Exhibit 99.1
TETRA TECHNOLOGIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Introduction
The following unaudited pro forma financial statements reflect the sale of approximately 79% of Maritech Resources, Inc.’s (“Maritech”) proved reserves as of December 31, 2010 to Tana Exploration Company LLC (“Tana”), a subsidiary of TRT Holdings, Inc. (“TRT”) pursuant to a Purchase and Sale Agreement dated April 1, 2011. The unaudited pro forma financial statements of TETRA Technologies, Inc. (the “Company”) as of March 31, 2011 and the three months ended March 31, 2011 and the year ended December 31, 2010 are based on the historical consolidated balance sheet and results of operations of the Company. These unaudited pro forma financial statements are qualified in their entirety by reference to such historical financial statements of the Company and related notes.
The pro forma adjustments have been prepared as if the transaction had taken place on March 31, 2011, in the case of the pro forma balance sheet, or as of January 1, 2010, in the case of the pro forma statements of operations for the year ended December 31, 2010 and the three months ended March 31, 2011. The unaudited pro forma consolidated financial information is provided for illustrative purposes only and does not purport to present what the actual results of operations would have been had the transaction occurred on the respective dates assumed, nor is it necessarily indicative of the Company’s future operating results. However, the pro forma adjustments reflected in the accompanying unaudited pro forma consolidated financial information reflect estimates and assumptions that the Company believes to be reasonable.
TETRA TECHNOLOGIES, INC.
UNAUDITED PRO FORMA BALANCE SHEET
March 31, 2011
| | | Historical Results | | | Pro Forma Adjustments | | Pro Forma Results | |
| | | (In thousands) | |
| ASSETS | |
| Current Assets: | | | | | | | | | | |
| Cash and cash equivalents | | $ | 72,481 | | | $ | 173,274 | | (a) | | $ | 242,455 | |
| | | | | | | | (3,300 | ) | (b) | | | | |
| Restricted cash | | | 99 | | | | | | | | | 99 | |
| Trade accounts receivable, net of allowance for doubtful accounts | | | 158,314 | | | | (702 | ) | (c) | | | 157,612 | |
| Inventories | | | 98,376 | | | | (674 | ) | (c) | | | 97,702 | |
| Deferred tax asset | | | 32,211 | | | | 269 | | (d) | | | 32,480 | |
| Prepaid expenses and other current assets | | | 41,618 | | | | (4,547 | ) | (c) | | | 37,071 | |
| Total current assets | | | 403,099 | | | | | | | | | 567,419 | |
| | | | | | | | | | | | | | |
| Property, plant and equipment: | | | | | | | | | | | | | |
| Land and building | | | 77,309 | | | | | | | | | 77,309 | |
| Machinery and equipment | | | 449,514 | | | | | | | | | 449,514 | |
| Automobiles and trucks | | | 46,377 | | | | | | | | | 46,377 | |
| Chemical plants | | | 156,366 | | | | | | | | | 156,366 | |
| Oil and gas producing properties | | | 585,141 | | | | (467,084 | ) | (c) | | | 118,057 | |
| Construction in progress | | | 20,933 | | | | | | | | | 20,933 | |
| Less accumulated depreciation and depletion | | | (652,317 | ) | | | 277,239 | | (c) | | | (375,078 | ) |
| Net property, plant and equipment | | | 683,323 | | | | | | | | | 493,478 | |
| Other assets: | | | | | | | | | | | | | |
| Goodwill | | | 99,005 | | | | | | | | | 99,005 | |
| Patents, trademarks, and other intangible assets | | | 13,987 | | | | | | | | | 13,987 | |
| Other assets | | | 31,920 | | | | (440 | ) | (c) | | | 31,480 | |
| Total other assets | | | 144,912 | | | | | | | | | 144,472 | |
| Total assets | | $ | 1,231,334 | | | | | | | | $ | 1,205,369 | |
| | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| Current liabilities: | | | | | | | | | | | | | |
| Trade accounts payable | | $ | 32,445 | | | | | | | | $ | 32,445 | |
| Accrued liabilities | | | 79,197 | | | | (906 | ) | (c) | | | 78,291 | |
| Decommissioning and other asset retirement obligations | | | 100,718 | | | | | | | | | 100,718 | |
| Derivative liabilities | | | 12,046 | | | | | | | | | 12,046 | |
| Total current liabilities | | | 224,406 | | | | | | | | | 223,500 | |
| | | | | | | | | | | | | | |
| Long-term debt | | | 305,035 | | | | | | | | | 305,035 | |
| Deferred income taxes | | | 42,039 | | | | 17,881 | | (d) | | | 59,920 | |
| Decommissioning and other asset retirement obligations | | | 130,116 | | | | (72,086 | ) | (c) | | | 58,030 | |
| Other long-term liabilities | | | 12,385 | | | | | | | | | 12,385 | |
| | | | 489,575 | | | | | | | | | 435,370 | |
Stockholders’ equity | | | 517,353 | | | | 29,146 | | (e) | | | 546,499 | |
| Total liabilities and partners’ capital/net parent equity | | $ | 1,231,334 | | | | | | | | $ | 1,205,369 | |
See accompanying notes to unaudited pro forma financial statements.
