Attached files
file | filename |
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8-K - 8-K - Bonanza Creek Energy, Inc. | a13-2742_68k.htm |
EX-99.3 - EX-99.3 - Bonanza Creek Energy, Inc. | a13-2742_6ex99d3.htm |
EX-99.2 - EX-99.2 - Bonanza Creek Energy, Inc. | a13-2742_6ex99d2.htm |
EX-23.1 - EX-23.1 - Bonanza Creek Energy, Inc. | a13-2742_6ex23d1.htm |
Exhibit 99.1
Item 6. Selected Financial Data.
The following tables set forth selected historical financial data of us and our predecessor, BCEC, as of and for the periods indicated. The consolidated statements of operations data for the years ended December 31, 2007 and 2008 are derived from audited consolidated financial statements of BCEC not included in this report. The consolidated audited financial statements of BCEC for the periods not included in this report were previously filed in BCEIs Form S-1 (File No. 333-174765). The consolidated statement of operations data for the years ended December 31, 2009 and the period ended December 23, 2010 are derived from the audited consolidated financial statements of BCEC included elsewhere in this report. The consolidated statement of operations data for the eight day period ended December 31, 2010 and year ended December 31, 2011 are derived from the audited consolidated financial statements of BCEI included elsewhere in this report. The consolidated balance sheets data as of December 31, 2007, 2008 and 2009 are derived from the audited consolidated financial statements of BCEC, which are not included in this report. The consolidated audited financial statements of BCEC for the periods not included in this report were previously filed in BCEIs Form S-1 (File No. 333-174765). The consolidated balance sheet data as of December 31, 2010 and 2011 is derived from our audited consolidated financial statements of BCEI included elsewhere in this report. In managements opinion, the financial statements include all adjustments necessary for the fair presentation of our financial condition as of such date and our results of operations for such periods.
The summary unaudited pro forma statement of operations of Bonanza Creek Energy, Inc. for the year ended December 31, 2010 gives effect to our Corporate Restructuring as if it had occurred on January 1, 2010.
The selected historical financial data should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Continuing Operations and both our and our predecessors financial statements and the notes to those financial statements included elsewhere in this Current Report on Form 8-K.
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Bonanza Creek Energy, Inc. |
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Bonanza Creek Energy Company, |
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Period |
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Bonanza |
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2007 |
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2008 |
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2009 |
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Period |
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(December 23, |
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Year Ended |
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Creek |
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(unaudited) |
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(in thousands, except per share data) |
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Statement of Operations Data: |
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Revenues: |
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Oil sales |
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$ |
7,462 |
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$ |
27,171 |
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$ |
22,377 |
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$ |
29,608 |
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$ |
1,200 |
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$ |
79,568 |
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$ |
40,466 |
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Natural gas sales |
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1,736 |
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5,160 |
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3,655 |
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6,226 |
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207 |
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13,442 |
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10,253 |
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Natural gas liquids and CO2 sales |
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821 |
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2,782 |
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3,169 |
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7,672 |
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213 |
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12,714 |
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8,365 |
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Total revenues |
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10,019 |
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35,113 |
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29,201 |
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43,506 |
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1,620 |
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105,724 |
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59,084 |
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Operating expenses: |
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Lease operating |
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2,191 |
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8,633 |
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10,745 |
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11,948 |
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419 |
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18,253 |
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14,377 |
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Severance and ad valorem taxes |
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514 |
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1,439 |
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1,984 |
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1,468 |
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66 |
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5,918 |
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2,368 |
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Depreciation, depletion and amortization |
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3,529 |
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11,065 |
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12,594 |
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12,598 |
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436 |
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28,014 |
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18,856 |
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General and administrative |
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4,752 |
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7,477 |
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7,610 |
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8,375 |
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324 |
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13,164 |
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9,339 |
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Employee stock compensation(3) |
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4,449 |
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Exploration |
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9 |
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226 |
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878 |
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246 |
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Impairment of oil and gas properties(4) |
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1,594 |
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623 |
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Cancelled private placement(5) |
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2,378 |
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2,378 |
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Total operating expenses |
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10,986 |
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30,217 |
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32,933 |
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36,993 |
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1,245 |
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71,299 |
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47,564 |
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Income (loss) from operations |
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(967 |
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4,896 |
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(3,732 |
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6,513 |
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375 |
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34,425 |
