Attached files
file | filename |
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8-K/A - 8-K/A - Approach Resources Inc | d81478e8vkza.htm |
EX-23.1 - EX-23.1 - Approach Resources Inc | d81478exv23w1.htm |
EX-99.1 - EX-99.1 - Approach Resources Inc | d81478exv99w1.htm |
Exhibit 99.2
Approach Resources Inc.
Unaudited Pro Forma Combined Balance Sheet
(In thousands)
Unaudited Pro Forma Combined Balance Sheet
(In thousands)
Unaudited Pro Forma Combined Balance Sheet
On February 28 2011, Approach Resources Inc. (together with our subsidiaries, Approach, the
Company, we, us or our) acquired a 38.33% working interest in our Cinco Terry operating
area from two non-operating partners for $76 million, subject to usual and customary post-closing
adjustments (the Working Interest Acquisition). We were the operator of the properties prior to
the Working Interest Acquisition.
The following pro forma combined balance sheet presents our historical financial position
combined with the Working Interest Acquisition as if the acquisition and the financing for the
acquisition had occurred on December 31, 2010, and includes adjustments which give effect to events
that are directly attributable to the transaction and that are factually supportable, regardless of
whether they have a continuing impact or are nonrecurring.
The pro forma combined balance sheet is not necessarily indicative of what our financial
position actually would have been had we completed the acquisition at December 31, 2010. In
addition, the pro forma combined balance sheet does not purport to project our future financial
position.
The pro forma combined balance sheet should be read in conjunction with the:
| Separate historical audited financial statements of Approach Resources Inc. included in our Annual Report on Form 10-K for the year ended December 31, 2010; and | ||
| Separate historical audited statement of revenue and direct operating expenses for the year ended December 31, 2010, and notes to the historical summaries of revenue and direct operating expenses included in the Companys Current Report on Form 8-K/A filed April 21, 2011. |
We prepared the pro forma combined balance sheet using the purchase method of accounting.
Accordingly, our estimated cost for the Working Interest Acquisition of $76 million ($70 million,
after purchase price adjustments), has been allocated to these assets acquired and liabilities
assumed according to their estimated fair values at the date of acquisition.
See notes to unaudited pro forma combined balance sheet.
1
Approach Resources Inc.
Unaudited
Pro Forma Combined Balance Sheet
(In thousands)
(In thousands)
December 31, 2010 | ||||||||||||
Approach | ||||||||||||
Resources Inc. | ||||||||||||
Consolidated | Combined | |||||||||||
Historical | Pro Forma | Pro Forma | ||||||||||
Amounts | Adjustments | Amounts | ||||||||||
ASSETS |
||||||||||||
CURRENT ASSETS: |
||||||||||||
Cash and cash equivalents |
$ | 23,465 | $ | (2,489 | ) | $ | 20,976 | |||||
Accounts receivable: |
||||||||||||
Joint interest owners |
8,319 | | 8,319 | |||||||||
Oil and gas sales |
6,044 | | 6,044 | |||||||||
Unrealized gain on commodity derivatives |
862 | | 862 | |||||||||
Prepaid expenses and other current assets |
322 | | 322 | |||||||||
Deferred income taxes current |
2,318 | | 2,318 | |||||||||
Total current assets |
41,330 | (2,489 | ) | 38,841 | ||||||||
PROPERTIES AND EQUIPMENT: |
||||||||||||
Oil and gas properties, at cost, using the successful
efforts method of accounting |
474,917 | 70,036 | 544,953 | |||||||||
Furniture, fixtures and equipment |
1,077 | | 1,077 | |||||||||
475,994 | 70,036 | 546,030 | ||||||||||
Less accumulated depletion, depreciation and amortization |
(106,784 | ) | | (106,784 | ) | |||||||
Net properties and equipment |
369,210 | 70,036 | 439,246 | |||||||||
OTHER ASSETS |
2,549 | | 2,549 | |||||||||
Total assets |
$ | 413,089 | $ | 67,547 | $ | 480,636 | ||||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||||||
CURRENT LIABILITIES: |
||||||||||||
Advances from non-operators |
$ | 509 | $ | | $ | 509 | ||||||
Accounts payable |
11,426 | | 11,426 | |||||||||
Oil and gas sales payable |
5,534 | | 5,534 | |||||||||
Accrued liabilities |
10,686 | | 10,686 | |||||||||
Unrealized loss on commodity derivatives |
1,085 | | 1,085 | |||||||||
Total current liabilities |
29,240 | | 29,240 | |||||||||
NON-CURRENT LIABILITIES: |
||||||||||||
Long-term debt |
| 67,000 | 67,000 | |||||||||
Unrealized loss on commodity derivatives |
871 | | 871 | |||||||||
Deferred income taxes |
44,616 | | 44,616 | |||||||||
Asset retirement obligations |
5,416 | 547 | 5,963 | |||||||||
Total liabilities |
80,143 | 67,547 | 147,690 | |||||||||
COMMITMENTS AND CONTINGENCIES |
||||||||||||
STOCKHOLDERS EQUITY : |
||||||||||||
Preferred stock, $0.01 par value, 10,000,000 shares
authorized none outstanding |
| | | |||||||||
Common stock, $0.01 par value, 90,000,000 shares
authorized, 28,226,890 and 20,959,285 issued and
outstanding, respectively |
282 | | 282 | |||||||||
Additional paid-in capital |
273,912 | | 273,912 | |||||||||
Retained earnings |
58,986 | | 58,986 | |||||||||
Accumulated other comprehensive loss |
(234 | ) | | (234 | ) | |||||||
Total stockholders equity |
332,946 | | 332,946 | |||||||||
Total liabilities and stockholders equity |
$ | 413,089 | $ | 67,547 | $ | 480,636 | ||||||
See notes to unaudited pro forma combined balance sheet.
2
Notes to Unaudited Pro Forma Combined Balance Sheet
1. Description of Transaction and Basis of Presentation
On February 28, 2011, we acquired a 38.33% working interest in our Cinco Terry operating area
from two non-operating partners for $76 million, subject to usual and customary post-closing
adjustments. We were the operator of the properties prior to the Working Interest Acquisition.
The asset purchase has been accounted for as a purchase under generally accepted accounting
principles (GAAP). The assets and liabilities of the Working Interest Acquisition are recorded
at their respective fair values, and consolidated with our assets and liabilities upon completion
of the acquisition. The results of operations of the Working Interest Acquisition will be
consolidated with our existing operations beginning on March 1, 2011. Our financial statements
issued after the completion of the acquisition will reflect these values, but will not be restated
retroactively to reflect the historical financial position or results of operations of the Working
Interest Acquisition.
2. Pro Forma Adjustments
Adjustments included in the column under the heading Pro Forma Adjustments reflects the
Working Interest Acquisition as if it occurred on December 31, 2010. The following is a summary of
the purchase price paid and its allocation (in thousands):
Purchase price: |
||||
Acquisition price(1) |
$ | 76,000 | ||
Asset retirement obligations assumed |
547 | |||
Post-closing purchase price adjustments |
(6,511 | ) | ||
Total |
$ | 70,036 | ||
Allocation: |
||||
Wells, equipment and related facilities |
$ | 50,874 | ||
Mineral interests in oil and gas properties |
19,162 | |||
Total |
$ | 70,036 | ||
(1) | We funded $67 million through borrowings under our revolving credit facility, and the remaining amount was funded with cash on hand. |
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