Attached files

file filename
8-K/A - FORM 8-K/A - QUALITY DISTRIBUTION INCd382598d8ka.htm
EX-99.2 - AUDITED STATEMENT OF FINANCIAL POSITION OF RM RESOURCES - QUALITY DISTRIBUTION INCd382598dex992.htm
EX-99.5 - UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION - QUALITY DISTRIBUTION INCd382598dex995.htm
EX-23.1 - CONSENT OF INDEPENDENT - QUALITY DISTRIBUTION INCd382598dex231.htm
EX-99.3 - UNAUDITED INTERIM FINANCIAL STATEMENTS FOR WYLIE BICE TRUCKING - QUALITY DISTRIBUTION INCd382598dex993.htm
EX-99.1 - AUDITED STATEMENT OF FINANCIAL POSITION OF WYLIE BICE TRUCKING - QUALITY DISTRIBUTION INCd382598dex991.htm

Exhibit 99.4

RM Resources, LLC

Unaudited Financial Statements

March 31, 2012


RM Resources, LLC

Index

March 31, 2012

 

 

     Page(s)  

Financial Statements (Unaudited)

  

Statements of Financial Position

     2   

Statements of Operations

     3   

Statements of Cash Flows

     4   

Notes to Financial Statements

     5–7   


RM Resources, LLC

Statements of Financial Position

March 31, 2012 and December 31, 2011 (Unaudited)

 

 

(in thousands)    March 31, 2012      December 31, 2011  

Assets

     

Current assets

     

Cash and cash equivalents

   $ 2,220       $ 1,605   

Accounts receivable, net

     1,787         1,989   

Other

     47         47   
  

 

 

    

 

 

 

Total current assets

     4,054         3,641   

Property and equipment, net

     4,376         4,139   

Other assets

     121         121   
  

 

 

    

 

 

 

Total assets

   $ 8,551       $ 7,901   
  

 

 

    

 

 

 

Liabilities and Members’ Equity

     

Current liabilities

     

Accounts payable

   $ 719       $ 469   
  

 

 

    

 

 

 

Total current liabilities

     719         469   

Asset retirement obligations

     555         550   
  

 

 

    

 

 

 

Total liabilities

     1,274         1,019   
  

 

 

    

 

 

 

Members’ Equity

     7,277         6,882   
  

 

 

    

 

 

 

Total liabilities and members’ equity

   $ 8,551       $ 7,901   
  

 

 

    

 

 

 

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

 

2


RM Resources, LLC

Statements of Operations

Three Months Ended March 31, 2012 and 2011 (Unaudited)

 

 

     Three Months Ended  
(in thousands)    March 31,  
     2012     2011  

Operating revenues

    

Service revenues

   $ 1,381      $ 1,396   
  

 

 

   

 

 

 

Total operating revenues

     1,381        1,396   
  

 

 

   

 

 

 

Operating expenses

    

Fuel, supplies and maintenance

     378        274   

Depreciation and amortization

     76        42   

Selling and administrative

     325        248   

Insurance costs

     18        8   

Communication and utilities

     35        25   
  

 

 

   

 

 

 

Total operating expenses

     832        597   
  

 

 

   

 

 

 

Operating income

     549        799   

Other income

     (1     —     

Interest expense

     5        4   
  

 

 

   

 

 

 

Net income

   $ 545      $ 795   
  

 

 

   

 

 

 

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

 

3


RM Resources, LLC

Statements of Cash Flows

Three Months Ended March 31, 2012 and 2011 (Unaudited)

 

 

(in thousands)    Three Months Ended
March 31,
 
     2012     2011  

Cash flows from operating activities

    

Net income

   $ 545      $ 796   

Adjustments to reconcile net income to net cash provided by operating activities

    

Depreciation and amortization

     76        42   

Changes in assets and liabilities

    

Accounts receivables

     203        266   

Accounts payable

     249        172   

Asset retirement obligations

     5        4   
  

 

 

   

 

 

 

Net cash provided by operating activities

     1,078        1,280   
  

 

 

   

 

 

 

Cash flows from investing activities

    

Capital expenditures

     (313     (540
  

 

 

   

 

 

 

Net cash used in investing activities

     (313     (540
  

 

 

   

 

 

 

Cash flows from financing activities

    

Member distributions

     (150     (680
  

 

 

   

 

 

 

Net cash used in financing activities

     (150     (680
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     615        60   

Cash and cash equivalents

    

Beginning of period

     1,605        688   
  

 

 

   

 

 

 

End of period

   $ 2,220      $ 748   
  

 

 

   

 

 

 

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

 

4


RM Resources, LLC

Notes to Financial Statements (Unaudited)

March 31, 2012

 

 

1. Nature of Business and Operations

RM Resources, LLC, located in Medora, North Dakota, (the “Company” or “RM”), operates four salt water injection disposal wells within the Bakken Shale. All four of the wells are considered to be Type II wells in accordance with the Environmental Protection Agency (“EPA”) Title 40 Regulation. Type II wells inject nonhazardous fluids associated with oil and natural gas production. Most of the injected fluid is salt water (brine), which is brought to the surface in the process of producing (extracting) oil and gas. In addition, brine and other fluids are injected to enhance (improve) oil and gas production.

