Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT OF MATERIAL EVENTS OR CORPORATE CHANGES - CROSSTEX ENERGY INC | a13-12728_18k.htm |
EXHIBIT 99.1
Crosstex Energy, Inc.
Unaudited Pro Forma Combined Financial Statements
Introduction
The following is our unaudited combined pro forma statement of operations for the year ended December 31, 2012.
Our unaudited pro forma combined statement of operations for the year ended December 31, 2012 reflects the following transactions as if each such transaction occurred as of January 1, 2012.
· the acquisition (the “Clearfield Acquisition”) by a wholly-owned subsidiary of Crosstex Energy, L.P. (the “Partnership”) of Clearfield Energy, Inc. (“Clearfield”) for $215.0 million in cash;
· the Partnership’s issuance of $250.0 million in aggregate principal amount of 7.125% senior unsecured notes due 2022 (the “2022 Notes”) for net proceeds of $245.1 million, net of transaction costs, the proceeds of which were used to partially finance the Clearfield Acquisition; and
· the Partnership’s offering of 10,120,000 common units at a unit price of $16.28 ($15.63 net of transaction costs) for net proceeds of $157.8, the proceeds of which were used to partially finance the Clearfield Acquisition.
The pro forma statement of operations was derived by adjusting the historical financial statements of Crosstex Energy, Inc. The adjustments are based on currently available information and, therefore, the actual adjustments may differ from the pro forma adjustments.
The Crosstex historical results for the year ended December 31, 2012 include the results of the Clearfield Acquisition from the acquisition date of July 2, 2012 forward. The Clearfield historical results are from January 1, 2012 through July 2, 2012.
Management believes that the adjustments provide a reasonable basis for presenting the significant effects of the Clearfield Acquisition, issuance of the 2022 Notes and issuance of common units. The unaudited pro forma financial statements do not purport to present the financial position or results of operations of Crosstex Energy, Inc. had the Clearfield Acquisition, the 2022 Notes issuance or issuance of common units actually been completed as of the dates indicated. Moreover, the statements do not project the financial position or results of operations of Crosstex Energy, Inc. for any future date or period.
CROSSTEX ENERGY, INC.
Unaudited Pro Forma Combined Statement of Operations
Year Ended December 31, 2012
(In thousands, except unit data)
|
|
|
Crosstex |
|
Clearfield |
|
Pro Forma |
|
Pro Forma |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Revenues |
|
$ |
1,655,851 |
|
$ |
105,911 |
|
$ |
— |
|
$ |
1,761,762 |
|
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
| ||||
|
Purchased oil, gas and NGLs |
|
1,262,093 |
|
83,445 |
|
— |
|
1,345,538 |
| ||||
|
Operating expenses |
|
130,882 |
|
12,358 |
|
— |
|
143,240 |
| ||||
|
General and administrative |
|
65,083 |
|
— |
|
— |
|
65,083 |
| ||||
|
Gain on sale of property |
|
(342 |
) |
— |
|
— |
|
(342 |
) | ||||
|
Loss on derivatives |
|
1,006 |
|
— |
|
— |
|
1,006 |
| ||||
|
Depreciation and amortization |
|
162,300 |
|
2,681 |
|
1,882 |
(a) |
166,863 |
| ||||
|
Total operating costs and expenses |
|
1,621,022 |
|
98,484 |
|
1,882 |
|
1,721,388 |
| ||||
|
Operating income (loss) |
|
34,829 |
|
7,427 |
|
(1,882 |
) |
40,374 |
| ||||
|
Other income (expense): |
|
|
|
|
|
|
|
|
| ||||
|
Interest expense, net of interest income |
|
(86,515 |
) |
(36 |
) |
(6,791 |
)(b) |
(93,342 |
) | ||||
|
Equity in earnings of limited liability company |
|
3,250 |
|
— |
|
— |
|
3,250 |
| ||||
|
Other income |
|
5,054 |
|
— |
|
— |
|
5,054 |
| ||||
|
Total other expense |
|
(78,211 |
) |
(36 |
) |
(6,791 |
) |
(85,038 |
) | ||||
|
Income (loss) before non-controlling interest and income taxes |
|
(43,382 |
) |
7,391 |
|
(8,673 |
) |
(44,664 |
) | ||||
|
Income tax benefit (provision) |
|
6,642 |
|
(2,006 |
) |
802 |
(c) |
5,438 |
| ||||
|
Net income (loss) |
|
(36,740 |
) |
5,385 |
|
(7,871 |
) |
(39,226 |
) | ||||
|
Less: Net income (loss) attributable to the non-controlling interest in the Partnership’s net income |
|
(24,259 |
) |
— |
|
(1,833 |
)(d) |
(26,092 |
) | ||||
|
Net income (loss) attributable to Crosstex Energy, Inc. |
|
$ |
(12,481 |
) |
$ |
5,385 |
|
$ |
(6,038 |
) |
$ |
(13,134 |
) |
|
Net loss per common share: |
|
|
|
|
|
|
|
|
| ||||
|
Basic and diluted common share |
|
$ |
(0.26 |
) |
|
|
|
|
$ |
(0.28 |
) | ||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
|
Basic and diluted common share |
|
47,384 |
|
|
|
|
|
47,384 |
| ||||
Crosstex Energy, Inc.
Notes to Unaudited Pro Forma Combined Financial Statements
Offering and Transactions
Our unaudited pro forma combined statement of operations for the year ended December 31, 2012 reflects the following transactions as if each such transaction occurred as of January 1, 2012.
