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Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 15, 2013

 

 

Enduro Royalty Trust

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   1-35333   45-6259461

(State or other jurisdiction

of incorporation)

  

(Commission

File Number)

  

(IRS Employer

Identification No.)

The Bank of New York Mellon Trust Company, N.A., Trustee

Global Corporate Trust

919 Congress Avenue

Austin, Texas

   78701
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (800) 852-1422

Not Applicable

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 7.01 Regulation FD

Enduro Resource Partners LLC (“Enduro”), which is the sponsor of Enduro Royalty Trust (the “Trust”), has prepared a presentation titled “Enduro Royalty Trust Investor Update” and intends to post the presentation to the Trust’s website after the Trust issues its February 15, 2013 press release announcing the distribution payable in March 2013. A copy of the presentation is furnished as Exhibit 99.1.

The information included in Item 7.01 of this report, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

Item 9.01 Financial Statements and Exhibits.

 

  (d) Exhibits.

Exhibit 99.1         Enduro Royalty Trust Investor Presentation dated February 2013.

 

-2-

SIGNATURES

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 hereunto duly authorized.

 

    Enduro Royalty Trust
    By:   The Bank of New York Mellon Trust Company, N.A., as Trustee
Date: February 15, 2013   By:  

/s/ Mike Ulrich

    Mike Ulrich
    Vice President

 

-3-

EXHIBIT INDEX

 

Exhibit

   

Description

99.1    Enduro Royalty Trust Investor Presentation dated February 2013.

 

-4-

EX-99.1
Enduro Royalty Trust
Investor Update
February 2013
Exhibit 99.1

Forward-Looking Statements
2
•
risks associated with the drilling and operation of oil and natural gas wells;
•
the amount of future direct operating expenses and development expenses;
•
the effect of existing and future laws and regulatory actions;
•
the effect of changes in commodity prices or alternative fuel prices;
•
the impact of hedge contracts;
•
conditions in the capital markets;
•
competition from others in the energy industry;
•
uncertainty of estimates of oil and natural gas reserves and production; 
•
uncertainty of unrisked reserves and nonproven reserve potential; and
•
cost inflation.
This presentation includes “forward-looking statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All
statements other than statements of historical fact included in this presentation, including without limitation all
statements regarding the financial position, business strategy, production and reserve growth, and other plans and
objectives for the future operations of the Trust and Enduro are forward-looking statements. Such statements may be
influenced by factors that could cause actual outcomes and results to differ materially from those projected. No
assurance can be given that such expectations will prove to have been correct. The following important factors could
affect the future results of the energy industry in general, and Enduro and the Trust in particular, and could cause
actual results to differ materially from those expressed in such forward-looking statements:
You should not place undue reliance on these forward-looking statements. All forward-looking
statements speak only as of the date of this presentation.  The information in this presentation is provided by the
sponsor of the Trust, Enduro Resource Partners LLC.  More information about factors that potentially could affect the
Trust’s financial results is included in the Trust’s filings with the Securities and Exchange Commission, including its
most recent Annual Report on Form 10-K and any subsequent filings.

Enduro’s 2013 budget adds value
3
•
2013 capital budget is expected to have over a 30% IRR
•
The capital budget is primarily oil
•
The budget is expected to grow oil production by 6% while still distributing
significant cash flow to unitholders
•
These types of projects maintain a healthy trust for the future

•
Since its IPO in November 2011, Enduro Royalty Trust’s cumulative distributions
total $2.34, or an average of over $0.145 per month, 7% higher than S-1 estimates.
•
Enduro expects continued oil projects in the Permian to contribute to strong oil
production in 2013.
Production outperformance has led to strong distributions
4

Enduro’s oil production has exceeded forecast
5
Actual Oil Production
S-1 Oil Forecast

Oil production is expected to continue to outperform
6
•
Through a combination of Permian Basin drilling projects in 2013, oil production is
expected to increase by 6% from the 4    quarter of 2012 to the 4    quarter of 2013
•
Permian Basin projects are what will continue to strengthen the oil base of Enduro
Royalty Trust for years to come
th
th

7
•
Oil revenues represented 75% of the revenue
attributable to the Underlying Properties in 2012
•
Continuing to invest in the oil base will yield long-term
benefits for the Trust
•
2013
capital
is
expected
to
be
$22
-
$24
million,
focused
on
projects
in
the
Permian
Basin
($18
-
$19
million
net
to
the Trust’s 80% NPI)
•
Certain oil projects began in December 2012, as
represented in the $3.25 million capital incurred for the
Underlying Properties announced in February 2013
•
2013
capital
is
concentrated
in
the
1 
&
4    Quarters
2013 capital program focused on oil projects makes sense
2012 Revenues
2013 Capital Budget
December 2012 & Q1 2013 Capital
th
st

