IVANHOE ENERGY INC. INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
EXHIBIT 99.2
INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On July17, 2009, the Company and its wholly-owned subsidiary, Ivanhoe Energy Holdings Inc. (the “Seller”) completed a Stock Purchase Agreement (the “Agreement”) with Seneca Resources Corporation and its wholly-owned subsidiary, Seneca South Midway LLC (the “Purchaser”) for the sale of all of the issued and outstanding shares (the “Purchased Shares”) of Ivanhoe Energy (USA) Inc. (“IE USA”) for a purchase price of $39,200,000 (the “Sale”).
The Purchaser is acquiring all of the Company’s oil and gas exploration and production operations in the United States, including production properties and infrastructure in California and Texas and additional exploration acreage in California. Under the terms of the Agreement, certain non-operating assets have been excluded, including cash, certain accounts receivable, non-operating licenses, leases and other contracts and the Company’s office premises in Bakersfield, California.
An escrow deposit in the amount of $2 million will be available to the Purchaser for a period of one year to satisfy any indemnification obligations of the Seller. In addition, the Company used approximately $5.2 million of the Purchase Price to repay an outstanding loan to a third party financial institution holding a security interest in IE USA’s assets. The Company intends to use the balance of the Purchase Price for the ongoing development of its heavy oil projects in Canada and Ecuador and for general corporate purposes.
In accordance with Article 11 of Regulation S-X, the accompanying unaudited pro forma condensed consolidated balance sheet as at March 31, 2009 gives effect to the disposition of Ivanhoe Energy (USA) Inc. as if it had been consummated as of March 31, 2009, and the accompanying unaudited pro forma consolidated statements of operations for the three-month periods ended March 31, 2009, and 2008, and the years ended December 31, 2008, 2007 and 2006, give effect to the disposition of Ivanhoe Energy (USA) Inc. as if it had been consummated at the beginning of the periods presented.
The historical financial information on which the pro forma statements are based is included in Ivanhoe Energy Inc.’s (“Ivanhoe” or the “Company”) Annual Report on Form 10-K for the year ended December 31, 2008, which was filed on March 16, 2009, and Xxxxxxx’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, which was filed on May 11, 2009. This historical financial information is prepared in accordance with Canadian generally accepted accounting principles (“GAAP”). The impact of material differences between Canadian and U.S. GAAP on the historical information is presented in Note 1 to these pro forma condensed consolidated financial statements. The pro forma condensed consolidated financial statements and the notes thereto should be read in conjunction with these historical consolidated financial statements.
The unaudited pro forma condensed consolidated financial statements are based on the estimates and assumptions included in the notes to the unaudited pro forma condensed consolidated financial statements. The adjustments included in the unaudited pro forma condensed consolidated financial statements are preliminary. Management believes that the estimates, assumptions and adjustments set forth in the notes to the unaudited pro forma condensed consolidated financial statements are reasonable under the circumstances and based upon the information available.
The unaudited pro forma condensed consolidated financial statements are presented for illustrative and informational purposes only and are subject to a number of assumptions which may not be indicative of the operating results or financial position that might have been achieved had the disposition been completed at the dates indicated or what the results will be for any future periods. These unaudited pro forma amounts do not, therefore, project Xxxxxxx’s financial position or results of operations for any future date or period. The unaudited pro forma condensed consolidated statements of operations do not include the gain that Ivanhoe would have recognized for the sale of Ivanhoe Energy (USA) Inc. if the transaction was completed at the beginning of the periods presented.
