Exhibit 99.1
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial statements are based on the historical consolidated financial statements of PDC Energy, Inc. (the "Company") and have been adjusted to give effect to the divestiture of its Piceance, Northeastern Colorado and certain other non-core Colorado oil and gas properties (the “Divestiture”). The unaudited pro forma condensed consolidated balance sheet as of March 31, 2013 gives effect to the Divestiture as if it had occurred on March 31, 2013. The unaudited pro forma condensed consolidated statements of operations for the years ended December 31, 2012, 2011 and 2010 and the three month periods ended March 31, 2013 and 2012 give effect to the Divestiture as if it had occurred on January 1, 2010. The unaudited pro forma condensed consolidated information has been prepared using estimates based on preliminary amounts and is subject to customary post-closing adjustments.
The unaudited pro forma condensed consolidated information should be read in conjunction with the Company's historical consolidated financial statements and accompanying notes which are included in its Annual Report on Form 10-K for the year ended December 31, 2012, as filed on February 27, 2013 with the U.S. Securities and Exchange Commission (the “SEC”), and its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013, as filed on May 1, 2013 with the SEC.
The pro forma condensed consolidated statements of operations for the years ended December 31, 2012, 2011 and 2010 and the three month periods ended March 31, 2013 and 2012 include the following adjustments:
| • | Natural gas, NGL and crude oil sales, sales from natural gas marketing, and well operations, pipeline and other income have been adjusted downward to reflect the reduction in revenue related to assets being divested; |
| • | Production costs, cost of natural gas marketing, exploration expense, impairment of natural gas and crude oil properties, depreciation, depletion and amortization and accretion of asset retirement obligations have been adjusted downward to reflect the costs and expenses associated with the assets being divested; and |
| • | Income taxes are reflected using the Company's long-term deferred tax rate. |
The pro forma condensed consolidated balance sheet as of March 31, 2013 includes the following adjustments:
| • | Cash as been increased by the sales price, which reflects preliminary adjustments, of 185.2 million, net of repayment of our revolving credit facility outstanding balance of $57 million and selling fees of $2.4 million; |
| • | The adjustment to assets and liabilities held for sale, other assets and liabilities and deferred taxes reflects a reduction in the book value of the assets and related liabilities being divested; and |
| • | The net gain on the transaction, which has not been tax effected, is reflected as an adjustment to retained earnings. |
| PDC ENERGY, INC. | |||||||||||||||||||||||
| Pro Forma Condensed Consolidated Statements of Operations | |||||||||||||||||||||||
| (unaudited; in thousands, except per share data) | |||||||||||||||||||||||
| �� | |||||||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2013 | 2012 | ||||||||||||||||||||||
| As Reported | Pro Forma Adjustments - Divestiture | Pro Forma | As Reported | Pro Forma Adjustments - Divestiture | Pro Forma | ||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Natural gas, NGLs and crude oil sales | $ | 79,439 | $ | (349 | ) | $ | 79,090 | $ | 66,955 | $ | (463 | ) | $ | 66,492 | |||||||||
| Sales from natural gas marketing | 13,670 | — | 13,670 | 11,381 | — | 11,381 | |||||||||||||||||
| Commodity price risk management gain (loss), net | (22,355 | ) | — | (22,355 | ) | 11,501 | — | 11,501 | |||||||||||||||
| Well operations, pipeline income and other | 1,072 | (2 | ) | 1,070 | 1,169 | (2 | ) | 1,167 | |||||||||||||||
| Total revenues | 71,826 | (351 | ) | 71,475 | 91,006 | (465 | ) | 90,541 | |||||||||||||||
| Costs, expenses and other: | |||||||||||||||||||||||
| Production costs | 15,858 | (39 | ) | 15,819 | 12,936 | (62 | ) | 12,874 | |||||||||||||||
| Cost of natural gas marketing | 13,736 | — | 13,736 | 11,091 | — | 11,091 | |||||||||||||||||
