8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No.1)

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 8, 2014

ATHLON ENERGY INC.

(Exact name of registrant as specified in its charter)

Delaware	001-36026	46-2549833
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

420 Throckmorton Street, Suite 1200, Fort Worth, Texas	76102
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (817) 984-8200

Not applicable

(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:

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

EXPLANATORY NOTE

On April 9, 2014, Athlon Energy Inc., a Delaware corporation (the “Company”), filed a Current Report on Form 8-K (the “Initial Report”) to report, among other things, that the Company had entered into three purchase and sale agreements with five unrelated third-party sellers to acquire certain producing properties and undeveloped acreage for an aggregate purchase price of $873 million in cash, subject to customary purchase price adjustments in the oil and natural gas industry.   This Current Report on Form 8-K/A (the “Amendment”) amends and supplements the Initial Report to include: (1) the audited consolidated financial statements of Hibernia Energy, LLC as of and for the year ended December 31, 2013 and (2) the unaudited pro forma financial statements of the Company as of and for the year ended December 31, 2013.  No other amendments to the Initial Report are being made by the Amendment.

Item 9.01. Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

The audited consolidated financial statements of Hibernia Energy, LLC as of and for the year ended December 31, 2013, are included as Exhibit 99.1 to the Amendment.

The audited Schedules of Direct Operating Revenues and Direct Operating Expenses of Certain Oil and Natural Gas Properties of Hibernia Holdings, LLC and Piedra Energy II, LLC for the year ended December 31, 2013, were included as Exhibits 99.2 and 99.3, respectively, to the Initial Report.

(b) Pro Forma Financial Information.

The unaudited pro forma financial statements of the Company as of and for the year ended December 31, 2013, are included as Exhibit 99.4 to the Amendment.

(d) Exhibits.

99.1	Audited Consolidated Financial Statements of Hibernia Energy, LLC as of and for the year ended December 31, 2013.
99.2	Audited Schedule of Direct Operating Revenues and Direct Operating Expenses of Certain Oil and Natural Gas Properties of Hibernia Holdings, LLC for the year ended December 31, 2013 (incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K, filed with the SEC on April 9, 2014).
99.3	Audited Schedule of Direct Operating Revenues and Direct Operating Expenses of Certain Oil and Natural Gas Properties of Piedra Energy II, LLC for the year ended December 31, 2013 (incorporated by reference to Exhibit 99.3 to the Company’s Current Report on Form 8-K, filed with the SEC on April 9, 2014).
99.4	Unaudited pro forma financial statements of the Company as of and for the year ended December 31, 2013.

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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.

	ATHLON ENERGY INC.
Date: April 11, 2014	By:	/s/ William B. D. Butler
		William B. D. Butler
		Vice President–Chief Financial Officer and
		Principal Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Audited Consolidated Financial Statements of Hibernia Energy, LLC as of and for the year ended December 31, 2013.
99.2	Audited Schedule of Direct Operating Revenues and Direct Operating Expenses of Certain Oil and Gas Properties of Hibernia Holdings, LLC for the year ended December 31, 2013 (incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K, filed with the SEC on April 9, 2014).
99.3	Audited Schedule of Direct Operating Revenues and Direct Operating Expenses of Certain Oil and Natural Gas Properties of Piedra Energy II, LLC for the year ended December 31, 2013 (incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K, filed with the SEC on April 9, 2014).
99.4	Unaudited pro forma financial statements of the Company as of and for the year ended December 31, 2013.

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EX-99.1

Exhibit 99.1

HIBERNIA ENERGY, LLC AND SUBSIDIARIES

CONSOLIDATED FINANCIAL REPORT

DECEMBER 31, 2013

C O N T E N T S

	Page
INDEPENDENT AUDITOR’S REPORT	2
FINANCIAL STATEMENTS
Consolidated Balance Sheet	3
Consolidated Statement of Operations	5
Consolidated Statement of Members’ Equity	6
Consolidated Statement of Cash Flows	7
Notes to Consolidated Financial Statements	9

INDEPENDENT AUDITOR’S REPORT

To the Members of

Hibernia Energy, LLC and Subsidiaries

We have audited the accompanying consolidated financial statements of Hibernia Energy, LLC and Subsidiaries (collectively, the Company) (A Delaware Limited Liability Company), which comprise the consolidated balance sheet as of December 31, 2013, and the related consolidated statements of operations, members’ equity, and cash flows for the year then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.  We conducted our audit in accordance with auditing standards generally accepted in the United States of America.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.  The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error.  In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.  Accordingly, we express no such opinion.  An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Hibernia Energy, LLC and Subsidiaries as of December 31, 2013, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

WEAVER AND TIDWELL, L.L.P.

