Attached files
| file | filename |
|---|---|
| EX-99.1 - EX-99.1 - Alta Mesa Holdings, LP | d483202dex991.htm |
| EX-10.10 - EX-10.10 - Alta Mesa Holdings, LP | d483202dex1010.htm |
| EX-3.2 - EX-3.2 - Alta Mesa Holdings, LP | d483202dex32.htm |
| EX-3.1 - EX-3.1 - Alta Mesa Holdings, LP | d483202dex31.htm |
| 8-K - 8-K - Alta Mesa Holdings, LP | d483202d8k.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 our oil and natural gas assets in Weeks Island field to Texas Petroleum Investment Company on December 30, 2017 and the disposition of all our remaining oil and natural gas assets that were not located in the STACK prior to the closing of the Business Combination with Alta Mesa Resources Inc. (formerly Silver Run Acquisition Corporation II, a Delaware corporation (“AMR”), to High Mesa Holdings, L.P, a Delaware limited partnership.
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 the disposition of the remaining non-STACK assets had been consummated on January 1, 2014. The unaudited condensed consolidated balance sheet has been prepared as if the sale transaction and the disposition of the remaining non-STACK assets had been consummated on September 30, 2017.
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 SHEET
AS OF SEPTEMBER 30, 2017
| Pro forma | ||||||||||||
| September 30, | Pro forma | September 30, | ||||||||||
| 2017 | Adjustments (a) | 2017 | ||||||||||
| (in thousands) | ||||||||||||
| ASSETS |
||||||||||||
| CURRENT ASSETS |
||||||||||||
| Cash and cash equivalents |
$ | 3,740 | $ | (62 | ) | $ | 3,678 | |||||
| Short-term restricted cash |
1,173 | — | 1,173 | |||||||||
| Accounts receivable, net of allowance of $802 |
71,260 | (4,775 | ) | 66,485 | ||||||||
| Other receivables |
679 | (154 | ) | 525 | ||||||||
| Receivable due from affiliate |
839 | — | 839 | |||||||||
| Prepaid expenses and other current assets |
2,215 | (1 | ) | 2,214 | ||||||||
| Derivative financial instruments |
6,952 | — | 6,952 | |||||||||
|
|
|
|
|
|
|
|||||||
| TOTAL CURRENT ASSETS |
86,858 | (4,992 | ) | 81,866 | ||||||||
|
|
|
|
|
|
|
|||||||
| PROPERTY AND EQUIPMENT |
||||||||||||
| Oil and natural gas properties, successful efforts method, net |
944,867 | (102,254 | ) | 842,613 | ||||||||
| Other property and equipment, net |
9,139 | (2,709 | ) | 6,430 | ||||||||
|
|
|
|
|
|
|
|||||||
| TOTAL PROPERTY AND EQUIPMENT, NET |
954,006 | (104,963 | ) | 849,043 | ||||||||
|
|
|
|
|
|
|
|||||||
| OTHER ASSETS |
||||||||||||
| Investment in LLC — cost |
9,000 | (9,000 | ) | — | ||||||||
| Deferred financing costs, net |
1,943 | — | 1,943 | |||||||||
| Notes receivable due from affiliate |
12,121 | — | 12,121 | |||||||||
| Deposits and other long-term assets |
14,686 | (1,185 | ) | 13,501 | ||||||||
| Derivative financial instruments |
5,282 | — | 5,282 | |||||||||
|
|
|
|
|
|
|
|||||||
| TOTAL OTHER ASSETS |
43,032 | (10,185 | ) | 32,847 | ||||||||
|
|
|
|
|
|
|
|||||||
| TOTAL ASSETS |
$ | 1,083,896 | $ | (120,140 | ) | $ | 963,756 | |||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES AND PARTNERS’ CAPITAL |
||||||||||||
| CURRENT LIABILITIES |
||||||||||||
| Accounts payable and accrued liabilities |
$ | 144,546 | $ | (5,748 | ) | $ | 138,798 | |||||
| Advances from non-operators |
3,872 | — | 3,872 | |||||||||
| Advances from related party |
47,794 | — | 47,794 | |||||||||
| Asset retirement obligations |
