Attached files
Exhibit 99.2
QEP RESOURCES, INC.
UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION
Wexpro Company Separation and QEP Resources, Inc. Spinoff
After the Distribution Date, QEP Resources, Inc. (QEP Resources or Company) will not beneficially own any shares of Wexpro Company (Wexpro) common stock and, following such date, will no longer consolidate Wexpro’s financial results, and the historical financial results of Wexpro will be reflected in the Company’s consolidated financial statements as discontinued operations.
Pro Forma Information
The accompanying unaudited pro forma condensed consolidated balance sheet of QEP Resources as of March 31, 2010, is presented as if the separation had occurred on March 31, 2010. The accompanying unaudited pro forma consolidated statements of income of QEP Resources for the three months ended March 31, 2010 and the years ended December 31, 2009, 2008 and 2007 are presented as if the separation had occurred on January 1, 2007.
The accompanying unaudited pro forma consolidated financial information is presented based on information available, is intended for informational purposes only and is not necessarily indicative of and does not purport to represent the financial condition or operating results that would have actually occurred had the separation occurred as described, nor is it necessarily indicative of QEP Resources’ future financial condition or operating results. In addition, the accompanying unaudited pro forma consolidated financial information does not reflect actions that may be undertaken by management after the separation. The accompanying unaudited pro forma consolidated financial information should be read in conjunction with the notes thereto and “Management’s Discussion and Analysis of Results of Operations and Financial Condition” and the Company’s consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010.
QEP Resources’ independent registered public accounting firm has not examined, reviewed, compiled or applied agreed upon procedures to the unaudited pro forma consolidated historical financial information presented herein and, accordingly, assumes no responsibility for it.
The following is a brief description of the amounts recorded under each of the column headings in the accompanying unaudited pro forma consolidated balance sheet and the unaudited pro forma consolidated statements of income:
Historical QEP Resources
This column reflects QEP Resources’ historical financial position as of March 31, 2010, and historical operating results for the three months ended March 31, 2010 and the years ended December 31, 2009, 2008, and 2007 prior to any pro forma adjustments described under the headings “Wexpro Separation” and “Other Adjustments” below.
Wexpro Separation
This column reflects Wexpro’s historical financial position as of March 31, 2010, and its historical operating results for the three months ended March 31, 2010 and the years ended December 31, 2009, 2008 and 2007.
Other Adjustments
This column represents pro forma adjustments for transactions between QEP Resources and Questar, including Wexpro, that were previously eliminated in consolidation or reported as transactions with affiliates or that arose as a direct result of the separation and are reflected in the Company’s consolidated financial position and results of operations upon the completion of the separation. These adjustments are more fully described in the notes to unaudited pro forma consolidated financial information.
1
QEP RESOURCES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 2010
(Unaudited)
| Historical QEP Resources |
Wexpro Separation |
Other Adjustments |
Pro Forma QEP Resources |
|||||||||||||||
| (in millions) | ||||||||||||||||||
| ASSETS |
||||||||||||||||||
| Current Assets |
||||||||||||||||||
| Notes receivable |
$ | 27.9 | (b) | $ | 27.9 | |||||||||||||
| Accounts receivable, net |
$ | 236.7 | $ | (7.7 | ) | 8.2 | (b) | 237.2 | ||||||||||