High impact growth projects beginning in Q1 2013
8
•
Enduro has received proposals from several operators for projects that began in
Q1 2013
•
Significant projects during 2013 include Lost Tank and Harper Devonian field
development
Project
Description
Operator
Area
2013 Anticipated
Capital
Expenditure
($000's)
Expected
Net IP
(BOE/D)
Bootes 15 Fed Com 1H
Drill & Complete
Devon
Permian - SE NM
825
$                         
35
               
Lost Tank 4 Fed 22
Drill & Complete
Occidental
Permian - SE NM
2,050
                        
150
             
Lost Tank 4 Fed 23
Drill & Complete
Occidental
Permian - SE NM
2,300
                        
150
             
Lost Tank 3 Fed 26Y
Drill & Complete
Occidental
Permian - SE NM
2,750
                        
150
             
Lost Tank 3 Fed 27
Drill & Complete
Occidental
Permian - SE NM
2,750
                        
150
             
Harper Devonian U 614
Drill & Complete
Occidental
Permian - West Texas
285
                           
15
               
Harper Devonian U 711
Drill & Complete
Occidental
Permian - West Texas
287
                           
15
               

History of Lost Tank Field
•
Lost Tank Field is a premier oil field in the southeastern New Mexico portion of the Permian
Basin
•
Enduro
acquired
the
Lost
Tank
Field
from
a
major
in
January
2011
at
which
time
the
field
was producing 544 BOE/D net
•
Lost Tank is operated by Occidental Petroleum
•
The field has been productive from the Brushy Canyon and the Wolfcamp formations
•
Current production in the field is 750 BOE/D net to the Underlying Properties
•
The
field
has
contributed
$11
million
of
net
profits
during
2012
to
the
Underlying
Properties
Enduro’s ownership is a 50% working
interest and appears in yellow
9

Royalty Trust Properties
Lost Tank Field –
Wolfcamp Development Plan
10

Development has been a big success at Lost Tank
•
There has been an ongoing program of drilling in the field
•
The Trust has benefited from this development
•
2010 and 2011 drilling activity focused on development of the Brushy Canyon member of the
Delaware formation
•
Drilled 20 wells in the field in 2010 for $24 million
•
Producing rate more than doubled to 1,100 BOE/D
•
Occidental is an aggressive and experienced operator
11

Lost Tank production is starting to grow
•
Drilling activity is focused on continued development of the Wolfcamp formation
•
2 wells currently produce from the Wolfcamp making 215 BOE/D net
•
2 of the 4 wells will complete drilling in Q1 2013 at a total capital cost of $7.3 million net to the
Underlying Properties, which includes capital spent in December 2012
•
Single Wolfcamp wells in the area have exhibited initial producing rates of 235 BOE/D net to
the Underlying Properties
•
Enduro is excited about this development
12
•
An
additional
4
wells
have
been
approved
by
Enduro
for
development
of
the
Wolfcamp
in
2013

2013 Development Plan Effects
•
Drilling 4 wells in Q1 and Q4 will cost an estimated $12.8 million
•
Drilled and completed 2 wells in Q4 2012 and Q1 2013 for $7.3 million net
•
Expected uplift to start in February 2013 at 300 to 350 BOE/D
•
Capital expenditures in Lost Tank will impact the Trust distribution
•
December 2012 by approximately $0.07 per unit
•
January 2013 by approximately $0.085 per unit
•
Expect the next 2 wells to be drilled in the 4  
Quarter of 2013
•
Increased production in Lost Tank should have a long-lasting and positive impact
on the distribution
13
th

Underlying Properties
14
Harper Devonian Unit
Structure Top Devonian

Harper Devonian Unit
•
Harper Devonian Unit is a legacy oil field in West Texas and Enduro owns an 8.3% working
interest
•
Enduro acquired the unit from a major in January 2011 at which time the field was
producing less than 10 BOE/D
•
Harper Devonian Unit is operated by Occidental Petroleum
•
The field has been increasing in production since Enduro acquired it
•
Current production in the field is 25 BOE/D net to the Underlying Properties
15

•
Drilling 2 new wells will cost an estimated $0.6 million
•
Drilled 1 well already for $0.2 million in January 2013
•
Expected uplift to start in February and March 2013 at 20 to 30 BOE/D net to
the Underlying Properties
•
Enduro expects that there may be future potential in this field
16
Harper Devonian Unit 2013 Development Plan Effects

Summary
17
•
2013 capital budget is focused on oil
•
Enduro expects 6% oil production growth in 2013 while still generating
significant cash flow
•
The
combination
of
long
life
properties
and
development
projects
help to
maintain the Trust’s distribution for the future
•
Growing production bodes well for the Trust in 2014, 2015 and beyond