Exhibit 99.2
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial data reflects Atlas Energy, L.P.’s (NYSE: ATLS; the “Partnership” or “ATLS”) historical results as adjusted on a pro forma basis to give effect to (A) Atlas Resource Partners, L.P.’s (NYSE: ARP; “ARP”) acquisitions of (i) certain oil and gas assets from EP Energy E&P Company, L.P. (“EP Energy”) for $709.6 million in cash (the “EP Energy Acquisition”), and (ii) a 25% non-operated net working interest in oil and natural gas liquids producing assets in the Rangely Field in northwest Colorado from Merit Management Partners I, L.P., Merit Energy Partners III, L.P. and Merit Energy Company, LLC (“Merit Energy”) for $420.0 million in cash (the “Rangely Acquisition”), funded with borrowings under ARP’s revolving credit facility, the issuance of an additional $100.0 million of ARP’s 7.75% senior unsecured notes due on January 15, 2021 (“7.75% ARP Senior Notes”) for net proceeds of approximately $97.3 million, and the issuance of an additional 15.5 million ARP common limited partner units (including approximately 2.0 million units pursuant to an over-allotment option) in a public offering at a price of $19.90 per unit yielding net proceeds of approximately $297.5 million, and (B) (i) Atlas Pipeline Partners, L.P.’s (“APL”) May 7, 2013 acquisition from TEAK Midstream, LLC (“TEAK”) of 100% of the outstanding member and other ownership interests of TEAK for approximately $1.0 billion (the “TEAK Acquisition”). The estimated adjustments to give effect to the acquisitions are described in the notes to the unaudited pro forma financial data.
The unaudited pro forma consolidated statements of operations information for the three months ended March 31, 2014 and the year ended December 31, 2013 assume the following transactions had occurred as of January 1, 2013. In addition, the pro forma consolidated balance sheet as of March 31, 2014 reflects the following transactions as if they had occurred on March 31, 2014:
• | the EP Energy Acquisition for cash consideration of $709.6 million; |
• | the issuance of 6.3 million ARP common limited partner units (including 0.8 million units pursuant to an over-allotment option) in a public offering at a price of $21.18 per unit yielding net proceeds of approximately $190.1 million; |
• | the issuance of an additional $100.0 million of 7.75% ARP Senior Notes for net proceeds of approximately $97.3 million; |
• | the Rangely Acquisition for cash consideration of $420.0 million, which was funded through borrowings under ARP’s revolving credit facility and the related issuance of approximately 15.5 million ARP common limited partner units (including approximately 2.0 million units pursuant to an over-allotment option) in a public offering at a price of $19.90 per unit yielding net proceeds of approximately $297.5 million; and |
• | the TEAK Acquisition for approximately $1.0 billion. |
The unaudited pro forma consolidated balance sheet and the unaudited pro forma consolidated statements of operations were derived by adjusting the Partnership’s historical consolidated financial statements. However, management of the Partnership believes that the adjustments provide a reasonable basis for presenting the significant effects of the transactions described above. The unaudited pro forma financial data presented is for informational purposes only and is based upon available information and assumptions that management of the Partnership believes are reasonable under the circumstances. The allocation of the fair value of the assets
acquired and liabilities assumed is based upon their estimated fair values, which are subject to adjustment and could change significantly as the Partnership continues to evaluate the preliminary allocations related to the Rangely Acquisition. This unaudited pro forma financial information is not necessarily indicative of what the financial position or results of operations of the Partnership would have been had the transactions been consummated on the dates assumed, nor are they necessarily indicative of any future operating results or financial position. The Partnership may have performed differently had the transactions actually occurred on the dates assumed.
Consolidated supplemental oil and gas disclosures as of December 31, 2013, which were presented inclusive of the EP Energy Acquisition, were included with the Partnership’s annual filing on Form 10-K for the year ended December 31, 2013 specifically in Item 8: Financial Statements and Supplementary Data – Footnote 21 “Supplemental Oil and Gas Disclosures (Unaudited)”.
In February 2012, the board of directors of the Partnership’s General Partner (“the Board”) approved the formation of ARP as a newly created exploration and production master limited partnership and the related transfer of substantially all of the Partnership’s exploration and production assets to ARP on March 5, 2012. The Board also approved the distribution of approximately 5.2 million ARP common units to the Partnership’s unitholders, which were distributed on March 13, 2012 using a ratio of 0.1021 ARP limited partner units for each of the Partnership’s common units owned on the record date of February 28, 2012.
