Attached files
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| 8-K - FORM 8-K - MCMORAN EXPLORATION CO /DE/ | d440563d8k.htm |
Exhibit 99.1
McMoRan EXPLORATION CO.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On November 13, 2012, McMoRan Exploration Co. (McMoRan) completed the sale of a package of Gulf of Mexico traditional shelf oil and gas properties in the Eugene Island area to Arena Energy, LP (Arena) for cash consideration before closing adjustments of $36.8 million and the assumption of approximately $37.3 million of related abandonment obligations. Previously, on October 2, 2012, McMoRan completed the sale of three Gulf of Mexico shelf oil and gas properties in the West Delta and Mississippi Canyon areas to Renaissance Offshore, LLC for cash consideration before closing adjustments of $28.0 million and the assumption of approximately $8.4 million of related asset retirement obligations (collectively, the Transactions). The Transactions were effective July 1, 2012.
The following unaudited pro forma condensed consolidated financial statements and accompanying notes of McMoRan as of and for the nine months ended September 30, 2012 and for the year ended December 31, 2011 (Pro Forma Statements), which have been prepared by McMoRan’s management, are derived from the audited consolidated financial statements of McMoRan for the year ended December 31, 2011 included in its 2011 Annual Report on Form 10-K and the unaudited condensed consolidated financial statements of McMoRan as of and for the nine months ended September 30, 2012 included in its Quarterly Report on Form 10-Q for the period then ended.
The Pro Forma Statements are provided for illustrative purposes only and do not purport to represent what McMoRan’s financial position or results of operations would have been had the Transactions been consummated on the dates indicated or the financial position or results of operations for any future date or period. The unaudited pro forma condensed consolidated balance sheet was prepared assuming the Transactions had occurred on September 30, 2012. The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2011 and for the nine months ended September 30, 2012 were prepared assuming the Transactions had occurred on January 1, 2011. McMoRan believes the assumptions used in the preparation of the Pro Forma Statements provide a reasonable basis for presenting the significant effects directly attributable to the Transactions.
The Pro Forma Statements should be read in
conjunction with the historical consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which are set forth in McMoRan’s Annual Report
on Form 10-K for the year ended December 31, 2011 and in McMoRan’s Quarterly Report on Form
10-Q for the quarter ended September 30, 2012.
McMoRan EXPLORATION CO.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2012
(in thousands)
| Historical | Renaissance Pro Forma Adjustments |
Arena Pro Forma Adjustments |
Pro Forma | |||||||||||||
| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
$ | 191,934 | $ | 23,053 | a | $ | 25,753 | a | $ | 240,740 | ||||||
| Accounts receivable |
56,044 | (1 | )b | (4 | )b | 56,039 | ||||||||||
| Inventories |
35,551 | — | — | 35,551 | ||||||||||||
| Prepaid expenses |
16,636 | — | — | 16,636 | ||||||||||||
| Current assets from discontinued operations including restricted cash of $473 |
797 | — | — | 797 | ||||||||||||
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| Total current assets |
300,962 | 23,052 | 25,749 | 349,763 | ||||||||||||
| Property, plant and equipment, net |
2,378,285 | (28,536 | )c | (32,364 | )c | 2,317,385 | ||||||||||
| Restricted cash and other |
62,575 | — | (2,440 | )d | 60,135 | |||||||||||
| Deferred costs |
9,023 | — | — | 9,023 | ||||||||||||
| Long-term assets from discontinued operations |
439 | — | — | 439 | ||||||||||||
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| Total assets |
$ | 2,751,284 | $ | (5,484 | ) | $ | (9,055 | ) | $ | 2,736,745 | ||||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Current liabilities: |
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| Accounts payable |
