Attached files
file | filename |
---|---|
8-K - CURRENT REPORT ON FORM -K - MAGNUM HUNTER RESOURCES CORP | magnum_8k-102309.htm |
EX-99.1 - PRESS RELEASE - ASSET PURCHASE AGREEMENT - MAGNUM HUNTER RESOURCES CORP | magnum_8k-ex9901.htm |
EX-23.2 - CONSENT - MAGNUM HUNTER RESOURCES CORP | magnum_8k-ex2302.htm |
EX-99.2 - PRESS RELEASE - COMMITMENT LETTER FOR BMO CAPITAL MARKETS - MAGNUM HUNTER RESOURCES CORP | magnum_8k-ex9902.htm |
EX-23.1 - CONSENT - MAGNUM HUNTER RESOURCES CORP | magnum_8k-ex2301.htm |
EX-99.3 - AUDITED FINANCIAL STATEMENTS - MAGNUM HUNTER RESOURCES CORP | magnum_8k-ex9903.htm |
EX-2.1 - ASSET PURCHASE AGREEMENT - MAGNUM HUNTER RESOURCES CORP | magnum_8k-ex0201.htm |
EXHIBIT
99.4
UNAUDITED
PRO FORMA COMBINED FINANCIAL DATA
The following unaudited pro forma
combined financial data are derived from the consolidated financial statements
of the Company and certain historical financial data in respect of various
assets acquired by the Company. The Unaudited Pro Forma Balance Sheet
of the Company as of June 30, 2009 has been prepared assuming the Triad
acquisition and all necessary ancillary transactions had been consummated on
June 30, 2009. The Unaudited Pro Forma Income Statement for the year
ended December 31, 2008 and the six months ended June 30, 2009 have been
prepared assuming the Triad acquisition and all necessary ancillary transactions
had been consummated as of January 1, 2008. The pro forma adjustments set forth
on the attached Unaudited Pro Forma Balance Sheet and Unaudited Pro Forma Income
Statements reflect the following as if they occurred on the dates hereinabove
set forth:
(1)
|
Triad
Acquisition. The Triad acquisition as described in the Asset
Purchase Agreement dated October 28, 2009 (including the issuance of the
Redeemable Convertible Preferred Stock as part of the acquisition price of
Triad).
|
(2)
|
Incurrence
of indebtedness under the New Revolving Credit Facility described in the
commitment letter from Bank of Montreal dated October 23,
2009.
|
(3)
|
Proposed
issuance of common stock as described elsewhere in this
document. These are included because they are a required
condition to move forward and close the
transaction.
|
(4)
|
Proposed
issuance of common stock estimated to occur at or near the closing date of
the Triad Acquisition. These are included because they are a
required condition to move forward and close the
transaction.
|
The Unaudited Pro Forma Balance Sheet
reflects the preliminary allocations of the purchase price for the acquisition
of Triad to the assets and liabilities of the Company. The final allocation of
the purchase price, and the resulting effect on the balance sheet as well as
depreciation and depletion expense in the accompanying Unaudited Pro Forma
Combined Income Statements, may differ based on the actual final allocation of
the purchase price.
The unaudited pro forma combined
financial data should be read in conjunction with the notes thereto and with the
consolidated financial statements of the Company and the notes thereto as filed
in the Company's Form 10-K and Form 10-Q.
The unaudited pro forma combined
financial data are not indicative of the financial position or results of
operations of the Company which would actually have occurred if the transactions
described above had occurred at the dates presented or which may be obtained in
the future. In addition, future results may vary significantly from
the results reflected in such statements due to normal oil and natural gas
production declines, changes in prices paid for oil and natural gas, future
acquisitions, drilling activity and other factors.
