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 March 31, 2010
 
 or





o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from _______________________to____________________________




Commission File No. 000-51267





RIDGEWOOD ENERGY L FUND, LLC


(Exact name of registrant as specified in its charter)








Delaware

(State or other jurisdiction of

incorporation or organization)

11-3719724

(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)








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  ýNo  o





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes o No  o





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.





Large accelerated filer
o
Accelerated filer
oNon-accelerated filer

(Do not check if a smaller reporting company)
o
Smaller reporting company
x





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o  No  x





As of May 7, 2010 the Fund had 350.1081 shares of LLC Membership Interest outstanding.












Table ofContentsPART I - FINANCIAL INFORMATION

PageItem 1.    Financial Statements:

1Unaudited Condensed Balance Sheets as of March 31, 2010 and December 31, 2009

1Unaudited Condensed Statements of Operations for the three months ended

March 31, 2010 and 2009

2Unaudited Condensed Statements of Cash Flows for the three months ended

March 31, 2010 and 2009

3Notes to Unaudited Condensed Financial Statements

4Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations

9Item 3.    Quantitative and Qualitative Disclosures about Market Risk

13Item 4.    Controls and Procedures

14PART II - OTHER INFORMATIONItem 1.     Legal Proceedings

14Item 1A.  Risk Factors

14Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds

14Item 3.     Defaults Upon Senior Securities

14Item 4.     (Removed and Reserved)

14Item 5.     Other Information

14Item 6.     Exhibits

15SIGNATURES

16








Table of Contents




PART I - FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSRIDGEWOOD ENERGY L FUND, LLCUNAUDITED CONDENSED BALANCE SHEETS(in thousands, except share data)March 31, 2010


December 31, 2009ASSETSCurrent assets:Cash and cash equivalents

$
1,972


$
1,947Production receivable


128



155Other current assets


15



27Total current assets


2,115



2,129Salvage fund


1,228



1,221Oil and gas properties:Proved properties


8,637



8,637Less: accumulated depletion and amortization


(3,312
)


(3,119
)Total oil and gas properties, net


5,325



5,518Total assets

$
8,668


$
8,868LIABILITIES AND MEMBERS' CAPITALCurrent liabilities:Due to operators

$
432


$
360Asset retirement obligations


354



449Accrued expenses


189



184Total current liabilities


975



993Asset retirement obligations


803



799Total liabilities


1,778



1,792Commitments and contingencies (Note 8)Members' capital:Manager:Distributions


(2,386
)


(2,345
)Retained earnings


1,596



1,557Manager's total


(790
)


(788
)Shareholders:Capital contributions (670 shares authorized;

350.1081 issued and outstanding)


51,401



51,401Syndication costs


(5,502
)


(5,502
)Distributions


(13,520
)


(13,287
)Accumulated deficit


(24,699
)


(24,748
)Shareholders' total


7,680



7,864Total members' capital


6,890



7,076Total liabilities and members' capital

$
8,668


$
8,868




The accompanying notes are an integral part of these unaudited condensed financial statements.




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RIDGEWOOD ENERGY L FUND, LLCUNAUDITED CONDENSED STATEMENTS OF OPERATIONS(in thousands, except per share data)Three months ended March 31,2010


2009RevenueOil and gas revenue

$
408


$
763ExpensesDepletion and amortization


193



731Impairment of proved properties


-



516Operating expenses


73



74General and administrative expenses


61



74Total expenses


327



1,395Income (loss) from operations


81



(632
)Other incomeInterest income


7



16Net income (loss)

$
88


$
(616
)Manager InterestNet income

$
39


$
81Shareholder InterestNet income (loss)

$
49


$
(697
)Net income (loss) per share

$
140


$
(1,991
)




The accompanying notes are an integral part of these unaudited condensed financial statements.