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Unaudited Pro Forma Condensed Consolidated Balance Sheet |
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As at March 31, 2009 |
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(stated in thousands of U.S. Dollars, except share amounts) |
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Historical |
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Ivanhoe Energy |
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Pro Forma |
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(USA) Inc. (i) |
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Adjustments |
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Notes |
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Assets |
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Current Assets: |
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|
|
|
|
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|
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|
|||||
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Cash and cash equivalents |
$ |
28,364 |
|
$ |
(2,248) |
|
$ |
31,066 |
|
ii |
|
$ |
58,776 |
|
|
|
- |
|
- |
|
1,594 |
|
iii |
|
|
|||||
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Accounts receivable |
5,790 |
|
(1,473) |
|
114 |
|
iii |
|
4,431 |
|||||
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Prepaid and other current assets |
1,631 |
|
(170) |
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- |
|
|
|
1,461 |
|||||
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Derivative instruments |
1,167 |
|
(163) |
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- |
|
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|
1,004 |
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Cash in escrow |
- |
|
- |
|
2,000 |
|
iv |
|
2,000 |
|||||
|
|
36,952 |
|
(4,054) |
|
34,774 |
|
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|
67,672 |
|||||
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|
|
|
|
|
|
|
|
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|
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Oil and gas properties and development costs, net |
174,684 |
|
(31,142) |
|
- |
|
|
|
143,542 |
|||||
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Intangible assets - HTLTM technology |
92,153 |
|
- |
|
- |
|
|
|
92,153 |
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Long term assets |
671 |
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(450) |
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- |
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|
|
221 |
|||||
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$ |
304,460 |
|
$ |
(35,646) |
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$ |
34,774 |
|
|
|
$ |
303,588 |
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Liabilities and Shareholders' Equity |
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Current Liabilities: |
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Accounts payable and accrued liabilities |
$ |
8,481 |
|
$ |
(288) |
|
$ |
- |
|
|
|
$ |
8,193 |
|
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Income tax payable |
2,286 |
|
- |
|
- |
|
|
|
2,286 |
|||||
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Debt - current portion |
5,200 |
|
(5,200) |
|
- |
|
|
|
- |
|||||
|
|
15,967 |
|
(5,488) |
|
- |
|
|
|
10,479 |
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|
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Long term debt |
37,007 |
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- |
|
- |
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|
37,007 |
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Asset retirement obligations |
3,972 |
|
(1,834) |
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- |
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2,138 |
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Long term obligation |
1,900 |
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- |
|
- |
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|
1,900 |
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|
58,846 |
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(7,322) |
|
- |
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51,524 |
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Shareholders' Equity: |
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Share capital, issued 279,381,187 common shares |
413,857 |
