EX-99.3 6 d317815dex993.htm UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET Unaudited Pro Forma Condensed Consolidated Balance Sheet

EXHIBIT 99.3

GENESIS ENERGY, L.P.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

TABLE OF CONTENTS

 

     Page  

INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

     1   

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2011

     2   

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2011

     3   

Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements

     4   


GENESIS ENERGY, L.P.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Introduction to Unaudited Pro Forma Condensed Consolidated Financial Statements

The following Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2011 and the Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2011 give effect to the acquisition by Genesis Energy, L.P. (“Genesis” or the “Company”) of interests in several Gulf of Mexico crude oil pipeline systems from Marathon Oil Company. The acquired pipeline interests (the “Acquired Interests”) include a 28% interest in Poseidon Oil Pipeline Company, L.L.C. (“Poseidon”), a 100% interest in Marathon Offshore Pipeline, LLC (“MOPL”), and a 29% interest in Odyssey Pipeline L.L.C (“Odyssey”). MOPL (subsequently named GEL Offshore Pipeline, LLC) includes a 23% interest in the Eugene Island crude oil pipeline system and a 100% interest in two small offshore pipelines. These pro forma financial statements, including the related assumptions and adjustments described in the notes thereto, are referred to as the Unaudited Pro Forma Financial Statements. See Note 1 below for additional information related to the acquired pipeline interests.

The Unaudited Pro Forma Statements are based upon the (i) historical audited financial statements of the Company, Poseidon and MOPL, and (ii) historical financial information of Odyssey. The acquired ownership interests in Poseidon and Odyssey are accounted for under the equity method of accounting and are presented in the accompanying pro forma financial statements accordingly. The acquisition of MOPL was accounted for using the acquisition method in accordance with Financial Accounting Standards Board Accounting Standards Codification 805, Business Combinations (“ASC 805”). The assets acquired and liabilities assumed from MOPL have been recorded at their estimated fair values on a preliminary basis. The preliminary allocation of fair value used in the Unaudited Pro Forma Financial Statements is based on management’s preliminary valuation. The estimates and assumptions are subject to change upon finalization of the valuation. Actual amounts recorded upon finalization of estimates of fair values may differ from the information presented in the Unaudited Pro Forma Financial Statements. However, it is not anticipated that any final adjustments will have a material impact on the Company’s pro forma operating results.

The Unaudited Pro Forma Financial Statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in Genesis’ Annual Report on Form 10-K for the year ended December 31, 2011, and the audited financial statements of Poseidon and MOPL included in this current report on Form 8-K/A. Separate financial statements of Odyssey are excluded as it is insignificant in relation to the other acquired pipeline interests and to the Company’s financial position and results of operations.

The Unaudited Pro Forma Financial Statements were prepared assuming that the acquisition of the pipeline interests and the related borrowings to fund the acquisition were consummated as of December 31, 2011 for the Unaudited Pro Forma Condensed Consolidated Balance Sheet, and as of January 1, 2011 for the Unaudited Pro Forma Condensed Consolidated Statement of Operations. The Unaudited Pro Forma Financial Statements have been prepared based upon assumptions deemed appropriate by Genesis and may not be indicative of actual results.

 

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GENESIS ENERGY, L.P.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2011

(In thousands)

 

           Historical            Historical               
           28% Equity            29% Equity               
     Historical     Interest in      Historical     Interest in      Pro Forma     Pro Forma  
     Genesis     Poseidon      MOPL     Odyssey      Adjustments     Genesis  

ASSETS

              

CURRENT ASSETS:

              

Cash and cash equivalents

   $ 10,817         $ 200           $ 11,017   

Accounts receivables—trade, net

     237,989           747             238,736   

Inventories

     101,124                  101,124   

Other

     26,174                  26,174   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total current assets

     376,104        —           947        —           —          377,051   

FIXED ASSETS, at cost

     541,138           31,540           (22,722 )A      568,871   
               18,915  B   

Less: Accumulated depreciation

     (124,213        (22,722        22,722  A      (124,213
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Net fixed assets

     416,925        —           8,818        —           18,915        444,658   

NET INVESTMENT IN DIRECT

              

