Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - MAGNUM HUNTER RESOURCES CORP | l41738e8vk.htm |
Exhibit 99.1
UNAUDITED
PRO FORMA COMBINED FINANCIAL DATA
The following Unaudited Pro Forma Combined Financial Data are
derived from the consolidated financial statements of Magnum
Hunter and certain historical financial data in respect of
various assets acquired by Magnum Hunter. The Unaudited Pro
Forma Combined Balance Sheet of Magnum Hunter as of
September 30, 2010 has been prepared assuming the
acquisition of the PostRock assets, NGAS Resources, and NuLoch
Resources and all necessary ancillary transactions had been
consummated on September 30, 2010. The Unaudited Pro Forma
Combined Income Statement for the year ended December 31,
2009 and the nine months ended September 30, 2010 have been
prepared assuming the acquisition of the PostRock assets, NGAS
Resources, and NuLoch Resources and all necessary ancillary
transactions had been consummated as of January 1, 2009. We
have also included for clarity unaudited pro forma
combined balance sheet and unaudited pro forma combined income
statements for the combination of Magnum Hunter, PostRock and
NGAS Resources. The pro forma adjustments set forth on the
attached Unaudited Pro Forma Combined Balance Sheet and
Unaudited Pro Forma Combined Income Statements reflect the
following as if they occurred on the dates hereinabove set forth:
(1) PostRock, NGAS Resources, and NuLoch Resources
Acquisitions. The first and second completed phases of the
acquisition of PostRock assets as described in the Purchase and
Sale Agreement dated December 24, 2010, the NGAS Resources
acquisition as described in the Arrangement Agreement dated
December 23, 2010, and the NuLoch Resources acquisition as
described in the Arrangement Agreement dated January 19,
2011.
(2) Incurrence of indebtedness under the proposed new
revolving credit facility to be entered into pursuant to and as
described in the commitment letter from Bank of Montreal dated
January 13, 2011.
(3) Issuance of common stock upon the closing dates of the
acquisition of the PostRock assets NGAS Resources, and NuLoch
Resources.
(4) Payment of change of control compensation in the NGAS
Resources and NuLoch Resources acquisitions.
The Unaudited Pro Forma Balance Sheet reflects the preliminary
adjustments to record the estimated fair values of the assets
and liabilities acquired in the acquisitions of the PostRock
assets NGAS Resources and NuLoch Resources. The final entries,
and the resulting effect on Magnum Hunter’s balance sheet
as well as items in Magnum Hunter’s Income Statements, may
differ based on the actual determination of the fair values of
the assets acquired and liabilities assumed.
Transaction costs related to these acquisitions will be recorded
as expenses in the periods in which these costs are incurred.
These expenses are not included in the Unaudited Pro Forma
Combined Income Statements.
The Unaudited Pro Forma Combined Financial Data should be read
in conjunction with the notes thereto and with the consolidated
financial statements of Magnum Hunter and the notes thereto as
filed in Magnum Hunter’s
Form 10-K
and
Form 10-Q.
The Unaudited Pro Forma Combined Financial Data are not
indicative of the financial position or results of operations of
Magnum Hunter which would actually have occurred if the
transactions described above had occurred at the dates presented
or which may be obtained in the future. In addition, future
results may vary significantly from the results reflected in
such statements due to normal oil and natural gas production
declines, changes in prices paid for oil and natural gas, future
acquisitions, drilling activity and other factors.
The Unaudited Pro Forma Combined Financial Data include
financial information received from PostRock and NuLoch
Resources and such financial information has been accepted and
incorporated as presented without independent verification of
such financial information.
UNAUDITED
PRO FORMA COMBINED BALANCE SHEET
As of September 30, 2010
As of September 30, 2010
|
NuLoch |
Combined |
|||||||||||||||||||||||||||||||||||
|
Resources |
Combined |
Pro Forma for |
||||||||||||||||||||||||||||||||||
|
NuLoch |
Conversion to |
NuLoch |
Pro Forma for |
Magnum Hunter, |
||||||||||||||||||||||||||||||||
|
Magnum |
NGAS |
Resources |
PostRock |
NGAS |
US GAAP and |
Resources |
Magnum Hunter, |