1
UNAUDITED
PRO FORMA COMBINED BALANCE SHEET
As of
June 30, 2009
(dollars
in thousands)
Magnum
Hunter
Historical
|
Pro
Forma Adjustments
|
Note
Ref
|
Pro
Forma
|
||||||||||||
ASSETS:
|
|||||||||||||||
Current
Assets
|
|||||||||||||||
Cash
& Equivalents
|
$ | 678 | $ | 4,322 | (6) | $ | 5,000 | ||||||||
Accounts
Receivables
|
1,292 | 3,155 | (1) | 4,447 | |||||||||||
Derivative
Assets
|
1,906 | - | 1,906 | ||||||||||||
Other
Current Assets
|
209 | 901 | (1) | 1,110 | |||||||||||
Total
Current Assets
|
4,085 | 8,378 | 12,463 | ||||||||||||
Property
and Equipment
|
|||||||||||||||
Oil
and natural gas properties, successful efforts accounting
|
|||||||||||||||
Unproved
|
18,200 | 8,896 | (1) | 27,096 | |||||||||||
Proved
Properties, Net
|
31,069 | 61,770 | (1) | 92,839 | |||||||||||
Machinery,
Equipment and Other, net
|
135 | 8,721 | (1) | 8,856 | |||||||||||
Total
Property and Equipment, net
|
49,404 | 79,387 | 128,791 | ||||||||||||
Other
Assets
|
|||||||||||||||
Derivative
Assets
|
2,423 | - | 2,423 | ||||||||||||
Deferred
financing costs, net of amortization
|
992 | 941 | (2) | 1,933 | |||||||||||
Other
Assets
|
10 | 418 | (1) | 428 | |||||||||||
TOTAL
ASSETS
|
$ | 56,914 | $ | 89,124 | $ | 146,038 | |||||||||
LIABILITIES
& EQUITY:
|
|||||||||||||||
Current
Liabilities
|
|||||||||||||||
Accounts
Payable
|
$ | 570 | $ | 1,267 | (1) | $ | 1,837 | ||||||||
Accrued
Liabilities
|
304 | 559 | (1) | 863 | |||||||||||
Distribution
Payable
|
- | 1,716 | (1) | 1,716 | |||||||||||
Other
Current Liabilities
|
945 | 47 | (1) | 992 | |||||||||||
Current
Portion of Equipment Notes
|
867 | (1) | 867 | ||||||||||||
Total
Current Liabilities
|
1,819 | 4,456 | 6,275 | ||||||||||||
Notes
Payable, Revolving Credit Agreement
|
7,500 | 45,525 | (3) | 53,025 | |||||||||||
Notes
Payable, Term Loan
|
15,000 | (15,000 | ) | (3) | - | ||||||||||
Notes
Payable for Equipment, less current portion
|
- | 3,086 | (1) | 3,086 | |||||||||||
Asset
Retirement Obligation
|
1,684 | 134 | (1) | 1,818 | |||||||||||
TOTAL
LIABILITIES
|
26,003 | 38,201 | 64,204 | ||||||||||||
Redeemable
Convertible Preferred Stock
|
- | 15,000 | (1) | 15,000 | |||||||||||
Shareholders
Equity
|
|||||||||||||||
Common
stock, $0.01 par value
|
408 | 200 | (4) | 608 | |||||||||||
Additional
Paid-In-Capital
|
51,983 | 37,365 | (4) | 89,348 | |||||||||||
Accumulated
Deficit
|
(22,750 | ) | (1,642 | ) | (5) | (24,392 | ) | ||||||||
Total
MHR Shareholders' Equity
|
29,641 | 35,923 | 65,564 | ||||||||||||
Minority
Interest
|
1,270 | - | 1,270 | ||||||||||||
Total
Equity
|
30,911 | 35,923 | 66,834 | ||||||||||||
TOTAL
LIABILITIES & EQUITY:
|
$ | 56,914 | $ | 89,124 | $ | 146,038 |
See
accompanying notes to Unaudited Pro Forma Combined Financial
Data
2
UNAUDITED
COMBINED PRO FORMA INCOME STATEMENT
Six
Months Ended June 30, 2009
(dollars
and shares in thousands)
Magnum
Hunter
Historical
|
Triad
Historical
|
Pro
Forma Adjustments
|
Note
Ref
|
Pro
Forma
|
||||||||||||||||
Revenue:
|
||||||||||||||||||||
Oil
and Gas Sales
|
$ | 4,246 | $ | 8,287 | $ | - | $ | 12,533 | ||||||||||||
Field
Operations
|
- | 3,233 | - | 3,233 | ||||||||||||||||
Other
Income
|
200 | 57 | - | 257 | ||||||||||||||||
Gain
(Loss) on Sale
|
- | (20 | ) | - | (20 | ) | ||||||||||||||
Total
Revenue
|
4,446 | 11,557 | - | 16,003 | ||||||||||||||||
Expenses:
|
||||||||||||||||||||
Lease
Operating Expenses
|
2,518 | 3,042 | - | 5,560 | ||||||||||||||||
Field
Operations
|