|
- |
|
- |
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413,857 |
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Purchase warrants |
18,805 |
|
- |
|
- |
|
|
|
18,805 |
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Contributed surplus |
17,323 |
|
- |
|
- |
|
|
|
17,323 |
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Convertible note |
2,086 |
|
- |
|
- |
|
|
|
2,086 |
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Accumulated deficit |
(206,457) |
|
(28,324) |
|
34,774 |
|
ii, v |
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(200,007) |
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|
245,614 |
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(28,324) |
|
34,774 |
|
|
|
252,064 |
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|
$ |
304,460 |
|
$ |
(35,646) |
|
$ |
34,774 |
|
|
|
$ |
303,588 |
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|
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Notes:
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i. |
This column represents the removal of Ivanhoe Energy (USA) Inc.’s condensed balance sheet (after adjusting for intercompany items) from Ivanhoe Energy Inc.’s historical condensed consolidated balance sheet. |
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ii. |
This adjustment is recorded to reflect net cash that Ivanhoe Energy Inc. received as consideration for the sale of Ivanhoe Energy (USA) Inc., net of any adjustments – see v. below, had the transaction been completed as of March 31, 2009. |
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iii. |
Excluded assets are to remain with the Company and settlement of certain receivables will occur subsequent to the sale of Ivanhoe Energy (USA) Inc. |
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iv. |
Xxxx held in escrow as required by the Stock Purchase Agreement. |
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v. |
This amount includes adjustments pertaining to the sale of Ivanhoe Energy (USA) Inc. and consists of the following: |
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• |
$36.3 million in proceeds net of cash in escrow and costs associated with the sale. |
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• |
$5.2 million of Ivanhoe Energy (USA) Inc. current debt that the Company paid concurrent with the sale. |
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Unaudited Pro Forma Condensed Consolidated Statement of Operations |
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For the Three Months Ended March 31, 2009 |
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(stated in thousands of U.S. Dollars, except per share amounts) |
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|
Historical |
|
Ivanhoe Energy |
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Pro Forma |
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(USA) Inc. |
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Revenue |
|
|
|
|
|
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Oil and gas revenue |
$ |
7,699 |
|
$ |
(1,966) |
|
|
5,733 |
|
Gain on derivative instruments |
268 |
|
(186) |
|
82 |
|||
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Interest income |
13 |
|
(2) |
|
11 |
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|
7,980 |
|
(2,154) |
|
5,826 |
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Expenses |
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|
|
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Operating costs |
3,727 |
|
(1,026) |
|
2,701 |
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General and administrative |
4,954 |
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(68) |
|
4,886 |
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Business and technology development |
2,037 |
|
- |
|
2,037 |
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Depletion and depreciation |
7,632 |
|
(1,677) |
|
5,955 |
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Interest expense and financing costs |
259 |
|
(82) |
|
177 |
|||
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|
18,609 |
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(2,853) |
|
15,756 |
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|
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Loss from continuing operations before income taxes |
(10,629) |
|
699 |
|
(9,930) |
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Current provision for income taxes |
