Date of Report (Date of earliest event reported) | December 18, 2014 | |
(December 15, 2014) |
Delaware | 000-51719 | 65-1177591 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
600 Travis, Suite 5100 Houston, Texas | 77002 |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (281) 840-4000 | |
NOT APPLICABLE | |
(Former name or former address, if changed since last report.) |
Exhibit Number | Description | |
Exhibit 99.1 | The unaudited pro forma condensed combined balance sheet of LINN Energy as of September 30, 2014, which gives effect to Granite Wash Assets Sale, and the unaudited pro forma condensed combined statements of operations of LINN Energy for the nine months ended September 30, 2014, and for the year ended December 31, 2013, which give effect to the Granite Wash Assets Sale, the Devon Assets Acquisition and the Berry Acquisition. |
LINN ENERGY, LLC | |
(Registrant) | |
Date: December 18, 2014 | /s/ David B. Rottino |
David B. Rottino | |
Executive Vice President, Business Development and Chief Accounting Officer (As Duly Authorized Officer and Chief Accounting Officer) |
LINN Energy Historical | Granite Wash Assets Sale Pro Forma Adjustments | LINN Energy Pro Forma | |||||||||
(in thousands) | |||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 59,161 | $ | 1,806,615 | (a) | $ | 59,161 | ||||
(1,806,615 | ) | (a) | |||||||||
Accounts receivable – trade, net | 522,633 | — | 522,633 | ||||||||
Derivative instruments | 337,244 | — | 337,244 | ||||||||
Assets held for sale | 1,865,040 | (1,507,468 | ) | (b) | 357,572 | ||||||
Other current assets | 165,512 | (14,208 | ) | (c) | 151,304 | ||||||
Total current assets | 2,949,590 | (1,521,676 | ) | 1,427,914 | |||||||
Noncurrent assets: | |||||||||||
Oil and natural gas properties (successful efforts method), net | 15,036,848 | — | 15,036,848 | ||||||||
Other property and equipment, net | 486,595 | — | 486,595 | ||||||||
Derivative instruments | 305,274 | — | 305,274 | ||||||||
Other noncurrent assets | 148,687 | — | 148,687 | ||||||||
Total noncurrent assets | 15,977,404 | — | 15,977,404 | ||||||||
Total assets | $ | 18,926,994 | $ | (1,521,676 | ) | $ | 17,405,318 | ||||
LIABILITIES AND UNITHOLDERS’ CAPITAL | |||||||||||
Current liabilities: | |||||||||||
Accounts payable and accrued expenses | $ | 826,976 | $ | — | $ | 826,976 | |||||
Derivative instruments | 2,597 | — | 2,597 | ||||||||
Other accrued liabilities | 327,449 | (108,330 | ) | (b) | 219,119 | ||||||
Current portion of long-term debt | 1,300,000 | (1,300,000 | ) | (a) | — | ||||||
Total current liabilities | 2,457,022 | (1,408,330 | ) | 1,048,692 | |||||||
Noncurrent liabilities: | |||||||||||
Credit facilities | 3,683,175 | (496,615 | ) | (a) | 3,186,560 | ||||||
Term loan | 500,000 | — | 500,000 | ||||||||
Senior notes, net | 6,826,971 | — | 6,826,971 | ||||||||
Derivative instruments | 80 | — | 80 | ||||||||
Other noncurrent liabilities | 527,613 | — | 527,613 | ||||||||
Total noncurrent liabilities | 11,537,839 | (496,615 | ) | 11,041,224 | |||||||
Unitholders’ capital: | |||||||||||
Units issued and outstanding | 5,629,837 | — | 5,629,837 | ||||||||
Accumulated deficit | (697,704 | ) | 397,477 | (d) | (314,435 | ) | |||||
(14,208 | ) | (c) | |||||||||
4,932,133 | 383,269 | 5,315,402 | |||||||||
Total liabilities and unitholders’ capital | $ | 18,926,994 | $ | (1,521,676 | ) | $ | 17,405,318 |
LINN Energy Historical | Granite Wash Assets Sale Pro Forma Adjustments | Devon Assets Acquisition Historical | Devon Assets Acquisition Pro Forma Adjustments | LINN Energy Pro Forma | |||||||||||||||
(in thousands, except per unit amounts) | |||||||||||||||||||
Revenues and other: | |||||||||||||||||||
