Attached files
| file | filename |
|---|---|
| EX-99.3 - EX-99.3 - Kimbell Royalty Partners, LP | a18-27149_1ex99d3.htm |
| EX-99.2 - EX-99.2 - Kimbell Royalty Partners, LP | a18-27149_1ex99d2.htm |
| 8-K/A - 8-K/A - Kimbell Royalty Partners, LP | a18-27149_18ka.htm |
HAYMAKER MINERALS & ROYALTIES, LLC
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
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|
|
As of |
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As of |
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|
|
|
June 30, 2018 |
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December 31, 2017 |
| ||
|
ASSETS |
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|
|
|
| ||
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CURRENT ASSETS |
|
|
|
|
| ||
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Cash and cash equivalents |
|
$ |
3,091,812 |
|
$ |
4,535,578 |
|
|
Accounts receivable |
|
|
|
|
| ||
|
Oil, natural gas and natural gas liquids |
|
1,724,369 |
|
2,174,365 |
| ||
|
Other |
|
684,254 |
|
199,262 |
| ||
|
Receivables from affiliates |
|
162,685 |
|
123,755 |
| ||
|
Prepaid expenses |
|
119,874 |
|
99,488 |
| ||
|
Short-term derivative asset |
|
— |
|
2,031,116 |
| ||
|
Total current assets |
|
5,782,994 |
|
9,163,564 |
| ||
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PROPERTY AND EQUIPMENT |
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|
|
|
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Oil and natural gas properties, full cost method of accounting |
|
|
|
|
| ||
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Proved properties |
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144,376,023 |
|
137,909,769 |
| ||
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Unevaluated properties |
|
47,884,862 |
|
54,152,062 |
| ||
|
Total oil and natural gas properties, at cost |
|
192,260,885 |
|
192,061,831 |
| ||
|
Accumulated depletion and impairment |
|
(102,878,473 |
) |
(100,523,400 |
) | ||
|
Total oil and natural gas properties, net |
|
89,382,412 |
|
91,538,431 |
| ||
|
Other property and equipment, net |
|
238,261 |
|
272,298 |
| ||
|
Total property and equipment, net |
|
89,620,673 |
|
91,810,729 |
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|
|
|
|
|
|
| ||
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NONCURRENT ASSETS |
|
|
|
|
| ||
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Deferred loan costs |
|
129,070 |
|
205,600 |
| ||
|
Total noncurrent assets |
|
129,070 |
|
205,600 |
| ||
|
|
|
|
|
|
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TOTAL ASSETS |
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$ |
95,532,737 |
|
$ |
101,179,893 |
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|
|
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|
|
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LIABILITIES AND MEMBERS’ CAPITAL |
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CURRENT LIABILITIES |
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|
|
|
| ||
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Accounts payable |
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$ |
95,853 |
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$ |
137,094 |
|
|
Current income taxes payable |
|
— |
|
102,194 |
| ||
|
Accrued interest |
|
11,631 |
|
134,282 |
| ||
|
Accrued expenses |
|
2,405,869 |
|
721,702 |
| ||
|
Total current liabilities |
|
2,513,353 |
|
1,095,272 |
| ||
|
NONCURRENT LIABILITIES |
|
|
|
|
| ||
|
Deferred revenue |
|
— |
|
129,672 |
| ||
|
Deferred income taxes |
|
9,643 |
|
9,643 |
| ||
|
Long term debt |
|
15,510,991 |
|
15,510,991 |
| ||
|
Total noncurrent liabilities |
|
15,520,634 |
|
15,650,306 |
| ||
|
Total liabilities |
|
18,033,987 |
|
16,745,578 |
| ||
|
|
|
|
|
|
| ||
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MEMBERS’ CAPITAL |
|
77,498,750 |
|
84,434,315 |
| ||
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TOTAL LIABILITIES AND MEMBERS’ CAPITAL |
|
$ |
95,532,737 |