(1,645) |
|
- |
|
(1,645) |
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Net Loss from continuing operations |
$ |
(12,274) |
|
$ |
699 |
|
$ |
(11,575) |
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|
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Net Loss per share - Basic and Diluted |
$ |
(0.04) |
|
|
|
$ |
(0.04) |
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Weighted Average Number of Shares (in thousands) |
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|
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|
|||
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Basic and Diluted |
279,381 |
|
|
|
279,381 |
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IVANHOE ENERGY INC. |
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Unaudited Pro Forma Condensed Consolidated Statement of Operations |
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For the Three Months Ended March 31, 2008 |
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(stated in thousands of U.S. Dollars, except per share amounts) |
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|
|
|
|
|
|
|
|||
|
|
Historical |
|
Ivanhoe Energy |
|
Pro Forma |
|||
|
|
Ivanhoe Energy Inc. |
|
(USA) Inc. |
|
Ivanhoe Energy Inc. |
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|
Revenue |
|
|
|
|
|
|||
|
Oil and gas revenue |
$ |
15,043 |
|
$ |
(4,155) |
|
$ |
10,888 |
|
Loss on derivative instruments |
(3,946) |
|
1,264 |
|
(2,682) |
|||
|
Interest income |
72 |
|
(44) |
|
28 |
|||
|
|
11,169 |
|
(2,935) |
|
8,234 |
|||
|
Expenses |
|
|
|
|
|
|||
|
Operating costs |
5,392 |
|
(1,082) |
|
4,310 |
|||
|
General and administrative |
3,946 |
|
(360) |
|
3,586 |
|||
|
Business and technology development |
1,476 |
|
- |
|
1,476 |
|||
|
Depletion and depreciation |
8,366 |
|
(1,457) |
|
6,909 |
|||
|
Interest expense and financing costs |
533 |
|
(148) |
|
385 |
|||
|
|
19,713 |
|
(3,047) |
|
16,666 |
|||
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|
|
|
|
|
|
|||
|
Net Loss from continuing operations |
$ |
(8,544) |
|
$ |
112 |
|
$ |
(8,432) |
|
|
|
|
|
|
|
|||
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Net Loss per share - Basic and Diluted |
$ |
(0.03) |
|
|
|
$ |
(0.03) |
|
|
|
|
|
|
|
|
|||
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Weighted Average Number of Shares (in thousands) |
|
|
|
|
|
|||
|
Basic and Diluted |
244,873 |
|
|
|
244,873 |
|||
|
|
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|
IVANHOE ENERGY INC. |
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Unaudited Pro Forma Condensed Consolidated Statement of Operations |
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|
For the Year Ended December 31, 2008 |
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|
(stated in thousands of U.S. Dollars, except per share amounts) |
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|
|
|
||||||||
|
|
Historical |
|
Ivanhoe Energy |
|
Pro Forma |
||||
|
|
Ivanhoe Energy Inc. |
|
(USA) Inc. |
|
Ivanhoe Energy Inc. |
||||
|
Revenue |
|
|
|
|
|
||||
|
Oil and gas revenue |
$ |
66,490 |
|
$ |
(18,120) |
|
$ |
48,370 |
|
|
Gain on derivative instruments |
1,966 |
|
(278) |
|
1,688 |
||||
|
Interest income |
710 |
|
(98) |
|
612 |
||||
|
|
69,166 |
|
(18,496) |
|
50,670 |
||||
|
Expenses |
|
|
|
|
|
||||
|
Operating costs |
26,652 |
|
(5,137) |
|
21,515 |
||||
|
General and administrative |
18,190 |
|
(2,411) |
|
15,779 |
||||
|
Business and technology development |
6,453 |
|
- |
|
6,453 |
||||
|
Depletion and depreciation |
31,904 |
|
(6,143) |
|
25,761 |
||||
|
Interest expense and financing costs |
1,829 |
|
(520) |
|
1,309 |
||||
|
Provision for impairment of GTL intangible asset and development costs |
15,054 |
|
- |
|
15,054 |
||||
|
Write off of deferred financing costs |
2,621 |
|
- |
|
2,621 |
||||
|
|
102,703 |
|
(14,211) |
|
88,492 |
||||
|
|
|
|
|
|
|
||||
|
Loss from continuing operations before income taxes |
(33,537) |
|
(4,285) |
|
(37,822) |
||||
|
|
|
|
|
|
|
||||
|
Current provision for income taxes |
(656) |
|
2 |
|
(654) |
||||
|
Net Loss from continuing operations |
$ |
(34,193) |
|
$ |
(4,283) |
|
$ |
(38,476) |
|
|
|
|
|
|
|
|
||||
|
Net Loss per share - Basic and Diluted |
$ |
(0.13) |
|
|
|
$ |
(0.15) |
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|
|
|
|
|
|
|
||||
|
Weighted Average Number of Shares (in thousands) |
|
|
|
|
|
||||
|
Basic and Diluted |
258,815 |
|
|
