Unaudited Pro Forma Condensed Consolidated Financial Statements
VIKING ENERGY GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED 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 July 8, 2022, four of the wholly-owned subsidiaries of Petrodome Energy, LLC (“Petrodome”), a wholly owned subsidiary of Viking Energy Group, Inc. (“Viking”), entered into Purchase and Sale Agreements (the “Purchase Agreements”) to sell all of their interests in the oil and gas assets owned by those Petrodome subsidiaries, including in the aggregate, interests in 8 producing wells, 8 shut-in wells, 2 salt water disposal wells and 1 inactive well, to the third parties and on the headline terms described below (collectively the “Dispositions”). On July 8, 2022, the Dispositions were completed and the purchase price in each of the Dispositions was received by each of the subsidiaries, and applied to repay CrossFirst Bank all amounts owed to it by Petrodome under the June 13, 2018, revolving line of credit loan, which loan was secured by a mortgage on all of the oil and gas leases of Petrodome and its subsidiaries, a security agreement covering all of Petrodome assets, and a guaranty by Viking.
·
On July 8, 2022, Petrodome Napoleonville, LLC, the wholly owned Louisiana subsidiary of Petrodome, entered into (i) a Purchase and Sale Agreement to sell 50% of its oil and gas assets to Napoleonville, L.L.C., a Delaware limited liability company, for a $37,500 purchase price, and (ii) a Purchase and Sale Agreement to sell the remaining 50% of its oil and gas assets to WPP Petro, L.L.C., a Delaware limited liability company, for a $37,500 purchase price.
·
On July 8, 2022, Petrodome Bloomington, LLC, the wholly owned Texas subsidiary of Petrodome, entered into (i) a Purchase and Sale Agreement to sell 50% of its oil and gas assets to Bloomington, L.L.C., a Delaware limited liability company, for a $25,000 purchase price, and (ii) a Purchase and Sale Agreement to sell the remaining 50% of its oil and gas assets
·
On July 8, 2022, Petrodome Pineville, LLC, the wholly owned Mississippi subsidiary of Petrodome, entered into (i) a Purchase and Sale Agreement to sell 50% of its oil and gas assets to Bay Springs North, L.L.C., a Delaware limited liability company, for a $1,657,500 purchase price, and (ii) a Purchase and Sale Agreement to sell the remaining 50% of its oil and gas assets to WPP Petro, L.L.C., a Delaware limited liability company, for a $1,657,500 purchase price.
·
On July 8, 2022, Petrodome Louisiana Pipeline, LLC, the wholly owned Louisiana subsidiary of Petrodome, entered into (i) a Purchase and Sale Agreement to sell 50% of its oil and gas assets to East Mud Lake, L.L.C., a Delaware limited liability company, for a $75,000 purchase price, and (ii) a Purchase and Sale Agreement to sell the remaining 50% of its oil and gas assets to WPP Petro, L.L.C., a Delaware limited liability company, for a $75,000 purchase price.
The unaudited pro forma condensed consolidated balance sheet as of June 30, 2022 and statements of operations for the six months ended June 30, 2022 and the year ended December 31, 2021 give pro forma effect to the elimination of certain assets and liabilities associated with the Dispositions as if they occurred on June 30, 2022 (in the case of the balance sheet) or January 1, 2021 (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, 2021.
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.
2
VIKING ENERGY GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS AT JUNE 30, 2022
Historical
June 30,
2022
Pro Forma Adjustments
Pro Forma
June 30,
2022
ASSETS
Current assets:
Cash
$
3,332,399
$
3,332,399
Accounts receivable, net
6,125,290
6,125,290
Inventory
8,146,111
8,146,111
Notes receivable
1,960,000
1,960,000
Prepaids and other current assets
670,957
670,957
Total current assets
20,234,757
20,234,757
Total oil and gas properties, net
14,162,055
(12,791,680
)(a)
1,370,375
Fixed assets, net
1,510,486
1,510,486
Right of use assets, net
5,000,859
5,000,859
ESG Clean Energy license, net
4,732,747
4,732,747
Due from related parties
456,965
456,965
Other intangibles – Simson Maxwell, net
3,790,935
3,790,935
Other intangibles – Variable Interest Entities
15,433,340
15,433,340
Goodwill
252,290
252,290
Deposits and other assets
10,300
10,300
TOTAL ASSETS
$
65,584,734
$
52,793,054
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
3,324,595
$
3,324,595
Accrued expenses and other current liabilities
879,004
879,004
Customer deposits
1,396,347
1,396,347
Due to Camber Energy, Inc.
8,022,300
8,022,300
Undistributed revenues and royalties
3,228,070
3,228,070
Current portion of operating lease liability
1,354,637
1,354,637
Due to related parties
674,604
674,604
Current portion of notes payable – related parties
74,645
74,645
Bank indebtedness – credit facility
3,310,982
3,310,982
Current portion of long-term debt – net of discount
4,549,393
(3,590,000
)(a)
959,393
Total current liabilities
26,814,577
23,224,577
Notes payable – related parties – net of current portion
673,252
673,252
Long term debt - net of current portion and debt discount
2,425,034
2,425,034
Operating lease liability, net of current portion
3,786,750
3,786,750
Contingent obligations
1,435,757
1,435,757
��
Asset retirement obligation
2,193,281
(239,975
)(a)
1,953,306
TOTAL LIABILITIES
37,328,651
33,498,676
Commitments and contingencies
-
STOCKHOLDERS’ EQUITY
Preferred Stock Series C, $0.001 par value, 50,000 shares authorized, 28,092 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
28
28
Preferred Stock Series E, $0.001 par value, 2,075 shares authorized, 475 and 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
5
5
Common stock, $0.001 par value, 500,000,000 shares authorized, 114,780,967 and 111,030,965 shares issued and outstanding as of June 30, 2022, and December 31, 2021, respectively.