|
$ |
101,179,893 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
HAYMAKER MINERALS & ROYALTIES, LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
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Six months ended June 30, |
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|
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2018 |
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2017 |
| ||
|
OPERATING REVENUES |
|
|
|
|
| ||
|
Crude oil and condensate sales |
|
$ |
5,621,833 |
|
$ |
4,306,970 |
|
|
Natural gas sales |
|
1,277,575 |
|
1,613,075 |
| ||
|
Natural gas liquids sales and other |
|
907,804 |
|
509,707 |
| ||
|
Income from lease bonus |
|
1,119,041 |
|
1,592,029 |
| ||
|
Total revenues |
|
8,926,253 |
|
8,021,781 |
| ||
|
|
|
|
|
|
| ||
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COSTS AND EXPENSES: |
|
|
|
|
| ||
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Production, ad valorem, and withholding taxes |
|
629,955 |
|
368,641 |
| ||
|
Production expense |
|
593,825 |
|
562,715 |
| ||
|
Depletion, depreciation and amortization |
|
2,389,109 |
|
1,813,553 |
| ||
|
(Gain) loss on sale of assets |
|
— |
|
(12,870,998 |
) | ||
|
General and administrative |
|
3,281,048 |
|
3,077,889 |
| ||
|
Total costs and expenses |
|
6,893,937 |
|
(7,048,200 |
) | ||
|
|
|
|
|
|
| ||
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INCOME FROM OPERATIONS |
|
2,032,316 |
|
15,069,981 |
| ||
|
|
|
|
|
|
| ||
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OTHER INCOME (EXPENSES) |
|
|
|
|
| ||
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Gain (loss) on derivatives |
|
(632,594 |
) |
1,699,155 |
| ||
|
Interest expense |
|
(398,643 |
) |
(929,159 |
) | ||
|
Loss on debt extinguishment |
|
— |
|
(265,061 |
) | ||
|
Other income (expense) |
|
17,710 |
|
— |
| ||
|
Total other income (expense) |
|
(1,013,527 |
) |
504,935 |
| ||
|
|
|
|
|
|
| ||
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INCOME TAX EXPENSE (BENEFIT) |
|
(566 |
) |
(3,918 |
) | ||
|
|
|
|
|
|
| ||
|
NET INCOME |
|
$ |
1,019,355 |
|
$ |
15,578,834 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
HAYMAKER MINERALS & ROYALTIES, LLC
CONDENSED CONSOLIDATED STATEMENTS OF MEMBERS’ CAPITAL (UNAUDITED)
|
BALANCE AT DECEMBER 31, 2017 |
|
$ |
84,434,315 |
|
|
Net income |
|
1,019,355 |
| |
|
Contributions |
|
45,080 |
| |
|
Distributions |
|
(8,000,000 |
) | |
|
BALANCE AT JUNE 30, 2018 |
|
$ |
77,498,750 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
HAYMAKER MINERALS & ROYALTIES, LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
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|
|
Six months ended June 30, |
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|
|
|
2018 |
|
2017 |
| ||
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|
|
|
|
|
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CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
| ||
|
Net income |
|
$ |
1,019,355 |
|
$ |
15,578,834 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
| ||
|
Depreciation, depletion and amortization |
|
2,389,109 |
|
1,813,553 |
| ||
|
(Gain) loss on sale of assets |
|
— |
|
(12,870,998 |
) | ||
|
Mark-to-market commodity derivative contracts |
|
|
|
|
| ||
|
(Gain) loss on derivatives, net of settlements |
|
632,594 |
|
(1,699,155 |
) | ||
|
Net cash (payments) received from settlements of commodity derivatives |
|
913,530 |
|
1,398,818 |
| ||
|
Loss on debt extinguishment |
|
— |
|
265,061 |
| ||
|
Amortization of deferred loan costs |
|
81,969 |
|
170,245 |
| ||
|
Changes in operating assets and liabilities: |
|
|
|
|
| ||
|
Accounts receivable |
|
449,996 |
|
(173,071 |
) | ||
|
Accounts payable and accrued expenses |
|
1,418,081 |
|
(25,417 |
) | ||
|
Prepaid expenses and other current assets |
|
(20,386 |
) |
7,106 |
| ||
|
Receivables/payables from affiliates |
|
(38,930 |
) |
285,157 |
| ||
|
Deferred revenue |
|
(129,672 |
) |
— |
| ||
|
Net cash provided by operating activities |
|
6,715,646 |
|
