Attached files
| file | filename |
|---|---|
| 8-K/A - 8-K/A - Rose Rock Midstream, L.P. | d647669d8ka.htm |
| EX-99.3 - EX-99.3 - Rose Rock Midstream, L.P. | d647669dex993.htm |
| EX-99.4 - EX-99.4 - Rose Rock Midstream, L.P. | d647669dex994.htm |
| EX-23.2 - EX-23.2 - Rose Rock Midstream, L.P. | d647669dex232.htm |
| EX-23.1 - EX-23.1 - Rose Rock Midstream, L.P. | d647669dex231.htm |
| EX-99.2 - EX-99.2 - Rose Rock Midstream, L.P. | d647669dex992.htm |
EXHIBIT 99.5
ROSE ROCK MIDSTREAM, L.P.
Unaudited Pro Forma Condensed Consolidated Financial Statements
On December 16, 2013, Rose Rock Midstream, L.P. (“RRMS”) purchased from SemGroup Corporation (“SemGroup”) a one-third interest in SemCrude Pipeline, L.L.C. (“SCPL”), a subsidiary of SemGroup, in exchange for cash, limited partner common units and an increase in the capital account of the general partner, pursuant to a Contribution Agreement entered into on December 12, 2013. This transaction increased RRMS’ membership interest in SCPL to two-thirds. RRMS had acquired its initial one-third ownership interest through a similar transaction on January 11, 2013. Subsequent to the December 16, 2013 transaction, RRMS will consolidate SCPL and reflect a one-third noncontrolling interest representing the membership interest retained by SemGroup.
The accompanying unaudited pro forma condensed consolidated financial statements of RRMS have been prepared in accordance with Article 11 of Regulation S-X. The accompanying unaudited pro forma condensed consolidated balance sheet reflects the transaction with SemGroup as if it had occurred on September 30, 2013. The accompanying unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2013 reflects the December 16, 2013 transaction with SemGroup as if it had occurred on January 1, 2012. The accompanying unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2012 reflects the January 11, 2013 and December 16, 2013 transactions as if they had occurred on January 1, 2012. The terms “we”, “our”, “us”, and similar language used in these unaudited pro forma condensed consolidated financial statements refer to RRMS and its subsidiaries.
These unaudited pro forma condensed consolidated financial statements have been derived from our historical financial statements, which are included in our quarterly report on Form 10-Q for the quarter ended September 30, 2013 and our annual report on Form 10-K for the year ended December 31, 2012. These unaudited pro forma condensed consolidated financial statements should be read in conjunction with our historical financial statements and related notes thereto.
These unaudited pro forma condensed consolidated financial statements are provided for illustrative purposes only and do not purport to represent what our actual results of operations or financial position would have been if the transaction(s) had occurred on the dates assumed, nor are they necessarily indicative of our future operating results or financial position. However, the pro forma adjustments shown in these unaudited pro forma condensed consolidated financial statements reflect estimates and assumptions that we believe to be reasonable.
1
ROSE ROCK MIDSTREAM, L.P.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
as of September 30, 2013
(in thousands, except unit amounts)
| as of September 30, 2013 | ||||||||||||
| Historical | Pro Forma adjustments |
Pro Forma | ||||||||||
| ASSETS |
||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 1,914 | $ | 8 | (a) | $ | 1,922 | |||||
| Accounts receivable |
257,901 | — | 257,901 | |||||||||
| Receivable from affiliates |
178 | — | 178 | |||||||||
| Inventories |
32,720 | — | 32,720 | |||||||||
| Other current assets |
1,587 | — | 1,587 | |||||||||
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| Total current assets |
294,300 | 8 | 294,308 | |||||||||
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| Property, plant and equipment (net of accumulated depreciation of $45,657 at September 30, 2013) |
313,193 | — | 313,193 | |||||||||
| Equity method investment |
77,449 | 150,627 | (a) | 228,076 | ||||||||
| Goodwill |
27,261 | — | 27,261 | |||||||||
| Other intangible assets (net of accumulated amortization of $258 at September 30, 2013) |
5,760 | — | 5,760 | |||||||||
| Other noncurrent assets, net |
4,776 | — | 4,776 | |||||||||
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| Total assets |
$ | 722,739 | $ | 150,635 | $ | 873,374 | ||||||
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| LIABILITIES AND PARTNERS’ CAPITAL |
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| Current liabilities: |
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| Accounts payable |
$ | 237,010 | $ | — | $ | 237,010 | ||||||
| Payable to affiliates |
6,298 | 191 | (a) | 6,489 | ||||||||
| Accrued liabilities |
7,426 | — | 7,426 | |||||||||
| Other current liabilities |
3,757 | — | 3,757 | |||||||||
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| Total current liabilities |
