Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - PENN VIRGINIA CORP | d8k.htm |
| EX-2.1 - PURCHASE AND SALE AGREEMENT - PENN VIRGINIA CORP | dex21.htm |
| EX-99.1 - PRESS RELEASE - PENN VIRGINIA CORP | dex991.htm |
Exhibit 99.2
PENN VIRGINIA CORPORATION AND SUBSIDIARIES
TRANSACTION DESCRIPTION FOR THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
On August 31, 2011, Penn Virginia Corporation (the “Company”), through its indirect wholly owned subsidiaries Penn Virginia MC Energy L.L.C. (“PVMCE”) and Penn Virginia Oil & Gas Corporation (“PVOG”), completed the previously announced sale of substantially all of PVMCE’s and PVOG’s Arkoma Basin oil and gas assets, together with certain other Mid-Continent oil and gas assets, to Unit Petroleum Company for a purchase price of $30.5 million (the “Transaction”). The oil and gas assets subject to the Transaction are located in Beaver, Caddo, Canadian, Cleveland, Custer, Dewey, Ellis, Garvin, Grady, Haskell, Hughes, Latimer, Le Flore, Logan, McClain, McIntosh, Noble, Oklahoma, Pawnee, Pittsburg, Sequoyah, Stephens and Washita Counties of Oklahoma and Irion, Lipscomb, Ochiltree and Upton Counties of Texas.
The following unaudited pro forma condensed consolidated financial statements and explanatory notes present the financial statements of the Company assuming the Transaction occurred as of June 30, 2011 with respect to the balance sheet and as of January 1, 2010 with respect to the statements of income for the six months ended June 30, 2011 and the year ended December 31, 2010.
PENN VIRGINIA CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
| As of June 30, 2011 | ||||||||||||
| Historical | Pro Forma Adjustments |
Pro Forma | ||||||||||
| Assets |
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| Current assets |
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| Cash and cash equivalents |
$ | 30,681 | $ | 28,690 | (a) | $ | 59,371 | |||||
| Accounts receivable, net of allowance for doubtful accounts |
67,779 | — | 67,779 | |||||||||
| Other current assets |
18,344 | — | 18,344 | |||||||||
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| Total current assets |
116,804 | 28,690 | 145,494 | |||||||||
| Property and equipment, net |
1,728,121 | (30,341 | )(b) | 1,697,780 | ||||||||
| Other assets |
24,705 | — | 24,705 | |||||||||
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| Total assets |
$ | 1,869,630 | $ | (1,651 | ) | $ | 1,867,979 | |||||
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| Liabilities and Shareholders’ equity |
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| Current liabilities |
$ | 95,372 | $ | — | $ | 95,372 | ||||||
| Other liabilities |
18,578 | — | 18,578 | |||||||||
| Deferred income taxes |
276,405 | (578 | ) (c) | 275,827 | ||||||||
| Long-term debt |
597,668 | — | 597,668 | |||||||||
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| Total liabilities |
988,023 | (578 | ) | 987,445 | ||||||||
| Shareholders’ equity: |
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| Common stock |
269 | — | 269 | |||||||||
| Paid-in capital |
685,559 | — | 685,559 | |||||||||
| Retained earnings |
197,059 | (1,073 | )(d) | 195,986 | ||||||||
| Deferred compensation obligation |
3,235 | — | 3,235 | |||||||||
| Accumulated other comprehensive loss |
(870 | ) | — | (870 | ) | |||||||
| Treasury stock |
(3,645 | ) | — | (3,645 | ) | |||||||
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| Total shareholders’ equity |
881,607 | (1,073 | ) | 880,534 | ||||||||
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| Total liabilities and shareholders’ equity |
$ | 1,869,630 | $ | (1,651 | ) | $ | 1,867,979 | |||||
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PENN VIRGINIA CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(in thousands except per share data)
| For the Six Months Ended June 30, 2011 | ||||||||||||
| Historical | Pro Forma Adjustments |
Pro Forma | ||||||||||
| Revenues |
||||||||||||
| Natural gas, crude oil and natural gas liquids (NGLs) |
$ | 140,702 | $ | (6,057 | )(e) | $ | 134,645 | |||||
| Other |
1,499 | 38 | (e) | 1,537 | ||||||||
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| Total revenues |
142,201 | (6,019 | ) | 136,182 | ||||||||
| Operating expenses |
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| Lease operating |