Houston, Texas

March 14, 2014

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FINANCIAL STATEMENTS

HIBERNIA ENERGY, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2013

ASSETS
CURRENT ASSETS
Cash	$	1,299,107
Accounts receivable
Accrued oil and gas sales	3,015,724
Joint interest owners	110,828
Prepaid expenses	28,715
Derivative asset - current	91,008
Total current assets	4,545,382
OIL AND GAS PROPERTIES, full cost method
Cost being amortized, net of accumulated depletion of $4,129,404	122,922,447
Total oil and gas properties, net	122,922,447
OTHER ASSETS
Other property and equipment, net of accumulated depreciation and amortization of $79,891	145,513
Debt issuance costs, net	421,889
Total other assets	567,402
TOTAL ASSETS	$	128,035,231

The Notes to Consolidated Financial Statements are an integral part of this statement.

3

LIABILITIES AND MEMBERS’ EQUITY
CURRENT LIABILITIES
Accounts payable, vendors	$	9,191,769
Accrued revenue payable	3,021
Accrued interest payable	217,591
Total current liabilities	9,412,381
LONG-TERM LIABILITIES
Term loan facility	45,000,000
Asset retirement obligations	724,142
Derivative liability - non-current	737,821
Total long-term liabilities	46,461,963
Total liabilities	55,874,344
MEMBERS’ EQUITY	72,160,887
TOTAL LIABILITIES AND MEMBERS’ EQUITY	$	128,035,231

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HIBERNIA ENERGY, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2013

REVENUES
Oil and gas sales	$	17,594,929
Loss on oil and gas derivative, net	(1,821,049		)
Total revenues	15,773,880
EXPENSES
Oil and gas production expenses	1,720,797
Severance taxes and related expenses	843,254
Depletion, depreciation and amortization	3,417,012
Accretion of asset retirement obligations	18,715
General and administrative expenses	3,340,409
Total expenses	9,340,187
Income from operations	6,433,693
OTHER INCOME (EXPENSE)
Other income	160,274
Interest expense	(1,160,105		)
Total other expense	(999,831		)
NET INCOME	$	5,433,862

The Notes to Consolidated Financial Statements are an integral part of this statement.

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HIBERNIA ENERGY, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF MEMBERS’ EQUITY

YEAR ENDED DECEMBER 31, 2013

BALANCE, beginning of year	$	34,294,458
Cash contributions	32,532,567
Distributions	(100,000		)
Net income	5,433,862
BALANCE, end of year	$	72,160,887

The Notes to Consolidated Financial Statements are an integral part of this statement.

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HIBERNIA ENERGY, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2013

CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	5,433,862
Adjustments to reconcile net income to net cash provided by operating activities
Depletion, depreciation and amortization	3,417,012
Accretion of asset retirement obligations	18,715
Amortization of debt issuance cost	147,664
Market value adjustment for derivative instruments	646,813
Change in operating assets and liabilities
Accounts receivable	216,937
Accounts receivable JIB	(110,828		)
Prepaid expenses and other assets	(1,764		)
Accounts payable and revenue payable	(652,822		)
Accounts payable, joint interest owners	(3,205,583		)
Other accrued liabilities	206,933
Net cash provided by operating activities	6,116,939
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of oil and gas properties	8,552,998
Acquisition of oil and gas properties	(65,665,866		)
Capital expenditures - drilling and development	(34,486,030		)
Capital expenditures of non-oil and gas fixed assets	(122,074		)
Net cash used in investing activities	(91,720,972		)
CASH FLOWS FROM FINANCING ACTIVITIES
Debt issuance costs	(443,752		)
Proceeds from term loan facilities	73,000,000
Principal payments of debt	(28,000,000		)
Proceeds from capital contributions	32,532,567
Distributions	(100,000		)
Net cash provided by financing activities	76,988,815
Net decrease in cash and cash equivalents	(8,615,218		)
CASH, beginning of year	9,914,325
CASH, end of year	$	1,299,107

The Notes to Consolidated Financial Statements are an integral part of this statement.

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HIBERNIA ENERGY, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2013

(CONTINUED)

CASH PAID DURING THE PERIOD FOR:
Interest	$	344,224
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Addition to oil and gas properties for asset retirement obligations	$	705,427
Settlement of ARO on sale of oil and gas properties	$	(67,324	)
Accrued capital expenditures	$	8,383,291

The Notes to Consolidated Financial Statements are an integral part of this statement.

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HIBERNIA ENERGY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Hibernia Energy, LLC and Subsidiaries (collectively, the Company) is a Delaware Limited Liability Company formed on July 28, 2010 to conduct oil and gas exploration, drilling and development operations in the continental United States.  The majority of the Company’s operations are in the state of Texas and most notably in the Permian Basin.

Principles of Consolidation

The consolidated financial statements include the accounts of the following wholly-owned subsidiaries: Hibernia Resources, LLC, a Texas Limited Liability Company, and Hibernia Holdings, LLC, a Texas Limited Liability Company.  All intercompany accounts and transactions are eliminated in consolidation.

Oil and Gas Properties

The Company follows the full cost method of accounting for oil and gas properties.  Accordingly, all costs associated with acquisition, exploration and development of oil and gas reserves, including costs directly related to overhead and related asset retirement costs are capitalized.  Costs incurred to maintain producing wells and related equipment and lease and well operating costs are charged to expense as incurred.  Depreciation and depletion expense for oil and gas producing property and related equipment was $3,392,761 for the year ended December 31, 2013.  The Company had capitalized costs being amortized of $127,051,851, less accumulated depletion and amortization of $4,129,404 as of December 31, 2013.

