Exhibit 99.1
ENERGEN CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated financial statements reflect the historical financial statements of Energen Corporation (Energen or the Company) adjusted to give effect to the sale of certain non-core Permian Basin assets in the Delaware Basin in Texas and in the San Juan Basin in New Mexico for an aggregate purchase price of $552 million.
The unaudited pro forma condensed consolidated balance sheet as of June 30, 2016 has been prepared to reflect the sales closing subsequent to June 30, 2016 as if they occurred on June 30, 2016. The unaudited pro forma condensed consolidated statements of income for the three months and six months ended June 30, 2016 and 2015 and the year ended December 31, 2015 gives effect to all transactions as if they occurred on January 1, 2015. The sales proceeds reflected in the accompanying unaudited pro forma condensed consolidated financial statements have been reduced by transaction costs of approximately $5 million to arrive at aggregate net pre-tax sales proceeds of approximately $547 million.
The actual pre-tax sales proceeds received by Energen when the transactions closed were approximately $539 million, before consideration of transaction costs of approximately $5 million. The change in the pre-tax sales proceeds was caused by approximately $13 million in purchase price adjustments related to the operations of the properties subsequent to the effective dates and other one-time adjustments including transfer payments and certain amounts due the buyer. The purchase price is subject to further purchase price adjustments following closing.
The unaudited pro forma condensed consolidated financial statements have been prepared in accordance with Article 11 of Regulation S-X and are for informational purposes only. The unaudited pro forma condensed consolidated financial statements do not purport to indicate the results that would actually have been obtained had the sale been completed on the assumed date or for the periods presented, or which may be realized in the future. The unaudited pro forma condensed consolidated financial statements, including the notes thereto, should be read in conjunction with the historical financial statements of the Company included in our 2015 Annual Report on Form 10-K and our quarterly report on Form 10-Q for the three months and six months ended June 30, 2016. The unaudited pro forma condensed consolidated financial statements have been prepared using the estimates upon which the payments at closing were based.
|
| | | | | | | | | | | |
| Exhibit 99.1 | |
| ENERGEN CORPORATION |
| UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET |
| AS OF JUNE 30, 2016 |
| | | | | | |
| | | | Pro Forma | | |
| (in thousands, except share data) | As Reported | | Adjustments | | Pro Forma |
| ASSETS | | | | | |
| Current Assets | | |
|
| |
|
|
| Cash and cash equivalents | $ | 309,889 |
| | $ | 255,157 |
| a | $ | 565,046 |
|
| Accounts receivable, net | 76,119 |
| | — |
| | 76,119 |
|
| Inventories | 12,596 |
| | — |
| | 12,596 |
|
| Assets held for sale | 176,914 |
| | (176,914 | ) | b | — |
|
| Derivative instruments | 3,235 |
| | — |
| | 3,235 |
|
| Prepayments and other | 7,087 |
| | — |
| | 7,087 |
|
| Total current assets | 585,840 |
| | 78,243 |
| | 664,083 |
|
| Property, Plant and Equipment | | | | | |