3,960 | (3,926 | ) | 34 | ||||||||
| Derivative financial instruments |
348 | — | 348 | |||||||||
|
|
|
|
|
|
|
|||||||
| TOTAL CURRENT LIABILITIES |
200,520 | (9,674 | ) | 190,846 | ||||||||
|
|
|
|
|
|
|
|||||||
| LONG-TERM LIABILITIES |
||||||||||||
| Asset retirement obligations, net of current portion |
65,152 | (55,419 | ) | 9,733 | ||||||||
| Long-term debt, net |
565,247 | (22,483 | ) | 542,764 | ||||||||
| Notes payable to founder |
27,861 | — | 27,861 | |||||||||
| Other long-term liabilities |
7,613 | (2,902 | ) | 4,711 | ||||||||
|
|
|
|
|
|
|
|||||||
| TOTAL LONG-TERM LIABILITIES |
665,873 | (80,804 | ) | 585,069 | ||||||||
|
|
|
|
|
|
|
|||||||
| TOTAL LIABILITIES |
866,393 | (90,478 | ) | 775,915 | ||||||||
| PARTNERS’ CAPITAL |
217,503 | (29,662 | ) | 187,841 | ||||||||
|
|
|
|
|
|
|
|||||||
| TOTAL LIABILITIES AND PARTNERS’ CAPITAL |
$ | 1,083,896 | $ | (120,140 | ) | $ | 963,756 | |||||
|
|
|
|
|
|
|
|||||||
See notes to the unaudited pro forma condensed consolidated financial statements.
F-1
ALTA MESA HOLDINGS, LP
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017
| Pro forma | ||||||||||||
| September 30, | Pro forma | September 30, | ||||||||||
| 2017 | Adjustments (a) | 2017 | ||||||||||
| (in thousands) | ||||||||||||
| Operating revenues and other |
||||||||||||
| Oil, natural gas and natural gas liquids |
$ | 230,205 | $ | (45,698 | ) | $ | 184,507 | |||||
| Other revenues |
274 | (274 | ) | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Total operating revenues |
230,479 | (45,972 | ) | 184,507 | ||||||||
| Gain on acquisition of oil and natural gas properties |
6,893 | (1,626 | ) | 5,267 | ||||||||
| Gain on derivative contracts |
38,024 | — | 38,024 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total operating revenues and other |
275,396 | (47,598 | ) | 227,798 | ||||||||
|
|
|
|
|
|
|
|||||||
| Operating expenses |
||||||||||||
| Lease and plant operating expense |
49,836 | (21,944 | ) | 27,892 | ||||||||
| Marketing and transportation |
21,566 | (1,080 | ) | 20,486 | ||||||||
| Production and ad valorem taxes |
8,812 | (5,101 | ) | 3,711 | ||||||||
| Workover expense |
5,112 | (1,981 | ) | 3,131 | ||||||||
| Exploration expense |
19,930 | (8,042 | ) | 11,888 | ||||||||
| Depreciation, depletion, and amortization expense |
80,082 | (16,836 | ) | 63,246 | ||||||||
| Impairment expense |
29,206 | (28,018 | ) | 1,188 | ||||||||
| Accretion expense |
1,447 | (1,213 | ) | 234 | ||||||||
| General and administrative expense |
35,534 | (66 | ) | 35,468 | ||||||||
|
|
|
|
|
|
|
|||||||
| Total operating expenses |
251,525 | (84,281 | ) | 167,244 | ||||||||
|
|
|
|
|
|
|
|||||||
| Income (loss) from operations |
23,871 | 36,683 | 60,554 | |||||||||
| Other income (expense) |
||||||||||||
| Interest expense, net |
(38,189 | ) | (88 | ) | (38,277 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total other income (expense) |
(38,189 | ) | (88 | ) | (38,277 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Income (loss) before income taxes |
(14,318 | ) | 36,595 | 22,277 | ||||||||
| Provision for (benefit from) state income taxes |
285 | (285 | ) | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Income (loss) from continuing operations |
$ | (14,603 | ) | $ | 36,880 | $ | 22,277 | |||||
|
|
|
|
|
|
|
|||||||
See notes to the unaudited pro forma condensed consolidated financial statements.
