Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Amplify Energy Corp | d201670d8k.htm |
Exhibit 99.1
MEMORIAL PRODUCTION PARTNERS LP
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
Introduction
On July 14, 2016, Memorial Production Partners LP (the “Partnership”) sold certain assets located in Colorado and Wyoming (“Rockies Divestiture”) to Urban Fund II, LP and Urban Oil and Gas Partners B-1, LP for total proceeds of approximately $18.1 million, subject to customary post-closing adjustments. On June 14, 2016, the Partnership sold certain assets located in the Permian Basin (“Permian Divestiture”) to Boaz Energy II, LLC for total proceeds of approximately $37.4 million, subject to customary post-closing adjustments. The Permian Divestiture was previously reported on the Partnership’s Current Report on Form 8-K filed June 20, 2016.
The unaudited pro forma condensed consolidated balance sheet is based on the unaudited condensed consolidated balance sheet of the Partnership as of March 31, 2016 and includes pro forma adjustments to give effect to both the Rockies Divestiture and Permian Divestiture as if the transactions had occurred on March 31, 2016. The unaudited pro forma condensed statement of consolidated operations for the three months ended March 31, 2016 is based on the unaudited condensed statement of consolidated operations of the Partnership for the three months ended March 31, 2016 and includes pro forma adjustments to give effect to both the Rockies Divestiture and Permian Divestiture as if the transactions had occurred on January 1, 2015. The unaudited pro forma condensed statement of consolidated and combined operations for the year ended December 31, 2015 is based on the audited statement of consolidated and combined operations of the Partnership for the year ended December 31, 2015 and includes pro forma adjustments to give effect to both the Rockies Divestiture and Permian Divestiture as if the transactions had occurred on January 1, 2015.
The pro forma adjustments to the historical condensed consolidated and combined financial statements are based on currently available information and certain estimates and assumptions. The actual effect of the transactions discussed in the accompanying notes ultimately may differ from the unaudited pro forma adjustments included herein. However, management believes that the assumptions utilized to prepare the pro forma adjustments provide a reasonable basis for presenting the significant effects of the transactions and that the unaudited pro forma adjustments are factually supportable, give appropriate effect to the impact of events that are directly attributable to the transactions, and reflect those items expected to no longer have a continuing impact on the Partnership.
MEMORIAL PRODUCTION PARTNERS LP
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 2016
(In thousands, except outstanding units)
| Rockies | Permian | |||||||||||||||||||
| Historical | Divestiture | Divestiture | Pro Forma | |||||||||||||||||
| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
$ | 836 | $ | 18,100 | (a) | $ | 37,425 | (d) | $ | 836 | ||||||||||
| (18,100 | ) | (b) | (37,425 | ) | (e) | |||||||||||||||
| Accounts receivable |
45,290 | — | — | 45,290 | ||||||||||||||||
| Short-term derivative instruments |
259,854 | — | — | 259,854 | ||||||||||||||||
| Prepaid expenses and other current assets |
4,839 | — | — | 4,839 | ||||||||||||||||
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| Total current assets |
310,819 | — | — | 310,819 | ||||||||||||||||
| Property and equipment, at cost: |
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| Oil and natural gas properties, successful efforts method |
3,639,835 | (128,405 | ) | (a) | (401,180 | ) | (d) | 3,110,250 | ||||||||||||
| Support equipment and facilities |
206,147 | — | — | 206,147 | ||||||||||||||||
| Other |
2,491 | — | (37 | ) | (d) | 2,454 | ||||||||||||||
| Accumulated depreciation, depletion and impairment |
(1,931,091 | ) | 92,730 | (a) | 363,267 | (d) | (1,475,094 | ) | ||||||||||||
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| Property and equipment, net |
1,917,382 | (35,675 | ) | (37,950 | ) | 1,843,757 | ||||||||||||||
| Long-term derivative instruments |
442,616 | — | — | 442,616 | ||||||||||||||||
| Restricted investments |
154,766 | — | — | 154,766 | ||||||||||||||||
| Other long-term assets |
4,519 | — | — | 4,519 | ||||||||||||||||
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| Total assets |
$ | 2,830,102 | $ | (35,675 | ) | $ | (37,950 | ) | $ | 2,756,477 | ||||||||||
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| LIABILITIES AND EQUITY |
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| Current liabilities: |
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| Accounts payable |
$ | 6,863 | $ | — | $ | — | $ | 6,863 | ||||||||||||
| Accounts payable - affiliates |
5,137 | — | — | 5,137 | ||||||||||||||||
