Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
On September 11, 1997, Seagull Energy Corporation, a Texas corporation
("Seagull" or the "Company"), entered into a Share Sale Agreement with Rio Alto
Exploration Ltd. ("Rio Alto") regarding the sale of Seagull's Canadian oil and
gas subsidiary, Seagull Energy Canada Ltd. ("Seagull Canada"). The unaudited pro
forma condensed statements of operations for the six months ended June 30, 1997
and the year ended December 31, 1996 give effect to the sale of Seagull Canada
as if the disposition had occurred on January 1, 1996. The unaudited pro forma
condensed balance sheet as of June 30, 1997 gives effect to the sale of Seagull
Canada as if the disposition had occurred on June 30, 1997.
The unaudited pro forma information presented is based on the
historical consolidated financial statements of Seagull and should be read in
conjunction with such financial statements and the related notes thereto.
Certain reclassifications have been made to 1996 information to conform to the
presentation used in 1997. The unaudited pro forma information presented does
not purport to be indicative of actual results, as if the disposition had been
in effect on the dates or for the periods indicated, or of future results.
SEAGULL ENERGY CORPORATION
PRO FORMA
STATEMENT OF OPERATIONS
(Amounts in Thousands Except Per Share Amounts)
Six Months Ended June 30, 1997
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Seagull Pro Forma
Seagull Canada Adjustments Pro Forma
------------- --------------- ------------------ ---------------
(A)
Revenues:
Oil and gas operations $ 230,410 $ 18,384 $ 212,026
Alaska transmission and distribution 51,343 - 51,343
------------- --------------- ------------------ ---------------
281,753 18,384 - 263,369
------------- --------------- ------------------ ---------------
Costs of Operations:
Alaska transmission and distribution
cost of gas sold 23,966 - 23,966
Operations and maintenance 83,876 5,887 77,989
Exploration charges 16,299 1,469 14,830
Depreciation, depletion and amortization 87,772 7,595 80,177
General and administrative 5,423 - 5,423
------------- --------------- ------------------ ---------------
217,336 14,951 - 202,385
------------- --------------- ------------------ ---------------
Operating Profit (Loss) 64,417 3,433 - 60,984
Other (Income) Expense:
Interest expense 19,995 1,360 (3,125) (B) 15,510
(Gain) loss on sales of property,
plant and equipment, net 118 (15) 133
Interest income and other (1,031) (6) (1,025)
------------- --------------- ------------------ ---------------
Income Before Income Taxes 45,335 2,094 3,125 46,366
------------- --------------- ------------------ ---------------
Income Tax Expense 25,460 1,332 1,094 (C) 25,222
------------- --------------- ------------------ ---------------
Net Income $ 19,875 $ 762 $ 2,031 $ 21,144
============= =============== ================== ===============
Earnings Per Share $ 0.31 $ 0.33
============= ===============
Weighted Average Number of Common
Shares Outstanding 64,028 64,028
============= ===============
See accompanying notes to unaudited pro forma condensed statement of
operations.
SEAGULL ENERGY CORPORATION
PRO FORMA
STATEMENT OF OPERATIONS
(Amounts in Thousands Except Per Share Amounts)
Year Ended December 31, 1996
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Seagull Pro Forma
Seagull Canada Adjustments Pro Forma
------------- --------------- ------------------ ---------------
(A)
Revenues:
Oil and gas operations $ 419,595 $ 33,816 $ 385,779
Alaska transmission and distribution 97,616 - 97,616
------------- --------------- ------------------ ---------------
517,211 33,816 - 483,395
------------- --------------- ------------------ ---------------
Costs of Operations:
Alaska transmission and distribution
cost of gas sold 42,600 - 42,600
Operations and maintenance 147,294 14,147 133,147
Exploration charges 50,772 4,295 46,477
Depreciation, depletion and
amortization 155,669 16,856 138,813
General and administrative 17,433 - 17,433
------------- --------------- ------------------ ---------------
413,768 35,298 - 378,470
------------- --------------- ------------------ ---------------
Operating Profit (Loss) 103,443 (1,482) - 104,925
Other (Income) Expense:
Merger expense 9,982 - 9,982
Interest expense 44,842 4,191 (6,170) (B) 34,481
(Gain) loss on sales of property,
plant and equipment, net (1,088) (501) (587)
Interest income and other (5,149) (350) (4,799)
------------- --------------- ------------------ ---------------
48,587 3,340 (6,170) 39,077
------------- --------------- ------------------ ---------------
Income (Loss) Before Income Taxes 54,856 (4,822) 6,170 65,848
Income Tax Expense 25,895 1,375 2,160 (C) 26,680
------------- --------------- ------------------ ---------------
Net Income (Loss) $ 28,961 $ (6,197) $ 4,010 $ 39,168
============= =============== ================== ===============
Earnings Per Share $ 0.45 $ 0.61
============= ===============
Weighted Average Number of Common
Shares Outstanding 64,073 64,073
============= ===============
See accompanying notes to unaudited pro forma condensed statement of operations.
