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8-K/A - SABINE OIL & GAS CORP | spin-offproformafs8xka.htm |
Exhibit 99.1
Introduction to the Unaudited Pro Forma Condensed Consolidated Financial Statements
On September 30, 2011, Forest Oil Corporation (“Forest”) completed the spin-off of Lone Pine Resources Inc. (“Lone Pine”). The spin-off was completed by means of a special stock dividend, which consisted of a pro rata spin-off of the 70,000,000 shares of Lone Pine common stock owned by Forest, representing approximately 82% of the outstanding shares of Lone Pine, to all holders of record of Forest common stock as of September 16, 2011.
The following unaudited pro forma condensed consolidated financial statements of Forest adjust the historical condensed consolidated financial statements of Forest for the spin-off of Lone Pine. The historical condensed consolidated financial statements of Forest set forth below have been derived from and should be read together with the historical audited and unaudited consolidated financial statements and the related notes of Forest included in the Annual Report on Form 10-K for the year ended December 31, 2010 and the Quarterly Report on Form 10-Q for the quarter ended June 30, 2011. The unaudited pro forma condensed consolidated balance sheet was prepared as if the spin-off occurred on June 30, 2011. The unaudited pro forma condensed consolidated statements of operations were prepared as if the spin-off occurred on January 1, 2010.
The unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and do not purport to represent what the results of operations or financial position of Forest would actually have been had the spin-off occurred on the dates noted above, or to project the results of operations or financial position of Forest for any future periods. The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable. Unless otherwise indicated, the pro forma adjustments are directly attributable to the spin-off and are expected to have a continuing impact on the results of operations of Forest. In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma condensed consolidation financial statements have been made.
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Exhibit 99.1
FOREST OIL CORPORATION | ||||||||||
Unaudited Pro Forma Condensed Consolidated Statements of Operations | ||||||||||
Six Months Ended June 30, 2011 | ||||||||||
(In Thousands, Except Per Share Amounts) | ||||||||||
Historical | Pro Forma Adjustments (a) | Pro Forma | ||||||||
Revenues: | ||||||||||
Oil, natural gas, and NGL sales | $ | 440,419 | $ | (87,516 | ) | $ | 352,903 | |||
Interest and other | 850 | (20 | ) | 830 | ||||||
Total revenues | $ | 441,269 | $ | (87,536 | ) | $ | 353,733 | |||
Costs, expenses, and other: | ||||||||||
Lease operating expenses | $ | 64,320 | $ | (17,207 | ) | $ | 47,113 | |||
Production and property taxes | 25,487 | (1,226 | ) | 24,261 | ||||||
Transportation and processing costs | 15,081 | (8,015 | ) | 7,066 | ||||||
General and administrative | 34,771 | (6,035 | ) | 28,736 | ||||||
Depreciation, depletion, and amortization | 140,885 | (39,981 | ) | 100,904 | ||||||
Interest expense | 76,722 | (1,239 | ) | 75,483 | ||||||
Realized and unrealized gains on derivative instruments, net | (9,801 | ) | 5,130 | (4,671 | ) | |||||
Other, net | 8,169 | 4,288 | 12,457 | |||||||
Total costs, expenses, and other | $ | 355,634 | $ | (64,285 | ) | $ | 291,349 | |||
Earnings before income taxes | 85,635 | (23,251 | ) | 62,384 | ||||||
Income taxes | 49,991 | (9,432 | ) | (b) | 40,559 | |||||
Net earnings | $ | 35,644 | $ | (13,819 | ) | $ | 21,825 | |||
Less: net earnings attributable to noncontrolling interest | 64 | (64 | ) | — | ||||||
Net earnings attributable to Forest Oil Corporation | $ | 35,580 | $ | (13,755 | ) | $ | 21,825 | |||
Basic earnings per common share attributable to Forest Oil Corporation | $ | 0.31 | $ | 0.19 | ||||||
Diluted earnings per common share attributable to Forest Oil Corporation | $ | 0.31 | $ | 0.19 | ||||||
Weighted average basic shares outstanding | 111,490 | 111,490 | ||||||||
Weighted average diluted shares outstanding | 112,060 | 112,066 |
