RSP Permian (RSPP) 8-K/A Silver Hill Energy Partners Holdings, LLC

Exhibit 99.3

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

RSP Permian, Inc.

Pro Forma Combined Balance Sheet as of September 30, 2016

(in thousands)

	Historical RSPP			SHEP I Seller			SHEP II			Pro Forma Adjustments			Total
ASSETS
Current Assets:
Cash and cash equivalents	$	22,376		$	2,552		$	2,104		$	72,177	(a)(b)(d)	$	99,209
Accounts receivable:
Oil and natural gas sales		36,325			6,034			9,740			(15,774	) (b)		36,325
Joint interest owners and other		12,180			—			—			—			12,180
Derivatives – settled, but uncollected		8,965			—			—			—			8,965
Short-term derivative instruments		4,879			—			—			—			4,879
Prepaid expenses and other current assets		35			192			62			(254	) (b)		35
Total Current Assets		84,760			8,778			11,906			56,149			161,593
Property, plant & equipment, at cost:
Oil and natural gas properties, successful efforts method		3,341,592			227,591			376,868			1,891,599	(b)		5,837,650
Accumulated depreciation, depletion and impairment		(501,930	)		(48,503	)		(12,639	)		61,142	(b)(c)		(501,930	)
Oil and natural gas properties, net		2,839,662			179,088			364,229			1,952,741			5,335,720
Other property and equipment		38,308			—			—			—			38,308
Total Property, plant & equipment, at cost		2,877,970			179,088			364,229			1,952,741			5,374,028
Restricted cash		152			—			—			—			152
Other long-term assets		11,938			210			—			(210	) (b)		11,938
Debt issuance costs		—			412			617			(1,029	) (b)		—
Investment in Midstream Joint Venture		—			65,225			—			(65,225	) (b)		—
Total Assets	$	2,974,820			253,713			376,752			1,942,426		$	5,547,711
LIABILITIES AND STOCKHOLDERS’ EQUITY/MEMBERS’ CAPITAL
Current Liabilities:
Accounts payable	$	7,687			15,719			22,905			(35,001	) (b)		11,310
Accrued expenses		33,737			60			128			(188	) (b)		33,737
Interest payable		23,722			—			—			—			23,722
Deferred taxes		—			190			—			(190	) (b)		—
Short-term derivative instruments		7,309			569			3,459			(4,028	) (b)		7,309
Total Current Liabilities		72,455			16,538			26,492			(39,407	)		76,078
Long-term debt		722,724			52,000			81,000			217,000	(a)(b)		1,072,724
Other long-term liabilities		11,455			1,422			1,425			—			14,302
Long-term derivative instruments		—			255			3,836			(4,091	) (b)		—
Deferred tax liabilities		328,000			—			—			—			328,000
Total Liabilities		1,134,634			70,215			112,753			173,502			1,491,104
Members’ capital		—			183,498			263,999			(447,497	) (b)		—
Common stock		1,016			—			—			563	(a)(b)		1,579
Additional paid-in capital		1,881,160			—			—			2,216,270	(a)(b)		4,097,430
Retained deficit		(41,990	)		—			—			(412	) (a)(b)		(42,202	)
Total Equity		1,840,186			183,498			263,999			1,768,924			4,056,607
Total Liabilities & Equity	$	2,974,820			253,713			376,752			1,942,426		$	5,547,711

RSP Permian, Inc.

Pro Forma Combined Statement of Operations for the Nine Months Ended September 30, 2016

(in thousands, except per share amounts)