NGAS Resources, |
||||||||||||||||||||||||||||
|
Hunter |
Resources |
Historical |
Pro Forma |
Pro Forma |
USD |
Pro Forma |
NGAS Resources |
PostRock and |
||||||||||||||||||||||||||||
| Historical | Historical | (CAN $) | Adjustments | Adjustments | Adjustments | Adjustments | and PostRock | NuLoch Resources | ||||||||||||||||||||||||||||
|
ASSETS
|
||||||||||||||||||||||||||||||||||||
|
CURRENT ASSETS:
|
||||||||||||||||||||||||||||||||||||
|
Cash and cash equivalents
|
$ | 836,601 | $ | 5,105,017 | $ | 114,000 | $ | — | $ | — | (4) | $ | (3,203 | ) | $ | — | $ | 5,941,618 | $ | 6,052,415 | ||||||||||||||||
|
Accounts receivable
|
7,002,332 | 5,535,965 | 4,291,000 | (1) | 21,140 | — | (4) | (193,470 | ) | — | 12,559,437 | 16,656,967 | ||||||||||||||||||||||||
|
Derivative assets
|
573,657 | — | — | — | — | — | — | 573,657 | 573,657 | |||||||||||||||||||||||||||
|
Notes receivable
|
— | 6,632,906 | — | — | (2) | (6,632,906 | ) | — | — | — | — | |||||||||||||||||||||||||
|
Prepaids and other current assets
|
1,433,235 | 772,755 | 384,000 | (1) | 2,658 | (2) | (75,141 | )(4) | (10,790 | ) | — | 2,133,507 | 2,506,717 | |||||||||||||||||||||||
|
Total current assets
|
9,845,825 | 18,046,643 | 4,789,000 | 23,798 | (6,708,047 | ) | (207,463 | ) | — | 21,208,219 | 25,789,756 | |||||||||||||||||||||||||
|
PROPERTY AND EQUIPMENT (Net of Accumulated Depletion and
Depreciation):
|
||||||||||||||||||||||||||||||||||||
|
Oil and natural gas properties, successful efforts accounting
|
152,402,137 | 160,681,864 | 84,643,000 | (1) | 44,264,097 | (2) | (50,836,043 | )(4) | (16,078,371 | )(3) | 357,589,389 | 306,512,055 | 732,666,073 | |||||||||||||||||||||||
|
Equipment and other fixed assets
|
15,065,160 | 24,018,018 | — | (1) | 154,300 | (2) | (13,612,316 | )(4) | 328,502 | — | 25,625,162 | 25,953,664 | ||||||||||||||||||||||||
|
Total property and equipment, net
|
167,467,297 | 184,699,882 | 84,643,000 | 44,418,397 | (64,448,359 | ) | (15,749,869 | ) | 357,589,389 | 332,137,217 | 758,619,737 | |||||||||||||||||||||||||
|
OTHERS ASSETS:
|
||||||||||||||||||||||||||||||||||||
|
Derivative assets
|
529,836 | — | — | — | — | — | — | 529,836 | 529,836 | |||||||||||||||||||||||||||
|
Note receivable
|
— | 1,742,524 | — | — | (2) | (1,742,524 | ) | — | — | — | — | |||||||||||||||||||||||||
|
Other assets
|
1,600,250 | 430,374 | — | — | (2) | (171,429 | ) | — | — | 1,859,195 | 1,859,195 | |||||||||||||||||||||||||
|
Deferred financing costs, net of amortization
|
2,781,741 | 837,908 | — | — | (2) | (1,128,399 | ) | — | — | 2,491,250 | 2,491,250 | |||||||||||||||||||||||||
|
Deferred tax asset
|
— | — | 5,411,000 | — | — | (4) | 3,209,753 | (3) | (8,620,753 | ) | — | — | ||||||||||||||||||||||||
|
Goodwill
|
— | 313,177 | — | — | (2) | (313,177 | ) | — | — | — | — | |||||||||||||||||||||||||
|
Total assets
|
$ | 182,224,949 | $ | 206,070,508 | $ | 94,843,000 | $ | 44,442,195 | $ | (74,511,935 | ) | $ | (12,747,579 | ) | $ | 348,968,636 | $ | 358,225,717 | $ | 789,289,774 | ||||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||||||||||||||
|
CURRENT LIABILITIES:
|
||||||||||||||||||||||||||||||||||||
|
Accounts payable
|
$ | 17,105,988 | $ | 3,016,509 | $ | 6,561,000 | $ | — | $ | — | (4) | $ | (184,364 | )(3) | $ | — | $ | 20,122,497 | $ | 26,499,133 | ||||||||||||||||
|
Accrued liabilities
|
4,269,193 | 3,404,714 | 2,376,000 | (1) | 421,951 | (2) | 9,330,923 | (4) | (66,765 | ) | 7,032,198 | 17,426,781 | 26,768,214 | |||||||||||||||||||||||
|
Revenue payable
|
2,408,129 | — | — | — | — | — | — | 2,408,129 | 2,408,129 | |||||||||||||||||||||||||||
|
Dividend payable
|
— | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
|
Current portion of notes payable
|
568,562 | 49,892,193 | 5,782,000 | — | (2) | (49,892,193 | )(4) | (162,474 | )(3) | (5,619,526 | ) | 568,562 | 568,562 | |||||||||||||||||||||||
|
Warrant liability
|
— | — | — | — | (2) | 1,279,834 | — | — | 1,279,834 | 1,279,834 | ||||||||||||||||||||||||||
|
Derivative liability
|
— | 52,306 | — | — | (2) | (52,306 | ) | — | — | — | — | |||||||||||||||||||||||||
|
Total current liabilities
|
24,351,872 | 56,365,722 | 14,719,000 | 421,951 | (39,333,742 | ) | (413,603 | ) | 1,412,672 | 41,805,803 | 57,523,872 | |||||||||||||||||||||||||
|
Deferred compensation
|
— | 1,112,198 | — | — | (2) | (1,112,198 | ) | — | — | — | — | |||||||||||||||||||||||||
|
Deferred income tax
|
