Attached files
| file | filename |
|---|---|
| EX-99.1 - EX-99.1 - GULFPORT ENERGY CORP | d223346dex991.htm |
| EX-23.1 - EX-23.1 - GULFPORT ENERGY CORP | d223346dex231.htm |
| 8-K - FORM 8-K - GULFPORT ENERGY CORP | d223346d8k.htm |
Exhibit 99.2
GULFPORT ENERGY CORPORATION
Summary Unaudited Pro Forma Consolidated Financial Information
The following unaudited pro forma consolidated financial information is presented to illustrate the effect of Gulfport’s (or our) purchase of oil and gas assets from Vitruvian for cash and shares of our common stock to be issued to Vitruvian in the Acquisition. The unaudited pro forma balance sheet as of December 31, 2016 is based on our historical financial statements as of December 31, 2016 after giving effect to the transaction as if it had occurred on December 31, 2016. The unaudited pro forma statements of operations for the fiscal year ended December 31, 2016 are based on the historical financial statements for such period after giving effect to the transaction as if it had occurred on January 1, 2016. The unaudited pro forma financial information should be read in conjunction with our historical consolidated financial statements and notes thereto included in our reports filed with the SEC under the Securities Exchange Act of 1934, as amended.
The preparation of the unaudited pro forma consolidated financial information is based on financial statements prepared in accordance with accounting principles generally accepted in the United States of America. These principles require the use of estimates that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates.
The unaudited pro forma consolidated financial information is provided for illustrative purposes only and does not purport to represent what our actual results of operations or our financial position would have been had the transactions occurred on the respective dates assumed, nor is it indicative of our future operating results or financial position. The pro forma adjustments reflected in the accompanying unaudited pro forma consolidated financial information reflect estimates and assumptions that our management believes to be reasonable.
GULFPORT ENERGY CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
At December 31, 2016
| Pro | ||||||||||||||||
| Gulfport | Vitruvian | Forma | Gulfport | |||||||||||||
| Historical | Historical | Adjustments | Combined | |||||||||||||
| (in thousands) |
||||||||||||||||
| Assets | ||||||||||||||||
| Current assets: |
||||||||||||||||
| Cash and cash equivalents |
$ | 1,275,875 | $ | 2,632 | $ | (1,171,725 | ) (1), (2) | $ | 106,782 | |||||||
| Restricted cash |
185,000 | — | (185,000 | ) (2) | — | |||||||||||
| Accounts receivable - oil and gas |
136,761 | 38,304 | (38,304 | ) (1) | 136,761 | |||||||||||
| Accounts receivable - related parties |
16 | 2,187 | (2,187 | ) (1) | 16 | |||||||||||
| Prepaid expenses and other current assets |
7,639 | 12,834 | (12,834 | ) (1) | 7,639 | |||||||||||
| Short-term derivative instruments |
3,488 | 2,275 | (2,275 | ) (1) | 3,488 | |||||||||||
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|
|||||||||
| Total current assets |
1,608,779 | 58,232 | (1,412,325 | ) | 254,686 | |||||||||||
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| Property and equipment: |
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| Oil and natural gas properties, full-cost accounting, $1,580,305, $368,238 and $3,058,815 excluded from amortization as reported and pro forma as adjusted, respectively |
6,071,920 | 1,252,966 | 569,524 | (2) | 7,894,410 | |||||||||||
| Other property and equipment |
68,986 | 17,199 | (17,199 | ) (1) | 68,986 | |||||||||||
| Accumulated depletion, depreciation, amortization and impairment |
(3,789,780 | ) | (498,256 | ) | 498,256 | (1) | (3,789,780 | ) | ||||||||
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| Property and equipment, net |
2,351,126 | 771,909 | 1,050,581 | 4,173,616 | ||||||||||||
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| Other assets |
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| Equity investments |
243,920 | — | — | 243,920 | ||||||||||||
| Deferred financing costs |
— | 1,386 | (1,386 | ) (1) | — | |||||||||||
| Long-term derivative instruments |
5,696 | — | — | 5,696 | ||||||||||||
| Deferred tax asset |
4,692 | — | — | 4,692 | ||||||||||||
| Other assets |
8,932 | 28 | (28 | ) (1) | 8,932 | |||||||||||
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| Total other assets |
263,240 | 1,414 | (1,414 | ) | 263,240 | |||||||||||