| Oil and natural gas properties, successful efforts method | | | | | |
| Proved properties | 7,288,899 |
| | — |
| | 7,288,899 |
|
| Unproved properties | 85,618 |
| | — |
| | 85,618 |
|
| Less accumulated depreciation, depletion and amortization | 3,515,599 |
| | — |
| | 3,515,599 |
|
| Oil and natural gas properties, net | 3,858,918 |
| | — |
| | 3,858,918 |
|
| Other property and equipment, net | 45,755 |
| | — |
| | 45,755 |
|
| Total property, plant and equipment, net | 3,904,673 |
| | — |
| | 3,904,673 |
|
| Other postretirement assets | 4,358 |
| | — |
| | 4,358 |
|
| Other assets | 9,866 |
| | — |
| | 9,866 |
|
| TOTAL ASSETS | $ | 4,504,737 |
| | $ | 78,243 |
|
| $ | 4,582,980 |
|
| | | |
|
| |
|
|
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | |
| Current Liabilities | | | | | |
| Accounts payable | $ | 53,108 |
| | $ | — |
| | $ | 53,108 |
|
| Accrued taxes | 16,684 |
| | — |
| | 16,684 |
|
| Accrued wages and benefits | 13,386 |
| | — |
| | 13,386 |
|
| Accrued capital costs | 40,347 |
| | — |
| | 40,347 |
|
| Revenue and royalty payable | 57,979 |
| | — |
| | 57,979 |
|
| Liabilities related to assets held for sale | 13,279 |
| | (13,279 | ) | b | — |
|
| Derivative instruments | 46,452 |
| | — |
| | 46,452 |
|
| Other | 19,344 |
| | — |
| | 19,344 |
|
| Total current liabilities | 260,579 |
| | (13,279 | ) | | 247,300 |
|
| Long-term debt | 551,245 |
| | — |
| | 551,245 |
|
| Asset retirement obligations | 91,473 |
| | — |
| | 91,473 |
|
| Deferred income taxes | 460,424 |
| | 32,948 |
| d | 493,372 |
|
| Noncurrent derivative instruments | 12,875 |
| | — |
| | 12,875 |
|
| Other long-term liabilities | 11,910 |
| | — |
| | 11,910 |
|
| Total liabilities | 1,388,506 |
| | 19,669 |
| | 1,408,175 |
|
| Commitments and Contingencies | | | | | |
|
| | | | | | | | | | | |
| Shareholders’ Equity | | | | | |
| Preferred stock, cumulative, $0.01 par value, 5,000,000 shares authorized | — |
| | — |
| | — |
|
| Common shareholders’ equity | | | | | |
| Common stock, $0.01 par value; 150,000,000 shares authorized; 100,130,219 shares issued | 1,001 |
| | — |
| | 1,001 |
|
| Premium on capital stock | 1,366,280 |
| | — |
| | 1,366,280 |
|
| Retained earnings | 1,879,659 |
| | 58,574 |
| c | 1,938,233 |
|
| Accumulated other comprehensive income (loss), net of tax | | | | | |
| Pension and postretirement plans | 1,995 |
| | — |
| | 1,995 |
|
| Deferred compensation plan | 2,235 |
| | — |
| | 2,235 |
|
| Treasury stock, at cost; 3,122,699 shares | (134,939 | ) | | — |
| | (134,939 | ) |
| Total shareholders’ equity | 3,116,231 |
| | 58,574 |
| | 3,174,805 |
|
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 4,504,737 |
| | $ | 78,243 |
| | $ | 4,582,980 |
|
| | | | | | |
|
| | | | | | | | | | | |
| Exhibit 99.1 | |
| ENERGEN CORPORATION |
| UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME |
| FOR THE THREE MONTHS ENDED JUNE 30, 2016 |
| | | | | | |
| | | | Pro Forma | | |
| (in thousands, except share data) | As Reported | | Adjustments | | Pro Forma |
| Revenues | | | | | |
| Oil, natural gas liquids and natural gas sales | 171,637 |
| | (14,424 | ) | e | 157,213 |
|
| Gain (loss) on derivative instruments, net | (65,872 | ) | | — |
| | (65,872 | ) |
| Total revenues | 105,765 |
| | (14,424 | ) | | 91,341 |
|
| Operating Costs and Expenses | | | | | |