2
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RIDGEWOOD ENERGY L FUND, LLCUNAUDITED CONDENSED STATEMENTS OF CASH FLOWS(in thousands)Three months ended March 31,2010


2009Cash flows from operating activitiesNet income (loss)

$
88


$
(616
)Adjustments to reconcile net income (loss) to net cash

provided by operating activities:Depletion and amortization


193



731Impairment of proved property


-



516Settlement of asset retirement obligation


(95
)


(47
)Accretion expense


4



3Changes in assets and liabilities:Decrease (increase) in production receivable


27



(160
)Decrease in other current assets


12



62Increase in due to operators


93



3Increase in accrued expenses


5



2Net cash provided by operating activities


327



494Cash flows from investing activitiesCapital expenditures for oil and gas properties


(21
)


(738
)Salvage fund investments


(7
)


(458
)Net cash used in investing activities


(28
)


(1,196
)Cash flows from financing activitiesDistributions


(274
)


(343
)Net cash used in financing activities


(274
)


(343
)Net increase (decrease) in cash and cash equivalents


25



(1,045
)Cash and cash equivalents, beginning of period


1,947



3,656Cash and cash equivalents, end of period

$
1,972


$
2,611




The accompanying notes are an integral part of these unaudited condensed financial statements.




3
 Table of Contents




RIDGEWOOD ENERGY L FUND, LLC


NOTES TOUNAUDITED CONDENSED FINANCIAL STATEMENTS








1.
Organization and Purpose





The Ridgewood Energy L Fund, LLC (the “Fund”), a Delaware limited liability company, was formed on May 27, 2004 and operates pursuant to a limited liability company agreement (the “LLC Agreement”) dated as of July 6, 2004 by and among Ridgewood Energy Corporation (the “Manager”), and the shareholders of the Fund.  The Fund was organized to 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.  With respect to project investments, the Manager locates potential projects, conducts due diligence, negotiates with operators and completes the transactions in which the investments are made.  The Manager performs, or arranges for the performance of, the management, advisory and administrative services required for Fund operations. Such services include, without limitation, the administration of shareholder accounts, shareholder relations and the preparation, review and dissemination of tax and other financial information.  In addition, the Manager provides office space, equipment and facilities and other services necessary for Fund operations.  The Manager also engages and manages the contractual relations with unaffiliated custodians, depositories, accountants, attorneys, broker-dealers, corporate fiduciaries, insurers, banks and others as required.  See Notes 2, 6 and 8.





2.
Summary of Significant Accounting Policies





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, 2009 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.





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 property balances, determination of proved reserves, impairments and asset retirement obligations.  Actual results may differ from those estimates.




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.  Effective January 1, 2010, the federally insured limits of the Fund’s deposits are $250 thousand per insured financial institution.  At March 31, 2010, the Fund’s balances exceeded federally insured limits by $1.6 million, all of which was invested in money market accounts that invest solely in U.S. Treasury bills and notes.





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, 2010, the Fund had investments in U.S. Treasury securities within its salvage fund that are classified as held-to-maturity, totaling $1.2 million, which mature in December 2010 and February 2012.  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.




4
 Table of Contents




Interest earned on the account will become part of the salvage fund.  There are no restrictions on withdrawals from the salvage fund.





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.





The successful efforts method of accounting for oil and gas producing activities is followed. Acquisition costs are capitalized when incurred.  Other oil and gas exploration costs, excluding the costs of drilling exploratory wells, are charged to expense as incurred.  The costs of drilling exploratory wells are capitalized pending the determination of whether the wells have discovered proved commercial reserves.  If proved commercial reserves have not been found, exploratory drilling costs are expensed to dry-hole expense.  Costs to develop proved reserves, including the costs of all development wells and related facilities and equipment used in the production of oil and gas, are capitalized.  Expenditures for ongoing repairs and maintenance of producing properties are expensed as incurred.





Upon the sale or retirement of a proved property, the cost and related accumulated depletion and amortization will be eliminated from the property accounts, and the resultant gain or loss is recognized.  Upon the sale or retirement of an unproved property, gain or loss on the sale is recognized.