4,750,133 |
| ||
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
| ||
|
Acquisitions of oil and natural gas properties |
|
(199,053 |
) |
(130,000 |
) | ||
|
Divestitures of oil and natural gas properties |
|
— |
|
32,061,284 |
| ||
|
Other capital expenditures |
|
— |
|
(11,472 |
) | ||
|
Net cash provided by (used in) investing activities |
|
(199,053 |
) |
31,919,812 |
| ||
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
| ||
|
Repayments of debt |
|
— |
|
(19,414,998 |
) | ||
|
Deferred offering costs |
|
— |
|
(687,559 |
) | ||
|
Deferred loan costs |
|
(5,439 |
) |
— |
| ||
|
Debt extinguishment fees |
|
— |
|
(31,102 |
) | ||
|
Contributions |
|
45,080 |
|
— |
| ||
|
Distributions |
|
(8,000,000 |
) |
— |
| ||
|
Net cash used in financing activities |
|
(7,960,359 |
) |
(20,133,659 |
) | ||
|
|
|
|
|
|
| ||
|
Net increase (decrease) in cash and cash equivalents |
|
$ |
(1,443,766 |
) |
$ |
16,536,286 |
|
|
|
|
|
|
|
| ||
|
Cash and cash equivalents, beginning of period |
|
4,535,578 |
|
1,052,713 |
| ||
|
Cash and cash equivalents, end of period |
|
$ |
3,091,812 |
|
$ |
17,588,999 |
|
|
|
|
|
|
|
| ||
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
|
|
| ||
|
Cash paid for interest |
|
$ |
439,325 |
|
$ |
786,528 |
|
|
|
|
|
|
|
| ||
|
Cash paid for income taxes |
|
$ |
101,628 |
|
$ |
16,242 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
HAYMAKER MINERALS & ROYALTIES, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Six Months Ended June 30, 2018 and 2017
1. Organization and Basis of Presentation
Organization
Haymaker Minerals & Royalties, LLC, a Delaware limited liability company (“the Company”), was formed in May 2013 by Haymaker Management Company, LLC and Kayne Anderson Energy Fund VI, LP (“Kayne’’) to own and continually acquire mineral and royalty interests in many of North America’s leading resource plays. The Company’s headquarters are located in Houston, Texas.
The Company has a contractual right to receive a fixed percentage of the oil and gas production coming from any acreage in which we own a mineral or royalty interest. The Company does not own or invest in any working interests or net profit interests which allows for the receipt of royalty revenues without having to pay any of the associated operating or capital costs related to the resource development.
In April 2016, the Company entered into a master services agreement with Haymaker Services, LLC (the “Manager”) to provide portfolio management and administrative services to the Company.
Basis of Presentation
The unaudited interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The year-end balance sheet data was derived from audited financial statements but does not include disclosures required by GAAP for annual periods. The information furnished herein reflects all normal recurring adjustments that are, in the opinion of management, necessary for a fair statement of financial position and results of operations for the respective interim periods.
Our financial results for the six months ended June 30, 2018 are unaudited and are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. These unaudited financial statements should be read in conjunction with our audited annual financial statements as of and for the year ended December 31, 2017 and notes thereto.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Haymaker Holding Company, LLC (“Haymaker Holding”), Haymaker Greenfield, LLC, (“Greenfield”), and the Company. Haymaker Holding and Greenfield are both wholly owned subsidiaries of the Company. Intercompany transactions and balances have been eliminated in the consolidation.
2. Summary of Significant Accounting Policies
Significant accounting policies are described in Note 2 in the Company’s audited annual financial statements as of and for the year ended December 31, 2017. There have been no changes in such policies or the application of such policies since December 31, 2017, other than the recently adopted accounting pronouncement described below.