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| Total assets |
$ | 4,223,145 | $ | 831,555 | $ | (363,158 | ) | $ | 4,691,542 | |||||||
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| Liabilities and Stockholders’ Equity | ||||||||||||||||
| Current liabilities: |
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| Accounts payable and accrued liabilities |
$ | 265,124 | $ | 69,637 | $ | (69,637 | ) (1) | $ | 265,124 | |||||||
| Asset retirement obligation - current |
195 | — | — | 195 | ||||||||||||
| Short-term derivative instruments |
119,219 | 15,384 | (15,384 | ) (1) | 119,219 | |||||||||||
| Current maturities of long-term debt |
276 | 221,500 | (221,500 | ) (1) | 276 | |||||||||||
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| Total current liabilities |
384,814 | 306,521 | (306,521 | ) | 384,814 | |||||||||||
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| Long-term derivative instrument |
26,759 | 6,443 | (6,443 | ) (1) | 26,759 | |||||||||||
| Asset retirement obligation - long-term |
34,081 | 6,647 | (2,889 | ) (1), (2) | 37,839 | |||||||||||
| Long-term debt, net of current maturities |
1,593,599 | 98,731 | (98,731 | ) (1) | 1,593,599 | |||||||||||
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| Total liabilities |
2,039,253 | 418,342 | (414,584 | ) | 2,043,011 | |||||||||||
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| Commitments and contingencies |
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| Preferred stock, $.01 par value |
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| Stockholders’ equity: |
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| Common stock - $.01 par value |
1,588 | — | 239 | (2) | 1,827 | |||||||||||
| Paid-in capital |
3,946,442 | — | 464,400 | (2) | 4,410,842 | |||||||||||
| Accumulated other comprehensive loss |
(53,058 | ) | — | — | (53,058 | ) | ||||||||||
| Retained (deficit) earnings |
(1,711,080 | ) | 413,213 | (413,213 | ) (1) | (1,711,080 | ) | |||||||||
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| Total stockholders’ equity |
2,183,892 | 413,213 | 51,426 | 2,648,531 | ||||||||||||
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| Total liabilities and stockholders’ equity |
$ | 4,223,145 | $ | 831,555 | $ | (363,158 | ) | $ | 4,691,542 | |||||||
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GULFPORT ENERGY CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2016
| Vitruvian | ||||||||||||||||
| Gulfport | Vitruvian | Acquisition | ||||||||||||||
| Historical | Historical | Adjustments | Pro Forma | |||||||||||||
| (in thousands) | ||||||||||||||||
| Revenues: |
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| Gas sales |
$ | 420,128 | $ | 96,741 | $ | — | $ | 516,869 | ||||||||
| Oil and condensate sales |
81,173 | 49,585 | — | 130,758 | ||||||||||||
| Natural gas liquids sales |
59,115 | 29,070 | — | 88,185 | ||||||||||||
| Net loss on gas, oil and NGL derivatives |
(174,506 | ) | — | (38,209 | ) (3) | (212,715 | ) | |||||||||
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| 385,910 | 175,396 | (38,209 | ) | 523,097 | ||||||||||||
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| Costs and expenses: |
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| Lease operating expenses |
68,877 | 6,819 | — | 75,696 | ||||||||||||
| Production taxes |
13,276 | 3,055 | — | 16,331 | ||||||||||||
| Midstream gathering and processing |
165,972 | 42,042 | — | 208,014 | ||||||||||||
| Depreciation, depletion, and amortization |
245,974 | 64,751 | 34,396 | (4) | 345,121 | |||||||||||
| Impairment of oil and gas properties |
715,495 | 190,532 | — | 906,027 | ||||||||||||
| General and administrative |
43,409 | 17,553 | (13,188 | ) (5) | 47,774 | |||||||||||
| Accretion expense |
1,057 | — | 337 | (6) | 1,394 | |||||||||||
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| 1,254,060 | 324,752 | 21,545 | 1,600,357 | |||||||||||||
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| LOSS FROM OPERATIONS: |
(868,150 | ) | (149,356 | ) | (59,754 | ) | (1,077,260 | ) | ||||||||
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| OTHER (INCOME) EXPENSE: |
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| Interest expense |
63,530 | — | — | 63,530 | ||||||||||||
| Interest income |
(1,230 | ) | — | — | (1,230 | ) | ||||||||||
| Insurance proceeds |
(5,718 | ) | — | — | (5,718 | ) | ||||||||||
| Loss on debt extinguishment |
23,776 | — | — | 23,776 | ||||||||||||
