Exhibit 99.2
OUTPUT EXPLORATION, LLC
AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2007 AND 2006
(Unaudited)
OUTPUT EXPLORATION, LLC
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31, | March 31, | ||||||||
2007 | 2006 | ||||||||
ASSETS | |||||||||
CURRENT ASSETS | |||||||||
Cash and cash equivalents | $ | 3,180,382 | $ | 1,801,862 | |||||
Accounts receivable | 5,829,522 | 7,625,978 | |||||||
Prepaid expenses | 297,713 | 1,011,880 | |||||||
TOTAL CURRENT ASSETS | 9,307,617 | 10,439,720 | |||||||
PROPERTY, PLANT AND EQUIPMENT, NET | |||||||||
Oil and gas properties, full cost method | 146,478,716 | 138,431,859 | |||||||
Furniture, fixtures and equipment | 1,717,035 | 1,715,855 | |||||||
148,195,751 | 140,147,714 | ||||||||
Less: accumulated depreciation, depletion and amortization | (49,481,846 | ) | (37,866,476 | ) | |||||
NET PROPERTY AND EQUIPMENT | 98,713,905 | 102,281,238 | |||||||
DEBT ISSUE COSTS, net of accumulated amortization | 127,657 | 672,859 | |||||||
OTHER ASSETS | 371,227 | 432,688 | |||||||
TOTAL ASSETS | $ | 108,520,406 | $ | 113,826,505 | |||||
LIABILITIES AND PARTNERS’ CAPITAL | |||||||||
CURRENT LIABILITIES | |||||||||
Accounts payable and accrued liabilities | $ | 4,688,419 | $ | 10,714,989 | |||||
Current portion of commodity financial instruments | 4,514,765 | 9,374,109 | |||||||
Current portion of asset retirement obligations | 424,293 | 628,834 | |||||||
TOTAL CURRENT LIABILITIES | 9,627,477 | 20,717,932 | |||||||
DEFERRED TAX LIABILITY, net | 15,139,844 | 12,395,135 | |||||||
LONG-TERM LIABILITIES | |||||||||
Long-term debt, net of current portion | 60,494,330 | 53,448,891 | |||||||
Long-term portion of commodity financial instruments | - | 5,814,244 | |||||||
Asset retirement obligations, net of current portion | 761,561 | 487,949 | |||||||
TOTAL LONG TERM LIABILITIES | 61,255,891 | 59,751,084 | |||||||
TOTAL LIABILITIES | 86,023,212 | 92,864,151 | |||||||
COMMITMENTS AND CONTINGENCIES | - | - | |||||||
MEMBERS’ EQUITY | 22,497,194 | 20,962,354 | |||||||
TOTAL LIABILITIES AND MEMBERS’ EQUITY | $ | 108,520,406 | $ | 113,826,505 |
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OUTPUT EXPLORATION, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Year To Date | Year To Date | |||||||||
March 31, 2007 | March 31, 2006 | |||||||||
REVENUES | ||||||||||
Oil and gas revenues | $ | 6,560,836 | $ | 7,387,531 | ||||||
Other | 92,259 | 157,431 | ||||||||
TOTAL REVENUES | 6,653,095 | 7,544,962 | ||||||||
EXPENSES | ||||||||||
Operating costs and severance taxes | 1,988,190 | 2,448,435 | ||||||||
Depreciation, depletion and amortization | 3,095,763 | 2,611,263 | ||||||||
General and administrative | 1,488,259 | 1,166,750 | ||||||||
TOTAL EXPENSES | 6,572,212 | 6,226,448 | ||||||||
INCOME FROM OPERATIONS | 80,883 | 1,318,514 | ||||||||
OTHER INCOME (EXPENSE) | ||||||||||
Interest expense | (1,408,657 | ) | (1,274,752 | ) | ||||||
Interest income | 38,941 | 28,090 | ||||||||
Other income (loss) | (409 | ) | - | |||||||
TOTAL OTHER EXPENSE | (1,370,125 | ) | (1,246,662 | ) | ||||||
INCOME (LOSS) BEFORE INCOME TAXES | (1,289,243 | ) | 71,852 | |||||||
INCOME TAX BENEFIT (EXPENSE) | - | (472,012 | ) | |||||||
NET INCOME (LOSS) | $ | (1,289,243 | ) | $ | (400,160 | ) |
