Exhibit 99.2
GASCO ENERGY, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Basis of Presentation
The following unaudited pro forma condensed consolidated financial statements give effect to the previously announced purchase and sale agreement. On March 22, 2012, Gasco Energy, Inc. (the “Company”) closed the purchase and sale agreement with Wapiti Oil & Gas II, L.L.C., a Delaware limited liability company (“Wapiti”) in accordance with the Purchase and Sale Agreement, dated February 23, 2012, between the Company’s wholly owned subsidiary, Gasco Production Company (“GPC”), and Wapiti (the “Wapiti Transaction”), pursuant to which the Company (i) sold to Wapiti an undivided 50% of the Company’s interest in certain of its Uinta Basin producing oil and gas assets for $18,000,000 in cash and a promissory note payable by Wapiti to the Company in the amount of $1,192,321, and (ii) transferred to Wapiti an undivided 50% of its interest in certain of its Uinta Basin non-producing oil and gas assets in exchange for, among other agreements, Wapiti’s commitment to fund $30.0 million of the drilling and completion costs associated with the exploration and development of the transferred assets. GPC also entered into a Development Agreement with Wapiti, which includes terms and conditions of a drilling program agreed to by the parties.
The pro forma adjustments in the accompanying unaudited condensed consolidated balance sheet have been prepared as if the Wapiti Transaction was completed on December 31, 2011. The pro forma adjustments in the accompanying unaudited condensed consolidated statement of operations have been prepared as if the Wapiti Transaction was completed on January 1, 2011. The pro forma condensed consolidated financial statements do not purport to be indicative of the financial position or results of the Company’s operations as of such dates or for such periods, nor are necessarily indicative of future results.
The Company used $10,607,621 of the sales proceeds to repay the debt outstanding under its revolving credit facility at March 22, 2012, which has not been given pro forma effect in these unaudited pro forma condensed consolidated financial statements.
GASCO ENERGY, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AT DECEMBER 31, 2011
| | | | Pro Forma | | | | | |
| | Historical | | Adjustments | | | | Pro Forma | |
ASSETS | | | | | | | | | |
CURRENT ASSETS | | | | | | | | | |
Cash and cash equivalents | | $ | 1,965,967 | | $ | 18,000,000 | | (a) | | $ | 19,965,967 | |
Note receivable | | 500,000 | | 1,192,321 | | (a) | | 1,692,321 | |
Other current assets | | 5,222,629 | | — | | | | 5,222,629 | |
Total | | 7,688,596 | | 19,192,321 | | | | 26,880,917 | |
| | | | | | | | | |
PROPERTY, PLANT AND EQUIPMENT, at cost | | | | | | | | | |
Oil and gas properties (full cost method) | | | | | | | | | |
Proved properties | | 268,793,463 | | (15,550,780 | ) | (b) | | 253,242,683 | |
Unproved properties | | 36,938,162 | | — | | | | 36,938,162 | |
Other assets | | 3,609,349 | | — | | | | 3,609,349 | |
Total | | 309,340,974 | | (15,550,780 | ) | | | 293,790,194 | |
Less accumulated depletion, depreciation, amortization and impairment | | (234,132,806 | ) | — | | | | (234,132,806 | ) |
Total | | 75,208,168 | | (15,550,780 | ) | | | 59,657,388 | |
| | | | | | | | | |
NON-CURRENT ASSETS | | 1,757,472 | | — | | | | 1,757,472 | |
| | | | | | | | | |
TOTAL ASSETS | | $ | 84,654,236 | | $ | 3,641,541 | | | | $ | 88,295,777 | |
| | | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | |
CURRENT LIABILITIES | | | | | | | | | |
Current portion of long-term debt | | $ | 8,544,969 | | — | | | | $ | 8,544,969 | |
Other current liabilities | | 5,733,304 | | — | | | | 5,733,304 | |
Total | | 14,278,273 | | — | | | | 14,278,273 | |
| | | | | | | | | |
NONCURRENT LIABILITIES | | | | | | | | | |
5.5% Convertible Senior Notes due 2015, net of unamortized discount of $22,574,687 | | 22,593,313 | | | | | | 22,593,313 | |
Asset retirement obligation | | 1,226,796 | | (561,276 | ) | (c) | | 665,520 | |
Other noncurrent liabilities | | 6,900,629 | | — | | | | 6,900,629 | |
Total | | 30,720,738 | | (561,276 | ) | | | 30,159,462 | |
| | | | | | | | | |
STOCKHOLDERS’ EQUITY | | 39,655,225 | | 4,202,817 | | (d) | | 43,858,042 | |
| | | | | | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 84,654,236 | | $ | 3,641,541 | | | | $ | 88,295,777 | |
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements
GASCO ENERGY, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2011