| Oil, natural gas liquids and natural gas production | 42,840 |
| | (5,659 | ) | e | 37,181 |
|
| Production and ad valorem taxes | 11,265 |
| | (1,223 | ) | e | 10,042 |
|
| Depreciation, depletion and amortization | 117,035 |
| | (6,439 | ) | e | 110,596 |
|
| Exploration | 1,520 |
| | (31 | ) | e | 1,489 |
|
| General and administrative | 23,548 |
| | (11 | ) | e | 23,537 |
|
| Accretion of discount on asset retirement obligations | 1,779 |
| | (248 | ) | e | 1,531 |
|
| (Gain) loss on sale of assets and other, net | (161,097 | ) | | 160,998 |
| e | (99 | ) |
| Total operating costs and expenses | 36,890 |
| | 147,387 |
| | 184,277 |
|
| Operating Income (Loss) | 68,875 |
| | (161,811 | ) | | (92,936 | ) |
| Other Income (Expense) | | | | | |
| Interest expense | (9,038 | ) | | — |
| | (9,038 | ) |
| Other income | 63 |
| | — |
| | 63 |
|
| Total other expense | (8,975 | ) | | — |
| | (8,975 | ) |
| Income (Loss) Before Income Taxes | 59,900 |
| | (161,811 | ) | | (101,911 | ) |
| Income tax expense (benefit) | 23,141 |
| | (58,229 | ) | f | (35,088 | ) |
| Net Income (Loss) | $ | 36,759 |
| | $ | (103,582 | ) | | $ | (66,823 | ) |
| | | | | | |
| | | | | | |
| Diluted Earnings per Average Common Share | $ | 0.38 |
| | $ | (1.07 | ) | g | $ | (0.69 | ) |
| Basic Earnings per Average Common Share | $ | 0.38 |
| | $ | (1.07 | ) | g | $ | (0.69 | ) |
| | | | | | |
| Diluted Average Common Shares Outstanding | 97,389,079 |
| | | | 97,389,079 |
|
| Basic Average Common Shares Outstanding | 97,066,705 |
| | | | 97,066,705 |
|
|
| | | | | | | | | | | |
| Exhibit 99.1 | |
| ENERGEN CORPORATION |
| UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME |
| FOR THE THREE MONTHS ENDED JUNE 30, 2015 |
| | | | | | |
| | | | Pro Forma | | |
| (in thousands, except share data) | As Reported | | Adjustments | | Pro Forma |
| Revenues | | | | | |
| Oil, natural gas liquids and natural gas sales | 219,290 |
| | (19,964 | ) | e | 199,326 |
|
| Gain (loss) on derivative instruments, net | (50,964 | ) | | — |
| | (50,964 | ) |
| Total revenues | 168,326 |
| | (19,964 | ) | | 148,362 |
|
| Operating Costs and Expenses | | | | | |
| Oil, natural gas liquids and natural gas production | 53,581 |
| | (5,820 | ) | e | 47,761 |
|
| Production and ad valorem taxes | 13,352 |
| | (1,865 | ) | e | 11,487 |
|
| Depreciation, depletion and amortization | 149,843 |
| | (12,653 | ) | e | 137,190 |
|
| Asset impairment | 60,413 |
| | (1,725 | ) | e | 58,688 |
|
| Exploration | 11,018 |
| | (10,666 | ) | e | 352 |
|
| General and administrative | 38,652 |
| | (527 | ) | e | 38,125 |
|
| Accretion of discount on asset retirement obligations | 1,669 |
| | (237 | ) | e | 1,432 |
|
| (Gain) loss on sale of assets and other, net | 1,476 |
| | (154 | ) | e | 1,322 |
|
| Total operating costs and expenses | 330,004 |
| | (33,647 | ) | | 296,357 |
|
| Operating Income (Loss) | (161,678 | ) | | 13,683 |
| | (147,995 | ) |
| Other Income (Expense) | | | | | |
| Interest expense | (11,244 | ) | | — |
| | (11,244 | ) |
| Other income | 41 |
| | — |
| | 41 |
|
| Total other expense | (11,203 | ) | | — |
| | (11,203 | ) |
| Income (Loss) Before Income Taxes | (172,881 | ) | | 13,683 |
| | (159,198 | ) |
| Income tax expense (benefit) | (61,280 | ) | | 4,926 |
| f | (56,354 | ) |
| Net Income (Loss) | $ | (111,601 | ) | | $ | 8,757 |
| | $ | (102,844 | ) |