— | 10,289,262 | — | — | (2) | (10,289,262 | ) | — | (3) | 108,631,200 | — | 108,631,200 | ||||||||||||||||||||||||
|
Payable on sale of partnership
|
640,695 | — | — | — | — | — | — | 640,695 | 640,695 | |||||||||||||||||||||||||||
|
Notes payable, less current portion
|
52,689,323 | 15,256,975 | — | (1) | 19,702,874 | (2) | 38,447,848 | — | — | 126,097,020 | 126,097,020 | |||||||||||||||||||||||||
|
Asset retirement obligation
|
4,634,858 | 2,397,132 | 1,375,000 | (1) | 17,000 | — | (4) | (38,638 | ) | — | 7,048,990 | 8,385,353 | ||||||||||||||||||||||||
|
Derivative liability
|
— | 146,668 | — | — | (2) | (146,668 | ) | — | — | — | — | |||||||||||||||||||||||||
|
Other long-term liabilities
|
— | 1,895,000 | — | — | — | — | — | 1,895,000 | 1,895,000 | |||||||||||||||||||||||||||
|
Total liabilities
|
82,316,748 | 87,462,957 | 16,094,000 | 20,141,825 | (12,434,022 | ) | (452,241 | ) | 110,043,872 | 177,487,508 | 303,173,139 | |||||||||||||||||||||||||
|
COMMITMENTS AND CONTINGENCIES
|
||||||||||||||||||||||||||||||||||||
|
REDEEMABLE PREFERRED STOCK:
|
||||||||||||||||||||||||||||||||||||
|
Series C Cumulative Perpetual Preferred Stock, cumulative
dividend rate 10.25% per annum, 4,000,000 authorized, 1,153,741
issued and outstanding as of September 30, 2010, with
liquidation preference of $25.00 per share
|
28,843,525 | — | — | — | — | — | — | 28,843,525 | 28,843,525 | |||||||||||||||||||||||||||
|
SHAREHOLDERS’ EQUITY:
|
||||||||||||||||||||||||||||||||||||
|
Preferred stock, 6,000,000 shares authorized, none issued
and outstanding
|
— | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
|
Common stock, $0.01 par value; 100,000,000 shares
authorized, 68,885,661 shares issued and outstanding as of
September 30, 2010
|
688,857 | 132,080,532 | 77,484,000 | (1) | 32,012 | (2) | (132,000,206 | )(4) | (2,177,300 | )(3) | (74,878,653 | ) | 801,195 | 1,229,242 | ||||||||||||||||||||||
|
Additional paid in capital
|
118,317,477 | 4,735,629 | 1,856,000 | (1) | 24,603,358 | (2) | 52,902,174 | (4) | (52,154 | )(3) | 303,821,533 | 200,558,638 | 506,184,017 | |||||||||||||||||||||||
|
Accumulated other comprehensive loss
|
— | — | (713,000 | ) | — | — | (4) | 20,035 | (3) | 692,965 | — | — | ||||||||||||||||||||||||
|
Accumulated deficit
|
(47,501,911 | ) | (18,184,980 | ) | 122,000 | (1) | (335,000 | )(2) | 16,996,489 | (4) | (10,085,919 | )(3) | 9,288,919 | (49,025,402 | ) | (49,700,402 | ) | |||||||||||||||||||
|
Treasury Stock, previously deposit on Triad, at cost,
761,652 shares
|
(1,310,357 | ) | (23,630 | ) | — | — | (2) | 23,630 | — | — | (1,310,357 | ) | (1,310,357 | ) | ||||||||||||||||||||||
|
Unearned common stock in KSOP, at cost, 137,900 shares
|
(542,366 | ) | — | — | — | — | — | — | (542,366 | ) | (542,366 | ) | ||||||||||||||||||||||||
|
Total Magnum Hunter shareholders’ equity
|
69,651,700 | 118,607,551 | 78,749,000 | 24,300,370 | (62,077,913 | ) | (12,295,338 | ) | 238,924,764 | 150,481,708 | 455,860,134 | |||||||||||||||||||||||||
|
Non-controlling interest
|
1,412,976 | — | — | — | — | — | — | 1,412,976 | 1,412,976 | |||||||||||||||||||||||||||
|
Total Equity
|
71,064,676 | 118,607,551 | 78,749,000 | 24,300,370 | (62,077,913 | ) | (12,295,338 | ) | 238,924,764 | 151,894,684 | 457,273,110 | |||||||||||||||||||||||||
|
Total liabilities and shareholders’ equity
|
$ | 182,224,949 | $ | 206,070,508 | $ | 94,843,000 | $ | 44,442,195 | $ | (74,511,935 | ) | $ | (12,747,579 | ) | $ | 348,968,636 | $ | 358,225,717 | $ | 789,289,774 | ||||||||||||||||
See accompanying notes to Unaudited Pro Forma Combined Financial
Data
|
Combined |
||||||||||||||||||||||||||||||||||||||||
|
Pro Forma |
||||||||||||||||||||||||||||||||||||||||
|
Combined |
for Magnum |
|||||||||||||||||||||||||||||||||||||||
|
NuLoch |
Pro Forma |
Hunter, |
||||||||||||||||||||||||||||||||||||||
|
Resources |
for Magnum |
NGAS |
||||||||||||||||||||||||||||||||||||||
|
NuLoch |
NGAS |
Conversion to |
NuLoch |
Hunter, |
Resources, |
|||||||||||||||||||||||||||||||||||
|
Magnum |
NGAS |
Resources |
PostRock |
Resources |
US GAAP & |
Resources |
NGAS |
PostRock |
||||||||||||||||||||||||||||||||
|
Hunter |
PostRock |
Resources |
Historical |
Pro Forma |
Pro Forma |
USD |
Pro Forma |
Resources |
and NuLoch |
|||||||||||||||||||||||||||||||
| Historical | Historical | Historical | (CAN $) | Adjustments | Adjustments | Adjustments | Adjustments | and PostRock | Resources | |||||||||||||||||||||||||||||||