TETRA TECHNOLOGIES, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
Year Ended December 31, 2010
| | | Historical Results | | | Pro Forma Adjustments | | Pro Forma Results | |
| | | (In thousands, except unit and per unit data) | |
| Revenue: | | | | | | | | | | |
| Product sales | | $ | 419,926 | | | | (103,317 | ) | (f) | | $ | 316,609 | |
| Services and rentals | | | 452,752 | | | | (1,706 | ) | (f) | | | 451,046 | |
| Total revenues | | | 872,678 | | | | | | | | | 767,655 | |
| | | | | | | | | | | | | | |
| Cost of revenues: | | | | | | | | | | | | | |
| Cost of product sales | | | 302,675 | | | | (41,207 | ) | (f) | | | 261,468 | |
| Cost of services and rentals | | | 289,407 | | | | | | | | | 289,407 | |
| Depreciation, depletion, amortization, and accretion | | | 148,022 | | | | (52,137 | ) | (f) | | | 95,885 | |
| Impairments of long-lived assets | | | 88,867 | | | | (15,547 | ) | (f) | | | 73,320 | |
| Total cost of revenues | | | 828,971 | | | | | | | | | 720,080 | |
| Gross profit | | | 43,707 | | | | | | | | | 47,575 | |
| General and administrative expense | | | 100,132 | | | | 1,374 | | (f) | | | 101,506 | |
| Operating income (loss) | | | (56,425 | ) | | | | | | | | (53,931 | ) |
| Interest expense | | | 17,304 | | | | | | | | | 17,304 | |
| Other (income) expense, net | | | 64 | | | | | | | | | 64 | |
| Income (loss) before income taxes and discontinued operations | | | (73,793 | ) | | | | | | | | (71,299 | ) |
| Provision (benefit) for income taxes | | | (30,468 | ) | | | 905 | | (g) | | | (29,563 | ) |
| Net loss before discontinued operations | | $ | (43,325 | ) | | | | | | | $ | (41,736 | ) |
Net loss per common unit (basic and diluted) | | $ | (0.57 | ) | | | | | | | $ | (0.55 | ) |
See accompanying notes to unaudited pro forma financial statements.