| Revenues payable |
25,427 | — | — | 25,427 | ||||||||||||||||
| Accrued liabilities |
61,744 | 363 | (c) | (2,804 | ) | (d) | 60,019 | |||||||||||||
| 716 | (f) | |||||||||||||||||||
| Short-term derivative instruments |
2,098 | — | — | 2,098 | ||||||||||||||||
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| Total current liabilities |
101,269 | 363 | (2,088 | ) | 99,544 | |||||||||||||||
| Long-term debt |
1,957,984 | (18,100 | ) | (b) | (37,425 | ) | (e) | 1,902,459 | ||||||||||||
| Asset retirement obligations |
164,964 | (11,629 | ) | (a) | (5,727 | ) | (d) | 147,608 | ||||||||||||
| Long-term derivative instruments |
2,161 | — | — | 2,161 | ||||||||||||||||
| Deferred tax liabilities |
2,158 | — | — | 2,158 | ||||||||||||||||
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| Total liabilities |
2,228,536 | (29,366 | ) | (45,240 | ) | 2,153,930 | ||||||||||||||
| Commitments and contingencies |
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| Equity: |
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| Partners’ equity: |
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| Common units (82,925,302 units outstanding at March 31, 2016) |
600,767 | (5,940 | ) | (a) | 7,998 | (d) | 601,747 | |||||||||||||
| (363 | ) | (c) | (715 | ) | (f) | |||||||||||||||
| General partner (86,797 units outstanding at March 31, 2016) |
799 | (6 | ) | (a) | 8 | (d) | 800 | |||||||||||||
| (1 | ) | (f) | ||||||||||||||||||
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| Total partners’ equity |
601,566 | (6,309 | ) | 7,290 | 602,547 | |||||||||||||||
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| Total liabilities and equity |
$ | 2,830,102 | $ | (35,675 | ) | $ | (37,950 | ) | $ | 2,756,477 | ||||||||||
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MEMORIAL PRODUCTION PARTNERS LP
UNAUDITED PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2016
(In thousands, except per unit amounts)
| Historical | Rockies Divestiture (g) |
Permian Divestiture (h) |
Pro Forma Adjustments |
Pro Forma | ||||||||||||||||||
| Revenues: |
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| Oil & natural gas sales |
$ | 60,623 | $ | (1,784 | ) | $ | (3,046 | ) | $ | — | $ | 55,793 | ||||||||||
| Other revenues |
243 | — | (147 | ) | — | 96 | ||||||||||||||||
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| Total revenues |
60,866 | (1,784 | ) | (3,193 | ) | — | 55,889 | |||||||||||||||
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| Costs and expenses: |
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| Lease operating |
35,696 | (1,109 | ) | (3,068 | ) | — | 31,519 | |||||||||||||||
| Gathering, processing, and transportation |
9,209 | (388 | ) | (21 | ) | — | 8,800 | |||||||||||||||
| Exploration |
122 | (13 | ) | (78 | ) | — | 31 | |||||||||||||||
| Taxes other than income |
4,008 | (292 | ) | (532 | ) | — | 3,184 | |||||||||||||||
| Depreciation, depletion, and amortization |
44,429 | (1,479 | ) | (1,346 | ) | — | 41,604 | |||||||||||||||
| Impairment of proved oil and natural gas properties |
8,342 | — | — | — | 8,342 | |||||||||||||||||
| General and administrative |
13,524 | — | — | — | 13,524 | |||||||||||||||||
| Accretion of asset retirement obligations |
2,707 | (263 | ) | (113 | ) | — | 2,331 | |||||||||||||||
| (Gain) loss on commodity derivative instruments |
(51,745 | ) | — | — | — | (51,745 | ) | |||||||||||||||
| (Gain) loss on sale of properties |
(96 | ) | — | — | — | (96 | ) | |||||||||||||||
| Other, net |
119 | (2 | ) | (58 | ) | — | 59 | |||||||||||||||
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| Total costs and expenses |
66,315 | (3,546 | ) | (5,216 | ) | — | 57,553 | |||||||||||||||
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| Operating income (loss) |
(5,449 | ) | 1,762 | 2,023 | — | (1,664 | ) | |||||||||||||||
| Other income (expense): |
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| Interest expense, net |
(32,552 | ) | — | (3 | ) | 110 | (i) | (32,218 | ) | |||||||||||||
| 227 | (j) | |||||||||||||||||||||
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| Total other income (expense) |
(32,552 | ) | — | (3 | ) | 337 | (32,218 | ) | ||||||||||||||
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| Income (loss) before income taxes |
(38,001 | ) | 1,762 | 2,020 | 337 | (33,882 | ) | |||||||||||||||
| Income tax benefit (expense) |
(96 | ) | — | — | — | (96 | ) | |||||||||||||||
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| Net income (loss) attributable to Memorial Production Partners LP |
$ | (38,097 | ) | $ | 1,762 | $ | 2,020 | $ | 337 | $ | (33,978 | ) | ||||||||||
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| Earnings per unit: |
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| Basic and diluted earnings per unit |
$ | (0.46 | ) | $ | (0.41 | ) | ||||||||||||||||
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| Weighted average limited partner units outstanding: |