|
REVENUE:
|
||||||||||||||||||||||||||||||||||||||||
|
Oil and gas sales
|
$ | 23,920,482 | $ | 1,565,341 | $ | 17,644,686 | $ | 10,137,000 | $ | — | $ | — | (4) | $ | (43,897 | ) | $ | — | $ | 43,130,509 | $ | 53,223,612 | ||||||||||||||||||
|
Field operations and other
|
3,330,013 | — | 18,283,713 | — | — | — | — | — | 21,613,726 | 21,613,726 | ||||||||||||||||||||||||||||||
|
Total revenue
|
27,250,495 | 1,565,341 | 35,928,399 | 10,137,000 | — | — | (43,897 | ) | — | 64,744,235 | 74,837,338 | |||||||||||||||||||||||||||||
|
EXPENSES:
|
||||||||||||||||||||||||||||||||||||||||
|
Lease operating expenses
|
8,153,941 | 477,661 | 11,007,455 | 2,917,000 | — | — | (4) | (520,455 | ) | — | 19,639,057 | 22,035,602 | ||||||||||||||||||||||||||||
|
Severance taxes and marketing
|
2,167,359 | 112,275 | — | — | — | — | (4) | 725,143 | — | 2,279,634 | 3,004,777 | |||||||||||||||||||||||||||||
|
Exploration
|
1,075,643 | — | — | — | — | — | (4) | 6,178,682 | — | 1,075,643 | 7,254,325 | |||||||||||||||||||||||||||||
|
Field operations
|
3,143,255 | — | 12,086,682 | — | — | — | — | — | 15,229,937 | 15,229,937 | ||||||||||||||||||||||||||||||
|
Impairment of oil and gas properties
|
19,991 | — | — | — | — | — | — | — | 19,991 | 19,991 | ||||||||||||||||||||||||||||||
|
Depreciation, depletion and accretion
|
7,138,488 | — | 9,906,178 | 6,898,000 | (5) | 286,475 | (7) | (4,976,199 | )(4) | (876,705 | )(13) | (1,580,830 | ) | 12,354,942 | 16,795,407 | |||||||||||||||||||||||||
|
General and administrative
|
17,903,244 | — | 9,166,021 | 2,736,000 | — | (8) | (625,344 | )(4) | 1,207,388 | — | 26,443,921 | 30,387,309 | ||||||||||||||||||||||||||||
|
Total expenses
|
39,601,921 | 589,936 | 42,166,336 | 12,551,000 | 286,475 | (5,601,543 | ) | 6,714,053 | (1,580,830 | ) | 77,043,125 | 94,727,348 | ||||||||||||||||||||||||||||
|
LOSS FROM OPERATIONS
|
(12,351,426 | ) | 975,405 | (6,237,937 | ) | (2,414,000 | ) | (286,475 | ) | 5,601,543 | (6,757,950 | ) | 1,580,830 | (12,298,890 | ) | (19,890,010 | ) | |||||||||||||||||||||||
|
OTHER INCOME AND (EXPENSE):
|
||||||||||||||||||||||||||||||||||||||||
|
Interest income
|
54,578 | — | 667,686 | 13,000 | — | (9) | (658,526 | )(4) | (448 | ) | — | 63,738 | 76,290 | |||||||||||||||||||||||||||
|
Interest expense
|
(3,016,429 | ) | — | (5,073,965 | ) | (128,000 | )(6) | (664,972 | )(10) | 3,748,826 | (4) | 4,407 | — | (5,006,540 | ) | (5,130,133 | ) | |||||||||||||||||||||||
|
Gain (Loss) on derivative contracts
|
2,347,808 | — | (337,195 | ) | — | — | (11) | 337,195 | — | — | 2,347,808 | 2,347,808 | ||||||||||||||||||||||||||||
|
Other, net
|
— | — | 307,808 | — | — | — | — | — | 307,808 | 307,808 | ||||||||||||||||||||||||||||||
|
Net loss before income taxes
|
(12,965,469 | ) | 975,405 | (10,673,603 | ) | (2,529,000 | ) | (951,447 | ) | 9,029,038 | (6,753,991 | ) | 1,580,830 | (14,586,076 | ) | (22,288,237 | ) | |||||||||||||||||||||||
|
Income tax benefit
|
— | — | 2,270,287 | 626,000 | — | (12) | (2,270,287 | )(4) | 602,205 | (14) | (1,228,205 | ) | — | — | ||||||||||||||||||||||||||
|
Net (income) loss attributable to non-controlling interest
|
(91,223 | ) | — | — | — | — | — | — | — | (91,223 | ) | (91,223 | ) | |||||||||||||||||||||||||||
|
Net loss attributable to Magnum Hunter
|
(13,056,692 | ) | 975,405 | (8,403,316 | ) | (1,903,000 | ) | (951,447 | ) | 6,758,751 | (6,151,786 | ) | 352,625 | (14,667,229 | ) | (22,379,460 | ) | |||||||||||||||||||||||
|
Dividend on Preferred Stock
|
(1,309,527 | ) | — | — | — | — | — | — | — | (1,309,527 | ) | (1,309,527 | ) | |||||||||||||||||||||||||||
|
Net loss attributable to common shareholders
|
$ | (14,366,219 | ) | $ | 975,405 | $ | (8,403,316 | ) | $ | (1,903,000 | ) | $ | (951,447 | ) | $ | 6,758,751 | $ | (6,151,786 | ) | $ | 352,625 | $ | (15,986,826 | ) | $ | (23,688,987 | ) | |||||||||||||
|
Loss per common share Basic and diluted
|
$ | (0.23 | ) | $ | (0.22 | ) | $ | (0.20 | ) | |||||||||||||||||||||||||||||||
|
Weighted average number of common shares outstanding Basic and
diluted
|
62,010,895 | (15 | ) | 3,201,360 | (15) | 8,032,627 | (15 | ) | 42,804,675 | 73,244,882 | 116,049,557 | |||||||||||||||||||||||||||||
See accompanying notes to Unaudited Pro Forma Combined Financial
Data
|
Combined |
||||||||||||||||||||||||||||||||||||||||
|
Pro Forma |
||||||||||||||||||||||||||||||||||||||||
|
Combined |
for Magnum |