| | | | | | |
| | | | | | |
| Diluted Earnings per Average Common Share | $ | (1.52 | ) | | $ | 0.12 |
| g | $ | (1.40 | ) |
| Basic Earnings per Average Common Share | $ | (1.52 | ) | | $ | 0.12 |
| g | $ | (1.40 | ) |
| | | | | | |
| Diluted Average Common Shares Outstanding | 73,452,169 |
| | | | 73,452,169 |
|
| Basic Average Common Shares Outstanding | 73,452,169 |
| | | | 73,452,169 |
|
|
| | | | | | | | | | | |
| Exhibit 99.1 | |
| ENERGEN CORPORATION |
| UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME |
| FOR THE SIX MONTHS ENDED JUNE 30, 2016 |
| | | | | | |
| | | | Pro Forma | | |
| (in thousands, except share data) | As Reported | | Adjustments | | Pro Forma |
| Revenues | | | | | |
| Oil, natural gas liquids and natural gas sales | 294,401 |
| | (27,602 | ) | e | 266,799 |
|
| Gain (loss) on derivative instruments, net | (60,417 | ) | | — |
| | (60,417 | ) |
| Total revenues | 233,984 |
| | (27,602 | ) | | 206,382 |
|
| Operating Costs and Expenses | | | | | |
| Oil, natural gas liquids and natural gas production | 90,567 |
| | (13,272 | ) | e | 77,295 |
|
| Production and ad valorem taxes | 22,435 |
| | (2,745 | ) | e | 19,690 |
|
| Depreciation, depletion and amortization | 236,397 |
| | (14,304 | ) | e | 222,093 |
|
| Asset impairment | 220,025 |
| | (31,407 | ) | e | 188,618 |
|
| Exploration | 1,762 |
| | (111 | ) | e | 1,651 |
|
| General and administrative | 53,073 |
| | (576 | ) | e | 52,497 |
|
| Accretion of discount on asset retirement obligations | 3,536 |
| | (500 | ) | e | 3,036 |
|
| (Gain) loss on sale of assets and other, net | (160,875 | ) | | 161,000 |
| e | 125 |
|
| Total operating costs and expenses | 466,920 |
| | 98,085 |
| | 565,005 |
|
| Operating Income (Loss) | (232,936 | ) | | (125,687 | ) | | (358,623 | ) |
| Other Income (Expense) | | | | | |
| Interest expense | (18,871 | ) | | — |
| | (18,871 | ) |
| Other income | 159 |
| | (39 | ) | e | 120 |
|
| Total other expense | (18,712 | ) | | (39 | ) | | (18,751 | ) |
| Income (Loss) Before Income Taxes | (251,648 | ) | | (125,726 | ) | | (377,374 | ) |
| Income tax expense (benefit) | (85,291 | ) | | (45,183 | ) | f | (130,474 | ) |
| Net Income (Loss) | $ | (166,357 | ) | | $ | (80,543 | ) | | $ | (246,900 | ) |
| | | | | | |
| | | | | | |
| Diluted Earnings per Average Common Share | $ | (1.81 | ) | | $ | (0.88 | ) | g | $ | (2.69 | ) |
| Basic Earnings per Average Common Share | $ | (1.81 | ) | | $ | (0.88 | ) | g | $ | (2.69 | ) |
| | | | | | |
| Diluted Average Common Shares Outstanding | 91,849,542 |
| | | | 91,849,542 |
|
| Basic Average Common Shares Outstanding | 91,849,542 |
| | | | 91,849,542 |
|
|
| | | | | | | | | | | |
| Exhibit 99.1 | |
| ENERGEN CORPORATION |
| UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME |
| FOR THE SIX MONTHS ENDED JUNE 30, 2015 |
| | | | | | |
| | | | Pro Forma | | |
| (in thousands, except share data) | As Reported | | Adjustments | | Pro Forma |
| Revenues | | | | | |
| Oil, natural gas liquids and natural gas sales | 407,112 |
| | (36,137 | ) | e | 370,975 |
|
| Gain (loss) on derivative instruments, net | (16,928 | ) | | — |
| | (16,928 | ) |
| Total revenues | 390,184 |
| | (36,137 | ) | | 354,047 |
|
| Operating Costs and Expenses | | | | | |
| Oil, natural gas liquids and natural gas production | 121,335 |
| | (11,927 | ) | e | 109,408 |
|