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11,520 |
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Other income (expense): |
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Interest expense |
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(1,609 |
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(12,227 |
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(16,582 |
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(18,001 |
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(58 |
) |
(4,017 |
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(1,263 |
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Amortization of debt discount |
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(1,684 |
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(5,987 |
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(7,963 |
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(8,862 |
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Write off of deferred financing costs |
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(1,663 |
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(1,663 |
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Gain on sale of oil and gas properties |
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8 |
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Unrealized gain (loss) in fair value of warrant put option(6) |
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(32,302 |
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70,972 |
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(80,640 |
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34,345 |
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Unrealized gain (loss) in fair value of commodity derivatives |
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(925 |
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48,716 |
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(34,589 |
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(7,605 |
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(514 |
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225 |
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(8,119 |
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Realized gain (loss) on settled commodity derivatives |
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26 |
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1,913 |
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13,451 |
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5,919 |
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(47 |
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(3,024 |
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5,872 |
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Other income (loss) |
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(43 |
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(229 |
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(180 |
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19 |
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(110 |
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(46 |
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Total other income (expense) |
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(36,537 |
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103,166 |
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(126,503 |
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4,152 |
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(619 |
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(6,926 |
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(5,219 |
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Income (loss) from continuing operations before taxes |
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(37,504 |
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108,062 |
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(130,235 |
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10,665 |
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(244 |
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27,499 |
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6,301 |
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Income tax benefit (expense)(7) |
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90 |
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(12,890 |
) |
(2,319 |
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Income (loss) from continuing operations |
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(37,504 |
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108,062 |
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(130,235 |
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10,665 |
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(154 |
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14,609 |
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3,982 |
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Discontinued operations |
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(Loss) income from operations associated with oil and gas properties held for sale (including impairments in 2008, 2009, and 2011 of $24.8 million, $0.6 million, and $3.4 million respectively)(4) |
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(2,856 |
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(39,308 |
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149 |
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64 |
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(13 |
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(3,610 |
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(312 |
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Gain on sale of oil and gas properties |
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303 |
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4,055 |
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4,055 |
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Income tax (expense) benefit |
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5 |
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1,692 |
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(1,377 |
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(Loss) income from discontinued operations |
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(2,856 |
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(39,308 |
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452 |
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4,119 |
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(8 |
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(1,918 |
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2,366 |
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Net income (loss) |
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$ |
(40,360 |
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$ |
68,754 |
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$ |
(129,783 |
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$ |
14,784 |
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$ |
(162 |
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$ |
12,691 |
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$ |
6,348 |
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Basic and Diluted Income Per Share(8) |
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Income from continuing operations |
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$ |
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$ |
0.49 |
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$ |
0.14 |
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Income from discontinued operations |
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$ |
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$ |
(0.6 |
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$ |
0.08 |
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Net income per common share |
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$ |
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$ |
0.43 |
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$ |
0.22 |
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Weight Average Shares Outstanding, Basic and Diluted |
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29,123 |
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29,576 |
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29,123 |
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(1) We completed our Corporate Restructuring on December 23, 2010.
(2) The pro forma information above gives effect to our Corporate Restructuring as if it had occurred on January 1, 2010. See Unaudited Pro Forma Financial Data.
(3) In connection with our IPO, the Company distributed 243,945 fully vested shares of common stock previously held in trust to our employees and recorded a $4.1 million stock compensation charge. In addition, the Company distributed the remaining 3,400 shares of our former Class B common stock to our employees. In connection with our IPO, all issued and outstanding shares of our former Class B Common Stock converted into 437,787 shares of restricted common stock, vesting over a three year period and we recorded a $0.1 million stock compensation charge. We expect to recognize employee stock compensation expense relating to these grants during the years ended December 31, 2012, 2013, and 2014 of approximately $2.5 million, $2.5 million, and $2.3 million, respectively, assuming no forfeitures.