|||||||||||||||||||||||||||||||||||||||
|
NuLoch |
Pro Forma |
Hunter, |
||||||||||||||||||||||||||||||||||||||
|
Resources |
for Magnum |
NGAS |
||||||||||||||||||||||||||||||||||||||
|
NuLoch |
NGAS |
Conversion to |
NuLoch |
Hunter, |
Resources, |
|||||||||||||||||||||||||||||||||||
|
Magnum |
NGAS |
Resources |
PostRock |
Resources |
US GAAP & |
Resources |
NGAS |
PostRock |
||||||||||||||||||||||||||||||||
|
Hunter |
PostRock |
Resources |
Historical |
Pro Forma |
Pro Forma |
USD |
Pro Forma |
Resources |
and Nuloch |
|||||||||||||||||||||||||||||||
| Historical | Historical | Historical | (CAN $) | Adjustments | Adjustments | Adjustments | Adjustments | and PostRock | Resources | |||||||||||||||||||||||||||||||
|
REVENUE:
|
||||||||||||||||||||||||||||||||||||||||
|
Oil and gas sales
|
$ | 10,035,033 | $ | 819,806 | $ | 26,586,422 | $ | 6,662,000 | $ | — | $ | — | (4) | $ | (745,571 | ) | $ | — | $ | 37,441,261 | $ | 43,357,690 | ||||||||||||||||||
|
Field operations and other
|
222,668 | — | 31,237,251 | — | — | — | — | — | 31,459,919 | 31,459,919 | ||||||||||||||||||||||||||||||
|
Gain on sale of property
|
14,000 | — | 3,346,491 | — | — | — | — | — | 3,360,491 | 3,360,491 | ||||||||||||||||||||||||||||||
|
Total revenue
|
10,271,701 | 819,806 | 61,170,164 | 6,662,000 | — | — | (745,571 | ) | — | 72,261,671 | 78,178,100 | |||||||||||||||||||||||||||||
|
EXPENSES:
|
||||||||||||||||||||||||||||||||||||||||
|
Lease operating expenses
|
4,220,345 | 909,151 | 11,357,397 | 2,342,000 | — | — | (4) | (554,131 | ) | — | 16,486,893 | 18,274,762 | ||||||||||||||||||||||||||||
|
Severance taxes and marketing
|
1,057,818 | 47,970 | — | — | — | — | (4) | 325,707 | — | 1,105,788 | 1,431,495 | |||||||||||||||||||||||||||||
|
Exploration
|
896,337 | — | — | — | — | — | (4) | 1,140,856 | — | 896,337 | 2,037,193 | |||||||||||||||||||||||||||||
|
Field operations
|
— | 22,776 | 21,344,671 | — | — | — | — | — | 21,367,447 | 21,367,447 | ||||||||||||||||||||||||||||||
|
Impairment of oil & gas properties
|
633,953 | — | — | — | — | — | — | — | 633,953 | 633,953 | ||||||||||||||||||||||||||||||
|
Depreciation, depletion and accretion
|
4,499,611 | — | 14,019,826 | 5,434,000 | (5) | 189,021 | (7) | (6,583,042 | )(4) | (638,180 | )(13) | (926,795 | ) | 12,125,416 | 15,994,441 | |||||||||||||||||||||||||
|
General and administrative
|
8,490,364 | — | 12,965,735 | 1,433,000 | — | — | (4) | 964,910 | — | 21,456,099 | 23,854,009 | |||||||||||||||||||||||||||||
|
Total expenses
|
19,798,428 | 979,897 | 59,687,629 | 9,209,000 | 189,021 | (6,583,042 | ) | 1,239,162 | (926,795 | ) | 74,071,933 | 83,593,300 | ||||||||||||||||||||||||||||
|
LOSS FROM OPERATIONS
|
(9,526,727 | ) | (160,091 | ) | 1,482,535 | (2,547,000 | ) | (189,021 | ) | 6,583,042 | (1,984,733 | ) | 926,795 | (1,810,262 | ) | (5,415,200 | ) | |||||||||||||||||||||||
|
OTHER INCOME (EXPENSE):
|
||||||||||||||||||||||||||||||||||||||||
|
Interest income
|
959 | — | 355,675 | 2,000 | — | (8) | (327,811 | )(4) | (239 | ) | — | 28,823 | 30,584 | |||||||||||||||||||||||||||
|
Interest expense
|
(3,336,346 | ) | — | (9,049,931 | ) | (156,000 | )(6) | (886,629 | )(10) | 4,586,834 | (4) | 18,675 | — | (8,686,072 | ) | (8,823,397 | ) | |||||||||||||||||||||||
|
Gain (loss) on derivative contracts
|
(2,325,251 | ) | — | 14,726 | — | — | (11) | (14,726 | ) | — | — | (2,325,251 | ) | (2,325,251 | ) | |||||||||||||||||||||||||
|
Other, net
|
— | — | (845,560 | ) | — | — | — | (4) | 7,534,402 | — | (845,560 | ) | 6,688,842 | |||||||||||||||||||||||||||
|
Net loss before income taxes and extrordinary items
|
(15,187,365 | ) | (160,091 | ) | (8,042,555 | ) | (2,701,000 | ) | (1,075,650 | ) | 10,827,339 | 5,568,105 | 926,795 | (13,638,322 | ) | (9,844,422 | ) | |||||||||||||||||||||||
|
Income tax benefit
|
— | — | 341,394 | 2,304,000 | — | (12) | (341,394 | )(4) | 104,473 | (14) | (2,408,473 | ) | — | — | ||||||||||||||||||||||||||
|
Extraordinary item
|
— | — | — | 2,281,000 | — | — | (4) | (2,281,000 | ) | — | — | — | ||||||||||||||||||||||||||||
|
Less: Net loss attributable to non-controlling interest
|
63,156 | — | — | — | — | — | — | — | 63,156 | 63,156 | ||||||||||||||||||||||||||||||
|
Net loss attributable to Magnum Hunter
|
(15,124,209 | ) | (160,091 | ) | (7,701,161 | ) | 1,884,000 | (1,075,650 | ) | 10,485,945 | 3,391,578 | (1,481,678 | ) | (13,575,166 | ) | (9,781,266 | ) | |||||||||||||||||||||||
