Exhibit 99.1
Magnum Hunter Resources Corporation
Unaudited Pro Forma Consolidated Balance Sheet
The unaudited pro forma consolidated balance sheet gives effect to the following transactions (collectively referred to as the “transactions”):
| |
| 1) | The sale by Williston Hunter Canada, Inc., a subsidiary of Magnum Hunter Resources Corporation (the “Company”), of certain oil and natural gas properties and assets located in Alberta, Canada (“Williston Hunter Canada Properties”) for cash consideration of CAD $9.5 million (approximately U.S. $8.6 million at the exchange rate as of the close of business on March 31, 2014), before customary purchase price adjustments, which closed on April 10, 2014; and |
| |
| 2) | The sale by the Company of 100% of its ownership interest in the Company's Canadian subsidiary, Williston Hunter Canada, Inc., whose assets consisted primarily of oil and natural gas properties located in the Tableland Field in Saskatchewan, Canada, for a purchase price of CAD $75.0 million (approximately U.S. $67.8 million at the exchange rate as of the close of business on March 31, 2014), subject to customary purchase price adjustments. The transaction closed on May 12, 2014. |
The unaudited pro forma balance sheet as of March 31, 2014 is based on the Company’s unaudited consolidated balance sheet as of March 31, 2014, included in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2014, and gives effect to the transactions described above as if they occurred on March 31, 2014.
Because all of the operations of Williston Hunter Canada, Inc. were presented as discontinued operations in the Company’s historical financial statements for the three months ended March 31, 2014 and twelve months ended December 31, 2013, there were no pro forma adjustments to continuing operations. Therefore no pro forma statement of operations is presented.
The unaudited pro forma consolidated balance sheet as of March 31, 2014 presented herein has been included as required by the rules of the Securities and Exchange Commission and is provided for informational purposes only. The unaudited pro forma consolidated balance sheet should be read in conjunction with the Company’s historical consolidated financial statements and related notes for the three months ended March 31, 2014 and the year ended December 31, 2013.
The unaudited pro forma consolidated balance sheet presented herein is based upon assumptions and includes adjustments as explained in the notes to the unaudited pro forma consolidated balance sheet, and the actual recording of the transactions could differ. The unaudited pro forma consolidated balance sheet presented herein is not necessarily indicative of the financial position that would have occurred had the transactions described above occurred on the date indicated and should not be viewed as indicative of financial position in the future. However, management believes that the assumptions used provide a reasonable basis for presenting the significant effects of the transactions discussed above and that the pro forma adjustments give appropriate effect to those assumptions.
MAGNUM HUNTER RESOURCES CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 2014
(in thousands)
|
| | | | | | | | | | | | | | | | |
| | | Historical | | Williston Hunter Canada Properties | | Williston Hunter Canada, Inc. Transaction | | Pro Forma |
| ASSETS | | | | | | | | |
| Current assets: | | | | | | | | |
| Cash and cash equivalents | | $ | 64,452 |
| | $ | 8,587 |
| A | $ | 67,792 |
| D | $ | 140,831 |
|
| Restricted cash | | 5,000 |
| | — |
| | — |
| | 5,000 |
|
| Accounts receivable: | | | | | | | | |
| Oil and natural gas sales | | 28,698 |
| | — |
| | — |
| | 28,698 |
|
| Joint interest and other, net of allowance for doubtful accounts | | 34,010 |
| | — |
| | — |
| | 34,010 |
|
| Derivative assets | | 35 |
| | — |
| | — |
| | 35 |
|
| Inventory | | 4,052 |
| | — |
| | — |
| | 4,052 |
|
| Investments | | 11,436 |
| | — |
| | — |
| | 11,436 |
|
| Prepaid expenses and other assets | | 3,471 |
| | — |
| | — |
| | 3,471 |
|
| Assets held for sale | | 5,018 |
| | — |
| | (2,830 | ) | E | 2,188 |
|
| Total current assets | | 156,172 |
| | 8,587 |
| | 64,962 |
| | 229,721 |
|
| | | | | | | | | |
| Property plant and equipment: | | | | | | | | |
| Oil and natural gas properties, successful efforts method of accounting, net | | 1,221,298 |
| | — |
| | — |
| | 1,221,298 |
|
| Gas transportation, gathering, and processing equipment, net | | 317,187 |
| | — |
| | — |
| | 317,187 |
|
| Total property and equipment, net | | 1,538,485 |
| | — |
| | — |
| | 1,538,485 |
|
| | | | | | | | | |
| Other assets: | | | | | | | | |
| Deferred financing costs, net of amortization | | 17,738 |
| | — |
| | — |
| | 17,738 |
|
| Derivative assets, long-term | | 585 |
| | — |
| | — |
| | 585 |
|
| Intangible assets, net | | 6,029 |
| | — |
| | — |
| | 6,029 |
|
| Goodwill | | 30,602 |
| | — |
| | — |
| | 30,602 |
|
| Assets held for sale | | 142,349 |
| | (1,702 | ) | B | (55,087 | ) | E | 85,560 |
|
| Other assets | | 1,893 |
| | — |
| | — |
| | 1,893 |
|
| Total assets | | $ | 1,893,853 |
| | $ | 6,885 |
| | $ | 9,875 |
| | $ | 1,910,613 |
|
The accompanying Notes are an integral part of the Unaudited Pro Forma Consolidated Balance Sheet.
