Range Resources - Louisiana, Inc. - FORM 8-K - EX-99.1

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8-K - 8-K - Range Resources - Louisiana, Inc.	d202251d8k.htm

Exhibit 99.1

MEMORIAL RESOURCE DEVELOPMENT CORP.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

Introduction

On June 1, 2016, Memorial Resource Development Corp. (the “Company”) sold Memorial Production Partners GP LLC (“MEMP GP”), the general partner of Memorial Production Partners LP (“MEMP”), Beta Operating Company, LLC and MEMP Services LLC (collectively, the “Disposition Entities”) to MEMP for total proceeds of $0.75 million. This disposition qualifies as a discontinued operation since MEMP was a reportable segment.

The unaudited pro forma consolidated and combined financial data of the Company was derived from our historical consolidated and combined financial statements. The unaudited pro forma consolidated balance sheet assumes the disposition of the Disposition Entities occurred on March 31, 2016. The unaudited pro forma consolidated and combined statements of operations give effect to the disposition of the Disposition Entities as if the disposition occurred on January 1, 2013. The following unaudited pro forma consolidated and combined financial information should be read in conjunction with our historical financial statements and accompanying notes.

The pro forma adjustments are based on the best information available and assumptions that management believes are factually supportable and reasonable; however, such adjustments are subject to change. In addition, such adjustments are estimates. The unaudited pro forma consolidated and combined information is for illustrative and informational purposes only and is not intended to reflect what our consolidated position and results of operations would have been had the disposition occurred on the dates indicated and is not necessarily indicative of our future consolidated financial position and results of operations.

The pro forma adjustments remove all of the Disposition Entities’ consolidated assets, liabilities and results of operations (including MEMP and its subsidiaries) and also gives effect to adjustments to reflect the cash proceeds from the sale of the Disposition Entities and intercompany balances which were previously eliminated in consolidation.

MEMORIAL RESOURCE DEVELOPMENT CORP.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2016

(In thousands, except per share amounts)


	Historical			Disposition Entities			Pro Forma
Revenues:
Oil & natural gas sales	$	141,701		$	(60,623	)	$	81,078
Other revenues		243			(243	)		—

Total revenues		141,944			(60,866	)		81,078


Costs and expenses:
Lease operating		42,410			(35,696	)		6,714
Gathering, processing, and transportation		31,150			(9,209	)		21,941
Gathering, processing, and transportation – affiliate		14,187			—			14,187
Exploration		2,568			(122	)		2,446
Taxes other than income		6,872			(4,008	)		2,864
Depreciation, depletion, and amortization		104,228			(44,429	)		59,799
Impairment of proved oil and natural gas properties		8,342			(8,342	)		—
Incentive unit compensation expense		(21,761	)		—			(21,761	)
General and administrative		24,657			(13,524	)		11,133
Accretion of asset retirement obligations		2,847			(2,707	)		140
(Gain) loss on commodity derivative instruments		(88,187	)		51,745			(36,442	)
(Gain) loss on sale of properties		(46	)		96			50
Other, net		119			(119	)		—

Total costs and expenses		127,386			(66,315	)		61,071

Operating income (loss)		14,558			5,449			20,007

Other income (expense):
Interest expense, net		(43,909	)		32,552			(11,357	)
Other, net		4			—			4

Total other income (expense)		(43,905	)		32,552			(11,353	)

Income (loss) from continuing operations before income taxes		(29,347	)		38,001			8,654
Income tax benefit (expense)		(3,033	)		96			(2,937	)

Net income (loss) from continuing operations	$	(32,380	)	$	38,097		$	5,717


Earnings per common share from continuing operations:
Basic	$	0.03					$	0.03

Diluted	$	0.03					$	0.03


Weighted average common and common equivalent shares outstanding:
Basic		203,665						203,665

Diluted		203,665						203,665

MEMORIAL RESOURCE DEVELOPMENT CORP.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2015