254,491 | 191 | 254,682 | |||||||||
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| Long-term debt |
85,043 | 173,138 | (b) | 258,181 | ||||||||
| Commitments and contingencies |
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| Rose Rock Midstream, L.P. partners’ capital: |
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| Common units – public (13,753,872 units issued and outstanding at September 30, 2013) |
252,360 | (90,613 | )(c) | 161,747 | ||||||||
| Common units – SemGroup (2,889,709 units issued and outstanding at September 30, 2013) |
53,598 | 25,528 | (c) | 79,126 | ||||||||
| Subordinated units – SemGroup (8,389,709 units issued and outstanding at September 30, 2013) |
51,304 | (55,468 | )(c) | (4,164 | ) | |||||||
| Class A units—SemGroup (1,250,000 units issued and outstanding at September 30, 2013) |
18,008 | 23,868 | (c) | 41,876 | ||||||||
| General partner |
7,935 | (1,973 | )(c) | 5,962 | ||||||||
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| Total Rose Rock Midstream, L.P. partners’ capital |
383,205 | (98,658 | ) | 284,547 | ||||||||
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| Noncontrolling interests in consolidated subsidiaries |
— | 75,964 | (a) | 75,964 | ||||||||
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| Total equity |
383,205 | (22,694 | ) | 360,511 | ||||||||
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| Total liabilities and equity |
$ | 722,739 | $ | 150,635 | $ | 873,374 | ||||||
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2
ROSE ROCK MIDSTREAM, L.P.
Unaudited Pro Forma Condensed Consolidated Statement of Income
Nine Months Ended September 30, 2013
(in thousands, except per unit amounts)
| Nine Months Ended September 30, 2013 | ||||||||||||
| Historical | Pro Forma adjustments |
Pro Forma | ||||||||||
| Revenues, including revenues from affiliates: |
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| Product |
$ | 473,594 | $ | — | $ | 473,594 | ||||||
| Service |
40,891 | — | 40,891 | |||||||||
| Other |
— | — | — | |||||||||
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| Total revenues |
514,485 | — | 514,485 | |||||||||
| Expenses, including expenses from affiliates: |
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| Costs of products sold, exclusive of depreciation and amortization |
446,507 | — | 446,507 | |||||||||
| Operating |
20,473 | — | 20,473 | |||||||||
| General and administrative |
9,961 | 11 | (d) | 9,972 | ||||||||
| Depreciation and amortization |
11,327 | — | 11,327 | |||||||||
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| Total expenses |
488,268 | 11 | 488,279 | |||||||||
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| Earnings from equity method investment |
10,431 | 21,455 | (d) | 31,886 | ||||||||
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| Operating income |
36,648 | 21,444 | 58,092 | |||||||||
| Other expenses: |
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| Interest expense |
6,121 | 5,194 | (e) | 11,315 | ||||||||
| Other expense (income) |
(12 | ) | — | (12 | ) | |||||||
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| Total other expenses |
6,109 | 5,194 | 11,303 | |||||||||
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| Net income |
30,539 | 16,250 | (d) | 46,789 | ||||||||
| Less: net income attributable to noncontrolling interests |
— | 10,625 | (d) | 10,625 | ||||||||
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| Net income attributable to partners |
$ | 30,539 | $ | 5,625 | $ | 36,164 | ||||||
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| Net income allocated to general partner |
$ | 850 | $ | 112 | (f) | $ | 962 | |||||
| Net income allocated to common unitholders |
$ | 18,329 | $ | 3,439 | (f) | $ | 21,768 | |||||
| Net income allocated to subordinated unitholders |
$ | 11,323 | $ | 1,569 | (f) | $ | 12,892 | |||||
| Net income allocated to Class A unitholders |
$ | 37 | $ | 505 | (f) | $ | 542 | |||||
| Earnings per limited partner unit: |
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| Common unit (basic) |
$ | 1.46 | $ | 1.55 | ||||||||
| Common unit (diluted) |
$ | 1.45 | $ | 1.54 | ||||||||
| Subordinated unit (basic and diluted) |
$ | 1.35 | $ | 1.54 | ||||||||
| Class A unit (basic and diluted) |
$ | 0.03 | $ | 0.22 | ||||||||
| Basic weighted average number of limited partner units outstanding: |
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| Common units |
12,587 | 1,500 | (g) | 14,087 | ||||||||
| Subordinated units |
8,390 | — | 8,390 | |||||||||
| Class A units |
1,200 | 1,250 | (g) | 2,450 | ||||||||
| Diluted weighted average number of limited partner units outstanding: |
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| Common units |
12,621 | 1,500 | (g) | 14,121 | ||||||||
| Subordinated units |
8,390 | — | 8,390 | |||||||||
| Class A units |
1,200 | 1,250 | (g) | 2,450 | ||||||||
3
ROSE ROCK MIDSTREAM, L.P.
