Attached files
| file | filename |
|---|---|
| 8-K - 8-K - STONE ENERGY CORP | d769220d8k.htm |
| EX-10.1 - EX-10.1 - STONE ENERGY CORP | d769220dex101.htm |
Exhibit 99.1
STONE ENERGY CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
On July 31, 2014, Stone Energy Corporation (“Stone”) completed the sale of its non-core Gulf of Mexico (“GOM”) conventional shelf properties to Talos Energy Offshore LLC, referred to herein as the “Sold Properties”. Additional details of the sale are described in the notes to these financial statements.
The accompanying unaudited pro forma consolidated financial statements and accompanying notes as of and for the three months ended March 31, 2014 and the year ended December 31, 2013 (the “Pro Forma Statements”), which have been prepared by Stone’s management, have been derived from the historical audited and unaudited consolidated financial statements of Stone included in the Annual Report on Form 10-K for the year ended December 31, 2013 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2014.
The unaudited pro forma consolidated balance sheet was prepared assuming the sale of the Sold Properties, including purchase price adjustments to date, occurred on March 31, 2014. The unaudited pro forma consolidated statements of income were prepared assuming the sale of the Sold Properties, including purchase price adjustments to date, occurred on January 1, 2013.
The Pro Forma Statements are presented for illustrative purposes only and do not indicate the results of operations or financial position of Stone had the transaction been in effect on the dates or for the periods indicated, or the results of operations or financial position of Stone for any future periods. The Pro Forma Statements should be read in conjunction with Stone’s Annual Report on Form 10-K for the year ended December 31, 2013 and Stone’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014.
STONE ENERGY CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2014
(In thousands of dollars)
| Historical | Pro Forma Adjustments |
Pro Forma | ||||||||||
| Assets | ||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 202,761 | $ | 175,147 | (a) | $ | 377,908 | |||||
| Accounts receivable |
190,573 | 190,573 | ||||||||||
| Fair value of hedging contracts |
745 | 745 | ||||||||||
| Current income tax receivable |
7,366 | 7,366 | ||||||||||
| Deferred taxes |
36,098 | 36,098 | ||||||||||
| Inventory |
4,651 | 4,651 | ||||||||||
| Other current assets |
1,774 | 1,774 | ||||||||||
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| Total current assets |
443,968 | 175,147 | 619,115 | |||||||||
| Oil and gas properties, full cost method of accounting: |
||||||||||||
| Proved, net |
1,845,774 | (307,892 | ) (b) | 1,537,882 | ||||||||
| Unevaluated |
906,043 | (1,106 | ) (b) | 904,937 | ||||||||
| Other property and equipment, net |
26,975 | 26,975 | ||||||||||
| Fair value of hedging contracts |
1,867 | 1,867 | ||||||||||
| Other assets, net |
37,154 | 37,154 | ||||||||||
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| Total assets |
$ | 3,261,781 | ($ | 133,851 | ) | $ | 3,127,930 | |||||
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| Liabilities and Stockholders’ Equity | ||||||||||||
| Current liabilities: |
||||||||||||
| Accounts payable to vendors |
$ | 165,973 | $ | 165,973 | ||||||||
| Undistributed oil and gas proceeds |
55,676 | 55,676 | ||||||||||
| Accrued interest |
22,247 | 22,247 | ||||||||||
| Fair value of hedging contracts |
15,277 | 15,277 | ||||||||||
| Asset retirement obligations |
87,927 | (7,314 | ) (c) | 80,613 | ||||||||
| Other current liabilities |
28,467 | 28,467 | ||||||||||
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| Total current liabilities |
375,567 | (7,314 | ) | 368,253 | ||||||||
| Long-term debt |
1,030,466 | 1,030,466 | ||||||||||
| Deferred taxes |
406,477 | 406,477 | ||||||||||
| Asset retirement obligations |
416,171 | (126,537 | ) (c) | 289,634 | ||||||||
| Fair value of hedging contracts |
376 | 376 | ||||||||||
| Other long-term liabilities |
46,772 | 46,772 | ||||||||||
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| Total liabilities |
2,275,829 | (133,851 | ) | 2,141,978 | ||||||||
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| Stockholders’ equity: |
||||||||||||
| Common stock |
491 | 491 | ||||||||||
| Treasury stock |
(860 | ) | (860 | ) | ||||||||
| Additional paid-in capital |
1,394,694 | 1,394,694 | ||||||||||
| Accumulated deficit |
(399,222 | ) | (399,222 | ) | ||||||||
| Accumulated other comprehensive loss |
(9,151 | ) | (9,151 | ) | ||||||||
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| Total stockholders’ equity |
985,952 | — | 985,952 | |||||||||
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| Total liabilities and stockholders’ equity |
$ | 3,261,781 | ($ | 133,851 | ) | $ | 3,127,930 | |||||
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See accompanying notes to the unaudited pro forma consolidated financial statements.