| Accounts receivable from affiliates |
31.6 | (30.4 | ) | (1.2 | ) | (b) | ||||||||||||
| Fair value of derivative contracts |
313.3 | 313.3 | ||||||||||||||||
| Inventories |
78.9 | (4.1 | ) | 74.8 | ||||||||||||||
| Prepaid expenses and other |
32.5 | (1.1 | ) | 31.4 | ||||||||||||||
| Total Current Assets |
693.0 | (43.3 | ) | 34.9 | 684.6 | |||||||||||||
| Property, Plant and Equipment |
8,500.1 | (1,033.2 | ) | 7,466.9 | ||||||||||||||
| Accumulated depreciation, depletion and amortization |
(2,688.7 | ) | 443.8 | (2,244.9 | ) | |||||||||||||
| Net Property, Plant and Equipment |
5,811.4 | (589.4 | ) | 5,222.0 | ||||||||||||||
| Investment in unconsolidated affiliates |
44.1 | 44.1 | ||||||||||||||||
| Goodwill |
60.1 | 60.1 | ||||||||||||||||
| Fair value of derivative contracts |
170.4 | 170.4 | ||||||||||||||||
| Other noncurrent assets |
24.7 | (16.4 | ) | 8.3 | ||||||||||||||
| TOTAL ASSETS |
$ | 6,803.7 | $ | (649.1 | ) | $ | 34.9 | $ | 6,189.5 | |||||||||
| LIABILITIES AND EQUITY |
||||||||||||||||||
| Current Liabilities |
||||||||||||||||||
| Checks outstanding in excess of cash balances |
$ | 11.5 | $ | (1.9 | ) | $ | 9.6 | |||||||||||
| Notes payable |
$ | 3.0 | (a),(b) | 3.0 | ||||||||||||||
| Notes payable to Questar |
53.0 | (27.9 | ) | (25.1 | ) | (b) | ||||||||||||
| Accounts payable and accrued expenses |
374.1 | (42.8 | ) | 16.9 | (b) | 348.2 | ||||||||||||
| Accounts payable to affiliates |
17.6 | (7.7 | ) | (9.9 | ) | (b) | ||||||||||||
| Fair value of derivative contracts |
139.5 | 139.5 | ||||||||||||||||
| Deferred income taxes - current |
45.7 | 4.4 | 50.1 | |||||||||||||||
| Current portion of long-term debt |
150.0 | 150.0 | ||||||||||||||||
| Total Current Liabilities |
791.4 | (75.9 | ) | (15.1 | ) | 700.4 | ||||||||||||
| Long-term debt, less current portion |
1,198.7 | (200.0 | ) | (a) | 998.7 | |||||||||||||
| Deferred income taxes |
1,364.2 | (105.5 | ) | 1,258.7 | ||||||||||||||
| Asset retirement obligations |
191.3 | (52.8 | ) | 138.5 | ||||||||||||||
| Fair value of derivative contracts |
111.7 | 111.7 | ||||||||||||||||
| Other long-term liabilities |
51.6 | (9.6 | ) | 42.0 | ||||||||||||||
| EQUITY |
||||||||||||||||||
| Common Shareholder’s Equity |
3,040.5 | (405.3 | ) | 250.0 | (a) | 2,885.2 | ||||||||||||
| Noncontrolling interest |
54.3 | 54.3 | ||||||||||||||||
| Total Equity |
3,094.8 | (405.3 | ) | 250.0 | 2,939.5 | |||||||||||||
| TOTAL LIABILITIES AND EQUITY |
$ | 6,803.7 | $ | (649.1 | ) | $ | 34.9 | $ | 6,189.5 | |||||||||
See notes to unaudited pro forma consolidated financial information
2
QEP RESOURCES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
Three Months Ended March 31, 2010
(Unaudited)
| Historical QEP Resources |
Wexpro Separation |
Other Adjustments |
Pro Forma QEP Resources |
|||||||||||||||
| (in millions, except per share amounts) | ||||||||||||||||||
| REVENUES |
||||||||||||||||||
| From unaffiliated customers |
$ | 576.3 | $ | (6.2 | ) | $ | 10.0 | (c) | $ | 580.1 | ||||||||
| From affiliated companies |
66.5 | (60.5 | ) | (6.0 | ) | (c) | ||||||||||||
| Total Revenues |
642.8 | (66.7 | ) | 4.0 | 580.1 | |||||||||||||
| OPERATING EXPENSES |
||||||||||||||||||
| Cost of natural gas and other products sold (excluding operating expenses shown separately) |
173.9 | 3.9 | (c) | 177.8 | ||||||||||||||
| Operating and maintenance |
56.7 | (5.0 | ) | 0.1 | (c) | 51.8 | ||||||||||||
| General and administrative |
30.1 | (4.8 | ) | 25.3 | ||||||||||||||
| Production and other taxes |
30.7 | (7.8 | ) | 22.9 | ||||||||||||||
| Depreciation, depletion and amortization |
163.3 | (15.9 | ) | 147.4 | ||||||||||||||
| Exploration |
3.6 | 3.6 | ||||||||||||||||
| Abandonment and impairment |
7.6 | 7.6 | ||||||||||||||||
| Wexpro Agreement-oil income sharing |
0.3 | (0.3 | ) | |||||||||||||||
| Total Operating Expenses |
466.2 | (33.8 | ) | 4.0 | 436.4 | |||||||||||||
| Net loss from asset sales |
(0.9 | ) | 0.1 | (0.8 | ) | |||||||||||||
