UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported): October 1, 2013
ALTA MESA HOLDINGS, LP
(Exact name of registrant as specified in its charter)
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Texas |
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333-173751 |
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20-3565150 |
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(State or other jurisdiction of |
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(Commission File Number) |
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(I.R.S. Employer |
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incorporation or organization) |
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Identification Number) |
15021 Katy Freeway, Suite 400
Houston, Texas, 77094
(Address of principal executive offices)
(281) 530-0991
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.01. Completion of Acquisition or Disposition of Assets.
On October 1, 2013 we closed a transaction to purchase certain producing properties in South Louisiana from Stone Energy Offshore, L.L.C. for cash consideration of approximately $45 million plus related abandonment costs. The purchase price was funded with borrowings under our senior secured revolving credit facility. This purchase increases our working interest in numerous wells in our Weeks Island field as well as increases our acreage in that area by approximately 600 gross acres for properties in which we previously had no working interest. Total estimated net proved reserves associated with the acquisition are 1.8 million BOE as of July 1, 2013. The effective date of this transaction is August 1, 2013.
On October 2, 2013 we closed the sale of certain of our properties in East Texas to Cubic Oil, Inc., comprising a portion of our Hilltop field (“Hilltop divestiture”). The properties sold were primarily producers of dry natural gas located in Leon County, Texas. As of July 1, 2013, estimated net proved reserves associated with these properties were 11.2 Bcfe. The cash purchase price was approximately $19 million (net of costs of the sale). The purchase and sale agreement provides for customary adjustments to the purchase price for revenues and expenses incurred after the effective date of July 1, 2013. Cash received was utilized partially to pay down borrowings under our senior secured revolving credit facility and partially for general corporate purposes.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
As of October 1, 2013, the borrowing base under our senior secured revolving credit facility has been increased by the lenders to $385 million. This represents an increase of $55 million over the previous level of $330 million. We are in compliance with all of the financial covenants associated with the credit facility and the next scheduled redetermination of the borrowing base is May 1, 2014. The credit facility is available to provide funds for the exploration, development and/or acquisition of oil and gas properties and for working capital and other general corporate purposes. The credit facility is provided by a syndicate of nine banks agented by Wells Fargo Bank, N.A. and co-agented by Union Bank, N.A. Subsequent to the closing of the two transactions described in Item 2.01 above, the total debt outstanding under our credit facility is approximately $291.3 million as of October 3, 2013.
Item 9.01. Financial Statements and Exhibits.
(b) Pro forma Financial Information.
Unaudited pro forma financial information of Alta Mesa Holdings, LP to give effect to the Hilltop divestiture is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference:
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Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2013; |
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Unaudited Pro Forma Condensed Consolidated Statement of Operations for the six months ended June 30, 2013; and |
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Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2012. |
(d) Exhibits
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Exhibit Number |
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Title of Document |
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99.1 |
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Unaudited Pro Forma Condensed Consolidated Financial Statements of Alta Mesa Holdings, LP as of June 30, 2013 and for the Six Months ended June 30, 2013 and the year ended December 31, 2012. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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ALTA MESA HOLDINGS, LP |
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October 3, 2013 |
By: |
/s/ Michael A. McCabe |
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Michael A. McCabe, Vice President and Chief Financial Officer of Alta Mesa Holdings GP, LLC, general partner of Alta Mesa Holdings, LP |
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Exhibit Index
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Exhibit Number |
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Title of Document |
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99.1 |
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Unaudited Pro Forma Condensed Consolidated Financial Statements of Alta Mesa Holdings, LP as of June 30, 2013 and for the Six Months ended June 30, 2013 and the year ended December 31, 2012. |
ALTA MESA HOLDINGS, LP
UNAUDITED PRO FORMA CONDENSED CONSOLIDTAED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statements and explanatory notes give effect to the sale of certain oil and natural gas properties by Alta Mesa Holdings, LP (“Alta Mesa,” “we,” “us”), located in our Hilltop field in East Texas to Cubic Energy, Inc., (“Cubic”) on September 30, 2013.
The unaudited pro forma condensed consolidated financial statements and explanatory notes are based on the estimates and assumptions set forth in the explanatory notes. The unaudited pro forma condensed consolidated financial statements have been prepared utilizing our historical consolidated financial statements, and should be read in conjunction with the historical consolidated financial statements and notes thereto.
The unaudited pro forma consolidated statements of operations have been prepared as if the sale transaction had been consummated on January 1, 2012. The unaudited condensed consolidated balance sheet has been prepared as if the sale transaction had been consummated June 30, 2013.
The unaudited pro forma condensed consolidated financial statements are presented for informational purposes only, are based on certain assumptions that we believe are reasonable, and do not purport to represent our financial condition or our results of operations had the business combinations occurred on the dates noted above or to project the results for any future date or period. In the opinion of management, all adjustments have been made that are necessary to present fairly the unaudited pro forma condensed consolidated financial information.