NOTES TO UNAUDITED PRO FORMA
CONDENSED STATEMENTS OF OPERATIONS
The Company expects to close the transaction no later than early in the
fourth quarter 1997. These pro forma financial statements do not include any
purchase price adjustments to be determined upon closing, which are not expected
to be material to the financial information presented herein.
(A) To remove the results of operations of Seagull Canada.
(B) To reduce interest expense to give effect to the use of net proceeds from
the disposition to reduce amounts outstanding under U.S. and Canadian credit
facilities.
(C) To adjust U.S. federal incomes taxes for the impact of the adjustments
described in Note (B) above. This amount does not include the tax benefits that
are expected to be realized upon closing of the sale of approximately $4.0
million.
SEAGULL ENERGY CORPORATION
PRO FORMA
CONDENSED BALANCE SHEET
(Amounts in Thousands)
June 30, 1997
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Seagull Pro Forma
Seagull Canada Adjustments Pro Forma
------------- ------------- -------------- -------------
(A)
Assets
Current Assets:
Cash and cash equivalents $ 29,465 $ 38 - $ 29,427
Accounts receivable, net 149,346 4,565 144,781
Inventories 13,638 638 13,000
Prepaid expenses and other 15,271 360 14,911
------------- ------------- ------------ -----------
Total Current Assets 207,720 5,601 - 202,119
Property, Plant and Equipment - at cost
(successful efforts method for oil and
gas properties) 2,177,335 248,189 1,929,146
Accumulated Depreciation, Depletion and
Amortization 890,298 57,166 833,132
------------- ------------ ------------ -----------
1,287,037 191,023 - 1,096,014
Other Assets 43,011 456 42,555
------------- ------------ ------------ -----------
Total Assets $1,537,768 $ 197,080 $ - $1,340,688
============= ============ ============ ===========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts and note payable $ 158,140 $ 4,346 $ 153,794
Accrued expenses 45,028 877 44,151
Current maturities of long-term debt 7,247 - - 7,247
------------- ------------ ------------ -----------
Total Current Liabilities 210,415 5,223 205,192
Long-Term Debt 588,752 64,436 (113,064)(B) 411,252
Other Noncurrent Liabilities 60,348 103 60,245
Deferred Income Taxes 42,154 23,589 (4,000)(C) 14,565
Redeemable Bearer Shares 15,837 - 15,837
Shareholders' Equity 620,262 103,729 117,064 (D) 633,597
Commitments and Contingencies - -
------------- ----------- ------------ -----------
Total Liabilities and Shareholders' Equity $1,537,768 $ 197,080 $ - $1,340,688
============= =========== ============ ===========
See accompanying notes to unaudited pro forma condensed balance sheet.
NOTES TO UNAUDITED PRO FORMA
CONDENSED BALANCE SHEET
The Company expects to close the transaction no later than early in the
fourth quarter 1997. These pro forma financial statements do not include any
purchase price adjustments to be determined upon closing, which are not expected
to be material to the financial information presented herein.
(A) To remove the assets, liabilities and shareholders' equity of Seagull
Canada.
(B) To reflect estimated use of net proceeds at June 30, 1997 to repay all the
long-term debt of Seagull Canada ($64.4 million) and the remainder to reduce
Seagull's long-term debt ($113.1 million).
(C) To record the estimated income tax benefit of $4 million associated with the
sale of Seagull Canada.
(D) To (i) record the gain on sale of Seagull Canada, including the related
income tax benefit, as if the disposition had occurred on June 30, 1997, and
(ii) reflect shareholders' equity of Seagull Canada as of June 30, 1997.