| OPERATING INCOME |
175.7 | (32.8 | ) | 142.9 | ||||||||||||||
| Interest and other income |
1.2 | (0.4 | ) | 0.1 | (c) | 0.9 | ||||||||||||
| Income from unconsolidated affiliates |
0.8 | 0.8 | ||||||||||||||||
| Interest expense |
(20.0 | ) | 0.1 | (0.1 | ) | (c) | (20.0 | ) | ||||||||||
| INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
157.7 | (33.1 | ) | 124.6 | ||||||||||||||
| Income taxes |
(57.8 | ) | 11.9 | (45.9 | ) | |||||||||||||
| NET INCOME FROM CONTINUING OPERATIONS |
99.9 | (21.2 | ) | 78.7 | ||||||||||||||
| Net income from continuing operations attributable to noncontrolling interest |
(0.6 | ) | (0.6 | ) | ||||||||||||||
| NET INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO QEP RESOURCES |
$ | 99.3 | $ | (21.2 | ) | $ | 78.1 | |||||||||||
| Earnings from continuing operations per common share attributable to QEP Resources |
||||||||||||||||||
| Basic |
$ | 0.45 | ||||||||||||||||
| Diluted |
0.44 | |||||||||||||||||
| Weighted-average common shares outstanding (d) |
||||||||||||||||||
| Used in basic calculation |
174.9 | |||||||||||||||||
| Used in diluted calculation |
177.2 | |||||||||||||||||
See notes to unaudited pro forma consolidated financial information
3
QEP RESOURCES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 2009
(Unaudited)
| Historical QEP Resources |
Wexpro Separation |
Other Adjustments |
Pro Forma QEP Resources |
|||||||||||||||
| (in millions, except per share amounts) | ||||||||||||||||||
| REVENUES |
||||||||||||||||||
| From unaffiliated customers |
$ | 1,949.0 | $ | (17.8 | ) | $ | 41.3 | (c) | $ | 1,972.5 | ||||||||
| From affiliated companies |
249.5 | (225.1 | ) | (24.4 | ) | (c) | ||||||||||||
| Total Revenues |
2,198.5 | (242.9 | ) | 16.9 | 1,972.5 | |||||||||||||
| OPERATING EXPENSES |
||||||||||||||||||
| Cost of natural gas and other products sold (excluding operating expenses shown separately) |
411.1 | 16.7 | (c) | 427.8 | ||||||||||||||
| Operating and maintenance |
222.8 | (21.2 | ) | 0.1 | (c) | 201.7 | ||||||||||||
| General and administrative |
108.6 | (17.0 | ) | 0.1 | (c) | 91.7 | ||||||||||||
| Production and other taxes |
82.9 | (20.0 | ) | 62.9 | ||||||||||||||
| Depreciation, depletion and amortization |
617.9 | (58.8 | ) | 559.1 | ||||||||||||||
| Exploration |
25.0 | 25.0 | ||||||||||||||||
| Abandonment and impairment |
20.3 | 20.3 | ||||||||||||||||
| Wexpro Agreement-oil income sharing |
1.0 | (1.0 | ) | |||||||||||||||
| Total Operating Expenses |
1,489.6 | (118.0 | ) | 16.9 | 1,388.5 | |||||||||||||
| Net gain from asset sales |
1.2 | 0.3 | 1.5 | |||||||||||||||
| OPERATING INCOME |
710.1 | (124.6 | ) | 585.5 | ||||||||||||||
| Interest and other income |
7.0 | (3.2 | ) | 0.7 | (c) | 4.5 | ||||||||||||
| Income from unconsolidated affiliates |
2.7 | 2.7 | ||||||||||||||||
| Unrealized and realized loss on basis-only swaps |
(189.6 | ) | (189.6 | ) | ||||||||||||||
| Interest expense |
(70.3 | ) | 0.9 | (0.7 | ) | (c) | (70.1 | ) | ||||||||||
| INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
459.9 | (126.9 | ) | 333.0 | ||||||||||||||
| Income taxes |
(163.8 | ) | 46.2 | (117.6 | ) | |||||||||||||
| NET INCOME FROM CONTINUING OPERATIONS |
296.1 | (80.7 | ) | 215.4 | ||||||||||||||
| Net income from continuing operations attributable to noncontrolling interest |
(2.6 | ) | (2.6 | ) | ||||||||||||||
| NET INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO QEP RESOURCES |
$ | 293.5 | $ | (80.7 | ) | $ | 212.8 | |||||||||||
| Earnings from continuing operations per common share attributable to QEP Resources |
||||||||||||||||||
| Basic |
$ | 1.22 | ||||||||||||||||
| Diluted |
1.21 | |||||||||||||||||
| Weighted-average common shares outstanding (d) |
||||||||||||||||||
| Used in basic calculation |
174.1 | |||||||||||||||||
| Used in diluted calculation |
176.3 | |||||||||||||||||
See notes to unaudited pro forma consolidated financial information
4
QEP RESOURCES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 2008