$ | 89,635 | $ | (184 | )b | $ | (44 | )b | $ | 89,407 | ||||||
| Accrued liabilities |
145,779 | — | — | 145,779 | ||||||||||||
| Accrued interest and dividends payable |
20,704 | — | — | 20,704 | ||||||||||||
| Current portion of accrued oil and gas reclamation costs |
64,571 | — | — | 64,571 | ||||||||||||
| 5 1/4% convertible senior notes due October 2012 |
345 | — | — | 345 | ||||||||||||
| Other current liabilities |
6,480 | (2,800 | )e | (3,680 | )e | — | ||||||||||
| Current liabilities from discontinued operations, including sulphur reclamation costs |
2,717 | — | — | 2,717 | ||||||||||||
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| Total current liabilities |
330,231 | (2,984 | ) | (3,724 | ) | 323,523 | ||||||||||
| 5 1/4% convertible senior notes due October 2013 |
67,832 | — | — | 67,832 | ||||||||||||
| 11.875% senior notes |
300,000 | — | — | 300,000 | ||||||||||||
| 4% convertible senior notes |
188,943 | — | — | 188,943 | ||||||||||||
| Accrued oil and gas reclamation costs |
227,279 | (8,360 | )f | (37,287 | )f | 181,632 | ||||||||||
| Other long-term liabilities |
19,896 | — | (2,440 | )d | 17,456 | |||||||||||
| Other long-term liabilities from discontinued operations, including sulphur reclamation costs |
18,624 | — | — | 18,624 | ||||||||||||
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| Total liabilities |
1,152,805 | (11,344 | ) | (43,451 | ) | 1,098,010 | ||||||||||
| Stockholders’ equity |
1,598,479 | 5,860 | g | 34,396 | g | 1,638,735 | ||||||||||
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| Total liabilities and stockholders’ equity |
$ | 2,751,284 | $ | (5,484 | ) | $ | (9,055 | ) | $ | 2,736,745 | ||||||
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See accompanying notes.
McMoRan EXPLORATION CO.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2011
(in thousands, except per share amounts)
| Historical | Renaissance Pro Forma Adjustments |
Arena Pro Forma Adjustments |
Pro Forma | |||||||||||||
| Revenues: |
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| Oil and natural gas |
$ | 542,310 | $ | (12,588 | )h | $ | (34,971 | )h | $ | 494,751 | ||||||
| Service |
13,104 | (895 | )h | (1,135 | )h | 11,074 | ||||||||||
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| Total revenues |
555,414 | (13,483 | ) | (36,106 | ) | 505,825 | ||||||||||
| Costs and expenses: |
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| Production and delivery costs |
206,319 | (2,389 | )h | (15,077 | )h | 188,853 | ||||||||||
| Depletion, depreciation and amortization expense |
307,902 | (4,577 | )i | (14,000 | )i | 289,325 | ||||||||||
| Exploration expenses |
81,742 | — | — | 81,742 | ||||||||||||
| General and administrative expenses |
49,471 | — | — | 49,471 | ||||||||||||
| Main Pass Energy HubTM costs |
588 | — | — | 588 | ||||||||||||
| Insurance recoveries |
(91,076 | ) | — | — | (91,076 | ) | ||||||||||
| Gain on sale of oil and gas property |
(900 | ) | — | — | (900 | ) | ||||||||||
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| Total costs and expenses |
554,046 | (6,966 | ) | (29,077 | ) | 518,003 | ||||||||||
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| Operating income (loss) |
1,368 | (6,517 | ) | (7,029 | ) | (12,178 | ) | |||||||||
| Interest expense, net |
(8,782 | ) | — | — | (8,782 | ) | ||||||||||
| Other income (expense), net |
810 | — | — | 810 | ||||||||||||
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| Loss from continuing operations before income taxes |
(6,604 | ) | (6,517 | ) | (7,029 | ) | (20,150 | ) | ||||||||
| Income tax expense |
— | — | — | — | ||||||||||||
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| Loss from continuing operations |
(6,604 | ) | (6,517 | ) | (7,029 | ) | (20,150 | ) | ||||||||
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| Basic and diluted loss per share of common stock from continuing operations |
$ | (0.04 | ) | $ | (0.13 | ) | ||||||||||
| Basic and diluted average common shares outstanding |
159,216 | 159,216 | ||||||||||||||
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See accompanying notes.