All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, will be amortized on the unit-of-production method using estimates of proved reserves.  Investments in unevaluated properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs.  If the results of an assessment indicate that the properties are impaired; the amount of the impairment is added to the capitalized costs to be amortized.

In addition, the capitalized costs are subject to a “ceiling test,” which limits such costs to the aggregate of the estimated present value (discounted at 10 percent) of future net revenues from proved reserves, using the first of the month un-weighted average pricing for the year, based on current operating conditions, plus the lower of cost or fair market value of unevaluated properties.  The Company had capitalized costs, net of depletion, of $122,922,447 which did not exceed the estimated present value of future net revenues from proved reserves.  As such, no impairment was recorded for the year ended December 31, 2013.

9

HIBERNIA ENERGY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED

Oil and Gas Properties — Continued

Sales of proved and unproved properties are accounted for as adjustments of capitalized costs with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves, in which case the gain or loss is recognized in the operating results of the Company.  Abandoned properties are accounted for as adjustments of capitalized costs with no loss recognized.  The Company sold its remaining 7.5% interest in the Martin and Palo Pinto counties effective January 1, 2013.  The Company did not recognize a gain or loss on the divestiture.  See further disclosure regarding the sale in Note 3.

The Company excludes from amortization the cost of unevaluated properties, the cost of exploratory wells in progress and major development projects.  The Company did not have any costs excluded from amortization at December 31, 2013.

Property Acquisitions Accounted for as Business Combinations

The Company accounts for the acquisition of oil and gas properties under the requirements of Accounting Standards Codification Topic 805 (ASC Topic 805), Business Combinations, issued in December 2007, with additional guidance issued in April 2009.  ASC Topic 805 requires an acquiring entity to recognize all assets acquired and liabilities assumed at fair value under the acquisition method of accounting, provided they qualify for acquisition accounting under the standard.  The Company accounts for all property acquisitions that include working interests in proved leaseholds, both operated and non-operated, that would generate more than an immaterial balance of goodwill or gain as business combinations.  The Company does not apply acquisition accounting to the purchase of oil and gas properties entirely comprised of unproved leasehold, which is in compliance with ASC Topic 805.

The Company adopted ASC Topic 805 at inception, July 28, 2010.  In 2013, the Company purchased proven properties in Martin County.  See further disclosure in Note 4.  Accordingly, the Company conducted an assessment of net assets acquired, while transaction and integration costs associated with the acquisitions were expensed as incurred.

The Company uses relevant market assumptions to determine fair value and allocate purchase price, such as future commodity pricing for purchased hydrocarbons, market multiples for similar transactions and replacement value for certain equipment.  Many of the assumptions are unobservable.

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HIBERNIA ENERGY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED

Other Property and Equipment

Other property and equipment are carried at cost and consist of computer software, furniture and fixtures and office equipment.  Depreciation is provided for using the straight-line method over three to seven years based on the estimated useful life of the assets.  Depreciation and amortization expense for other property and equipment totaled $24,251 for the year ended December 31, 2013.  Repairs and maintenance are charged to expense as incurred.

Asset Retirement Obligations

The Company accounts for the asset retirement obligations in accordance with the ASC Topic 410, Asset Retirement and Environmental Obligations (ASC Topic 410).  ASC Topic 410 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred.  A liability is incurred when a well is drilled.  The liability amounts are based on future retirement cost estimates and incorporate many assumptions, such as expected economic recoveries of oil and gas, time to abandonment, future inflation rates and the credit-adjusted risk-free rate of interest.  The retirement obligation is recorded at its estimated present value at the obligation’s inception with an offsetting increase to proved properties on the consolidated balance sheet.

Accretion of the discount of the estimated liability is recorded as an expense over the life of the asset.  See further disclosure regarding the asset retirement obligation at Note 8.

Debt Issue Costs

Direct costs totaling $638,750 associated with the Company’s term loan facility have been capitalized as of December 31, 2013 and are being amortized over the term of the loan facility using a method consistent with the interest method.  Accumulated amortization as of December 31, 2013 was $216,861.  Amortization expense was $147,664 for the year ended December 31, 2013.

Revenue Recognition

Oil and gas revenue is recognized when the product is sold to a purchaser, delivery has occurred and collectability of the revenue is reasonably assured.  The Company had no significant imbalance asset or liability as of December 31, 2013.

Fair Value of Financial Instruments

The Company’s financial instruments as defined by ASC Topic 825, Financial Instruments (ASC Topic 825), consist of cash, accounts receivable, accounts payable, and accrued liabilities.  The carrying value of these instruments approximate fair value due to the short maturity of these instruments.

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HIBERNIA ENERGY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED

Cash and Cash Equivalents

The Company considers all highly liquid instruments with an original maturity of three months or less at the time of issuance to be cash equivalents.  At December 31, 2013, the Company’s cash balance totaled $1,299,107.

