MAGNUM HUNTER RESOURCES CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - May 16, 2014

Attached files

file filename
8-K - 8-K - MAGNUM HUNTER RESOURCES CORPmhrform8-kxaxitems201.htm


Exhibit 99.1


Magnum Hunter Resources Corporation
Unaudited Pro Forma Consolidated Balance Sheet

The unaudited pro forma consolidated balance sheet gives effect to the following transactions (collectively referred to as the “transactions”):

1)
The sale by Williston Hunter Canada, Inc., a subsidiary of Magnum Hunter Resources Corporation (the “Company”), of certain oil and natural gas properties and assets located in Alberta, Canada (“Williston Hunter Canada Properties”) for cash consideration of CAD $9.5 million (approximately U.S. $8.6 million at the exchange rate as of the close of business on March 31, 2014), before customary purchase price adjustments, which closed on April 10, 2014; and

2)
The sale by the Company of 100% of its ownership interest in the Company's Canadian subsidiary, Williston Hunter Canada, Inc., whose assets consisted primarily of oil and natural gas properties located in the Tableland Field in Saskatchewan, Canada, for a purchase price of CAD $75.0 million (approximately U.S. $67.8 million at the exchange rate as of the close of business on March 31, 2014), subject to customary purchase price adjustments. The transaction closed on May 12, 2014.

The unaudited pro forma balance sheet as of March 31, 2014 is based on the Company’s unaudited consolidated balance sheet as of March 31, 2014, included in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2014, and gives effect to the transactions described above as if they occurred on March 31, 2014.
 
Because all of the operations of Williston Hunter Canada, Inc. were presented as discontinued operations in the Company’s historical financial statements for the three months ended March 31, 2014 and twelve months ended December 31, 2013, there were no pro forma adjustments to continuing operations. Therefore no pro forma statement of operations is presented.
 
The unaudited pro forma consolidated balance sheet as of March 31, 2014 presented herein has been included as required by the rules of the Securities and Exchange Commission and is provided for informational purposes only. The unaudited pro forma consolidated balance sheet should be read in conjunction with the Company’s historical consolidated financial statements and related notes for the three months ended March 31, 2014 and the year ended December 31, 2013.
 
The unaudited pro forma consolidated balance sheet presented herein is based upon assumptions and includes adjustments as explained in the notes to the unaudited pro forma consolidated balance sheet, and the actual recording of the transactions could differ. The unaudited pro forma consolidated balance sheet presented herein is not necessarily indicative of the financial position that would have occurred had the transactions described above occurred on the date indicated and should not be viewed as indicative of financial position in the future. However, management believes that the assumptions used provide a reasonable basis for presenting the significant effects of the transactions discussed above and that the pro forma adjustments give appropriate effect to those assumptions.















MAGNUM HUNTER RESOURCES CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 2014
(in thousands)
 
 
Historical
 
Williston Hunter Canada Properties
 
Williston Hunter Canada, Inc. Transaction
 
Pro Forma
ASSETS
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
64,452

 
$
8,587

A
$
67,792

D
$
140,831

Restricted cash
 
5,000

 
—

 
—

 
5,000

Accounts receivable:
 
 
 
 
 
 
 
 
Oil and natural gas sales
 
28,698

 
—

 
—

 
28,698

Joint interest and other, net of allowance for doubtful accounts
 
34,010

 
—

 
—

 
34,010

Derivative assets
 
35

 
—

 
—

 
35

Inventory
 
4,052

 
—

 
—

 
4,052

Investments
 
11,436

 
—

 
—

 
11,436

Prepaid expenses and other assets
 
3,471

 
—

 
—

 
3,471

Assets held for sale
 
5,018

 
—

 
(2,830
)
E
2,188

Total current assets
 
156,172

 
8,587

 
64,962

 
229,721

 
 
 
 
 
 
 
 
 
Property plant and equipment:
 
 
 
 
 
 
 