STONE ENERGY CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2013
(In thousands, except per share amounts)
| Historical | Pro Forma Adjustments |
Pro Forma | ||||||||||
| Operating revenue: |
||||||||||||
| Oil production |
$ | 715,104 | ($ | 116,908 | ) (a) | $ | 598,196 | |||||
| Gas production |
190,580 | (46,702 | ) (a) | 143,878 | ||||||||
| Natural gas liquids production |
60,687 | (6,488 | ) (a) | 54,199 | ||||||||
| Other operational income |
7,808 | (206 | ) (a) | 7,602 | ||||||||
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| Total operating revenue |
974,179 | (170,304 | ) | 803,875 | ||||||||
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| Operating expenses: |
||||||||||||
| Lease operating expenses |
201,153 | (61,830 | ) (a) | 139,323 | ||||||||
| Transportation, processing and gathering expenses |
42,172 | (3,369 | ) (a) | 38,803 | ||||||||
| Production taxes |
15,029 | (1,942 | ) (a) | 13,087 | ||||||||
| Depreciation, depletion and amortization |
350,574 | (75,747 | ) (c) | 274,827 | ||||||||
| Accretion expense |
33,575 | (8,906 | ) (b) | 24,669 | ||||||||
| Salaries, general and administrative expenses |
59,524 | 59,524 | ||||||||||
| Franchise tax settlement |
12,590 | 12,590 | ||||||||||
| Incentive compensation expense |
15,340 | 15,340 | ||||||||||
| Other operational expenses |
151 | (28 | ) (a) | 123 | ||||||||
| Derivative expense, net |
2,090 | 2,090 | ||||||||||
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| Total operating expenses |
732,198 | (151,822 | ) | 580,376 | ||||||||
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| Income from operations |
241,981 | (18,482 | ) | 223,499 | ||||||||
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| Other (income) expenses: |
||||||||||||
| Interest expense |
32,837 | 32,837 | ||||||||||
| Interest income |
(1,695 | ) | (1,695 | ) | ||||||||
| Other income |
(2,799 | ) | (2,799 | ) | ||||||||
| Loss on early extinguishment of debt |
27,279 | 27,279 | ||||||||||
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| Total other expenses |
55,622 | — | 55,622 | |||||||||
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| Income before income taxes |
186,359 | (18,482 | ) | 167,877 | ||||||||
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| Provision (benefit) for income taxes: |
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| Current |
(10,904 | ) | (10,904 | ) | ||||||||
| Deferred |
79,629 | (6,654 | ) (d) | 72,975 | ||||||||
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| Total income taxes |
68,725 | (6,654 | ) | 62,071 | ||||||||
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| Net income |
$ | 117,634 | ($ | 11,828 | ) | $ | 105,806 | |||||
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| Basic earnings per share |
$ | 2.36 | $ | 2.12 | ||||||||
| Diluted earnings per share |
$ | 2.36 | $ | 2.12 | ||||||||
| Average shares outstanding |
48,693 | 48,693 | ||||||||||
| Average shares outstanding assuming dilution |
48,735 | 48,735 | ||||||||||
See accompanying notes to the unaudited pro forma consolidated financial statements.