- | 3,208 | - | 3,208 | ||||||||||||||||
Exploration
|
114 | 131 | - | 245 | ||||||||||||||||
Depreciation,
Depletion and Accretion
|
2,107 | 2,613 | 634 | (7) | 5,354 | |||||||||||||||
General
and Administrative
|
2,192 | 1,120 | - | 3,312 | ||||||||||||||||
Total
Expenses
|
6,931 | 10,114 | 634 | 17,679 | ||||||||||||||||
Income
(Loss) From Operations
|
(2,485 | ) | 1,443 | (634 | ) | (1,676 | ) | |||||||||||||
Other
Income and (Expense)
|
||||||||||||||||||||
Interest
Income
|
1 | 12 | - | 13 | ||||||||||||||||
Interest
Expense
|
(1,178 | ) | (1,662 | ) | 1,341 | (8) | (1,499 | ) | ||||||||||||
Bankruptcy
Professional Fees
|
- | (2,061 | ) | - | (2,061 | ) | ||||||||||||||
Gain
(Loss) on Derivative Contracts
|
(1,218 | ) | 600 | - | (618 | ) | ||||||||||||||
Net
Loss
|
(4,880 | ) | (1,668 | ) | 707 | (5,841 | ) | |||||||||||||
Less:
Net Loss Attributable to Noncontrolling Interest
|
115 | - | - | 115 | ||||||||||||||||
Net
Loss Attributable to Magnum Hunter Resources Corporation
|
(4,765 | ) | (1,668 | ) | 707 | (5,726 | ) | |||||||||||||
Dividend
on Preferred Stock
|
- | - | (206 | ) | (9) | (206 | ) | |||||||||||||
Net
Loss Attributable to Common Stockholders
|
$ | (4,765 | ) | $ | (1,668 | ) | $ | 501 | $ | (5,932 | ) | |||||||||
Earnings
Per Common Share
Basic
and Diluted
|
$ | (0.13 | ) | $ | - | $ | - | $ | (0.13 | ) | ||||||||||
Weighted
Average Number of Common Shares Outstanding
Basic
and Diluted
|
36,788 | - | 20,000 | (4) | 56,788 |
See
accompanying notes to Unaudited Pro Forma Combined Financial
Data
3
UNAUDITED
COMBINED PRO FORMA INCOME STATEMENT
Year
Ended December 31, 2008
(dollars
and shares in thousands)
Magnum
Hunter
Historical
|
Triad
Historical
|
Pro
Forma
Adjustments
|
Note
Ref
|
Pro Forma | ||||||||||||||||
Revenue:
|
||||||||||||||||||||
Oil
and Gas Sales
|
$ | 14,486 | $ | 32,570 | $ | - | $ | 47,056 | ||||||||||||
Field
Operations
|
- | 7,771 | - | 7,771 | ||||||||||||||||
Other
Income
|
200 | 1 | - | 201 | ||||||||||||||||
Gain
(Loss) on Sale
|
1,197 | 2,237 | - |
|
3,434 | |||||||||||||||
Total
Revenue
|
15,883 | 42,579 | - |
|
58,462 | |||||||||||||||
Expenses:
|
||||||||||||||||||||
Lease
Operating Expenses
|
5,379 | 8,579 | - |
|
13,958 | |||||||||||||||
Field
Operations
|
- | 10,161 | - |
|
10,161 | |||||||||||||||
Exploration
|
7,349 | 473 | - |
|
7,822 | |||||||||||||||
Impairment
of Oil and Gas Properties
|
1,973 | - | - | 1,973 | ||||||||||||||||
Depreciation,
Depletion and Accretion
|
7,682 | 5,833 | 980 | (7) | 14,495 | |||||||||||||||
General
and Administrative
|
3,964 | 3,587 | - | 7,551 | ||||||||||||||||
Total
Expenses
|
26,347 | 28,633 | 980 | 55,960 | ||||||||||||||||
Income
(Loss) From Operations
|
(10,464 | ) | 13,946 | (980 | ) | 2,502 | ||||||||||||||
Other
Income and (Expense)
|
||||||||||||||||||||
Interest
Income
|
189 | 110 | - | 299 | ||||||||||||||||
Interest
Expense
|
(2,772 | ) | (4,093 | ) | 2,563 | (8) | (4,302 | ) | ||||||||||||
Bankruptcy
Professional Fees
|
- | (329 | ) | - | (329 | ) | ||||||||||||||
Loss
on Debt Extinguishment
|
(2,791 | ) | - | - | (2,791 | ) | ||||||||||||||
Gain
(Loss) on Derivative Contracts
|
7,311 | (3,397 | ) | - | 3,914 | |||||||||||||||
Net
Loss
|
(8,527 | ) | 6,237 | 1,583 | (707 | ) | ||||||||||||||
Less:
Net Loss Attributable to Noncontrolling Interest
|
1,640 | - | - | 1,640 | ||||||||||||||||
Net
Loss Attributable to Magnum Hunter Resources Corporation
|
(6,887 | ) | 6,237 | 1,583 | 933 | |||||||||||||||