F-2
ALTA MESA HOLDINGS, LP
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2016
| Pro forma | ||||||||||||
| December 31, | Pro forma | December 31, | ||||||||||
| 2016 | Adjustments (a) | 2016 | ||||||||||
| (in thousands) | ||||||||||||
| Operating revenues and other |
||||||||||||
| Oil, natural gas and natural gas liquids |
$ | 210,293 | $ | (70,287 | ) | $ | 140,006 | |||||
| Other revenues |
415 | (214 | ) | 201 | ||||||||
|
|
|
|
|
|
|
|||||||
| Total operating revenues |
210,708 | (70,501 | ) | 140,207 | ||||||||
| Gain (loss) on sale of assets |
3,542 | (3,539 | ) | 3 | ||||||||
| Gain (loss) on derivative contracts |
(40,460 | ) | — | (40,460 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total operating revenues and other |
173,790 | (74,040 | ) | 99,750 | ||||||||
|
|
|
|
|
|
|
|||||||
| Operating expenses |
||||||||||||
| Lease and plant operating expense |
56,893 | (29,474 | ) | 27,419 | ||||||||
| Marketing and transportation |
13,326 | (1,698 | ) | 11,628 | ||||||||
| Production and ad valorem taxes |
10,750 | (7,985 | ) | 2,765 | ||||||||
| Workover expense |
4,714 | (1,273 | ) | 3,441 | ||||||||
| Exploration expense |
24,777 | (7,547 | ) | 17,230 | ||||||||
| Depreciation, depletion, and amortization expense |
92,901 | (39,416 | ) | 53,485 | ||||||||
| Impairment expense |
16,306 | (15,924 | ) | 382 | ||||||||
| Accretion expense |
2,174 | (1,904 | ) | 270 | ||||||||
| General and administrative expense |
41,758 | (1,290 | ) | 40,468 | ||||||||
|
|
|
|
|
|
|
|||||||
| Total operating expenses |
263,599 | (106,511 | ) | 157,088 | ||||||||
|
|
|
|
|
|
|
|||||||
| Income (loss) from operations |
(89,809 | ) | 32,471 | (57,338 | ) | |||||||
| Other income (expense) |
||||||||||||
| Interest expense, net |
(59,990 | ) | (10 | ) | (60,000 | ) | ||||||
| Loss on extinguishment of debt |
(18,151 | ) | — | (18,151 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total other income (expense) |
(78,141 | ) | (10 | ) | (78,151 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Income (loss) before income taxes |
(167,950 | ) | 32,461 | (135,489 | ) | |||||||
| Provision for (benefit from) state income taxes |
(29 | ) | 29 | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Income (loss) from continuing operations |
$ | (167,921 | ) | $ | 32,432 | $ | (135,489 | ) | ||||
|
|
|
|
|
|
|
|||||||
See notes to the unaudited pro forma condensed consolidated financial statements.
