EXHIBIT 99.3

 

bREITBurn Energy Partners L.P.

 

 

	Page
Unaudited Pro Forma Combined Balance Sheet as of September 30, 2013	1
Unaudited Pro Forma Combined Statement of Operations for the Nine Months Ended September 30, 2013	2
Unaudited Pro Forma Combined Statement of Operations for the Year Ended December 31, 2012	3
Notes to Unaudited Pro Forma Combined Financial Statements	4

 

 

BreitBurn Energy Partners L.P. and Subsidiaries

Unaudited Pro Forma Combined Balance Sheet

As of September 30, 2013

 

Thousands of dollars		BreitBurn Energy Partners L.P.  Historical				Pro Forma Adjustments  (Note 3)					BreitBurn Energy Partners L.P. Pro Forma
ASSETS
Current assets
Cash		$	2,818			$	-				$	2,818
Accounts and other receivables, net			115,931				-					115,931
Derivative instruments			16,558				-					16,558
Related party receivables			530				-					530
Inventory			11,118				-					11,118
Prepaid expenses			3,071				-					3,071
Intangibles, net			6,554									6,554
Total current assets			156,580				-					156,580
Equity investments			7,126				-					7,126
Property, plant and equipment
Oil and gas properties			4,409,806				303,179		(a)			4,712,985
Non-oil and gas assets			15,986				-					15,986
Property, plant and equipment			4,425,792				303,179					4,728,971
Accumulated depletion and depreciation			(813,713	)			-					(813,713	)
Net property, plant and equipment			3,612,079				303,179					3,915,258
Other long-term assets
Intangibles			6,693				-					6,693
Derivative instruments			71,085				-					71,085
Other long-term assets			46,893				-					46,893
Total assets		$	3,900,456			$	303,179				$	4,203,635
LIABILITIES AND EQUITY
Current liabilities
Accounts payable		$	50,653			$	-				$	50,653
Derivative instruments			12,388				-					12,388
Revenue and royalties payable			26,576				-					26,576
Wages and salaries payable			12,154				-					12,154
Accrued interest payable			29,467				-					29,467
Accrued liabilities			36,645				-					36,645
Total current liabilities			167,883				-					167,883
Credit facility			1,090,000				302,110		(b)			1,392,110
Senior notes, net			755,699				-					755,699
Deferred income taxes			2,739				-					2,739
Asset retirement obligation			111,642				1,069		(a)			112,711
Derivative instruments			1,775				-					1,775
Other long-term liabilities			4,431				-					4,431
Total liabilities			2,134,169				303,179					2,437,348
Commitments and contingencies
Equity
Partners' equity			1,766,287				-					1,766,287
Total equity			1,766,287				-					1,766,287
Total liabilities and equity		$	3,900,456			$	303,179				$	4,203,635

 

See the accompanying notes to the unaudited pro forma combined financial statements.

 

 

BreitBurn Energy Partners L.P. and Subsidiaries

Unaudited Pro Forma Combined Statements of Operations

For the Nine Months Ended September 30, 2013

 

Thousands of dollars, except per unit amounts		BreitBurn Energy Partners L.P. Historical				Whiting  Assets  Hisotrical (Note 4)				Permian Basin Assets Historical  (Note 4)				Pro Forma Adjustments  (Note 4)					BreitBurn Energy Partners L.P.  Pro Forma
Revenues and other income items
Oil, NGLs and natural gas sales		$	467,061			$	119,742	(a)		$	51,278	(a)		$	-				$	638,081
Loss on commodity derivative instruments, net			(11,948	)			-								-					(11,948	)
Other revenue, net			2,197				-				-				-					2,197
Total revenues and other income items			457,310				119,742				51,278				-					628,330
Operating costs and expenses
Operating costs			181,889				32,734	(a)			7,425	(a)			-					222,048
Depletion, depreciation and amortization			154,456				-				-				42,912		(b)			197,368
General and administrative expenses			44,695				-				-				(2,630	)	(b)			42,065
Loss on sale of assets			139				-				-				-					139
Total operating costs and expenses			381,179				32,734				7,425				40,282					461,620
Operating income (loss)			76,131				87,008				43,853				(40,282	)				166,710
Interest expense, net of capitalized interest			60,387				-				-				18,447		(c)			78,834
Other income, net			(5	)			-				-				-					(5	)
Total other expense			60,382				-				-				18,447					78,829
Income (loss) before taxes			15,749				87,008				43,853				(58,729	)				87,881
Income tax expense			628				-				-				-					628
Net income (loss) attributable to the partnership		$	15,121			$	87,008			$	43,853			$	(58,729	)			$	87,253
Basic net income per unit		$	0.15																$	0.88
Diluted net income per unit		$	0.15																$	0.87
Weighted average number of units used to calculate (d)
Basic net income per unit			99,634																	99,634
Diluted net income per unit			99,989																	99,989