21,064 | (1,858 | )(e) | 19,206 | ||||||||
| Gathering, processing and transportation |
8,309 | (553 | )(e) | 7,756 | ||||||||
| Production and ad valorem taxes |
7,898 | 1,435 | (e) | 9,333 | ||||||||
| General and administrative |
26,306 | (94 | )(e) | 26,212 | ||||||||
| Exploration |
48,916 | (3,685 | )(e) | 45,231 | ||||||||
| Depreciation, depletion and amortization |
67,879 | (3,835 | )(f) | 64,044 | ||||||||
| Impairments |
71,071 | (71,071 | )(g) | — | ||||||||
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| Total operating expenses |
251,443 | (79,661 | ) | 171,782 | ||||||||
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| Operating loss |
(109,242 | ) | 73,642 | (35,600 | ) | |||||||
| Other income (expense) |
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| Interest expense |
(27,627 | ) | — | (27,627 | ) | |||||||
| Loss on extinguishment of debt |
(24,238 | ) | — | (24,238 | ) | |||||||
| Derivatives |
8,329 | — | 8,329 | |||||||||
| Other |
273 | — | 273 | |||||||||
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| Loss before income taxes |
(152,505 | ) | 73,642 | (78,863 | ) | |||||||
| Income tax benefit |
54,247 | (25,775 | )(h) | 28,472 | ||||||||
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| Net loss |
$ | (98,258 | ) | $ | 47,867 | $ | (50,391 | ) | ||||
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| Loss per share: |
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| Basic |
$ | (2.15 | ) | $ | (1.10 | ) | ||||||
| Diluted |
$ | (2.15 | ) | $ | (1.10 | ) | ||||||
| Weighted average shares outstanding, basic |
45,724 | 45,724 | ||||||||||
| Weighted average shares outstanding, diluted |
45,724 | 45,724 | ||||||||||
PENN VIRGINIA CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(in thousands except per share data)
| For the Year Ended December 31, 2010 | ||||||||||||
| Historical | Pro Forma Adjustments |
Pro Forma | ||||||||||
| Revenues |
||||||||||||
| Natural gas, crude oil and natural gas liquids (NGLs) |
$ | 251,336 | $ | (13,316 | )(e) | $ | 238,020 | |||||
| Other |
3,102 | 101 | (e) | 3,203 | ||||||||
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| Total revenues |
254,438 | (13,215 | ) | 241,223 | ||||||||
| Operating expenses |
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| Lease operating |
35,757 | (4,420 | )(e) | 31,337 | ||||||||
| Gathering, processing and transportation |
14,180 | (1,534 | )(e) | 12,646 | ||||||||
| Production and ad valorem taxes |
13,917 | (787 | ) (e) | 13,130 | ||||||||
| General and administrative |
58,383 | (1,533 | )(e) | 56,850 | ||||||||
| Exploration |
49,641 | (4,170 | )(e) | 45,471 | ||||||||
| Depreciation, depletion and amortization |
134,700 | (7,770 | )(f) | 126,930 | ||||||||
| Impairments |
45,959 | (32,005 | )(g) | 13,954 | ||||||||
| Other |
709 | — | 709 | |||||||||
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| Total operating expenses |
353,246 | (52,219 | ) | 301,027 | ||||||||
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| Operating loss |
(98,808 | ) | 39,004 | (59,804 | ) | |||||||
| Other income (expense) |
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| Interest expense |
(53,679 | ) | — | (53,679 | ) | |||||||
| Derivatives |
41,906 | — | 41,906 | |||||||||
| Other |
2,403 | — | 2,403 | |||||||||
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| Loss from continuing operations before income taxes |
(108,178 | ) | 39,004 | (69,174 | ) | |||||||
| Income tax benefit |
42,851 | (13,652 | )(h) | 29,199 | ||||||||
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| Net loss from continuing operations |
(65,327 | ) | 25,352 | (39,975 | ) | |||||||
| Income from discontinued operations, net of tax |
33,448 | — | 33,448 | |||||||||
| Gain on sale of discontinued operations, net of tax |
51,546 | — | 51,546 | |||||||||
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| Net income |
19,667 | 25,352 | 45,019 | |||||||||
| Less net income attributable to noncontrolling interests in discontinued operations |
(28,090 | ) | — | (28,090 | ) | |||||||
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| Income (loss) attributable to Penn Virginia Corporation |
$ | (8,423 | ) | $ | 25,352 | $ | 16,929 | |||||
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| Earnings (loss) per share attributable to Penn Virginia Corporation - Basic: |