(4) The impairment for the year ended 2008 resulted from a write-down of the carrying value of our oil and natural gas reserves due to depressed year-end prices. The impairment for 2011 was related to steam flooding results in our legacy California assets that were lower than expected and the impairment of one non-core field in Southern Arkansas was related to the loss of a lease.
(5) Expenditures in connection with a cancelled private placement of our preferred stock.
(6) In connection with its purchase of our senior subordinated notes D.E. Shaw Synoptic Portfolios 5, L.L.C. received warrants to purchase equity interests in our predecessor. These warrants contained a put right exercisable beginning on May 17, 2014. The periods presented for our predecessor reflect the changes in the fair market value of that put option. The warrants and aggregate warrant exercise price were exchanged for shares of our common stock in connection with our Corporate Restructuring.
(7) Our predecessor, BCEC, was a partnership for federal income tax purposes and, therefore, was not subject to entity-level taxation. Our pro forma results reflect our taxation as a subchapter C corporation at an estimated combined state and federal income tax rate of 36.8%.
(8) As a limited liability company, ownership interests in our predecessor were held as units rather than shares.
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Bonanza Creek Energy |
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Bonanza Creek |
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As of December 31, |
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As of December 31, |
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2007 |
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2008 |
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2009 |
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2010 |
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2011 |
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(in thousands) |
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Balance Sheet Data: |
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Cash and cash equivalents |
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$ |
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$ |
4,088 |
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$ |
2,522 |
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$ |
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$ |
2,090 |
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Property and equipment, net |
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51,093 |
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182,976 |
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177,126 |
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481,374 |
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618,229 |
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Oil and gas properties held for sale, less accumulated depreciation and depletion |
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38,553 |
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12,304 |
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11,241 |
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15,208 |
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9,896 |
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Total assets |
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97,044 |
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241,625 |
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211,552 |
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516,104 |
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664,349 |
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Long term debt, including current portion: |
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Credit facility |
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27,274 |
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107,000 |
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99,000 |
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55,400 |
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6,600 |
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Senior subordinated notes, net of discount |
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51,561 |
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75,499 |
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92,442 |
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Subordinated unsecured note |
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10,000 |
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10,799 |
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Warrant put options(1) |
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42,851 |
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828 |
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81,468 |
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Total members/stockholders equity (deficit) |
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(33,566 |
) |
35,988 |
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(93,795 |
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356,380 |
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527,982 |
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Bonanza Creek Energy, Inc. |
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Bonanza Creek Energy Company, LLC |
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Period |
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Year Ended December 31, |
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Period |
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(December 23, |
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Year |
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2007 |
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2008 |
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2009 |
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2010(2) |
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2010 |
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2011 |
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(in thousands) |
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Other Financial Data: |
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Net cash provided by (used in) operating activities |
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$ |
(561 |
) |
$ |
11,128 |
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$ |
11,134 |
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$ |
22,759 |
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$ |
(1,633 |
) |
$ |
57,603 |
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Net cash provided by (used in) investing activities |
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(43,265 |
) |
(79,581 |
) |
(7,185 |
) |
(32,127 |
) |
(817 |
) |
(158,902 |
) | ||||||
Net cash provided by (used in) financing activities |
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38,787 |
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72,541 |
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(5,515 |
) |
9,297 |
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103,389 |
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(1) The warrants and aggregate warrant exercise price were exchanged for shares of our common stock in connection with our Corporate Restructuring.
(2) We completed our Corporate Restructuring on December 23, 2010.
Unaudited Pro Forma Financial Information
We completed our Corporate Restructuring on December 23, 2010. The following unaudited pro forma financial information shows the pro forma effect of our Corporate Restructuring. We have not included a pro forma balance sheet since the effects of our Corporate Restructuring are reflected in the December 31, 2010 balance sheet included elsewhere in this Current Report on Form 8-K. The unaudited pro forma statement of operations for the year ended December 31, 2010 was prepared as if our Corporate Restructuring had occurred at January 1, 2010.