ALTA MESA HOLDINGS, LP
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2015
| December 31, 2015 |
Pro forma Adjustments (a) |
Pro forma December 31, 2015 |
||||||||||
| (in thousands) | ||||||||||||
| Operating revenues and other |
||||||||||||
| Oil, natural gas and natural gas liquids |
$ | 241,284 | $ | (108,166 | ) | $ | 133,118 | |||||
| Other revenues |
682 | (192 | ) | 490 | ||||||||
|
|
|
|
|
|
|
|||||||
| Total operating revenues |
241,966 | (108,358 | ) | 133,608 | ||||||||
| Gain (loss) on sale of assets |
67,781 | (167 | ) | 67,614 | ||||||||
| Gain on derivative contracts |
124,141 | — | 124,141 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total operating revenues and other |
433,888 | (108,525 | ) | 325,363 | ||||||||
|
|
|
|
|
|
|
|||||||
| Operating expenses |
||||||||||||
| Lease and plant operating expense |
67,706 | (40,294 | ) | 27,412 | ||||||||
| Marketing and transportation expense |
4,030 | (2,320 | ) | 1,710 | ||||||||
| Production and ad valorem taxes |
15,131 | (12,024 | ) | 3,107 | ||||||||
| Workover expense |
6,511 | (3,980 | ) | 2,531 | ||||||||
| Exploration expense |
42,718 | (32,944 | ) | 9,774 | ||||||||
| Depreciation, depletion, and amortization expense |
143,969 | (82,697 | ) | 61,272 | ||||||||
| Impairment expense |
176,774 | (157,975 | ) | 18,799 | ||||||||
| Accretion expense |
2,076 | (1,869 | ) | 207 | ||||||||
| General and administrative expense |
44,454 | (6,600 | ) | 37,854 | ||||||||
|
|
|
|
|
|
|
|||||||
| Total operating expenses |
503,369 | (340,703 | ) | 162,666 | ||||||||
|
|
|
|
|
|
|
|||||||
| Income (loss) from operations |
(69,481 | ) | 232,178 | 162,697 | ||||||||
| Other income (expense) |
||||||||||||
| Interest expense, net |
(61,750 | ) | 43 | (61,707 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total other income (expense) |
(61,750 | ) | 43 | (61,707 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Income (loss) before state income taxes |
(131,231 | ) | 232,221 | 100,990 | ||||||||
| Provision for state income taxes |
562 | — | 562 | |||||||||
|
|
|
|
|
|
|
|||||||
| Income (loss) from continuing operations |
$ | (131,793 | ) | $ | 232,221 | $ | 100,428 | |||||
|
|
|
|
|
|
|
|||||||
See notes to the unaudited pro forma condensed consolidated financial statements.
ALTA MESA HOLDINGS, LP
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2014
| Pro forma | ||||||||||||
| December 31, | Pro forma | December 31, | ||||||||||
| 2014 | Adjustments (a) | 2014 | ||||||||||
| (in thousands) | ||||||||||||
| Operating revenues and other |
||||||||||||
| Oil, natural gas and natural gas liquids |
$ | 431,125 | $ | (314,464 | ) | $ | 116,661 | |||||
| Other |
1,003 | (321 | ) | 682 | ||||||||
|
|
|
|
|
|
|
|||||||
| Total operating revenues |
432,128 | (314,785 | ) | 117,343 | ||||||||
| Gain (loss) on sale of assets |
87,520 | (87,515 | ) | 5 | ||||||||
| Gain oil and natural gas derivative contracts |
96,559 | — | 96,559 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total operating revenues and other |
616,207 | (402,300 | ) | 213,907 | ||||||||
|
|
|
|
|
|
|
|||||||
| Operating expenses |
||||||||||||
| Lease and plant operating expense |
64,686 | (46,700 | ) | 17,986 | ||||||||
| Marketing and transportation expense |
9,134 | (8,052 | ) | 1,082 | ||||||||
| Production and ad valorem taxes |
28,214 | (25,360 | ) | 2,854 | ||||||||
| Workover expense |
8,961 | (6,318 | ) | 2,643 | ||||||||
| Exploration expense |
61,912 | (50,080 | ) | 11,832 | ||||||||
| Depreciation, depletion, and amortization expense |
141,804 | (112,742 | ) | 29,062 | ||||||||
| Impairment expense |
74,927 | (74,924 | ) | 3 | ||||||||
| Accretion expense |
2,198 | (1,911 | ) | 287 | ||||||||
| General and administrative expense |
69,198 | (833 | ) | 68,365 | ||||||||
|
|
|
|
|
|
|
|||||||
| Total operating expenses |
461,034 | (326,920 | ) | 134,114 | ||||||||
|
|
|
|
|
|
|
|||||||
| Income (loss) from operations |
155,173 | (75,380 | ) | 79,793 | ||||||||
| Other income (expense) |
||||||||||||
| Interest expense, net |
(55,797 | ) | 45 | (55,752 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total other income (expense) |
(55,797 | ) | 45 | (55,752 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Income (loss) before state income taxes |
99,376 | (75,335 | ) | 24,041 | ||||||||
| Provision for state income taxes |
176 | — | 176 | |||||||||
|
|
|
|
|
|
|
|||||||
| Income (loss) from continuing operations |
$ | 99,200 | $ | (75,335 | ) | $ | 23,865 | |||||
|
|
|
|
|
|
|
|||||||
See notes to the unaudited pro forma condensed consolidated financial statements.