Oil, natural gas and natural gas liquids sales | $ | 2,844,185 | $ | (413,290 | ) | (e) | $ | 352,139 | $ | — | $ | 2,783,034 | |||||||
Losses on oil and natural gas derivatives | (198,579 | ) | — | — | — | (198,579 | ) | ||||||||||||
Marketing revenues | 100,655 | (2,835 | ) | (e) | — | — | 97,820 | ||||||||||||
Other revenues | 19,392 | (9,490 | ) | (e) | — | — | 9,902 | ||||||||||||
2,765,653 | (425,615 | ) | 352,139 | — | 2,692,177 | ||||||||||||||
Expenses: | |||||||||||||||||||
Lease operating expenses | 570,564 | (42,671 | ) | (e) | 91,884 | — | 619,777 | ||||||||||||
Transportation expenses | 143,896 | (25,594 | ) | (e) | — | — | 118,302 | ||||||||||||
Marketing expenses | 75,920 | (1,876 | ) | (e) | — | — | 74,044 | ||||||||||||
General and administrative expenses | 221,518 | — | — | (5,486 | ) | (i) | 216,032 | ||||||||||||
Exploration costs | 10,492 | — | — | — | 10,492 | ||||||||||||||
Depreciation, depletion and amortization | 832,523 | (152,913 | ) | (f) | — | 101,348 | (j) | 784,832 | |||||||||||
3,874 | (k) | ||||||||||||||||||
Impairment of long-lived assets | 603,250 | — | — | — | 603,250 | ||||||||||||||
Taxes, other than income taxes | 201,014 | (13,914 | ) | (e) | 29,280 | — | 216,380 | ||||||||||||
Gains on sale of assets and other, net | (27,750 | ) | — | — | — | (27,750 | ) | ||||||||||||
2,631,427 | (236,968 | ) | 121,164 | 99,736 | 2,615,359 | ||||||||||||||
Other income and (expenses): | |||||||||||||||||||
Interest expense, net of amounts capitalized | (422,160 | ) | 10,972 | (g) | — | (44,583 | ) | (l) | (462,560 | ) | |||||||||
2,846 | (h) | (9,635 | ) | (m) | |||||||||||||||
Other, net | (6,699 | ) | — | — | — | (6,699 | ) | ||||||||||||
(428,859 | ) | 13,818 | — | (54,218 | ) | (469,259 | ) | ||||||||||||
Income (loss) before income taxes | (294,633 | ) | (174,829 | ) | 230,975 | (153,954 | ) | (392,441 | ) | ||||||||||
Income tax expense | 2,674 | — | — | — | (n) | 2,674 | |||||||||||||
Net income (loss) | $ | (297,307 | ) | $ | (174,829 | ) | $ | 230,975 | $ | (153,954 | ) | $ | (395,115 | ) | |||||
Net loss per unit: | |||||||||||||||||||
Basic | $ | (0.92 | ) | $ | (1.22 | ) | |||||||||||||
Diluted | $ | (0.92 | ) | $ | (1.22 | ) | |||||||||||||
Weighted average units outstanding: | |||||||||||||||||||
Basic | 328,783 | 328,783 | |||||||||||||||||
Diluted | 328,783 | 328,783 |
LINN Energy Historical | Granite Wash Assets Sale Pro Forma Adjustments | Devon Assets Acquisition Historical | Berry Acquisition Historical | Devon Assets Acquisition and Berry Acquisition Pro Forma Adjustments | LINN Energy Pro Forma | ||||||||||||||||||
(in thousands, except per unit amounts) | |||||||||||||||||||||||
Revenues and other: | |||||||||||||||||||||||
Oil, natural gas and natural gas liquids sales | $ | 2,073,240 | $ | (553,726 | ) | (e) | $ | 530,648 | $ | 1,103,245 | $ | — | $ | 3,153,407 | |||||||||
Gains (losses) on oil and natural gas derivatives | 177,857 | — | — | (34,711 | ) | — | 143,146 | ||||||||||||||||
Marketing revenues | 54,171 | (10,712 | ) | (e) | — | 41,819 | — | 85,278 | |||||||||||||||
Other revenues | 26,387 | (16,111 | ) | (e) | — | 949 | — | 11,225 | |||||||||||||||
2,331,655 | (580,549 | ) | 530,648 | 1,111,302 | — | 3,393,056 | |||||||||||||||||
Expenses: | |||||||||||||||||||||||
Lease operating expenses | 372,523 | (58,695 | ) | (e) | 151,906 | 325,209 | — | 790,943 | |||||||||||||||
Transportation expenses | 128,440 | (36,639 | ) | (e) | — | 32,930 | — | 124,731 | |||||||||||||||
Marketing expenses | 37,892 | (1,550 | ) | (e) | — | 30,078 | — | 66,420 | |||||||||||||||
General and administrative expenses | 236,271 | — | — | 122,991 | (93,260 | ) | (i) | 266,002 | |||||||||||||||
Exploration costs | 5,251 | — | — | 24,048 | — | 29,299 | |||||||||||||||||
