EXHIBIT 99.1
UNAUDITED PRO FORMA
FINANCIAL INFORMATION
CONDENSED STATEMENT OF EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
AND EACH OF THE YEARS IN THE THREE-YEAR PERIOD
ENDED DECEMBER 31, 1995
AND
CONDENSED BALANCE SHEET
AS OF JUNE 30, 1996
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
On September 10, 1996, Seagull Energy Corporation ("Seagull") acquired all
of the outstanding common stock of Esso Suez Inc. ("Esso Suez") (the "Esso Suez
Acquisition") and certain assets of Esso Egypt Limited for a net purchase price
of approximately $74 million in cash. On October 3, 1996, the shareholders of
Seagull and the shareholders of Global Natural Resources Inc. ("Global")
approved a stock merger (the "Merger") whereby each outstanding share of Global
common stock was converted into .88 of share of Seagull common stock (the
"Common Stock Exchange Ratio").
The unaudited pro forma condensed statements of earnings for the six months
ended June 30, 1996 and each of the years in the three-year period ended
December 31, 1995 give effect to (i) the Merger using the pooling of interests
method of accounting for business combinations and (ii) the Esso Suez
Acquisition, financed under Seagull's revolving credit facilities (the "Credit
Facilities"), as if the acquisition had occurred on January 1, 1995. The
unaudited pro forma condensed balance sheet as of June 30, 1996 gives effect to
(i) the Merger using the pooling of interests method of accounting for business
combinations and (ii) the Esso Suez Acquisition, financed under the Credit
Facilities, as if the acquisition had occurred on June 30, 1996. The
transactions contemplated by the Merger will be accounted for as a pooling of
interests whereby the assets, liabilities and results of operations of Seagull
and Global are combined using the historical cost-based amounts of the two
separate entities.
The unaudited pro forma information presented is based upon the respective
historical consolidated financial statements of Seagull, Global and Esso Suez
and should be read in conjunction with such financial statements and the related
notes thereto. Estimated pre-tax expenses of approximately $8 million related to
effecting the Merger of Seagull and Global will be deducted in determining the
net income of the combined enterprise for the period in which the expenses are
incurred. The effects of such expenses are not reflected in the following
unaudited pro forma condensed financial statements. The unaudited pro forma
condensed financial information has been prepared from, and should be read in
conjunction with, the historical consolidated financial statements and notes
thereto of Seagull, Global and Esso Suez. The unaudited pro forma information
presented does not purport to be indicative of actual results, as if the
combinations had been in effect on the dates of or for the periods indicated, or
of future results.
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UNAUDITED PRO FORMA CONDENSED STATEMENTS OF EARNINGS
Six Months Ended June 30, 1996
(Dollars in Thousands, Except Per Share Amounts)
Seagull/ Esso Pro Forma
Seagull Global Adjustments Global Suez Adjustments Combined
--------- -------- ------------- --------- -------- ------------ ---------
Revenues:
Gas and oil operations................... $145,302 $55,516 $ $200,818 $26,903 $ $227,721
Alaska transmission and distribution..... 51,133 - 51,133 - 51,133
--------- -------- --------- --------- -------- --------- ---------
196,435 55,516 251,951 26,903 278,854
Costs of Operations:
Alaska transmission and distribution
cost of gas sold....................... 22,457 - 22,457 - 22,457
Operations and maintenance............... 51,013 23,638 (3,723)(B) 70,928 5,114 76,042
Exploration charges...................... 14,841 5,944 (600)(B) 20,185 - 20,185
Depreciation, depletion and amortization. 62,320 12,278 600 (B) 75,198 11,021 (11,021)(D) 82,790
7,592 (D)
--------- -------- --------- --------- -------- --------- ---------
150,631 41,860 (3,723) 188,768 16,135 (3,429) 201,474
--------- -------- --------- --------- -------- --------- ---------
Operating Profit........................... 45,804 13,656 3,723 63,183 10,768 3,429 77,380
Other (Income) Expense:
General and administrative............... 7,933 - 3,723 (B) 11,656 - 11,656
Interest expense......................... 22,654 29 22,683 - 2,246 (E) 24,929
Loss (gain) on sale of property, plant
and equipment, net.................... (384) 3 (381) - (381)
Interest income and other................ (468) (534) (1,002) (50) (1,052)
--------- -------- --------- --------- -------- --------- ---------
29,735 (502) 3,723 32,956 (50) 2,246 35,152
--------- -------- --------- --------- -------- --------- ---------
Earnings Before Income Taxes............... 16,069 14,158 - 30,227 10,818 1,183 42,228
Income Tax Expense......................... 7,130 7,012 707 (C) 14,849 6,566 (786)(F) 20,629
--------- -------- --------- --------- -------- --------- ---------
Net Earnings............................... $ 8,939 $ 7,146 $ (707) $ 15,378 $ 4,252 $ 1,969 $ 21,599
========= ======== ========= ========= ======== ========= =========
Earnings Per Share......................... $ 0.24 $ 0.24 $ 0.34
========= ========= =========
Weighted Average Number of Common
Shares Outstanding (in thousands)........ 37,062 26,098 (A) 63,160 63,160
========= ========= ========= =========
See Accompanying Notes to Unaudited Pro Forma Condensed Statements of Earnings.
