Attached files
| file | filename |
|---|---|
| 8-K - GASTAR EXPLORATION, INC. | v200860_8k.htm |
| EX-99.1 - GASTAR EXPLORATION, INC. | v200860_ex99-1.htm |
Exhibit
99.2
GASTAR
EXPLORATION LTD.
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEAR ENDED DECEMBER 31, 2009 AND
NINE
MONTHS ENDED SEPTEMBER 30, 2010
Introduction
On November 1, 2010, Gastar Exploration
USA Inc., a wholly-owned subsidiary of Gastar Exploration Ltd. (collectively,
the “Company”) completed its previously announced Marcellus Shale joint venture
transaction with Atinum Marcellus I LLC (“Atinum”) (the “Atinum Joint Venture”)
as contemplated by the Purchase and Sale Agreement, dated September 21, 2010,
and the Form of Participation Agreement (the “Closing”). Pursuant to
the Closing, the Company assigned a 21.43% interest in all of its existing
Marcellus Shale assets in West Virginia and Pennsylvania, which consists of
approximately 34,200 net acres and a 50% working interest in 16 producing
shallow conventional wells and one non-producing vertical Marcellus Shale
well. At Closing, Atinum paid approximately $30.0 million in cash to
the Company. As of Closing, the drilling carry balance was $40.0
million, which will be used to cover Atinum’s 50% share of drilling, completion
and infrastructure costs along with 75% of the Company’s 50% share of those same
costs within the areas of mutual interest.
The following unaudited pro forma
condensed consolidated financial statements and accompanying notes present the
financial statements of the Company assuming the transaction occurred as of
September 30, 2010 with respect to the Condensed Consolidated Balance Sheet and
as of January 1, 2009 with respect to the Condensed Consolidated Statement of
Operations for the nine months ended September 30, 2010 and the year ended
December 31, 2009.
The adjustments presented in the
unaudited pro forma condensed consolidated financial statements are based on
currently available information and certain estimates and
assumptions. Therefore, actual results may differ from the pro forma
adjustments. However, management believes that the estimates and
assumptions used provide a reasonable basis for presenting the significant
effects of the transaction. Management also believes the pro forma
adjustments give appropriate effect to the estimates and assumptions and are
applied in conformity with U.S. generally accepted accounting
principles.
GASTAR
EXPLORATION LTD. AND SUBSIDIARIES
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
|
September
30, 2010
|
||||||||||||
|
Historical
|
Pro Forma
Adjustments
|
Pro Forma
|
||||||||||
|
(in
thousands, except share and per share data )
|
||||||||||||
|
ASSETS
|
||||||||||||
|
CURRENT
ASSETS:
|
||||||||||||
|
Cash
and cash equivalents
|
$ | 6,937 | $ | 6,000 | (a) | $ | 12,937 | |||||
|
Term
deposit
|
- | - | ||||||||||
|
Accounts
receivable, net of allowance for doubtful accounts of $577
|
2,954 | 2,954 | ||||||||||
|
Receivable
from unproved property sale
|
- | - | ||||||||||
|
Commodity
derivative contracts
|
12,233 | 12,233 | ||||||||||
|
Prepaid
expenses
|
269 | 269 | ||||||||||
|
Total
current assets
|
22,393 | 6,000 | 28,393 | |||||||||
|
PROPERTY,
PLANT AND EQUIPMENT:
|
||||||||||||
|
Natural
gas and oil properties, full cost method of accounting:
|
||||||||||||
|
Unproved
properties, excluded from amortization
|
151,793 | (25,289 | )(b) | 126,504 | ||||||||
|
Proved
properties
|
338,954 | (4,816 | )(b)(d) | 334,138 | ||||||||
|
Total
natural gas and oil properties
|
490,747 | (30,105 | ) | 460,642 | ||||||||
|
Furniture
and equipment
|
1,032 | 1,032 | ||||||||||
|
Total
property, plant and equipment
|
491,779 | (30,105 | ) | 461,674 | ||||||||
|
Accumulated
depreciation, depletion and amortization
|
(290,094 | ) | (290,094 | ) | ||||||||
|
Total
property, plant and equipment, net
|
201,685 | (30,105 | ) | 171,580 | ||||||||
|
OTHER
ASSETS:
|
||||||||||||
|
Restricted
cash
|
50 | 50 | ||||||||||
|
Commodity
derivative contracts
|
11,567 | 11,567 | ||||||||||
|
Deferred
charges, net
|
567 | 567 | ||||||||||
|
Drilling
advances and other assets
|
100 | 100 | ||||||||||
|
Total
other assets
|