FINANCING LEASES, net of unearned income

     162,460                  162,460   

EQUITY INVESTEES

     326,947        34,532           1,320         11,179  C      510,264   
               136,286  D   

INTANGIBLE ASSETS, net of amortization

     93,356                  93,356   

GOODWILL

     325,046                  325,046   

OTHER ASSETS, net of amortization

     30,006                  30,006   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

TOTAL ASSETS

   $ 1,730,844      $ 34,532       $ 9,765      $ 1,320       $ 166,380      $ 1,942,841   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

LIABILITIES AND PARTNERS’ CAPITAL

              

CURRENT LIABILITIES:

              

Accounts payable—trade

   $ 199,357         $ 218           $ 199,575   

Accrued liabilities

     50,071           6             50,077   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total current liabilities

     249,428        —           224        —           —          249,652   

SENIOR SECURED CREDIT FACILITIES

     409,300                205,900  E      615,200   

SENIOR UNSECURED NOTES

     250,000                  250,000   

DEFERRED TAX LIABILITIES

     12,549           183           (183 )F      12,549   

OTHER LONG-TERM LIABILITIES

     16,929           5,873             22,802   

PARTNERS’ CAPITAL:

              

Common unitholders

     792,638                  792,638   

Equity

       34,532         3,485        1,320         (39,337 )G      —     
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

TOTAL LIABILITIES AND PARTNERS’ CAPITAL

   $ 1,730,844      $ 34,532       $ 9,765      $ 1,320       $ 166,380      $ 1,942,841   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.

 

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GENESIS ENERGY, L.P.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2011

(In thousands, except amounts per unit)

 

           Historical            Historical               
           28% Equity            29% Equity               
     Historical     Interest in      Historical     Interest in      Pro Forma     Pro Forma  
     Genesis     Poseidon      MOPL     Odyssey      Adjustments     Genesis  

REVENUES:

              

Supply and logistics

   $ 2,825,768                $ 2,825,768   

Refinery services

     201,711                  201,711   

Pipeline transportation services

     62,190           7,024             69,214   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total revenues

     3,089,669        —           7,024        —           —          3,096,693   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

COSTS AND EXPENSES:

              

Supply and logistics costs:

              

Product costs

     2,643,687                  2,643,687   

Operating costs

     123,121                  123,121   

Refinery services operating costs

     126,782                  126,782   

Pipeline transportation operating costs

     16,964           935           906  H      18,805   

General and administrative

     34,473           796           (485 )I      34,784   

Depreciation and amortization

     61,926           1,126           1,892  J      64,944   

Net loss on disposal of surplus assets

     264                  264   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total costs and expenses

     3,007,217        —           2,857        —           2,313        3,012,387   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

OPERATING INCOME

     82,452        —           4,167        —           (2,313     84,306   

Equity in earnings of equity investees

     3,347        15,375           1,674         (4,543 )K      14,735   
               (1,118 )L   

Interest expense

     (35,767             (6,177 )M      (41,944
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Income from continuing operations before income taxes

     50,032        15,375         4,167        1,674         (14,151     57,097   

Income tax benefit (expense)

     1,217           (1,459        1,459  N      1,217   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

INCOME FROM CONTINUING OPERATIONS

   $ 51,249      $ 15,375       $ 2,708      $ 1,674       $ (12,692   $ 58,314   
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

NET INCOME ATTRIBUTABLE TO

              

GENESIS ENERGY, L.P. PER COMMON UNIT:

              

Basic and Diluted

   $ 0.75                $ 0.86   
  

 

 

             

 

 

 

WEIGHTED AVERAGE OUTSTANDING

              

COMMON UNITS:

              

Basic and Diluted

     67,938                  67,938   
  

 

 

             

 

 

 

The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.

 

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GENESIS ENERGY, L.P.

NOTES TO THE UNAUDITED PRO FORMA

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except where otherwise indicated)

Note 1. Acquisition of the Gulf of Mexico Pipeline Interests

On January 3, 2012, Genesis acquired from Marathon Oil Company interests in several Gulf of Mexico crude oil pipeline systems described below. The total purchase price was $205.9 million, subject to post-closing adjustments. The purchase price was funded with cash available under our credit facility.

