Attached files
| file | filename |
|---|---|
| 8-K - 8-K - EL PASO CORP/DE | a12-12959_18k.htm |
Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On May 24 2012, the sale of El Paso’s exploration and production business was completed as contemplated by the Agreement and Plan of Merger (the “Kinder Morgan Merger Agreement”), dated as of October 16, 2011, by and among El Paso, LLC and Kinder Morgan, Inc. (“Kinder Morgan”) and certain of their respective subsidiaries. Under the terms of the Purchase and Sale Agreement, the Purchaser paid to Sellers approximately $7.2 billion in cash, subject to certain post-closing adjustments. In conjunction with the sale, a portion of the proceeds was utilized to repay approximately $961 million outstanding under the EP Energy revolving credit facility.
The following pro forma condensed consolidated financial information has been developed by applying pro forma adjustments to the historical financial statements of El Paso Corporation. The following unaudited pro forma condensed consolidated balance sheet data as of March 31, 2012 of El Paso has been prepared to give effect to the transaction as if the sale of El Paso’s exploration and production assets had occurred on March 31, 2012. The following unaudited pro forma condensed consolidated statements of income data of El Paso for the quarter ended March 31, 2012 and year ended December 31, 2011 have been prepared to give effect to the transaction as if the sale of El Paso’s exploration and production assets had occurred on January 1, 2011.
The unaudited pro forma condensed consolidated financial information includes pro forma adjustments that are factually supportable and directly attributable to the transaction. In addition, with respect to the unaudited pro forma condensed consolidated statements of income, only those unaudited pro forma adjustments that are expected to have a continuing impact on the consolidated results have been included. The pro forma adjustments do not include the effects of additional transactions that may occur subsequent to the sale of El Paso’s exploration and production business, including the use of proceeds to effect Kinder Morgan’s acquisition of El Paso.
The unaudited pro forma adjustments are based on available preliminary information and certain assumptions that El Paso believes are reasonable under the circumstances. The unaudited pro forma condensed consolidated financial information is presented for informational purposes only. The following unaudited pro forma condensed consolidated financial information is not necessarily indicative of the results that might have occurred had the sale of the exploration and production assets taken place on March 31, 2012 for balance sheet purposes, or on January 1, 2011 for statement of income purposes, and is not intended to be a projection of future results. All pro forma adjustments and their underlying assumptions are described more fully in the notes to the unaudited pro forma condensed consolidated financial information.
The Unaudited pro forma condensed consolidated financial information should be read in conjunction with the following documents (i) El Paso’s Annual Report on Form 10-K for the year ended December 31, 2011 and (ii) El Paso’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.
EL PASO CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2012
(In millions)
|
|
|
Historical |
|
Pro Forma |
|
|
Pro Forma |
| |||
|
|
|
|
|
|
|
|
|
| |||
|
ASSETS |
|
|
|
|
|
|
|
| |||
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Current assets |
|
$ |
1,615 |
|
$ |
(550 |
)(a) |
|
$ |
7,317 |
|
|
|
|
|
|
7,213 |
(b) |
|
|
| |||
|
|
|
|
|
(961 |
)(c) |
|
|
| |||
|
Property, plant and equipment, net |
|
19,271 |
|
(4,202 |
)(a) |
|
15,069 |
| |||
|
Investments in unconsolidated affiliates |