MAGNUM HUNTER RESOURCES CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 2014
(in thousands)
|
| | | | | | | | | | | | | | | | |
| | | Historical | | Williston Hunter Canada Properties | | Williston Hunter Canada, Inc. Transaction | | Pro Forma |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Current portion of notes payable | | $ | 5,372 |
| | $ | — |
| | $ | — |
| | $ | 5,372 |
|
| Accounts payable | | 136,740 |
| | — |
| | — |
| | 136,740 |
|
| Accounts payable to related parties | | 451 |
| | — |
| | — |
| | 451 |
|
| Accrued liabilities | | 68,245 |
| | — |
| | — |
| | 68,245 |
|
| Revenue payable | | 11,317 |
| | — |
| | — |
| | 11,317 |
|
| Derivative liabilities | | 5,276 |
| | — |
| | — |
| | 5,276 |
|
| Liabilities associated with assets held for sale | | 20,159 |
| | (54 | ) | B | (3,846 | ) | E | 16,259 |
|
| Other liabilities | | 2,456 |
| | — |
| | — |
| | 2,456 |
|
| Total current liabilities | | 250,016 |
| | (54 | ) | | (3,846 | ) | | 246,116 |
|
| | | | | | | | | |
| Other liabilities: | | | | | | | | |
| Long-term debt | | 891,534 |
| | — |
| | — |
| | 891,534 |
|
| Asset retirement obligation | | 16,546 |
| | — |
| | — |
| | 16,546 |
|
| Derivative liabilities, long-term | | 72,611 |
| | — |
| | — |
| | 72,611 |
|
| Other long term liabilities | | 2,218 |
| | — |
| | — |
| | 2,218 |
|
| Long-term liabilities associated with assets held for sale | | 12,983 |
| | — |
| | (1,510 | ) | E | 11,473 |
|
| Total liabilities | | 1,245,908 |
| | (54 | ) | | (5,356 | ) | | 1,240,498 |
|
| | | | | | | | | |
| Redeemable preferred stock: | | | | | | | | |
| Series C Cumulative Perpetual Preferred Stock | | 100,000 |
| | — |
| | — |
| | 100,000 |
|
| Series A Convertible Preferred Units of Eureka Hunter Holdings, LLC | | 142,275 |
| | — |
| | — |
| | 142,275 |
|
| | | | | | | | | |
| Shareholders’ equity: | | | | | | | | |
| Preferred Stock, 10,000,000 shares authorized | | | | | | | | |
| Series D Cumulative Perpetual Preferred Stock | | 221,244 |
| | — |
| | — |
| | 221,244 |
|
| Series E Cumulative Convertible Preferred Stock | | 95,069 |
| | — |
| | — |
| | 95,069 |
|
| Common stock | | 1,773 |
| | — |
| | — |
| | 1,773 |
|
| Additional paid in capital | | 767,645 |
| | — |
| | — |
| | 767,645 |
|
| Accumulated deficit | | (662,853 | ) | | 6,939 |
| C | (6,659 | ) | F | (662,573 | ) |
| Accumulated other comprehensive loss | | (22,305 | ) | | — |
| | 21,890 |
| E | (415 | ) |
| Treasury stock, at cost: | | | | | | | | |
| Series E Cumulative Preferred Stock | | (2,030 | ) | | — |
| | — |
| | (2,030 | ) |
| Common stock | | (1,914 | ) | | — |
| | — |
| | (1,914 | ) |
| Total Magnum Hunter Resources Corporation shareholders’ equity | | 396,629 |
| | 6,939 |
| | 15,231 |
| | 418,799 |
|
| Non-controlling interest | | 9,041 |
| | — |
| | — |
| | 9,041 |
|
| Total shareholders’ equity | | 405,670 |
| | 6,939 |
| | 15,231 |
| | 427,840 |
|
| Total liabilities and shareholders’ equity | | $ | 1,893,853 |
| | $ | 6,885 |
| | $ | 9,875 |
| | $ | 1,910,613 |
|
The accompanying Notes are an integral part of the Unaudited Pro Forma Consolidated Balance Sheet.