The accompanying financial information was from the historical accounting records. We made no additional pro forma adjustment to general and administrative expense since we were the operator of these properties prior to the acquisitions.
The following unaudited pro forma financial statements do not purport to represent what our actual results of operations would have been if this acquisition had occurred on January 1, 2010. The unaudited pro forma financial statements should be read in conjunction with our historical financial statements and related notes for the periods presented included elsewhere in this Current Report on Form 8-K.
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Bonanza |
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Holmes |
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Bonanza |
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Pro Forma |
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Bonanza |
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(unaudited) |
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(unaudited) |
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(in thousands, except per share data) |
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Revenues: |
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Oil, natural gas, natural gas liquids and CO2 sales |
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$ |
43,506 |
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$ |
13,958 |
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$ |
1,620 |
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$ |
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$ |
59,084 |
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Operating expenses: |
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Lease operating |
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11,948 |
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2,010 |
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419 |
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14,377 |
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Severance and ad valorem taxes |
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1,468 |
|
834 |
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66 |
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2,368 |
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Exploration |
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227 |
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19 |
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246 |
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Depreciation, depletion and amortization(1) |
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12,598 |
|
3,006 |
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436 |
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2,816 |
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18,856 |
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General and administrative |
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8,375 |
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640 |
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324 |
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9,339 |
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Cancelled private placement |
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2,378 |
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2,378 |
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Total operating expenses |
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36,994 |
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6,509 |
|
1,245 |
|
2,816 |
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47,564 |
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Income from operations |
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6,512 |
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7,449 |
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375 |
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(2,816 |
) |
11,520 |
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Other income (expense): |
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Other income (loss) |
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19 |
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(65 |
) |
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(46 |
) | |||||
Write off of deferred financing costs |
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(1,663 |
) |
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(1,663 |
) | |||||
Unrealized gain on fair value of warrant put option(2) |
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34,345 |
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(34,345 |
) |
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Amortization of debt discount(3) |
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(8,862 |
) |
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|
8,862 |
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Realized gain on settled commodity derivatives |
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5,919 |
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|
|
(47 |
) |
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|
5,872 |
| |||||
Unrealized loss in fair value of commodity derivatives |
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(7,605 |
) |
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|
(514 |
) |
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(8,119 |
) | |||||
Interest expense(4) |
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(18,001 |
) |
(439 |
) |
(57 |
) |
17,234 |
|
(1,263 |
) | |||||
Total other income (expense) |
|
4,152 |
|
(504 |
) |
(618 |
) |
(8,249 |
) |
(5,219 |
) | |||||
Income (loss) from continuing operations |
|
10,664 |
|
6,945 |
|
(243 |
) |
(11,065 |
) |
6,301 |
| |||||
Pro forma income tax expense(5) |
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|
|
|
|
|
|
(2,319 |
) |
(2,319 |
) | |||||
Income (loss) from continuing operations |
|
|
|
|
|
|
|
|
|
$ |
3,982 |
| ||||
(Loss) income from operations associated with oil and gas properties held for sale |
|
65 |
|
|
|
(13 |
) |
(364 |
) |
(312 |
) | |||||
Gain on sale of oil and gas properties |
|
4,055 |
|
|
|
|
|
|
|
4,055 |
| |||||
Pro forma income tax (expense) benefit(5) |
|
|
|
|
|
|
|
(1,377 |
) |
(1,377 |
) | |||||
Income from discontinued operations |
|
4,120 |
|
|
|
(13 |
) |
(1,741 |
) |
2,366 |
| |||||
Net Income |
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$ |
14,784 |
|
$ |
6,945 |
|
$ |
(256 |
) |
$ |
(15,125 |
) |
$ |
6,348 |
|
Basic and diluted income per share |
|
|
|
|
|
|
|
|
|
|
| |||||
Income from continuing operations |
|
|
|
|
|
|
|
|
|
$ |
0.14 |
| ||||
Income from discontinued operations |
|
|
|
|
|
|
|
|
|
$ |
0.08 |
| ||||
Net income per common share |
|
|
|
|
|
|
|
|
|
$ |
0.22 |
|
(1) Pro forma depletion expense gives effect to our Corporate Restructuring which required the application of purchase accounting. The expense was calculated using estimated proved reserves as of the beginning of the period, production for the applicable period, and the fair value of the purchase price allocated to proved oil and gas properties.