 

See the accompanying notes to the unaudited pro forma combined financial statements.

 

 

BreitBurn Energy Partners L.P. and Subsidiaries

Unaudited Pro Forma Combined Statement of Operations

For the Year Ended December 31, 2012

 

		BreitBurn Energy Partners L.P.				AEO Assets Historical				Whiting Assets Historical				Permian Basin Assets Historical				Pro Forma Adjustments					BreitBurn Energy Partners  L.P.
Thousands of dollars, except per unit amounts		Historical				(Note 4)				(Note 4)				(Note 4)				(Note 4)					Pro Forma
Revenues and other income items
Oil, NGLs, and natural gas sales		$	413,867			$	27,468	(a)		$	239,528	(a)		$	25,428	(a)		$	-				$	706,291
Gain on commodity derivative instruments, net			5,580				-				-				-				-					5,580
Other revenue, net			3,548				-				-				-				-					3,548
Total revenues and other income items			422,995				27,468				239,528				25,428				-					715,419
Operating costs and expenses
Operating costs			195,779				5,868	(a)			62,166	(a)			3,849	(a)			-					267,662
Depletion, depreciation and amortization			149,565				-				-				-				78,249		(b)			227,814
General and administrative expenses			55,465				-				-				-				1,000		(b)			56,465
Loss on sale of assets			486				-				-				-				-					486
Total operating costs and expenses			401,295				5,868				62,166				3,849				79,249					552,427
Operating income (loss)			21,700				21,600				177,362				21,579				(79,249	)				162,992
Interest expense, net of capitalized interest			61,206				-				-				-				29,013		(c)			90,219
Loss on interest rate swaps			1,101				-				-				-				-					1,101
Other expense, net			48				-				-				-				-					48
Total other expense			62,355				-				-				-				29,013					91,368
Income (loss) before taxes			(40,655	)			21,600				177,362				21,579				(108,262	)				71,624
Income tax expense			84				-				-				-				-					84
Net income (loss)			(40,739	)			21,600				177,362				21,579				(108,262	)				71,540
Less: Net income attributable to noncontrolling interest			(62	)			-				-				-				-					(62	)
Net income (loss) attributable to the partnership		$	(40,801	)		$	21,600			$	177,362			$	21,579			$	(108,262	)			$	71,478
Basic net income (loss) per unit		$	(0.56	)																			$	0.72
Diluted net income (loss) per unit		$	(0.56	)																			$	0.71
Weighted average number of units used to calculate
Basic net income (loss) per unit			72,745																25,907					98,652
Diluted net income (loss) per unit			72,745																28,414					101,159

 

See the accompanying notes to the unaudited pro forma combined financial statements.

 

 

Notes to the Unaudited Pro Forma Combined Financial Statements

 

1.

General

 

BreitBurn Energy Partners L.P. is a Delaware limited partnership formed on March 23, 2006. BreitBurn Energy Partners L.P. completed its initial public offering in October 2006. References in this filing to “the Partnership,” “we,” “our,” “us” or like terms refer to BreitBurn Energy Partners L.P. and its subsidiaries. We are an independent oil and gas partnership focused on the acquisition, exploitation and development of oil and gas properties in the United States.