Dividend
on Preferred Stock
|
(734 | ) | - | (412 | ) | (9) | (1,146 | ) | ||||||||||||
Net
Loss Attributable to Common Stockholders
|
$ | (7,621 | ) | $ | 6,237 | $ | 1,171 | $ | (213 | ) | ||||||||||
Earnings
Per Common Share
Basic
and Diluted
|
$ | (0.21 | ) | $ | - | $ | - | $ | (0.00 | ) | ||||||||||
Weighted
Average Number of Common Shares Outstanding
Basic
and Diluted
|
36,714 | - | 20,000 | (4) | 56,714 |
See
accompanying notes to Unaudited Pro Forma Combined Financial
Data
4
NOTES TO
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
(dollars
in thousands)
(1)
|
To
record the acquisition of Triad’s assets for a purchase price of
$85,405. The Company will deposit $1,100 of the net purchase
price on or before November 7, 2009. The estimated purchase
price includes the payoff in cash of loans under Triad’s existing
revolving and term credit agreement, the payoff in cash of existing debtor
in possession financing, the payoff in cash of certain other Triad
liabilities and costs at closing, the assumption of certain notes payable
related to equipment included in the transaction, the assumption of
certain other current liabilities of Triad, and the issuance of Redeemable
Convertible Preferred Stock of the Company. The acquisition is accounted
for under the purchase method of accounting. All assets
acquired and liabilities assumed are recorded at fair market value as
determined by management. As noted above, these are preliminary estimates
and are subject to adjustment. The Company expects to incur
legal and professional fees connected with this transaction of $650, which
will be expensed. The following table summarizes the assets acquired and
purchase price paid:
|
ASSETS ACQUIRED (at fair market
value):
|
|||||
Unproved
oil and gas properties
|
$ | 8,896 | |||
Proved
oil and gas properties
|
61,770 | ||||
Equipment
and other fixed assets
|
8,721 | ||||
Other
non current assets
|
418 | ||||
Cash
and cash equivalents
|
1,544 | ||||
Accounts
receivable
|
3,155 | ||||
Other
current assets
|
901 | ||||
Total
assets acquired
|
$ | 85,405 | |||
PURCHASE PRICE (at fair market
value)
|
|||||
Cash
payments at closing:
|
|||||
Payoff
Triad revolving and term debt
|
$ | 55,000 | |||
Payoff
Triad debtor in possession loan
|
500 | ||||
Payoff
other Triad liabilities at closing
|
7,229 | ||||
Total
cash payments
|
62,729 | ||||
Liabilities
assumed:
|
|||||
Notes
payable for equipment
|
3,953 | ||||
ARO
assumed
|
134 | ||||
Accounts
payable
|
1,267 | ||||
Accrued
liabilities
|
559 | ||||
Distribution
payable
|
1,716 | ||||
Other
current liabilities
|
47 | ||||
Total
liabilities assumed
|
7,676 | ||||
Redeemable
Convertible Preferred Stock
|
|||||
Stated
value $15 million, reflected at
|
|||||
estimated
current fair market value
|
15,000 | ||||
Total
purchase price paid
|
$ | 85,405 | |||
Decrease in cash from the
acquisition:
|
|||||
Cash
payment portion of purchase price
|
$ | 62,729 | |||
Estimated
legal and professional transaction fees
|
650 | ||||
Less
Cash and equivalents acquired from Triad
|
(1,544 | ) | |||
Net
decrease in cash from the acquisition
|
$ | 61,835 |
5
(2)
|
To
record the estimated deferred financing fees associated with the Company’s
New Revolving Credit Facility, of $1,933, net of write off of $992, for
the Company’s existing facility which is being extinguished and replaced
as part of this transaction. The resulting net change to
deferred financing costs is:
|
New