| Production and ad valorem taxes | 32,417 |
| | (3,833 | ) | e | 28,584 |
|
| Depreciation, depletion and amortization | 284,224 |
| | (24,360 | ) | e | 259,864 |
|
| Asset impairment | 66,996 |
| | (6,374 | ) | e | 60,622 |
|
| Exploration | 11,781 |
| | (10,797 | ) | e | 984 |
|
| General and administrative | 70,707 |
| | (648 | ) | e | 70,059 |
|
| Accretion of discount on asset retirement obligations | 3,679 |
| | (410 | ) | e | 3,269 |
|
| (Gain) loss on sale of assets and other, net | (26,868 | ) | | (289 | ) | e | (27,157 | ) |
| Total operating costs and expenses | 564,271 |
| | (58,638 | ) | | 505,633 |
|
| Operating Income (Loss) | (174,087 | ) | | 22,501 |
| | (151,586 | ) |
| Other Income (Expense) | | | | | |
| Interest expense | (23,002 | ) | | — |
| | (23,002 | ) |
| Other income | 87 |
| | (13 | ) | e | 74 |
|
| Total other expense | (22,915 | ) | | (13 | ) | | (22,928 | ) |
| Income (Loss) Before Income Taxes | (197,002 | ) | | 22,488 |
| | (174,514 | ) |
| Income tax expense (benefit) | (69,981 | ) | | 8,096 |
| f | (61,885 | ) |
| Net Income (Loss) | $ | (127,021 | ) | | $ | 14,392 |
| | $ | (112,629 | ) |
| | | | | | |
| | | | | | |
| Diluted Earnings per Average Common Share | $ | (1.74 | ) | | $ | 0.20 |
| g | $ | (1.54 | ) |
| Basic Earnings per Average Common Share | $ | (1.74 | ) | | $ | 0.20 |
| g | $ | (1.54 | ) |
| | | | | | |
| Diluted Average Common Shares Outstanding | 73,143,021 |
| | | | 73,143,021 |
|
| Basic Average Common Shares Outstanding | 73,143,021 |
| | | | 73,143,021 |
|
|
| | | | | | | | | | | |
| Exhibit 99.1 | |
| ENERGEN CORPORATION |
| UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME |
| FOR THE YEAR ENDED DECEMBER 31, 2015 |
| | | | | | |
| | | | Pro Forma | | |
| (in thousands, except share data) | As Reported | | Adjustments | | Pro Forma |
| Revenues | | | | | |
| Oil, natural gas liquids and natural gas sales | $ | 763,261 |
| | $ | (71,036 | ) | e | $ | 692,225 |
|
| Gain (loss) on derivative instruments, net | 115,293 |
| | — |
| | 115,293 |
|
| Total revenues | 878,554 |
| | (71,036 | ) | | 807,518 |
|
| Operating Costs and Expenses | | | | | |
| Oil, natural gas liquids and natural gas production | 228,380 |
| | (27,780 | ) | e | 200,600 |
|
| Production and ad valorem taxes | 57,380 |
| | (7,371 | ) | e | 50,009 |
|
| Depreciation, depletion and amortization | 593,789 |
| | (53,008 | ) | e | 540,781 |
|
| Asset impairment | 1,292,308 |
| | (193,241 | ) | e | 1,099,067 |
|
| Exploration | 14,878 |
| | (13,537 | ) | e | 1,341 |
|
| General and administrative | 149,132 |
| | (3,369 | ) | e | 145,763 |
|
| Accretion of discount on asset retirement obligations | 7,108 |
| | (898 | ) | e | 6,210 |
|
| (Gain) loss on sale of assets and other, net | (26,570 | ) | | (358 | ) | e | (26,928 | ) |
| Total operating costs and expenses | 2,316,405 |
| | (299,562 | ) | | 2,016,843 |
|
| Operating Income (Loss) | (1,437,851 | ) | | 228,526 |
| | (1,209,325 | ) |
| Other Income (Expense) | | | | | |
| Interest expense | (43,108 | ) | | — |
| | (43,108 | ) |
| Other income | 223 |
| | (96 | ) | e | 127 |
|
| Total other expense | (42,885 | ) | | (96 | ) | | (42,981 | ) |
| Income (Loss) Before Income Taxes | (1,480,736 | ) | | 228,430 |
| | (1,252,306 | ) |
| Income tax expense (benefit) | (535,005 | ) | | 83,766 |
| f | (451,239 | ) |