12,284 | - | 12,284 | |||||||||
|
TOTAL
ASSETS
|
$ | 236,362 | $ | (24,105 | ) | $ | 212,257 | |||||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||||||
|
CURRENT
LIABILITIES:
|
||||||||||||
|
Accounts
payable
|
$ | 3,127 | $ | 3,127 | ||||||||
|
Revenue
payable
|
4,556 | 4,556 | ||||||||||
|
Accrued
interest
|
167 | 167 | ||||||||||
|
Accrued
drilling and operating costs
|
3,540 | 3,540 | ||||||||||
|
Commodity
derivative contracts
|
3,263 | 3,263 | ||||||||||
|
Commodity
derivative premium payable
|
3,024 | 3,024 | ||||||||||
|
Accrued
litigation settlement liability
|
19,750 | 19,750 | ||||||||||
|
Short-term
loan
|
- | - | ||||||||||
|
Accrued
taxes payable
|
- | - | ||||||||||
|
Other
accrued liabilities
|
1,706 | 1,706 | ||||||||||
|
Total
current liabilities
|
39,133 | - | 39,133 | |||||||||
|
LONG-TERM
LIABILITIES:
|
||||||||||||
|
Long-term
debt
|
24,000 | (24,000 | )(c) | - | ||||||||
|
Commodity
derivative contracts
|
2,141 | 2,141 | ||||||||||
|
Commodity
derivative premium payable
|
5,838 | 5,838 | ||||||||||
|
Accrued
litigation settlement liability
|
1,400 | 1,400 | ||||||||||
|
Asset
retirement obligation
|
6,463 | (105 | )(d) | 6,358 | ||||||||
|
Warrant
derivative
|
- | - | ||||||||||
|
Total
long-term liabilities
|
39,842 | (24,105 | ) | 15,737 | ||||||||
|
Commitments
and contingencies (Note 13)
|
||||||||||||
|
SHAREHOLDERS'
EQUITY:
|
||||||||||||
|
Preferred
stock, no par value; unlimited shares authorized; no shares
issued
|
- | - | ||||||||||
|
Common
stock, no par value; unlimited shares authorized; 50,378,094 shares issued
and outstanding at September 30, 2010
|
263,809 | 263,809 | ||||||||||
|
Additional
paid-in capital
|
22,789 | 22,789 | ||||||||||
|
Accumulated
deficit
|
(129,211 | ) | (129,211 | ) | ||||||||
|
Total
shareholders' equity
|
157,387 | - | 157,387 | |||||||||
|
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
|
$ | 236,362 | $ | (24,105 | ) | $ | 212,257 | |||||
GASTAR
EXPLORATION LTD. AND SUBSIDIARIES
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
|
For the Nine Months Ended September 30, 2010
|
||||||||||||
|
Historical
|
Pro Forma
Adjustments
|
Pro Forma
|
||||||||||
|
(in thousands, except share and per share data )
|
||||||||||||
|
REVENUES:
|
||||||||||||
|
Natural
gas and oil revenues
|
$ | 22,152 | $ | (160 | )(e) | $ | 21,992 | |||||
|
Unrealized
natural gas hedge gain (loss)
|
13,893 | 13,893 | ||||||||||
|
Total
revenues
|
36,045 | (160 | ) | 35,885 | ||||||||
|
EXPENSES:
|
||||||||||||
|
Production
taxes
|
300 | (7 | )(f) | 293 | ||||||||
|
Lease
operating expenses
|
5,206 | (85 | )(f) | 5,121 | ||||||||
|
Transportation,
treating and gathering
|
3,508 | (0 | ) | 3,508 | ||||||||
|
Depreciation,
depletion and amortization
|
6,068 | (38 | )(f) | 6,030 | ||||||||
|
Impairment
of natural gas and oil properties
|
- | - | ||||||||||
|
Accretion
of asset retirement obligation
|
292 | (5 | )(f) | 287 | ||||||||
|
General
and administrative expense
|
11,618 | 11,618 | ||||||||||
|
Litigation
settlement expense
|
21,150 | 21,150 | ||||||||||
|
Total
expenses
|
48,142 | (135 | ) | 48,007 | ||||||||
|
LOSS
FROM OPERATIONS
|
(12,097 | ) | (25 | ) | (12,122 | ) | ||||||
|
OTHER
INCOME (EXPENSE):
|
||||||||||||
|
Interest
expense
|
(120 | ) | (120 | ) | ||||||||
|
Early
extinguishment of debt
|
- | - | ||||||||||
|
Investment
income and other
|
1,343 | 1,343 | ||||||||||
|
Gain
on sale of assets
|
- | - | ||||||||||
|
Unrealized
warrant derivative gain (loss)
|
205 | 205 | ||||||||||
|
Foreign
transaction gain
|
349 | 349 | ||||||||||
|
INCOME
(LOSS) BEFORE PROVISION FOR INCOME TAXES
|
(10,320 | ) | (25 | ) | (10,345 | ) | ||||||
|
Provision
for income tax expense (benefit)
|
(804 | ) | (804 | ) | ||||||||
|
NET
INCOME (LOSS)
|
$ | (9,516 | ) | $ | (25 | ) | $ | (9,541 | ) | |||
|
NET
INCOME (LOSS) PER SHARE:
|
||||||||||||
|
Basic
|
$ | (0.19 | ) | $ | (0.19 | ) | ||||||
|
Diluted
|
$ | (0.19 | ) | $ | (0.19 | ) | ||||||
|
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING:
|
||||||||||||
|
Basic
|
49,063,253 | 49,063,253 | ||||||||||
|
Diluted
|
49,063,253 | 49,063,253 | ||||||||||
GASTAR
EXPLORATION LTD. AND SUBSIDIARIES