ATLAS ENERGY, L.P. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 2014
(in thousands)
(Unaudited)
Acquisition | ||||||||||||||||||||||||
Historical | Rangely | Adjustments | Pro Forma | |||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
CURRENT ASSETS: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 24,779 | $ | — | $ | 420,000 | (b | ) | $ | 153,857 | ||||||||||||||
129,078 | (c | ) | ||||||||||||||||||||||
(420,000 | ) | (e | ) | |||||||||||||||||||||
Accounts receivable | 327,031 | — | — | 327,031 | ||||||||||||||||||||
Current portion of derivative asset | 161 | — | — | 161 | ||||||||||||||||||||
Prepaid expenses and other | 42,213 | 4,041 | (a | ) | — | 46,254 | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total current assets | 394,184 | 4,041 | 129,078 | 527,303 | ||||||||||||||||||||
PROPERTY, PLANT AND EQUIPMENT, NET | 5,024,505 | 417,264 | (a,u | ) | — | 5,441,769 | ||||||||||||||||||
INTANGIBLE ASSETS, NET | 655,679 | — | — | 655,679 | ||||||||||||||||||||
INVESTMENT IN JOINT VENTURE | 269,058 | — | — | 269,058 | ||||||||||||||||||||
GOODWILL, NET | 402,180 | — | — | 402,180 | ||||||||||||||||||||
LONG-TERM DERIVATIVE ASSET | 28,325 | — | — | 28,325 | ||||||||||||||||||||
OTHER ASSETS, NET | 124,305 | — | 8,253 | (d | ) | 134,808 | ||||||||||||||||||
2,250 | (d | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
$ | 6,898,236 | $ | 421,305 | $ | 139,581 | $ | 7,459,122 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
LIABILITIES AND PARTNERS’ CAPITAL/EQUITY | ||||||||||||||||||||||||
CURRENT LIABILITIES: | ||||||||||||||||||||||||
Current portion of long-term debt | $ | 2,794 | $ | — | $ | — | $ | 2,794 | ||||||||||||||||
Accounts payable | 187,899 | — | — | 187,899 | ||||||||||||||||||||
Accrued producer liabilities | 191,066 | — | — | 191,066 | ||||||||||||||||||||
Current portion of derivative liability | 36,929 | — | — | 36,929 | ||||||||||||||||||||
Accrued interest | 21,689 | — | — | 21,689 | ||||||||||||||||||||
Accrued well drilling and completion costs | 72,158 | — | — | 72,158 | ||||||||||||||||||||
Accrued liabilities | 76,475 | — | — | 76,475 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total current liabilities | 589,010 | — | — | 589,010 | ||||||||||||||||||||
LONG-TERM DEBT, LESS CURRENT PORTION | 2,830,337 | — | 97,250 | (b | ) | 2,972,150 | ||||||||||||||||||
25,269 | (b | ) | ||||||||||||||||||||||
19,294 | (d | ) | ||||||||||||||||||||||
DEFERRED INCOME TAXES, NET | 32,892 | — | — | 32,892 | ||||||||||||||||||||
ASSET RETIREMENT OBLIGATIONS | 92,927 | 1,305 | (a | ) | — | 94,232 |
Acquisition | ||||||||||||||||||||||||
Historical | Rangely | Adjustments | Pro Forma | |||||||||||||||||||||
OTHER LONG-TERM LIABILITIES | 12,702 | — | — | 12,702 | ||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||||||||||||
PARTNERS’ CAPITAL/EQUITY: | ||||||||||||||||||||||||
Common limited partners’ interests | 345,045 | — | (2,397 | ) | (d | ) | 342,648 | |||||||||||||||||
Equity | — | 420,000 | (a | ) | (420,000 | ) | (e | ) | — | |||||||||||||||
Accumulated other comprehensive income | 2,140 | — | — | 2,140 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
347,185 | 420,000 | (422,397 | ) | 344,788 | ||||||||||||||||||||
Non-controlling interests | 2,993,183 | — | (6,394 | ) | (d | ) | 3,413,348 | |||||||||||||||||
297,481 | (b | ) | ||||||||||||||||||||||
129,078 | (c | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total partners’ capital/equity | 3,340,368 | 420,000 | (2,232 | ) | 3,758,136 | |||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
$ | 6,898,236 | $ | 421,305 | $ | 139,581 | $ | 7,459,122 | |||||||||||||||||
|
|
|
|
|
|
|
|
ATLAS ENERGY, L.P. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2014
(in thousands)
(Unaudited)
Acquisition | ||||||||||||||||||||
Historical | Rangely | Adjustments | Pro Forma | |||||||||||||||||
