $2.1 million, related to manager and shareholder distributions.
Cash flows used in financing activities during the nine months ended September 30, 2018 were $3.0 million, related to manager and shareholder distributions.
Estimated Capital Expenditures
Capital expenditures for oil and gas properties have been funded with the capital raised by the Fund in its private placement offering. The Fund’s capital has been fully allocated to its projects. As a result, the Fund will not invest in any new projects and will limit its investment activities, if any, to those projects in which it currently has a working interest. See “Business Update” under this Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report for information regarding the Fund’s current projects. See “Liquidity Needs” below for additional information.
Liquidity Needs
The Fund’s primary short-term liquidity needs are to fund its operations and capital expenditures for its oil and gas properties. Such needs are funded utilizing operating income and existing cash on-hand.
As of September 30, 2019, the Fund’s estimated capital commitments related to its oil and gas properties were $4.1 million (which include asset retirement obligations for the Fund’s projects of $1.6 million), of which $1.3 million is expected to be spent during the next twelve months. Based upon its current cash position and its current reserve estimates, the Fund expects cash flow from operations to be sufficient to cover its commitments and ongoing operations. Reserve estimates are projections based on engineering data that cannot be measured with precision, require substantial judgment, and are subject to frequent revision.
The Manager is entitled to receive an annual management fee from the Fund regardless of the Fund’s profitability in that year. However, pursuant to the terms of the LLC Agreement, the Manager is also permitted to waive the management fee at its own discretion.
Distributions, if any, are funded from available cash from operations, as defined in the LLC Agreement, and the frequency and amount are within the Manager’s discretion. However, distributions may be impacted by amounts of future capital required for the ongoing development of the Diller and Marmalard projects and funding their estimated asset retirement obligations.
Off-Balance Sheet Arrangements
The Fund had no off-balance sheet arrangements as of September 30, 2019 and December 31, 2018 and does not anticipate the use of such arrangements in the future.
| 14 |
Contractual Obligations
The Fund enters into participation and joint operating agreements with operators. On behalf of the Fund, an operator enters into various contractual commitments pertaining to exploration, development and production activities. The Fund does not negotiate such contracts. No contractual obligations exist as of September 30, 2019 and December 31, 2018, other than those discussed in “Estimated Capital Expenditures” above.
Recent Accounting Pronouncements
See Note 1 of “Notes to Unaudited Condensed Financial Statements” - “Organization and Summary of Significant Accounting Policies” contained in Item 1. “Financial Statements” within Part I of this Quarterly Report for a discussion of recent accounting pronouncements.
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Not required.
| ITEM 4. | CONTROLS AND PROCEDURES |
In accordance with Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Fund’s management, including its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Fund’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Fund’s disclosure controls and procedures were effective as of September 30, 2019.
There has been no change in the Fund’s internal control over financial reporting that occurred during the three months ended September 30, 2019 that has materially affected, or is reasonably likely to materially affect, the Fund’s internal control over financial reporting.
PART II – OTHER INFORMATION
| ITEM 1. | LEGAL PROCEEDINGS |
None.
| ITEM 1A. | RISK FACTORS |
Not required.
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
None.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None.
| ITEM 4. | MINE SAFETY DISCLOSURES |
None.
| ITEM 5. | OTHER INFORMATION |
None.
| 15 |
| ITEM 6. | EXHIBITS |
|
EXHIBIT NUMBER |
TITLE OF EXHIBIT | METHOD OF FILING |
| 31.1 | Filed herewith | |
| 31.2 | Filed herewith | |
| 32 | Filed herewith | |
| 101.INS | XBRL Instance Document | Filed herewith |
| 101.SCH | XBRL Taxonomy Extension Schema | Filed herewith |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase | Filed herewith |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
Filed herewith |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase | Filed herewith |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase | Filed herewith |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
RIDGEWOOD ENERGY X FUND, LLC
| ||||||
| Dated: | November 5, 2019 | By: | /s/ | ROBERT E. SWANSON | ||
| Name: | Robert E. Swanson | |||||
| Title: | Chief Executive Officer | |||||
| (Principal Executive Officer) | ||||||
| Dated: | November 5, 2019 | By: | /s/ | KATHLEEN P. MCSHERRY | ||
| Name: | Kathleen P. McSherry | |||||
| Title: | Executive Vice President and Chief Financial Officer | |||||
| (Principal Financial and Accounting Officer) |
16
EXHIBIT 31.1
CERTIFICATION
I, Robert E. Swanson, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Ridgewood Energy X Fund, LLC;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Dated: | November 5, 2019 | |||
| /s/ | ROBERT E. SWANSON | |||
| Name: | Robert E. Swanson | |||
| Title: | Chief Executive Officer | |||
| (Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION
I, Kathleen P. McSherry, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Ridgewood Energy X Fund, LLC;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Dated: | November 5, 2019 | |||
| /s/ | KATHLEEN P. MCSHERRY | |||
| Name: | Kathleen P. McSherry | |||
| Title: | Executive Vice President and Chief Financial Officer | |||
| (Principal Financial and Accounting Officer) |
EXHIBIT 32
CERTIFICATIONS PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report on Form 10-Q of the Ridgewood Energy X Fund, LLC (the “Fund”) for the period ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof, (the “Report”), each of the undersigned officers of the Fund hereby certifies, pursuant to 18 U.S.C. (section) 1350, as adopted pursuant to (section) 906 of the Sarbanes-Oxley Act of 2002, that to the best of their knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund. |
| Dated: | November 5, 2019 | /s/ | ROBERT E. SWANSON | ||
| Name: | Robert E. Swanson | ||||
| Title: | Chief Executive Officer | ||||
| (Principal Executive Officer) | |||||
| Dated: | November 5, 2019 | /s/ | KATHLEEN P. MCSHERRY | ||
| Name: | Kathleen P. McSherry | ||||
| Title: | Executive Vice President and Chief Financial Officer | ||||
| (Principal Financial and Accounting Officer) |
A signed original of this written statement or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Fund and will be retained by the Fund and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of this report or as a separate disclosure document.