(In thousands, except per share amounts)


	Historical			Disposition Entities			Pro Forma
Revenues:
Oil & natural gas sales	$	178,972		$	(91,949	)	$	87,023
Other revenues		869			(869	)		—

Total revenues		179,841			(92,818	)		87,023


Costs and expenses:
Lease operating		45,700			(40,478	)		5,222
Gathering, processing, and transportation		23,429			(8,666	)		14,763
Exploration		816			(90	)		726
Taxes other than income		9,430			(6,655	)		2,775
Depreciation, depletion, and amortization		91,798			(51,266	)		40,532
Impairment of proved oil and natural gas properties		251,347			(251,347	)		—
Incentive unit compensation expense		10,224			—			10,224
General and administrative		27,487			(14,511	)		12,976
Accretion of asset retirement obligations		1,757			(1,634	)		123
(Gain) loss on commodity derivative instruments		(253,649	)		145,459			(108,190	)

Total costs and expenses		208,339			(229,188	)		(20,849	)

Operating income (loss)		(28,498	)		136,370			107,872

Other income (expense):
Interest expense, net		(38,574	)		28,818			(9,756	)
Other, net		111			(160	)		(49	)

Total other income (expense)		(38,463	)		28,658			(9,805	)

Income (loss) from continuing operations before income taxes		(66,961	)		165,028			98,067
Income tax benefit (expense)		(45,188	)		(2,370	)		(47,558	)

Net income (loss) from continuing operations	$	(112,149	)	$	162,658		$	50,509


Earnings per common share from continuing operations:
Basic	$	0.24					$	0.24

Diluted	$	0.24					$	0.24


Weighted average common and common equivalent shares outstanding:
Basic		190,705						190,705

Diluted		190,705						190,705

MEMORIAL RESOURCE DEVELOPMENT CORP.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2015

(In thousands, except per share amounts)


	Historical			Disposition Entities			Pro Forma
Revenues:
Oil & natural gas sales	$	729,464		$	(355,422	)	$	374,042
Other revenues		2,725			(2,725	)		—

Total revenues		732,189			(358,147	)		374,042


Costs and expenses:
Lease operating		193,102			(168,199	)		24,903
Gathering, processing, and transportation		107,493			(34,939	)		72,554
Gathering, processing, and transportation – affiliate		25,403			—			25,403
Exploration		11,286			(2,317	)		8,969
Taxes other than income		40,724			(25,828	)		14,896
Depreciation, depletion, and amortization		384,556			(195,814	)		188,742
Impairment of proved oil and natural gas properties		616,784			(616,784	)		—
Incentive unit compensation expense		35,142			—			35,142
General and administrative		102,959			(56,671	)		46,288
Accretion of asset retirement obligations		7,542			(7,125	)		417
(Gain) loss on commodity derivative instruments		(744,139	)		462,890			(281,249	)
(Gain) loss on sale of properties		(3,045	)		2,998			(47	)
Other, net		(665	)		665			—

Total costs and expenses		777,142			(641,124	)		136,018

Operating income (loss)		(44,953	)		282,977			238,024

Other income (expense):
Interest expense, net		(154,128	)		114,732			(39,396	)
Other, net		(979	)		(43	)		(1,022	)

Total other income (expense)		(155,107	)		114,689			(40,418	)

Income (loss) from continuing operations before income taxes		(200,060	)		397,666			197,606
Income tax benefit (expense)		(97,830	)		(2,175	)		(100,005	)

Net income (loss) from continuing operations	$	(297,890	)	$	395,491		$	97,601


Earnings per common share from continuing operations:
Basic	$	0.49					$	0.49

Diluted	$	0.49					$	0.49


Weighted average common and common equivalent shares outstanding:
Basic		193,698						193,698

Diluted		193,698						193,698

MEMORIAL RESOURCE DEVELOPMENT CORP.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2014

(In thousands, except per share amounts)


