Exhibit 99.3
Unaudited Pro Forma Consolidated Balance Sheet
As of March 31, 2007
(In Thousands) | Pro Forma | ||||||||||
Pro Forma | Consolidated | ||||||||||
TXCO | Output | Adjustments | Balance Sheet | ||||||||
Assets | |||||||||||
Current Assets | |||||||||||
Cash and equivalents | $3,668 | $3,180 | $ - | $ 6,848 | |||||||
Accounts receivable, net | 9,725 | 5,830 | (1,216 | ) | (1) | 14,339 | |||||
Federal income tax receivable | 9,734 | - | - | 9,734 | |||||||
Prepaid expenses and other | 3,297 | 298 | (130 | ) | (1) | 5,690 | |||||
2,225 | (2) | ||||||||||
Total Current Assets | 26,424 | 9,308 | 879 | 36,611 | |||||||
Property and Equipment, net | 136,876 | 98,714 | (19,865 | ) | (1) | 251,850 | |||||
102,587 | (2) | ||||||||||
9,452 | (3) | ||||||||||
40,953 | (3) | ||||||||||
26,673 | (4) | ||||||||||
(102,587 | ) | (5) | |||||||||
(40,953 | ) | (5) | |||||||||
Other Assets | |||||||||||
Deferred tax asset | 513 | - | - | 513 | |||||||
Debt issue costs, net of amortization | - | 127 | (127 | ) | (3) | - | |||||
Other assets | 2,539 | 371 | (2,000 | ) | (2) | 796 | |||||
22 | (3) | ||||||||||
(136 | ) | (4) | |||||||||
Total Other Assets | 3,052 | 498 | (2,241 | ) | 1,309 | ||||||
Total Assets | $166,352 | $108,520 | $14,898 | $289,770 | |||||||
Liabilities and Stockholders' Equity | |||||||||||
Current Liabilities | |||||||||||
Accounts payable, trade | $10,611 | $4,688 | $ (102 | ) | (1) | $15,038 | |||||
(159 | ) | (2) | |||||||||
Undistributed revenue | 429 | 429 | |||||||||
Notes payable | 262 | 262 | |||||||||
Derivative settlements payable | 52 | 52 | |||||||||
Accrued derivative obligation - short-term | 125 | 4,515 | (2,073 | ) | (3) | 126 | |||||
(2,441 | ) | (4) | |||||||||
Other payables and accrued liabilities | 6,017 | 424 | (59 | ) | (1) | 6,382 | |||||
Total Current Liabilities | 17,496 | 9,627 | (4,834 | ) | 22,289 | ||||||
Long-Term Liabilities | |||||||||||
Long-term debt | 22,851 | 60,494 | 121,817 | (2) | 121,817 | ||||||
(22,851 | ) | (2) | |||||||||
(48,519 | ) | (3) | |||||||||
(11,975 | ) | (4) | |||||||||
Deferred income taxes | 15,140 | 15,140 | |||||||||
Asset retirement obligation | 3,111 | 762 | (248 | ) | (1) | 3,625 | |||||
Total Long-Term Liabilities | 25,962 | 76,396 | 38,224 | 140,582 | |||||||
Stockholders' Equity | |||||||||||
Preferred stock | - | ||||||||||
Common stock | 334 | 3 | (2) | 337 | |||||||
Additional paid-in-capital | 122,618 | 3,997 | (2) | 126,615 | |||||||
Retained earnings | 726 | 22,497 | (20,802 | ) | (1) | 731 | |||||
5 | (2) | ||||||||||
100,892 | (3) | ||||||||||
40,953 | (4) | ||||||||||
(102,587 | ) | (5) | |||||||||
(40,953 | ) | (5) | |||||||||
Accumulated other comprehensive loss, net of tax | (319 | ) | (319 | ) | |||||||
Less treasury stock, at cost | (465 | ) | (465 | ) | |||||||
Total Stockholders' Equity | 122,894 | 22,497 | (18,492 | ) | 126,899 | ||||||
Total Liabilities and Stockholders' Equity | $166,352 | $108,520 | $14,898 | $289,770 |
See accompanying notes to unaudited pro forma consolidated financial statements
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Unaudited Pro Forma Consolidated Statement of Operations
Three Months Ended March 31, 2007
(In Thousands, Except per Share Amounts) | Pro Forma | |||||||||||
Pro Forma | Statement | |||||||||||
TXCO | Output | Adjustments | of Operations | |||||||||
Revenues | ||||||||||||
Oil and gas sales | $8,725 | $6,561 | $(1,772) | (6) | $14,594 | |||||||
1,080 | (10) | |||||||||||
Gas gathering operations | 2,494 | 2,494 | ||||||||||
Other operating income | 1 | 92 | 93 | |||||||||
Total Revenues | 11,220 | 6,653 | (692) | 17,181 | ||||||||
Costs and Expenses | ||||||||||||
Lease operations | 2,660 | 1,625 | (119 | ) | (6) | 4,166 | ||||||
Production taxes | 494 | 363 | 857 | |||||||||
Exploration expenses, including dry hole costs | 375 | 375 | ||||||||||
Impairments and abandonments | 686 | 686 | ||||||||||