(Unaudited)
| Historical QEP Resources |
Wexpro Separation |
Other Adjustments |
Pro Forma QEP Resources |
|||||||||||||||
| (in millions, except per share amounts) | ||||||||||||||||||
| REVENUES |
||||||||||||||||||
| From unaffiliated customers |
$ | 2,297.2 | $ | (31.1 | ) | $ | 52.7 | (c) | $ | 2,318.8 | ||||||||
| From affiliated companies |
232.9 | (209.9 | ) | (23.0 | ) | (c) | ||||||||||||
| Total Revenues |
2,530.1 | (241.0 | ) | 29.7 | 2,318.8 | |||||||||||||
| OPERATING EXPENSES |
||||||||||||||||||
| Cost of natural gas and other products sold (excluding operating expenses shown separately) |
575.1 | 29.5 | (c) | 604.6 | ||||||||||||||
| Operating and maintenance |
243.6 | (23.5 | ) | 0.1 | (c) | 220.2 | ||||||||||||
| General and administrative |
91.7 | (13.7 | ) | 0.1 | (c) | 78.1 | ||||||||||||
| Production and other taxes |
144.6 | (37.7 | ) | 106.9 | ||||||||||||||
| Depreciation, depletion and amortization |
410.0 | (48.5 | ) | 361.5 | ||||||||||||||
| Exploration |
29.3 | 29.3 | ||||||||||||||||
| Abandonment and impairment |
45.4 | 45.4 | ||||||||||||||||
| Wexpro Agreement-oil income sharing |
6.1 | (6.1 | ) | |||||||||||||||
| Total Operating Expenses |
1,545.8 | (129.5 | ) | 29.7 | 1,446.0 | |||||||||||||
| Net gain from asset sales |
60.2 | 0.2 | 60.4 | |||||||||||||||
| OPERATING INCOME |
1,044.5 | (111.3 | ) | 933.2 | ||||||||||||||
| Interest and other income |
14.6 | (6.6 | ) | 2.2 | (c) | 10.2 | ||||||||||||
| Income from unconsolidated affiliates |
1.7 | 1.7 | ||||||||||||||||
| Unrealized and realized loss on basis-only swaps |
(79.2 | ) | (79.2 | ) | ||||||||||||||
| Interest expense |
(62.2 | ) | 2.7 | (2.2 | ) | (c) | (61.7 | ) | ||||||||||
| INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
919.4 | (115.2 | ) | 804.2 | ||||||||||||||
| Income taxes |
(324.9 | ) | 41.3 | (283.6 | ) | |||||||||||||
| NET INCOME FROM CONTINUING OPERATIONS |
594.5 | (73.9 | ) | 520.6 | ||||||||||||||
| Net income from continuing operations attributable to noncontrolling interest |
(9.0 | ) | (9.0 | ) | ||||||||||||||
| NET INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO QEP RESOURCES |
$ | 585.5 | $ | (73.9 | ) | $ | 511.6 | |||||||||||
| Earnings from continuing operations per common share attributable to QEP Resources |
||||||||||||||||||
| Basic |
$ | 2.96 | ||||||||||||||||
| Diluted |
2.90 | |||||||||||||||||
| Weighted-average common shares outstanding (d) |
||||||||||||||||||
| Used in basic calculation |
172.8 | |||||||||||||||||
| Used in diluted calculation |
176.1 | |||||||||||||||||
See notes to unaudited pro forma consolidated financial information
5
QEP RESOURCES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 2007
(Unaudited)
| Historical QEP Resources |
Wexpro Separation |
Other Adjustments |
Pro Forma QEP Resources |
|||||||||||||||
| (in millions, except per share amounts) | ||||||||||||||||||
| REVENUES |
||||||||||||||||||
| From unaffiliated customers |
$ | 1,671.3 | $ | (21.6 | ) | $ | 38.4 | (c) | $ | 1,688.1 | ||||||||
| From affiliated companies |
172.1 | (155.7 | ) | (16.4 | ) | (c) | ||||||||||||
| Total Revenues |
1,843.4 | (177.3 | ) | 22.0 | 1,688.1 | |||||||||||||
| OPERATING EXPENSES |
||||||||||||||||||
| Cost of natural gas and other products sold (excluding operating expenses shown separately) |
474.7 | 21.8 | (c) | 496.5 | ||||||||||||||
| Operating and maintenance |
187.9 | (16.5 | ) | 171.4 | ||||||||||||||
| General and administrative |
91.3 | (14.7 | ) | 0.2 | (c) | 76.8 | ||||||||||||
| Production and other taxes |
81.6 | (20.0 | ) | 61.6 | ||||||||||||||
| Depreciation, depletion and amortization |
295.1 | (31.2 | ) | 263.9 | ||||||||||||||
| Exploration |
22.0 | 22.0 | ||||||||||||||||
| Abandonment and impairment |
11.2 | 11.2 | ||||||||||||||||
| Wexpro Agreement-oil income sharing |
4.9 | (4.9 | ) | |||||||||||||||
| Total Operating Expenses |
1,168.7 | (87.3 | ) | 22.0 | 1,103.4 | |||||||||||||