 

On December 30, 2013, the Partnership and BreitBurn Operating L.P. (“BreitBurn Operating”), our wholly owned subsidiary, completed the acquisition of certain assets from CrownRock, L.P (“CrownRock”), Lynden USA Inc. (“Lynden”) and other additional interests in certain of the acquired assets in the Permian Basin from other sellers (together with the CrownRock and Lynden Acquisition the “Permian Basin Assets”). The Partnership paid $282.2 million and $19.3 million in cash subject to customary purchase price adjustments to CrownRock (the “CrownRock Acquisition”) and Lynden (the “Lynden Acquisition”), respectively. The amount paid to the other sellers was approximately $0.6 million. The assets acquired consist of oil and gas producing and non-producing properties located in the Wolfberry field in the Permian Basin of West Texas as further defined in the Purchase and Sale Agreement (the “CrownRock Assets” and the “Lynden Assets”).

 

On July 15, 2013, the Partnership and BreitBurn Operating L.P. completed the acquisition of certain assets from Whiting Oil and Gas Corporation (“Whiting”), a wholly owned subsidiary of Whiting Petroleum Corporation (the “Whiting Acquisition”). The Partnership paid approximately $845.3 million in cash, including post-closing adjustments. The assets acquired consist of oil and gas producing properties located in the Postle and Northeast Hardesty fields in Texas County, Oklahoma, including the related gathering and processing facilities, Hough crude oil pipeline, a 60% interest in the 120-mile Transpetco-operated CO2 transportation pipeline and other assets as further defined in the Purchase and Sale Agreement (the “Whiting Assets”).

 

On November 30, 2012, the Partnership and BreitBurn Operating completed the acquisition of certain assets from American Energy Operations, Inc. (“AEO”). The Partnership paid AEO approximately $38 million in cash and issued them approximately 3.01 million common units representing limited partner interests in the Partnership (“Common Units”) (the “AEO Acquisition”). The AEO Acquisition consisted principally of oil properties located in the Belridge Field in Kern County, California (the “AEO Assets”).

 

We account for acquisitions as business combinations using the acquisition method of accounting.

 

2.

Basis of Presentation

 

The Partnership’s unaudited pro forma combined balance sheet at September 30, 2013 has been presented to show the effect as if the CrownRock Acquisition and the Lynden Acquisition had occurred on September 30, 2013. The unaudited pro forma combined balance sheet at September 30, 2013 does not include the effect of the acquisitions from the other sellers in the Permian Basin Acquisitions as the amounts were not material. The Whiting Acquisition and the AEO Acquisition were already included in our balance sheet at September 30, 2013.

 

The unaudited pro forma combined statements of operations for the nine months ended September 30, 2013 and for the year ended December 31, 2012 have been presented based on the individual statements of operations of the Partnership, and reflect the pro forma operating results attributable to the CrownRock Assets, Lynden Assets, Whiting Assets and the AEO Assets as if the acquisitions and the related transactions had occurred on January 1, 2012. Our historical statements of operations include operating results from the AEO Assets for the nine months ended September 30, 2013 and, as such, there are no pro forma adjustments related to the AEO Assets for this period. Our historical statements of operations include operating results from the Whiting Assets for the period from July 15, 2013 to September 30, 2013 and, as such, the pro forma adjustments related to the Whiting Assets for the period January 1, 2013 to July 15, 2013 are included for the nine months ended September 30, 2013. In 2012, our historical statements of operations include operating results from the AEO Assets for December 2012 and, as such, these are pro forma adjustments related to the AEO Assets for the eleven months period ended November 30, 2012. The pro forma adjustments related to the Whiting Assets are for the entire 2012 year.

