Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT OF MATERIAL EVENTS OR CORPORATE CHANGES - HKN, Inc. | a11-30311_18k.htm |
Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED CONSOIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated balance sheet as of September 30, 2011 and the unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2011 and year ended December 31, 2010 are based on the historical financial statements of HKN, Inc. (the “Company”) after giving effect to the disposition of the Company’s remaining oil and gas producing properties as more fully described in Item 2.01 of this Current Report on Form 8-K, and applying the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed consolidated financial statements. The pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable.
The unaudited pro forma condensed consolidated balance sheet as of September 30, 2011 and the unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2011 are presented as if the disposition of the assets had occurred on September 30, 2011.
The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2010 is presented as if the disposition of the assets had occurred on December 31, 2010.
The unaudited pro forma financial information is provided for illustrative purposes only and does not purport to present what our results would actually have been had these transactions actually occurred on the dates presented or to project our results of operations or financial position for any future period. The unaudited pro forma condensed consolidated financial statements, including notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with (i) the Company’s historical consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2010 and (ii) the Company’s historical unaudited condensed consolidated financial statements included in its Form 10-Q for the nine months ended September 30, 2011.
HKN, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
September 30, 2011
(in thousands)
|
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Pro Forma |
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Historical |
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Adjustments |
|
Pro Forma |
| |||
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Assets |
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Current Assets: |
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|
|
| |||
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Cash and cash equivalents |
|
$ |
7,414 |
|
$ |
18,856 |
(a) |
$ |
26,270 |
|
|
Restricted cash |
|
18,337 |
|
— |
|
18,337 |
| |||
|
Accounts receivable, net |
|
1,706 |
|
(1,706 |
)(b) |
— |
| |||
|
Accounts receivable - affiliates |
|
135 |
|
— |
|
135 |
| |||
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Note receivable - affiliates |
|
5,000 |
|
— |
|
5,000 |
| |||
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Prepaid expenses and other current assets |
|
712 |
|
(369 |
)(b) |
343 |
| |||
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Total Current Assets |
|
33,304 |
|
16,781 |
|
50,085 |
| |||
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|
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|
|
|
| |||
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Property and equipment, net |
|
36,204 |
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(29,576 |
)(c) |
6,628 |
| |||
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|
| |||
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Intangible assets, net |
|
2,135 |
|
— |
|
2,135 |
| |||
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Investment in Global |
|
16,156 |
|
— |
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16,156 |
| |||
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Other assets |
|
33 |
|
(32 |
)(b) |
1 |
| |||
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Total Assets |
|
$ |
87,832 |
|
$ |
(12,827 |
) |
$ |
75,005 |
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Liabilities and Stockholders’ Equity |
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Current Liabilities: |
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| |||
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Trade payables |
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$ |
415 |
|
$ |
(394 |
)(b) |
$ |
21 |
|
|
Accrued liabilities and other |
|
1,938 |
|
(1,422 |
)(b) |
516 |
| |||
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Asset retirement obligation - current |
|
808 |
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(343 |
)(d) |
465 |
| |||
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Income tax contingency |
|
225 |
|
— |
|
225 |
| |||
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Revenues and royalties payable |
|
785 |
|
(785 |
)(b) |
— |
| |||
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Preferred stock dividends |
|
4 |
|
— |
|
4 |
| |||
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Total Current Liabilities |
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4,175 |
|
(2,944 |
) |
1,231 |
| |||
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|
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|
| |||
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Asset retirement obligation |
|
8,550 |
|
(8,550 |
)(d) |
— |
| |||
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Deferred income taxes |
|
573 |
|
— |
|
573 |
| |||
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BWI contingency |
|
800 |
|
— |
|
800 |
| |||
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Total Liabilities |
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14,098 |
|
(11,494 |
) |
2,604 |
| |||
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Stockholders’ Equity: |
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Total Stockholders’ Equity |
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73,734 |
|
(1,333 |
) |
72,401 |
| |||
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Total Liabilities and Stockholders’ Equity |
|
$ |
87,832 |
|
$ |
(12,827 |
) |
$ |
75,005 |
|
The accompanying notes are an integral part of the pro forma condensed consolidated financial information.
HKN, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Nine Months ended September 30, 2011
(in thousands except for share and per share amounts)
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Pro Forma |
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Historical |
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Adjustments |
|
Pro Forma |
| |||
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| |||
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Revenues and other: |
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Oil and gas operations |
|
$ |
8,256 |
|
$ |
(8,256 |
)(e) |
$ |
— |
|
|
Oil and gas processing and handling income |
|
1,097 |
|
(1,097 |
)(e) |
— |
| |||
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Total revenues |
|
9,353 |
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(9,353 |
) |
— |
| |||
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Costs and expenses: |
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| |||
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Oil and gas operating expenses |
|
5,739 |
|
(5,739 |
)(e) |
— |
| |||
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General and administrative expenses |
|
2,926 |
|
677 |
(f) |
3,603 |
| |||
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Depreciation, depletion, amortization and accretion |
|
2,191 |
|
(1,970 |
)(g) |
221 |
| |||
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Total costs and expenses |
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10,856 |
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(7,032 |
) |
3,824 |
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Other income and (expenses): |
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Interest and other expenses |
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(24 |
) |
— |
|
(24 |
) | |||
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Interest and other income |
|
483 |
|
(28 |
)(e) |
455 |
| |||
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Total other income and (expenses) |
|
459 |
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(28 |
) |
431 |
| |||
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Loss from operations before income taxes |
|
$ |
(1,044 |
) |
$ |
(2,349 |
) |
$ |
(3,393 |
) |
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Income tax benefit |
|
— |
|
— |
|
— |
| |||
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Net loss |
|
$ |
(1,044 |
) |
$ |
(2,349 |
) |
$ |
(3,393 |
) |
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Net loss attributable to noncontrolling interests |
|
326 |
|
— |
|
326 |
| |||
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Net loss attributable to HKN, Inc. stockholders |
|
$ |
(718 |
) |
$ |
(2,349 |
) |
$ |
(3,067 |
) |
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Accrual of dividends related to preferred stock |
|
(12 |
) |
— |
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(12 |
) | |||
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Gain on payments of dividends of preferred stock |
|
8 |
|
— |
|
8 |
| |||
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Net loss attributed to common stock |
|
$ |
(722 |
) |
$ |
(2,349 |
) |
$ |
(3,071 |
) |
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Net loss per common share, basic and diluted |
|
$ |
(0.05 |
) |
$ |
— |
|
$ |
(0.20 |
) |
|
Weighted average common shares outstanding: |
|
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|
|
|
|
| |||
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Basic and diluted |
|
15,187,973 |
|
— |
|
15,187,973 |
| |||
The accompanying notes are an integral part of the pro forma condensed consolidated financial information.