|
258,815 |
||||
|
|
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|
IVANHOE ENERGY INC. |
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Unaudited Pro Forma Condensed Consolidated Statement of Operations |
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|
For the Year Ended December 31, 2007 |
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|
(stated in thousands of U.S. Dollars, except per share amounts) |
||||||||
|
|
|
|||||||
|
|
Historical |
|
Ivanhoe Energy |
|
Pro Forma |
|||
|
|
Ivanhoe Energy Inc. |
|
(USA) Inc. |
|
Ivanhoe Energy Inc. |
|||
|
Revenue |
|
|
|
|
|
|||
|
Oil and gas revenue |
$ |
43,635 |
|
$ |
(12,270) |
|
$ |
31,365 |
|
Loss on derivative instruments |
(10,587) |
|
5,594 |
|
(4,993) |
|||
|
Interest income |
469 |
|
(152) |
|
317 |
|||
|
|
33,517 |
|
(6,828) |
|
26,689 |
|||
|
Expenses |
|
|
|
|
|
|||
|
Operating costs |
17,319 |
|
(4,319) |
|
13,000 |
|||
|
General and administrative |
12,076 |
|
(1,972) |
|
10,104 |
|||
|
Business and technology development |
9,625 |
|
- |
|
9,625 |
|||
|
Depletion and depreciation |
26,524 |
|
(5,884) |
|
20,640 |
|||
|
Interest expense and financing costs |
1,050 |
|
(427) |
|
623 |
|||
|
Provision for impairment of oil and gas properties |
6,130 |
|
- |
|
6,130 |
|||
|
|
72,724 |
|
(12,602) |
|
60,122 |
|||
|
|
|
|
|
|
|
|||
|
Net Loss from continuing operations |
$ |
(39,207) |
|
$ |
5,774 |
|
$ |
(33,433) |
|
|
|
|
|
|
|
|||
|
Net Loss per share - Basic and Diluted |
$ |
(0.16) |
|
|
|
$ |
(0.14) |
|
|
|
|
|
|
|
|
|||
|
Weighted Average Number of Shares (in thousands) |
242,362 |
|
|
|
242,362 |
|||
|
|
||||||||
|
IVANHOE ENERGY INC. |
|||||||||
|
Unaudited Pro Forma Condensed Consolidated Statement of Operations |
|||||||||
|
For the Year Ended December 31, 2006 |
|||||||||
|
(stated in thousands of U.S. Dollars, except per share amounts) |
|||||||||
|
|
|
|
|
|
|
||||
|
|
Historical |
|
Ivanhoe Energy |
|
Pro Forma |
||||
|
|
Ivanhoe Energy Inc. |
|
(USA) Inc. |
|
Ivanhoe Energy Inc. |
||||
|
Revenue |
|
|
|
|
|
||||
|
Oil and gas revenue |
$ |
47,748 |
|
$ |
(12,065) |
|
$ |
35,683 |
|
|
Loss on derivative instruments |
(424) |
|
424 |
|
- |
||||
|
Interest income |
776 |
|
(139) |
|
637 |
||||
|
|
48,100 |
|
(11,780) |
|
36,320 |
||||
|
Expenses |
|
|
|
|
|
||||
|
Operating costs |
16,133 |
|
(4,299) |
|
11,834 |
||||
|
General and administrative |
10,180 |
|
(1,628) |
|
8,552 |
||||
|
Business and technology development |
7,610 |
|
- |
|
7,610 |
||||
|
Depletion and depreciation |
32,550 |
|
(5,378) |
|
27,172 |
||||
|
Interest expense and financing costs |
963 |
|
(290) |
|
673 |
||||
|
Provision for impairment of oil and gas properties |
5,420 |
|
- |
|
5,420 |
||||
|
Write off of deferred acquisition costs |
736 |
|
- |
|
736 |
||||
|
|
73,592 |
|
(11,595) |
|
61,997 |
||||
|
|
|
|
|
|
|
||||
|
Net Loss from continuing operations |
$ |
(25,492) |
|
$ |
(185) |
|
$ |
(25,677) |
|
|
|
|
|
|
|
|
||||
|
Net Loss per share - Basic and Diluted |
$ |
(0.11) |
|
|
|
$ |
(0.11) |
||
|
|
|
|
|
|
|
||||
|
Weighted Average Number of Shares (in thousands) |
235,640 |
|
|
|
235,640 |
||||
|
|
|||||||||
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
(all tabular amounts are expressed in thousands of U.S. dollars except per share amounts)
|
|
1. |
ADDITIONAL DISCLOSURE REQUIRED UNDER U.S. GAAP |
The Company’s unaudited pro forma condensed consolidated financial statements have been prepared in accordance with GAAP as applied in Canada. In the case of the Company, Canadian GAAP conforms in all material respects with U.S. GAAP except for certain matters, the details of which are more fully described in our financial statements in Item 8 of our 2008 Annual Report filed on Form 10-K and in the Form 10-Q for the quarter ended March 31, 2009, and are summarized as follows:
Unaudited Pro forma Condensed Consolidated Balance Sheet
The application of U.S. GAAP has the following effects on consolidated balance sheet items as reported under Canadian GAAP:
|
|
As at March 31, 2009 |
||||||||
|
|
Pro forma |
|
|
|
|
Pro forma |
|||
|
|
Canadian |
|
Increase |
|
|
U.S. |
|||
|
|
GAAP |
|
(Decrease) |
Notes |
|
GAAP |
|||
|
|
|
|
|
|
|
|
|||
|
Assets |
|
|
|
|
|
|
|||
|
Current Assets: |
|
|
|
|
|
|
|||
|
Cash and cash equivalents |
$ |
58,776 |
|
$ |
- |
|
|
$ |
58,776 |
|
Accounts receivable |
4,431 |
|
- |
|
|
4,431 |
|||
|
Prepaid and other current assets |
1,461 |
|
- |
|
|
1,461 |
|||
|
Derivative instruments |