 

 

Pro forma data is based on currently available information and certain estimates and assumptions as explained in the notes to the unaudited pro forma combined financial statements. Pro forma data is not necessarily indicative of the financial results that would have been attained had the CrownRock Acquisition, the Lynden Acquisition, the Whiting Acquisition and the AEO Acquisition occurred on January 1, 2012. As actual adjustments may differ from the pro forma adjustments, the pro forma amounts presented should not be viewed as indicative of operations in future periods. The accompanying unaudited pro forma combined financial statements of the Partnership should be read in conjunction with our Quarterly Report on Form 10-Q for the nine months ended September 30, 2013, our Annual Report on Form 10-K for the year ended December 31, 2012, as amended, the statement of revenues and direct operating expenses for the CrownRock Assets and Lynden Assets and the notes thereto filed as Exhibit 99.1 and Exhibit 99.2 to this Current Report on Form 8-K. The statement of revenues and direct operating expenses for the AEO Assets and the related notes thereto filed as Exhibit 99.2 to our Current Report on Form 8-K filed on December 6, 2012. The statement of revenues and direct operating expenses for the Whiting Assets and the related notes thereto filed as Exhibit 99.1 to our Current Report on Form 8-K/A filed on August 30, 2013.

 

3.

Pro Forma Adjustments to the Unaudited Combined Balance Sheet

 

Pro forma adjustments to the Unaudited Combined Balance Sheet for the period ended September 30, 2013 reflect the acquisition and the preliminary purchase price allocation for the 2013 Permian Basin Assets, assuming borrowings were made under our Second Amended and Restated Credit Agreement.

 

The preliminary purchase price allocation is based on discounted cash flows, quoted market prices and estimates made by management, the most significant assumptions related to the estimated fair values assigned to oil and gas properties. To estimate the fair values of the properties, estimates of oil and gas reserves were prepared by management in consultation with independent engineers. We apply estimated future prices to the estimated reserve quantities acquired, and estimate future operating and development costs to arrive at estimates of future net revenues. For estimated proved reserves, the future net revenues are discounted using a weighted average cost of capital, which approximated 10%.

 

The preliminary purchase price allocation is subject to final closing adjustments. We expect to finalize the purchase price allocation within one year of the acquisition date.

 

(a)

The preliminary allocation of the purchase price for the 2013 Permian Basin Assets is summarized below:

 

Thousands of dollars
Oil and gas properties - proved		$	258,728
Oil and gas properties - unproved			44,451
Asset retirement obligation			(1,069	)
		$	302,110

 

(b)

The purchase price was approximately $302.1 million and the payment was made with borrowings under our Second Amended and Restated Credit Agreement.

  

 

4. Pro Forma Adjustments to the Unaudited Combined Statement of Operations

 

Pro forma adjustments to the Consolidated Statement of Operations for the nine months ended September 30, 2013 and for the year ended December 31, 2012 assume the CrownRock, Lynden, Whiting and AEO acquisitions were consummated on January 1, 2012.

 

The unaudited pro forma combined statements of operations have been adjusted as follows:

 

(a)

Record revenue and direct operating expenses for the acquired assets derived from historical financial records.

 

For the nine months ended September 30, 2013:

 

Permian Basin Assets - for the nine months ended September 30, 2013, $51.3 million of revenue and $7.4 million of direct operating expenses.

 

Thousands of dollars		CrownRock, L.P. Historical				Lynden USA Inc. Historical				Permian Basin Assets  Historical
Revenues		$	47,439			$	3,839			$	51,278
Direct Operating Expenses			6,960				465				7,425
Revenues in excess of directing operating expenses		$	40,479			$	3,374			$	43,853

  

Whiting - for the period January 1, 2013 to July 15, 2013, $119.7 million of revenue and $32.7 million of direct operating expenses.

 

For the year ended December 31, 2012:

 

Permian Basin Assets - for the year ended December 31, 2012, $25.4 million of revenue and $3.8 million of direct operating expenses.

 

Thousands of dollars		CrownRock, L.P. Historical				Lynden USA Inc. Historical				Permian Basin Assets  Historical
Revenues		$	24,248			$	1,180			$	25,428
Direct Operating Expenses			3,734				115				3,849
Revenues in excess of directing operating expenses		$	20,514			$	1,065			$	21,579

 

Whiting - for the year ended December 31, 2012, $239.5 million of revenue and $62.2 million of direct operating expenses.

 

AEO-for the eleven months ended November 30, 2012, $27.5 million of revenue and $5.9 million of direct operating expenses.