|
2,742 |
|
(335 |
)(a) |
|
2,407 |
| |||
|
Other |
|
750 |
|
(35 |
)(a) |
|
715 |
| |||
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Total assets |
|
$ |
24,378 |
|
$ |
1,130 |
|
|
$ |
25,508 |
|
|
|
|
|
|
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|
|
|
| |||
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LIABILITIES AND EQUITY |
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|
|
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|
|
| |||
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Current liabilities |
|
$ |
1,936 |
|
$ |
(338 |
)(a) |
|
$ |
1,620 |
|
|
|
|
|
|
22 |
(d) |
|
|
| |||
|
Long-term financing obligations, less current maturities |
|
12,620 |
|
(961 |
)(c) |
|
11,659 |
| |||
|
Deferred income taxes |
|
633 |
|
666 |
(d) |
|
1,299 |
| |||
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Other |
|
1,907 |
|
(287 |
)(a) |
|
1,620 |
| |||
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Total liabilities |
|
$ |
17,096 |
|
$ |
(898 |
) |
|
$ |
16,198 |
|
|
Equity |
|
|
|
|
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|
|
| |||
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El Paso Corporation stockholders’ equity: |
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|
|
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|
|
|
| |||
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Common stock |
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$ |
2,366 |
|
$ |
— |
|
|
$ |
2,366 |
|
|
Additional paid-in capital |
|
5,392 |
|
— |
|
|
5,392 |
| |||
|
Retained earnings (accumulated deficit) |
|
(2,207 |
) |
2,028 |
(d) |
|
(179 |
) | |||
|
Accumulated other comprehensive loss |
|
(785 |
) |
— |
|
|
(785 |
) | |||
|
Treasury stock |
|
(270 |
) |
— |
|
|
(270 |
) | |||
|
Total El Paso Corporation stockholders’ equity |
|
4,496 |
|
2,028 |
|
|
6,524 |
| |||
|
Noncontrolling interests |
|
2,786 |
|
— |
|
|
2,786 |
| |||
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Total equity |
|
7,282 |
|
2,028 |
|
|
9,310 |
| |||
|
Total liabilities and equity |
|
$ |
24,378 |
|
$ |
1,130 |
|
|
$ |
25,508 |
|
See accompanying notes.
EL PASO CORPORATION
UNAUDITED PRO FORMA CONDENSED CONDOLIDATED STATEMENTS OF INCOME
FOR THE QUARTER ENDED MARCH 31, 2012
(In millions, except per share amounts)
|
|
|
Historical |
|
Pro Forma |
|
Pro Forma |
| |||
|
|
|
|
|
|
|
|
| |||
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Operating revenues |
|
$ |
1,260 |
|
$ |
(484 |
) |
$ |
776 |
|
|
Operating expenses |
|
|
|
|
|
|
| |||
|
Cost of products and services |
|
54 |
|
(25 |
) |
29 |
| |||
|
Operation and maintenance |
|
338 |
|
(98 |
) |
240 |
| |||
|
Ceiling test charges |
|
62 |
|
(62 |
) |
— |
| |||
|
Depreciation, depletion and amortization |
|
330 |
|
(201 |
) |
129 |
| |||
|
Taxes, other than income taxes |
|
82 |
|
(28 |
) |
54 |
| |||
|
|
|
866 |
|
(414 |
) |
452 |
| |||
|
Operating income |
|
394 |
|
(70 |
) |
324 |
| |||
|
Other income and (expenses) |
|
|
|
|
|
|
| |||
|
Earnings from unconsolidated affiliates |
|
35 |
|
3 |
|
38 |
| |||
|
Other income, net |
|
16 |
|
(1 |
) |
15 |
| |||
|
Interest and debt expense |
|
(226 |
) |
4 |
|
(222 |
) | |||
|
Income from continuing operations before income taxes |
|
219 |
|
(64 |
) |
155 |
| |||
|
Income taxes |
|
70 |
|
(40 |
) |
30 |
| |||
|
Net income from continuing operations |
|
149 |
|
(24 |
) |
125 |
| |||
|
Net income attributable to noncontrolling interests |
|
(63 |
) |
— |
|
(63 |
) | |||
|
Net income attributable to El Paso Corporation from continuing operations |
|
$ |
86 |
|
$ |
(24 |
) |
$ |
62 |
|
|
Basic and diluted earnings per common share |
|
|
|
|
|
|
|
|
| |
|
Net income attributable to El Paso Corporation from continuing operations |
|
$ |
0.11 |
|
|
|
$ |
0.08 |
| |
See accompanying notes.