Depreciation, depletion and amortization | 829,311 | (271,716 | ) | (f) | — | 279,757 | 165,260 | (j) | 1,008,422 | ||||||||||||||
5,810 | (k) | ||||||||||||||||||||||
Impairment of long-lived assets | 828,317 | (791,753 | ) | (o) | — | — | — | 36,564 | |||||||||||||||
Taxes, other than income taxes | 138,631 | (22,171 | ) | (e) | 44,279 | 41,509 | — | 202,248 | |||||||||||||||
(Gains) losses on sale of assets and other, net | 13,637 | — | — | (23 | ) | — | 13,614 | ||||||||||||||||
2,590,273 | (1,182,524 | ) | 196,185 | 856,499 | 77,810 | 2,538,243 | |||||||||||||||||
Other income and (expenses): | |||||||||||||||||||||||
Interest expense, net of amounts capitalized | (421,137 | ) | 9,726 | (g) | — | (96,127 | ) | (60,252 | ) | (l) | (582,242 | ) | |||||||||||
(14,452 | ) | (m) | |||||||||||||||||||||
Loss on extinguishment of debt | (5,304 | ) | — | — | — | — | (5,304 | ) | |||||||||||||||
Other, net | (8,477 | ) | — | — | 51 | — | (8,426 | ) | |||||||||||||||
(434,918 | ) | 9,726 | — | (96,076 | ) | (74,704 | ) | (595,972 | ) | ||||||||||||||
Income (loss) before income taxes | (693,536 | ) | 611,701 | 334,463 | 158,727 | (152,514 | ) | 258,841 | |||||||||||||||
Income tax expense (benefit) | (2,199 | ) | — | — | 65,280 | (65,280 | ) | (n) | (2,199 | ) | |||||||||||||
Net income (loss) | $ | (691,337 | ) | $ | 611,701 | $ | 334,463 | $ | 93,447 | $ | (87,234 | ) | $ | 261,040 | |||||||||
Net income (loss) per unit: | |||||||||||||||||||||||
Basic | $ | (2.94 | ) | $ | 0.77 | ||||||||||||||||||
Diluted | $ | (2.94 | ) | $ | 0.77 | ||||||||||||||||||
Weighted average units outstanding: | |||||||||||||||||||||||
Basic | 237,544 | 93,757 | (p) | 331,301 | |||||||||||||||||||
Diluted | 237,544 | 93,757 | (p) | 331,301 |
| the historical consolidated statement of operations of LINN Energy with adjustments to reflect the Granite Wash Assets Sale; and |
| the historical statement of revenues and direct operating expenses of the properties acquired in the Devon Assets Acquisition. |
| the historical consolidated statement of operations of LINN Energy with adjustments to reflect the Granite Wash Assets Sale; |
| the historical statement of revenues and direct operating expenses of the properties acquired in the Devon Assets Acquisition; and |
| the historical statement of operations of Berry. |
(a) | Reflects approximately $1.8 billion of net cash proceeds received from the Granite Wash Assets Sale. $1.3 billion of the net cash proceeds received was used to repay in full the term loan and approximately $497 million was used to repay a portion of the borrowings outstanding under LINN Energy’s credit facility. |
(b) | Reflects the elimination of assets and liabilities associated with the Granite Wash Assets Sale which were classified as “held for sale” at September 30, 2014. See below for a summary of the net assets sold (in thousands): |
Assets: | |||
Current | $ | 10,827 | |
Oil and natural gas properties | 1,355,780 | ||
Other property and equipment | 140,861 | ||
Total assets sold | 1,507,468 | ||
Liabilities: | |||
Accounts payable | 92,779 | ||
Asset retirement obligations | 15,551 | ||
Total liabilities sold | 108,330 | ||
Net assets sold | $ | 1,399,138 |
(c) | Reflects the write-off of deferred financing fees related to the $1.3 billion term loan repaid using a portion of the net cash proceeds received from the Granite Wash Assets Sale. This expense is excluded from the pro forma statements of operations as it reflects a nonrecurring charge not expected to have a continuing impact; however, upon repayment of the associated debt, LINN Energy will recognize this expense in its statement of operations. |