	Historical			Disposition Entities			Pro Forma
Revenues:
Oil & natural gas sales	$	970,747		$	(561,677	)	$	409,070
Other revenues		4,378			(4,366	)		12

Total revenues		975,125			(566,043	)		409,082


Costs and expenses:
Lease operating		161,303			(143,733	)		17,570
Gathering, processing, and transportation		77,848			(31,892	)		45,956
Exploration		16,603			(2,750	)		13,853
Taxes other than income		45,751			(33,141	)		12,610
Depreciation, depletion, and amortization		314,193			(185,955	)		128,238
Impairment of proved oil and natural gas properties		432,116			(407,540	)		24,576
Incentive unit compensation expense		943,949			—			943,949
General and administrative		87,673			(49,124	)		38,549
Accretion of asset retirement obligations		6,306			(5,773	)		533
(Gain) loss on commodity derivative instruments		(749,988	)		492,254			(257,734	)
(Gain) loss on sale of properties		3,057			—			3,057
Other, net		(12	)		11			(1	)

Total costs and expenses		1,338,799			(367,643	)		971,156

Operating income (loss)		(363,674	)		(198,400	)		(562,074	)

Other income (expense):
Interest expense, net		(133,833	)		83,550			(50,283	)
Loss on extinguishment of debt		(37,248	)		—			(37,248	)
Other, net		(337	)		657			320

Total other income (expense)		(171,418	)		84,207			(87,211	)

Income (loss) from continuing operations before income taxes		(535,092	)		(114,193	)		(649,285	)
Income tax benefit (expense)		(100,971	)		(1,421	)		(102,392	)

Net income (loss) from continuing operations	$	(636,063	)	$	(115,614	)	$	(751,677	)


Earnings per common share from continuing operations:
Basic	$	(4.08	)				$	(4.08	)

Diluted	$	(4.08	)				$	(4.08	)


Weighted average common and common equivalent shares outstanding:
Basic		192,498						192,498

Diluted		192,498						192,498

MEMORIAL RESOURCE DEVELOPMENT CORP.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2013

(In thousands, except per share amounts)


	Historical			Disposition Entities			Pro Forma
Revenues:
Oil & natural gas sales	$	610,992		$	(391,440	)	$	219,552
Other revenues		3,075			(3,075	)		—

Total revenues		614,067			(394,515	)		219,552


Costs and expenses:
Lease operating		111,798			(94,591	)		17,207
Gathering, processing, and transportation		42,721			(25,055	)		17,666
Exploration		2,356			(1,322	)		1,034
Taxes other than income		27,146			(18,447	)		8,699
Depreciation, depletion, and amortization		184,717			(113,814	)		70,903
Impairment of proved oil and natural gas properties		6,600			(4,072	)		2,528
Incentive unit compensation expense		43,279			(8,282	)		34,997
General and administrative		82,079			(46,665	)		35,414
Accretion of asset retirement obligations		5,581			(4,988	)		593
(Gain) loss on commodity derivative instruments		(29,294	)		26,133			(3,161	)
(Gain) loss on sale of properties		(85,621	)		2,848			(82,773	)
Other, net		649			(647	)		2

Total costs and expenses		392,011			(288,902	)		103,109

Operating income (loss)		222,056			(105,613	)		116,443

Other income (expense):
Interest expense, net		(69,250	)		44,302			(24,948	)
Other, net		145			(2	)		143

Total other income (expense)		(69,105	)		44,300			(24,805	)

Income (loss) from continuing operations before income taxes		152,951			(61,313	)		91,638
Income tax benefit (expense)		(1,619	)		308			(1,311	)

Net income (loss) from continuing operations	$	151,332		$	(61,005	)	$	90,327


Earnings per common share from continuing operations:
Basic	$	—					$	—

Diluted	$	—					$	—


Weighted average common and common equivalent shares outstanding:
Basic		—						—