(a) | Represents the elimination of the results of operations of Lone Pine Resources Inc. The adjustments do not reflect nonrecurring stock-based compensation costs and the related tax effects directly resulting from the spin-off, estimated to be approximately $13 million, approximately $5 million of which was capitalized to oil and gas properties pursuant to the full cost method of accounting, with the offsetting credit going to capital surplus. This is an estimate of actual costs, the expense portion of which will be included in Forest's results of operations. These costs will occur on the date of the spin-off and relate to modifications of Forest stock-based compensation awards, including restricted stock units where a portion of the unamortized stock-based compensation expense was accelerated due to the lifting of restrictions on a portion of the awards, and to Lone Pine employees' stock-based compensation awards vesting in connection with the spin-off. |
(b) | The pro forma income tax adjustments include Lone Pine’s historical Canadian income tax provision as adjusted for the income tax effects related to intercompany interest charges between Forest and Lone Pine at statutory rates. |
Exhibit 99.1
FOREST OIL CORPORATION | ||||||||||
Unaudited Pro Forma Condensed Consolidated Statements of Operations | ||||||||||
Year Ended December 31, 2010 | ||||||||||
(In Thousands, Except Per Share Amounts) | ||||||||||
Historical | Pro Forma Adjustments (a) | Pro Forma | ||||||||
Revenues: | ||||||||||
Oil, natural gas, and NGL sales | $ | 853,739 | $ | (146,047 | ) | $ | 707,692 | |||
Interest and other | 1,012 | (23 | ) | 989 | ||||||
Total revenues | $ | 854,751 | $ | (146,070 | ) | $ | 708,681 | |||
Costs, expenses, and other: | ||||||||||
Lease operating expenses | $ | 118,074 | $ | (25,680 | ) | $ | 92,394 | |||
Production and property taxes | 46,079 | (2,423 | ) | 43,656 | ||||||
Transportation and processing costs | 23,980 | (10,738 | ) | 13,242 | ||||||
General and administrative | 73,204 | (9,267 | ) | 63,937 | ||||||
Depreciation, depletion, and amortization | 251,618 | (63,645 | ) | 187,973 | ||||||
Interest expense | 149,523 | (381 | ) | 149,142 | ||||||
Realized and unrealized gains on derivative instruments, net | (150,132 | ) | — | (150,132 | ) | |||||
Other, net | (5,743 | ) | 13,082 | 7,339 | ||||||
Total costs, expenses, and other | $ | 506,603 | $ | (99,052 | ) | $ | 407,551 | |||
Earnings before income taxes | 348,148 | (47,018 | ) | 301,130 | ||||||
Income taxes | 120,627 | (7,173 | ) | (b) | 113,454 | |||||
Net earnings | $ | 227,521 | $ | (39,845 | ) | $ | 187,676 | |||
Basic earnings per common share | $ | 2.01 | $ | 1.66 | ||||||
Diluted earnings per common share | $ | 2.00 | $ | 1.65 | ||||||
Weighted average basic shares outstanding | 110,809 | 110,809 | ||||||||
Weighted average diluted shares outstanding | 111,498 | 111,549 |
(a) | Represents the elimination of the results of operations of Lone Pine Resources Inc. The adjustments do not reflect nonrecurring stock-based compensation costs and the related tax effects directly resulting from the spin-off, estimated to be approximately $13 million, approximately $5 million of which was capitalized to oil and gas properties pursuant to the full cost method of accounting, with the offsetting credit going to capital surplus. This is an estimate of actual costs, the expense portion of which will be included in Forest's results of operations. These costs will occur on the date of the spin-off and relate to modifications of Forest stock-based compensation awards, including restricted stock units where a portion of the unamortized stock-based compensation expense was accelerated due to the lifting of restrictions on a portion of the awards, and to Lone Pine employees' stock-based compensation awards vesting in connection with the spin-off. |
(b) | The pro forma income tax adjustments include Lone Pine’s historical Canadian income tax provision as adjusted for the income tax effects related to intercompany interest charges between Forest and Lone Pine at statutory rates. |
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Exhibit 99.1
FOREST OIL CORPORATION | ||||||||||
Unaudited Pro Forma Condensed Consolidated Balance Sheet | ||||||||||