	Historical RSPP			SHEP I Seller			SHEP II from January 12, 2016 to September 30, 2016			Concho Properties Working Interest from Jan 1, 2016 to February 25, 2016		Pro Forma Adjustments			Total
REVENUES
Oil sales	$	211,212		$	—		$	—		$	3,862	$	64,617	(f)	$	279,691
Natural gas sales		8,841			—			—			186		5,117	(f)		14,144
NGL sales		10,869			—			—			—		118	(f)		10,987
Crude oil, natural gas, and natural gas liquids		—			37,872			31,980			—		(69,852	) (f)		—
Unrealized gain (loss) on derivatives		—			(3,343	)		(7,296	)		—		10,639	(f)		—
Realized gain (loss) on derivatives		—			896			(972	)		—		76	(f)		—
Total revenues	$	230,922		$	35,425		$	23,712		$	4,048	$	10,715		$	304,822
OPERATING EXPENSES
Lease operating expenses		41,359			11,932			11,404			1,993		(203	) (f)		66,485
Production and ad valorem taxes		14,985			1,626			1,377			—		203	(f)		18,191
Depreciation, depletion, and amortization		141,877			10,728			12,483			—		2,452	(c)		167,540
Asset retirement obligation accretion		354			—			—			—		—			354
Impairments		4,322			2,398			155			—		—			6,875
Exploration		828			1,817			—			—		—			2,645
General and administrative expenses		25,997			1,535			2,187			—		—			29,719
Total operating costs and expenses	$	229,722		$	30,036		$	27,606		$	1,993	$	2,452		$	291,809
Operating income (loss)		1,200			5,389			(3,894	)		2,055		8,263			13,013
OTHER INCOME (EXPENSE)
Other income		587			—			—			—		—	(f)		587
Loss on derivative instruments		(6,222	)		—			—			—		(10,715	) (f)		(16,937	)
Interest expense		(39,041	)		(903	)		(1,107	)		—		(13,781	) (d)		(54,832	)
Total other expense	$	(44,676	)	$	(903	)	$	(1,107	)	$	—	$	(24,496	)	$	(71,182	)
INCOME (LOSS) BEFORE TAXES		(43,476	)		4,486			(5,001	)		2,055		(16,233	)		(58,169	)
Income and Franchise Tax Expense		17,242			—			—			—		5,209	(e)		22,451
Equity Gain in Midstream Joint Venture		—			814			—			—		(814	) (g)		—
NET INCOME (LOSS)	$	(26,234	)	$	5,300		$	(5,001	)	$	2,055	$	(11,838	)	$	(35,718	)
Per share amounts
Basic: Net Loss	$	(0.26	)											(h)	$	(0.23	)
Diluted: Net Loss	$	(0.26	)											(h)	$	(0.23	)
Weighted Average Shares Outstanding
Basic		100,161														156,461
Diluted		100,161														156,461

RSP Permian, Inc.

Pro Forma Combined Statements of Operations for the Year Ended December 31, 2015

(in thousands, except per share amounts)

	Historical RSPP			SHEP I			Concho Properties Working Interest		Pro Forma Adjustments			Total
REVENUES
Oil sales	$	263,286		$	—		$	23,713	$	14,194	(f)	$	301,193
Natural gas sales		10,517			—			1,061		868	(f)		12,446
NGL sales		10,189			—			—		14	(f)		10,203
Crude oil, natural gas, and natural gas liquids		—			15,381			—		(15,381	) (f)		—
Unrealized gain on derivatives		—			2,519			—		(2,519	) (f)		—
Realized gain on derivatives		—			394			—		(394	) (f)		—
Total revenues	$	283,992		$	18,294		$	24,774	$	(3,218	)	$	323,842
OPERATING EXPENSES
Lease operating expenses		53,124			5,306			9,438		(1,256	) (f)		66,612
Production and ad valorem taxes		19,995			664			—		1,256	(f)		21,915
Depreciation, depletion, and amortization		154,039			8,835			—		31,574	(c)		194,448
Asset retirement obligation accretion		336			—			—		—			336
Impairments		34,269			8,074			—		—			42,343
Exploration		2,380			—			—		—			2,380
General and administrative expenses		27,317			4,368			—		—			31,685
Total operating costs and expenses	$	291,460		$	27,247		$	9,438	$	31,574		$	359,719
Gain on sale of assets		306			—			—		—			306
Operating income (loss)		(7,774	)		(8,953	)		15,336		(34,792	)		(36,183	)
OTHER INCOME (EXPENSE)
Other income		469			—			—		(107	) (f)		362
Gain (Loss) on derivative instruments		20,906			—			—		2,913	(f)		23,819
Interest expense		(43,538	)		(278	)		—		(18,375	) (d)		(62,191	)
Total other income (expense)	$	(22,163	)	$	(278	)	$	—	$	(15,569	)	$	(38,010	)
INCOME (LOSS) BEFORE TAXES		(29,937	)		(9,231	)		15,336		(50,361	)		(74,193	)
Income and Franchise Tax Expense		11,683			(199	)		—		15,899	(e)		27,383
Equity Losses in Midstream Joint Venture		—			(474	)		—		474	(g)		—
NET INCOME (LOSS)	$	(18,254	)	$	(9,904	)	$	15,336	$	(33,988	)	$	(46,810	)
Per share amounts
Basic: Net Loss	$	(0.21	)								(h)	$	(0.33	)
Diluted: Net Loss	$	(0.21	)								(h)	$	(0.33	)
Weighted Average Shares Outstanding
Basic		86,770											143,070
Diluted		86,770											143,070

RSP Permian, Inc.