|
Dividend on Preferred Stock
|
(25,654 | ) | — | — | — | — | — | — | — | (25,654 | ) | (25,654 | ) | |||||||||||||||||||||||||||
|
Net loss to attributable to common shareholders
|
$ | (15,149,863 | ) | $ | (160,091 | ) | $ | (7,701,161 | ) | $ | 1,884,000 | $ | (1,075,650 | ) | $ | 10,485,945 | $ | 3,391,578 | $ | (1,481,678 | ) | $ | (13,600,820 | ) | $ | (9,806,920 | ) | |||||||||||||
|
Net loss per common share, basic and diluted
|
$ | (0.39 | ) | $ | (0.27 | ) | $ | (0.11 | ) | |||||||||||||||||||||||||||||||
|
Weighted average number of common shares outstanding, basic and
diluted
|
38,953,834 | (15) | 3,201,360 | (15) | 8,032,627 | (15) | 42,804,675 | 50,187,821 | 92,992,496 | |||||||||||||||||||||||||||||||
See accompanying notes to Unaudited Pro Forma Combined Financial
Data
NOTES TO
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
| (1) | To record the acquisition of PostRock’s assets for an estimated purchase price of $44.3 million. The estimated purchase price includes cash payment and issuance of common stock of Magnum Hunter, which is based on the closing price of $7.58 per share on December 30, 2010, the closing date for the first phase of the PostRock acquisition, and the closing price of $7.97 per share on January 14, 2011, the closing date for the second phase of the PostRock acquisition. The purchase and sale agreement for the PostRock properties had valued the common stock at $6.21 per share based on the volume weighted average price of Magnum Hunter’s common stock for the 10 consecutive trading days prior to execution of the agreement on December 24, 2010. The acquisition is accounted for under the purchase method of accounting. All assets acquired and liabilities assumed are recorded at fair market value as determined by management. As noted above, these are preliminary estimates and are subject to adjustment. The following table summarizes the assets acquired and purchase price paid: |
|
Fair value of total purchase price:
|
||||||||
|
2,255,046 shares of common stock issued on
December 30, 2010 valued at $7.58 per share
|
$ | 17,093,248 | ||||||
|
946,314 shares of common stock issued on January 14,
2011 valued at $7.97 per share
|
7,542,122 | |||||||
|
Cash paid December 30, 2010 with funds to be borrowed under
the proposed new revolving line of credit agreement
|
13,938,891 | |||||||
|
Cash paid on January 14, 2011 with funds to be borrowed
under the proposed new revolving line of credit agreement
|
5,763,983 | |||||||
|
Net operations since effective date
|
(21,140 | ) | ||||||
|
Total
|
$ | 44,317,104 | ||||||
|
Amounts recognized for assets acquired and liabilities assumed:
|
||||||||
|
Working capital
|
(84,293 | ) | ||||||
|
Oil and gas properties
|
$ | 44,264,097 | ||||||
|
Equipment and other fixed assets
|
154,300 | |||||||
|
Asset retirement obligation
|
(17,000 | ) | ||||||
|
Total
|
$ | 44,317,104 | ||||||
|
Working capital acquired:
|
||||||||
|
Prepaid expenses
|
2,658 | |||||||
|
Transfer tax payable
|
(86,951 | ) | ||||||
|
Total working capital acquired
|
$ | (84,293 | ) |
| (2) | To record the acquisition of NGAS Resources’ assets for an estimated purchase price of $117.7 million. The estimated purchase price includes the estimated shares of common stock of Magnum Hunter to be issued to shareholders of NGAS Resources, the estimated shares of common stock of Magnum Hunter issued to certain holders of NGAS Resources convertible notes, payment to Seminole to restructure a gas gathering and transportation agreement, the assumption of the senior credit facility of NGAS Resources, the assumption of certain notes payable related to equipment included in the transaction, and the payoff in cash of the remaining NGAS Resources convertible notes. The acquisition is accounted for under the purchase method of accounting. All assets acquired and liabilities assumed are recorded at fair market value as determined by |
| management. As noted above, these are preliminary estimates and are subject to adjustment. The following table summarizes the assets acquired, liabilities assumed, and purchase price paid: |
|
Fair value of total purchase price:
|
||||||||
|
Estimated 6,634,026 shares of common stock at estimated
$7.15 per share(1)
|
$ | 47,433,286 | ||||||
|
Estimated 1,398,601 shares of common stock at estimated
$7.15 per share(1)
|
10,000,000 | |||||||
|
Senior credit facility assumed