| Exploration expense | 1,689 | — | 1,689 | 1,872 | — | 1,872 | |||||||||||||||||
| Impairment of natural gas and crude oil properties | 46,459 | — | 46,459 | 588 | — | 588 | |||||||||||||||||
| General and administrative expense | 15,115 | — | 15,115 | 14,708 | — | 14,708 | |||||||||||||||||
| Depreciation, depletion, and amortization | 27,949 | — | 27,949 | 27,912 | — | 27,912 | |||||||||||||||||
| Accretion of asset retirement obligations | 1,148 | — | 1,148 | 727 | — | 727 | |||||||||||||||||
| Gain on sale of properties and equipment | (38 | ) | — | (38 | ) | (154 | ) | — | (154 | ) | |||||||||||||
| Total cost, expenses and other | 121,916 | (39 | ) | 121,877 | 69,680 | (62 | ) | 69,618 | |||||||||||||||
| Income (loss) from operations | (50,090 | ) | (312 | ) | (50,402 | ) | 21,326 | (403 | ) | 20,923 | |||||||||||||
| Interest expense | (13,357 | ) | — | (13,357 | ) | (10,444 | ) | — | (10,444 | ) | |||||||||||||
| Interest income | — | — | — | 2 | — | 2 | |||||||||||||||||
| Income (loss) from continuing operations before income taxes | (63,447 | ) | (312 | ) | (63,759 | ) | 10,884 | (403 | ) | 10,481 | |||||||||||||
| Provision for income taxes | 22,492 | 126 | 22,618 | (4,120 | ) | 154 | (3,966 | ) | |||||||||||||||
| Income (loss) from continuing operations attributable to shareholders | $ | (40,955 | ) | $ | (186 | ) | $ | (41,141 | ) | $ | 6,764 | $ | (249 | ) | $ | 6,515 | |||||||
| Earnings per share from continuing operations: | |||||||||||||||||||||||
| Basic | $ | (1.35 | ) | $ | (1.36 | ) | $ | 0.29 | $ | 0.28 | |||||||||||||
| Diluted | $ | (1.35 | ) | $ | (1.36 | ) | $ | 0.28 | $ | 0.27 | |||||||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||||||||
| Basic | 30,270 | 30,270 | 23,609 | 23,609 | |||||||||||||||||||
| Diluted | 30,270 | 30,270 | 23,889 | 23,889 | |||||||||||||||||||
| PDC ENERGY, INC. | |||||||||||||||||||||||||||||||||||
| Pro Forma Condensed Consolidated Statements of Operations | |||||||||||||||||||||||||||||||||||
| (unaudited; in thousands, except per share data) | |||||||||||||||||||||||||||||||||||
| Year Ended December, 31 | |||||||||||||||||||||||||||||||||||
| 2012 | 2011 | 2010 | |||||||||||||||||||||||||||||||||
| As Reported | Pro Forma Adjustments - Divestiture | Pro Forma | As Reported | Pro Forma Adjustments - Divestiture | Pro Forma | As Reported | Pro Forma Adjustments - Divestiture | Pro Forma | |||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||
| Natural gas, NGL and crude oil sales | $ | 270,327 | $ | (33,343 | ) | $ | 236,984 | $ | 276,605 | $ | (56,966 | ) | $ | 219,639 | $ | 205,029 | $ | (58,981 | ) | $ | 146,048 | ||||||||||||||
| Sales from natural gas marketing | 47,079 | (1,708 | ) | 45,371 | 66,419 | (2,949 | ) | 63,470 | 69,071 | (3,836 | ) | 65,235 | |||||||||||||||||||||||
| Commodity price risk management gain, net | 32,339 | — | 32,339 | 46,090 | — | 46,090 | 59,891 | — | 59,891 | ||||||||||||||||||||||||||
| Well operations, pipeline income and other | 6,388 | (1,861 | ) | 4,527 | 6,846 | (2,410 | ) | 4,436 | 9,030 | (3,595 | ) | 5,435 | |||||||||||||||||||||||
| Total revenues | 356,133 | (36,912 | ) | 319,221 | 395,960 | (62,325 | ) | 333,635 | 343,021 | (66,412 | ) | 276,609 | |||||||||||||||||||||||
| Costs, expenses and other: | |||||||||||||||||||||||||||||||||||
| Production costs | 75,485 | (20,989 | ) | 54,496 | 67,352 | (22,946 | ) | 44,406 | 63,543 | (33,676 | ) | 29,867 | |||||||||||||||||||||||
| Cost of natural gas marketing | 46,552 | (1,529 | ) | 45,023 | 65,465 | (2,634 | ) | 62,831 | 68,015 | (3,282 | ) | 64,733 | |||||||||||||||||||||||
| Exploration expense | 22,605 | (2,254 | ) | 20,351 | 6,253 | (519 | ) | 5,734 | 13,675 | (4,468 | ) | 9,207 | |||||||||||||||||||||||
| Impairment of natural gas and crude oil properties | 168,149 | (162,254 | ) | 5,895 | 25,159 | (22,858 | ) | 2,301 | 6,481 | (2,111 | ) | 4,370 | |||||||||||||||||||||||
| General and administrative expense | 58,815 | — | 58,815 | 61,454 | — | 61,454 | 42,188 | — | 42,188 | ||||||||||||||||||||||||||
| Depreciation, depletion and amortization | 146,879 | (48,101 | ) | 98,778 | 128,907 | (41,274 | ) | 87,633 | 108,095 | (41,977 | ) | 66,118 | |||||||||||||||||||||||