| | | | Pro Forma | | | | | |
| | Historical | | Adjustments | | | | Pro Forma | |
| | | | | | | | | |
REVENUES | | | | | | | | | |
Gas | | $ | 15,359,973 | | $ | (5,317,555 | ) | (e) | | $ | 10,042,418 | |
Oil | | 2,975,635 | | (1,264,461 | ) | (e) | | 1,711,174 | |
Total | | 18,335,608 | | (6,582,016 | ) | | | 11,753,592 | |
| | | | | | | | | |
OPERATING EXPENSES | | | | | | | | | |
Lease operating | | 8,785,828 | | (3,322,120 | ) | (e) | | 5,463,708 | |
Transportation and processing | | 2,759,780 | | (989,603 | ) | (e) | | 1,770,177 | |
Depletion, depreciation and amortization | | 3,525,806 | | (1,215,682 | ) | (f) | | 2,310,124 | |
Loss on sale of assets, net | | 93,674 | | — | | | | 93,674 | |
General and administrative | | 4,933,691 | | (348,443 | ) | (g) | | 4,585,248 | |
Total | | 20,098,779 | | (5,875,848 | ) | | | 14,222,931 | |
| | | | | | | | | |
OPERATING LOSS | | (1,763,171 | ) | (706,168 | ) | | | (2,469,339 | ) |
| | | | | | | | | |
OTHER (EXPENSE) INCOME | | | | | | | | | |
Interest expense | | (6,764,933 | ) | — | | | | (6,764,933 | ) |
Derivative gains | | 996,484 | | — | | | | 996,484 | |
Amortization of deferred income from sale of assets | | 202,452 | | — | | | | 202,452 | |
Interest income | | 27,523 | | — | | | | 27,523 | |
Total | | (5,538,474 | ) | — | | | | (5,538,474 | ) |
| | | | | | | | | |
NET LOSS | | $ | (7,301,645 | ) | $ | (706,168 | ) | | | $ | (8,007,813 | ) |
| | | | | | | | | |
NET LOSS PER COMMON SHARE | | | | | | | | | |
BASIC | | $ | (0.05 | ) | | | | | $ | (0.05 | ) |
DILUTED | | $ | (0.05 | ) | | | | | $ | (0.05 | ) |
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements
GASCO ENERGY, INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
1. Pro Forma Adjustments and Assumptions
The unaudited pro forma condensed consolidated financial statements give pro forma effect to the following:
(a) Represents the cash and the promissory note received upon the closing of the Wapiti Transaction, including the closing adjustments.
(b) Represents the carrying amount of the 50% undivided interest of the producing assets sold to Wapiti.
(c) Represents the adjustment to the asset retirement obligation related to the 50% undivided interest in the producing assets sold to Wapiti.
(d) Represents the excess of carrying value of assets and liabilities over the consideration received on the sale of a 50% undivided interest in producing assets sold to Wapiti.
(e) Represents the reversal of revenues and expenses attributable to the 50% undivided interest in producing assets sold to Wapiti.
(f) Represents the adjustment to depreciation, depletion and amortization expense for the reduction in (i) production volumes, (ii) reserve volumes (iii) capitalized costs and (iv) asset retirement obligations attributable to the 50% undivided interest in producing assets sold to Wapiti.
(g) Represents the reversal of the transaction costs directly attributable to the Wapiti transaction.
2. Summary Pro Forma Oil and Natural Gas Reserve Information (Unaudited)
The following table sets fort summary pro forma reserve information as of December 31, 2011 which gives effect to the Wapiti Transaction.
Estimated Quantities of Oil and Natural Gas Reserves
| | Historical | | Pro Forma
Adjustments | | Pro Forma | |
| | | | | | | |
Total Proved Reserve Quantities: | | | | | | | |
Oil (Bbl) | | 502,055 | | (219,676 | ) | 282,379 | |
Gas (Mcf) | | 36,798,310 | | (13,876,839 | ) | 22,921,471 | |
Total (Mcfe) | | 39,810,640 | | (15,194,895 | ) | 24,615,745 | |
Standardized Measure of Discounted Future Net Cash Flows
| | Historical | | Pro Forma
Adjustments | | Pro Forma | |
| | | | | | | |
Future cash flows | | $ | 172,844,800 | | $ | (68,452,500 | ) | $ | 104,392,300 | |
Future production and development costs | | (92,505,100 | ) | 37,283,900 | | (55,221,200 | ) |
Future income taxes (a) | | — | | — | | — | |
Future net cash flows before discount | | 80,339,700 | | (31,168,600 | ) | 49,171,100 | |
10% discount to present value | | (35,689,700 | ) | 14,004,550 | | (21,685,150 | ) |
Standardized measure of discounted future net cash flows | | $ | 44,650,000 | | $ | (17,164,050 | ) | $ | 27,485,950 | |
(a) The calculations of standardized measure do not include deductions for future income tax expenses because the tax basis of the properties involved and the future tax deductions were greater than the net cash flows from the proved oil and gas reserves for the year ended December 31, 2011.