1,004 |
|
- |
|
|
1,004 |
|||
|
Cash in escrow |
2,000 |
|
- |
|
|
2,000 |
|||
|
Total Current Assets |
67,672 |
|
- |
|
|
67,672 |
|||
|
|
|
|
|
|
|
|
|||
|
Oil and gas properties |
|
|
|
|
|
|
|||
|
and development costs, net |
143,542 |
|
(38,500) |
(i) |
|
116,629 |
|||
|
|
|
|
13,143 |
(ii) |
|
|
|||
|
|
|
|
(1,164) |
(iii) |
|
|
|||
|
|
|
|
(392) |
(iv) |
|
|
|||
|
Intangible assets - technology |
92,153 |
|
- |
|
|
92,153 |
|||
|
Long term assets |
221 |
|
392 |
(v) |
|
613 |
|||
|
Total Assets |
$ |
303,588 |
|
$ |
(26,521) |
|
|
$ |
277,067 |
|
|
|
|
|
|
|
|
|||
|
Liabilities and Shareholders' Equity |
|
|
|
|
|
|
|||
|
Current Liabilities: |
|
|
|
|
|
|
|||
|
Accounts payable and accrued liabilities |
8,193 |
|
- |
|
|
8,193 |
|||
|
Income tax payable |
2,286 |
|
- |
|
|
2,286 |
|||
|
Derivative instruments |
- |
|
3,162 |
(vi) |
|
3,162 |
|||
|
Total Current Liabilities |
10,479 |
|
3,162 |
|
|
13,641 |
|||
|
|
|
|
|
|
|
|
|||
|
Long term debt |
37,007 |
|
392 |
(v) |
|
38,701 |
|||
|
|
|
|
1,694 |
(iv) |
|
|
|||
|
|
|
|
(392) |
(iv) |
|
|
|||
|
Asset retirement obligations |
2,138 |
|
- |
|
|
2,138 |
|||
|
Long term obligation |
1,900 |
|
- |
|
|
1,900 |
|||
|
Total Liabilities |
51,524 |
|
4,856 |
|
|
56,380 |
|||
|
|
|
|
|
|
|
|
|||
|
Shareholders' Equity: |
|
|
|
|
|
|
|||
|
Share capital |
413,857 |
|
74,455 |
(vii) |
|
501,014 |
|||
|
|
|
|
(498) |
(viii) |
|
|
|||
|
|
|
|
13,200 |
(vi) |
|
|
|||
|
Purchase warrants |
18,805 |
|
(18,805) |
(vi) |
|
- |
|||
|
Contributed surplus |
17,323 |
|
(3,250) |
(vii) |
|
11,126 |
|||
|
|
|
|
(2,947) |
(vi) |
|
|
|||
|
Convertible note |
2,086 |
|
(2,086) |
(iv) |
|
- |
|||
|
Accumulated deficit |
(200,007) |
|
(91,446) |
|
|
(291,453) |
|||
|
Total Shareholders' Equity |
252,064 |
|
(31,377) |
|
|
220,687 |
|||
|
Total Liabilities and Shareholders' Equity |
$ |
303,588 |
|
$ |
(26,521) |
|
|
$ |
277,067 |
Unaudited Pro forma Condensed Consolidated Statements of Operations
The application of U.S. GAAP had the following effects on net loss and net loss per share as reported under Canadian GAAP:
|
|
Three Months Ended March 31, 2009 |
||||||||
|
|
Pro forma |
|
|
|
|
Pro forma |
|||
|
|
Canadian |
|
Increase |
|
|
U.S. |
|||
|
|
GAAP |
|
(Decrease) |
Notes |
|
GAAP |
|||
|
Revenue |
|
|
|
|
|
|
|||
|
Oil and gas revenue |
$ |
5,733 |
|
$ |
- |
|
|
$ |
5,733 |
|
Gain (loss) on derivative instruments |
82 |
|
(2,041) |
(vi) |
|
(1,959) |
|||
|
Interest income |
11 |
|
- |
|
|
11 |
|||
|
Total Revenue |
5,826 |
|
(2,041) |
|
|
3,785 |
|||
|
|
|
|
|
|
|
|
|||
|
Expenses |
|
|
|
|
|
|
|||
|
Operating costs |
2,701 |
|
- |
|
|
2,701 |
|||
|
General and administrative |
4,886 |
|
(392) |
(iv) |
|
4,494 |
|||
|
Business and technology development |
2,037 |
|
- |
|
|
2,037 |
|||
|
Depletion and depreciation |
5,955 |
|
(3,214) |
(ii) |
|
2,741 |
|||
|
Interest expense and financing costs |
177 |
|
- |
|
|
177 |
|||
|
Provision for impairment |
|
|
|
|
|
|
|||
|
of HTLTM development costs |
- |
|
146 |
(iii) |
|
146 |
|||
|
Total Expenses |
15,756 |
|
(3,460) |
|
|
12,296 |
|||
|
|
|
|
|
|
|
|
|||
|
Loss from continuing operations before Income Taxes |
(9,930) |
|
1,419 |
|
|
(8,511) |
|||
|
|
|
|
|
|
|
|
|||
|
Current provision for income taxes |
(1,645) |
|
- |
|
|
(1,645) |
|||
|
|
|
|
|
|
|
|
|||
|
Net Loss from continuing operations |
$ |
(11,575) |
|
$ |
1,419 |
|
|
$ |
(10,156) |
|
|
|
|
|
|
|
|
|||
|
Net Loss per share - Basic and Diluted |
$ |
(0.04) |
|
$ |
- |
|
|
$ |
(0.04) |
|
|
|
|
|
|
|
|
|||
|
Weighted Average Number of shares (in thousands) |
|
|
|
|
|
|
|||
|
Basic and Diluted |
|
279,381 |
|
|
|
|
279,381 |
||
|
|
Three Months Ended March 31, 2008 |
||||||||
|
|
Pro forma |
|
|
|
|
Pro forma |
|||
|
|
Canadian |
|
Increase |
|
|
U.S. |
|||
|
|
GAAP |
|
(Decrease) |
Notes |
|
GAAP |
|||
|
Revenue |
|
|
|
|
|
|
|||
|
Oil and gas revenue |
$ |
10,888 |
|
$ |
- |
|
|
$ |
10,888 |
|
Gain (loss) on derivative instruments |
(2,682) |
|
(3,167) |
(vi) |
|
(5,849) |
|||
|
Interest income |
28 |
|
- |
|
|
28 |
|||
|
Total Revenue |
8,234 |
|
(3,167) |
|
|
5,067 |
|||
|
|
|
|
|
|
|
|
|||
|
Expenses |
|
|
|
|
|
|
|||
|
Operating costs |
4,310 |
|
- |
|
|
4,310 |
|||
|
General and administrative |
3,586 |
|
- |
|
|
3,586 |
|||
|
Business and technology development |
1,476 |
|
- |
|
|
1,476 |
|||
|
Depletion and depreciation |
6,909 |
|
(879) |
(ii) |
|
6,030 |
|||
|
Interest expense and financing costs |
385 |
|
- |
|
|
385 |
|||
|