114,781
114,781
Additional paid-in capital
126,909,137
126,909,137
Accumulated other comprehensive loss
(112,686
)
(112,686
)
Accumulated deficit
(110,046,514
)
(8,961,705
)(a)
(119,008,219
)
Parent’s Stockholders’ Equity in Viking
16,864,751
7,903,046
Non-controlling interest
11,391,332
11,391,332
TOTAL STOCKHOLDERS’ EQUITY
28,256,083
19,294,378
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
65,584,734
$
52,793,054
3
VIKING ENERGY GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2022
Historical
Six Months Ended June 30,
2022
Pro Forma Adjustments
Pro Forma
Six Months Ended June 30,
2022
Revenue
Oil and gas sales
$
3,548,872
(2,070,975
)(b)
$
1,477,897
Power generation units and parts
3,634,127
3,634,127
Service and repairs
5,322,563
5,322,563
12,505,562
10,434,587
Operating expenses
Cost of goods sold
5,053,599
5,053,599
Lease operating costs
1,186,168
(757,564
)(b)
428,604
General and administrative
8,480,762
8,480,762
Stock based compensation
588,870
588,870
Depreciation, depletion and amortization
1,013,470
(470,513
)(b)
542,957
Accretion - ARO
81,631
(11,076
)(b)
70,555
Total operating expenses
16,404,500
15,165,347
Income (loss) from operations
(3,898,938
)
(4,730,760
)
Other income (expense)
Interest expense
(353,045
)
(353,045
)
Amortization of debt discount
(94,896
)
(94,896
)
Change in fair value of derivatives
-
-
Loss on financing settlements
-
-
Other income
511,855
511,855
Total other income (expense)
63,914
63,914
Net loss before income taxes
(3,835,024
)
(4,666,846
)
Income tax benefit (expense)
-
-
Net loss
(3,835,024
)
(4,666,846
)
Net loss attributable to non-controlling interest
(548,854
)
(548,854
)
Net loss attributable to Viking Energy Group, Inc.
$
(3,286,170
)
$
(4,117,992
)
Earnings (loss) per common share
Basic and Diluted
(0.03
)
(0.04
)
Weighted average number of common shares outstanding
Basic and Diluted
114,364,300
114,364,300
4
VIKING ENERGY GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2021
Historical
Year Ended
December 31,
2021
Pro Forma Adjustments
Pro Forma
Year Ended
December 31,
2021
Revenue
Oil and gas sales
$
33,679,679
(2,767,176
)(b)
$
30,912,503
Power generation units and parts
1,607,077
1,607,077
Service and repairs
2,701,208
2,701,208
37,987,964
35,220,788
Operating expenses
Cost of goods sold
3,003,044
3,003,044
Lease operating costs
15,878,437
(1,414,019
)(b)
14,464,418
General and administrative
8,121,519
8,121,519
Stock based compensation
1,738,145
1,738,145
Depreciation, depletion and amortization
7,307,157
(1,348,660
)(b)
5,958,497
Accretion - ARO
608,691
(25,243
)(b)
583,448
Total operating expenses
36,656,993
33,869,071
Income (loss) from operations
1,330,971
1,351,717
Other income (expense)
Interest expense
(10,053,014
)
(10,053,014
)
Amortization of debt discount
(3,704,049
)
(3,704,049
)
Change in fair value of derivatives
(17,338,784
)
(17,338,784
)
Loss on financing settlements
(4,774,628
)
(4,774,628
)
Equity in earnings of unconsolidated subsidiary
(178,942
)
(178,942
)
Gain on disposal of membership interests
19,457,104
19,457,104
Interest and other income
470,492
470,492
Total other income (expense)
(16,121,821
)
(16,121,821
)
Net loss before income taxes
(14,790,850
)
(14,770,104
)
Income tax benefit (expense)
-
-
Net loss
(14,790,850
)
(14,770,104
)
Net loss attributable to non-controlling interest
305,003
305,003
Net loss attributable to Viking Energy Group, Inc.
$
(14,485,847
)
$
(15,075,107
)
Earnings (loss) per common share
Basic and Diluted
(0.18
)
(0.18
)
Weighted average number of common shares outstanding
Basic and Diluted
82,228,404
82,228,404
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VIKING ENERGY GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Disposition 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, 2022.
a)
Reflects the elimination of assets and liabilities and resulting loss on disposition of assets sold.
Disposition Adjustments to the Unaudited Pro Forma Condensed Consolidated Statement 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, 2022, and for the year ended December 31, 2021.
b)
Represents the elimination of oil and gas production revenues and expenses for the assets sold.
6
VIKING ENERGY GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED PRO FORMA EFFECT OF THE DISPOSITION OF OIL AND GAS ASSETS
Reserve Category
Historical
December 31,
2021
Pro Forma
Dispositions
Pro Forma
December 31,
2021
Proved Reserves
Developed, Producing
1,164,578
(1,034,526
)
130,052
Developed, Non Producing
414,418
(350,963
)
63,455
Total Proved Reserves
1,578,996
(1,385,489
)
193,507
Estimated Future Net Cash Flows
$
26,837,237
$
(22,638,200
)
$
4,199,037
10% annual discount for estimated timing of cash flows
(11,822,285
)
10,427,800
(1,394,485
)
Discounted Future Net Cash Flows
$
15,014,952
$
(12,210,400
)
$
2,804,552
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