Accounts Receivable

Accounts receivable include amounts due from oil and gas purchasers and amounts due from joint interest owners.  Accounts receivable, accrued oil and gas sales, consist of accrued revenues due under normal trade terms, generally requiring payment within 30 days of production.  Accounts receivable, joint interest owners, consist of joint working interest owner obligations generally due within 30 days of invoice date.  No interest was charged in 2013 on past-due balances.  The Company did not provide an allowance for doubtful accounts in 2013, based on management’s expectations that all receivables would be collected.  The Company has not realized material bad debt expenses in the past.

Commodity Hedging and Derivative Financial Instruments

From time to time, the Company utilizes derivative financial instruments, consisting of swaps, puts and calls, in order to manage exposure to changes in commodity prices.  These derivative contracts require financial settlements with counterparties based on the differential between a fixed price and a market price for a fixed quantity of oil and natural gas without the exchange of underlying volumes.  The notional amounts of these derivative contracts are based on expected production from existing wells.

The Company accounts for derivative contracts in accordance with ASC Topic 815, Accounting for Derivative Instruments and Hedging Activities, which established accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives), and for hedging activities.

Currently, the Company has elected not to designate any derivative contracts as accounting hedges under the provisions of ASC Topic 815.  As such, all derivative contracts are carried at their fair value on the consolidated balance sheet and are marked-to-market at the end of each period with a related adjustment to earnings.

Any realized and unrealized gains or losses are recorded as gain (loss) on derivatives, net, as an increase or decrease in revenue in the consolidated statement of operations.  See further disclosure regarding commodity hedging at Note 5 and Note 8.

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HIBERNIA ENERGY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED

Income Taxes

The Company is organized as a Delaware Limited Liability Company and is treated as a flow-through entity for income tax purposes.  As a result, the net taxable income of the Company and any related tax credits, for federal income tax purposes, are deemed to pass to the members of the Company even though such net taxable income or tax credits may not have actually been distributed.  Accordingly, no tax provision has been made in the consolidated financial statements of the Company since the income tax is an obligation of the members.

In 2006, the State of Texas enacted the Texas Margin Tax Bill effective January 1, 2008 for the tax year ended December 31, 2007.  The Company has not recorded a provision for the tax for the year ended December 31, 2013 as management does not believe the amount owed, if any, will be material to the Company.

The Company follows the provisions of ASC Topic 740, Income Taxes (ASC Topic 740), relating to accounting for uncertainties in income taxes.  ASC Topic 740 clarifies the accounting for uncertainties in income taxes by prescribing a minimum recognition threshold that a tax position is required to meet before being recognized in the consolidated financial statements.  ASC Topic 740 requires that the Company recognize in their consolidated financial statements the financial effects of a tax position, if that position is more likely than not of being sustained upon examination, including resolution of any appeals or litigation processes, based upon the technical merits of the position. ASC Topic 740 also provides guidance on measurement, classification, interest and penalties and disclosure.  Tax positions taken related to the Company’s pass-through status and those taken in determining their state income tax liability, including deductibility of expenses, have been reviewed and management is of the opinion that material positions taken by the Company would more likely than not be sustained by examination.  Accordingly, the Company has not recorded an income tax liability for uncertain tax benefits at December 31, 2013.  As of December 31, 2013, the Company’s tax years 2010 through 2013 remain subject to examination.

Concentration of Credit Risk

The Company’s financial instruments exposed to concentrations of credit risk consist primarily of cash and accounts receivable.  The Company places its cash with financial institutions.  At times, balances may be in excess of FDIC insurance limits.

The Company had revenues from two purchasers which accounted for over 78% of the 2013 oil and gas revenues and 100% of the oil and gas receivables at December 31, 2013.  This concentration of customers may impact the Company’s overall business risk, either positively or negatively, in that these entities may be similarly affected by changes in economic or other conditions.  The Company believes this risk is mitigated by the size, reputation and nature of its purchasers.

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HIBERNIA ENERGY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED

Concentration of Credit Risk — Continued

The majority of the Company’s revenues are from oil and gas production in Texas.  These concentrations may also impact the Company by changes in the Texas region.

Use of Estimates and Certain Significant Estimates

The preparation of the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company’s management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes.  Actual results could differ from those estimates.  Significant assumptions are required in the valuation of proved oil and gas reserves which, as described above, may affect the amount at which oil and gas properties are recorded.  Estimation of asset retirement obligations also requires significant assumptions.  It is possible these estimates could be revised in the near term and these revisions could be material.

NOTE 2.   EQUITY-BASED COMPENSATION

ASC Topic 718, Compensation — Stock Compensation (ASC Topic 718), addresses the accounting for share-based payment transactions in which a company receives goods or services in exchange for:  (a) equity instruments of the Company, or (b) liabilities that are based on the fair value of the company’s equity instruments or that may be settled by the issuance of such equity instruments.  ASC Topic 718 focuses primarily on accounting for transactions in which a company obtains employee services in share-based payment transactions.  ASC Topic 718 generally requires that such transactions be accounted for using a fair value based method.