 
Oil and natural gas properties, successful efforts method of accounting, net
 
1,221,298

 
—

 
—

 
1,221,298

Gas transportation, gathering, and processing equipment, net
 
317,187

 
—

 
—

 
317,187

Total property and equipment, net
 
1,538,485

 
—

 
—

 
1,538,485

 
 
 
 
 
 
 
 
 
Other assets:
 
 
 
 
 
 
 
 
Deferred financing costs, net of amortization
 
17,738

 
—

 
—

 
17,738

Derivative assets, long-term
 
585

 
—

 
—

 
585

Intangible assets, net
 
6,029

 
—

 
—

 
6,029

Goodwill
 
30,602

 
—

 
—

 
30,602

Assets held for sale
 
142,349

 
(1,702
)
B
(55,087
)
E
85,560

Other assets
 
1,893

 
—

 
—

 
1,893

Total assets
 
$
1,893,853

 
$
6,885

 
$
9,875

 
$
1,910,613


The accompanying Notes are an integral part of the Unaudited Pro Forma Consolidated Balance Sheet.


















MAGNUM HUNTER RESOURCES CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 2014
(in thousands)
 
 
Historical
 
Williston Hunter Canada Properties
 
Williston Hunter Canada, Inc. Transaction
 
Pro Forma
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
Current portion of notes payable
 
$
5,372

 
$
—

 
$
—

 
$
5,372

Accounts payable
 
136,740

 
—

 
—

 
136,740

Accounts payable to related parties
 
451

 
—

 
—

 
451

Accrued liabilities
 
68,245

 
—

 
—

 
68,245

Revenue payable
 
11,317

 
—

 
—

 
11,317

Derivative liabilities
 
5,276

 
—

 
—

 
5,276

Liabilities associated with assets held for sale
 
20,159

 
(54
)
B
(3,846
)
E
16,259

Other liabilities
 
2,456

 
—

 
—

 
2,456

Total current liabilities
 
250,016

 
(54
)
 
(3,846
)
 
246,116

 
 
 
 
 
 
 
 
 
Other liabilities:
 
 
 
 
 
 
 
 
Long-term debt
 
891,534

 
—

 
—

 
891,534

Asset retirement obligation
 
16,546

 
—

 
—

 
16,546

Derivative liabilities, long-term
 
72,611

 
—

 
—

 
72,611

Other long term liabilities
 
2,218

 
—

 
—

 
2,218

Long-term liabilities associated with assets held for sale
 
12,983

 
—

 
(1,510
)
E
11,473

Total liabilities
 
1,245,908

 
(54
)
 
(5,356
)
 
1,240,498

 
 
 
 
 
 
 
 
 
Redeemable preferred stock:
 
 
 
 
 
 
 
 
Series C Cumulative Perpetual Preferred Stock
 
100,000

 
—

 
—

 
100,000

Series A Convertible Preferred Units of Eureka Hunter Holdings, LLC
 
142,275

 
—

 
—

 
142,275

 
 
 
 
 
 
 
 
 
Shareholders’ equity:
 
 
 
 
 
 
 
 
Preferred Stock, 10,000,000 shares authorized
 
 
 
 
 
 
 
 
Series D Cumulative Perpetual Preferred Stock
 
221,244

 
—

 
—

 
221,244

Series E Cumulative Convertible Preferred Stock
 
95,069

 
—

 
—

 
95,069

Common stock
 
1,773

 
—

 
—

 
1,773

Additional paid in capital
 
767,645

 
—

 
—

 
767,645

Accumulated deficit
 
(662,853
)
 
6,939

C
(6,659
)
F
(662,573
)
Accumulated other comprehensive loss
 
(22,305
)
 
—

 
21,890

E
(415
)
Treasury stock, at cost:
 
 
 
 
 
 
 
 
Series E Cumulative Preferred Stock
 
(2,030
)
 
—

 
—

 
(2,030
)
Common stock
 
(1,914
)
 
—

 
—

 
(1,914
)
Total Magnum Hunter Resources Corporation shareholders’ equity
 
396,629

 
6,939

 
15,231

 
418,799

Non-controlling interest
 
9,041

 
—

 
—

 
9,041

Total shareholders’ equity
 
405,670

 
6,939

 
15,231

 
427,840

Total liabilities and shareholders’ equity
 
$
1,893,853

 
$
6,885

 
$
9,875

 
$
1,910,613


The accompanying Notes are an integral part of the Unaudited Pro Forma Consolidated Balance Sheet.