Unaudited Pro Forma Condensed Consolidated Statement of Income
Year Ended December 31, 2012
(in thousands, except per unit amounts)
| Year Ended December 31, 2012 | ||||||||||||
| Historical | Pro Forma adjustments |
Pro Forma | ||||||||||
| Revenues, including revenues from affiliates: |
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| Product |
$ | 576,158 | $ | — | $ | 576,158 | ||||||
| Service |
44,318 | — | 44,318 | |||||||||
| Other |
(59 | ) | — | (59 | ) | |||||||
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| Total revenues |
620,417 | — | 620,417 | |||||||||
| Expenses, including expenses from affiliates: |
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| Costs of products sold, exclusive of depreciation and amortization |
546,966 | — | 546,966 | |||||||||
| Operating |
23,302 | — | 23,302 | |||||||||
| General and administrative |
12,083 | 2 | (h) | 12,085 | ||||||||
| Depreciation and amortization |
12,131 | — | 12,131 | |||||||||
| Gain on disposal |
— | (3,500 | )(h) | (3,500 | ) | |||||||
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| Total expenses |
594,482 | (3,498 | ) | 590,984 | ||||||||
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| Earnings from equity method investment |
— | 36,439 | (h) | 36,439 | ||||||||
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| Operating income |
25,935 | 39,937 | 65,872 | |||||||||
| Other expenses: |
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| Interest expense |
1,912 | 13,441 | (e) | 15,353 | ||||||||
| Other expense (income) |
69 | — | 69 | |||||||||
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| Total other expenses |
1,981 | 13,441 | 15,422 | |||||||||
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| Net income |
23,954 | 26,496 | (h) | 50,450 | ||||||||
| Less: net income attributable to noncontrolling interests |
— | 13,312 | (h) | 13,312 | ||||||||
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| Net income attributable to partners |
$ | 23,954 | $ | 13,184 | $ | 37,138 | ||||||
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| Net income allocated to general partner |
$ | 479 | $ | 264 | (f) | $ | 743 | |||||
| Net income allocated to common unitholders |
$ | 11,737.5 | $ | 8,286 | (f) | $ | 20,024 | |||||
| Net income allocated to subordinated unitholders |
$ | 11,737.5 | $ | 3,861 | (f) | $ | 15,599 | |||||
| Net income (loss) allocated to Class A unitholders |
$ | — | $ | 773 | (f) | $ | 773 | |||||
| Earnings per limited partner unit: |
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| Common unit (basic) |
$ | 1.40 | $ | 1.50 | ||||||||
| Common unit (diluted) |
$ | 1.40 | $ | 1.49 | ||||||||
| Subordinated unit (basic and diluted) |
$ | 1.40 | $ | 1.86 | ||||||||
| Class A unit (basic and diluted) |
$ | — | $ | 0.31 | ||||||||
| Basic weighted average number of limited partner units outstanding: |
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| Common units |
8,390 | 5,000 | (g) | 13,390 | ||||||||
| Subordinated units |
8,390 | — | 8,390 | |||||||||
| Class A units |
— | 2,500 | (g) | 2,500 | ||||||||
| Diluted weighted average number of limited partner units outstanding: |
||||||||||||
| Common units |
8,406 | 5,000 | (g) | 13,406 | ||||||||
| Subordinated units |
8,390 | — | 8,390 | |||||||||
| Class A units |
— | 2,500 | (g) | 2,500 | ||||||||
4
These pro forma financial statements do not include the impact of $1.4 million of transaction related costs.
(a) Represents adjustments to consolidate SemCrude Pipeline, L.L.C. at September 30, 2013. In January 2013, RRMS purchased a one-third interest in SemCrude Pipeline, L.L.C. The purchase of an incremental one-third gives RRMS a controlling two-thirds interest in SemCrude Pipeline, L.L.C. Therefore, SemCrude Pipeline, L.L.C. will be consolidated by RRMS with a one-third noncontrolling interest. The sale of the interest in SemCrude Pipeline, L.L.C. is a transaction between SemGroup and its consolidated subsidiary, RRMS, and is accounted for as a transaction between entities under common control. Therefore, the assets received by RRMS are recorded at the parent company book value and any excess purchase price is treated as an equity transaction.
(b) RRMS borrowed $173.1 million on its revolving credit facility to fund the purchase.