REVENUES: | ||||||||||||||||||||
Gas and oil production | $ | 100,825 | $ | 23,105 | $ | — | $ | 123,930 | ||||||||||||
Well construction and completion | 49,377 | — | — | 49,377 | ||||||||||||||||
Gathering and processing | 710,980 | — | — | 710,980 | ||||||||||||||||
Administration and oversight | 1,729 | — | — | 1,729 | ||||||||||||||||
Well services | 5,479 | — | — | 5,479 | ||||||||||||||||
Loss on mark-to-market derivatives | (8,671 | ) | — | — | (8,671 | ) | ||||||||||||||
Other, net | 543 | — | — | 543 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total revenues | 860,262 | 23,105 | — | 883,367 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
COSTS AND EXPENSES: | ||||||||||||||||||||
Gas and oil production | 38,758 | 8,247 | — | 47,005 | ||||||||||||||||
Well construction and completion | 42,936 | — | — | 42,936 | ||||||||||||||||
Gathering and processing | 604,954 | — | — | 604,954 | ||||||||||||||||
Well services | 2,482 | — | — | 2,482 | ||||||||||||||||
General and administrative | 48,402 | — | (2,379 | ) | (f | ) | 46,023 | |||||||||||||
Depreciation, depletion and amortization | 101,278 | — | 4,418 | (g | ) | 105,715 | ||||||||||||||
19 | (h | ) | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total costs and expenses | 838,810 | 8,247 | 2,058 | 849,115 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
OPERATING INCOME (LOSS) | 21,452 | 14,858 | (2,058 | ) | 34,252 | |||||||||||||||
Interest expense | (41,314 | ) | — | 377 | (i | ) | (43,329 | ) | ||||||||||||
(1,953 | ) | (j | ) | |||||||||||||||||
(369 | ) | (k | ) | |||||||||||||||||
(70 | ) | (l | ) | |||||||||||||||||
Loss on asset sales and disposal | (1,603 | ) | — | — | (1,603 | ) | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
NET INCOME (LOSS) BEFORE TAX | (21,465 | ) | 14,858 | (4,073 | ) | (10,680 | ) | |||||||||||||
Income tax benefit | (398 | ) | — | — | (398 | ) | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
NET INCOME (LOSS) | (21,067 | ) | 14,858 | (4,073 | ) | (10,282 | ) | |||||||||||||
(Income) loss attributable to non-controlling interests | 7,142 | — | (7,844 | ) | (m | ) | (702 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON LIMITED PARTNERS | $ | (13,925 | ) | $ | 14,858 | $ | (11,917 | ) | $ | (10,984 | ) | |||||||||
|
|
|
|
|
|
|
|
Acquisition | ||||||||||||||
Historical | Rangely | Adjustments | Pro Forma | |||||||||||
NET LOSS ATTRIBUTABLE TO COMMON LIMITED PARTNERS PER UNIT: |
| |||||||||||||
Basic | $ | (0.27 | ) | $ | (0.21 | ) | ||||||||
|
|
|
| |||||||||||
Diluted | $ | (0.27 | ) | $ | (0.21 | ) | ||||||||
|
|
|
| |||||||||||
WEIGHTED AVERAGE COMMON LIMITED PARTNER UNITS OUTSTANDING: | ||||||||||||||
Basic | 51,491 | 51,491 | ||||||||||||
|
|
|
| |||||||||||
Diluted | 51,491 | 51,491 | ||||||||||||
|
|
|
|
ATLAS ENERGY, L.P. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2013
(in thousands, except per unit data)
(Unaudited)
For the Period from January 1 to July 31, 2013 | For the Period from January 1 to May 7, 2013 | For the Year Ended December 31, 2013 | ||||||||||||||||||||||||||
Historical | EP Energy | TEAK | Rangely | Adjustments | Pro Forma | |||||||||||||||||||||||
REVENUES: | ||||||||||||||||||||||||||||
Gas and oil production | $ | 273,906 | $ | 90,626 | $ | — | $ | 91,575 | $ | — | $ | 456,107 | ||||||||||||||||
Well construction and completion | 167,883 | — | — | — | — | 167,883 | ||||||||||||||||||||||
Gathering and processing | 2,139,694 | — | 36,111 | — | — | 2,175,805 | ||||||||||||||||||||||
Administration and oversight | 12,277 | — | — | — | — | 12,277 | ||||||||||||||||||||||
Well services | 19,492 | — | — | — | — | 19,492 | ||||||||||||||||||||||
Gain on mark-to-market derivatives | (28,764 | ) | — | — | — | — | (28,764 | ) | ||||||||||||||||||||