The Company is owned by three members, each with equal interests, rights, preferences and privileges.

 

2. General

The financial statements presented herein have been prepared in conformity with accounting principles generally accepted in the United States of America and should be read in conjunction with the audited 2011 financial statements. In the opinion of management, these financial statements contain all adjustments, consisting of only normal reoccurring adjustments, that are deemed necessary for fair presentation.

 

3. Service Revenues

The components of service revenues are as follows for the three months ended March 31 (in thousands):

 

     2012      2011  
     (unaudited)  

Water revenue

   $ 1,365       $ 1,304   

Junk oil revenue

     16         92   
  

 

 

    

 

 

 
   $ 1,381       $ 1,396   
  

 

 

    

 

 

 

 

4. Accounts Receivable

Accounts receivable consisted of the following at (in thousands):

 

     March 31, 2012     December 31, 2011  
     (unaudited)  

Trade accounts receivable

   $ 1,802      $ 2,004   

Less: Allowance for doubtful accounts

     (15     (15
  

 

 

   

 

 

 
   $ 1,787      $ 1,989   
  

 

 

   

 

 

 

 

5


RM Resources, LLC

Notes to Financial Statements (Unaudited)

March 31, 2012

 

 

The activity in the allowance for doubtful accounts is as follows (in thousands):

 

Balance at December 31, 2010

     —     

Adjustment to bad debt expense

     (15

Write-offs, net of recoveries

     —     
  

 

 

 

Balance at December 31, 2011

     (15

Adjustment to bad debt expense

     —     

Write-offs, net of recoveries

     —     
  

 

 

 

Balance at March 31, 2012 (unaudited)

   $ (15
  

 

 

 

 

5. Property and Equipment

Property and equipment consisted of the following at (in thousands):

 

     March 31, 2012     December 31, 2011  
     (unaudited)        

Disposal wells and improvements

   $ 4,934      $ 4,621   

Accumulated depreciation

     (558     (482
  

 

 

   

 

 

 

Property and equipment, net

   $ 4,376      $ 4,139   
  

 

 

   

 

 

 

Depreciation expense was approximately $0.08 million and $0.04 million for the three months ended March 31, 2012 and 2011, respectively.

 

6. Asset Retirement Obligations

Asset retirement obligations at the Company relate to the costs of future well closings. These costs include equipment, supplies and labor to plug the well and reclaim the property. As of March 31, 2012 and December 31, 2011, the Company has approximately $4.4 million and $4.1 million, respectively, of assets requiring an asset retirement obligation reserve.

The following table presents the rollforward of the asset retirement obligation liability for the three months ended March 31, 2012 (in thousands):

 

Balance at December 31, 2010

     360   

2011 additions

     190   

2011 retirements

     —     
  

 

 

 

Balance at December 31, 2011

     550   

2012 additions

     5   

2012 retirements

     —     
  

 

 

 

Balance at March 31, 2012 (unaudited)

   $ 555   
  

 

 

 

 

6


RM Resources, LLC

Notes to Financial Statements (Unaudited)

March 31, 2012

 

 

7. Transactions With Related Parties

During the three month periods ended March 31, 2012 and 2011, the Company recognized approximately $1.2 million and $0.2 million, respectively, of revenues from Wylie Bice Trucking, LLC (“WBT”), whose owner is also 33% member in RM Resources. Of this total, approximately, $0.7 million and $0.04 million was included in accounts receivable as of March 31, 2012 and March 31, 2011, respectively. The revenue was generated as WBT injected flowback and production water into disposal wells owned by the Company.

During the three months ended March 31, 2012, the Company paid approximately $0.1 million in management fees to Rodne Consulting, LLC (“RC”), which is owned by Dean Rodne, a 33% member in the Company.

 

8. Commitments and Contingencies

Litigation

The Company is involved in various legal proceedings that have arisen in the ordinary course of business. In the opinion of the Company’s management, all such proceedings are adequately covered by insurance or, if not so covered, should not materially result in any liability which would have a material adverse effect on the financial position, results of operations or cash flows of the Company.

 

9. Subsequent Events

On May 7, 2012, the Company’s members entered into an asset purchase agreement with QC Environmental Services, Inc. to sell the operating assets and rights of the Company for $31.7 million, plus potential additional consideration of $7.6 million if certain future operating and performance criteria are satisfied. On June 1, 2012, this sale was consummated for an adjusted purchase price of $31.4 million.

The North Dakota Industrial Commission (NDIC) Oil & Gas Division issued rule changes to the regulations established over drilling and production of oil which became effective April 1, 2012. In these rule changes, it was noted that rule # 43-02-03-19.5 prohibited the use of a reserve pit on most wells unless the wells drilled above the depth of 5,000 feet or for disposal wells in the Dakota Group formation.

One of RM Resources primary revenue streams is pit disposal water. The prohibition of disposal reserve pits at well sites will reduce the number of barrels being disposed. The Company does not expect a significant decline in disposal revenues as the wells are still viable for disposal of other types of disposal water such as production, chemical, and flow-back water.

 

7