The Company was required to implement the provisions of ASC Topic 718 on May 16, 2013 when the Board of Managers authorized the issuance to certain key employees of management, certain management incentive units (MIU’s), entitling such persons to contractual distributions of profits of the Company if certain targeted investment returns are achieved.  The MIU’s will be accounted for according to the requirements of ASC Topic 718 due to the payouts being consistent with equity ownership of the Company based on the substantive terms of the instruments.

MIU’s represent non-voting equity interests and do not entitle the holders to voting rights.  Five million MIU’s have been authorized and 4,425,000 have been granted as of December 31, 2013.  As of December 31, 2013, there have been no distributions associated with the MIUs.

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HIBERNIA ENERGY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.   EQUITY-BASED COMPENSATION — CONTINUED

The members’ equity accounts will be adjusted for distributions paid to the members and additional capital contributions that are made by the members.  All revenues, costs and expenses of the Company are allocated to the members in accordance with the Amended Formation Agreements.

The MIU’s represent non-voting equity interests and do not have an exercise price.  Members holding MIU’s shall be subject in all respects to the Amended Formation Agreements, including provisions relating to the distribution of such profits, information rights with respect to the Company, and competition and confidentiality.

Based on the relevant terms that define the MIU’s, these instruments should be treated as an equity ownership interest of the Company, with no value attributed and no expense recognized.  Similar instruments that qualify as equity-based compensation instruments (such as stock options and restricted stock) with similar performance metrics are considered performance vested instruments with no expense recognized until the Company’s achievement of such metrics are deemed “probable,” as defined by ASC Topic 718.

Given the aggressive metrics set forth by the Amended Formation Agreements as well as the practical scenarios under which similar instruments are typically realized by similar companies (units typically do not have value until a major asset liquidation event occurs, which cannot be deemed “probable” under ASC Topic 718 until it has occurred), the realization of these units is not probable at inception.

NOTE 3.   DIVESTITURES OF CERTAIN OIL AND GAS PROPERTIES

On April 22, 2013, the Company completed the sale of a portion its assets located in Martin and Palo Pinto Counties, Texas to an independent exploration and production company (the Purchaser) effective January 1, 2013.  The sale was comprised of the Company’s 7.5% interest in producing wells and leaseholds, in exchange for total net proceeds of $8,552,998.  Under the Full Cost Method, sales of oil and gas properties are accounted for as an adjustment of capitalized costs, with no gain or loss recognized, unless such adjustment would significantly alter the relationship between capitalized costs and proved oil and gas reserves attributable to a cost center.  The properties sold were comprised of a small portion of total reserves of the Company which would not significantly alter the relationship between capitalized costs and proved oil and gas reserves resulting in no gain on the sale.

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HIBERNIA ENERGY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4.   ACQUISITIONS OF OIL AND GAS PROPERTIES

On May 17, 2013, the Company completed the acquisition of 100% working interest and associated net revenue interests ranging from 67.73% to 75.13% as of December 31, 2013 located in Martin County, Texas at a cost of approximately $65,665,866.  The acquisition consisted of proved, proved behind pipe, and proved undeveloped leasehold acreage.  The purchase was effective May 1, 2013.

The difference between the purchase price and the fair value of the assets was immaterial for the acquisition noted above and therefore, no goodwill or gain was recorded.  The allocation below represents the fair values assigned to each of the assets acquired and liabilities assumed:

Proven leaseholds	$	63,393,000
Wells and related equipment	3,500,000
Asset retirement obligations assumed	(393,000		)
Purchase price adjustments	165,866
Purchase price, net	$	66,665,866

NOTE 5.   FAIR VALUE MEASUREMENTS

The Company follows the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, which establishes a framework for measuring fair value in generally accepted accounting principles, clarifies the definition of fair value within that framework, and expands disclosures about the use of fair value measurements.

ASC Topic 820 defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.

ASC Topic 820 provides a framework for measuring fair value, establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and requires consideration of the counterparty’s creditworthiness when valuing certain assets.  Any such adjustments were not material as of December 31, 2013.

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HIBERNIA ENERGY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5.   FAIR VALUE MEASUREMENTS – CONTINUED

The three-level fair value hierarchy for disclosure of fair value measurements defined by ASC Topic 820 is as follows:

Level 1 – Unadjusted, quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.  An active market is defined as a market where transactions for the financial instrument occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 – Inputs, other than quoted prices in active markets, that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level 3 – Prices or valuations that require unobservable inputs that are both significant to the fair value measurement and unobservable.  Valuation under level 3 generally involves a significant degree of judgment from management.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.  Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters.  Where observable prices or inputs are not available, valuation models are applied.

These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instrument’s complexity.

The Company’s derivative contracts are carried at fair value under ASC Topic 820.  The fair value is based upon independently sourced market parameters.  To ensure these derivative contracts are recorded at fair value, valuation adjustments may be required to reflect the creditworthiness of the counterparty and constraints on liquidity.  Any such adjustment was not material for the year ended December 31, 2013.