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UNAUDITED PRO FORMA CONDENSED STATEMENTS OF EARNINGS
Year Ended December 31, 1995
(Dollars in Thousands, Except Per Share Amounts)
Seagull/ Esso Pro Forma
Seagull Global Adjustments Global Suez Adjustments Combined
--------- --------- ----------- ---------- --------- ----------- ---------
Revenues:
Gas and oil operations................... $238,503 $78,457 $ $316,960 $ 75,889 $ $392,849
Alaska transmission and distribution..... 97,770 - 97,770 - 97,770
--------- --------- --------- ---------- --------- --------- ---------
336,273 78,457 414,730 75,889 490,619
Costs of Operations:
Alaska transmission and distribution
cost of gas sold....................... 46,328 - 46,328 - 46,328
Operations and maintenance............... 105,674 40,964 (5,556)(B) 141,082 11,766 152,848
Exploration charges...................... 29,555 11,768 (1,100)(B) 40,223 - 40,223
Depreciation, depletion and amortization. 124,790 21,520 1,100 (B) 147,410 32,154 (32,154)(D) 169,523
22,113 (D)
Impairment of long-lived assets.......... 44,376 4,466 48,842 - 48,842
--------- --------- --------- ---------- --------- ---------- ---------
350,723 78,718 (5,556) 423,885 43,920 (10,041) 457,764
--------- --------- --------- ---------- --------- ---------- ---------
Operating Profit (Loss).................... (14,450) (261) 5,556 (9,155) 31,969 10,041 32,855
Other (Income) Expense:
General and administrative............... 19,167 - 5,556 (B) 24,723 - 24,723
Interest expense......................... 52,814 164 52,978 - 5,032 (E) 58,010
Loss (gain) on sale of property, plant
and equipment, net.................... (83,591) 203 (83,388) - (83,388)
Interest income and other................ (1,160) (3,352) (4,512) (34) (4,546)
--------- --------- --------- ---------- --------- ---------- ---------
(12,770) (2,985) 5,556 (10,199) (34) 5,032 (5,201)
--------- --------- --------- ---------- --------- ---------- ---------
Earnings (Loss) Before Income Taxes........ (1,680) 2,724 - 1,044 32,003 5,009 38,056
Income Tax Expense (Benefit)............... (2,312) 9,031 (3,937) (C) 2,782 22,843 (1,761)(F) 23,864
--------- --------- --------- ---------- --------- ---------- ---------
Net Earnings (Loss)........................ $ 632 $ (6,307) $3,937 $ (1,738) $ 9,160 $ 6,770 $ 14,192
========= ========= ========= ========== ========= ========== =========
Earnings (Loss) Per Share.................. $ 0.02 $ (0.03) $ 0.23
========= ========== =========
Weighted Average Number of Common
Shares Outstanding (in thousands)........ 36,717 25,957 (A) 62,674 62,674
========= ========= ========== ========
See Accompanying Notes to Unaudited Pro Forma Condensed Statements of Earnings.