Capitalized acquisition costs of producing oil and gas properties are depleted by the units-of-production method.





At March 31, 2010 and December 31, 2009, amounts recorded in due to operators totaling $0.2 million and $0.3 million, respectively, related to capital expenditures for oil and gas properties.





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 properties.




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, 2010 and the year ended December 31, 2009.





March 31, 2010


December 31, 2009(in thousands)Balance, beginning of period

$
1,248


$
886Liabilities incurred


-



244Liabilities settled


(95
)


-Accretion expense


4



13Revision to prior estimate


-



105Balance, end of period

$
1,157


$
1,248




As indicated above, the Fund maintains a salvage fund to provide for the funding of future asset retirement obligations. Subsequent to the issuance of the Fund’s December 31, 2009 financial statements, the Fund’s management determined that it had incorrectly classified $449 thousand in long term liabilities that should have been classified as current liabilities related to asset retirement obligations expected to be paid by December 31, 2010.  Accordingly, the accompanying December 31, 2009 balance sheet has been corrected to increase current liabilities – asset retirement obligations and total current liabilities by $449 thousand, and decrease noncurrent liabilities by $449 thousand.  There was no impact on the statements of operations or cash flows.





5
 Table of Contents





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


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 collectibility 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


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 producing 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 producing property.  The Fund provides for impairments on unproved properties when it determines that the property will not be developed or that 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.





The Fund did not record any impairments to its oil and gas properties during the three months ended March 31, 2010.  During the three months ended March 31, 2009, the Fund recorded impairments totaling $0.5 million related to Vermilion 344 and South Timbalier 77, as a result of lower oil and gas commodity prices and additional asset retirement obligations, respectively.  The fair value of Vermilion 344 was determined based on level 3 inputs, which include projected income from proved and probable reserves utilizing forward price curves, net of anticipated costs, discounted.





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.  The sum of proved developed and proved undeveloped reserves is used as the base for depleting or amortizing leasehold acquisition costs, the costs to acquire proved properties and platform and pipeline costs.





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


Profits and losses are allocated 85% to shareholders in proportion to their relative capital contributions and 15% to the Manager, except for interest income and certain expenses such as dry-hole costs, trust fees, depletion and amortization, which are allocated 99% to shareholders and 1% to the Manager.


6
 Table of Contents
  3.
Recent Accounting Standards


In January 2010, the Financial Accounting Standards Board (“FASB”) issued guidance on improving disclosures about fair value measurements.  This guidance has new requirements for disclosures related to recurring or nonrecurring fair-value measurements including significant transfers into and out of Level 1 and Level 2 fair-value measurements and information on purchases, sales, issuances, and settlements in a rollforward reconciliation of Level 3 fair-value measurements. This guidance was effective for the Fund beginning January 1, 2010.  The adoption of this guidance did not have a material impact on the Fund’s financial statements.  The Level 3 reconciliation disclosures are effective for fiscal years beginning after December 15, 2010, which will be effective for the Fund December 31, 2011. The adoption of the guidance is not expected to have a material impact on the Fund’s financial statements.





4.
Unproved Properties - Capitalized Exploratory Well Costs





Leasehold acquisition and exploratory drilling costs are capitalized pending determination of whether the well has found proved reserves.  Unproved properties are assessed on a quarterly basis by evaluating and monitoring if sufficient progress is made on assessing the reserves.  At March 31, 2010 and December 31, 2009, the Fund had no unproved properties.





Capitalized exploratory well costs are expensed as dry-hole costs in the event that reserves are not found or are not in sufficient quantities to complete the well and develop the field.  At times, the Fund receives credits on certain wells from their respective operators upon review and audit of the wells’ costs.  There were no dry-hole costs for the three months ended March 31, 2010 and 2009.





5.
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.