Unaudited Pro Forma Combined Financial Statements

Introduction

The Company is a Delaware corporation formed as a successor to RSP LLC in September 2013 to engage in the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas. The following unaudited pro forma combined financial statements of the Company reflect the combined historical results of RSP LLC, SHEP I and SHEP II, on a pro forma basis to give effect to the following transactions, which are described in further detail below, as if they had occurred on September 30, 2016 for pro forma balance sheet purposes, and on January 1, 2015 for pro forma statements of operations purposes:

The Silver Hill Energy Partners Acquisition. On October 13, 2016, RSP agreed to acquire all of the outstanding membership interests of SHEP I and SHEP II (collectively, “Silver Hill”). Silver Hill is engaged in the acquisition and development of working and leasehold interests in oil and natural gas properties located in the Permian Basin.

The Equity Offering. For purposes of the unaudited pro forma combined financial statements, the “Equity Offering” is defined as the issuance and sale to the public of 25.3 million shares of RSPP common stock in October 2016, resulting in $977 million of proceeds, net of underwriting discounts, commissions and offering-related expenses.

The unaudited pro forma combined statements of operations of the Company for the year ended December 31, 2015 are based on the audited historical statements of operations of the Company for the year ended December 31, 2015, adjusted to give effect to the SHEP acquisitions and the aforementioned Equity Offering as if they occurred on January 1, 2015.

The unaudited pro forma combined statements of operations of the Company for the nine months ended September 30, 2016 are based on the unaudited historical statements of operations of the Company for the nine months ended September 30, 2016, adjusted to give effect to the SHEP Acquisitions and the aforementioned Equity Offering as if they occurred on January 1, 2015. The unaudited pro forma combined consolidated balance sheet of the Company as of September 30, 2106 is based on the unaudited historical consolidated balance sheet of the Company as of September 30, 2016, adjusted to give effect to the SHEP Acquisitions and the aforementioned Equity Offering as if they occurred on September 30, 2016.

The pro forma data presented reflect events directly attributable to the described transactions and certain assumptions that the Company believes are reasonable. The pro forma data are not necessarily indicative of financial results that would have been attained had the described transactions occurred on the dates indicated above because they necessarily exclude various operating expenses, such as incremental general and administrative expenses that may be necessary to run the combined companies. The adjustments are based on currently available information and certain estimates and assumptions. Management believes that the assumptions provide a reasonable basis for presenting the significant effects of the transactions as contemplated and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma financial statements.

The unaudited pro forma financial statements and related notes are presented for illustrative purposes only. If the Equity Offering and the SHEP Acquisitions had occurred in the past, the Company’s operating results might have been materially different from those presented in the unaudited pro forma financial statements. The unaudited pro forma combined financial statements should not be relied upon as an indication of operating results that the Company would have achieved if the transactions contemplated herein had taken place on the specified date. In addition, future results may vary significantly from the results reflected in the unaudited pro forma financial statements of operations and should not be relied on as an indication of the future results the Company will have after the completion of the transactions noted in these unaudited pro forma combined financial statements.

The following notes discuss the columns presented and the entries made to the unaudited combined financial statements.

Historical RSPP. This column represents the unaudited historical statements of operations and consolidated balance sheet for the Company for the applicable period.

SHEP I. This column represents the unaudited historical statements of operations for SHEP I for the applicable period.

SHEP I Seller. This column represents the unaudited historical statements of operations and consolidated balance sheet for the SHEP I Seller for the applicable period. The SHEP I Seller has no material assets, liabilities or operations other than those that arise from its ownership of SHEP I.

SHEP II. This column represents the unaudited historical statements of operations and consolidated balance sheet for SHEP II for the applicable period.

Concho Properties Working Interest. This column represents the unaudited historical statement of operations for an acquiree of SHEP II. These assets were comprised solely of working interests in producing oil and gas properties.

Note 1—Pro Forma Adjustments

Pro Forma Adjustments. We made the following adjustments in the preparation of the unaudited pro forma statements of operations.