(c) Partners’ capital accounts reflect the issuance of 1.5 million limited partner common units valued at $54.5 million to SemGroup (based on December 11, 2013 closing price of $36.30), 1.25 million Class A units for $40.3 million ($36.30 per unit discounted for the expected forbearance period) to SemGroup and a general partner contribution of $1.9 million to maintain its 2% ownership interest and a reduction of equity of $193.9 million shared pro-rata by the owners, which represents the excess of the purchase price of the one-third interest in SemCrude Pipeline, L.L.C. in excess of the book value at September 30, 2013.
(d) Represents adjustment to consolidate SemCrude Pipeline, L.L.C. for the nine months ended September 30, 2013 and reflect a one-third noncontrolling interest for the ownership retained by SemGroup.
(e) Interest expense adjustment for nine months ended September 30, 2013 assumes that debt incurred in the purchase of the one-third interest in SemCrude Pipeline, L.L.C. was outstanding since January 1, 2012 at a rate of 4.0%, based on the initial borrowing rate at close of the transaction. Interest expense adjustment for the year ended December 31, 2012 assumes that debt incurred in the January 11, 2013 transaction of $130.3 million and the December 13, 2013 transaction of $173.1 million was outstanding since January 1, 2012 at rates of 5.0% and 4.0%, respectively, based on the initial borrowing rates at close of the respective transactions.
(f) Under the two-class method, net income related to declared distributions on current period earnings are first allocated to their respective classes of equity and the remaining earnings are then allocated based on ownership. Adjustments to allocation of net income do not assume any change in the historical amount of distributions declared in either the amount or the units receiving distributions. The remaining amount of pro forma net income has been allocated, after reduction for the allocation of historical distributions declared, based on the pro forma class and number of units outstanding after the transaction.
The following table shows distributions declared and paid (in thousands, except for per unit amounts):
| Quarter Ended |
SemGroup | |||||||||||||||||||||||||||||||
| Record Date | Payment Date | Distribution per Unit |
General Partner |
Incentive Distri- butions |
Common Units |
Subord- inated Units |
Common Units- Public |
Total Distributions |
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| December 31, 2011 |
February 3, 2012 | February 13, 2012 | $ | 0.0670 | $ | 23 | $ | — | $ | 93 | $ | 561 | $ | 470 | $ | 1,147 | ||||||||||||||||
| March 31, 2012 |
May 7, 2012 | May 15, 2012 | $ | 0.3725 | $ | 128 | $ | — | $ | 517 | $ | 3,125 | $ | 2,607 | $ | 6,377 | ||||||||||||||||
| June 30, 2012 |
August 6, 2012 | August 14, 2012 | $ | 0.3825 | $ | 131 | $ | — | $ | 532 | $ | 3,209 | $ | 2,678 | $ | 6,550 | ||||||||||||||||
| September 30, 2012 |
November 5, 2012 | November 14, 2012 | $ | 0.3925 | $ | 134 | $ | — | $ | 545 | $ | 3,294 | $ | 2,748 | $ | 6,721 | ||||||||||||||||
| December 31, 2012 |
February 4, 2013 | February 14, 2013 | $ | 0.4025 | $ | 167 | $ | — | $ | 1,163 | $ | 3,377 | $ | 3,624 | $ | 8,331 | ||||||||||||||||
| March 31, 2013 |
May 6, 2013 | May 15, 2013 | $ | 0.4300 | $ | 179 | $ | 41 | $ | 1,242 | $ | 3,607 | $ | 3,872 | $ | 8,941 | ||||||||||||||||
| June 30, 2013 |
August 5, 2013 | August 14, 2013 | $ | 0.4400 | $ | 183 | $ | 72 | $ | 1,271 | $ | 3,692 | $ | 3,962 | $ | 9,180 | ||||||||||||||||
| September 30, 2013 |
November 5, 2013 | November 14, 2013 | $ | 0.4500 | $ | 232 | $ | 127 | $ | 1,301 | $ | 3,775 | $ | 6,189 | $ | 11,624 | ||||||||||||||||
5
(g) Adjustment reflects the impact to the weighted average number of shares outstanding for basic and diluted earnings per unit based on the number of common limited partner and Class A units issued in connection with the transactions. The adjustment for the year ended December 31, 2012 includes the units issued in connection with the December 13, 2013 transaction, as detailed above, and includes 3.5 million common units and 1.25 million Class A units issued in connection with the January 11, 2013 transaction.
(h) Represents adjustments to consolidated SemCrude Pipeline, L.L.C. for the year ended December 31, 2012 and reflect a one-third noncontrolling interest for the ownership retained by SemGroup. The year ended December 31, 2012 includes a $3.5 million gain on disposal. The gain represents the receipt of additional proceeds in 2012 related to the September 2010 disposal of a portion of the SemCrude Pipeline, L.L.C. equity interest in White Cliffs Pipeline, L.L.C.
6