PRO FORMA FINANCIAL INFORMATION
Exhibit 99.1
The following unaudited pro forma condensed consolidated financial statements are based on Petroleum Development Corporation’s (the "Company's") historical condensed consolidated financial statements and adjusted to give effect to the disposition of its core and non-core Permian Basin assets to be accounted for as a discontinued operation. The unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2011 and the twelve months ended December 31, 2010 give effect to the Permian Basin asset dispositions as if they had occurred on January 1, 2010. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2011 gives effect to this disposition as if it had occurred on September 30, 2011.
The unaudited pro forma condensed consolidated information should be read in conjunction with the historical consolidated financial statements and accompanying notes which are included in the Annual Report on Form 10-K of the Company for the year ended December 31, 2010.
The pro forma condensed consolidated statements of operations for the nine months ended September 30, 2011 and the twelve months ended December 31, 2010 include the following pro forma adjustments:
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| • | Natural gas, NGL and crude oil sales has been adjusted downward to reflect the reduction in sales revenue related to the Permian Basin production. |
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| • | Production costs, exploration expense, and depreciation, depletion and amortization have been adjusted downward to reflect the costs and expenses associated with the Permian Basin assets. |
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| • | Income taxes are reflected using the Company's long term deferred income tax rate of 38%. |
The pro forma condensed consolidated balance sheet as of September 30, 2011 includes the following adjustments:
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| • | The sales prices totaling $187.0 million, net of selling fees of $2.1 million, have been reflected as a repayment of the corporate credit facility outstanding balance of $172.5 million, with the remainder reflected in cash and cash equivalents. |
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| • | The adjustment to properties and equipment, net, reflects a reduction of the book value of the Permian Basin assets. |
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| • | The net gain on the transactions, which has not been tax effected, is reflected as adjustments to retained earnings. |
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| PETROLEUM DEVELOPMENT CORPORATION |
| (dba PDC Energy) |
| Pro Forma Condensed Consolidated Statements of Operations |
| (unaudited; in thousands, except per share data) |
| | | | | | | | | | | | | |
| | | Nine Months Ended September 30, 2011 | | Year Ended December 31, 2010 |
| | | Historical | | Pro Forma Adjustments - Divestiture | | Pro Forma | | Historical | | Pro Forma Adjustments - Divestiture (1) | | Pro Forma |
| Revenues: | | | | | | | | | | | | |
| Natural gas, NGL and crude oil sales | | $ | 215,468 |
| | $ | (18,852 | ) | | $ | 196,616 |
| | $ | 209,644 |
| | $ | (4,615 | ) | | $ | 205,029 |
|
| Sales from natural gas marketing | | 51,308 |
| | — |
| | 51,308 |
| | 69,071 |
| | — |
| | 69,071 |
|
| Commodity price risk management gain, net | | 43,361 |
| | — |
| | 43,361 |
| | 59,891 |
| | — |
| | 59,891 |
|
| Well operations, pipeline income and other | | 5,350 |
| | (82 | ) | | 5,268 |
| | 9,041 |
| | (11 | ) | | 9,030 |
|
| Total revenues | | 315,487 |
| | (18,934 | ) | | 296,553 |
| | 347,647 |
| | (4,626 | ) | | 343,021 |
|
| | | | | | | | | | | | | |
| Costs, expenses and other: | | | | | | | | | | | | |
| Production costs | | 56,559 |
| | (7,176 | ) | | 49,383 |
| | 66,817 |
| | (1,945 | ) | | 64,872 |
|
| Cost of natural gas marketing | | 50,427 |
| | — |
| | 50,427 |
| | 68,015 |
| | — |
| | 68,015 |
|
| Exploration expense | | 5,537 |
| | (35 | ) | | 5,502 |
| | 20,266 |
| | (110 | ) | | 20,156 |
|
| General and administrative expense | | 47,065 |
| | — |