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UNAUDITED PRO FORMA CONDENSED STATEMENTS OF EARNINGS
Year Ended December 31, 1994
(Dollars in Thousands, Except Per Share Amounts)
Pro Forma
Seagull Global Adjustments Combined
----------- ----------- ------------- -------------
Revenues:
Gas and oil operations................... $ 302,506 $ 62,943 $ $ 365,449
Alaska transmission and distribution..... 105,598 - 105,598
----------- ----------- ------------- -------------
408,104 62,943 471,047
Costs of Operations:
Alaska transmission and distribution
cost of gas sold....................... 54,465 - 54,465
Operations and maintenance............... 119,987 36,960 (6,591) (B) 150,356
Exploration charges...................... 26,888 19,325 (2,400) (B) 43,813
Depreciation, depletion and amortization. 144,697 9,837 2,400 (B) 156,934
----------- ----------- ------------- -------------
346,037 66,122 (6,591) 405,568
----------- ----------- ------------- -------------
Operating Profit (Loss).................... 62,067 (3,179) 6,591 65,479
Other (Income) Expense:
General and administrative............... 10,252 - 6,591 (B) 16,843
Interest expense......................... 51,550 124 51,674
Loss (gain) on sale of property, plant
and equipment, net.................... (413) 8 (405)
Interest income and other................ (254) (1,714) (1,968)
----------- ----------- ------------- -------------
61,135 (1,582) 6,591 66,144
----------- ----------- ------------- -------------
Earnings (Loss) Before Income Taxes........ 932 (1,597) - (665)
Income Tax Expense (Benefit)............... (2,314) 6,656 (602) (C) 3,740
----------- ----------- ------------- -------------
Net Earnings (Loss)........................ $ 3,246 $ (8,253) $ 602 $ (4,405)
=========== =========== ============= =============
Earnings (Loss) Per Share.................. $ 0.09 $ (0.07)
=========== =============
Weighted Average Number of Common
Shares Outstanding (in thousands)........ 36,904 26,102 (A) 63,006
=========== ============= =============
See Accompanying Notes to Unaudited Pro Forma Condensed Statements of Earnings.
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UNAUDITED PRO FORMA CONDENSED STATEMENTS OF EARNINGS
Year Ended December 31, 1993
(Dollars in Thousands, Except Per Share Amounts)
Pro Forma
Seagull Global Adjustments Combined
----------- ------------ ------------- -----------
Revenues:
Gas and oil operations................... $269,921 $75,084 $ $ 345,005
Alaska transmission and distribution..... 107,244 - 107,244
----------- ------------ ------------- -----------
377,165 75,084 452,249
Costs of Operations:
Alaska transmission and distribution
cost of gas sold....................... 59,898 - 59,898
Operations and maintenance............... 107,457 54,651 (7,664) (B) 154,444
Exploration charges...................... 17,265 6,946 (2,400) (B) 21,811
Depreciation, depletion and amortization. 116,556 8,376 2,400 (B) 127,332
----------- ------------ ------------- -----------
301,176 69,973 (7,664) 363,485
----------- ------------ ------------- -----------
Operating Profit........................... 75,989 5,111 7,664 88,764
Other (Income) Expense:
General and administrative............... 11,666 - 7,664 (B) 19,330
Interest expense......................... 36,753 101 36,854
Gain on sale of property, plant
and equipment, net.................... (3,929) (1,752) (5,681)
Interest income and other................ (1,779) (4,257) (6,036)
----------- ------------ ------------- -----------
42,711 (5,908) 7,664 44,467
----------- ------------ ------------- -----------
Earnings Before Income Taxes............... 33,278 11,019 - 44,297
Income Tax Expense......................... 6,080 6,532 3,799 (C) 16,411
----------- ------------ ------------- -----------
Net Earnings............................... $ 27,198 $ 4,487 $ (3,799) $ 27,886
=========== ============ ============= ===========
Earnings Per Share......................... $ 0.76 $ 0.46
=========== ===========
Weighted Average Number of Common
Shares Outstanding (in thousands)........ 35,790 24,958 (A) 60,748
=========== ============= ===========
See Accompanying Notes to Unaudited Pro Forma Condensed Statements of Earnings.
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NOTES TO UNAUDITED PRO FORMA
CONDENSED STATEMENTS OF EARNINGS
(A) The pro forma weighted average number of common shares outstanding has
been computed by multiplying the historical average common shares
outstanding for Global by the Common Stock Exchange Ratio of .88.