Other, net | (6,973 | ) | — | (2,729 | ) | — | — | (9,702 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total revenues | 2,577,515 | 90,626 | 33,382 | 91,575 | — | 2,793,098 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
COSTS AND EXPENSES: | ||||||||||||||||||||||||||||
Gas and oil production | 100,178 | 41,630 | — | 32,069 | — | 173,877 | ||||||||||||||||||||||
Well construction and completion | 145,985 | — | — | — | — | 145,985 | ||||||||||||||||||||||
Gathering and processing | 1,802,618 | — | 30,694 | — | — | 1,833,312 | ||||||||||||||||||||||
Well services | 9,515 | — | — | — | — | 9,515 | ||||||||||||||||||||||
General and administrative | 197,976 | — | 1,575 | — | (24,735 | ) | (f | ) | 155,530 | |||||||||||||||||||
(19,286 | ) | (n | ) | |||||||||||||||||||||||||
Depreciation, depletion and amortization | 308,533 | 17,742 | 5,954 | — | 17,381 | (g | ) | 357,639 | ||||||||||||||||||||
76 | (h | ) | ||||||||||||||||||||||||||
7,953 | (o | ) | ||||||||||||||||||||||||||
Asset impairment | 81,880 | — | — | — | — | 81,880 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total costs and expenses | 2,646,685 | 59,372 | 38,223 | 32,069 | (18,611 | ) | 2,757,738 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
OPERATING INCOME (LOSS) | (69,170 | ) | 31,254 | (4,841 | ) | 59,506 | 18,611 | 35,360 | ||||||||||||||||||||
Interest expense | (132,581 | ) | — | (2,176 | ) | — | (1,391 | ) | (i | ) | (150,558 | ) | ||||||||||||||||
(1,303 | ) | (p | ) | |||||||||||||||||||||||||
(7,813 | ) | (j | ) | |||||||||||||||||||||||||
(1,476 | ) | (k | ) |
For the Period from January 1 to July 31, 2013 | For the Period from January 1 to May 7, 2013 | For the Year Ended December 31, 2013 | ||||||||||||||||||||||||||
Historical | EP Energy | TEAK | Rangely | Adjustments | Pro Forma | |||||||||||||||||||||||
(280 | ) | (l | ) | |||||||||||||||||||||||||
2,176 | (q | ) | ||||||||||||||||||||||||||
(5,340 | ) | (r | ) | |||||||||||||||||||||||||
(374 | ) | (s | ) | |||||||||||||||||||||||||
Income (loss) on asset sales and disposal | (2,506 | ) | — | 269 | — | — | (2,237 | ) | ||||||||||||||||||||
Loss on early extinguishment of debt | (26,601 | ) | — | — | — | — | (26,601 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
NET INCOME (LOSS) BEFORE TAX | (230,858 | ) | 31,254 | (6,748 | ) | 59,506 | 2,810 | (144,036 | ) | |||||||||||||||||||
Income tax benefit | (2,260 | ) | — | — | — | — | (2,260 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
NET INCOME (LOSS) | (228,598 | ) | 31,254 | (6,748 | ) | 59,506 | 2,810 | (141,776 | ) | |||||||||||||||||||
(Income) loss attributable to non-controlling interests | 153,231 | — | — | — | (4,136 | ) | (t | ) | 90,123 | |||||||||||||||||||
(58,972 | ) | (m | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON LIMITED PARTNERS | (75,367 | ) | 31,254 | (6,748 | ) | 59,506 | (60,298 | ) | (51,653 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
NET LOSS ATTRIBUTABLE TO COMMON LIMITED PARTNERS PER UNIT: | ||||||||||||||||||||||||||||
Basic | $ | (1.47 | ) | $ | (1.01 | ) | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Diluted | $ | (1.47 | ) | $ | (1.01 | ) | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
WEIGHTED AVERAGE COMMON LIMITED PARTNER UNITS OUTSTANDING: | ||||||||||||||||||||||||||||
Basic | 51,387 | 51,387 | ||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Diluted | 51,387 | 51,387 | ||||||||||||||||||||||||||
|
|
|
|
ATLAS ENERGY, L.P. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(a) | To reflect the preliminary purchase price allocation of the Rangely Acquisition. Due to the recent date of the Rangely Acquisition, the purchase price allocation for the assets acquired and liabilities assumed is based upon estimated fair values, which are subject to adjustment and could change significantly as ARP continues to evaluate this preliminary allocation. |