17

HIBERNIA ENERGY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5.   FAIR VALUE MEASUREMENTS – CONTINUED

The following table presents the fair value hierarchy for those assets measured at fair value on a recurring basis as of December 31, 2013.  See Note 9 for further details on derivative contracts.

	Fair Value Measurements on a Recurring Basis
	Quoted
	Prices in		Other
	Active		Observable			Unobservable
	Markets		Inputs			Inputs
	(Level 1)		(Level 2)			(Level 3)		Total
Asset - current
Commodity swap contracts at December 31, 2013	$	—	$	91,008		$	—	$	91,008
Total current asset	$	—	$	91,008		$	—	$	91,008
Liability - noncurrent
Commodity put option contracts at December 31, 2013	$	—	$	(333,599	)	$	—	$	(333,599	)
Commodity swap contracts at December 31, 2013	—		(404,222		)	—		(404,222		)
Total noncurrent asset	$	—	$	(737,821	)	$	—	$	(737,821	)

NOTE 6.   LONG-TERM DEBT

Credit Agreement

On September 25, 2013, the Company entered into a Credit Agreement with a new lender.  Pursuant to the Credit Agreement, from time to time, the Company may borrow the lesser of the available borrowing base, as determined by the Credit Agreement, or $150,000,000, which is the maximum borrowing capacity of the Credit Agreement.  The conforming borrowing base at the time of the agreement was $40,000,000, however, was re-determined to be $67,000,000 on December 30, 2013.  The Credit Agreement is secured by substantially all of the Company’s oil and gas properties.

18

HIBERNIA ENERGY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6.   LONG-TERM DEBT – CONTINUED

Credit Agreement – Continued

The borrowing base under Credit Agreement is re-determined semi-annually based on the Company’s ability to meet the compliance provisions of the agreement.  The outstanding balance on the Credit Agreement was $45,000,000 at December 31, 2013.

During 2013, outstanding balances on the term loan facility carried interest equal to the greatest of the Prime Rate in effect on such day, the Federal Funds Effective Rate in effect on such day plus ½ of 1% and the Adjusted LIBO Rate for a one month interest period on such day plus 1.0% based on the borrowing base utilization.  The average interest rate for 2013 was 2.74% with interest expense totaling $218,217 for the year ended December 31, 2013.  Interest on the Credit Agreement is due quarterly and all outstanding principal amounts are due at maturity.  The term loan facility matures on September 25, 2018.  The Company is subject to certain non-financial and financial covenants under the Credit Agreement, including a minimum current ratio of 1.0, and debt to EBITDAX of no less than 4.0 to 1.0.  The Company was in compliance with all financial covenants as of December 31, 2013.

Term Loan Facility

The Company entered into a Term Loan Facility (Loan Facility) with a lender on February 14, 2011.  Pursuant to the Loan Facility, from time to time, the Company could borrow the lesser of the available borrowing base, as determined under the terms of the Loan Facility, or $75 million, which was the maximum borrowing capacity of the Loan Facility.  The Loan Facility was secured by substantially all of the Company’s oil and gas properties located in Martin and Palo Pinto Counties, Texas.

During 2013, outstanding balances on the term loan facility carried interest as the sum of the Alternate Base Rate plus the applicable margin (ranging from 0.5% to 1.5%) or the sum of the LIBOR rate plus the LIBOR spread (ranging from 1.75% to 2.75%) based on the borrowing base utilization.  The average interest rate for 2013 was 3.75% with interest expense totaling $344,224 for the year ended December 31, 2013.  The Company settled and closed this loan facility on September 25, 2013 and repaid the $28,000,000 outstanding balance and all accrued interest.  The Loan Facility is closed and unavailable as of December 31, 2013.

19

HIBERNIA ENERGY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7.   ASSET RETIREMENT OBLIGATIONS

The Company accounts for its asset retirement obligations in accordance with ASC Topic 410, Asset Retirement and Environmental Obligations (ASC Topic 410).  ASC Topic 410 establishes accounting requirements for retirement obligations associated with tangible long-lived assets, including: 1) the timing of liability recognition, 2) initial measurement of the liability, 3) allocation of asset retirement cost to expense, 4) subsequent measurement of the liability, and 5) related financial statement disclosure.  ASC Topic 410 requires that an asset retirement cost be capitalized as part of the cost of the related long-lived asset and subsequently allocated to expense using a systematic and rational method.

The Company’s asset retirement obligations relate to future plugging and abandonment expenses of its oil and gas properties.  The following table shows the changes in the balance of the asset retirement obligations during the period through December 31, 2013:

Asset retirement obligations, beginning of year	$	67,324
Liabilities recorded	705,427
Liabilities settled	(67,324		)
Accretion expense	18,715
Asset retirement obligations, end of year	$	724,142

NOTE 8.   COMMODITY RISK MANAGEMENT

The Company’s revenues are derived from the sale of oil and gas production.  Accordingly, the Company is exposed to risks associated with the volatility of oil and gas prices.  The Company, with the approval of the Board of Directors, has established a hedging program to hedge its expected oil and gas revenue against price volatility.