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OUTPUT EXPLORATION, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ EQUITY (UNAUDITED)
YEAR TO DATE -- MARCH 31, 2007
Accumulated | |||||||||
Other | Total | ||||||||
Comprehensive | Members’ | ||||||||
Income | Equity | ||||||||
Balance at January 1, 2007 | $ | (3,806,310 | ) | $ | 23,554,829 | ||||
Contributions | 9,576 | ||||||||
Comprehensive income (loss): | |||||||||
Net loss | (1,289,243 | ) | |||||||
Commodity financial instruments | 222,032 | 222,032 | |||||||
Total comprehensive income | 222,032 | (1,067,211 | ) | ||||||
Balance at March 31, 2007 | $ | (3,584,278 | ) | $ | 22,497,194 |
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OUTPUT EXPLORATION, LLC
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ EQUITY (UNAUDITED)
YEAR TO DATE -- MARCH 31, 2006
Accumulated | |||||||||
Other | Total | ||||||||
Comprehensive | Members’ | ||||||||
Income | Equity | ||||||||
Balance at January 1, 2006 | $ | (17,478,531 | ) | $ | 14,976,579 | ||||
Contributions | 68,755 | ||||||||
Comprehensive income (loss): | |||||||||
Net loss | (400,160 | ) | |||||||
Commodity financial instruments | 6,317,180 | 6,317,180 | |||||||
Total comprehensive income | 6,317,180 | 5,917,020 | |||||||
Balance at March 31, 2006 | $ | (11,161,351 | ) | $ | 20,962,354 |
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OUTPUT EXPLORATION, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Year To Date | Year To Date | |||||||
March 31, 2007 | March 31, 2006 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | $ | (1,289,242 | ) | $ | (400,160 | ) | ||
Adjustments to reconcile net loss to net cash | ||||||||
provided by operating activities: | ||||||||
Depreciation, depletion and amortization | 3,095,763 | 2,611,263 | ||||||
Amortization of debt issuance cost | 159,699 | 147,881 | ||||||
Compounding interest expense | 374,851 | - | ||||||
Change in operating assets and liabilities: | ||||||||
Accounts receivable | 1,229,047 | 1,452,591 | ||||||
Prepaid expenses | (62,078 | ) | (162,991 | ) | ||||
Accounts payable and accrued liabilities | (994,759 | ) | 659,168 | |||||
Commodity financial instruments | - | 62,688 | ||||||
Deferred income taxes | - | 472,012 | ||||||
Other assets | (97,088 | ) | (117,984 | ) | ||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 2,416,193 | 4,724,468 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Capital expenditures - oil and gas properties | (1,926,716 | ) | (8,186,060 | ) | ||||
Sale of oil and gas properties | - | 1,756,433 | ||||||
Capital expenditures - computer equipment & furniture | - | (9,217 | ) | |||||
NET CASH USED IN INVESTING ACTIVITIES | (1,926,716 | ) | (6,438,844 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from long-term debt | 500,000 | 339,595 | ||||||
Contributions from members | 9,562 | 68,769 | ||||||
Payments for debt issue costs | (101,039 | ) | (6,024 | ) | ||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 408,523 | 402,340 | ||||||
NET INCREASE IN CASH AND | ||||||||
CASH EQUIVALENTS | 898,000 | (1,312,036 | ) | |||||
CASH AND CASH EQUIVALENTS, beginning of period | 2,282,382 | 3,113,898 | ||||||
CASH AND CASH EQUIVALENTS, end of period | $ | 3,180,382 | $ | 1,801,862 |
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