(2) BCEC issued an aggregate of 33,089 warrants to purchase Class A units during 2006, 2007, and 2008 in connection with the sale of senior subordinated notes. These warrants included a one time right and option to put the warrants back to BCEC at fair market value less the exercise price. This pro forma adjustment reverses the mark-to-market income for the warrant put right that was recorded during 2010. This presentation assumes that the warrants were exercised on January 1, 2010 in connection with a recapitalization.
(3) During 2010, BCEC recorded accretion expense for the subordinated debt discount. This pro forma adjustment reverses the accretion expense recorded during 2010. This presentation assumes that the subordinated debt was paid off on January 1, 2010 in connection with a recapitalization.
(4) This pro forma adjustment reduces interest expense by $10.9 million for BCEC interest expense that was paid in kind during 2010, a further reduction to interest expense for the amortization of debt issuance costs related to BCECs second lien term loan that was entered into during 2010, and a further reduction for cash interest expense paid on the revolving credit facilities of BCEC and HEC and BCECs related party note payable during 2010. This presentation assumes that BCECs subordinated debt, the second lien term loan and BCECs related party note payable were paid off and the balance outstanding on our revolving credit facility was reduced on January 1, 2010 in connection with a recapitalization.
(5) Pro forma income taxes related to our pre-tax income for the year ended December 31, 2010 and is based on our expected tax rate of 36.8%.
Pro Forma Reserve Quantity and Standardized Measure Information
The following table sets forth certain unaudited pro forma information concerning our proved oil and gas reserves giving effect to our Corporate Restructuring as if it had occurred on January 1, 2010. The following estimates of proved oil and gas reserves, both developed and undeveloped, represent interests we acquired in our Corporate Restructuring, and are located solely within the United States. Proved reserves represent estimated quantities of crude oil and natural gas which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved developed oil and gas reserves are the quantities expected to be recovered through existing wells with existing equipment and operating methods. Proved undeveloped oil and gas reserves are reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells for which relatively major expenditures are required for completion.
The estimate of proved reserves and related valuations for the period ended December 23, 2010 was based upon a report prepared by Cawley, Gillespie & Associates, Inc. Petroleum Consultants as of December 31, 2010, adjusted for eight days of operations. The estimates of proved reserves are inherently imprecise and are continually subject to revision based on production history, results of additional exploration and development, price changes and other factors. These estimates do not include probable or possible reserves. The information provided does not represent our estimate of expected future cash flows or value of proved oil and gas reserves.
Changes in estimated reserve quantities:
|
|
Oil (MBbl) |
|
Natural Gas (MMcf) |
| ||||||||
|
|
Bonanza |
|
Holmes |
|
Pro Forma |
|
Bonanza |
|
Holmes |
|
Pro Forma |
|
BalanceDecember 31, 2009 |
|
15,270 |
|
6,118 |
|
21,388 |
|
27,610 |
|
16,565 |
|
44,175 |
|
Extensions and discoveries |
|
1,258 |
|
50 |
|
1,308 |
|
2,249 |
|
228 |
|
2,477 |
|
Sales of minerals in place |
|
(559 |
) |
|
|
(559 |
) |
|
|
|
|
|
|
Production |
|
(595 |
) |
(138 |
) |
(733 |
) |
(1,309 |
) |
(781 |
) |
(2,090 |
) |
Revisions to previous estimates |
|
1,302 |
|
(308 |
) |
994 |
|
12,674 |
|
5,690 |
|
18,364 |
|
BalanceDecember 23, 2010 |
|
16,676 |
|
5,722 |
|
22,398 |
|
41,224 |
|
21,702 |
|
62,926 |
|
Proved developed reserves: |
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009 |
|
4,710 |
|
1,292 |
|
6,002 |
|
7,021 |
|
5,346 |
|
12,367 |
|
December 23, 2010 |
|
6,465 |
|
1,734 |
|
8,199 |
|
13,703 |
|
6,413 |
|
20,116 |
|
Proved undeveloped reserves: |
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009 |
|
10,560 |
|
4,826 |
|
15,386 |
|
20,589 |
|
11,219 |
|
31,808 |
|
December 23, 2010 |
|
10,211 |
|
3,988 |
|
14,199 |
|
27,521 |
|
15,289 |
|
42,810 |
|
The following table sets forth unaudited pro forma information concerning the discounted future net cash flows from our proved oil and gas reserves as of December 23, 2010, net of income tax expense, and giving effect to our Corporate Restructuring as if it had occurred on January 1, 2010. Future income tax expenses are calculated by applying appropriate year-end tax rates to future pretax net cash flows relating to proved oil and natural gas reserves. Future income tax expenses give effect to permanent differences, tax credits and loss carryforwards relating to the proved oil and natural gas reserves. Future net cash flows are discounted at a rate of 10% annually to derive the Standardized Measure. This calculation procedure does not necessarily result in an estimate of the fair market value or the present value of our oil and natural gas properties.