EL PASO CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2011
(In millions, except per share amounts)
|
|
|
Historical |
|
Pro Forma |
|
Pro Forma |
| |||
|
|
|
|
|
|
|
|
| |||
|
Operating revenues |
|
$ |
4,860 |
|
$ |
(1,867 |
) |
$ |
2,993 |
|
|
|
|
|
|
|
|
|
| |||
|
Operating expenses |
|
|
|
|
|
|
| |||
|
Costs of products and services |
|
181 |
|
(85 |
) |
96 |
| |||
|
Operation and maintenance |
|
1,394 |
|
(383 |
) |
1,011 |
| |||
|
Loss on deconsolidation of subsidiary |
|
600 |
|
— |
|
600 |
| |||
|
Ceiling test charges |
|
152 |
|
(152 |
) |
— |
| |||
|
Loss (gain) on long-lived assets |
|
2 |
|
(6 |
) |
(4 |
) | |||
|
Depreciation, depletion and amortization |
|
1,116 |
|
(612 |
) |
504 |
| |||
|
Taxes, other than income taxes |
|
283 |
|
(91 |
) |
192 |
| |||
|
|
|
3,728 |
|
(1,329 |
) |
2,399 |
| |||
|
Operating income |
|
1,132 |
|
(538 |
) |
594 |
| |||
|
Other income and (expenses) |
|
|
|
|
|
|
| |||
|
Earnings from unconsolidated affiliates |
|
151 |
|
7 |
|
158 |
| |||
|
Loss on debt extinguishment |
|
(169 |
) |
— |
|
(169 |
) | |||
|
Other income |
|
226 |
|
2 |
|
228 |
| |||
|
Other expenses |
|
(15 |
) |
— |
|
(15 |
) | |||
|
Interest and debt expense |
|
(948 |
) |
9 |
|
(939 |
) | |||
|
Income from continuing operations before income taxes |
|
377 |
|
(520 |
) |
(143 |
) | |||
|
Income taxes |
|
(50 |
) |
(235 |
) |
(285 |
) | |||
|
Net income from continuing operations |
|
427 |
|
(285 |
) |
142 |
| |||
|
Net income attributable to noncontrolling interests |
|
(286 |
) |
— |
|
(286 |
) | |||
|
Net income (loss) attributable to El Paso Corporation from continuing operations |
|
$ |
141 |
|
$ |
(285 |
) |
$ |
(144 |
) |
|
Basic earnings (loss) per common share |
|
|
|
|
|
|
| |||
|
Net income (loss) attributable to El Paso Corporation’s common stockholders from continuing operations |
|
$ |
0.19 |
|
|
|
|
$ |
(0.19 |
) |
|
Diluted earnings (loss) per common share |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to El Paso Corporation’s common stockholders from continuing operations |
|
$ |
0.18 |
|
|
|
|
$ |
(0.19 |
) |
See accompanying notes.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANICAL STATEMENTS
Historical El Paso
These amounts represent our condensed consolidated historical balance sheet and income statement information. Amounts for the quarter ended March 31, 2012 were derived from our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012. Amounts for the year ended December 31, 2011 were derived from our 2011 Annual Report on Form 10-K.
Pro Forma Adjustments
The pro forma adjustments reflect the sale of El Paso’s exploration and production business. Under the terms of the Purchase and Sale Agreement, the Purchaser paid to Sellers approximately $7.2 billion in cash, subject to certain post-closing adjustments. In conjunction with the sale, approximately $961 million of the proceeds received was utilized to repay amounts outstanding under EP Energy’s revolving credit facility. Kinder Morgan will utilize the remainder of the proceeds pursuant to the transactions contemplated by its merger with El Paso.
Pro Forma Adjustments
(a) Amounts represent the balance sheet effects of the sale of El Paso’s exploration and production business.
(b) Amount represents cash proceeds received of $7.2 billion.
(c) Amount represents the reduction of El Paso’s long term financing obligations due to the sale of El Paso’s exploration and production business, including approximately $961 million outstanding under the EP Energy revolving credit facility as of March 31, 2012.
(d) Amount represents the after-tax gain of approximately $2 billion (net of taxes of approximately $0.7 billion) on the sale of El Paso’s exploration and production business.
(e) Amounts represent the income statement effects of the sale of El Paso’s exploration and production business. El Paso’s pro forma income taxes for each period presented were calculated excluding income tax impacts associated with El Paso’s exploration and production business.