Unaudited Pro Forma Condensed Combined Financial Statements
VIKING ENERGY GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following sets forth unaudited pro forma condensed consolidated financial information of Viking Energy Group, Inc. (the “Company”) prepared in accordance with Article 8-05 of Regulation S-X. You should read this information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations, “Risk Factors” and the Company’s consolidated financial statements and related notes and other financial information included in its most recent Annual Report on Form 10-K, and Quarterly Reports on Form 10-Q. The unaudited pro forma condensed consolidated financial information is based on and has been derived from the Company’s historical consolidated financial statements.
On October 5, 2021, the Company entered into an Assignment of Membership Interests (the “Ichor Assignment Agreement”) with TO Ichor 2021, L.L.C. (“Ichor Assignee”), pursuant to which the Company assigned all of its membership interests in Ichor Energy Holdings, L.L.C. (“Ichor Holdings”) to the Ichor Assignee, effective October 5, 2021 (the “Ichor Assignment”).
On October 12, 2021, the Company entered into an Assignment of Membership Interests (the “Elysium Assignment Agreement”) with TO Elysium 2021, L.L.C. (“Elysium Assignee”), pursuant to which the Company assigned all of its membership interests in Elysium Energy Holdings, L.L.C. (“Elysium Holdings”) to the Elysium Assignee, effective October 12, 2021 (the “Elysium Assignment”).
The unaudited pro forma condensed consolidated balance sheet as of June 30, 2021 and statements of operations for the year ended December 31, 2020 and the six months ended June 30, 2021 give pro forma effect to the elimination of certain assets and liabilities associated with the Ichor Assignment and Elysium Assignment as if they occurred on June 30, 2021 (in the case of the balance sheet) or January 1, 2020 (in the case of the statement of operations). The unaudited pro forma effects of the disposition on the Company’s oil and gas reserves and the standardized measure of future net cash flows, give pro forma effect to the dispositions of the reserves based on the information disclosed in the Company’s annual report as of and for the year ended December 31, 2020.
The unaudited pro forma condensed consolidated financial information includes unaudited pro forma adjustments that are factually supportable and directly attributable to the respective transactions. In addition, the unaudited pro forma adjustments are expected to have a continuing impact on the Company’s results. The Company has prepared the unaudited pro forma condensed consolidated financial information for illustrative purposes only and it does not purport to represent what the results of operations or financial condition would have been had the respective transactions actually occurred on the dates indicated, nor does the Company purport to project the results of operations or financial condition for any future period or as of any future date. The actual results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.
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VIKING ENERGY GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
VIKING ENERGY GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2021
Historical, June 30, 2021
Pro Forma Ichor Adjustments
Pro Forma Elysium Adjustments
Pro Forma June 30, 2021
ASSETS
Current assets
Cash and cash equivalents
$
7,471,030
(3,525,933
)(a)
(2,910,181
)(a)
$
1,034,916
Accounts receivable
5,836,331
(2,449,384
)(a)
(2,482,221
)(a)
904,727
Total current assets
13,307,361
1,939,643
Oil and gas properties, net
97,656,287
(56,955,136
)(a)
(25,333,763
)(a)
15,367,388
Fixed assets, net
357,770
357,770
Deposits
57,896
(47,596
)(a)
10,300
TOTAL ASSETS
$
111,379,314
$
17,675,101
LIABILITIES AND MEMBERS' EQUITY
Current liabilities
Accounts payable and accrued expenses
$
5,328,304
(1,622,859
)(a)
(2,412,563
)(a)
$
1,292,882
Derivative liability
12,649,422
(8,844,538
)(a)
(3,804,884
)(a)
-
Undistributed revenue and royalties
5,833,882
(2,192,997
)(a)
(1,144,132
)(a)
2,496,753
Current portion of long term debt
44,325,164
(2,301,067
)(a)
(29,506,906
)(a)
12,517,191
Total current liabilities
68,136,772
16,306,826
Long term debt - net of current portion
51,636,447
(48,740,242
)(a)
(a)
2,896,205
Operating lease liability
204,714
204,714
Asset retirement obligations
6,455,705
(2,000,485
)(a)
(2,545,685
)(a)
1,909,535
Total Liabilities
126,433,638
21,317,280
Stockholders' Equity
Equity and accumulated income (loss)
(15,054,324
)
2,771,736
(a)
8,640,409
(a)
(3,642,179
)
Total Stockholders' Equity (Deficit)
(15,054,324
)
(3,642,179
)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
$
111,379,314
$
17,675,101
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VIKING ENERGY GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
VIKING ENERGY GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2021
Historical Six Months Ended June 30, 2021
Pro Forma Ichor Adjustments
Pro Forma Elysium Adjustments
Pro Formal Six Months Ended June 30, 2021
REVENUE
Oil and gas sales
$
21,190,712
(8,919,858
)(b)
(9,967,483
)(b)
$
2,303,371
OPERATING EXPENSES
Lease operating costs
9,974,748
(3,863,816
)(b)
(4,679,372
)(b)
1,431,560
General and administrative
2,320,934
(590,960
)(b)
(360,812
)(b)
1,369,162