Standardized Measure from estimated production of proved oil and gas reserves as of December 23, 2010 (in thousands):
|
|
Bonanza |
|
Holmes |
|
Pro Forma |
| |||
Future cash flows |
|
$ |
1,366,948 |
|
$ |
528,802 |
|
$ |
1,895,750 |
|
Future production costs |
|
(434,498 |
) |
(138,515 |
) |
(573,013 |
) | |||
Future development costs |
|
(222,007 |
) |
(130,202 |
) |
(352,209 |
) | |||
Future income tax expense |
|
(126,005 |
) |
(57,242 |
) |
(183,247 |
) | |||
Future net cash flows |
|
584,438 |
|
202,843 |
|
787,281 |
| |||
10% annual discount for estimated timing of cash flows |
|
(299,329 |
) |
(113,149 |
) |
(412,478 |
) | |||
Standardized Measure |
|
$ |
285,109 |
|
$ |
89,694 |
|
$ |
374,803 |
|
Future cash flows as shown above were reported without consideration for the effects of derivative transactions outstanding at each period end.
Changes in Standardized Measure from proved oil and gas reserves (in thousands):
|
|
Bonanza |
|
Holmes |
|
Pro Forma |
| |||
Beginning of period |
|
$ |
185,704 |
|
$ |
58,150 |
|
$ |
243,854 |
|
Sale of oil and gas produced, net of production costs |
|
(31,916 |
) |
(11,113 |
) |
(43,029 |
) | |||
Net changes in prices and production costs |
|
97,744 |
|
42,468 |
|
140,212 |
| |||
Extensions, discoveries and improved recoveries |
|
17,405 |
|
590 |
|
17,995 |
| |||
Development costs incurred |
|
21,615 |
|
9,342 |
|
30,957 |
| |||
Changes in estimated development cost |
|
(30,350 |
) |
(14,006 |
) |
(44,356 |
) | |||
Sales of mineral in place |
|
(10,799 |
) |
|
|
(10,799 |
) | |||
Revisions of previous quantity estimates |
|
65,959 |
|
11,833 |
|
77,792 |
| |||
Net change in income taxes |
|
(38,932 |
) |
(10,019 |
) |
(48,951 |
) | |||
Accretion of discount |
|
20,368 |
|
7,183 |
|
27,551 |
| |||
Changes in production rates and other |
|
(11,689 |
) |
(4,734 |
) |
(16,423 |
) | |||
End of period |
|
$ |
285,109 |
|
$ |
89,694 |
|
$ |
374,803 |
|
Average wellhead prices inclusive of adjustments for quality and location used in determining future net revenues related to the Standardized Measure calculation as of December 23, 2010 were calculated using the first-day-of-the-month price for each of the 12 months that made up the reporting period.
|
|
Bonanza |
|
Holmes |
| ||
Oil (per Bbl) |
|
$ |
74.77 |
|
$ |
75.33 |
|
Gas (per Mcf) |
|
$ |
4.72 |
|
$ |
4.98 |
|