UNAUDITED PRO FORMA FINANCIAL INFORMATION
Exhibit 99.2
UNAUDITED PRO FORMA FINANCIAL INFORMATION
On January 23, 2018, Gastar Exploration Inc. (the “Company” or “Gastar”) entered into a definitive agreement of sale and purchase (the “Sale Agreement”), by and between the Company and Revolution Resources, LLC to divest its interest in the West Xxxxxx Xxxxxx Lime Unit (“WEHLU”) and adjacent undeveloped acreage for a cash purchase price of approximately $107.5 million, subject to certain adjustments and customary closing conditions, (the “WEHLU Sale”). The WEHLU Sale had an effective date of October 1, 2017 and was completed on February 28, 2018. After certain adjustments, net cash proceeds from the WEHLU Sale were approximately $98.8 million, subject to certain additional adjustments.
The following unaudited pro forma financial information is derived from the historical financial statements of the Company and reflects the estimated impact of the WEHLU Sale. The Unaudited Pro Forma Consolidated Balance Sheet of Gastar as of December 31, 2017 has been prepared assuming the WEHLU Sale was consummated on December 31, 2017. The Unaudited Pro Forma Consolidated Statement of Operations of Gastar for the year ended December 31, 2017 has been prepared assuming the WEHLU Sale was consummated on January 1, 2017. These unaudited pro forma consolidated financial statements should be read in conjunction with the notes hereto and the consolidated financial statements and notes thereto of Gastar filed on Form 10-K for the year ended December 31, 2017.
The unaudited pro forma financial information is not indicative of the financial position or results of operations of Gastar which would have actually occurred if the transaction had occurred at the dates presented or which may be obtained in the future. In addition, future results may vary significantly from the results reflected in such statements due to normal oil and natural gas production declines, reductions in prices paid for oil or natural gas, future acquisitions or dispositions and other factors.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2017
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Pro Forma Adjustments |
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Gastar Historical |
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WEHLU Sale |
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Pro Forma |
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(in thousands, except share and per share data) |
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ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
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$ |
13,266 |
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$ |
98,809 |
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(a) |
$ |
112,075 |
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Accounts receivable, net |
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38,575 |
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— |
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38,575 |
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Commodity derivative contracts |
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1,370 |
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— |
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1,370 |
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Prepaid expenses |
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960 |
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— |
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|
960 |
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Total current assets |
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54,171 |
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98,809 |
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152,980 |
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PROPERTY, PLANT AND EQUIPMENT: |
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Oil and natural gas properties, full cost method of accounting: |
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Unproved properties, excluded from amortization |
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131,955 |
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— |
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131,955 |
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Proved properties |
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1,344,329 |
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(99,475 |
) |
(b) |
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1,244,854 |
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Total natural gas and oil properties |
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1,476,284 |
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(99,475 |
) |
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1,376,809 |
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Furniture and equipment |
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3,838 |
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— |
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3,838 |
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Total property, plant and equipment |
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1,480,122 |
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(99,475 |
) |
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1,380,647 |
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Accumulated depreciation, depletion and amortization |
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(1,155,027 |
) |
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— |
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(1,155,027 |
) |
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Total property, plant and equipment, net |
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325,095 |
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(99,475 |
) |
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225,620 |
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OTHER ASSETS: |
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Restricted cash |
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370 |
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— |
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370 |
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Advances to operators and other assets |
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82 |
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— |
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82 |
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Other |
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405 |
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— |
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405 |
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Total other assets |
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857 |
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— |
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857 |
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TOTAL ASSETS |
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$ |
380,123 |
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$ |
(666 |
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$ |
379,457 |
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LIABILITIES AND STOCKHOLDERS' DEFICIT |
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CURRENT LIABILITIES: |
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Accounts payable |
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$ |
24,382 |
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$ |
— |
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$ |
24,382 |
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Revenue payable |
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11,823 |
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— |
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11,823 |
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Accrued interest |
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7,298 |
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— |
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7,298 |
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Accrued drilling and operating costs |
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9,381 |
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— |
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9,381 |
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Advances from non-operators |
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1,445 |
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— |
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1,445 |
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Commodity derivative contracts |
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4,416 |
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— |
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4,416 |
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Commodity derivative premium payable |
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135 |
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— |
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135 |
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Other accrued liabilities |
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2,706 |
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1,475 |
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(c) |
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4,181 |
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Total current liabilities |
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61,586 |
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1,475 |
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63,061 |
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LONG-TERM LIABILITIES: |
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Long-term debt |
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342,952 |
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— |
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342,952 |
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Commodity derivative contracts |
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2,572 |
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— |
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2,572 |
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Asset retirement obligation |
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4,841 |
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(2,141 |
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(d) |
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2,700 |
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Total long-term liabilities |
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350,365 |
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(2,141 |
) |
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348,224 |
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Commitments and contingencies |
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STOCKHOLDERS' DEFICIT: |
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Preferred stock, 40,000,000 shares authorized |
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Series A Preferred stock, 4,045,000 shares issued and outstanding at December 31, 2017 with liquidation preference of $25.00 per share |
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41 |
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— |
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41 |
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Series B Preferred stock, 2,140,000 shares issued and outstanding at December 31, 2017 with liquidation preference of $25.00 per share |