(B) To reclassify general and administrative costs associated with Global's
corporate staff and Global's leasehold amortization of unproved
properties to be consistent with Seagull's accounting presentation.
(C) To adjust the valuation allowance associated with the deferred tax
assets primarily related to book to tax basis differences on domestic
property, plant and equipment generated during the applicable periods.
(D) To adjust depreciation, depletion and amortization expense to give
effect to the Esso Suez Acquisition.
(E) To record interest expense to give effect to the Esso Suez Acquisition
financed under the Credit Facilities.
(F) To adjust U.S. federal income taxes for adjustments.
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UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
June 30, 1996
(Dollars in Thousands)
ASSETS
Seagull/ Esso Pro Forma
Seagull Global Adjustments Global Suez Adjustments Combined
----------- ------- ------------ ----------- -------- ------------- ----------
Current Assets:
Cash and cash equivalents............ $ 14,404 $ 16,801 $ $ 31,205 $ 632 $ $ 31,837
Accounts receivable, net............. 107,583 13,399 120,982 96,191 (88,911)(D) 128,262
Inventories.......................... 5,488 - 5,488 7,157 12,645
Prepaid expense and other............ 6,502 4,056 10,558 739 11,297
---------- --------- --------- ---------- -------- ---------- ----------
Total Current Assets............... 133,977 34,256 168,233 104,719 (88,911) 184,041
Property, Plant and Equipment - at cost 1,645,282 216,741 1,862,023 255,113 (255,113)(B) 1,922,369
60,346 (C)
Accumulated Depreciation,
Depletion and Amortization........... 627,612 89,707 717,319 198,617 (198,617)(B) 717,319
---------- --------- --------- ---------- -------- ---------- ----------
1,017,670 127,034 1,144,704 56,496 3,850 1,205,050
Other Assets........................... 39,917 6,038 45,955 103 46,058
---------- --------- --------- ---------- -------- ---------- ----------
Total Assets....................... $1,191,564 $167,328 $ $1,358,892 $161,318 $ (85,061) $1,435,149
========== ========= ========= ========== ======== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable..................... $ 79,975 $ 10,641 $ $ 90,616 $ 647 $ $ 91,263
Accrued expenses..................... 33,518 11,386 44,904 1,610 46,514
Current maturities of long-term debt. 1,214 1,250 2,464 - 2,464
---------- --------- --------- ---------- -------- ---------- ----------
Total Current Liabilities.......... 114,707 23,277 137,984 2,257 140,241
Long-Term Debt......................... 522,632 16,250 538,882 - 74,000 (D) 612,882
Other Noncurrent Liabilities........... 53,581 624 54,205 - 54,205
Deferred Income Taxes.................. 41,111 - (5,811) (A) 35,300 - 35,300
Redeemable Bearer Shares............... - 16,265 16,265 - 16,265
Shareholders' Equity................... 459,533 110,912 5,811 (A) 576,256 159,061 (159,061)(E) 576,256
Commitments and Contingencies..........
---------- --------- --------- ---------- -------- ---------- ----------
Total Liabilities and
Shareholders' Equity............. $1,191,564 $167,328 $ $1,358,892 $161,318 $ (85,061) $1,435,149
========== ========= ========= ========== ======== ========== ==========
See Accompanying Notes to Unaudited Pro Forma Condensed Balance Sheet.
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NOTES TO UNAUDITED PRO FORMA
CONDENSED BALANCE SHEET
(A) To adjust the valuation allowance associated with the deferred tax
assets primarily related to the book to tax basis differences on
domestic property, plant and equipment. These deferred tax assets were
generated, but not expected to be utilized, by Global but will more
likely than not be utilized by the pro forma combined entity.
(B) To eliminate the historical cost of property, plant and equipment and
accumulated depreciation, depletion and amortization of Esso Suez.
(C) To adjust the assets acquired and liabilities assumed in the Esso Suez
Acquisition to reflect the allocation of the estimated purchase price.
(D) To record the financing of the Esso Suez Acquisition through additional
borrowings under the Credit Facilities and the prompt collection of
certain receivables.
(E) To eliminate the shareholder's equity of Esso Suez.
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