STONE ENERGY CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2014
(In thousands, except per share amounts)
| Historical | Pro Forma Adjustments |
Pro Forma | ||||||||||
| Operating revenue: |
||||||||||||
| Oil production |
$ | 138,289 | ($ | 30,324 | ) (a) | $ | 107,965 | |||||
| Gas production |
56,362 | (13,448 | ) (a) | 42,914 | ||||||||
| Natural gas liquids production |
27,970 | (2,971 | ) (a) | 24,999 | ||||||||
| Other operational income |
1,209 | (268 | ) (a) | 941 | ||||||||
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| Total operating revenue |
223,830 | (47,011 | ) | 176,819 | ||||||||
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| Operating expenses: |
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| Lease operating expenses |
46,903 | (16,287 | ) (a) | 30,616 | ||||||||
| Transportation, processing and gathering expenses |
14,626 | (1,648 | ) (a) | 12,978 | ||||||||
| Production taxes |
3,062 | (573 | ) (a) | 2,489 | ||||||||
| Depreciation, depletion and amortization |
82,646 | (17,306 | ) (c) | 65,340 | ||||||||
| Accretion expense |
7,555 | (2,065 | ) (b) | 5,490 | ||||||||
| Salaries, general and administrative expenses |
16,329 | 16,329 | ||||||||||
| Incentive compensation expense |
3,134 | 3,134 | ||||||||||
| Other operational expenses |
424 | 424 | ||||||||||
| Derivative expense, net |
599 | 599 | ||||||||||
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| Total operating expenses |
175,278 | (37,879 | ) | 137,399 | ||||||||
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| Income from operations |
48,552 | (9,132 | ) | 39,420 | ||||||||
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| Other (income) expenses: |
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| Interest expense |
8,357 | 8,357 | ||||||||||
| Interest income |
(143 | ) | (143 | ) | ||||||||
| Other income |
(707 | ) | (707 | ) | ||||||||
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| Total other expenses |
7,507 | — | 7,507 | |||||||||
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| Income before income taxes |
41,045 | (9,132 | ) | 31,913 | ||||||||
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| Provision (benefit) for income taxes: |
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| Deferred |
15,102 | (3,287 | ) (d) | 11,815 | ||||||||
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| Total income taxes |
15,102 | (3,287 | ) | 11,815 | ||||||||
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| Net income |
$ | 25,943 | ($ | 5,845 | ) | $ | 20,098 | |||||
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| Basic earnings per share |
$ | 0.52 | $ | 0.40 | ||||||||
| Diluted earnings per share |
$ | 0.52 | $ | 0.40 | ||||||||
| Average shares outstanding |
49,013 | 49,013 | ||||||||||
| Average shares outstanding assuming dilution |
49,062 | 49,062 | ||||||||||
See accompanying notes to the unaudited pro forma consolidated financial statements.
STONE ENERGY CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
On July 31, 2014, Stone completed the sale of its non-core GOM conventional shelf properties (the “Sold Properties”) to Talos Energy Offshore LLC. The net cash proceeds received from the sale totaled approximately $177.6 million, representing gross proceeds of $200.0 million adjusted by $22.4 million for preliminary purchase price adjustments for operations related to the Sold Properties after April 1, 2014, the effective date of the transaction. Estimated transaction costs associated with the sale are approximately $2.5 million.
The historical financial information has been derived from the historical audited and unaudited consolidated financial statements of Stone included in the Annual Report on Form 10-K for the year ended December 31, 2013 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2014. The unaudited pro forma consolidated balance sheet was prepared as if the sale occurred as of March 31, 2014. The unaudited pro forma consolidated statements of income were prepared as if the sale occurred as of January 1, 2013.
The pro forma adjustments were based on actual information and estimates made by management. These unaudited pro forma consolidated financial statements are provided for illustrative purposes only and may or may not provide an indication of results in the future.
Note 2 – Pro Forma Adjustments
The unaudited pro forma consolidated balance sheet at March 31, 2014 reflects the following adjustments:
| (a) | Adjustment for net cash proceeds of approximately $175.1 million, which represents the gross sales price of $200.0 million, less purchase price adjustments of $22.4 million, and less estimated transaction costs of $2.5 million. |
| (b) | Adjustment to reflect the application of proceeds as an adjustment to the capitalized costs of oil and gas properties. |
| (c) | Adjustment to eliminate the asset retirement obligations associated with the Sold Properties. |
The unaudited pro forma consolidated statements of income for the year ended December 31, 2013 and the three months ended March 31, 2014 reflect the following adjustments:
| (a) | Adjustment to eliminate oil and gas revenues and direct operating expenses associated with the Sold Properties. |
| (b) | Adjustment to eliminate accretion expense attributable to asset retirement obligations associated with the Sold Properties. |
| (c) | Adjustment to eliminate depreciation, depletion and amortization expense relative to the Sold Properties. |
| (d) | Adjustment to income tax expense for the effects of the above pro forma adjustments. |