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| Basic and diluted |
82,935 | 82,935 | ||||||||||||||||||||
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MEMORIAL PRODUCTION PARTNERS LP
UNAUDITED PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED AND COMBINED OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2015
(In thousands, except per unit amounts)
| Historical | Rockies Divestiture (g) |
Permian Divestiture (h) |
Pro Forma Adjustments |
Pro Forma | ||||||||||||||||||||
| Revenues: |
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| Oil & natural gas sales |
$ | 355,422 | $ | (12,931 | ) | $ | (22,615 | ) | $ | — | $ | 319,876 | ||||||||||||
| Pipeline tariff income and other |
2,725 | — | (843 | ) | — | 1,882 | ||||||||||||||||||
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| Total revenues |
358,147 | (12,931 | ) | (23,458 | ) | — | 321,758 | |||||||||||||||||
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| Costs and expenses: |
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| Lease operating |
168,199 | (5,549 | ) | (21,490 | ) | — | 141,160 | |||||||||||||||||
| Gathering, processing, and transportation |
34,939 | (1,959 | ) | (91 | ) | — | 32,889 | |||||||||||||||||
| Exploration |
2,317 | (47 | ) | (109 | ) | — | 2,161 | |||||||||||||||||
| Taxes other than income |
25,828 | (1,302 | ) | (1,998 | ) | — | 22,528 | |||||||||||||||||
| Depreciation, depletion, and amortization |
195,814 | (5,424 | ) | (7,116 | ) | — | 183,274 | |||||||||||||||||
| Impairment of proved oil and natural gas properties |
616,784 | (55,174 | ) | (52,606 | ) | — | 509,004 | |||||||||||||||||
| General and administrative |
56,671 | — | — | — | 56,671 | |||||||||||||||||||
| Accretion of asset retirement obligations |
7,125 | (442 | ) | (456 | ) | — | 6,227 | |||||||||||||||||
| (Gain) loss on commodity derivative instruments |
(462,890 | ) | — | — | — | (462,890 | ) | |||||||||||||||||
| (Gain) loss on sale of properties |
(2,998 | ) | — | — | — | (2,998 | ) | |||||||||||||||||
| Other, net |
(665 | ) | (52 | ) | (467 | ) | — | (1,184 | ) | |||||||||||||||
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| Total costs and expenses |
641,124 | (69,949 | ) | (84,333 | ) | — | 486,842 | |||||||||||||||||
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| Operating income (loss) |
(282,977 | ) | 57,018 | 60,875 | — | (165,084 | ) | |||||||||||||||||
| Other income (expense): |
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| Interest expense, net |
(114,732 | ) | (4 | ) | (132 | ) | 384 | (i | ) | (113,691 | ) | |||||||||||||
| 793 | (j | ) | ||||||||||||||||||||||
| Other income (expense) |
43 | (100 | ) | — | — | (57 | ) | |||||||||||||||||
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| Total other income (expense) |
(114,689 | ) | (104 | ) | (132 | ) | 1,177 | (113,748 | ) | |||||||||||||||
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| Income (loss) before income taxes |
(397,666 | ) | 56,914 | 60,743 | 1,177 | (278,832 | ) | |||||||||||||||||
| Income tax benefit (expense) |
2,175 | — | — | — | 2,175 | |||||||||||||||||||
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| Net income (loss) |
(395,491 | ) | 56,914 | 60,743 | 1,177 | (276,657 | ) | |||||||||||||||||
| Net income (loss) attributable to noncontrolling interest |
386 | — | — | — | 386 | |||||||||||||||||||
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| Net income (loss) attributable to Memorial Production Partners LP |
$ | (395,877 | ) | $ | 56,914 | $ | 60,743 | $ | 1,177 | $ | (277,043 | ) | ||||||||||||
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| Earnings per unit: |
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| Basic and diluted earnings per unit |
$ | (4.71 | ) | $ | (3.29 | ) | ||||||||||||||||||
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| Weighted average limited partner units outstanding: |
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| Basic and diluted |
83,528 | 83,528 | ||||||||||||||||||||||
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MEMORIAL PRODUCTION PARTNERS LP
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS
Note 1. Basis of Presentation
On July 14, 2016, Memorial Production Partners LP (the “Partnership”) sold certain assets located in Colorado and Wyoming (“Rockies Divestiture”) to Urban Fund II, LP and Urban Oil and Gas Partners B-1, LP (collectively, “Urban”) for total proceeds of approximately $18.1 million, subject to customary post-closing adjustments. On June 14, 2016, the Partnership sold certain assets located in the Permian Basin (“Permian Divestiture”) to Boaz Energy II, LLC for total proceeds of approximately $37.4 million, subject to customary post-closing adjustments. The Permian Divestiture was previously reported on the Partnership’s Current Report on Form 8-K filed June 20, 2016.