Stock based compensation
388,543
388,543
Depreciation, depletion and amortization
4,663,227
(2,017,637
)(b)
(1,550,822
)(b)
1,094,768
Accretion - ARO
289,674
(92,348
)(b)
(117,504
)(b)
79,822
TOTAL OPERATING EXPENSES
17,637,126
4,363,855
INCOME (LOSS) FROM OPERATIONS
3,553,586
(2,060,484
)
OTHER INCOME (EXPENSE)
Interest expense
(6,431,875
)
3,505,183
(b)
2,229,395
(b)
(697,297
)
Amortization of debt discount
(2,145,036
)
435,414
(b)
982,425
(b)
(727,197
)
Change in fair value of derivatives
(12,976,173
)
10,064,747
(b)
2,911,426
(b)
-
Loss on financing settlements
(926,531
)
(926,531
)
Other income (expense)
22,002
(273
)
21,729
TOTAL OTHER INCOME (EXPENSE)
(22,457,613
)
(2,329,296
)
NET INCOME (LOSS)
$
(18,904,027
)
$
(4,389,780
)
EARNINGS (LOSS) PER COMMON SHARE
Basic and Diluted
$
(0.28
)
$
(0.07
)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basis and Diluted
67,350,993
67,350,993
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VIKING ENERGY GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
VIKING ENERGY GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2020
Historical Year Ended December 31, 2020
Pro Forma Ichor Adjustments
Pro Forma Elysium Adjustments
Pro Forma Year Ended December 31, 2020
REVENUE
Oil and gas sales
$
40,266,780
(20,897,507
)(b)
(15,810,766
)(b)
$
3,558,507
OPERATING EXPENSES
Lease operating costs
19,075,749
(8,048,969
)(b)
(9,253,781
)(b)
1,772,999
Impairment of oil and gas properties
37,500,000
(20,568,275
)(b)
(b)
16,931,725
General and administrative
4,966,059
(1,027,404
)(b)
(791,968
)(b)
3,146,687
Stock based compensation
5,625,302
5,625,302
Depreciation, depletion and amortization
13,513,735
(6,029,318
)(b)
(3,727,044
)(b)
3,757,373
Accretion - asset retirement obligations
1,111,266
(5,797
)(b)
(913,853
)(b)
191,616
TOTAL OPERATING EXPENSES
81,792,111
31,425,702
INCOME (LOSS) FROM OPERATIONS
(41,525,331
)
(27,867,195
)
OTHER INCOME (EXPENSE)
Interest expense
(19,697,942
)
7,234,611
(b)
4,228,947
(b)
(8,234,384
)
Amortization of debt discount
(7,321,178
)
880,449
(b)
1,618,760
(b)
(4,821,969
)
Change in fair value of derivatives
5,485,573
(6,227,391
)(b)
893,458
(b)
151,640
Loss on financing settlements
(931,894
)
(931,894
)
Other income (expense)
2,527
(23,583
)(b)
(1,297
)(b)
(22,353
)
TOTAL OTHER INCOME (EXPENSE)
(22,462,914
)
(13,858,960
)
NET INCOME (LOSS)
(63,988,245
)
(41,726,155
)
Net loss attributable to noncontrolling interest
1,996,511
1,996,511
NET INCOME (LOSS) ATTRIBUTABLE TO VIKING ENERGY GROUP, INC.
(61,991,734
)
(39,729,644
)
Preferred stock deemed dividend
-
(42,002,301
)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
$
(61,991,734
)
$
(81,731,945
)
EARNINGS (LOSS) PER COMMON SHARE
Basis and Diluted
$
(2.42
)
$
(3.09
)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basis and Diluted
26,459,006
26,459,006
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VIKING ENERGY GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
VIKING ENERGY GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
Ichor Holdings and Elysium Holdings Assignment Adjustments to the Unaudited Pro Forma Condensed Consolidated Balance Sheet
The following adjustments have been made to the accompanying unaudited pro forma condensed consolidated balance sheet as of June 30, 2021.
(a)
Reflects the elimination of assets and liabilities and resulting gain on membership interest assignment of the properties sold.
Ichor Holdings and Elysium Holdings Assignment Adjustments to the Unaudited Pro Forma Condensed Consolidated Statements of Operations
The following adjustments have been made to the accompanying unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2021, and the year ended December 31, 2020.
(b)
Represents the elimination of gas and oil production revenue and expenses for the properties sold.
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VIKING ENERGY GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
VIKING ENERGY GROUP, INC.
UNAUDITED PRO FORMA EFFECT OF THE DISPOSITION OF OIL AND GAS RESERVES
AS OF DECEMBER 31, 2020
Estimated Quantities of Proved Reserves *(BOE) - 12/31/2020
Oil and Gas Dispositions
Total Company
Ichor Energy Holdings, LLC
Elysium Energy Holdings, LLC
Pro forma balances post disposition
Proved Developed, Producing
12,483,138
5,994,750
5,339,220
1,149,168
Proved Developed, Non Producing
3,471,570
1,306,080
1,926,270
239,220
Total Proved Developed
15,954,708
7,300,830
7,265,490
1,388,388
Proved Undeveloped
3,340,107
1,579,820
650,370
1,109,917
19,294,815
8,880,650
7,915,860
2,498,305
* BOE is calculated on a 6 to 1 ratio (mcf to bbl)
Standardized Measure of Disocunted Future Net Cash Flows - 12/31/2020
Oil and Gas Dispositions
Total Company
Ichor Energy Holdings, LLC
Elysium Energy Holdings, LLC
Pro forma balances post disposition
Future cash inflows
$
457,438,654
$
252,990,920
$
146,258,880
$
58,188,854
Future production costs
(202,285,561
)
(101,418,180
)
(73,427,200
)
(27,440,181
)
Future development costs
(32,860,370
)
(12,862,070
)
(8,234,290
)
(11,764,010
)
Future income tax expense
(8,424,790
)
(5,257,134
)
(2,448,241
)
(719,415
)
Future net cash flows
213,867,933
133,453,536
62,149,149
18,265,248
10% annual discount for estimated timing of cash flows
(96,141,109
)
(60,054,091
)
(27,967,117
)
(8,119,901
)
$
117,726,824
$
73,399,445
$
34,182,032
$
10,145,347
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