Recently Adopted Accounting Pronouncement
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The guidance requires entities to recognize revenue using the following five step model: identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue as the entity satisfies each performance obligation. Adoption of this standard could result in retrospective application, either in the form of recasting all prior periods presented or a cumulative adjustment to equity in the period of adoption. The guidance is effective for annual and interim periods beginning after December 15, 2017.
HAYMAKER MINERALS & ROYALTIES, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Six Months Ended June 30, 2018 and 2017
On January 1, 2018 the Company adopted ASU 2014-09 using the modified retrospective method. The Company completed its review of a representative sample of revenue contracts covering its material revenue streams and determined that there is no impact to its consolidated financial statements, results of operations or liquidity. When comparing the Company’s historical revenue recognition to the newly applied revenue recognition under ASC 606, there was no change to the amount or timing of revenue recognized. Therefore, no quantitative adjustment was required to be made to the prior periods presented in the unaudited consolidated financial statements after the adoption of ASC 606.
Accounting Policy — Revenue from Contracts with Customers
Royalty income represents the right to receive revenues from oil, natural gas and natural gas liquids sales obtained from the operator of the wells in which the Company owns a royalty interest. The Company’s oil, natural gas and natural gas liquids sales from properties in which the Company owns a mineral or royalty interest are generally structured whereby the producer of the properties sells the Company’s proportionate share of oil, natural gas and natural gas liquids production to a purchaser and the Company records revenue based on its proportionate interest when control transfers from the operator to the purchaser. The Company’s royalty income pricing provisions are tied to a market index.
Revenues from mineral and royalty interests in properties are recorded under the cash receipts approach as directly received from the operator’s statement accompanying the revenue check. Since revenue checks are generally received one to four months after the production month, the Company accrues for revenue earned but not received by estimated production volumes and product prices. The difference between the Company’s estimates and the actual amounts received for oil and natural gas sales is recorded in the month that payment is received from the operator. The Company’s royalty interests represent the right to receive royalty income from the producer once production and delivery has occurred, at which point payment is unconditional. Accordingly, the Company’s royalty income contracts do not give rise to contract assets or liabilities and there are no remaining performance obligations.
The Company also earns revenue from mineral lease bonuses. The Company generates lease bonus revenue by leasing its mineral interests to exploration and production companies. A lease agreement represents the Company’s contract with a customer and generally transfers the rights to any oil or natural gas discovered, grants the Company a right to a specified royalty interest, and requires that drilling and completion operations commence within a specified time period. Control is transferred to the lessee and the Company has satisfied its performance obligation when the lease agreement is executed, such that revenue is recognized when the lease bonus payment is received. At the time the Company executes the lease agreement, the Company expects to receive the lease bonus payment within a reasonable time, though in no case more than one year, such that the Company has not adjusted the expected amount of consideration for the effects of any significant financing component per the practical expedient provision in ASC 606.
3. Acquisitions & Divestitures
Divestitures
In February 2017, the Company disposed of certain assets in the Delaware basin for approximately $20.1 million, subject to customary post-closing adjustments. The divestiture resulted in a gain of $12.5 million. Total oil and natural gas properties decreased by $7.6 million, of which $4.3 million was related to proved properties and $3.3 million was related to unevaluated properties. The Company utilized the proceeds from the disposal of the assets in the Delaware basin to completely pay off its balance under the Second Lien. See Note 5—Debt for details of the Company’s extinguishment of the Second Lien.
In March 2017, the Company disposed of certain assets in the Midland basin for approximately $12.0 million, subject to customary post-closing adjustments. The divestiture resulted in a gain of approximately $0.4 million. Total oil and natural gas properties decreased by $11.6 million, of which $1.0 million was related to proved properties and $10.6 million was related to unevaluated properties.
HAYMAKER MINERALS & ROYALTIES, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Six Months Ended June 30, 2018 and 2017
4. Derivative Contracts
The Company enters into crude oil and natural gas swap contracts as part of its strategy to economically hedge against changes in crude oil and natural gas prices and to achieve more predictable cash flows in an environment of volatile oil and gas prices. While the use of these commodity derivative instruments limits the downside risk of adverse price movements, such use may also limit the Company’s ability to benefit from favorable price movements. The Company may, from time to time, add incremental derivatives to hedge additional production, restructure existing derivative contracts or enter into new transactions to modify the terms of current contracts in order to realize the current value of the Company’s existing positions.