| Net loss from asset sales |
(1.3 | ) | 0.7 | (0.6 | ) | |||||||||||||
| OPERATING INCOME |
673.4 | (89.3 | ) | 584.1 | ||||||||||||||
| Interest and other income |
9.7 | (1.9 | ) | 7.8 | ||||||||||||||
| Income from unconsolidated affiliates |
8.9 | 8.9 | ||||||||||||||||
| Unrealized and realized gain on basis-only swaps |
5.7 | 5.7 | ||||||||||||||||
| Interest expense |
(35.6 | ) | 2.0 | (33.6 | ) | |||||||||||||
| INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
662.1 | (89.2 | ) | 572.9 | ||||||||||||||
| Income taxes |
(241.3 | ) | 30.0 | (211.3 | ) | |||||||||||||
| NET INCOME FROM CONTINUING OPERATIONS |
$ | 420.8 | $ | (59.2 | ) | $ | 361.6 | |||||||||||
| Earnings from continuing operations per common share |
||||||||||||||||||
| Basic |
$ | 2.10 | ||||||||||||||||
| Diluted |
2.05 | |||||||||||||||||
| Weighted-average common shares outstanding (d) |
||||||||||||||||||
| Used in basic calculation |
172.0 | |||||||||||||||||
| Used in diluted calculation |
175.9 | |||||||||||||||||
See notes to unaudited pro forma consolidated financial information
6
Notes to Unaudited Pro Forma Consolidated Financial Information
Note 1: Unaudited pro forma adjustments to condensed consolidated balance sheet as of March 31, 2010.
The pro forma adjustments to QEP Resources’ unaudited consolidated balance sheet as of March 31, 2010, relate to (1) the elimination of the assets, liabilities and equity of Wexpro and (2) other adjustments as follows:
| (a) | An adjustment to reflect a $250.0 million cash contribution from Questar to QEP Resources in connection with the QEP Resources Spinoff and Wexpro Separation. Proceeds were used to repay debt. |
| (b) | Adjustments for transactions between QEP Resources and Questar, including Wexpro, that were eliminated in consolidation or reported as transactions with affiliates in the preparation of QEP Resources’ historical consolidated financial statements, but that are reflected as assets and liabilities in the amounts and descriptions presented under the column heading “Pro Forma QEP Resources” upon the completion of the QEP Resources Spinoff and Wexpro Separation. |
Note 2: Unaudited pro forma adjustments to consolidated statements of income for three months ended March 31, 2010 and the years ended December 31, 2009, 2008 and 2007.
The pro forma adjustments to QEP Resources’ unaudited consolidated statements of income for the three months ended March 31, 2010, and for the years ended December 31, 2009, 2008 and 2007, relate to (1) the elimination of the results of operations of Wexpro and (2) other adjustments as follows:
| (c) | Adjustments to revenues, costs of products sold, operating and maintenance expenses, general and administrative expenses, interest income and interest expense related to transactions between QEP Resources and Questar, including Wexpro, that were eliminated in consolidation or reported as transactions with affiliates in the preparation of QEP Resources’ historical consolidated financial statements, but that are reflected as revenues, costs of products sold, operating and maintenance expenses, general and administrative expenses, interest income and interest expense in the amounts and descriptions presented under the column heading “Pro Forma QEP Resources” upon the completion of the QEP Resources Spinoff and Wexpro Separation. |
Note 3: Earnings from continuing operations per common share attributable to QEP Resources for three months ended March 31, 2010 and the years ended December 31, 2009, 2008 and 2007.
| (d) | Because the QEP Resources Spinoff resulted in the issuance of QEP Resources shares and rights to receive or acquire shares in an amount that equaled the number of Questar shares and rights to receive or acquire shares, the pro forma basic and diluted weighted-average common shares outstanding for QEP Resources equal Questar’s for the corresponding periods. |
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