(14)HOURGLASS SANDS

In February 2018, we invested $4 million in Hourglass Sands, LLC (Hourglass), a permitted frac sand mining company in the State of Colorado. We own 100% of the Class A units and are consolidating the activity of Hourglass in these statements. Class A units are entitled to 100% of profit until our capital investment and interest is returned, then 90% of profits are allocated to us with remainder to Class B units. We do not own any Class B units.

In February 2018, a Yorktown company associated with one of our directors also invested $4 million in Hourglass in return for a royalty interest in Hourglass. This investment coupled with our $4 million investment brings the initial capitalization of Hourglass to $8 million. We report the royalty interest as a redeemable noncontrolling interest in the consolidated balance sheets. A representative of the Yorktown company holds a seat on the board of managers, and, with a change of control, the Yorktown company may be entitled to receive a portion of the net proceeds realized, as prescribed in the Hourglass operating agreement.

Below is a condensed Hourglass balance sheet as of September 30, 2019 and December 31, 2018 and a condensed statement of operations for the nine and three months ended September 30, 2019 and 2018. Current assets include cash totaling $1.6 million and sand inventory totaling $1.6 million as of September 30, 2019. Current assets include cash totaling $2.9 million and sand inventory totaling $1.3 million as of December 31, 2018.

Expenses are included in operating costs and expenses, exploration costs, and SG&A in our consolidated statements of comprehensive income.

Condensed Balance Sheet


	September 30,		December 31,
	2019		2018
Current assets	$	3,357	$	4,241
Property and equipment		3,049		3,092
Total assets	$	6,406	$	7,333

Total liabilities	$	13	$	502
Redeemable noncontrolling interests		4,000		4,000
Members' equity		2,393		2,831
Total liabilities and equity	$	6,406	$	7,333

Condensed Statement of Operations


	Nine Months Ended				Three Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Revenue	$	191	$	36	$	86	$	36
Expenses		629		907		133		350
Net loss	$	(438)	$	(871)	$	(47)	$	(314)