(b) | To reflect (i) $97.3 million of net proceeds from the public offering of ARP’s additional $100.0 million 7.75% Senior Notes in a private placement transaction; (ii) borrowings of $25.3 million under ARP’s revolving credit facility; and (iii) net proceeds of $297.5 million from ARP’s issuance of an additional 15.5 million common limited partner units (including approximately 2.0 million units pursuant to an over-allotment option) in a public offering at a price of $19.90 per unit. |
(c) | To reflect the issuance of 6.3 million ARP common limited partner units (including 0.8 million units pursuant to an over-allotment option) in a public offering at a price of $21.18 per unit yielding net proceeds of $129.1 million in March 2014. |
(d) | To reflect the partial application of borrowings under ARP’s revolving credit facility for (i) the payment of $8.3 million of ARP revolving credit facility fees, which will be amortized over the remaining term of the respective debt instrument; (ii) the payment of $2.3 million of deferred financing costs related to the issuance of ARP’s additional $100.0 million 7.75% Senior Notes, which will be amortized over the remaining term of the respective debt instrument; and (iii) the payment of costs of $8.8 million related to the acquisitions, which are expensed as incurred and are allocated between common limited partners’ interests and non-controlling interests. |
(e) | To reflect the consummation of the Rangely Acquisition through the transfer of cash consideration of $420.0 million. |
(f) | To reflect the adjustment to general and administrative expense to exclude ARP’s acquisition-related costs incurred related to the acquisitions consummated per the pro forma financial statements. |
(g) | To reflect incremental depreciation, depletion amortization expense related to the acquisition of oil and gas assets in the Rangely Acquisition. |
(h) | To reflect incremental accretion expense related to $1.3 million of asset retirement obligations on oil and natural gas properties acquired. |
(i) | To reflect the adjustment to interest expense related to the borrowings under ARP’s revolving credit facility to partially fund the acquisition of assets in the Rangely Acquisition based on the interest rate of 2.2%. |
(j) | To reflect the adjustment to interest expense from ARP’s additional $100.0 million issuance of 7.75% Senior Notes and the amortization of the debt discount associated with the 7.75% Senior Notes. |
(k) | To reflect the amortization of deferred financing costs incurred as a result of the Rangely Acquisition related to ARP’s revolving credit facility over the remainder of the facility’s term. |
(l) | To reflect the amortization of deferred financing costs related to ARP’s additional $100.0 million issuance of 7.75% Senior Notes. |
(m) | To reflect the adjustment of non-controlling interests in the net income (loss) of ARP as a result of the pro forma statement of operations adjustments previously noted. The allocation of ARP net income (loss) to non-controlling interests is based upon the general partner’s and limited partners’ relative ownership interests, as well as required minimum distributions to preferred limited partners. |
(n) | To reflect the adjustment to general and administrative expense to exclude APL’s acquisition-related costs incurred related to the TEAK Acquisition consummated per the pro forma financial statements. |
(o) | To reflect incremental depreciation and amortization expense related to the fair value assessment of the assets acquired in the TEAK Acquisition, including the basis difference in the fair value of equity method investments acquired. |
(p) | To reflect the adjustment to interest expense on ARP’s 7.75% Senior Notes issued on January 23, 2013. |
(q) | To reflect the adjustment to interest expense for TEAK’s repayment of debt from the net proceeds received on the sale of assets. |