6.
Related Parties





Effective September 1, 2007 and continuing for the remaining life of the Fund, the Manager elected to waive its management fee.  Upon the waiver of the management fee, the Fund began recording costs relating to services provided by the Manager for accounting and investor relations.  Such costs, totaling $20 thousand for each of the three months ended March 31, 2010 and 2009, respectively, were included in general and administrative expenses.





At times, short-term payables and receivables, which do not bear interest, arise from transactions with affiliates in the ordinary course of business.





None of the compensation paid to the Manager has been derived as a result of arm’s length negotiations.





The Fund has working interest ownership in certain projects to acquire and develop oil and natural gas projects with other entities that are likewise managed by the Manager.





7.
Fair Value Measurements





At March 31, 2010 and December 31, 2009, cash and cash equivalents, production receivable, salvage fund and accrued expenses approximate fair value.




7
 Table of Contents




8.
Commitments and Contingencies





Capital Commitments


The Fund has entered into multiple agreements for the drilling and development of its investment properties. The estimated capital expenditures associated with these agreements vary depending on the stage of development on a property-by-property basis. At March 31, 2010, the Fund has commitments of $1.6 million that exceed, by $0.4 million, its current available working capital of $1.1 million.  Based upon its current reserve estimates, the Fund expects cash flow from operations to be sufficient to cover these deficiencies, as well as 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.  In the event of a temporary production stoppage, causing the Fund’s wells to not produce cash flow from operations, the Fund may borrow from the Manager until such time that production is resumed.  At such time the Manager determines that the Fund is no longer capable of continuing to fund its operations, the Manager would elect to dissolve the Fund.





Environmental Considerations


The exploration for and development of oil and natural gas involves the extraction, production and transportation of materials which, under certain conditions, can be hazardous or cause environmental pollution problems. 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 and do not currently anticipate that compliance with federal, state and local environmental regulations will have a material adverse effect upon capital expenditures, results of operations or the competitive position of the Fund in the oil and gas industry.  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.  At March 31, 2010 and December 31, 2009, there were no known environmental contingencies that required the Fund to record a liability.





Insurance Coverage


The Fund is subject to all risks inherent in the exploration for and development of oil and natural gas. 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 an adverse impact upon earnings and financial position.  Moreover, insurance is obtained as a package covering all of the funds managed by the Manager.  Claims made by other funds managed by the Manager can reduce or eliminate insurance for the Fund.







9.    Subsequent Events




The Fund has assessed the impact of subsequent events through the date of issuance of its financial statements, and has concluded that there were no such events that require adjustment to, or disclosure in, the notes to the financial statements.











8
 Table of Contents





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 L 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 US 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 conditions affecting the pricing of oil and natural gas, the cost and availability of equipment, and changes in governmental regulations.  Examples of forward-looking statements made herein include statements regarding future projects, investments and insurance.  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





The following discussion and analysis of the Fund’s financial condition and operating results is based on its financial statements.  The preparation of this Quarterly Report requires the Fund to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Fund’s financial statements, and the reported amount of revenue and expense during the reporting period.  Actual results may differ from those estimates and assumptions.  See “Notes to Unaudited Condensed Financial Statements” in Part I of this Quarterly Report for a presentation of the Fund’s significant accounting policies.   No changes have been made to the Fund’s critical accounting policies and estimates disclosed in its 2009 Annual Report on Form 10-K.





Overview of the Fund’s Business





The Fund is a Delaware limited liability company formed on May 27, 2004 to acquire interests in oil and gas properties located in the United States offshore waters of Texas, Louisiana and Alabama in the Gulf of Mexico.  Ridgewood Energy Corporation (“Ridgewood Energy” or the “Manager”) a Delaware corporation, is the Manager. As the Manager, Ridgewood Energy has direct and exclusive control over the management of the Fund’s operations.  The Fund’s primary investment objective is to generate cash flow for distribution to its shareholders by generating returns across a portfolio of exploratory or development stage shallow water or deepwater projects.  However, the Fund is not required to make distributions to shareholders except as provided in the LLC Agreement.





