RIDGEWOOD ENERGY Y FUND LLC Annual Report – A Deeper Dive for Investors

For investors tracking RIDGEWOOD ENERGY Y FUND LLC, this guide cuts through the complexity of its 2025 SEC 10-K filing. We aim to provide a clear, comprehensive picture, highlighting key operational and financial aspects and clarifying the fund's evolving strategy.

Business Overview

RIDGEWOOD ENERGY Y FUND LLC invests in offshore oil and natural gas properties in the U.S. Gulf of America (off Texas, Louisiana, and Alabama). The fund acquires "working interests," which means it owns a share of production and revenue, while third-party operators handle the daily drilling and production.

The fund has undergone a fundamental strategic transformation. After fully investing its initial capital, RIDGEWOOD ENERGY Y FUND LLC will no longer invest in new oil and gas projects. This marks a significant shift: the fund is now focused solely on managing, optimizing, and ultimately harvesting value from its existing assets. Investors should understand this means the fund is in a "harvest" or "liquidation" phase, not a growth phase.

As of year-end 2025, the fund held interests in:

• 10 gross productive oil and natural gas wells (approximately 0.14 net wells), all producing both oil and natural gas.
• 40,313 gross developed acres (609 net acres) and 6,124 gross undeveloped acres (58 net acres) in the Gulf of America.

Financial Performance

Manager Compensation Trends: The annual management fee paid to Ridgewood Energy Corporation remained consistent at $0.9 million for both 2025 and 2024. Cash distributions paid to the manager from the fund's operations decreased significantly from $0.5 million in 2024 to $0.3 million in 2025. This decline suggests the fund generated less cash or distributable cash flow in 2025 than in the previous year.

Risk Factors

Investors should note: there is no public market for RIDGEWOOD ENERGY Y FUND LLC shares. This means your investment's value depends on the fund's underlying performance and eventual asset liquidation, not daily stock market fluctuations. Key risks include:

• Commodity Price Volatility: Sustained low prices would severely impact profitability and distributions. Conversely, excessively high prices could negate the Deepwater Royalty Relief benefit.
• Operational Risks & Reliance on Third Parties: Offshore operations, as seen with the Beta Project, face inherent risks like mechanical failures, well integrity issues (e.g., pressure problems), and natural disasters. The fund relies entirely on third-party operators, limiting its control over risk management and operational efficiency.
• Asset Concentration Risk: The fund's portfolio appears concentrated. Issues with the Beta Project, for example, disproportionately impact overall performance.
• Depletion of Reserves: Since the fund will not invest in new projects, its asset base is finite and subject to natural depletion. The fund's value will diminish over time as it produces reserves without replacing them.
• Weather Events: Hurricanes and other severe weather in the Gulf of America can cause significant damage, production shutdowns, and increased costs for operations.
• Regulatory & Environmental Changes: Changes in government regulations—especially those concerning offshore drilling, environmental standards, and royalty structures (like the Deepwater Royalty Relief Act's thresholds)—could increase operating costs, limit production, or impact profitability.
• Geopolitical Instability: Global events can create significant volatility in energy markets, affecting prices and demand.

Management Discussion and Analysis (MD&A) Highlights

Management's discussion highlights key operational challenges and strategic responses for 2025:

• Operational Challenge: The Beta Project: A major setback in 2025 involved the shutdown of two key wells (Well #3 and Well #4) in the "Beta Project" during the third quarter due to pressure issues. The Beta Project appears to be a material asset for the fund, and these shutdowns likely substantially reduced production volumes and cash flow for the year.
• Reduced Cash Flow Indicators: The decrease in distributions to the manager indicates a tougher year for cash generation from the fund's assets, likely exacerbated by the Beta Project issues.
• Future Capital Commitments: The fund faces significant future costs: $1.3 million for further development work on the Beta Project and $1.8 million for future "asset retirement obligations" (ARO)—costs associated with safely decommissioning wells in the Beta Project.
• Opportunities (Conditional): The Beta Project is eligible for "Deepwater Royalty Relief," which exempts certain production volumes from U.S. Government royalties and could save costs. However, this benefit is conditional: it does not apply if oil and natural gas prices exceed specific thresholds, turning into a risk if prices rise too high.
• Operational Remediation Plans: The fund has plans underway to address the shut-in wells in the Beta Project. Recompletion work for Well #4 began in January 2026 and continues, with Well #5 and Well #2 scheduled to follow. The operator is also actively working to bring Well #3 back online. The success and timeline of these efforts are critical for restoring production and cash flow.

Future Outlook

Given its strategic shift away from new investments, the fund's future is now entirely focused on maximizing value from its existing assets and managing their lifecycle.

• Beta Project Remediation: The immediate future's primary focus is the successful remediation and recommissioning of the shut-in wells in the Beta Project. This includes ongoing recompletion work for Well #4, scheduled work for Well #5 and Well #2, and efforts to bring Well #3 back online.
• Expected Costs: The fund anticipates spending an additional $1.3 million on Beta Project development and has earmarked $1.8 million for future asset retirement obligations. It expects to fund these costs from existing resources.
• Value Maximization: With no new investments, the fund's ability to generate cash flow and distributions will depend solely on the successful and efficient operation of its current wells, effective cost management, and favorable market prices for oil and natural gas.