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21 |
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— |
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21 |
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Common stock, par value $0.001 per share; 800,000,000 shares authorized; 218,874,418 shares issued and outstanding at December 31, 2017 |
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219 |
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— |
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219 |
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Additional paid-in capital |
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819,554 |
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— |
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819,554 |
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Accumulated deficit |
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(851,663 |
) |
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— |
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(851,663 |
) |
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Total stockholders' deficit |
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(31,828 |
) |
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— |
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(31,828 |
) |
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
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$ |
380,123 |
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$ |
(666 |
) |
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$ |
379,457 |
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See accompanying notes to unaudited pro forma consolidated financial information.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2017
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Pro Forma Adjustments |
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Gastar Historical |
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WEHLU Sale |
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Pro Forma |
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(in thousands, except share and per share data) |
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REVENUES: |
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Oil and condensate |
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$ |
54,667 |
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$ |
(27,155 |
) |
(e) |
$ |
27,512 |
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Natural gas |
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10,079 |
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(4,220 |
) |
(e) |
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5,859 |
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NGLs |
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11,841 |
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(6,170 |
) |
(e) |
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5,671 |
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Total oil and condensate, natural gas and NGLs revenues |
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76,587 |
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(37,545 |
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39,042 |
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Loss on commodity derivatives contracts |
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(4,457 |
) |
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— |
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(4,457 |
) |
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Total revenues |
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72,130 |
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(37,545 |
) |
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34,585 |
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EXPENSES: |
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Production taxes |
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2,830 |
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(1,561 |
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(f) |
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1,269 |
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Lease operating expenses |
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22,195 |
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(10,825 |
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(f) |
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11,370 |
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Transportation, treating and gathering |
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1,814 |
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— |
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1,814 |
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Depreciation, depletion and amortization |
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24,015 |
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(11,524 |
) |
(g) |
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12,491 |
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Accretion of asset retirement obligation |
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237 |
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(75 |
) |
(h) |
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162 |
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General and administrative expense |
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16,842 |
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— |
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16,842 |
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Total expenses |
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67,933 |
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(23,985 |
) |
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43,948 |
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INCOME (LOSS) FROM OPERATIONS |
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4,197 |
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(13,560 |
) |
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(9,363 |
) |
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OTHER INCOME (EXPENSE): |
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Interest expense |
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(38,955 |
) |
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— |
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(38,955 |
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Loss on early extinguishment of debt |
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(12,172 |
) |
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— |
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(12,172 |
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Investment and other income |
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175 |
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— |
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175 |
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LOSS BEFORE PROVISION FOR INCOME TAXES |
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(46,755 |
) |
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(13,560 |
) |
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(60,315 |
) |
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Provision for income taxes |
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— |
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— |
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(i) |
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— |
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NET LOSS |
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(46,755 |
) |
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(13,560 |
) |
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(60,315 |
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Dividends on preferred stock |
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(8,443 |
) |
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— |
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(8,443 |
) |
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Undeclared cumulative dividends on preferred stock |
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(6,030 |
) |
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— |
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(6,030 |
) |
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NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS |
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$ |
(61,228 |
) |
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$ |
(13,560 |
) |
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$ |
(74,788 |
) |
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NET LOSS PER SHARE OF COMMON STOCK ATTRIBUTABLE TO COMMON STOCKHOLDERS: |
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Basic |
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$ |
(0.31 |
) |
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$ |
(0.38 |
) |
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Diluted |
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$ |
(0.31 |
) |
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$ |
(0.38 |
) |
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WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: |
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Basic |
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195,369,489 |
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— |
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195,369,489 |
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Diluted |
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|
195,369,489 |
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— |
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|
195,369,489 |
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See accompanying notes to unaudited pro forma consolidated financial information
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1. |
Pro Forma Adjustments for the WEHLU Sale |
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(a) |
To record net cash proceeds at closing of $98.8 million for the WEHLU Sale at December 31, 2017. |
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(b) |
To record the reduction in property, plant and equipment for the sales proceeds net of purchase price adjustments and non-recurring estimated transaction costs directly related to the divestiture and to reduce the property, plant and equipment balance for the related asset retirement obligation costs at December 31, 2017. |
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(c) |
To record a liability for estimated non-recurring transaction costs directly related to the divestiture at December 31, 2017. |
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(d) |
To record the reduction in the asset retirement obligation liability at December 31, 2017. |
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(e) |
To record the reduction in oil and condensate, natural gas and NGLs sales revenues for the year ended December 31, 2017. |
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(f) |
To record the reduction in direct operating expenses for the year ended December 31, 2017. |
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(g) |
To record the reduction in DD&A expense for the year ended December 31, 2017. |
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(h) |
To record the reduction in accretion expense on the asset retirement obligation for the year ended December 31, 2017. |
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(i) |
Pro forma adjustment for provision for income taxes has not been included as the Company has a full valuation allowance against assets created by net operating losses generated. |