June 30, 2011 | ||||||||||
(In Thousands, Except Share Amount) | ||||||||||
Historical | Pro Forma Adjustments (a) | Pro Forma | ||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 479,149 | $ | (5,010 | ) | $ | 474,139 | |||
Accounts receivable | 99,390 | (28,067 | ) | 71,323 | ||||||
Derivative instruments | 52,607 | (3,984 | ) | 48,623 | ||||||
Inventory | 24,391 | (8,722 | ) | 15,669 | ||||||
Other current assets | 32,816 | (5,940 | ) | 26,876 | ||||||
Total current assets | $ | 688,353 | $ | (51,723 | ) | $ | 636,630 | |||
Property and equipment, at cost: | ||||||||||
Oil and gas properties, full cost method of accounting: | ||||||||||
Proved, net of accumulated depletion | $ | 2,209,505 | $ | (621,777 | ) | (b) | $ | 1,587,728 | ||
Unproved | 780,214 | (122,717 | ) | 657,497 | ||||||
Net oil and gas properties | $ | 2,989,719 | $ | (744,494 | ) | $ | 2,245,225 | |||
Other property and equipment, net of accumulated depreciation and amortization | 117,951 | (66,255 | ) | 51,696 | ||||||
Net property and equipment | $ | 3,107,670 | $ | (810,749 | ) | $ | 2,296,921 | |||
Deferred income taxes | 259,408 | (421 | ) | (b) | 258,987 | |||||
Goodwill | 257,386 | (17,966 | ) | 239,420 | ||||||
Derivative instruments | 18,342 | (1,146 | ) | 17,196 | ||||||
Other assets | 46,554 | (5,229 | ) | 41,325 | ||||||
$ | 4,377,713 | $ | (887,234 | ) | $ | 3,490,479 | ||||
LIABILITIES AND EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable and accrued liabilities | $ | 313,619 | $ | (37,263 | ) | $ | 276,356 | |||
Accrued interest | 23,059 | (105 | ) | 22,954 | ||||||
Derivative instruments | 42,428 | — | 42,428 | |||||||
Deferred income taxes | — | — | (b) | — | ||||||
Current portion of long-term debt | 286,031 | — | 286,031 | |||||||
Asset retirement obligations | 3,934 | (454 | ) | 3,480 | ||||||
Other current liabilities | 25,378 | (3,850 | ) | 21,528 | ||||||
Total current liabilities | $ | 694,449 | $ | (41,672 | ) | $ | 652,777 | |||
Long-term debt | 1,866,111 | (280,973 | ) | 1,585,138 | ||||||
Asset retirement obligations | 87,139 | (15,174 | ) | 71,965 | ||||||
Derivative instruments | 5,390 | — | 5,390 | |||||||
Deferred income taxes | 69,031 | (69,031 | ) | — | ||||||
Other liabilities | 75,882 | (8,932 | ) | 66,950 | ||||||
Total liabilities | $ | 2,798,002 | $ | (415,782 | ) | $ | 2,382,220 | |||
Equity: | ||||||||||
Forest Oil Corporation shareholders’ equity: | ||||||||||
Preferred stock, none issued and outstanding | $ | — | $ | — | $ | — | ||||
Common stock, 114,412,436 shares issued and outstanding | 11,441 | — | 11,441 | |||||||
Capital surplus | 2,799,155 | (296,881 | ) | (b) | 2,502,274 | |||||
Accumulated deficit | (1,389,325 | ) | (4,825 | ) | (b) | (1,394,150 | ) | |||
Accumulated other comprehensive income (loss) | 74,316 | (85,622 | ) | (11,306 | ) | |||||
Total Forest Oil Corporation shareholders’ equity | $ | 1,495,587 | $ | (387,328 | ) | $ | 1,108,259 | |||
Noncontrolling interest | 84,124 | (84,124 | ) | — | ||||||
Total equity | $ | 1,579,711 | $ | (471,452 | ) | $ | 1,108,259 | |||
$ | 4,377,713 | $ | (887,234 | ) | $ | 3,490,479 |
(a) | Represents the elimination of the assets, liabilities, and accumulated other comprehensive income of Lone Pine Resources Inc. as well as the noncontrolling interest. |
(b) | Includes an adjustment to reflect nonrecurring stock-based compensation costs and the related tax effects directly resulting from the spin-off, estimated to be approximately $13 million, approximately $5 million of which was capitalized to oil and gas properties pursuant to the full cost method of accounting, with the offsetting credit going to capital surplus. This is an estimate of actual costs that will be included in Forest's financial position and results of operations. These charges will occur on the date of the spin-off and relate to modifications of Forest stock-based compensation awards, including restricted stock units where a portion of the unamortized stock-based compensation expense was accelerated due to the lifting of restrictions on a portion of the awards, and to Lone Pine employees' stock-based compensation awards vesting in connection with the spin-off. |
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