The fair value of open swaps reported in the condensed consolidated balance sheets may differ from that which would be realized in the event the Company terminated its position in the contract. Risks may arise as a result of the failure of the counterparty to the swap contract to comply with the terms of the swap contract. The loss incurred by the failure of a counterparty is generally limited to the aggregate of the unrealized gain/loss on the swap contracts in an unrealized gain position. Therefore, the Company considers the creditworthiness of each counterparty to a swap contract in evaluating potential credit risk. A derivative counterparty of the Company is also a lender or an affiliate of a lender participating in the Company’s credit facility agreement. Additionally, risks may arise from unanticipated movements in the fair value of the underlying commodities.
Effective June 30, 2018, the Company terminated all remaining crude oil and natural gas swap positions. As a result of the termination of 39,479 Bbls of crude oil and 283,763 MMBtu of natural gas swap positions, the Company recorded a receivable of $0.7 million.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table summarizes the location and amounts of the Company’s assets and liabilities measured at fair value on a recurring basis as presented within discontinued operations in the condensed consolidated balance sheet as of December 31, 2017. Balances are presented on a gross basis, prior to the application of the impact of counterparty netting. Total derivative assets and liabilities are adjusted on an aggregate basis to take into consideration the effects of master netting arrangements. All items included in the tables below are Level 2 inputs within the fair value hierarchy:
As of December 31, 2017
|
|
|
Measurement |
|
Gross Fair Value |
|
Effect of |
|
Net Carrying |
| |||
|
Derivative assets |
|
|
|
|
|
|
|
|
| |||
|
Derivative assets (current) |
|
Level 2 |
|
$ |
2,031,116 |
|
$ |
— |
|
$ |
2,031,116 |
|
|
Derivative assets (noncurrent) |
|
Level 2 |
|
— |
|
— |
|
— |
| |||
|
Derivative liabilities |
|
|
|
|
|
|
|
|
| |||
|
Derivative liabilities (current) |
|
Level 2 |
|
— |
|
— |
|
— |
| |||
|
Derivative liabilities (noncurrent) |
|
Level 2 |
|
— |
|
— |
|
— |
| |||
|
Total |
|
|
|
$ |
2,031,116 |
|
$ |
— |
|
$ |
2,031,116 |
|
The fair value of the Company’s derivative assets and liabilities is based on a third-party industry-standard pricing model that uses market data obtained from third-party sources, including quoted forward prices for oil and gas, discount rates and volatility factors. The fair value is also compared to the values provided by the counterparty for reasonableness and is adjusted for the counterparties’ credit quality for derivative assets and the Company’s credit quality for derivative liabilities. To date, adjustments for credit quality have not had a material impact on the fair value.
The derivative asset and liability fair values reported in the condensed consolidated balance sheets are as of a particular point in time and subsequently change as these estimates are revised to reflect actual results, changes in market conditions and other factors. The Company typically has numerous hedge positions that span several time periods and often result in both derivative
HAYMAKER MINERALS & ROYALTIES, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Six Months Ended June 30, 2018 and 2017
assets and liabilities with the same counterparty, which positions are all offset to a single current and as single noncurrent derivative asset or liability in the condensed consolidated balance sheets. The Company nets the fair values of its derivative assets and liabilities associated with derivative instruments executed with the same counterparty pursuant to ISDA master agreements, which provide for net settlement over the term of the contract and in the event of default or termination of the contract.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
The Company applies the provisions of the fair value measurement standard on a nonrecurring basis to its nonfinancial assets and liabilities. These assets and liabilities are not measured at fair value on a recurring basis, but are subject to fair value adjustments when facts and circumstances arise that indicate a need for measurement.