Provision for impairment |
|
|
|
|
|
|
|||
|
of HTLTM development costs |
- |
|
9 |
(iii) |
|
9 |
|||
|
Total Expenses |
16,666 |
|
(870) |
|
|
15,796 |
|||
|
|
|
|
|
|
|
|
|||
|
Net Loss from continuing operations |
$ |
(8,432) |
|
$ |
(2,297) |
|
|
$ |
(10,729) |
|
|
|
|
|
|
|
|
|||
|
Net Loss per share - Basic and Diluted |
$ |
(0.03) |
|
$ |
(0.01) |
|
|
$ |
(0.04) |
|
|
|
|
|
|
|
|
|||
|
Weighted Average Number of shares (in thousands) |
|
|
|
|
|
|
|||
|
Basic and Diluted |
244,873 |
|
|
|
|
244,873 |
|||
|
|
Year Ended December 31, 2008 |
|||||||||
|
|
Pro forma |
|
|
|
|
Pro forma |
||||
|
|
Canadian |
|
Increase |
|
|
U.S. |
||||
|
|
GAAP |
|
(Decrease) |
Notes |
|
GAAP |
||||
|
Revenue |
|
|
|
|
|
|
||||
|
Oil and gas revenue |
$ |
48,370 |
|
$ |
- |
|
|
$ |
48,370 |
|
|
Gain (loss) on derivative instruments |
1,688 |
|
4,665 |
(vi) |
|
6,353 |
||||
|
Interest income |
612 |
|
- |
|
|
612 |
||||
|
Total Revenue |
50,670 |
|
4,665 |
|
|
55,335 |
||||
|
|
|
|
|
|
|
|
||||
|
Expenses |
|
|
|
|
|
|
||||
|
Operating costs |
21,515 |
|
- |
|
|
21,515 |
||||
|
General and administrative |
15,779 |
|
- |
|
|
15,779 |
||||
|
Business and technology development |
6,453 |
|
- |
|
|
6,453 |
||||
|
Depletion and depreciation |
25,761 |
|
(2,821) |
(ii) |
|
22,940 |
||||
|
Interest expense and financing costs |
1,309 |
|
- |
|
|
1,309 |
||||
|
Provision for impairment of HTLTM and GTL |
|
|
|
|
|
|
||||
|
intangible assets and development costs |
15,054 |
|
(4,640) |
(iii) |
|
10,414 |
||||
|
Write off of deferred financing costs |
2,621 |
|
- |
|
|
2,621 |
||||
|
Provision for impairmentof oil and gas properties |
- |
|
21,560 |
(i) |
|
21,560 |
||||
|
Total Expenses |
88,492 |
|
14,099 |
|
|
102,591 |
||||
|
|
|
|
|
|
|
|
||||
|
Loss from continuing operations before Income Taxes |
(37,822) |
|
(9,434) |
|
|
(47,256) |
||||
|
Current provision for income taxes |
(654) |
|
- |
|
|
(654) |
||||
|
Net Loss from continuing operations |
$ |
(38,476) |
|
$ |
(9,434) |
|
|
$ |
(47,910) |
|
|
|
|
|
|
|
|
|
||||
|
Net Loss per share - Basic and Diluted |
$ |
(0.15) |
|
$ |
(0.04) |
|
|
$ |
(0.19) |
|
|
|
|
|
|
|
|
|
||||
|
Weighted Average Number of shares (in thousands) |
|
|
|
|
|
|||||
|
Basic and Diluted |
258,815 |
|
|
|
|
258,815 |
||||
|
|
Year Ended December 31, 2007 |
||||||||
|
|
Pro forma |
|
|
|
|
Pro forma |
|||
|
|
Canadian |
|
Increase |
|
|
U.S. |
|||
|
|
GAAP |
|
(Decrease) |
Notes |
|
GAAP |
|||
|
Revenue |
|
|
|
|
|
|
|||
|
Oil and gas revenue |
$ |
31,365 |
|
$ |
- |
|
|
$ |
31,365 |
|
Gain (loss) on derivative instruments |
(4,993) |
|
592 |
(vi) |
|
(4,401) |
|||
|
Interest income |
317 |
|
- |
|
|
317 |
|||
|
Total Revenue |
26,689 |
|
592 |
|
|
27,281 |
|||
|
|
|
|
|
|
|
|
|||
|
Expenses |
|
|
|
|
|
|
|||
|
Operating costs |
13,000 |
|
- |
|
|
13,000 |
|||
|
General and administrative |
10,104 |
|
- |
|
|
10,104 |
|||
|
Business and technology development |
9,625 |
|
- |
|
|
9,625 |
|||
|
Depletion and depreciation |
20,640 |
|
(3,470) |
(ii) |
|
17,170 |
|||
|
Interest expense and financing costs |
623 |
|
- |
|
|
623 |
|||
|
Provision for impairment of HTLTM and GTL |
|
|
|
|
|
|
|||
|
intangible assets and development costs |
- |
|
(6,011) |
(iii) |
|
(6,011) |
|||
|
Provision for impairmentof oil and gas properties |
6,130 |
|
(280) |
(i) |
|
5,850 |
|||
|
Total Expenses |
60,122 |
|
(9,761) |
|
|
50,361 |
|||
|
|
|
|
|
|
|
|
|||
|
Net Loss from continuing operations |
$ |
(33,433) |
|
$ |
10,353 |
|
|
$ |
(23,080) |
|
|
|
|
|
|
|
|
|||
|
Net Loss per share - Basic and Diluted |
$ |
(0.14) |
|
$ |
0.04 |
|
|
$ |
(0.10) |
|
|
|
|
|
|
|
|
|||
|
Weighted Average Number of Shares (in thousands) |
|
|
|
|
|
|
|||
|
Basic and Diluted |
242,362 |
|
|
|
|
242,362 |
|||
|
|
Year Ended December 31, 2006 |
||||||||
|
|
Pro forma |
|
|
|
|
Pro forma |
|||
|
|
Canadian |
|
Increase |
|
|
U.S. |
|||
|
|
GAAP |
|
(Decrease) |
Notes |
|
GAAP |
|||
|
Revenue |
|
|
|
|
|
|
|||
|
Oil and gas revenue |
$ |
35,683 |
|
$ |
- |
|
|
$ |
35,683 |
|
Gain (loss) on derivative instruments |
- |
|
(691) |
(vi) |
|
(691) |
|||
|
Interest income |
637 |
|
- |
|
|
637 |
|||
|
Total Revenue |
36,320 |
|
(691) |
|
|
35,629 |
|||
|
|
|
|
|
|
|
|
|||
|
Expenses |
|
|
|
|
|
|
|||
|
Operating costs |
11,834 |
|
- |
|
|
11,834 |
|||
|
General and administrative |
8,552 |
|
- |
|
|
8,552 |
|||
|
Business and technology development |
7,610 |
|
- |
|
|
7,610 |
|||
|
Depletion and depreciation |
27,172 |
|
(2,369) |
(ii) |