Hedging transactions may take the form of collars, swaps, options or other derivatives indexed to NYMEX or other commodity price indexes.  Such derivative contracts will not exceed anticipated production volumes, are expected to have a reasonable correlation between price movements in the futures market and the spot markets where the Company’s production is marketed.  Derivatives are expected to be closed as related production occurs, but may be closed earlier if anticipated downward price movement occurs or if the Company believes the potential for such movement has abated.  These derivatives are indexed to NYMEX WTI (West Texas Intermediate) crude prices and NYMEX natural gas prices.

20

HIBERNIA ENERGY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8.   COMMODITY RISK MANAGEMENT — CONTINUED

The following tables reflect the Company’s open commodity derivative contracts at December 31, 2013 and the associated volumes and corresponding NYMEX reference price.

		Purchased
	Oil Barrels -	Put
Delivery Period	Monthly	NYMEX
04/01/14 - 06/30/14	30,000	$	90.00
07/01/14 - 09/30/14	30,000	$	90.00
10/01/14 - 12/31/14	30,000	$	90.00

		Written
	Oil Barrels -	Swap
Delivery Period	Monthly	NYMEX
01/01/14 - 03/31/14	30,000	$	94.53
04/01/14 - 06/30/14	30,000	$	94.53
07/01/14 - 09/30/14	30,000	$	94.53
10/01/14 - 12/31/14	30,000	$	94.53

		Written
	Oil Barrels -	Swap
Delivery Period	Monthly	NYMEX
01/01/14 - 03/31/14	75,000	$	95.30
04/01/14 - 06/30/14	75,000	$	95.30
07/01/14 - 09/30/14	75,000	$	95.30
10/01/14 - 12/31/14	75,000	$	95.30

21

HIBERNIA ENERGY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8.   COMMODITY RISK MANAGEMENT — CONTINUED

		Purchased
	Oil Barrels -	Put
Delivery Period	Monthly	NYMEX
01/01/15 - 03/31/15	30,000	$	85.00
04/01/15 - 06/30/15	30,000	$	85.00
07/01/15 - 09/30/15	30,000	$	85.00
10/01/15 - 10/31/15	10,000	$	85.00

		Written
	Oil Barrels -	Swap
Delivery Period	Monthly	NYMEX
01/01/15 - 03/31/15	45,000	$	88.55
04/01/15 - 06/30/15	45,000	$	88.55
07/01/15 - 09/30/15	45,000	$	88.55
10/01/15 - 10/31/15	15,000	$	88.55

		Written
	Oil Barrels -	Swap
Delivery Period	Monthly	NYMEX
01/01/15 - 03/31/15	30,000	$	86.55
04/01/15 - 06/30/15	30,000	$	86.55
07/01/15 - 09/30/15	30,000	$	86.55
10/01/15 - 12/31/15	30,000	$	86.55

The Company has chosen not to designate the swaps as “hedges” and therefore they do not qualify for hedge accounting treatment under ASC Topic 815.  The Company has recorded the contracts at fair value with the related gains and losses recorded as revenues from oil and gas producing activities.

During the year ended December 31, 2013, the Company recognized $1,821,049 of net losses from derivative instruments.  The loss includes a realized loss of $1,174,236 on settlements of derivative instruments during 2013.

Additionally, the Company recognized a current asset totaling $91,008, a current and a non-current liability totaling $333,599 and $404,222, respectively, related to the estimated fair value of the derivative instruments as of December 31, 2013.

22

HIBERNIA ENERGY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9.   COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases office facilities in Houston, Texas with a remaining lease term 26 months.  Rent expense charged to operations amounted to $98,232 for the year ended December 31, 2013.

The following is a schedule by year of rental payments due under operating leases as of December 31, 2013:

2014	$	68,266
2015	68,266
2016	11,378
	$	147,910

Environmental Issues

The Company’s operations are subject to risks normally incidental to the exploration for, and the production of, oil and gas, including blowouts, fires, and environmental risks such as oil spills or gas leaks that could expose the Company to liabilities associated with these risks.  In the Company’s acquisition of existing or previously drilled well bores, the Company may not be aware of what environmental safeguards were taken at the time such wells were drilled or during such time the wells were operated.  The Company maintains comprehensive insurance coverage that it believes is adequate to mitigate the risk of any adverse financial effects associated with these risks.

However, should it be determined that a liability exists with respect to any environmental cleanup or restoration, the liability to cure such a violation could still fall upon the Company.  No claim has been made, nor is the Company aware of any liability which the Company may have, as it relates to any environmental cleanup, restoration, or the violation of any rules or regulations relating thereto.

In addition, the Company is subject to extensive regulation at the federal and state levels that may materially affect its operations.

23

HIBERNIA ENERGY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10.   SUBSEQUENT EVENTS

The Company evaluated all events and transactions that occurred after December 31, 2013 and through March 14, 2014, the date the consolidated financial statements were available to be issued.