(a) Adjustments to reflect the Equity Offering, additional borrowings under the Company’s credit facility, and related proceeds.

(b) Adjustments to reflect the purchase of SHEP I and SHEP II, elimination of assets owned by SHEP I and SHEP II but retained by the selling shareholders of Silver Hill, and elimination of SHEP I and SHEP II equity balances.

The purchase price of the SHEP Acquisitions is estimated at $2.5 billion and is comprised of the fair value of 31 million shares of RSP common stock issued to the selling shareholders of Silver Hill, with estimated value of $1.24 billion, along with $1.20 billion of cash paid to those same selling shareholders, and liabilities assumed.

(c) Adjustments to historical depreciation, depletion, and amortization of SHEP I and SHEP II for the step up of oil and natural gas properties to estimated fair value. The initial allocation of value was approximately $2.0 billion to unproved property and $0.5 billion to proved property.

(d) Adjustments to reflect the increase in interest expense on approximately $350.0 million of borrowings by RSP LLC to fund the SHEP I and SHEP II acquisitions, using an estimated interest rate of 5.25%.

(e) Reflects the estimated incremental income tax provision associated with the Company’s historical results of operations, the SHEP I and SHEP II results of operations, and pro forma adjustments, assuming these earnings had been subject to federal income tax as a subchapter C corporation using an effective tax rate of approximately 35.5%, which is inclusive of federal and state income taxes.

(f) Adjustments to reclassify certain revenues and expenses of SHEP I and SHEP II to conform with the Company’s presentation of these revenues and expenses.

(g) Adjustments to eliminate equity gains and losses from a joint venture owned by SHEP I that will not be purchased by RSP LLC.

(h) Basic and diluted earnings per share is based on the sale of 25.3 million shares of RSPP common stock in the Equity Offering and then the issuance of 31 million shares of RSPP common stock as consideration in the SHEP Acquisitions.

Note 2—Pro Forma Supplemental Oil and Natural Gas Reserve Information

The following tables set forth certain unaudited pro forma information concerning the Company’s proved crude oil, natural gas and natural gas liquids (“NGLs”) reserves for the year December 31, 2015, giving effect to the acquisition of SHEP I and SHEP II as if it had occurred on January 1, 2015. There are numerous uncertainties inherent in estimating the quantities of proved reserves and projecting future rates of production and timing of development costs. The estimates of reserves, and the standardized measure of future net cash flow, shown below, reflects SHEP I and SHEP II’s development plan for their properties, rather than the Company’s development plan for the properties. The following reserve data represent estimates only and should not be construed as being precise. SHEP I and SHEP II natural gas reserves include NGLs.

	Natural gas									Oil									NGLs			Total
	(MMCF)									(MBbls)									(MBbls)			(MBoe)
	RSPP Historical			SHEP I Historical			SHEP II Historical			RSPP Historical			SHEP I Historical			SHEP II Historical			RSPP Historical			RSPP Pro Forma
Proved developed and undeveloped reserves:
As of December 31, 2014		92,422			3,038			4,313			69,273			1,452			2,699			21,739			111,792
Revisions of previous estimates		(20,205	)		(2,515	)		(2,151	)		(12,886	)		(993	)		(1,056	)		(4,251	)		(23,331	)
Extensions, discoveries, and other additions		55,313			12,030			14,876			50,375			7,718			9,258			6,971			88,025
Purchases of minerals in place		10,968			—			—			10,178			—			—			2,373			14,379
Production		(4,991	)		(324	)		(359	)		(5,805	)		(335	)		(566	)		(1,045	)		(8,697	)
As of December 31, 2015		133,507			12,229			16,679			111,135			7,842			10,335			25,787			182,168
Proved developed reserves:
December 31, 2014		35,921			440			2,119			27,716			396			1,281			8,221			44,027
December 31, 2015		56,640			3,770			5,726			44,128			2,182			3,668			11,020			72,021
Proved undeveloped reserves:
December 31, 2014		56,501			2,598			2,194			41,557			1,056			1,418			13,518			67,765
December 31, 2015		76,867			8,459			10,952			67,007			5,660			6,667			14,767			110,147

Standardized Measure of Discounted Future Net Cash Flows

Summarized in the following table is information for the standardized measure of discounted cash flows relating to proved reserves as of December 31, 2015, giving effect to the acquisitions of SHEP I and SHEP II. The standardized measure of discounted future net cash flows does not purport to be, nor should it be interpreted to present, the fair value of the oil and natural gas reserves of the property. An estimate of fair value would take into account, among other things, the recovery of reserves not presently classified as proved, the value of unproved properties, and consideration of expected future economic and operating conditions.