HKN, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year ended December 31, 2010
(in thousands except for share and per share amounts)
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Pro Forma |
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|
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Historical |
|
Adjustments |
|
Pro Forma |
| |||
|
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Revenues and other: |
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|
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Oil and gas operations |
|
$ |
11,184 |
|
$ |
(11,184 |
)(e) |
$ |
— |
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|
Oil and gas processing and handling income |
|
1,223 |
|
(1,223 |
)(e) |
— |
| |||
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Total revenues |
|
12,407 |
|
(12,407 |
) |
— |
| |||
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|
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Costs and expenses: |
|
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|
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|
|
| |||
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Oil and gas operating expenses |
|
7,844 |
|
(7,844 |
)(e) |
— |
| |||
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General and administrative expenses |
|
3,641 |
|
1,648 |
(f) |
5,289 |
| |||
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Depreciation, depletion, amortization and accretion |
|
3,419 |
|
(3,046 |
)(g) |
373 |
| |||
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Total costs and expenses |
|
14,904 |
|
(9,242 |
) |
5,662 |
| |||
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|
|
|
|
|
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Other income and (expenses): |
|
|
|
|
|
|
| |||
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Interest and other expenses |
|
(79 |
) |
— |
|
(79 |
) | |||
|
Interest and other income |
|
497 |
|
(153 |
)(e) |
344 |
| |||
|
Equity in losses of Spitfire |
|
(20 |
) |
— |
|
(20 |
) | |||
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Gain on sale of investment |
|
1,887 |
|
— |
|
1,887 |
| |||
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Total other income and (expenses) |
|
2,285 |
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(153 |
) |
2,132 |
| |||
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| |||
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Loss from operations before income taxes |
|
$ |
(212 |
) |
$ |
(3,318 |
) |
$ |
(3,530 |
) |
|
Income tax benefit |
|
(20 |
) |
— |
|
(20 |
) | |||
|
Net loss |
|
$ |
(192 |
) |
$ |
(3,318 |
) |
$ |
(3,510 |
) |
|
Net loss attributable to noncontrolling interests |
|
798 |
|
— |
|
798 |
| |||
|
Net income (loss) attributable to HKN, Inc. stockholders |
|
$ |
606 |
|
$ |
(3,318 |
) |
$ |
(2,712 |
) |
|
Accrual of dividends related to preferred stock |
|
(16 |
) |
— |
|
(16 |
) | |||
|
Gain on payments of dividends of preferred stock |
|
15 |
|
— |
|
15 |
| |||
|
Net income (loss) attributed to common stock |
|
$ |
605 |
|
$ |
(3,318 |
) |
$ |
(2,713 |
) |
|
Net income (loss) per common share, basic and diluted |
|
$ |
0.06 |
|
$ |
— |
|
$ |
(0.28 |
) |
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
| |||
|
Basic and diluted |
|
9,696,047 |
|
— |
|
9,696,047 |
| |||
The accompanying notes are an integral part of the pro forma condensed consolidated financial information.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(a) The pro forma adjustment reflects the $18.9 million in net cash proceeds received from the completed sale of the Company’s Main Pass oil and gas property (“Main Pass Asset”) and the expected sale of the Company’s remaining oil and gas assets (together with the Main Pass Asset, the “Gulf Coast Assets”). Of the $20.1 million proceeds received, a marketing fee of $402 thousand was paid in accordance with our agreement with Burks Oil and Gas Properties, Inc.
(b) The pro forma adjustment reflects the effects of the sale of the Company’s Gulf Coast Assets as well as any previous property sales made during 2010 and 2011, which includes pro forma adjustments for the transfer of all related assets and liabilities.
(c) The pro forma adjustment reflects the reduction of property and equipment of $205 million less the accumulated depletion of $175.4 million for the sale of the Company’s Gulf Coast Assets.
(d) The pro forma adjustment reflects the elimination of $8.9 million of asset retirement obligations, including $343 thousand in current obligations associated with the Company’s Gulf Coast Assets as well as any previous property sales made during 2010 and 2011.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(e) The pro forma statements of operations for the nine months ended September 30, 2011 and December 31, 2010 reflects adjustments to eliminate the net revenues, oil and gas operating expenses, and interest and other income directly related to the Company’s Gulf Coast Assets as well as any previous property sales made during 2010 and 2011 as these items will not continue after the completion of the sale of these assets.
(f) The pro forma adjustment reflects an increase to our general and administrative expenses due to the elimination of general and administrative costs related to our producing overhead and salary expenses that were capitalized.
(g) The pro forma adjustment reflects the reduction in depreciation, depletion, amortization and accretion expense based on the reduction in production volumes attributable to the properties sold.