Exhibit 99.4
Unaudited Pro Forma Consolidated Statement of Operations
Year Ended December 31, 2006
(In Thousands, Except per Share Amounts)
Pro Forma | |||||||||||
Pro Forma | Statement | ||||||||||
TXCO | Output | Adjustments | of Operations | ||||||||
Revenues | |||||||||||
Oil and gas sales | $56,520 | $30,302 | $(7,337 | ) | (13) | $85,963 | |||||
6,478 | (17) | ||||||||||
Gas gathering operations | 15,853 | 15,853 | |||||||||
Other operating income | 45 | 55 | 100 | ||||||||
Total Revenues | 72,418 | 30,357 | (859 | ) | 101,916 | ||||||
Costs and Expenses | |||||||||||
Lease operations | 7,248 | 7,537 | (770 | ) | (13) | 14,015 | |||||
Production taxes | 2,551 | 1,706 | 4,257 | ||||||||
Exploration expenses, including dry hole costs | 2,968 | 2,968 | |||||||||
Impairments and abandonments | 1,722 | 1,722 | |||||||||
Gas gathering operations | 16,255 | 16,255 | |||||||||
Depreciation, depletion and amortization | 23,840 | 11,163 | (4,034 | ) | (13) | 33,662 | |||||
2,693 | (14) | ||||||||||
General and administrative | 7,298 | 5,170 | (1,846 | ) | (15) | 10,622 | |||||
Total Costs and Expenses | 61,882 | 25,576 | (3,957 | ) | 83,501 | ||||||
Income (Loss) from Operations | 10,536 | 4,781 | 3,098 | 18,415 | |||||||
Other Income (Expense) | |||||||||||
Derivative mark-to-market gain | 1,995 | 1,995 | |||||||||
Derivative settlements loss | (2,686 | ) | (2,686 | ) | |||||||
Interest expense | (269 | ) | (5,577 | ) | (5,229 | ) | (16) | (11,075 | ) | ||
Interest income | 550 | 121 | 671 | ||||||||
Loan fee amortization | (216 | ) | (216 | ) | |||||||
Loss on sale of assets | (8 | ) | (8 | ) | |||||||
Total Other Income (Expense) | (634 | ) | (5,456 | ) | (5,229 | ) | (11,319 | ) | |||
Income (loss) before income taxes | 9,902 | (675 | ) | (2,131 | ) | 7,096 | |||||
Income tax (benefit) expense | 2,661 | 1,257 | (2,015 | ) | (18) | 1,903 | |||||
Net Income (loss) | $7,241 | $(1,932 | ) | $(116 | ) | $5,193 | |||||
Earnings Per Share | |||||||||||
Basic Earnings per share | $0.23 | $0.16 | |||||||||
Diluted Earnings per share | $0.22 | $0.15 | |||||||||
Shares outstanding | |||||||||||
Basic | 31,916 | 339 | (19) | 32,255 | |||||||
Diluted | 33,247 | 339 | (19) | 33,586 |
See accompanying notes to this Unaudited Pro Forma Consolidated Statement of Operations
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(13) | Represents revenue and expenses directly related to Output's California operations that were not acquired by TXCO. | |||
(14) | Adjustment to depletion expense reflecting the $36 million step-up in oil and gas properties as a result of the acquisition. | |||
(15) | 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 employeesof Output were eliminated and the non-continuing employees are not employed by TXCO Resources. | |||
(16) | Represents additional interest expense due to new debt structure as a result of the acquisition of Output. | |||
(17) | Reflects elimination of hedging transactions as a result of the termination of the hedges in connection with the acquisition. | |||
(18) | 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 27%. Calculated as follows: | |||
Output's 12/31/2006 loss before taxes | $ | (675 | ) | |
Net effect of pro forma adjustments on income before taxes | (2,131 | ) | ||
Pro forma loss before taxes | (2,806 | ) | ||
TXCO's effective tax rate | 27% | |||
Output's provision for decreased income taxes at TXCO's effective rate | (758 | ) | ||
Less Output's 12/31/2006 income tax expense | (1,257 | ) | ||
Pro forma adjustment to decrease provision for income taxes | $ | (2,015 | ) | |
(19) | Reflects additional shares issued as partial compensation for the acquisition of Output. |
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