Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Alta Mesa Holdings, LP | d137109d8k.htm |
| EX-99.1 - EX-99.1 - Alta Mesa Holdings, LP | d137109dex991.htm |
| EX-10.1 - EX-10.1 - Alta Mesa Holdings, LP | d137109dex101.htm |
Exhibit 99.2
ALTA MESA HOLDINGS, LP
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED 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 and subsequent collection of the proceeds had been consummated on January 1, 2014. The unaudited condensed consolidated balance sheet has been prepared as the sale transaction and as if the subsequent collection of the proceeds had been consummated on September 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.
ALTA MESA HOLDINGS, LP
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEETS
| September 30, 2015 |
Pro forma Adjustments |
Pro Forma September 30, 2015 |
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| (in thousands) | ||||||||||||
| ASSETS |
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| CURRENT ASSETS |
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| Cash and cash equivalents |
$ | 6,791 | $ | — | $ | 6,791 | ||||||
| Short-term restricted cash |
105 | 105 | ||||||||||
| Accounts receivable, net of allowance of $1,292 and $1,449, respectively |
27,125 | — | 27,125 | |||||||||
| Other receivables |
134,194 | (121,997 | )(a) | 12,197 | ||||||||
| Receivable due from affiliate |
1,375 | 1,375 | ||||||||||
| Prepaid expenses and other current assets |
3,551 | — | 3,551 | |||||||||
| Derivative financial instruments |
53,324 | — | 53,324 | |||||||||
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| TOTAL CURRENT ASSETS |
226,465 | (121,997 | ) | 104,468 | ||||||||
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| PROPERTY AND EQUIPMENT |
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| Oil and natural gas properties, successful efforts method, net |
611,298 | — | 611,298 | |||||||||
| Other property and equipment, net |
10,418 | — | 10,418 | |||||||||
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| TOTAL PROPERTY AND EQUIPMENT, NET |
621,716 | — | 621,716 | |||||||||
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| OTHER ASSETS |
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| Long-term restricted cash |
— | — | ||||||||||
| Investment in Partnership — cost |
9,000 | — | 9,000 | |||||||||
| Deferred financing costs, net |
9,960 | — | 9,960 | |||||||||
| Notes receivable due from affiliate |
9,028 | 9,028 | ||||||||||
| Advances to operators |
101 | — | 101 | |||||||||
| Deposits and other assets |
1,130 | — | 1,130 | |||||||||
| Derivative financial instruments |
39,778 | — | 39,778 | |||||||||
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| TOTAL OTHER ASSETS |
68,997 | — | 68,997 | |||||||||
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| TOTAL ASSETS |
$ | 917,178 | $ | (121,997 | ) | $ | 795,181 | |||||
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| LIABILITIES AND PARTNERS’ CAPITAL (DEFICIT) |
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| CURRENT LIABILITIES |
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| Accounts payable and accrued liabilities |
$ | 94,839 | $ | (7,911 | )(b) | $ | 86,928 | |||||
| Current portion, asset retirement obligations |
688 | — | 688 | |||||||||
| Derivative financial instruments |
— | — | — | |||||||||
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| TOTAL CURRENT LIABILITIES |
95,527 | (7,911 | ) | 87,616 | ||||||||
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| LONG-TERM LIABILITIES |
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| Asset retirement obligations, net of current portion |
63,443 | — | 63,443 | |||||||||
| Long-term debt |
814,557 | (114,086 | )(c) | 700,471 | ||||||||
| Notes payable to founder |
25,444 | — | 25,444 | |||||||||
| Derivative financial instruments |
— | — | ||||||||||
| Other long-term liabilities |
19,103 | — | 19,103 | |||||||||
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| TOTAL LONG-TERM LIABILITIES |
922,547 | (114,086 | ) | 808,461 | ||||||||
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| TOTAL LIABILITIES |
1,018,074 | (121,997 | ) | 896,077 | ||||||||
| PARTNERS’ CAPITAL (DEFICIT) |
(100,896 | ) | — | (100,896 | ) | |||||||
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| TOTAL LIABILITIES AND PARTNERS’ CAPITAL (DEFICIT) |
$ | 917,178 | $ | (121,997 | ) | $ | 795,181 | |||||
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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 YEAR ENDED DECEMBER 31, 2014
| Dec 31, 2014 | Pro forma Adjustments (1) |
Pro forma Adjustments (2) |
Pro Forma Dec 31, 2014 |
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| (in thousands) | ||||||||||||||||
| OPERATING REVENUES AND OTHER |
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| Oil, natural gas, and natural gas liquids |
$ | 431,125 | $ | (10,679 | )(a) | $ | (71,155 | )(c) | $ | 349,291 | ||||||
| Other revenues |
1,003 | — | — | 1,003 | ||||||||||||
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| 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 | ||||||||||||
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| Total operating revenues and other |
616,207 | (83,187 | ) | (71,155 | ) | 461,865 | ||||||||||
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| OPERATING EXPENSES |
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| 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 | ||||||||||||
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| Total operating expenses |
461,034 | (4,425 | ) | (30,359 | ) | 426,250 | ||||||||||