(r) | To reflect the adjustment to interest expense to partially finance the TEAK Acquisition with the issuance of $400.0 million of APL’s 4.75% Senior Notes offset by the reduction in borrowings of $154.5 million on APL’s revolving credit facility at an interest rate of 2.5% with funds from APL’s 4.75% Senior Notes. |
(s) | To reflect the amortization of deferred financing costs incurred related to (i) the issuance of APL’s 4.75% Senior Notes; and (ii) the amendment to APL’s revolving credit facility to provide for (a) the TEAK Acquisition to be a permitted investment; (b) for the joint ventures owned by TEAK to not be required to be guarantors nor provide security interests in their assets; and (c) for the revision of the calculation of the compliance calculations. |
(t) | To reflect the adjustment of non-controlling interests in the net income (loss) of APL as a result of the pro forma statement of operations adjustments previously noted. The allocation of APL net income (loss) to non-controlling interests is based upon the general partner’s and limited partners’ relative ownership interests in APL. |
(u) | The following tables set forth certain unaudited pro forma information concerning ARP’s proved oil, natural gas and natural gas liquids reserves for the year ended December 31, 2013, giving effect to the Rangely Acquisition as if it had occurred on January 1, 2013. There are numerous uncertainties inherent in estimating the quantities of proved reserves and projecting future rates of production and timing of development costs. The following reserve data represent estimates only and should not be construed as being precise. |
Proved Gas and Oil Reserve Quantities
ARP’s pro forma net proved gas and oil reserves and changes in net proved gas and oil reserves attributable to the Rangely Acquisition are summarized below:
Historical | Rangely | Pro Forma | ||||||||||
| Natural Gas (Mcf) |
| ||||||||||
Balance, January 1, 2013 | 573,774,257 | — | 573,774,257 | |||||||||
Extensions, discoveries and other additions | 90,098,219 | — | 90,098,219 | |||||||||
Sales of reserves in-place | (2,755,155 | ) | — | (2,755,155 | ) | |||||||
Purchase of reserves in-place | 452,683,902 | — | 452,683,902 | |||||||||
Transfers to limited partnerships | (2,485,210 | ) | — | (2,485,210 | ) | |||||||
Revisions(5) | (88,488,497 | ) | — | (88,488,497 | ) | |||||||
Production | (57,993,487 | ) | — | (57,993,487 | ) | |||||||
|
|
|
|
|
| |||||||
Balance, December 31, 2013 | 964,834,029 | — | 964,834,029 | |||||||||
Proved developed reserves at: | ||||||||||||
January 1, 2013 | 338,655,324 | — | 338,655,324 | |||||||||
December 31, 2013 | 727,926,951 | — | 727,926,951 | |||||||||
Proved undeveloped reserves at: | ||||||||||||
January 1, 2013 | 235,118,932 | — | 235,118,932 | |||||||||
December 31, 2013 | 236,907,078 | — | 236,907,078 |
Historical | Rangely | Pro Forma | ||||||||||
| Oil (Bbl) |
| ||||||||||
Balance, January 1, 2013 | 8,868,836 | 19,831,680 | 28,700,516 | |||||||||
Extensions, discoveries and other additions | 8,255,531 | — | 8,255,531 | |||||||||
Sales of reserves in-place | — | — | — | |||||||||
Purchase of reserves in-place | 1,598 | — | 1,598 | |||||||||
Transfers to limited partnerships | (239,910 | ) | — | (239,910 | ) | |||||||
Revisions | (1,412,359 | ) | 25,584 | (1,386,775 | ) | |||||||
Production | (485,226 | ) | (930,748 | ) | (1,415,974 | ) | ||||||
|
|
|
|
|
| |||||||
Balance, December 31, 2013 | 14,988,470 | 18,926,516 | 33,914,986 | |||||||||
Proved developed reserves at: | ||||||||||||
January 1, 2013 | 3,400,447 | 18,164,413 | 21,564,860 | |||||||||
December 31, 2013 | 3,458,907 | 17,480,779 | 20,939,686 | |||||||||
Proved undeveloped reserves at: | ||||||||||||
January 1, 2013 | 5,468,389 | 1,667,267 | 7,135,656 | |||||||||
December 31, 2013 | 11,529,563 | 1,445,737 | 12,975,300 |
Historical | Rangely Acquisition | Pro Forma | ||||||||||
| Natural Gas Liquids (Bbl) |