McMoRan EXPLORATION CO.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012
(in thousands, except per share amounts)
| Historical | Renaissance Pro Forma Adjustments |
Arena Pro Forma Adjustments |
Pro Forma | |||||||||||||
| Revenues: |
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| Oil and natural gas |
$ | 282,387 | $ | (8,006 | )h | $ | (15,913 | )h | $ | 258,468 | ||||||
| Service |
10,331 | (595 | )h | (791 | )h | 8,945 | ||||||||||
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| Total revenues |
292,718 | (8,601 | ) | (16,704 | ) | 267,413 | ||||||||||
| Costs and expenses: |
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| Production and delivery costs |
118,734 | (1,765 | )h | (5,855 | )h | 111,114 | ||||||||||
| Depletion, depreciation and amortization expense |
116,649 | (2,519 | )i | (5,871 | )i | 108,259 | ||||||||||
| Exploration expenses |
122,763 | — | — | 122,763 | ||||||||||||
| General and administrative expenses |
38,760 | — | — | 38,760 | ||||||||||||
| Main Pass Energy HubTM costs |
210 | — | — | 210 | ||||||||||||
| Insurance recoveries |
(1,229 | ) | — | 1,229 | j | — | ||||||||||
| Gain on sale of oil and gas property |
(799 | ) | — | — | (799 | ) | ||||||||||
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| Total costs and expenses |
395,088 | (4,284 | ) | (10,497 | ) | 380,307 | ||||||||||
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| Operating loss |
(102,370 | ) | (4,317 | ) | (6,207 | ) | (112,894 | ) | ||||||||
| Interest expense, net |
— | — | — | — | ||||||||||||
| Loss on debt exchange |
(5,955 | ) | (5,955 | ) | ||||||||||||
| Other income (expense), net |
525 | — | — | 525 | ||||||||||||
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| Loss from continuing operations before income taxes |
(107,800 | ) | (4,317 | ) | (6,207 | ) | (118,324 | ) | ||||||||
| Income tax expense |
— | — | — | — | ||||||||||||
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| Loss from continuing operations |
(107,800 | ) | (4,317 | ) | (6,207 | ) | (118,324 | ) | ||||||||
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| Basic and diluted loss per share of common stock from continuing operations |
$ | (0.67 | ) | $ | (0.73 | ) | ||||||||||
| Basic and diluted average common shares outstanding |
161,627 | 161,627 | ||||||||||||||
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See accompanying notes.
McMoRan EXPLORATION CO.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
On November 13, 2012, McMoRan Exploration Co. (McMoRan) completed the sale of a package of Gulf of Mexico traditional shelf oil and gas properties in the Eugene Island area (the Assets) to Arena Energy, LP (Arena) for cash consideration before closing adjustments of $36.8 million and the assumption of approximately $37.3 million of related abandonment obligations. The Assets represented approximately six percent of McMoRan’s total average daily production for the third quarter 2012 and six percent of McMoRan’s total estimated reserves at June 30, 2012. Independent reserve engineers’ estimates of proved reserves for the Assets at June 30, 2012, totaled approximately 545,000 barrels of oil and 11.9 billion cubic feet of natural gas (15.2 billion cubic feet of natural gas equivalents). The transaction was effective July 1, 2012.
Previously, on October 2, 2012, McMoRan completed the sale of three Gulf of Mexico shelf oil and gas properties in the West Delta and Mississippi Canyon areas to Renaissance Offshore, LLC (Renaissance) for cash consideration before closing adjustments of $28.0 million and the assumption of approximately $8.4 million of related abandonment obligations. Independent reserve engineers’ estimates of proved reserves for the three properties at June 30, 2012, totaled approximately 942,000 barrels of oil and 1.7 billion cubic feet of natural gas (7.4 billion cubic feet of natural gas equivalents). The transaction was effective July 1, 2012.
The combined cash proceeds from the Arena and Renaissance transactions (collectively, the Transactions) before closing adjustments totaled $64.8 million, and the subject properties in the aggregate represented approximately seven percent of McMoRan’s total average daily production for the third quarter 2012 and nine percent of McMoRan’s total estimated proved reserves at June 30, 2012.
The unaudited pro forma condensed consolidated balance sheet as of September 30, 2012 was prepared assuming that the Transactions had occurred on that date. The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2011 and for the nine months ended September 30, 2012 were prepared assuming the Transactions had occurred on January 1, 2011. The Pro Forma Statements do not purport to represent what McMoRan’s financial position or results of operations would have been had the Transactions been consummated on the dates indicated or the financial position or results of operations for any future date or period. McMoRan believes the assumptions used in the preparation of the Pro Forma Statements provide a reasonable basis for presenting the significant effects directly attributable to the Transactions.