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
|
For the Year Ended December 31, 2009
|
||||||||||||
|
Historical
|
Pro Forma
Adjustments
|
Pro Forma
|
||||||||||
|
(in thousands, except share and per share data )
|
||||||||||||
|
REVENUES:
|
|
|||||||||||
|
Natural
gas and oil revenues
|
$ | 40,636 | $ | (177 | )(e) | $ | 40,459 | |||||
|
Unrealized
natural gas hedge gain (loss)
|
(7,767 | ) | (7,767 | ) | ||||||||
|
Total
revenues
|
32,869 | (177 | ) | 32,692 | ||||||||
|
EXPENSES:
|
||||||||||||
|
Production
taxes
|
439 | (9 | )(f) | 430 | ||||||||
|
Lease
operating expenses
|
6,572 | (66 | )(f) | 6,506 | ||||||||
|
Transportation,
treating and gathering
|
1,547 | (0 | ) | 1,547 | ||||||||
|
Depreciation,
depletion and amortization
|
16,484 | (80 | )(f) | 16,404 | ||||||||
|
Impairment
of natural gas and oil properties
|
68,729 | 68,729 | ||||||||||
|
Accretion
of asset retirement obligation
|
379 | (3 | )(f) | 376 | ||||||||
|
General
and administrative expense
|
15,649 | 15,649 | ||||||||||
|
Total
expenses
|
109,799 | (158 | ) | 109,641 | ||||||||
|
LOSS
FROM OPERATIONS
|
(76,930 | ) | (19 | ) | (76,949 | ) | ||||||
|
OTHER
INCOME (EXPENSE):
|
||||||||||||
|
Interest
expense
|
(3,993 | ) | (3,993 | ) | ||||||||
|
Early
extinguishment of debt
|
(15,902 | ) | (15,902 | ) | ||||||||
|
Investment
income and other
|
1,267 | 1,267 | ||||||||||
|
Gain
on sale of assets
|
211,162 | 211,162 | ||||||||||
|
Unrealized
warrant derivative gain (loss)
|
(205 | ) | (205 | ) | ||||||||
|
Foreign
transaction gain
|
3,764 | 3,764 | ||||||||||
|
INCOME
(LOSS) BEFORE PROVISION FOR INCOME TAXES
|
119,163 | (19 | ) | 119,144 | ||||||||
|
Provision
for income tax expense (benefit)
|
70,317 | 70,317 | ||||||||||
|
NET
INCOME (LOSS)
|
$ | 48,846 | $ | (19 | ) | $ | 48,827 | |||||
|
NET
INCOME (LOSS) PER SHARE:
|
||||||||||||
|
Basic
|
$ | 1.06 | $ | 1.06 | ||||||||
|
Diluted
|
$ | 1.06 | $ | 1.06 | ||||||||
|
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING:
|
||||||||||||
|
Basic
|
46,102,662 | 46,102,662 | ||||||||||
|
Diluted
|
46,210,424 | 46,210,424 | ||||||||||
GASTAR
EXPLORATION LTD. AND SUBSIDIARIES
NOTES
TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
|
|
1.
|
Basis
of Presentation
|
The
historical amounts as of and for the nine months ended September 30, 2010 and
for the year ended December 31, 2009 are derived from and should be read in
conjunction with the Company’s Form 10-K for the year ended December 31, 2009,
filed on April 15, 2010, and Form 10-Q for the nine months ended September 30,
2010, which was filed on November 4, 2010.
The pro
forma adjustments in the accompanying Condensed Consolidated Balance Sheet have
been prepared as if the Closing of the Atinum Joint Venture was completed on
September 30, 2010. The pro forma adjustments in the accompanying
Condensed Consolidated Statements of Operations have been prepared as if the
Closing of the Atinum Joint Venture was completed on January 1,
2009. The pro forma Condensed Consolidated Financial Statements do
not contend to be indicative of the financial position or results of the
Company’s operations as of such dates or for such periods, nor are they
necessarily indicative of future results.
|
|
2.
|
Pro
Forma Adjustments and Assumptions
|
The
unaudited pro forma Condensed Consolidated Financial Statements give pro forma
effect to the following:
|
|
(a)
|
Reflects
the cash received upon the Closing of the Atinum Joint Venture, excluding
amounts used to repay outstanding debt under the Revolving Credit
Facility.
|
|
|
(b)
|
Reflects
the sale of the assets to Atinum.
|
|
|
(c)
|
Reflects
the repayment of outstanding debt under the Revolving Credit
Facility.
|
|
|
(d)
|
Reflects
the adjustment to the asset retirement obligation for Atinum’s share of
the assets sold and the liability
assumed.
|
|
|
(e)
|
Reflects
Atinum’s share of natural gas and oil revenues for Marcellus Shale
operations sold during the stated
period.
|
|
|
(f)
|
Reflects
Atinum’s share of production taxes, lease operating expenses,
depreciation, depletion and amortization expense and accretion expense for
Marcellus Shale operations sold during the stated
period.
|