Alta Mesa Holdings, LP - FORM 8-K - EX-99.2

Attached files

file	filename
EX-10.2 - EX-10.2 - Alta Mesa Holdings, LP	c403-20151002ex1022dfa22.htm
EX-99.1 - EX-99.1 - Alta Mesa Holdings, LP	c403-20151002ex991f73eb7.htm
8-K - FORM 8-K - Alta Mesa Holdings, LP	c403-20151002x8k.htm

Exhibit 99.2

ALTA MESA HOLDINGS, LP

UNAUDITED PRO FORMA CONDENSED CONSOLIDTAED FINANCIAL STATEMENTS

The following unaudited pro forma condensed consolidated financial statements and explanatory notes give effect to the sale of all membership interests (the “Membership Interests”) in Alta Mesa Eagle, LLC (“AME”), Alta Mesa Holdings, LP’s (“Alta Mesa,” “we,” “us”, “the Company”) wholly owned subsidiary, to EnerVest Energy Institutional Fund XIV-A, L.P. and EnerVest Energy Institutional Fund XIV-WIC, L.P. (collectively, “EnerVest”) on September 30, 2015, pursuant to a purchase and sale agreement (the “Sale Agreement”) entered into by the Company, AME and EnerVest on September 16, 2015, with an effective date of July 1, 2015.

The unaudited pro forma condensed consolidated financial statements and explanatory notes are based on the estimates and assumptions set forth in the explanatory notes. The unaudited pro forma condensed consolidated financial statements have been prepared utilizing our historical consolidated financial statements, and should be read in conjunction with the historical consolidated financial statements and notes thereto.

The unaudited pro forma consolidated statements of operations have been prepared as if the sale transaction had been consummated on January 1, 2014. The unaudited condensed consolidated balance sheet has been prepared as if the sale transaction had been consummated on June 30, 2015.

The unaudited pro forma condensed consolidated financial statements are presented for informational purposes only, are based on certain assumptions that we believe are reasonable, and do not purport to represent our financial condition or our results of operations had the business combinations occurred on the dates noted above or to project the results for any future date or period. In the opinion of management, all adjustments have been made that are necessary to present fairly the unaudited pro forma condensed consolidated financial information.

The unaudited pro forma condensed consolidated financial statements and explanatory notes are based on the estimates and assumptions set forth in the explanatory notes.

ALTA MESA HOLDINGS, LP

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

BALANCE SHEETS



						Pro Forma
	June 30,		Pro forma			June 30,
	2015		Adjustments			2015

	(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	8,529	$	—		$	8,529
Short-term restricted cash		105		—			105
Accounts receivable, net of allowance of $1,292		37,139		32,802	(c)		69,941
Other receivables		5,787		—			5,787
Receivable due from affiliate		2,838		—			2,838
Prepaid expenses and other current assets		12,280		—			12,280
Derivative financial instruments		20,609		—			20,609
TOTAL CURRENT ASSETS		87,287		32,802			120,089
PROPERTY AND EQUIPMENT
Oil and natural gas properties, successful efforts method, net		620,896		(50,218)	(a)		570,678
Other property and equipment, net		10,892		—			10,892
TOTAL PROPERTY AND EQUIPMENT, NET		631,788		(50,218)			581,570
OTHER ASSETS
Investment in LLC — cost		9,000		—			9,000
Deferred financing costs, net		10,880		—			10,880
Notes receivable due from affiliate		8,847		—			8,847
Advances to operators		245		—			245
Deposits and other assets		1,134		—			1,134
Derivative financial instruments		19,672		—			19,672
TOTAL OTHER ASSETS		49,778		—			49,778
TOTAL ASSETS	$	768,853	$	(17,416)		$	751,437
LIABILITIES AND PARTNERS’ CAPITAL (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	87,015	$	250	(a)	$	87,265
Current portion, asset retirement obligations		710		—			710
Derivative financial instruments		—		—			—
TOTAL CURRENT LIABILITIES		87,725		250			87,975
LONG-TERM LIABILITIES
Asset retirement obligations, net of current portion		62,504		(202)	(a)		62,302
Long-term debt		792,429		(83,622)	(b)		708,807
Notes payable to founder		25,139		—			25,139
Derivative financial instruments		64		—			64
Other long-term liabilities		14,968		—			14,968
TOTAL LONG-TERM LIABILITIES		895,104		(83,824)			811,280
TOTAL LIABILITIES		982,829		(83,574)			899,255
PARTNERS’ CAPITAL (DEFICIT)		(213,976)		66,158	(a)		(147,818)
TOTAL LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)	$	768,853	$	(17,416)		$	751,437

See notes to the unaudited pro forma condensed consolidated financial statements.