TETRA TECHNOLOGIES, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
Three Months Ended March 31, 2011
| | | Historical Results | | | Pro Forma Adjustments | | Pro Forma Results | |
| | | (In thousands, except unit and per unit data) | |
| Revenue: | | | | | | | | | | |
| Product sales | | $ | 106,523 | | | | (37,626 | ) | (f) | | $ | 68,897 | |
| Services and rentals | | | 116,022 | | | | (298 | ) | (f) | | | 115,724 | |
| Total revenues | | | 222,545 | | | | | | | | | 184,621 | |
| | | | | | | | | | | | | | |
| Cost of revenues: | | | | | | | | | | | | | |
| Cost of product sales | | | 77,018 | | | | (11,352 | ) | (f) | | | 65,666 | |
| Cost of services and rentals | | | 81,771 | | | | | | | | | 81,771 | |
| Depreciation, depletion, amortization, and accretion | | | 37,392 | | | | (15,091 | ) | (f) | | | 22,301 | |
| Total cost of revenues | | | 196,181 | | | | | | | | | 169,738 | |
| Gross profit | | | 26,364 | | | | | | | | | 14,883 | |
| General and administrative expense | | | 27,762 | | | | 439 | | (f) | | | 28,201 | |
| Operating income (loss) | | | (1,398 | ) | | | | | | | | (13,318 | ) |
| Interest expense | | | 4,191 | | | | | | | | | 4,191 | |
| Other (income) expense, net | | | (1,548 | ) | | | | | | | | (1,548 | ) |
| Income (loss) before income taxes and discontinued operations | | | (4,041 | ) | | | | | | | | (15,961 | ) |
| Provision (benefit) for income taxes | | | (1,529 | ) | | | (4,203 | ) | (g) | | | (5,732 | ) |
| Net loss before discontinued operations | | $ | (2,512 | ) | | | | | | | $ | (10,229 | ) |
Net loss per common unit (basic and diluted) | | $ | (0.03 | ) | | | | | | | $ | (0.13 | ) |
See accompanying notes to unaudited pro forma financial statements.
TETRA TECHNOLOGIES, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The historical financial information is derived from the historical consolidated financial statements of the Company. The pro forma adjustments have been prepared as if the transactions effected had taken place on March 31, 2011, in the case of the pro forma balance sheet, or as of January 1, 2010, in the case of the pro forma statements of operations for the year ended December 31, 2010 and the three months ended March 31, 2011. The unaudited pro forma financial statements reflect the sale of approximately 79% of Maritech’s proved reserves as of December 31, 2010 to Tana pursuant to a Purchase and Sale Agreement dated April 1, 2011.
As a result of the sale of the properties to Tana, Maritech will record a net pretax gain on sales of the properties, which the Company currently estimates will be approximately $60 million (estimated to be approximately $37 million after tax), and this net gain is not reflected in the unaudited pro forma statements of operations. The unaudited pro forma financial statements also do not give effect to the following transactions or plans that are associated with the Company’s sale of Maritech’s oil and gas properties:
| (a) | The February and March 2011 sales of additional Maritech oil and gas properties, that were individually not significant, and which resulted in the disposal of approximately 12% of Maritech’s December 31, 2010 proved reserves. |
| (b) | The April 2011 liquidation of all of the derivative cash flow hedges of Maritech’s oil and gas production cash flows. These derivative instruments were liquidated in exchange for a payment of $14.2 million, which will result in a charge to earnings during the second quarter of 2011. |
| (c) | The May 2011 agreement between Tana and the Company whereby Tana will sublease certain office space in the Company’s corporate headquarters building. |
| (d) | The June 2011 incentive payments made to certain Maritech employees associated with consummating the sale of Maritech oil and gas properties to Tana. |
| (e) | Maritech’s plans to reduce its general and administrative expenses to reflect its reduced activity going forward. |
| B. | Pro Forma Adjustments and Assumptions |
| 1. | Adjustments to Balance Sheet: |
| (a) | Adjustment to record proceeds from the sale of oil and gas properties to Tana, net of purchase price adjustments including post-effective date cash flows. |
| (b) | Adjustment to reflect cash payment of transaction fees. |
| | (c) | Adjustment to reflect sale of working capital, inventories, oil and gas producing properties less accumulated depletion, and assumption by Tana of decommissioning and other asset retirement obligations associated with the properties sold. |
| | (d) | Adjustment to deferred tax liabilities associated with the oil and gas properties sold. |
| | (e) | Adjustment to increase stockholders’ equity to reflect the gain on sale that would have been recognized assuming the transaction occurred on March 31, 2011. |
| 2. | Adjustments to Statements of Operations: |
| | (f) | Adjustment to eliminate revenue and direct operating expenses, including depletion and impairment expense, associated with the oil and gas properties sold. |
| | (g) | Adjustment to reflect income tax expense based on the Company’s pro forma tax rate applied to the cumulative effect of changes referenced within the unaudited pro forma statement of operations. |