Fair Value of Other Financial Instruments
The Company’s other financial instruments consist of cash, receivables and payables which are classified as Level 1 under the fair value hierarchy and long-term debt, which is classified as Level 2 under the fair value hierarchy. The carrying amounts of cash, receivables, and payables approximate fair value due to the highly liquid or short-term nature of these instruments. The fair value of the long-term debt approximates its carrying value as the interest rates are variable and reflective of market rates.
5. Debt
At June 30, 2018, the borrowing base and principal balance outstanding under the First Lien were $22.0 million and $15.5 million, respectively. At December 31, 2017, the borrowing base and principal balance outstanding under the First Lien were $22.0 million and $15.5 million, respectively.
Concurrent with the First Lien, the Company entered into a Second Lien Term Loan Credit Agreement with Wells Fargo Energy Capital, Inc. as the administrative agent (the “Second Lien”). The Second Lien provides for a maximum borrowing of $20.0 million. In February 2017, the Company paid in full the outstanding balance under the Second Lien and terminated such loan. The Company recorded a $0.3 million loss on debt extinguishment related to the repayment and termination of the Second Lien.
The interest rates elected for the First Lien at June 30, 2018 and December 31, 2017 were 4.10% and 3.57%, respectively, based on LIBOR plus the applicable margin. Accrued interest is payable at the end of each interest period and reported in the Company’s condensed consolidated balance sheets as a current payable. In addition to interest, the Company also pays a quarterly commitment fee of 0.50% per annum on the unused portion of the commitments.
All borrowings are collateralized by substantially all of the assets of the Company, and are subject to certain nonfinancial and financial covenants. At June 30, 2018 and at December 31, 2017, the most restrictive financial covenants require the Company to maintain a current ratio greater than 1.0:1.0 and a ratio of total debt to EBITDAX less than 4.0:1.0. At June 30, 2018 and December 31, 2017, the Company was in compliance with all covenants.
6. Members’ Capital
In accordance with the terms of the Company’s Limited Liability Company Agreement, the net profits and losses of the Company, and all other items of income, gain, loss, deduction, and credit of the Company, shall be allocated to each of the members for capital account and federal income tax purposes. Moreover, the Company may make distributions of available cash or other properties from time to time, as determined by the Company in its sole discretion. Pursuant to the Company’s LLC agreement (and as is customary for limited liability companies), the liabilities of the members is limited to their contributed capital.
HAYMAKER MINERALS & ROYALTIES, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Six Months Ended June 30, 2018 and 2017
During the six months ended June 30, 2018, members’ capital contributions totaled $45 thousand.
During the six months ended June 30, 2018, the Company distributed $8.0 million of available cash in accordance with the Company’s LLC agreement.
At June 30, 2018 and December 31, 2017, unfunded capital commitments totaled $42.8 million, respectively.
7. Commitments and Contingencies
The Company could be subject to various possible loss contingencies which arise primarily from interpretation of federal and state laws and regulations affecting the natural gas and crude oil industry. Such contingencies include differing interpretations as to the prices at which natural gas and crude oil sales may be made, the prices at which royalty owners may be paid for production from their leases, environmental issues and other matters. Management believes it has complied with the various laws and regulations, administrative rulings and interpretations.
Litigation
The Company is involved in disputes or legal actions arising in the ordinary course of business. Management does not believe the outcome of such disputes or legal actions will have a material adverse effect on the Company’s condensed consolidated financial statements, and no amounts have been accrued at June 30, 2018 or December 31, 2017, respectively.
8. Subsequent Events
On May 29, 2018, the Company and certain affiliates entered into a definitive agreement with Kimbell Royalty Partners, LP (“Kimbell”) to divest substantially all of the Company’s oil and gas mineral and royalty interests and other related assets for $84 million in cash and 4 million common units representing limited partner interests in Kimbell. The effective date of the transaction is April 1, 2018. The transaction closed on July 12, 2018. Pursuant to terms of the agreement, the Company paid in full the outstanding balance under the First Lien Loan at close.
On July 13, 2018, the Company distributed $56.8 million to Kayne and $0.2 million to Haymaker Management from the proceeds of the sale.
The Company has evaluated subsequent events through September 10, 2018, the date these financial statements were available to be issued, and has concluded that no other events need to be reported in relation to this period.