Diluted		—						—

MEMORIAL RESOURCE DEVELOPMENT CORP.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

MARCH 31, 2016

(In thousands, except per share amounts)


	Historical			Disposition Entities			Pro Forma Adjustments			Pro Forma
ASSETS
Current assets:
Cash and cash equivalents	$	2,075		$	(2,075	)	$	750	(a)	$	750
Accounts receivable		112,724			(46,457	)		9,746	(b)		76,013
Short-term derivative instruments		472,956			(259,854	)		—			213,102
Other financial instruments		35,358			—			—			35,358
Prepaid expenses and other current assets		11,443			(8,276	)		—			3,167

Total current assets		634,556			(316,662	)		10,496			328,390
Property and equipment, at cost:
Oil and natural gas properties, successful efforts method		6,181,292			(3,845,982	)		—			2,335,310
Other		26,837			(3,843	)		—			22,994
Accumulated depreciation, depletion and impairment		(2,430,065	)		1,931,882			—			(498,183	)

Property and equipment, net		3,778,064			(1,917,943	)		—			1,860,121
Long-term derivative instruments		517,045			(442,616	)		—			74,429
Restricted investments		154,766			(154,766	)		—			—
Other long-term assets		12,482			(4,519	)		—			7,963

Total assets	$	5,096,913		$	(2,836,506	)	$	10,496		$	2,270,903


LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	27,711		$	(7,586	)	$	—		$	20,125
Accounts payable – affiliates		9,443			(9,655	)		9,746	(b)		9,534
Revenues payable		58,572			(26,590	)		—			31,982
Accrued liabilities		133,998			(61,744	)		—			72,254
Short-term derivative instruments		2,098			(2,098	)		—			—

Total current liabilities		231,822			(107,673	)		9,746			133,895
Long-term debt – MRD Segment		1,113,483			—			—			1,113,483
Long-term debt – MEMP Segment		1,957,984			(1,957,984	)		—			—
Asset retirement obligations		175,495			(164,964	)		—			10,531
Long-term derivative instruments		2,161			(2,161	)		—			—
Deferred tax liabilities		198,320			(2,158	)		—			196,162
Other long-term liabilities		6,689			—			—			6,689

Total liabilities		3,685,954			(2,234,940	)		9,746			1,460,760
Commitments and contingencies
Equity:
Stockholders’ equity (deficit):
Preferred stock, $.01 par value: 50,000,000 shares authorized; no shares issued and outstanding		—			—			—			—
Common stock, $.01 par value: 600,000,000 shares authorized; 205,293,743 shares issued and outstanding at December 31, 2015; 193,435,414 shares issued and outstanding at December 31, 2014		2,053			—			—			2,053
Additional paid-in capital		1,542,340			—			568	(c)		1,542,908
Accumulated earnings (deficit)		(734,769	)		(799	)		750	(a)		(734,818	)

Total stockholders’ equity		809,624			(799	)		1,318			810,143

Noncontrolling interests		601,335			(600,767	)		(568	) (c)		—

Total equity		1,410,959			(601,566	)		750			810,143

Total liabilities and equity	$	5,096,913		$	(2,836,506	)	$	10,496		$	2,270,903

MEMORIAL RESOURCE DEVELOPMENT CORP.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

Note 2. Pro Forma Adjustments and Assumptions

Unaudited Pro Forma Consolidated Balance Sheet

The following adjustments were made in the preparation of the unaudited pro forma consolidated balance sheet as of March 31, 2016:

(a)

Pro forma adjustment to reflect the cash proceeds from the sale of the Disposition Entities.

(b)

Pro forma adjustment to reflect intercompany balances which previously eliminated in consolidation as of March 31, 2016.

(c)

Pro forma adjustment to reflect reclassification of amounts between equity categories.

Range Resources - Louisiana, Inc. - FORM 8-K - EX-99.1 - June 1, 2016

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Range Resources - Louisiana, Inc. Reports