ATLA MESA HOLDINGS, LP

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2014




			Pro forma			Pro forma				Pro Forma
		Dec 31, 2014	Adjustments (1)			Adjustments (2)				Dec 31, 2014

	(in thousands)
OPERATING REVENUES AND OTHER
Oil, natural gas, and natural gas liquids	$	431,125	$	(10,679)	(a)	$	(71,155)	(c)	$	349,291
Other revenues		1,003		—			—			1,003
Total operating revenues		432,128		(10,679)			(71,155)			350,294
Gain (loss) on sale of assets		87,520		(72,508)	(b)		—			15,012
Gain (loss) oil and natural gas derivative contracts		96,559		—			—			96,559
Total operating revenues and other		616,207		(83,187)			(71,155)			461,865
OPERATING EXPENSES
Lease and plant operating expense		73,820		(1,098)	(a)		(2,581)	(c)		70,141
Production and ad valorem taxes		28,214		(763)	(a)		(3,733)	(c)		23,718
Workover expense		8,961		(5)	(a)		(173)	(c)		8,783
Exploration expense		61,912		—			—			61,912
Depreciation, depletion, and amortization expense		141,804		(2,552)	(a)		(22,500)	(c)		116,752
Impairment expense		74,927		(4)	(a)		(1,365)	(c)		73,558
Accretion expense		2,198		(3)	(a)		(7)	(c)		2,188
General and administrative expense		69,198		—			—			69,198
Total operating expenses		461,034		(4,425)			(30,359)			426,250
INCOME (LOSS) FROM OPERATIONS		155,173		(78,762)			(40,796)			35,615
OTHER INCOME (EXPENSE)
Interest expense, net		(55,797)		—			—			(55,797)
TOTAL OTHER INCOME (EXPENSE)		(55,797)		—			—			(55,797)
INCOME (LOSS) BEFORE STATE INCOME TAXES		99,376		(78,762)			(40,796)			(20,182)
(Provision) for state income taxes		(176)		—			—			(176)
NET INCOME (LOSS)	$	99,200	$	(78,762)		$	(40,796)		$	(20,358)

See notes to the unaudited pro forma condensed consolidated financial statements.

ALTA MESA HOLDINGS, LP

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2015




			Pro forma				Pro Forma
		June 30, 2015	Adjustments				June 30, 2015
				(in thousands)
OPERATING REVENUES AND OTHER
Oil, natural gas, and natural gas liquids	$	131,883	$	(14,671)	(a)	$	117,212
Other		414		—			414
Total operating revenues		132,297		(14,671)			117,626
Gain (loss) on sale of assets		159		—	(b)		159
Gain (loss) oil and natural gas derivative contracts		11,599		—			11,599
Total operating revenues and other		144,055		(14,671)			129,384
OPERATING EXPENSES
Lease and plant operating expense		33,888		(572)	(a)		33,316
Production and ad valorem taxes		8,537		(966)	(a)		7,571
Workover expense		3,255		(9)	(a)		3,246
Exploration expense		30,341		—			30,341
Depreciation, depletion, and amortization expense		78,972		(9,011)	(a)		69,961
Impairment expense		77,361		(3,134)	(a)		74,227
Accretion expense		1,000		(6)	(a)		994
General and administrative expense		29,659		—			29,659
TOTAL EXPENSES		263,013		(13,698)			249,315
INCOME FROM OPERATIONS		(118,958)		(973)			(119,931)
OTHER INCOME (EXPENSE)
Interest expense, net		(29,186)		—			(29,186)
TOTAL OTHER INCOME (EXPENSE)		(29,186)		—			(29,186)
INCOME BEFORE INCOME TAXES		(148,144)		(973)			(149,117)
PROVISION FOR STATE INCOME TAXES		(576)		—			(576)
NET INCOME	$	(148,720)	$	(973)		$	(149,693)

See notes to the unaudited pro forma condensed consolidated financial statements.