· the acquisition (the “Clearfield Acquisition”) by a wholly-owned subsidiary of Crosstex Energy, L.P. (the “Partnership”) of Clearfield Energy, Inc. (“Clearfield”) for $215.0 million;
· the Partnership’s issuance of $250.0 million in aggregate principal amount of 7.125% senior unsecured notes due 2022 (the “2022 Notes”) for net proceeds of $245.1 million, net of transaction costs, the proceeds of which were used to partially finance the Clearfield Acquisition;
· the Partnership’s offering of 10,120,000 common units at a unit price of $16.28 ($15.63 net of transaction costs) for net proceeds of $157.8 million, the proceeds of which were used to partially finance the Clearfield Acquisition.
The following is an aggregation of Clearfield’s historical statement of operations for the six months ended June 30, 2012.
Aggregation of Clearfield Historical Financials
(In thousands, except unit data)
|
|
|
Clearfield |
|
Clearfield |
|
Clearfield |
| |||
|
|
|
|
|
|
|
|
| |||
|
Revenue |
|
$ |
66,660 |
|
$ |
39,251 |
|
$ |
105,911 |
|
|
Total revenues |
|
66,660 |
|
39,251 |
|
105,911 |
| |||
|
Operating costs and expenses: |
|
|
|
|
|
|
| |||
|
Purchased gas, NGLs and crude oil |
|
52,819 |
|
30,626 |
|
83,445 |
| |||
|
Operating expenses |
|
6,664 |
|
5,694 |
|
12,358 |
| |||
|
General and administrative |
|
1,669 |
|
(1,669 |
) |
— |
| |||
|
(Gain) loss on sale of property |
|
(1 |
) |
1 |
|
— |
| |||
|
Depreciation and amortization |
|
1,444 |
|
1,237 |
|
2,681 |
| |||
|
Total operating costs and expenses |
|
62,595 |
|
35,889 |
|
98,484 |
| |||
|
Operating income |
|
4,065 |
|
3,362 |
|
7,427 |
| |||
|
Other income (expense): |
|
|
|
|
|
|
| |||
|
Interest expense, net of interest income |
|
(44 |
) |
8 |
|
(36 |
) | |||
|
Other income (expense) |
|
128 |
|
(128 |
) |
— |
| |||
|
Total other income (expense) |
|
84 |
|
(120 |
) |
(36 |
) | |||
|
Income from continuing operations before non-controlling interest and income taxes |
|
4,149 |
|
3,242 |
|
7,391 |
| |||
|
Income tax provision |
|
(1,910 |
) |
(96 |
) |
(2,006 |
) | |||
|
Income from continuing operations, before discontinued Operations |
|
2,239 |
|
3,146 |
|
5,385 |
| |||
|
Discontinued operations: |
|
|
|
|
|
|
| |||
|
Income from discontinued operations, net of tax |
|
1,947 |
|
(1,947 |
) |
— |
| |||
|
Loss from sale of discontinued operations, net of tax |
|
(8,234 |
) |
8,234 |
|
— |
| |||
|
Discontinued operations, net of tax |
|
(6,287 |
) |
6,287 |
|
— |
| |||
|
Net income (loss) |
|
$ |
(4,048 |
) |
$ |
9,433 |
|
$ |
5,385 |
|
|
Less: Net income (loss) from continuing operations attributable to non-controlling interest |
|
71 |
|
(71 |
) |
— |
| |||
|
Net income (loss) attributable to Clearfield Energy, Inc. |
|
$ |
(4,119 |
) |
$ |
9,504 |
|
$ |
5,385 |
|
Pro Forma Adjustments to Consolidated Statement of Operations
(a) Reflects additional depreciation and amortization expenses realized from the assets acquired from Clearfield as if the acquisition had occurred on January 1, 2012. The additional depreciation and amortization expenses were calculated based on a straight line basis over 15 years.
(b) Represents the adjustment to historical interest expense on debt to be retired and interest expense on the 2022 Notes as follows (in thousands):
|
|
|
Year Ended |
| |
|
Increase in interest due to: |
|
|
| |
|
7.125% Senior Unsecured Notes due 2022 |
|
$ |
7,076 |
|
|
Decrease in interest due to: |
|
|
| |
|
Pay down of credit facility |
|
(499 |
) | |
|
Clearfield historical interest |
|
(36 |
) | |
|
Increase in amortization of deferred financing costs due to: |
|
|
| |
|
7.125% Senior Unsecured Notes due 2022 |
|
250 |
| |
|
Pro Forma increase to interest expense |
|
$ |
6,791 |
|
(c) Reflects the adjustment of income tax expense for the estimated tax expense associated with the Partnership’s new subsidiaries acquired in the Clearfield Acquisition (the “Clearfield Entities”). Certain of the Clearfield Entities, that primarily hold only fixed-rate financial instruments, will be treated as C corporations for tax purposes and therefore are required to pay income tax of an estimated incremental annual amount of $2.0 million on their net income, whereas the income (loss) from the remainder of the Clearfield assets will primarily pass through to the unitholders of the Partnership similar to the Partnership’s legacy results, including a minor portion to us. Historically, Clearfield was owned by a C-Corporation and all its results were subject to income tax.
(d) Reflects the change in interest of non-controlling partners in the Partnership due to the Clearfield Acquisition, the Partnership’s issuance of the 2022 Notes and the Partnership’s issuance of the 10,120,000 common units.