Poseidon is comprised of a 367-mile network of crude oil pipelines, varying in diameter from 16 to 24 inches, with capacity to deliver approximately 400,000 barrels per day of crude oil from developments in the central and western offshore Gulf of Mexico to other pipelines and terminals onshore and offshore Louisiana. MOPL includes a 23% interest in the Eugene Island system and a 100% interest in two small offshore pipelines. The Eugene Island system is comprised of a 183-mile network of crude oil pipelines, the main pipeline of which is 20 inches in diameter, with capacity to deliver approximately 200,000 barrels per day of crude oil from developments in the central Gulf of Mexico to other pipelines and terminals onshore Louisiana. Odyssey is comprised of a 120-mile network of crude oil pipelines, varying in diameter from 12 to 20 inches, with capacity to deliver up to 300,000 barrels per day of crude oil from developments in the eastern Gulf of Mexico to other pipelines and terminals onshore Louisiana.

Note 2. Pro Forma Adjustments

The following adjustments are included in the Unaudited Pro Forma Condensed Consolidated Balance Sheet and the Unaudited Pro Forma Condensed Consolidated Statement of Operations to reflect the estimated impact of the acquisition on the historical combined results of Genesis and the Acquired Interests.

 

(A) Adjustment to eliminate historical accumulated depreciation recorded by MOPL.
(B) Adjustment to reflect the excess of the preliminary fair value allocation over historical cost related to the acquisition of MOPL fixed assets. The preliminary allocation of fair value for MOPL is summarized as follows (in thousands):

 

Cash and cash equivalents

   $ 200   

Accounts receivable

     747   

Fixed assets

     27,733   

Accounts payable

     (218

Accrued liabilities

     (6

Other long-term liabilities

     (5,873
  

 

 

 

Total fair value allocated

   $ 22,583   
  

 

 

 

 

(C) Adjustment to reflect the excess of the allocated fair value of $12.5 million over Genesis’ 29% interest of Odyssey’s historical members’ equity, which was $1.3 million at December 31, 2011.
(D) Adjustment to reflect the excess of the allocated fair value of $170.8 million over Genesis’ 28% interest of Poseidon’s historical members’ equity, which was $34.5 million at December 31, 2011.
(E) Adjustment to reflect the borrowings under our senior secured credit facility used to fund the acquisition.
(F) Adjustment to exclude tax liabilities of MOPL that Genesis is not assuming.
(G) Adjustment to eliminate the historical equity of the Acquired Interests.
(H) Adjustment to reflect incremental insurance expense incurred as a result of the acquisition. Each partner in Poseidon and Odyssey is responsible for providing its own insurance coverage.
(I) Adjustment to eliminate transaction costs for this transaction included in Genesis’ 2011 historical general and administrative expenses.
(J) Adjustment to record depreciation expense for MOPL based on the preliminary allocation of fair values to fixed assets using estimated weighted-average useful lives of the underlying assets of 10 years.
(K) Adjustment to reflect the amortization of the excess of Genesis’ investment over its share of historical members’ equity on the balance sheet of Poseidon. Genesis paid $136.3 million more for its interest in the entity than its share of Poseidon’s historical members’ equity at the date of the acquisition. This excess amount is amortized using the straight-line method over the estimated remaining useful life of the Poseidon assets of approximately 30 years.

 

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GENESIS ENERGY, L.P.

NOTES TO THE UNAUDITED PRO FORMA

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except where otherwise indicated)

 

(L) Adjustment to reflect the amortization of the excess of Genesis’ investment over its share of historical members’ equity on the balance sheet of Odyssey. Genesis paid $11.2 million more for its interest in the entity than its share of Odyssey’s historical members’ equity at the date of the acquisition. This excess amount is amortized using the straight-line method over the remaining useful life of the Odyssey assets of approximately 10 years.
(M) Adjustment to record interest expense for the borrowings to fund the acquisition at a weighted average rate of 3% under Genesis’ senior secured credit facility.
(N) Adjustment to eliminate the historical corporate income tax expense recorded by MOPL as Genesis is not a taxable entity for federal income tax purposes.

 

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