 

(b)

For the nine months ended September 30, 2013:

 

Thousands of dollars		Permian Basin Assets				Whiting Assets				Total Pro Forma  Adjustments
Depletion, depreciation and amortization		$	8,799			$	34,113			$	42,912
General and administrative expenses			375				(3,005	)			(2,630	)

 

Record incremental depletion, depreciation and accretion expense related to the acquired assets. Record incremental general and administrative expenses of $1.0 million and an adjustment to remove acquisition transaction costs from general and administrative expenses related to the Whiting Assets of $3.6 million, which was included in the Partnership’s historical consolidated statement of operations.

  

 

For the year ended December 31, 2012:

 

Thousands of dollars		Permian Basin Assets				Whiting Assets				AEO Assets				Total Pro Forma Adjustments
Depletion, depreciation and amortization		$	4,833			$	66,513			$	6,903			$	78,249
General and administrative expenses			765				600				(365	)			1,000

 

Record incremental depletion, depreciation and accretion expense related to the acquired assets. Record incremental general and administrative expenses of $1.4 million and an adjustment to remove acquisition transaction costs from general and administrative expenses related to the AEO Assets of $0.4 million, which was included in the Partnership’s historical consolidated statement of operations.

 

(c)

Record incremental interest expense associated with bank debt and Senior Notes of approximately $531 million incurred to fund a portion of the CrownRock, Lynden, Whiting and AEO acquisitions; the assumed variable rate was 2.721% and 2.626% for the nine months ended September 30, 2013 and the year ended December 31, 2012, respectively. If the variable interest rate increased or decreased by 0.125% from the assumed variable rate, the annual pro forma interest expense would have increased or decreased by $1.7 million. We assumed a fixed rate of 7.875% on our Senior Notes debt.

 

- for the nine months ended September 30, 2013, $17.6 million.

- for the year ended December 31, 2012, $27.2 million.

 

Record incremental amortization of debt issuance costs incurred in connection with our Second Amended and Restated Credit Agreement.

 

- for the nine months ended September 30, 2013, $0.9 million.

- for the year ended December 31, 2012, $1.8 million.

 

(d)

For the year ended December 31, 2012 and for the nine months ended September 30, 2013, give effect, as of January 1, 2012, of the 3.01 million Common Units issued to AEO as partial consideration for the AEO Assets and the 9.2 million Common Units issued in February 2012, 11.5 million Common Units issued in November 2012, and 14.95 million Common Units issued in February 2013 to the denominator for calculating net income (loss) per unit. Also, include weighted average participating securities and dilutive units (previously not included in the denominator of net income (loss) per unit) as the pro forma combined statement of operations is in an income position compared to a loss position for the Partnership’s historical statement of operations for the year ended December 31, 2012.

 

 

5. Supplemental Oil and Gas Information (Unaudited)

 

The following table sets forth certain unaudited pro forma information regarding estimates of the Partnership’s proved oil and natural gas reserves for the year ended December 31, 2012, giving effect to the CrownRock Acquisition, the Lynden Acquisition and the Whiting Acquisition as if it had occurred on January 1, 2012. The AEO Acquisition was already included in the Partnership’s proved reserves as of December 31, 2012. Because oil reserve estimates are inherently imprecise and require extensive judgments of reservoir engineering data, they are generally less precise than estimates made in conjunction with financial disclosures.

 

The unweighted average first-day-of-the-month oil and natural gas prices used to determine our historical total estimated proved reserves as of December 31, 2012 were $95.97 per Bbl of oil for Michigan, California, Oklahoma, Texas and Florida, $76.79 per Bbl of oil for Wyoming and $4.12 per MMBtu of natural gas.