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| INCOME (LOSS) FROM OPERATIONS |
155,173 | (78,762 | ) | (40,796 | ) | 35,615 | ||||||||||
| OTHER INCOME (EXPENSE) |
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| Interest expense, net |
(55,797 | ) | — | — | (55,797 | ) | ||||||||||
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| TOTAL OTHER INCOME (EXPENSE) |
(55,797 | ) | — | — | (55,797 | ) | ||||||||||
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| INCOME (LOSS) BEFORE STATE INCOME TAXES |
99,376 | (78,762 | ) | (40,796 | ) | (20,182 | ) | |||||||||
| (Provision) for state income taxes |
(176 | ) | — | — | (176 | ) | ||||||||||
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| NET INCOME (LOSS) |
$ | 99,200 | $ | (78,762 | ) | $ | (40,796 | ) | $ | (20,358 | ) | |||||
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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 NINE MONTHS ENDED SEPTEMBER 30, 2015
| September 30, 2015 |
Pro forma Adjustments |
Pro Forma September 30, 2015 |
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| (in thousands) | ||||||||||||
| OPERATING REVENUES AND OTHER |
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| Oil, natural gas and natural gas liquids |
$ | 192,990 | $ | (20,177 | )(a) | $ | 172,813 | |||||
| Other |
651 | — | 651 | |||||||||
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| Total operating revenues |
193,641 | (20,177 | ) | 173,464 | ||||||||
| Gain (loss) on sale of assets |
66,520 | (66,282 | )(b) | 238 | ||||||||
| Gain (loss) oil and natural gas derivative contracts |
83,618 | — | 83,618 | |||||||||
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| Total operating revenues and other |
343,779 | (86,459 | ) | 257,320 | ||||||||
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| OPERATING EXPENSES |
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| Lease and plant operating expense |
53,222 | (3,600 | )(a) | 49,622 | ||||||||
| Production and ad valorem taxes |
12,914 | (1,579 | )(a) | 11,335 | ||||||||
| Workover expense |
4,140 | (35 | )(a) | 4,105 | ||||||||
| Exploration expense |
37,166 | — | 37,166 | |||||||||
| Depreciation, depletion, and amortization expense |
111,916 | (12,213 | )(a) | 99,703 | ||||||||
| Impairment expense |
86,294 | (3,134 | )(a) | 83,160 | ||||||||
| Accretion expense |
1,578 | (10 | )(a) | 1,568 | ||||||||
| General and administrative expense |
45,438 | — | 45,438 | |||||||||
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| TOTAL EXPENSES |
352,668 | (20,571 | ) | 332,097 | ||||||||
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| INCOME FROM OPERATIONS |
(8,889 | ) | (65,888 | ) | (74,777 | ) | ||||||
| OTHER INCOME (EXPENSE) |
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| Interest expense, net |
(45,861 | ) | — | (45,861 | ) | |||||||
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| TOTAL OTHER INCOME (EXPENSE) |
(45,861 | ) | — | (45,861 | ) | |||||||
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| INCOME BEFORE INCOME TAXES |
(54,750 | ) | (65,888 | ) | (120,638 | ) | ||||||
| PROVISION FOR STATE INCOME TAXES |
(891 | ) | — | (891 | ) | |||||||
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| NET INCOME (LOSS) |
$ | (55,641 | ) | $ | (65,888 | ) | $ | (121,529 | ) | |||
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See notes to the unaudited pro forma condensed consolidated financial statements.
ALTA MESA HOLDINGS, LP
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 1. | Description of the transaction |
On September 30, 2015, we closed the sale of all the membership interest in Alta Mesa Eagle, LLC (“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 was July 1, 2015. The Sale disposed 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. On October 1, 2015, total cash paid to the Company 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. On November 2, 2015, the Company received $35.4 million, which represents the remainder of our sales proceeds. Cash received, after transactions-related fees and expenses, was utilized to pay down borrowings under our senior secured revolving credit facility.
| 2. | 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 as occurred on September 30, 2015 and assuming subsequent collection of proceeds occurred on September 30, 2015.
The unaudited pro forma consolidated balance sheet as of September 30, 2015 reflects the following adjustments:
| a) | Adjustment to recognize the total net cash proceeds which were received subsequent to September 30, 2015. |
| b) | Adjustment to recognize a portion of the net cash proceeds used to pay for current liabilities. |
| c) | Adjustment recognize use of net cash proceeds to repay borrowings under our senior secured revolving credit facility. |
| 4. | 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:
| a) | 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. |
| b) | 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:
| c) | Elimination of the revenue and direct operating expenses and depreciation, depletion and amortization (“DD&A”) of the assets sold to EnerVest. |
| 5. | Adjustments and Assumptions to the Unaudited Pro Forma Condensed Consolidated Statements of Operations for the nine months ended September 30, 2015 |
Adjustments to the pro forma condensed statements of operations for the nine months ended September 30, 2015:
| a) | Elimination of the revenue and direct operating expenses and depreciation, depletion and amortization of the assets sold; |
| b) | The gain on sale of the Membership Interest of $66.3 million was excluded as it is a nonrecurring item. |