The Manager performs certain duties on the Fund’s behalf including the evaluation of potential projects for investment and ongoing management, administrative and advisory services associated with these projects.  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.





Revenues are subject to market pricing for oil and natural gas, which has been extremely 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.  Low commodity prices could have an adverse affect on the Fund’s future profitability.




9
 Table of Contents




Business Update





Information regarding the Fund’s current projects is provided in the following table.




Total SpentWorking


through

Total EstimatedLease Block

Interest


March 31, 2010

Budget

Status(in thousands)Future and Currently Drilling ProjectsEmerald Project well #2


2.5
%

$
-


$
500

Drilling commenced April 2010.  Results expected 
June 2010.Emerald Project well #3


2.5
%

$
-


$
500

Drilling date to be determined pending results of 
Emerald Project well #2.Producing PropertiesEmerald Project well # 1


2.5
%

$
1,684


$
1,684

Production commenced February 2009.Main Pass 275


10.0
%

$
1,922


$
1,932

Production commenced April 2007.  A minor 
recompletion is currently scheduled for 2011 at an 
estimated cost of $10 thousand.South Marsh Island 111


7.5
%

$
2,081


$
2,306

Production commenced February 2009.  
Recompletion efforts to access behind the pipe 
reserves are expected to commence in 2011 at an 
estimated cost of $0.2 million.West Delta 68


7.5
%

$
1,533


$
1,818

Production commenced July 2008. Recompletion a
ctivities commenced in April 2010 at an estimated 
cost of $21 thousand. An additional recompletion is 
currently scheduled for 2011 at an estimated cost of 
$0.3 million.West Delta 67


7.5
%

$
986


$
1,016

Production commenced July 2008. Recompletion

activities commenced in April 2010 at an

estimated cost of $15 thousand. An additional

recompletion is currently scheduled for 2011 at an

estimated cost of $15 thousand.





10
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Results of Operations


The following table summarizes the Fund’s results of operations for the three months ended March 31, 2010 and 2009 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 March 31,2010


2009(in thousands)RevenueOil and gas revenue

$
408


$
763ExpensesDepletion and amortization


193



731Impairment of proved properties


-



516Operating expenses


73



74General and administrative expenses


61



74Total expenses


327



1,395Income (loss) from operations


81



(632
)Other incomeInterest income


7



16Net income (loss)

$
88


$
(616
)


Overview.During the three months ended March 31 2010, the Fund had five producing wells; Main Pass 275 commenced production during 2007, West Delta 67 and West Delta 68 commenced production during 2008 and South Marsh Island 111 and the Emerald Project commenced production in February 2009.  During the three months ended March 31, 2009, the Fund had two additional producing wells, Eugene Island 337 and Vermilion 344, both of which were determined to be fully depleted at December 31, 2009.





Oil and Gas Revenue.Oil and gas revenue for the three months ended March 31, 2010 was $0.4 million, a $0.4 million decrease from the three months ended March 31, 2009.  The decrease is attributable to a decrease in sales volumes totaling $0.5 million offset by the impact of increased average prices totaling $0.1 million.





Oil sales volumes were 1 thousand barrels and 3 thousand barrels for the three months ended March 31, 2010 and 2009, respectively.  The Fund’s oil prices averaged $75 per barrel and $38 per barrel during the three months ended March 31, 2010 and 2009, respectively.





Gas sales volumes were 55 thousand mcf and 147 thousand mcf for the three months ended March 31, 2010 and 2009, respectively.  The Fund’s gas prices averaged $5.22 per mcf and $4.41 per mcf during the three months ended March 31, 2010 and 2009, respectively.





The decrease in oil and gas volumes was primarily attributable to decreased production rates for the Fund’s wells due to natural declines in production, and to Eugene Island 337 and Vermilion 344, which were fully depleted at December 31, 2009.  These decreases were partially offset by an increase in the number of production days due to the onset of production of South Marsh Island 111 and the Emerald Project in February 2009.