Credit Facility debt issuance costs
|
$ | 1,933 | ||||
Unamortized
debt issuance costs expensed
|
(992 | ) | ||||
Net
change to Deferred financing costs
|
$ | 941 |
(3)
|
To
record new borrowings and refinancing associated with the Triad
acquisition as follows:
|
New
Revolving Credit Facility
|
$ | 53,025 | ||||
Repay
Company’s previous Revolving Credit Facility
|
(7,500 | ) | ||||
Net
change to revolving facility
|
45,525 | |||||
Repay
Company’s previous Term Loan Facility
|
(15,000 | ) | ||||
Fees
paid on new credit facility
|
(1,933 | ) | ||||
Net
proceeds from New Credit Facility
|
$ | 28,592 |
(4)
|
To
record the issuance of common stock for the purpose of securing cash
necessary for the acquisition of Triad. The issuance will occur in two
parts, the first of which is an issue of five million shares and the
second of which is an issue of fifteen million shares. The first issue is
related to this 8-K filing and is expected to be priced at
two dollars per share, resulting in gross proceeds of $10,000. The second
issue will occur approximate with the closing date of the Triad
acquisition and is also expected to be priced at two dollars per share,
resulting in gross proceeds of $30,000. The estimated fees to be paid for
marketing these issues are $2,435, and were netted from Additional Paid-In
Capital. The net proceeds from the two issuances of common stock are
expected to be $37,565 after marketing fees. The Company’s common stock
has a par value of one cent per
share.
|
(5)
|
To
record the Company's charge against earnings of ($1,642) resulting from
the estimated legal and professional fees incurred in the Triad
acquisition of $650 (see Note 1) and the write-off of deferred financing
costs related to the previous credit facility of $992 (see Note
2).
|
(6)
|
To
record the change in cash as a result of the Triad acquisition,
the borrowing and repayment under the new and old revolving credit
facilities, respectively, and the net proceeds from the planned issuance
of common stock. The following table summarizes the changes in cash and
equivalents as reflected on the pro forma balance
sheet:
|
Net
proceeds from New Credit Facility (see Note 3)
|
$ | 28,592 | ||||
Net
proceeds from the issuance of common stock (see Note 4)
|
37,565 | |||||
Net
change in cash from the acquisition of Triad (see Note 1)
|
(61,835 | ) | ||||
Net
change to cash and cash equivalents
|
$ | 4,322 |
6
(7)
|
To
record the pro forma adjustment to depletion and depreciation expense as
the result of treating the acquisition of Triad as if it had occurred
January 1, 2008. Depletion was calculated using the units of production
method. Depreciation was computed using the straight-line
method based on the following useful
lives:
|
Gas
gathering system
|
20
years
|
||
Disposal
well
|
20
years
|
||
Machinery
and equipment
|
5 -
10 years
|
(8)
|
To
record the pro forma adjustment to interest expense as the result of
treating the acquisition of Triad, the borrowing and repayment under the
new and old revolving credit agreements, and the proceeds from the
issuance of common stock as if they occurred January 1,
2008
|
(9)
|
To
record the effect of the issuance of the Redeemable Convertible Preferred
Stock as if it had been issued at January 1, 2008. For the six month
period in 2009, the dividend adjustment reflects cash dividends of $206.
For the one year period in 2008, the dividend adjustment reflects cash
dividends of $412.
|
7