The unaudited pro forma condensed consolidated financial statements and explanatory notes are based on the estimates and assumptions set forth in the explanatory notes.
ALTA MESA HOLDINGS, LP
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEETS
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Pro Forma |
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June 30, |
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Pro forma |
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June 30, |
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2013 |
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Adjustments |
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2013 |
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(in thousands) |
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ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents |
$ |
7,766 |
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$ |
19,000 |
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$ |
26,766 |
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Restricted cash |
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— |
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— |
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— |
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Accounts receivable, net |
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46,506 |
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— |
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46,506 |
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Other receivables |
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4,564 |
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— |
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4,564 |
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Prepaid expenses and other current assets |
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4,346 |
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— |
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4,346 |
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Derivative financial instruments |
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20,067 |
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— |
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20,067 |
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TOTAL CURRENT ASSETS |
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83,249 |
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19,000 |
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102,249 |
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PROPERTY AND EQUIPMENT |
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Oil and natural gas properties, successful efforts method, net |
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723,575 |
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(19,514) |
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704,061 |
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Other property and equipment, net |
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16,514 |
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— |
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16,514 |
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TOTAL PROPERTY AND EQUIPMENT, NET |
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740,089 |
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(19,514) |
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720,575 |
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OTHER ASSETS |
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Investment in Partnership — cost |
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9,000 |
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— |
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9,000 |
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Deferred financing costs, net |
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12,276 |
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— |
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12,276 |
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Derivative financial instruments |
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16,934 |
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— |
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16,934 |
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Advances to operators |
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1,630 |
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— |
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1,630 |
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Deposits and other assets |
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1,790 |
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— |
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1,790 |
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TOTAL OTHER ASSETS |
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41,630 |
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— |
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41,630 |
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TOTAL ASSETS |
$ |
864,968 |
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$ |
(514) |
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$ |
864,454 |
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LIABILITIES AND PARTNERS’ CAPITAL (DEFICIT) |
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CURRENT LIABILITIES |
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Accounts payable and accrued liabilities |
$ |
102,365 |
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$ |
— |
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$ |
102,365 |
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Current portion, asset retirement obligations |
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2,587 |
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— |
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2,587 |
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Derivative financial instruments |
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616 |
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— |
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616 |
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TOTAL CURRENT LIABILITIES |
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105,568 |
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— |
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105,568 |
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LONG-TERM LIABILITIES |
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Asset retirement obligations, net of current portion |
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47,161 |
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(553) |
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46,608 |
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Long-term debt |
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691,613 |
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— |
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691,613 |
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Notes payable to founder |
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22,722 |
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— |
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22,722 |
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Other long-term liabilities |
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2,390 |
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— |
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2,390 |
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TOTAL LONG-TERM LIABILITIES |
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763,886 |
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(553) |
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763,333 |
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TOTAL LIABILITIES |
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869,454 |
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(553) |
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868,901 |
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PARTNERS’ CAPITAL (DEFICIT) |
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(4,486) |
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39 |
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(4,447) |
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TOTAL LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) |
$ |
864,968 |
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$ |
(514) |
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$ |
864,454 |
See notes to the unaudited pro forma condensed consolidated financial statements.
ATLA MESA HOLDINGS, LP
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2012
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Pro forma |
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Pro Forma |
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Dec 31, 2012 |
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Adjustments |
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Dec 31, 2012 |
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(in thousands) |
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REVENUES |
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Natural gas, oil and natural gas liquids |
$ |
332,166 |
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$ |
(4,479) |
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$ |
327,687 |
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Other |
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4,567 |
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— |
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4,567 |
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336,733 |
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(4,479) |
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332,254 |
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Unrealized loss — oil and natural gas derivative contracts |
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(17,434) |
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— |
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(17,434) |
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TOTAL REVENUES |
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319,299 |
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(4,479) |
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314,820 |
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EXPENSES |
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Lease and plant operating expense |
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69,047 |
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(1,706) |
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67,341 |
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Production and ad valorem taxes |
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23,485 |
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(49) |
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23,436 |
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Workover expense |
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12,740 |
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(408) |
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12,332 |
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Exploration expense |
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21,912 |
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— |
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21,912 |
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Depreciation, depletion, and amortization expense |
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109,252 |
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(5,123) |
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104,129 |
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Impairment expense |
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96,227 |
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(8,971) |
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87,256 |
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Accretion expense |
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1,813 |
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(23) |
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1,790 |
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General and administrative expense |
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40,222 |
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— |
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40,222 |
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TOTAL EXPENSES |
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374,698 |
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(16,280) |
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358,418 |
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INCOME (LOSS) FROM OPERATIONS |
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(55,399) |
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11,801 |
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(43,598) |
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OTHER INCOME (EXPENSE) |
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Interest expense, net |
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(41,833) |
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— |
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(41,833) |
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Litigation settlement |
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1,250 |
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— |
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1,250 |
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TOTAL OTHER INCOME (EXPENSE) |
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(40,583) |
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— |
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(40,583) |
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(LOSS) BEFORE INCOME TAXES |
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(95,982) |
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11,801 |
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(84,181) |
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PROVISION FOR STATE INCOME TAXES |
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107 |
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— |
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107 |
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NET (LOSS) |
$ |
(95,875) |
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$ |
11,801 |
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$ |
(84,074) |
See notes to the unaudited pro forma condensed consolidated financial statements.