Depletion and Amortization.  Depletion and amortization for the three months ended March 31, 2010 was $0.2 million, a decrease of $0.5 million from the three months ended March 31, 2009.  The decrease resulted from a decrease in production volumes totaling $0.5 million coupled with a decrease in average depletion rates totaling $0.1 million.  The decrease in depletion rates was primarily the result of the composite of productive wells coupled with revisions to reserve estimates.





Impairment of Proved Properties.  The Fund did not record any impairments to proved properties during the three months ended March 31, 2010.  During the three months ended March 31, 2009, the Fund recorded impairments totaling $0.5 million related to Vermilion 344 and South Timbalier 77, as a result of lower oil and gas commodity prices and additional retirement obligations, respectively.




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Operating Expenses.  Operating expenses include the costs of operating and maintaining wells and related facilities and accretion expense, as detailed in the following table.




Three months ended March 31,2010


2009(in thousands)Lease operating expense

$
69


$
71Accretion


4



3$
73


$
74


Lease operating expense for the three months ended March 31, 2010 and 2009 related to the Fund’s producing properties during each period as outlined above in “Overview”.  For the three months ended March 31, 2010, average production cost was $1.17 per mcfe compared to $0.42 per mcfe for the three months ended March 31, 2009.  Accretion expense is related to the asset retirement obligations established for the Fund’s proved properties.





General and Administrative Expenses.General and administrative expenses represent costs specifically identifiable or allocable to the Fund as detailed in the following table.




Three months ended March 31,2010


2009(in thousands)Accounting fees

$
30


$
32Management reimbursement and other


20



22Insurance expense


11



20$
61


$
74


Accounting fees represent audit and tax preparation fees, quarterly reviews and filing fees incurred by the Fund.  Management reimbursement and other expenses relate primarily to reimbursements for various administrative costs incurred on the Fund’s behalf.  Insurance expense represents premiums related to producing well and control of well insurance, which varies dependent upon the number of wells producing or drilling, and directors’ and officers’ liability insurance.





Interest Income.  Interest income is comprised of interest earned on money market accounts and investments in U.S. Treasury securities within the Fund’s salvage fund.  Interest income for the three months ended March 31, 2010 was $7 thousand, a $9 thousand decrease from the three months ended March 31, 2009.  The decrease was a result of a reduction in average outstanding balances earning interest coupled with lower interest rates earned.





Capital Resources and Liquidity





Operating Cash Flows


Cash flows provided by operating activities for the three months ended March 31, 2010 were $0.3 million, primarily related to revenue received of $0.4 million and favorable working capital of $0.1 million, partially offset by operating expenses of $0.1 million, general and administrative expenses of $0.1 million and the settlement of asset retirement obligations of $0.1 million.





Cash flows provided by operating activities for the three months ended March 31, 2009 were $0.5 million, primarily related to revenue received of $0.6 million and favorable working capital of $0.1 million, partially offset by operating expenses of $0.1 million and general and administrative expenses of $0.1 million.





Investing Cash Flows


Cash flows used in investing activities for the three months ended March 31, 2010 were $28 thousand, primarily related to capital expenditures for oil and gas properties.





Cash flows used in investing activities for the three months ended March 31, 2009 were $1.2 million, primarily related to capital expenditures for oil and gas properties of $0.7 million and salvage fund investments of $0.5 million.




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Financing Cash Flows


Cash flows used in financing activities for the three months ended March 31, 2010 were $0.3 million, related to manager and shareholder distributions.





Cash flows used in financing activities for the three months ended March 31, 2009 were $0.3 million, related to manager and shareholder distributions.




Estimated Capital Expenditures





The Fund has entered into multiple agreements for the drilling and development of its investment properties.  The estimated capital expenditures associated with these agreements can vary depending on the stage of development on a property-by-property basis.  As of March 31, 2010, the Fund had committed to spend an additional $1.6 million related to its investment properties, of which $0.7 million is expected to be incurred during the next twelve months.