NOTES TO ALTA MESA HOLDINGS, LP.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Description of the transaction
On December 30, 2017, we closed the sale of all our oil and natural gas properties in Weeks Island field, to Texas Petroleum Investment Company, a Texas corporation for a net proceeds $22.6 million, net of purchase price adjustments. The net proceeds were used to reduce amounts outstanding under the Company’s senior secured revolving credit facility. The oil and natural gas producing properties are located primarily in the Iberia Parish, Louisiana.
In connection with the closing of the Business Combination with Alta Mesa Resources Inc. (formerly Silver Run Acquisition Corporation II, a Delaware corporation (“AMR”), we have completed our transition from a diversified asset base composed of a portfolio of conventional assets to an unconventional oil and liquids-rich resource play in the eastern portion of the Anadarko Basin in Oklahoma (the “STACK”) with an extensive inventory of drilling opportunities. The STACK is an acronym describing both its location—Sooner Trend Anadarko Basin Canadian and Kingfisher County—and the multiple, stacked productive formations present in the area.
On February 8, 2018, just prior to the closing of the Business Combination, we assigned the remainder of our non-STACK assets to High Mesa Holdings, L.P. (“HMH, LP”), our parent company. At the time of the disposition, management estimated the carrying value of Alta Mesa’s remaining non-STACK assets to be $42.8 million with liabilities of $52.5 million, which liabilities include $44.6 million of asset retirement obligations. The remainder of our non-STACK oil and natural gas properties are primarily located in East Texas, Florida, South Texas and South Louisiana.
Although the Weeks Island field sale was not individually significant, we have presented the pro forma effects of both elements of the non-STACK assets divestiture in these pro forma financial statements because they collectively comprise a strategic shift in our operations. The results of operations related to the Weeks Island field and the remaining non-STACK assets (collectively the “non-STACK Assets Divestiture”) will be reported as discontinued operations.
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 as of September 30, 2017
The unaudited pro forma condensed consolidated balance sheet as of September 30, 2017 reflects the following adjustments assuming the non-STACK Assets Divestiture occurred on September 30, 2017:
| a) | Reflects the assets and liabilities of the non-STACK assets that were disposed of as part of the non-STACK Assets Divestiture. |
| b) | Reflects the net proceeds from the sale of the Weeks Island field to reduce amounts outstanding under the Company’s senior secured revolving credit facility. |
4) Adjustments and Assumptions to the Unaudited Pro Forma Condensed Consolidated Combined Statement of Operations for the Nine Months Ended September 30, 2017
The unaudited pro forma condensed consolidated combined statement of operations for the nine months ended September 30, 2017 reflects the following adjustments assuming the non-STACK Assets Divestiture occurred on January 1, 2016:
| a) | Reflects the operating results of the non-STACK assets disposed of as part of the non-STACK Assets Divestiture |
5) Adjustments and Assumptions to the Unaudited Pro Forma Condensed Consolidated Combined Statement of Operations for the Years Ended December 31, 2016, 2015 and 2014
The unaudited pro forma condensed consolidated combined statement of operations for the years ended December 31, 2016, 2015 and 2014 reflects the following adjustments assuming the non-STACK Assets Divestiture occurred on January 1, 2014:
| a) | Reflects the operating results of the non-STACK assets disposed of as part of the non-STACK Assets Divestiture |