|
34,000,000 | |||||||
|
Estimated NGAS Resources convertible notes to be paid off in
cash at closing
|
13,554,823 | |||||||
|
Other long-term debt assumed
|
6,150,000 | |||||||
|
Change in control payments in cash with funds to be borrowed
under the proposed new revolving line of credit agreement
|
5,000,000 | |||||||
|
Common stock warrants and options
|
1,564,677 | |||||||
|
Total
|
$ | 117,702,786 | ||||||
|
Amounts recognized for assets acquired and liabilities assumed:
|
||||||||
|
Working capital
|
$ | 1,484,450 | ||||||
|
Bonds and deposits
|
258,945 | |||||||
|
Oil and gas properties
|
109,845,821 | |||||||
|
Equipment and other fixed assets
|
10,405,702 | |||||||
|
Other long term liabilities
|
(4,292,132 | ) | ||||||
|
Total
|
$ | 117,702,786 | ||||||
|
Working capital acquired:
|
||||||||
|
Cash
|
$ | 5,105,017 | ||||||
|
Accounts receivable
|
5,535,965 | |||||||
|
Prepaid expenses
|
697,614 | |||||||
|
Accounts payable
|
(3,016,509 | ) | ||||||
|
Accrued liabilities
|
(892,858 | ) | ||||||
|
Transaction closing costs
|
(3,432,923 | ) | ||||||
|
Drilling advances
|
(2,511,856 | ) | ||||||
|
Total working capital acquired
|
$ | 1,484,450 | ||||||
| (1) | The closing stock price on January 26, 2011 for Magnum Hunter was used to estimate the value of the shares to be issued in the NGAS Resources acquisition. The final entries and the resulting effect on Magnum Hunter’s balance sheet may differ as they will be based on the actual stock price at the date of closing. |
| (3) | To record the acquisition of NuLoch Resources’ assets for an estimated purchase price of $414.7 million. The estimated purchase price includes the estimated shares of common stock of Magnum Hunter to be issued to shareholders of NuLoch Resources and the deferred tax liability resulting from the acquisition. The acquisition is accounted for under the purchase method of accounting. All assets acquired and liabilities assumed are recorded at fair market value as determined by management. As noted above, these are preliminary |
| estimates and are subject to adjustment. The following table summarizes the assets acquired, liabilities assumed, and purchase price paid: |
|
Fair value of total purchase price:
|
||||||||
|
Estimated 42,804,675 shares of common stock at estimated
$7.15 per share(1)
|
$ | 306,053,426 | ||||||
|
Deferred income tax liability (see schedule below)
|
108,631,200 | |||||||
|
Total
|
$ | 414,684,626 | ||||||
|
Amounts recognized for assets acquired and liabilities assumed:
|
||||||||
|
Working capital
|
$ | (10,388,639 | ) | |||||
|
Oil and gas properties
|
426,154,018 | |||||||
|
Equipment and other fixed assets
|
255,610 | |||||||
|
Asset retirement obligation
|
(1,336,363 | ) | ||||||
|
Total
|
$ | 414,684,626 | ||||||
|
Working capital acquired:
|
||||||||
|
Cash
|
$ | 110,797 | ||||||
|
Accounts receivable
|
4,097,529 | |||||||
|
Prepaid expenses
|
373,210 | |||||||
|
Advances
|
72,893 | |||||||
|
Transaction closing costs
|
(6,357,198 | ) | ||||||
|
Accounts payable and accrued liabilities
|
(8,685,870 | ) | ||||||
|
Total working capital acquired
|
$ | (10,388,639 | ) | |||||
| (1) | The closing common stock price on January 26, 2011 for Magnum Hunter was used to estimate the value of the shares to be issued in the NuLoch Resources acquisition. The final entries, and the resulting effect on Magnum Hunter’s balance sheet may differ as they will be based on the actual stock price at the date of closing. |
|
Deferred |
||||||||||||||||||||
|
Book |
Tax |
Asset |
||||||||||||||||||
|
Deferred Income Tax Liability
|
Rate | Basis | Basis | Difference | (Liability) | |||||||||||||||
|
PPE US
|
38.0 | % | $ | 272,426,827 | $ | 29,492,753 | $ | (242,934,074 | ) | $ | (92,217,800 | ) | ||||||||
|
PPE Canada
|
25.0 | % | 150,037,504 | 53,264,982 | (96,772,522 | ) | (24,193,100 | ) | ||||||||||||
|
NOL US – 2009
|
38.0 | % | 1,704,787 | 1,704,787 | 647,100 | |||||||||||||||
|
NOL Canada – 2009
|
25.0 | % | 28,530,348 | 28,530,348 | 7,132,600 | |||||||||||||||
|
Net Deferred Tax Liability
|
$ | (309,471,461 | ) | $ | (108,631,200 | ) | ||||||||||||||
| (4) | To record the adjustment to NuLoch Resources’ historical financial statements prepared in accordance with Canadian GAAP and in Canadian dollars to United States GAAP and United States dollars. The adjustment includes: |