Gas gathering operations | 2,881 | 2,881 | ||||||||||
Depreciation, depletion and amortization | 4,916 | 3,096 | (1,004 | ) | (6) | 8,474 | ||||||
1,466 | (7) | |||||||||||
General and administrative | 1,804 | 1,488 | (737 | ) | (8) | 2,555 | ||||||
Total Costs and Expenses | 13,816 | 6,572 | (394 | ) | 19,994 | |||||||
(Loss) from Operations | (2,596 | ) | 81 | (298 | ) | (2,813 | ) | |||||
Other Income (Expense) | ||||||||||||
Derivative mark-to-market loss | - | - | ||||||||||
Derivative settlements loss | - | - | ||||||||||
Interest expense | (277 | ) | (1,409 | ) | (1,083 | ) | (9) | (2,769 | ) | |||
Interest income | 26 | 39 | 65 | |||||||||
Loan fee amortization | (10 | ) | - | (10 | ) | |||||||
Total Other Income (Expense) | (261 | ) | (1,370 | ) | (1,083 | ) | (2,714 | ) | ||||
(Loss) before income taxes | (2,857 | ) | (1,289 | ) | (1,381 | ) | (5,527 | ) | ||||
Income tax (benefit) expense | (965 | ) | (908 | ) | (11) | (1,873 | ) | |||||
Net (Loss) | $(1,892 | ) | $(1,289 | ) | $(473 | ) | $(3,654 | ) | ||||
(Loss) Per Share | ||||||||||||
Basic (loss) per share | $(0.06 | ) | $(0.11 | ) | ||||||||
Diluted (loss) per share | $(0.06 | ) | $(0.11 | ) | ||||||||
Shares outstanding | ||||||||||||
Basic | 32,985 | 339 | (12) | 33,324 | ||||||||
Diluted | 32,985 | 339 | (12) | 33,324 |
See accompanying notes to unaudited pro forma consolidated financial statements
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Notes to March 31, 2007 Unaudited Pro Forma Consolidated Statements: | ||||
(1) | In accordance with the terms of the asset purchase agreement between TXCO and Output, TXCO did not acquire all or a portion of the assets, assume the liabilities or retain the equity represented in the applicable line items from Output. | |||
(2) | Reflects TXCO's new credit facility and common stock issued to complete the Output acquisition and funds utilized to pay off the old credit facility. | |||
(3) | Reflects acquisition adjustment of Output's assets, liabilities and equity and the pay off of Output's existing debt. | |||
(4) | Reflects acquisition adjustment of OPEX's assets, liabilities and equity and the pay off of OPEX's existing debt. | |||
(5) | Eliminate intercompany transactions for consolidation. | |||
(6) | Represents revenue and expenses directly related to Output's California operations that were not acquired by TXCO. | |||
(7) | Adjustment to depletion expense reflecting the $36 million step-up in oil and gas properties as a result of the acquisition. | |||
(8) | Represents salary and payroll related expenses of non-continuing employees of Output and certain professional fees not expected to occur in the combined organization. As a result of the acquisition, the positions of the non-continuing employees of Output were eliminated and the non-continuing employees are not employed by TXCO Resources. | |||
(9) | Represents additional interest expense due to new debt structure as a result of the acquisition of Output. | |||
(10) | Reflects elimination of hedging transactions as a result of the termination of the hedges in connection with the acquisition. | |||
(11) | Reflects an adjustment to record income tax expense on Output's pretax income and for the effects of the pro forma adjustments using TXCO's effective tax rate of 34%. Calculated as follows: | |||
Output's 3/31/2007 loss before taxes | $ | (1,289 | ) | |
Net effect of pro forma adjustments on income before taxes | (1,381 | ) | ||
Pro forma loss before taxes | (2,670 | ) | ||
TXCO's effective tax rate | 34% | |||
Output's provision for decreased income taxes at TXCO's effective rate | (908 | ) | ||
Less Output's 3/31/2007 income tax expense | - | |||
Pro forma adjustment to decrease provision for income taxes | $ | (908 | ) | |
(12) | Reflects additional shares issued as partial funding for the acquisition of Output. |
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