 

		BreitBurn Energy Partners L.P.												Whiting Assets												Permian Basin Assets												BreitBurn Energy Partners L.P.
		Historical												Historical												Historical (a)												Pro Forma
		Total				Oil				Gas				Total				Oil				Gas				Total				Oil				Gas				Total				Oil				Gas
		(MBoe)				(MBbl)				(MMcf)				(MBoe)				(MBbl)				(MMcf)				(MBoe)				(MBbl)				(MMcf)				(MBoe)				(MBbl)				(MMcf)
Proved Reserves
Beginning balance			151,106				52,682				590,543				36,011				34,406				9,636				3,820				2,867				5,718				190,938				89,955				605,897
Revision of previous estimates			(27,086	)			3,852				(185,627	)			12,020				11,504				3,090				2,020				1,090				5,580				(13,047	)			16,446				(176,957	)
Extensions, discoveries and other additions			-				-				-				-				-				-				4,809				3,265				9,265				4,809				3,265				9,265
Purchase of reserves in-place			33,696				26,092				45,625				-				-				-				2,397				1,589				4,846				36,093				27,681				50,471
Production			(8,318	)			(3,652	)			(27,997	)			(2,966	)			(2,885	)			(488	)			(381	)			(252	)			(776	)			(11,666	)			(6,789	)			(29,261	)
Ending balance			149,398				78,974				422,544				45,065				43,025				12,238				12,665				8,559				24,633				207,127				130,558				459,415
Proved Developed Reserves
Beginning balance			131,462				47,813				501,891				31,337				29,796				9,243				3,820				2,867				5,718				166,618				80,476				516,852
Ending balance			119,721				59,158				363,378				32,477				30,914				9,372				5,354				3,502				11,111				157,551				93,574				383,861
Proved Undeveloped Reserves																															-				-				-				-				-
Beginning balance			19,644				4,869				88,652				4,674				4,610				393				-				-				-				24,320				9,479				89,045
Ending balance			29,677				19,816				59,167				12,588				12,111				2,866				7,311				5,057				13,522				49,577				36,984				75,555

  

 

(a)

The following table sets forth pro forma information regarding estimates of the acquired Permian Basin Assets proved oil and natural gas reserves for the year ended December 31, 2012:

 

		CrownRock L.P.												Lynden USA Inc.												Permian Basin Assets
		Historical												Historical												Historical
		Total				Oil				Gas				Total				Oil				Gas				Total				Oil				Gas
		(MBoe)				(MBbl)				(MMcf)				(MBoe)				(MBbl)				(MMcf)				(MBoe)				(MBbl)				(MMcf)
Proved Reserves
Beginning balance			3,775				2,834				5,646				45				33				72				3,820				2,867				5,718
Revision of previous estimates			2,004				1,085				5,514				16				5				66				2,020				1,090				5,580
Extensions, discoveries and other additions			4,542				3,068				8,843				267				197				422				4,809				3,265				9,265
Improved recovery			-				-				-				-				-				-				-				-				-
Purchase of reserves in-place			1,666				1,133				3,200				730				456				1,646				2,397				1,589				4,846
Sale of reserves in-place			-				-				-				-				-				-				-				-				-
Production			(362	)			(241	)			(723	)			(20	)			(11	)			(53	)			(381	)			(252	)			(776	)
Ending balance			11,625				7,879				22,480				1,038				680				2,153				12,665				8,559				24,633
Proved Developed Reserves
Beginning balance			3,775				2,834				5,646				45				33				72				3,820				2,867				5,718
Ending balance			4,940				3,255				10,111				414				247				1,000				5,354				3,502				11,111
Proved Undeveloped Reserves
Beginning balance			-				-				-				-				-				-				-				-				-
Ending balance			6,686				4,624				12,369				625				433				1,153				7,311				5,057				13,522

  

The unweighted average first-day-of-the-month oil and natural gas prices used to determine the estimated proved reserves of the Permian Basin Assets as of December 31, 2012 were $91.21 per Bbl and $2.76 per Mcf of natural gas.