| | 47,065 |
| | 42,188 |
| | — |
| | 42,188 |
|
| Depreciation, depletion and amortization | | 99,347 |
| | (6,247 | ) | | 93,100 |
| | 109,243 |
| | (1,148 | ) | | 108,095 |
|
| Gain on sale of properties and equipment | | (32 | ) | | — |
| | (32 | ) | | (174 | ) | | — |
| | (174 | ) |
| Total costs, expenses and other | | 258,903 |
| | (13,458 | ) | | 245,445 |
| | 306,355 |
| | (3,203 | ) | | 303,152 |
|
| | | | | | | | | | | | | |
| Income from operations | | 56,584 |
| | (5,476 | ) | | 51,108 |
| | 41,292 |
| | (1,423 | ) | | 39,869 |
|
| Interest income | | 47 |
| | — |
| | 47 |
| | 71 |
| | — |
| | 71 |
|
| Interest expense | | (27,625 | ) | | — |
| | (27,625 | ) | | (33,250 | ) | | — |
| | (33,250 | ) |
| | | | | | | | | | | | | |
| Income from continuing operations before income taxes | | 29,006 |
| | (5,476 | ) | | 23,530 |
| | 8,113 |
| | (1,423 | ) | | 6,690 |
|
| Provision for income taxes | | 9,825 |
| | (2,081 | ) | | 7,744 |
| | 1,192 |
| | (540 | ) | | 652 |
|
| Income from continuing operations | | 19,181 |
| | (3,395 | ) | | 15,786 |
| | 6,921 |
| | (883 | ) | | 6,038 |
|
| Less: net loss attributable to noncontrolling interests | | — |
| | — |
| | — |
| | (280 | ) | | — |
| | (280 | ) |
| Income from continuing operations attributable to shareholders | | $ | 19,181 |
| | $ | (3,395 | ) | | $ | 15,786 |
| | $ | 7,201 |
| | $ | (883 | ) | | $ | 6,318 |
|
| | | | | | | | | | | | | |
| Earnings per share - income from continuing operations: | | | | | | | | | | | | |
| Basic | | $ | 0.82 |
| |
|
| | $ | 0.67 |
| | $ | 0.37 |
| |
| | $ | 0.32 |
|
| Diluted | | $ | 0.81 |
| |
| | $ | 0.67 |
| | $ | 0.36 |
| |
| | $ | 0.32 |
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| | | | | | | | | | | | | |
| Weighted average common shares outstanding: | | | | | | | | | | | | |
| Basic | | 23,497 |
| | | | 23,497 |
| | 19,674 |
| | | | 19,674 |
|
| Diluted | | 23,712 |
| | | | 23,712 |
| | 19,821 |
| | | | 19,821 |
|
(1) Represents the results of operations of the Permian Basin asset group from the date of acquisition, July 31, 2010.
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| PETROLEUM DEVELOPMENT CORPORATION |
| (dba PDC Energy) |
| Pro Forma Condensed Consolidated Balance Sheet |
| (unaudited; in thousands, except share and per share data) |
| | | | | | |
| | September 30, 2011 |
| | Historical | | Pro Forma Adjustments - Divestiture | | Pro Forma |
| Assets | | | | | |
| Current assets: | | | | | |
| Cash and cash equivalents | $ | 32,310 |
| | $ | 12,406 |
| | $ | 44,716 |
|
| Other current assets | 163,222 |
| | — |
| | 163,222 |
|
| Total current assets | 195,532 |
| | 12,406 |
| | 207,938 |
|
| Properties and equipment, net | 1,303,775 |
| | (148,954 | ) | | 1,154,821 |
|
| Other assets | 92,048 |
| | (129 | ) | | 91,919 |
|
| Total Assets | $ | 1,591,355 |
| | $ | (136,677 | ) | | $ | 1,454,678 |
|
| | | | | | |
| Liabilities and Equity | | | | | |
| Liabilities | | | | | |
| Current liabilities | $ | 170,289 |
| | $ | — |
| | $ | 170,289 |
|
| Long-term debt | 480,238 |
| | (172,500 | ) | | 307,738 |
|
| Deferred income taxes | 191,820 |
| | — |
| | 191,820 |
|
| Asset retirement obligations | 28,472 |
| | (2,660 | ) | | 25,812 |
|
| Other liabilities | 49,331 |
| | — |
| | 49,331 |
|
| Total liabilities | 920,150 |
| | (175,160 | ) | | 744,990 |
|
| | | | | | |
| Commitments and contingent liabilities | | | | | |
| | | | | | |
| Equity | | | | | |
| Shareholders' equity: | | | | | |
| Preferred shares, par value $0.01 per share; authorized 50,000,000 | | | | | |
| shares; issued: none | — |
| | — |
| | — |
|
| Common shares, par value $0.01 per share; authorized 100,000,000 | | | | | |
| shares; issued: 23,618,831 | 236 |
| | — |
| | 236 |
|
| Additional paid-in capital | 216,562 |
| | — |
| | 216,562 |
|
| Retained earnings | 454,644 |
| | 38,483 |
| | 493,127 |
|
| Treasury shares, at cost: 7,671 | (237 | ) | | — |
| | (237 | ) |
| Total shareholders' equity | 671,205 |
| | 38,483 |
| | 709,688 |
|
| Total Liabilities and Equity | $ | 1,591,355 |
| | $ | (136,677 | ) | | $ | 1,454,678 |
|
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