| Net Income (Loss) | $ | (945,731 | ) | | $ | 144,664 |
| | $ | (801,067 | ) |
| | | | | | |
| | | | | | |
| Diluted Earnings per Average Common Share | $ | (12.43 | ) | | $ | 1.90 |
| g | $ | (10.53 | ) |
| Basic Earnings per Average Common Share | $ | (12.43 | ) | | $ | 1.90 |
| g | $ | (10.53 | ) |
| | | | | | |
| Diluted Average Common Shares Outstanding | 76,078,371 |
| | | | 76,078,371 |
|
| Basic Average Common Shares Outstanding | 76,078,371 |
| | | | 76,078,371 |
|
Exhibit 99.1
ENERGEN CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| |
| 1. | Unaudited Pro Forma Condensed Consolidated Balance Sheet Adjustments |
The unaudited pro forma condensed balance sheet adjustments at June 30, 2016 related to the sales closed subsequent to June 30, 2016 are as follows:
| |
| a) | The estimated sales proceeds of $257.5 million used in the unaudited pro forma condensed consolidated balance sheet were reduced by estimated transaction costs of $2 million. These proceeds do not consider approximately $3 million of purchase price adjustments related to the operations of the properties subsequent to the effective dates and other one-time adjustments including certain amounts due the buyer. |
| |
| b) | Reflects the removal of the net assets sold all of which had been previously identified as held for sale. |
| |
| c) | The estimated after-tax net gain on the sale is reflected as an adjustment to retained earnings. The sales proceeds excluding $2 million of transaction costs were offset by $164 million in net assets sold. The estimated tax expense on the gain is approximately $33 million. As the gain is directly attributable to the transactions and is not expected to have a continuing impact on Energen's operations, the estimated gain is only reflected in retained earnings on the unaudited pro forma condensed consolidated balance sheet. |
| |
| d) | Deferred income taxes changed due to the anticipated additional net operating loss utilization of approximately $25.9 million and the $7.1 million reversal of deferred tax assets associated with the properties sold. |
| |
| 2. | Unaudited Pro Forma Condensed Consolidated Statement of Income Adjustments |
The unaudited pro forma condensed consolidated statement of income adjustments for the three months ended June 30, 2016, the three months ended June 30, 2015, the six months ended June 30, 2016, the six months ended June 30, 2015 and the year ended December 31, 2015 related to all sales are as follows:
| |
| e) | Reflects the elimination of the operating results of certain non-core Permian Basin assets in the Delaware Basin and the San Juan Basin assets. |
| |
| f) | Income tax expense has been calculated utilizing a blended federal and state statutory tax rate of approximately 36 percent. Income tax expense also includes an additional benefit of $23,000 and $0.1 million for the three months and six months ended June 30, 2016 and an additional benefit of $1.5 million for the year ended December 31, 2015 as a result of re-measuring the Company’s state deferred tax liabilities. This re-measurement reflected the state apportionment changes primarily related to the sale of the San Juan Basin properties. |
| |
| g) | The calculations of pro forma basic and diluted earnings per share for the period presented reflect the effect of the above-mentioned revenue and expense items. |