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| Continuing operations |
$ | (1.44 | ) | $ | (0.88 | ) | ||||||
| Discontinued operations |
0.12 | 0.12 | ||||||||||
| Gain on sale of Discontinued operations |
1.13 | 1.13 | ||||||||||
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| Net income (loss) |
$ | (0.19 | ) | $ | 0.37 | |||||||
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| Earnings (loss) per share attributable to Penn Virginia Corporation - Diluted: |
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| Continuing operations |
$ | (1.44 | ) | $ | (0.88 | ) | ||||||
| Discontinued operations |
0.12 | 0.12 | ||||||||||
| Gain on sale of Discontinued operations |
1.13 | 1.13 | ||||||||||
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| Net income (loss) |
$ | (0.19 | ) | $ | 0.37 | |||||||
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| Weighted average shares outstanding, basic |
45,553 | 45,553 | ||||||||||
| Weighted average shares outstanding, diluted |
45,553 | 45,787 | ||||||||||
PENN VIRGINIA CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
| 1. | Basis of Presentation |
The accompanying unaudited pro forma condensed consolidated financial statements and explanatory notes present the financial statements of Penn Virginia Corporation and subsidiaries (the “Company”) assuming the Transaction, as described in the Description of Transaction preceding these pro forma financial statements, occurred as of June 30, 2011 with respect to the balance sheet and as of January 1, 2010 with respect to the statements of income for the six months ended June 30, 2011 and the year ended December 31, 2010.
The unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and do not purport to represent what the financial position or results of operations of the Company would have been had the Transaction occurred on the dates noted above, or to project the financial position or results of operations of the Company for any future periods. The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable. The pro forma adjustments are directly attributable to the Transaction and are expected to have a continuing impact on the results of operations of the Company. In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma financial statements have been made.
The following are descriptions of the columns included in the accompanying unaudited pro forma condensed consolidated financial statements:
Historical – Represents the historical condensed consolidated balance sheet of the Company as of June 30, 2011 and the historical condensed consolidated statements of income of the Company for the six months ended June 30, 2011 and the year ended December 31, 2010.
Pro Forma Adjustments – Represents the adjustments to the historical condensed consolidated financial statements required to derive the pro forma financial position of the Company as of June 30, 2011, assuming the Transaction occurred as of June 30, 2011, and the pro forma results of operations of the Company for the six months ended June 30, 2011 and the year ended December 31, 2010, assuming the Transaction occurred as of January 1, 2010.
| 2. | Pro Forma Adjustments |
Condensed Consolidated Balance Sheet
| (a) | To record (i) the cash proceeds ($30.5 million) of the Transaction, minus (ii) the excess ($1.1 million) of estimated revenues over recoverable expenses attributable to the disposed assets for the period from the effective date to the closing date, minus (iii) transaction fees and other related closing costs ($0.7 million). |
| (b) | To reduce property and equipment by the carrying value of the disposed assets as of June 30, 2011. |
| (c) | To provide for an income tax benefit for the effects of the pro forma adjustments at statutory rates. |
| (d) | To record a net loss on the sale of the Arkoma Basin and other assets as of June 30, 2011. |
Condensed Consolidated Statements of Income
| (e) | To eliminate the revenues and direct operating expenses associated with the disposed assets subject to the Transaction. |
| (f) | To reverse depreciation, depletion and amortization charges related to the disposed assets. |
| (g) | To reverse impairment charges related to the disposed assets. |
| (h) | To adjust income tax expense for the effects of the pro forma adjustments at statutory rates. |