 

Summarized in the following table is information for the Partnership’s unaudited pro forma standardized measure of discounted cash flows relating to estimated proved reserves as of December 31, 2012, giving effect to the CrownRock Assets and the Lynden Assets. The standardized measure of discounted future net cash flows was determined based on the economic conditions in effect at December 31, 2012. The disclosures below do not purport to present the fair market value of the Partnership’s oil and gas reserves. An estimate of the fair market value would also take into account, among other things, the recovery of reserves in excess of proved reserves, anticipated future changes in prices and costs, a discount factor more representative of the time value of money and risks inherent in reserve estimates. The pro forma standardized measure of discounted future net cash flows is presented as follows:

 

		BreitBurn Energy Partners L.P.				Whiting Assets				Permian Basin Assets				BreitBurn Energy Partners L.P.
Thousands of dollars		Historical				Historical				Historical (a)				Pro Forma
Future cash inflows		$	8,512,018			$	3,697,226			$	948,001			$	13,157,245
Future development costs			(728,577	)			(308,732	)			(145,907	)			(1,183,216	)
Future production expense			(3,950,308	)			(1,390,023	)			(293,128	)			(5,633,459	)
Future net cash flows			3,833,133				1,998,471				508,966				6,340,570
Discounted at 10% per year			(1,843,238	)			(1,013,261	)			(322,598	)			(3,179,097	)
Standardized measure of discounted future net cash flows		$	1,989,895			$	985,210			$	186,368			$	3,161,473

 

 

(a)

The following table sets forth the pro forma standardized measure of discounted future net cash flows for the acquired Permian Basin Assets as follows:

 

		CrownRock L.P.				Lynden USA Inc.				Permian Basin Assets
Thousands of dollars		Historical				Historical				Historical
Future cash inflows		$	871,276			$	76,725			$	948,001
Future development costs			(132,434	)			(13,473	)			(145,907	)
Future production expense			(269,173	)			(23,955	)			(293,128	)
Future net cash flows			469,669				39,297				508,966
Discounted at 10% per year			(296,452	)			(26,146	)			(322,598	)
Standardized measure of discounted future net cash flows		$	173,217			$	13,151			$	186,368

 

The following table sets forth unaudited pro forma information for the principal sources of changes in the standardized measure of discounted future net cash flows for the year ended December 31, 2012, giving effect to the CrownRock Assets, the Lynden Assets and the Whiting Assets:

 

		BreitBurn Energy Partners L.P.				Whiting Assets				Permian Basin Assets				BreitBurn Energy Partners L.P.
Thousands of dollars		Historical				Historical				Historical (a)				Pro Forma
Beginning balance		$	1,659,301			$	983,002			$	57,996			$	2,700,299
Sales and transfers, net of production expense			(218,088	)			(177,362	)			(21,796	)			(417,246	)
Net change in sales and transfer prices, net of production expense			(320,533	)			(166,834	)			(2,386	)			(489,753	)
Previously estimated development costs incurred during year			61,767				67,356				27,038				156,161
Changes in estimated future development costs			(41,372	)			(215,881	)			(23,896	)			(281,149	)
Extensions, discoveries and improved recovery, net of costs			-								67,712				67,712
Purchase of reserves in place			530,532				-				35,858				566,390
Revision of quantity estimates and timing of estimated production			152,358				396,629				40,042				589,029
Accretion of discount			165,930				98,300				5,800				270,030
Ending balance		$	1,989,895			$	985,210			$	186,368			$	3,161,473

 

(a)

The following table sets forth pro forma principal sources of changes in standardized measure of discounted future net cash flows for the acquired Permian Basin Assets as follows:

 

		CrownRock L.P.				Lynden USA Inc.				Permian Basin Assets
Thousands of dollars		Historical				Historical				Historical
Beginning balance		$	57,429			$	567			$	57,996
Sales and transfers, net of production expense			(20,731	)			(1,065	)			(21,796	)
Net change in sales and transfer prices, net of production expense			(2,367	)			(19	)			(2,386	)
Previously estimated development costs incurred during year			20,095				6,943				27,038
Changes in estimated future development costs			(17,602	)			(6,294	)			(23,896	)
Extensions, discoveries and improved recovery, net of costs			65,069				2,643				67,712
Purchase of reserves in place			25,644				10,214				35,858
Revision of quantity estimates and timing of estimated production			39,937				105				40,042
Accretion of discount			5,743				57				5,800
Ending balance		$	173,217			$	13,151			$	186,368