Magnum Hunter Resources Corporation
Notes to Unaudited Pro Forma Consolidated Balance Sheet
|
| |
| A. | To record the proceeds from the sale of the Williston Hunter Canada Properties of CAD $9.5 million (USD $8.6 million) of cash, before customary closing adjustments. |
| | |
| B | To remove the Williston Hunter Canada Properties and related asset retirement obligation which were sold. |
| | |
| C | To record the gain of approximately $6.9 million in accumulated deficit for the sale of the Williston Hunter Canada Properties as the difference in the consideration received and carrying value of net assets sold. |
| | |
| D | To record the proceeds from the sale by the company of Williston Hunter Canada, Inc. of CAD $75.0 million (USD $67.8 million) of cash, before customary closing adjustments. |
| | |
| E | To remove the assets, liabilities, and accumulated other comprehensive income of Williston Hunter Canada, Inc., upon the sale. |
| | |
| F | To record the loss of approximately $6.7 million in accumulated deficit for the transaction as the difference in the consideration received and carrying value of net assets sold. |
Summary Pro Forma Oil, Gas and Natural Gas Reserves Data (Unaudited)
The table sets forth summary pro forma reserve data at December 31, 2013, which give effect to the transactions.
Estimated Quantities of Oil and Natural Gas Reserves at December 31, 2013
|
| | | | | | | | | | | | |
| | | Historical | | Williston Hunter Canada Properties | | Williston Hunter Canada, Inc. Transaction | | Pro Forma |
| Proved Reserves | | | | | | | | |
| Crude Oil (MBbl) | | 24,336 |
| | (217 | ) | | (2,126 | ) | | 21,993 |
|
| NGL (Mboe) | | 10,422 |
| | - |
| | (12 | ) | | 10,410 |
|
| Gas (MMcf) | | 246,782 |
| | (102 | ) | | (82 | ) | | 246,598 |
|
| Total (MBOE) | | 75,887 |
| | (234 | ) | | (2,152 | ) | | 73,501 |
|
| | | | | | | | | |
| Proved Developed Reserves | | | | | | | | |
| Crude Oil (MBbl) | | 12,085 |
| | (217 | ) | | (1,944 | ) | | 9,924 |
|
| NGL (Mboe) | | 6,989 |
| | - |
| | - |
| | 6,989 |
|
| Gas (MMcf) | | 176,585 |
| | (102 | ) | | - |
| | 176,483 |
|
| Total (MBOE) | | 48,506 |
| | (234 | ) | | (1,945 | ) | | 46,327 |
|
Standardized Measure of Discounted Future Net Cash Flows at December 31, 2013 (in thousands)
|
| | | | | | | | | | | | | | | | |
| | | Historical | | Williston Hunter Canada Properties | | Williston Hunter Canada, Inc. Transaction | | Pro Forma |
| Future cash inflows | | $ | 3,711,260 |
| | $ | (19,453 | ) | | $ | (193,301 | ) | | $ | 3,498,506 |
|
| Future production costs | | (1,423,306 | ) | | 4,475 |
| | 70,664 |
| | (1,348,167 | ) |
| Future development costs | | (421,797 | ) | | — |
| | 6,750 |
| | (415,047 | ) |
| Future income tax expense | | (149,367 | ) | | — |
| | — |
| | (149,367 | ) |
| Future net cash flows | | 1,716,790 |
| | (14,978 | ) | | (115,887 | ) | | 1,585,925 |
|
| 10% annual discount for estimated timing of cash flows | | (872,280 | ) | | 4,741 |
| | 48,805 |
| | (818,734 | ) |
| Standardized measure of discounted future net cash flows | | $ | 844,510 |
| | $ | (10,237 | ) | | $ | (67,082 | ) | | $ | 767,191 |
|