The unaudited pro forma condensed consolidated balance sheet is based on the unaudited condensed consolidated balance sheet of the Partnership as of March 31, 2016 and includes pro forma adjustments to give effect to both the Rockies Divestiture and Permian Divestiture as if the transactions had occurred on March 31, 2016. The unaudited pro forma condensed statement of consolidated operations for the three months ended March 31, 2016 is based on the unaudited condensed statement of consolidated operations of the Partnership for the three months ended March 31, 2016 and includes pro forma adjustments to give effect to both the Rockies Divestiture and Permian Divestiture as if the transactions had occurred on January 1, 2015. The unaudited pro forma condensed statement of consolidated and combined operations for the year ended December 31, 2015 is based on the audited statement of consolidated and combined operations of the Partnership for the year ended December 31, 2015 and includes pro forma adjustments to give effect to both the Rockies Divestiture and Permian Divestiture as if the transactions had occurred on January 1, 2015.
The pro forma adjustments to the historical condensed consolidated and combined financial statements are based on currently available information and certain estimates and assumptions. The actual effect of the transactions discussed in the accompanying notes ultimately may differ from the unaudited pro forma adjustments included herein. However, management believes that the assumptions utilized to prepare the pro forma adjustments provide a reasonable basis for presenting the significant effects of the transactions and that the unaudited pro forma adjustments are factually supportable, give appropriate effect to the impact of events that are directly attributable to the transactions, and reflect those items expected to no longer have a continuing impact on the Partnership.
The unaudited pro forma condensed consolidated and combined financial information should be read in conjunction with the Partnership’s 2015 Annual Report on Form 10-K filed on February 24, 2016, Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 filed on May 4, 2016 and Current Report on Form 8-K filed June 20, 2016.
Note 2. Pro Forma Adjustments and Assumptions
Unaudited Pro Forma Condensed Consolidated Balance Sheet
The following adjustments were made in the preparation of the unaudited pro forma condensed consolidated balance sheet as of March 31, 2016:
| (a) | Pro forma adjustments to reflect the closing of the Rockies Divestiture, including the receipt of $18.1 million in proceeds, subject to customary post-closing adjustments, the elimination of the associated net assets as of March 31, 2016, and the loss of $5.9 million arising from the transaction as of March 31, 2016. |
| (b) | Pro forma adjustment to reflect the use of the $18.1 million in proceeds from the Rockies Divestiture to repay borrowings under the Partnership’s revolving credit facility. |
| (c) | Pro forma adjustment to reflect estimated professional fees and closing costs related to the Rockies Divestiture. |
| (d) | Pro forma adjustments to reflect the closing of the Permian Divestiture, including the receipt of $37.4 million in proceeds, subject to customary post-closing adjustments, the elimination of the associated net assets as of March 31, 2016, and the gain of $8.0 million arising from the transaction as of March 31, 2016. |
| (e) | Pro forma adjustment to reflect the use of the $37.4 million in proceeds from the Permian Divestiture to repay borrowings under the Partnership’s revolving credit facility. |
| (f) | Pro forma adjustment to reflect estimated professional fees and closing costs related to the Permian Divestiture. |
Unaudited Condensed Consolidated and Combined Statement of Operations
The following adjustments were made in the preparation of the unaudited pro forma condensed statement of consolidated operations for the three months ended March 31, 2016 and the unaudited pro forma condensed statement of consolidated and combined operations for the year ended December 31, 2015:
| (g) | Pro forma adjustment to reflect the removal of operating revenues, operating expenses and capitalized interest related to the Rockies Divestiture. |
| (h) | Pro forma adjustment to reflect the removal of operating revenues, operating expenses and capitalized interest related to the Permian Divestiture. |
| (i) | Pro forma adjustment to reflect the reduction of interest expense related to the Rockies Divestiture, assuming the debt repayments described in (b) above occurred on January 1, 2015 using the Partnership’s revolving credit facility weighted average interest rate of 2.12% and 2.43% for the twelve months ended December 31, 2015 and three months ended March 31, 2016, respectively. |
| (j) | Pro forma adjustments to reflect the reduction of interest expense related to the Permian Divestiture, assuming the debt repayments described in (e) above occurred on January 1, 2015 using the Partnership’s revolving credit facility weighted average interest rate of 2.12% and 2.43% for the twelve months ended December 31, 2015 and three months ended March 31, 2016, respectively. |