| a. | To convert Canadian GAAP full cost accounting to US GAAP successful efforts accounting for oil and gas properties. This has reduced the net book value (NBV) of property and equipment as all geological and geophysical costs and general and administrative costs capitalized under Canadian GAAP have been expensed to conform with US GAAP. The NBV has also decreased due to all unsuccessful exploratory wells being expensed. The resulting change in NBV of oil and gas properties along with the reduction of depletion on a field level basis resulted in lower depletion expense over the periods presented. | |
| b. | To adjust NuLoch Resources for the conversion to US GAAP of an acquisition it completed in 2009. This adjustment resulted in the recording of additional fair value of oil and gas property and equipment of $8,969,000 and the value of shares issued increasing by $660,000 (Canadian GAAP value at announcement date vs US GAAP at closing date). These adjustments resulted in a future tax asset reduction of $2,242,000 and an increase in a recorded gain in 2009 of $6,278,000. | |
| c. | To adjust for Canadian GAAP “Flow-through shares” for treatment under US GAAP. This resulted in an increase to additional paid in capital and a decrease in deferred tax asset. |
| d. | Due to the adjustments noted above, adjustments to income tax expense or benefit were made to statements presented. |
| e. | To convert NuLoch Resources’ balance sheet as of September 30, 2010, income statement for the nine months ended September 30, 2010, and income statement for the twelve months ended December 31, 2009 from Canadian dollars to United States dollars using the applicable conversion factors. |
| (5) | To record the pro forma adjustment to depletion and depreciation expense as the result of treating the acquisition of the PostRock assets as if it had occurred January 1, 2009. Depletion was calculated using the units of production method. | |
| (6) | To record the pro forma adjustment to interest expense as the result of treating the cash paid in the acquisition of the PostRock assets as if it had been borrowed January 1, 2009. | |
| (7) | To record the pro forma adjustment to NGAS Resources’ depletion and depreciation expense as the result of treating the acquisition of NGAS Resources as if it had occurred January 1, 2009. Depletion was calculated using the units of production method. | |
| (8) | To record the pro forma adjustment to NGAS Resources’ refinancing costs amortized as the result of treating the acquisition of NGAS Resources as if it had occurred January 1, 2009. | |
| (9) | To record the pro forma adjustment to NGAS Resources’ interest income on notes receivable as the result of restructuring a gas gathering and transportation agreement as if it had occurred January 1, 2009. | |
| (10) | To record the pro forma adjustment to NGAS Resources’ interest expense as the result of treating the acquisition of NGAS Resources and the payment of assumed debt using Magnum Hunter’s credit facility as if it had occurred January 1, 2009. | |
| (11) | To record the pro forma adjustment to NGAS Resources’ gain (loss) on derivative contracts as the result of treating the acquisition of NGAS Resources as if it had occurred January 1, 2009. The derivative loss reported by NGAS Resources was the result of the convertible feature on certain notes payable which will be paid at closing. | |
| (12) | To record the pro forma adjustment to NGAS Resources’ income tax benefit on its income statements as the result of treating the acquisition of NGAS Resources as if it had occurred January 1, 2009. The deferred tax liability and income tax benefit on the NGAS Resources financial statements will be eliminated as the result of the fair market value adjustment to the oil and gas properties resulting from the acquisition. | |
| (13) | To record the pro forma adjustment to NuLoch Resources’ depletion and depreciation expense as the result of treating the acquisition of NuLoch Resources as if it had occurred January 1, 2009. Depletion was calculated using the units of production method. | |
| (14) | To record the pro forma adjustment to NuLoch Resources’ income tax benefit as the result of treating the acquisition of NuLoch Resources as if it had occurred January 1, 2009. | |
| (15) | Acquisition shares were added to the weighted average number of common shares outstanding as if the shares were issued January 1, 2009. |