Magnum Hunter Resources Corporation
Notes to Unaudited Pro Forma Consolidated Balance Sheet

A.
To record the proceeds from the sale of the Williston Hunter Canada Properties of CAD $9.5 million (USD $8.6 million) of cash, before customary closing adjustments.
 
 
B
To remove the Williston Hunter Canada Properties and related asset retirement obligation which were sold.
 
 
C
To record the gain of approximately $6.9 million in accumulated deficit for the sale of the Williston Hunter Canada Properties as the difference in the consideration received and carrying value of net assets sold.
 
 
D
To record the proceeds from the sale by the company of Williston Hunter Canada, Inc. of CAD $75.0 million (USD $67.8 million) of cash, before customary closing adjustments.
 
 
E
To remove the assets, liabilities, and accumulated other comprehensive income of Williston Hunter Canada, Inc., upon the sale.
 
 
F
To record the loss of approximately $6.7 million in accumulated deficit for the transaction as the difference in the consideration received and carrying value of net assets sold.







































Summary Pro Forma Oil, Gas and Natural Gas Reserves Data (Unaudited)

The table sets forth summary pro forma reserve data at December 31, 2013, which give effect to the transactions.

Estimated Quantities of Oil and Natural Gas Reserves at December 31, 2013

 
 
Historical
 
Williston Hunter Canada Properties
 
Williston Hunter Canada, Inc. Transaction
 
Pro Forma
Proved Reserves
 
 
 
 
 
 
 
 
Crude Oil (MBbl)
 
24,336

 
(217
)
 
(2,126
)
 
21,993

NGL (Mboe)
 
10,422

 
-

 
(12
)
 
10,410

Gas (MMcf)
 
246,782

 
(102
)
 
(82
)
 
246,598

Total (MBOE)
 
75,887

 
(234
)
 
(2,152
)
 
73,501

 
 
 
 
 
 
 
 
 
Proved Developed Reserves
 
 
 
 
 
 
 
 
Crude Oil (MBbl)
 
12,085

 
(217
)
 
(1,944
)
 
9,924

NGL (Mboe)
 
6,989

 
-

 
-

 
6,989

Gas (MMcf)
 
176,585

 
(102
)
 
-

 
176,483

Total (MBOE)
 
48,506

 
(234
)
 
(1,945
)
 
46,327


Standardized Measure of Discounted Future Net Cash Flows at December 31, 2013 (in thousands)

 
 
Historical
 
Williston Hunter Canada Properties
 
Williston Hunter Canada, Inc. Transaction
 
Pro Forma
Future cash inflows
 
$
3,711,260

 
$
(19,453
)
 
$
(193,301
)
 
$
3,498,506

Future production costs
 
(1,423,306
)
 
4,475

 
70,664

 
(1,348,167
)
Future development costs
 
(421,797
)
 
—

 
6,750

 
(415,047
)
Future income tax expense
 
(149,367
)
 
—

 
—

 
(149,367
)
Future net cash flows
 
1,716,790

 
(14,978
)
 
(115,887
)
 
1,585,925

10% annual discount for estimated timing of cash flows
 
(872,280
)
 
4,741

 
48,805

 
(818,734
)
Standardized measure of discounted future net cash flows
 
$
844,510

 
$
(10,237
)
 
$
(67,082
)
 
$
767,191






MAGNUM HUNTER RESOURCES CORP Reports