| Accretion of asset retirement obligations | 4,060 | (373 | ) | 3,687 | 1,733 | (335 | ) | 1,398 | 1,329 | (285 | ) | 1,044 | |||||||||||||||||||||||
| Gain on sale of properties and equipment | (4,353 | ) | — | (4,353 | ) | (196 | ) | — | (196 | ) | (174 | ) | — | (174 | ) | ||||||||||||||||||||
| Total costs, expenses and other | 518,192 | (235,500 | ) | 282,692 | 356,127 | (90,566 | ) | 265,561 | 303,152 | (85,799 | ) | 217,353 | |||||||||||||||||||||||
| Income (loss) from operations | (162,059 | ) | 198,588 | 36,529 | 39,833 | 28,241 | 68,074 | 39,869 | 19,387 | 59,256 | |||||||||||||||||||||||||
| Loss on extinguishment of debt | (23,283 | ) | — | (23,283 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||
| Interest expense | (48,287 | ) | — | (48,287 | ) | (36,985 | ) | — | (36,985 | ) | (33,250 | ) | — | (33,250 | ) | ||||||||||||||||||||
| Interest income | 8 | — | 8 | 47 | — | 47 | 71 | — | 71 | ||||||||||||||||||||||||||
| Income (loss) from continuing operations before income taxes | (233,621 | ) | 198,588 | (35,033 | ) | 2,895 | 28,241 | 31,136 | 6,690 | 19,387 | 26,077 | ||||||||||||||||||||||||
| Provision for income taxes | 88,835 | (75,871 | ) | 12,964 | 183 | (10,754 | ) | (10,571 | ) | (652 | ) | (7,365 | ) | (8,017 | ) | ||||||||||||||||||||
| Income (loss) from continuing operations | (144,786 | ) | 122,717 | (22,069 | ) | 3,078 | 17,487 | 20,565 | 6,038 | 12,022 | 18,060 | ||||||||||||||||||||||||
| Net loss attributable to noncontrolling interests | — | — | — | — | — | — | (280 | ) | — | (280 | ) | ||||||||||||||||||||||||
| Income (loss) from continuing operations attributable to shareholders | $ | (144,786 | ) | $ | 122,717 | $ | (22,069 | ) | $ | 3,078 | $ | 17,487 | $ | 20,565 | $ | 6,318 | $ | 12,022 | $ | 18,340 | |||||||||||||||
| Earnings per share from continuing operations: | |||||||||||||||||||||||||||||||||||
| Basic | $ | (5.23 | ) | $ | (0.80 | ) | $ | 0.13 | $ | 0.87 | $ | 0.33 | $ | 0.94 | |||||||||||||||||||||
| Diluted | $ | (5.23 | ) | $ | (0.80 | ) | $ | 0.13 | $ | 0.86 | $ | 0.32 | $ | 0.93 | |||||||||||||||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||||||||||||||||||||
| Basic | 27,677 | 27,677 | 23,521 | 23,521 | 19,674 | 19,674 | |||||||||||||||||||||||||||||
| Diluted | 27,677 | 27,677 | 23,871 | 23,871 | 19,821 | 19,821 | |||||||||||||||||||||||||||||
| PDC ENERGY, INC. | |||||||||||
| Pro Forma Condensed Consolidated Balance Sheet | |||||||||||
| (unaudited; in thousands, except share and per share data) | |||||||||||
| March 31, 2013 | |||||||||||
| As Reported | Pro Forma Adjustments - Divestiture | Pro Forma | |||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 2,494 | $ | 125,871 | $ | 128,365 | |||||
| Other current assets | 150,165 | (37,091 | ) | 113,074 | |||||||
| Total current assets | 152,659 | 88,780 | 241,439 | ||||||||
| Properties and equipment, net | 1,375,473 | — | 1,375,473 | ||||||||
| Assets held for sale | 216,802 | (184,305 | ) | 32,497 | |||||||
| Other assets | 36,879 | (3,055 | ) | 33,824 | |||||||
| Total Assets | $ | 1,781,813 | $ | (98,580 | ) | $ | 1,683,233 | ||||
| Liabilities and Shareholders' Equity | |||||||||||
| Liabilities | |||||||||||
| Current liabilities | $ | 194,753 | $ | (12,104 | ) | $ | 182,649 | ||||
| Long-term debt | 687,970 | (57,000 | ) | 630,970 | |||||||
| Deferred income taxes | 128,699 | (20,875 | ) | 107,824 | |||||||
| Asset retirement obligations | 34,296 | — | 34,296 | ||||||||
| Liabilities held for sale | 28,346 | (6,303 | ) | 22,043 | |||||||
| Other liabilities | 41,844 | (5,046 | ) | 36,798 | |||||||
| Total liabilities | 1,115,908 | (101,328 | ) | 1,014,580 | |||||||
| 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; 100,000,000 authorized shares; issued: 30,294,224 | 303 | — | 303 | ||||||||
| Additional paid-in capital | 389,831 | — | 389,831 | ||||||||
| Retained earnings | 276,150 | 2,748 | 278,898 | ||||||||
| Treasury shares, at cost 5,059 | (379 | ) | — | (379 | ) | ||||||
| Total shareholders' equity | 665,905 | 2,748 | 668,653 | ||||||||
| Total Liabilities and Equity | $ | 1,781,813 | $ | (98,580 | ) | $ | 1,683,233 | ||||