When the Manager makes a decision to participate in an exploratory project, it assumes that the well will be successful and allocates enough capital to budget for the completion of that well and the additional development wells and infrastructure anticipated.  If an exploratory well is deemed a dry hole or if it is determined to be un-economical, the capital allocated to the completion of that well and to the development of additional wells is then reallocated to a new project or used to make additional investments.





Capital expenditures for investment properties are funded with the capital raised by the Fund in its private placement offering, which is all the capital it will obtain.  The number of projects in which the Fund can invest will naturally be limited and each unsuccessful project the Fund experiences reduces its ability to generate revenue and exhaust its capital.  Typically, the Manager seeks an investment portfolio that combines high and low risk exploratory projects.





Liquidity Needs





The Fund’s primary short-term liquidity needs are to fund its operations, inclusive of capital expenditures for its investment properties.  Operations are funded utilizing operating income, existing cash on-hand and income earned therefrom. At March 31, 2010, the Fund has commitments of $1.6 million that exceed, by $0.4 million, its current available working capital of $1.1 million.  Based upon its current reserve estimates, the Fund expects cash flow from operations to be sufficient to cover these deficiencies, as well as 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.  In the event of a temporary production stoppage, causing the Fund’s wells to not produce cash flow from operations, the Fund may borrow from the Manager until such time that production is resumed.  At such time the Manager determines that the Fund is no longer capable of continuing to fund its operations, the Manager would elect to dissolve the Fund.





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.





Off-Balance Sheet Arrangements





The Fund had no off-balance sheet arrangements at March 31, 2010 and December 31, 2009 and does not anticipate the use of such arrangements in the future.





Contractual Obligations





The Fund enters into participation and 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 any contracts. No contractual obligations exist at March 31, 2010 and December 31, 2009 other than those discussed in “Estimated Capital Expenditures” above.





Recent Accounting Pronouncements





See Note 3 of Notes to Unaudited Condensed Financial Statements – “Recent Accounting Standards” contained in this Quarterly Report for a discussion of recent accounting pronouncements.





ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Not required.




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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 March 31, 2010.





There has been no change in the Fund’s internal control over financial reporting that occurred during the three months ended March 31, 2010 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





On August 16, 2006, the Manager of the Fund filed a lawsuit against the former independent registered public accounting firm for the Fund, Perelson Weiner, LLP (“Perelson”), in New Jersey Superior Court, captioned Ridgewood Energy Corporation v. Perelson Weiner, LLP, Docket No. L-6092-06.  The suit alleged professional malpractice and breach of contract in connection with audit and accounting services performed for the Fund by Perelson.  Thereafter, Perelson filed a counterclaim against the Manager on October 20, 2006, alleging breach of contract due to unpaid invoices in the amount of $326,554.  Discovery is ongoing and a trial date is currently scheduled for May 2010.  Legal costs related to this claim are borne by the Manager.





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. (REMOVEDAND RESERVED)





ITEM 5. OTHER INFORMATION





None.






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ITEM 6. EXHIBITS







EXHIBITNUMBER

TITLE OF EXHIBIT

METHOD OF FILING31.1

Certification of Robert E. Swanson, Chief Executive Officer of the Fund, pursuant to Securities Exchange Act Rule 13a-14(a)

Filed herewith31.2

Certification of Kathleen P. McSherry, Chief Financial Officer of the Fund, pursuant to Securities Exchange Act Rule 13a-14(a)

Filed herewith32

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, Chief Financial Officer of the Fund

Filed herewith
      15
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SIGNATURES







Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





RIDGEWOOD ENERGY L FUND, LLCDated:
May 7, 2010
By:
/s/


ROBERT E. SWANSONName:


Robert E. SwansonTitle:


Chief Executive Officer(Principal Executive Officer)Dated:
May 7, 2010
By:
/s/


KATHLEEN P. MCSHERRYName:


Kathleen P. McSherryTitle:


Executive Vice President and Chief Financial Officer(Principal Financial Officer)