The estimates of future cash flows and future production and development costs as of December 31, 2015 are based on the unweighted arithmetic average first-day-of-the-month price for the preceding 12-month period. Estimated future production of proved reserves and estimated future production and development costs of proved reserves are based on current costs and economic conditions. All wellhead prices are held flat over the forecast period for all reserve categories. The estimated future net cash flows are then discounted at a rate of 10%.

The standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves is as follows:

	December 31, 2015
	RSPP Historical			SHEP I Historical			SHEP II Historical			RSPP Pro Forma
(in thousands)
Future cash inflows	$	5,964,332		$	383,872		$	541,964		$	6,890,168
Future production costs		(1,855,044	)		(130,061	)		(156,706	)		(2,141,811	)
Future development costs		(1,187,244	)		(78,366	)		(82,700	)		(1,348,310	)
Future income tax expense (1)		(699,070	)		(2,015	)		(2,845	)		(703,930	)
Future net cash flows		2,222,974			173,430			299,713			2,696,117
10% discount for estimated timing of cash flows		(1,426,958	)		(103,413	)		(163,339	)		(1,693,710	)
Standardized measure of discounted future net cash flows	$	796,016		$	70,017		$	136,374		$	1,002,407

(1) Future net cash flows for SHEP I and SHEP II do not include the effects of income taxes on future revenues because those entities are limited liability companies not subject to entity-level income taxation. Accordingly, no provision for federal has been provided because taxable income was passed through to their equity holders. Had SHEP I and SHEP II been subject to entity-level income taxation for federal purposes, it is estimated the additional taxes would be $41.3 million and $62.6 million for SHEP I and SHEP II, respectively.

In the foregoing determination of future cash inflows, sales prices used for gas and oil for December 31, 2015 were estimated using the average price during the 12-month period, determined as the unweighted arithmetic average of the first-day-of-the-month price for each month. Prices were adjusted by lease for quality, transportation fees and regional price differentials. Future costs of developing and producing the proved gas and oil reserves reported at the end of each year shown were based on costs determined at each such year-end, assuming the continuation of existing economic conditions.

It is not intended that the FASB’s standardized measure of discounted future net cash flows represent the fair market value of the Company’s proved reserves. The Company cautions that the disclosures shown are based on estimates of proved reserve quantities and future production schedules which are inherently imprecise and subject to revision, and the 10% discount rate is arbitrary. In addition, costs and prices as of the measurement date are used in the determinations, and no value may be assigned to probable or possible reserves.

Changes in the standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves are as follows:

	December 31, 2015
	RSPP Historical			SHEP I Historical			SHEP II Historical			RSPP Pro Forma
(in thousands)
Standardized measure of discounted future net cash flows, beginning of year	$	876,131		$	26,624		$	56,619		$	959,374
Changes in the year resulting from:
Sales, less production taxes		(210,874	)		(9,411	)		(15,336	)		(235,621	)
Revisions of previous quantity estimates		(192,081	)		(16,709	)		(4,332	)		(213,122	)
Extensions, discoveries, and other additions		440,744			69,595			118,162			628,501
Net change in prices and production costs		(537,613	)		(9,170	)		(29,308	)		(576,091	)
Changes in estimated future development costs		14,480			—			—			14,480
Previously estimated development costs incurred during the period		107,829			—			700			108,529
Divestiture of reserves		—			—			—			—
Purchases of minerals in place		95,207			—			—			95,207
Accretion of discount		131,764			2,706			5,764			140,234
Net change in income taxes		164,377			(516	)		(389	)		163,472
Timing differences and other		(93,948	)		6,898			4,494			(82,556	)
Standardized measure of discounted future net cash flows, end of year	$	796,016		$	70,017		$	136,374		$	1,002,407

Estimates of economically recoverable oil and natural gas reserves and of future net revenues are based upon a number of variable factors and assumptions, all of which are to some degree subjective and may vary considerably from actual results. Therefore, actual production, revenues, development and operating expenditures may not occur as estimated. The reserve data are estimates only, are subject to many uncertainties and are based on data gained from production histories and on assumptions as to geologic formations and other matters. Actual quantities of oil and natural gas may differ materially from the amounts estimated.