(d) | Reflects a net gain on the Granite Wash Assets Sale of approximately $397 million, including costs to sell of approximately $10 million. This gain is excluded from the pro forma statements of operations as it reflects a nonrecurring credit not expected to have a continuing impact; however, upon closing the sale, LINN Energy will recognize the resulting gain or loss, if any, in its statement of operations. |
(e) | Reflects the elimination of the revenues and direct operating expenses associated with the Granite Wash Assets Sale. |
(f) | Reflects a reduction of depreciation, depletion and amortization expense as a result of the Granite Wash Assets Sale. |
(g) | Reflects a reduction of interest expense related to the repayment of approximately $1.8 billion of debt from the net cash proceeds received from the Granite Wash Assets Sale. |
(h) | Reflects a reduction of deferred financing fees amortization associated with the term loan repaid with a portion of the net proceeds received from the Granite Wash Assets Sale. |
(i) | Reflects acquisition-related transaction costs of approximately $5 million associated with the Devon Assets Acquisition included in the historical statement of operations for the nine months ended September 30, 2014, and $93 million associated with the Berry Acquisition included in the historical statement of operations for the year ended December 31, 2013. The transaction costs are excluded from the pro forma statements of operations as they reflect nonrecurring charges not expected to have a continuing impact on the combined results. |
(j) | Reflects incremental depreciation, depletion and amortization expense, using the units-of-production method, related to oil and natural gas properties acquired and using an estimated useful life of 10 years for the Devon Assets Acquisition and 20 years for the Berry Acquisition for other property and equipment as follows: |
• | for the period from January 1, 2014 through August 29, 2014, and for the year ended December 31, 2013, approximately $101 million and $152 million, respectively, related to the Devon Assets Acquisition; and |
• | for the period from January 1, 2013 through December 16, 2013, approximately $13 million related to the Berry Acquisition. |
(k) | Reflects incremental accretion expense related to asset retirement obligations on oil and natural gas properties acquired in the Devon Assets Acquisition. |
(l) | Reflects interest expense as follows: |
• | Increase of interest expense of approximately $45 million and $67 million for the period from January 1, 2014 through August 29, 2014, and for the year ended December 31, 2013, respectively, related to the unsecured bridge loan incurred to partially fund the purchase price of the Devon Assets Acquisition; the assumed weighted average interest rate was approximately 6.69%; and |
• | Reduction of interest expense of approximately $7 million for the period from January 1, 2013 through December 16, 2013, related to the amortization of the adjustment to fair value of Berry’s debt using the effective interest rate method. |
(m) | Reflects incremental amortization of deferred financing fees associated with the unsecured bridge loan. |
(n) | LINN Energy is treated as a partnership for federal and state income tax purposes. Accordingly, no recognition has been given to federal and state income taxes in the accompanying unaudited pro forma condensed combined statements of operations. |
(o) | Reflects the elimination of the impairment charge recorded for the year ended December 31, 2013, associated with the proved oil and natural gas properties sold in the Granite Wash Assets Sale. |
(p) | Reflects approximately 93.8 million LINN Energy units assumed to be issued on January 1, 2013, in conjunction with the Berry Acquisition. |