| Gain Loss on derivative contracts, net |
— | 38,209 | (38,209 | ) (3) | — | |||||||||||
| Loss from equity method investments |
33,985 | — | — | 33,985 | ||||||||||||
| Loss on sale of assets |
— | 85 | — | 85 | ||||||||||||
| Other expense |
129 | — | — | 129 | ||||||||||||
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| 114,472 | 38,294 | (38,209 | ) | 114,557 | ||||||||||||
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| LOSS BEFORE INCOME TAXES |
(982,622 | ) | (187,650 | ) | (21,545 | ) | (1,191,817 | ) | ||||||||
| INCOME TAX (BENEFIT) EXPENSE |
(2,913 | ) | 49 | 1,528 | (7) | (1,336 | ) | |||||||||
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| NET LOSS |
$ | (979,709 | ) | $ | (187,699 | ) | $ | (23,073 | ) | $ | (1,190,481 | ) | ||||
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| NET LOSS PER COMMON SHARE: |
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| Basic |
$ | (7.97 | ) | $ | (8.11 | ) | ||||||||||
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| Diluted |
$ | (7.97 | ) | $ | (8.11 | ) | ||||||||||
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| Weighted average common shares outstanding - Basic |
122,952,866 | 23,852,117 | 146,804,983 | |||||||||||||
| Weighted average common shares outstanding - Diluted |
122,952,866 | 23,852,117 | 146,804,983 | |||||||||||||
Notes:
| (1) | These adjustments reflect the elimination of certain assets and liabilities that were not part of the assets acquired or liabilities assumed in the Vitruvian Acquisition. |
| (2) | The Vitruvian Acquisition qualified as a business combination for accounting purposes and, as such, the Company estimated the fair value of the acquired properties as of the February 17, 2017 acquisition date. The fair value of the consideration transferred at the closing date of the Vitruvian Acquisition is allocated in the following preliminary purchase price allocation: |
| (In thousands) | ||||
| Consideration: |
||||
| Cash |
$ | 1,354,093 | ||
| Fair value of Gulfport’s common stock issued(i) |
464,639 | |||
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| Total Consideration |
$ | 1,818,732 | ||
| Estimated Fair Value of Assets Acquired and Liabilities Assumed: |
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| Oil and natural gas properties |
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| Proved properties |
$ | 341,144 | ||
| Unproved properties |
1,481,346 | |||
| Asset retirement obligations |
(3,758 | ) | ||
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| $ | 1,818,732 | |||
| (i) | 23,852,117 shares of Gulfport common stock at $19.48 per share (closing price at February 17, 2017) |
Upon closing of the Vitruvian Acquisition, the Company transferred $1.35 billion in cash, subject to certain adjustments, and approximately 23.9 million shares of the Company’s common stock (of which approximately 5.2 million shares are subject to the indemnity escrow). The value of the purchase price consideration may change based upon the finalization of purchase price adjustments and finalization of the Company’s valuation of the assets acquired and liabilities assumed.
The initial purchase price of $1.85 billion consisted of cash consideration of $1.35 billion and equity consideration of $500.0 million (23,852,117 shares of Gulfport common stock based on equity offering price of $20.96 on December 15, 2016). The decrease in the price of Gulfport’s common stock from $20.96 on December 15, 2016 to $19.48 on February 17, 2017 resulted in a decrease to the fair value of the total consideration paid of approximately $35.3 million, which resulted in a closing date fair value lower than the initial purchase price.
| (3) | The following adjustment has been made to the presentation of Vitruvian historical amounts to conform with the Company’s presentation. |
a. Reclassification of $38,209 of loss on derivative contracts, net to net loss on gas, oil and NGL derivatives.
| (4) | To adjust historical depletion expense associated with the oil and gas properties acquired. The pro forma adjustment includes adjusting the acquired oil and natural gas properties to their fair value calculated as of the acquisition date and applying the full cost method of accounting. |
| (5) | Reflects adjustment for historical general and administrative costs not acquired. |
| (6) | To adjust historical accretion expense associated with the oil and gas properties acquired. |
| (7) | To adjust historical income tax expense for the oil and gas properties acquired. |