|
24,803 |
|||
|
Interest expense and financing costs |
673 |
|
- |
|
|
673 |
|||
|
Provision for impairment of HTLTM and GTL |
|
|
|
|
|
|
|||
|
intangible assets and development costs |
- |
|
958 |
(iii) |
|
958 |
|||
|
Provision for impairmentof oil and gas properties |
5,420 |
|
10,520 |
(i) |
|
15,940 |
|||
|
Write off of deferred acquisition costs |
736 |
|
- |
|
|
736 |
|||
|
Total Expenses |
61,997 |
|
9,109 |
|
|
71,106 |
|||
|
|
|
|
|
|
|
|
|||
|
Net Loss from continuing operations |
$ |
(25,677) |
|
$ |
(9,800) |
|
|
$ |
(35,477) |
|
|
|
|
|
|
|
|
|||
|
Net Loss per share - Basic and Diluted |
$ |
(0.11) |
|
$ |
(0.04) |
|
|
$ |
(0.15) |
|
|
|
|
|
|
|
|
|||
|
Weighted Average Number of Shares (in thousands) |
|
|
|
|
|
|
|||
|
Basic and Diluted |
235,640 |
|
|
|
|
235,640 |
|||
Oil and Gas Properties and Development Costs
(i) There are certain differences between the full cost method of accounting for oil and gas properties as applied in Canada and as applied in the U.S. The principal difference is in the method of performing ceiling test evaluations under the full cost method of accounting rules.
(ii) The differences noted in (i) above have resulted in an accumulated net increase in impairment provisions on the Company’s oil and gas properties. This net increase in U.S. GAAP impairment provisions has resulted in lower depletion rates for U.S. GAAP purposes and consequently a reduction in depletion and depreciation expense and accumulated depletion for U.S. GAAP when compared to Canadian GAAP.
(iii) Under Canadian GAAP, the Company capitalizes certain development costs incurred for projects subsequent to executing a memorandum of understanding. If no definitive agreement is reached, then the project’s capitalized costs, which are deemed to have no future value, are written down and charged to the results of operations with a corresponding reduction in development costs. Under U.S. GAAP, these development costs incurred prior to executing a definitive agreement are considered to be research and development and are expensed as incurred.
(iv) Under Canadian GAAP we were required to bifurcate the value of a convertible note, allocating a portion to long term debt and a portion to equity. Under U.S. GAAP, the convertible debt securities in their entirety are classified as debt. Under Canadian GAAP this discount accretion was capitalized.
Long term Assets
(v) Under Canadian GAAP the Company accounts for deferred financing costs, or transaction costs, as a reduction from the related liability and accounted for using the effective interest method. Under U.S. GAAP purposes, these costs are classified as other assets and amortized over the expected term of the financial liability.
Liabilities and Shareholders’ Equity
(vi) The Company accounts for purchase warrants as equity under Canadian GAAP, whereas under U.S. GAAP, share purchase warrants with an exercise price denominated in a currency other than a company’s functional currency are accounted for as derivative liabilities. Changes in the fair value of the warrants are required to be recognized in the statement of operations each reporting period for U.S. GAAP purposes. At the time that the Company’s share purchase warrants are exercised, the value of the warrants will be reclassified to shareholders’ equity for U.S. GAAP purposes. Under Canadian GAAP, the fair value of the warrants on the issue date is recorded as a reduction to the proceeds from the issuance of common shares, with the offset to the warrant component of equity. The warrants are not revalued to fair value under Canadian GAAP.
(vii) In June 1999, the shareholders approved a reduction of stated capital in respect of the common shares by an amount of $74.5 million being equal to the accumulated deficit as at December 31, 1998. Under U.S. GAAP, a reduction of the accumulated deficit such as this is not recognized except in the case of a quasi reorganization.
(viii) Under Canadian GAAP, the Company accounts for all stock options granted to employees and directors since January 1, 2002 using the fair value based method of accounting. Prior to January 1, 2006 the Company did not recognize compensation costs in its financial statements for stock options issued to employees and directors. This difference has resulted in a carry-forward difference in contributed surplus under Canadian GAAP and U.S. GAAP but results in no significant differences in the statements of operations.