ALTA MESA HOLDINGS, LP
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2013
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Pro forma |
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Pro Forma |
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June 30, 2013 |
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Adjustments |
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June 30, 2013 |
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(in thousands) |
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REVENUES |
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Natural gas, oil and natural gas liquids |
$ |
191,091 |
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$ |
(2,488) |
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$ |
188,603 |
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Other |
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1,158 |
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— |
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1,158 |
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192,249 |
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(2,488) |
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189,761 |
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Unrealized gain — oil and natural gas derivative contracts |
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1,050 |
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— |
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1,050 |
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TOTAL REVENUES |
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193,299 |
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(2,488) |
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190,811 |
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EXPENSES |
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Lease and plant operating expense |
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33,650 |
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(1,192) |
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32,458 |
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Production and ad valorem taxes |
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13,196 |
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(6) |
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13,190 |
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Workover expense |
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8,585 |
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— |
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8,585 |
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Exploration expense |
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8,866 |
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— |
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8,866 |
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Depreciation, depletion, and amortization expense |
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52,880 |
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(1,471) |
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51,409 |
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Impairment expense |
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26,546 |
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— |
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26,546 |
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Accretion expense |
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892 |
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(14) |
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878 |
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Loss on sale of assets |
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1,190 |
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— |
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1,190 |
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General and administrative expense |
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18,761 |
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— |
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18,761 |
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TOTAL EXPENSES |
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164,566 |
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(2,683) |
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161,883 |
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INCOME FROM OPERATIONS |
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28,733 |
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|
195 |
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28,928 |
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OTHER INCOME (EXPENSE) |
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Interest expense, net |
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(26,851) |
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— |
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(26,851) |
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TOTAL OTHER INCOME (EXPENSE) |
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(26,851) |
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— |
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(26,851) |
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INCOME BEFORE INCOME TAXES |
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1,882 |
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195 |
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2,077 |
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PROVISION FOR STATE INCOME TAXES |
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— |
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— |
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— |
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NET INCOME |
$ |
1,882 |
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$ |
195 |
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$ |
2,077 |
See notes to the unaudited pro forma condensed consolidated financial statements.
ALTA MESA HOLDINGS, LP
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDTAED FINANCIAL STATEMENTS
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1. |
Description of the transactions |
On September 30, 2013 we closed a transaction to affect the sale of certain of our oil and natural gas properties in East Texas, comprising a portion of our Hilltop field (“Hilltop divestiture”). The properties sold were producers of dry natural gas in Leon County, Texas. As of June 30, 2013, estimated reserves associated with these properties were 11.2 Bcfe. A total of $19.0 million in cash was received (net of costs of the sale), and approximately $0.6 million in liabilities were assumed by the buyer, Cubic Oil, Inc. The purchase and sale agreement provides for customary adjustments to the purchase price for revenues and expenses incurred after the effective date of July 1, 2013. Cash received was utilized for general corporate purposes.
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2. |
Basis of Presentation |
The unaudited pro forma condensed consolidated financial information was prepared under the existing U.S. GAAP standards, which are subject to change and interpretation and was based on the historical consolidated financial statements of Alta Mesa.
The pro forma adjustments to historical financial information are based on currently available information and certain estimates and assumptions and therefore the actual effects of this transaction will differ from the pro forma adjustments.
3. Adjustments and Assumptions to the Unaudited Pro Forma Condensed Consolidated Balance Sheets
The pro forma balance sheet is prepared assuming the transaction had occurred on June 30, 2013. Expenses of the transaction were estimated based on the best available information.
Sales proceeds from the Hilltop divestiture are allocated as follows:
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Hilltop |
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Divestiture |
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(in thousands) |
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Sale price, in cash |
$ |
19,400 |
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Add: disposition of asset retirement obligations |
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553 |
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Less: estimated expenses of sale |
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(400) |
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Sale price, net |
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19,553 |
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Proved oil and natural gas properties |
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50,871 |
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Accumulated depreciation, depletion and amortization |
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(31,357) |
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Proved oil and natural gas properties, net |
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19,514 |
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Gain on sale of asset |
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39 |
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Total |
$ |
19,553 |
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4. |
Adjustments and Assumptions to the Unaudited Pro Forma Condensed Consolidated Statements of Operations |
The pro forma statement of operations was prepared assuming the transaction occurred on January 1, 2012.