| ||||||||||
Balance, December 31, 2013 | 16,061,897 | 1,352,990 | 17,414,887 | |||||||||
Extensions, discoveries and other additions | 8,197,272 | — | 8,197,272 | |||||||||
Sales of reserves in-place | (4,625 | ) | — | (4,625 | ) | |||||||
Purchase of reserves in-place | 55,187 | — | 55,187 | |||||||||
Transfers to limited partnerships | (258,381 | ) | — | (258,381 | ) | |||||||
Revisions(5) | (3,826,744 | ) | 30,524 | (3,796,220 | ) | |||||||
Production | (1,267,590 | ) | (101,642 | ) | (1,369,232 | ) | ||||||
|
|
|
|
|
| |||||||
Balance, December 31, 2013 | 18,957,016 | 1,281,872 | 20,238,888 | |||||||||
Proved developed reserves at: | ||||||||||||
January 1, 2013 | 7,884,778 | 1,352,990 | 9,237,768 | |||||||||
December 31, 2013 | 7,676,389 | 1,281,872 | 8,958,261 | |||||||||
Proved undeveloped reserves at: | ||||||||||||
January 1, 2013 | 8,177,120 | — | 8,177,120 | |||||||||
December 31, 2013 | 11,280,627 | — | 11,280,627 |
Standardized Measure
ARP’s pro forma standardized measure of discounted future net cash flows before income taxes related to the proved gas and oil reserves of the Rangely Acquisition is as follows (in thousands):
For the Year Ended December 31, 2013 | ||||||||||||
Historical | Rangely Acquisition | Pro Forma | ||||||||||
Future cash inflows | $ | 5,145,835 | $ | 1,798,238 | $ | 6,944,073 | ||||||
Future production costs | (2,347,592 | ) | (784,622 | ) | (3,132,214 | ) | ||||||
Future development costs | (746,725 | ) | (83,848 | ) | (830,573 | ) | ||||||
|
|
|
|
|
| |||||||
Future net cash flows | 2,051,518 | 929,768 | 2,981,286 | |||||||||
Less 10% annual discount for estimated timing of cash flows | (1,012,326 | ) | (558,029 | ) | (1,570,355 | ) | ||||||
|
|
|
|
|
| |||||||
Standardized measure of discounted future net cash flows | $ | 1,039,192 | $ | 371,739 | $ | 1,410,931 | ||||||
|
|
|
|
|
|
FASB requirements for gas and oil reserve estimation and disclosure require that reserve estimates and future cash flows be based on the average market prices for sales of gas and oil on the first calendar day of each month during the year. The average prices used for 2013 under these rules were $3.67 per Mcf of natural gas and $96.78 per barrel of oil.
Changes in Standardized Measure
ARP Pro forma changes in the standardized measure of discounted future net cash flows before income taxes related to the proved gas and oil reserves of the Rangely Acquisition are as follows:
Year Ended December 31, 2013 | ||||||||||||
Historical | Rangely Acquisition | Pro Forma | ||||||||||
Balance, beginning of year | $ | 623,676 | $ | 372,338 | $ | 996,014 | ||||||
Increase (decrease) in discounted future net cash flows: | ||||||||||||
Sales and transfers of oil and gas, net of related costs | (167,581 | ) | (59,506 | ) | (227,087 | ) | ||||||
Net changes in prices and production costs | 85,191 | (803 | ) | 84,388 | ||||||||
Revisions of previous quantity estimates | (1,881 | ) | 1,125 | (756 | ) | |||||||
Development costs incurred | 27,245 | 17,306 | 44,551 | |||||||||
Changes in future development costs | (21,579 | ) | (6,500 | ) | (28,079 | ) | ||||||
Transfers to limited partnerships | (53,392 | ) | — | (53,392 | ) | |||||||
Extensions, discoveries, and improved recovery less related costs | 143,338 | — | 143,338 | |||||||||
Purchases of reserves in-place | 473,058 | — | 473,058 | |||||||||
Sales of reserves in-place | (2,053 | ) | — | (2,053 | ) | |||||||
Accretion of discount | 62,368 | 37,234 | 99,602 | |||||||||
Estimated settlement of asset retirement obligations | (18,858 | ) | — | (18,858 | ) | |||||||
Estimated proceeds on disposals of well equipment | 17,052 | — | 17,052 | |||||||||
Changes in production rates (timing) and other | (127,392 | ) | 10,545 | (116,847 | ) | |||||||
|
|
|
|
|
| |||||||
Outstanding, end of year | $ | 1,039,192 | $ | 371,739 | $ | 1,410,931 | ||||||
|
|
|
|
|
|