ALTA MESA HOLDINGS, LP

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDTAED FINANCIAL STATEMENTS

Description of the transaction

On September 30, 2015, we closed the sale of all the membership interest in AME, the Company’s wholly owned subsidiary, to EnerVest. AME owns certain oil and natural gas non-operated, producing properties located primarily in the Eagle Ford shale play in Karnes County, Texas. The effective date of the transaction will be July 1, 2015. The Sale will dispose of all of the Company’s remaining interests in this area.

Pursuant to the Sale Agreement, the aggregate cash purchase price for all the Membership Interest was $125 million subject to certain adjustments, consisting of $118 million (the “Base Purchase Price”), and additional contingent payments of approximately $7.0 million in the aggregate, payable to the Company by EnerVest by the 15th of each calendar month in which certain amounts owed to AME prior to the effective date have been received. The net cash Base Purchase Price, after payment of transaction-related fees and expenses, was approximately $116.2 million. Total cash paid to the Company at closing was $85.2 million, consisting of $82.6 million equal to 70% of the Base Purchase Price, and $2.6 million for customary closing adjustments. Of the remaining Base Purchase Price, (a) 20% will be paid to the Company on the earlier of (i) November 2, 2015 (“Second Funding Date”) or (ii) three business days after EnerVest obtains the required proceeds under a credit facility secured by AME’s assets; and (b) 10%, less amounts for (i) any agreed upon uncured title defects, within three business days of November 2, 2015 and (ii) with respect to any disputed title defects, on a date after an independent expert’s final and binding decision. The Sale Agreement provides for customary adjustments to the Base Purchase Price for revenues and expenses incurred after the Effective Date. Cash received, after transactions-related fees and expenses, was utilized to pay down borrowings under our senior secured revolving credit facility.

Basis of Presentation

The unaudited pro forma condensed consolidated financial information was prepared in accordance with Securities and Exchange Commission (“SEC”) rules which are subject to change and interpretation and was based on the historical consolidated financial statements of Alta Mesa.

The pro forma adjustments to historical financial information are based on currently available information and certain estimates and assumptions and therefore the actual effects of this transaction will differ from the pro forma adjustments.

3. Adjustments and Assumptions to the Unaudited Pro Forma Condensed Consolidated Balance Sheet

The unaudited pro forma consolidated balance sheet were prepared assuming the transaction occurred on June 30, 2015.

The unaudited pro forma consolidated balance sheet as of June 30, 2015 reflects the following adjustments:

Adjustment to reflect the Eagle Ford divestiture providing for:

recognition of net cash proceeds received and legal fees incurred;

the elimination of the historical accounts of the assets;

recognition of related net gain on sale of $66.2 million; and

Adjustment to recognize the use of cash proceeds to repay borrowings under our senior secured revolving credit facility.

Adjustment to reflect the remaining balance to be received on Second Funding Date.

Adjustments and Assumptions to the Unaudited Pro Forma Condensed Consolidated Statements of Operations for the twelve months ended December 31, 2014

The unaudited pro forma condensed statements of operations were prepared assuming the transaction occurred on January 1, 2014.

(1) Adjustments to the pro forma condensed statements of operations for the twelve months ended December 31, 2014:

Elimination of approximately $6.3 million of revenue net of direct operating expenses and depreciation, depletion and amortization (“DD&A”) of the assets sold to Memorial Production Operating LLC (“MEMP”) on March 25, 2014.

Gain on sale of Eagle Ford assets of $72.5 million to MEMP on March 24, 2014 was excluded as it is a nonrecurring item.

(2) Adjustments to the pro forma condensed statements of operations for the twelve months ended December 31, 2014:

Elimination of the revenue and direct operating expenses and depreciation, depletion and amortization (“DD&A”) of the assets sold to EnerVest.

Adjustments and Assumptions to the Unaudited Pro Forma Condensed Consolidated Statements of Operations for the six months ended June 30, 2015

Adjustments to the pro forma condensed statements of operations for the six months ended June 30, 2015:

Elimination of the revenue and direct operating expenses and depreciation, depletion and amortization of the assets sold;

The gain on sale of the Membership Interest is not included as a pro forma adjustment in the pro forma condensed statements of operations as it is a nonrecurring item.

Alta Mesa Holdings, LP - FORM 8-K - EX-99.2 - October 2, 2015

Attached files

Alta Mesa Holdings, LP Reports