PRO FORMA ADJUSTMENTS
The unaudited pro forma condensed consolidated balance sheet includes the following adjustments:
| a. | Reflects transaction related cash proceeds received (excluding deposits received in advance of closing and prior to September 30, 2012), net of cash flow from operations (revenues less direct operating expenses) of the conveyed properties attributable to the period from the July 1, 2012 effective date through the respective transaction closing dates, and net of transaction costs. |
| b. | Reflects the elimination of certain working capital items conveyed in the Transactions. |
| c. | Reflects the elimination of McMoRan’s investment in property, plant and equipment related to the properties sold. |
| d. | Reflects the transfer of property abandonment surety escrow funds associated with certain of the properties conveyed to Arena. |
| e. | Reflects the elimination of deposit liabilities for the amounts received from Renaissance and Arena prior to September 30, 2012 as partial consideration under the terms of the Transactions. |
| f. | Reflects the elimination of asset retirement obligations associated with the properties conveyed in the Transactions. |
| g. | Reflects the impact to retained earnings (stockholders’ equity) for the estimated gains resulting from the Transactions that will be recorded by McMoRan in the fourth quarter of 2012. No transaction related gains are reflected in the accompanying unaudited pro forma condensed consolidated statements of operations. |
The unaudited pro forma condensed consolidated statements of operations include the following adjustments:
| h. | Reflects the elimination of revenues and direct operating expenses attributable to the properties sold. |
| i. | Reflects the elimination of depreciation, depletion and amortization attributable to the properties sold. |
| j. | Reflects the elimination of an insurance recovery attributable to one of the properties sold to Arena. |
SUMMARY PRO FORMA OIL AND NATURAL GAS RESERVE DATA (UNAUDITED)
The following table sets forth summary pro forma reserve data as of December 31, 2011 giving effect to the Transactions.
Estimated Quantities of Oil and Natural Gas Reserves at December 31, 2011:
| Historical | Renaissance Pro Forma Adjustments |
Arena Pro Forma Adjustments |
Pro Forma | |||||||||||||
| Proved Reserves: |
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| Oil and Natural Gas Liquids (MBbls) |
17,289 | (925 | ) | (489 | ) | 15,875 | ||||||||||
| Natural Gas (MMcf) |
152,051 | (1,645 | ) | (12,385 | ) | 138,021 | ||||||||||
| Total reserves (MMcfe) |
255,785 | (7,193 | ) | (15,319 | ) | 233,273 | ||||||||||
| Proved Developed Reserves: |
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| Oil and Natural Gas Liquids (MBbls) |
15,573 | (925 | ) | (489 | ) | 14,159 | ||||||||||
| Natural Gas (MMcf) |
123,626 | (1,645 | ) | (12,385 | ) | 109,596 | ||||||||||
| Total reserves (MMcfe) |
217,064 | (7,193 | ) | (15,319 | ) | 194,552 | ||||||||||
Standardized Measure of Discounted Future Net Cash Flows at December 31, 2011 (in thousands):
| Historical | Renaissance Pro Forma Adjustments |
Arena Pro Forma Adjustments |
Pro Forma | |||||||||||||
| Future cash inflows |
$ | 2,268,446 | $ | (104,190 | ) | $ | (106,049 | ) | $ | 2,058,207 | ||||||
| Future cost applicable to future cash flows: |
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| Production costs |
(566,947 | ) | 27,359 | 27,495 | (512,093 | ) | ||||||||||
| Development and abandonment costs |
(534,703 | ) | 17,530 | 39,769 | (477,404 | ) | ||||||||||
| Future income taxes |
— | — | — | — | ||||||||||||
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| Future net cash flows |
1,166,796 | (59,301 | ) | (38,785 | ) | 1,068,710 | ||||||||||
| Discount for estimated timing of net cash flows (10% discount rate) |
(337,965 | ) | 24,757 | 5,792 | (307,416 | ) | ||||||||||
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| $ | 828,831 | $ | (34,544 | ) | $ | (32,993 | ) | $ | 761,294 | |||||||
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