Through March 14, 2014, the Company has drawn an additional $26,000,000 on the Credit Agreement, bringing the outstanding balance held by the Company to $71,000,000.

The following table reflects derivative contracts entered into subsequent to December 31, 2013, and the associated volumes and corresponding NYMEX reference prices.  These derivatives are indexed to NYMEX Natural Gas prices.

	Natural Gas -	Purchased		Written
	MMBTUs	Put		Call
Delivery Period	Monthly	NYMEX		NYMEX
03/01/14 - 05/31/14	300,000	$	4.00	$	4.88
06/01/14 - 08/31/14	300,000	$	4.00	$	4.88
09/01/14 - 11/30/14	300,000	$	4.00	$	4.88
12/01/14 - 12/31/14	100,000	$	4.00	$	4.88

	Natural Gas -	Purchased		Written
	MMBTUs	Put		Call
Delivery Period	Monthly	NYMEX		NYMEX
01/01/15 - 03/31/15	300,000	$	3.75	$	4.59
04/01/15 - 06/30/15	300,000	$	3.75	$	4.59
07/01/15 - 09/30/15	300,000	$	3.75	$	4.59
10/01/15 - 12/31/15	300,000	$	3.75	$	4.59

24

EX-99.4

Exhibit 99.4

ATHLON ENERGY INC.

UNAUDITED PRO FORMA FINANCIAL STATEMENTS

INTRODUCTION

Athlon Energy Inc. (“Athlon”), a Delaware corporation, incorporated on April 1, 2013 and is an independent exploration and production company focused on the acquisition, development, and exploitation of unconventional oil and liquids-rich natural gas reserves in the Permian Basin.  On April 7, 2014, Athlon entered into purchase and sale agreements with Hibernia Holdings, LLC (“Hibernia”) and Piedra Energy II, LLC (“Piedra”) to acquire certain oil and natural gas properties and related assets in the Permian Basin in West Texas for $667.7 million in cash, in the aggregate (the “Acquisitions”).  The accompanying unaudited pro forma financial statements give effect to the Acquisitions, including related financing transactions.  The unaudited pro forma balance sheet assumes that the Acquisitions and related transactions occurred on December 31, 2013.  The unaudited pro forma statement of operations assumes that the Acquisitions and related transactions occurred on January 1, 2013.

The accompanying unaudited pro forma financial statements should be read together with: (1) Athlon’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2013; (2) Hibernia Energy LLC’s audited consolidated financial statements as of and for the year ended December 31, 2013, which is included as an exhibit to this Current Report on Form 8-K/A; and (3) Piedra’s audited Schedule of Direct Operating Revenues and Direct Operating Expenses of Certain Oil and Natural Gas Properties, which is incorporated by reference into this Current Report on Form 8-K/A.

The accompanying unaudited pro forma financial statements were derived by making certain adjustments to Athlon’s historical consolidated financial statements.  The adjustments are based on currently available information and certain estimates and assumptions.  Therefore, the actual adjustments may differ from the pro forma adjustments.  However, management believes that the assumptions provide a reasonable basis for presenting the significant effects of the transactions as contemplated and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma financial statements.

The unaudited pro forma financial statements and related notes are presented for illustrative purposes only.  If the Acquisitions and related transactions had occurred in the past, Athlon’s operating results might have been materially different from those presented in the unaudited pro forma financial statements.  The unaudited pro forma financial statements should not be relied upon as an indication of operating results that Athlon would have achieved if the Acquisitions and related transactions had taken place on the specified date.  In addition, future results may vary significantly from the results reflected in the unaudited pro forma statement of operations and should not be relied on as an indication of the future results Athlon will have after the completion of the Acquisitions and related transactions.

1

ATHLON ENERGY INC.

UNAUDITED PRO FORMA BALANCE SHEET

December 31, 2013

(in thousands)

	Athlon Historical			Hibernia Historical			Pro Forma Adjustments			Pro Forma as Adjusted
ASSETS
Current assets:
Cash and cash equivalents	$	113,025		$	1,299		$	(1,831	)(a)	$	109,094
							667,700		(b)
							(668,999		)(c)
							(2,100		)(d)
Accounts receivable	48,238			3,127			(3,127		)(c)	48,238
Inventory	928			—			—			928
Deferred taxes	380			—			—			380
Other	1,166			119			(119		)(c)	1,166
Total current assets	163,737			4,545			(8,476		)	159,806
Oil and natural gas properties and equipment, at cost - full cost method:
Evaluated, including wells and related equipment	1,244,178			127,051			182,231		(c)	1,553,460
Unevaluated	89,859			—			359,207		(c)	449,066
Accumulated depletion, depreciation, and amortization	(160,779		)	(4,129		)	4,129		(c)	(160,779		)
	1,173,258			122,922			545,567			1,841,747
Derivatives, at fair value	2,330			—			—			2,330
Debt issuance costs	14,679			422			1,831		(a)	16,510
							(422		)(c)
Other	1,447			146			(146		)(c)	1,447
Total assets	$	1,355,451		$	128,035		$	538,354		$	2,021,840
LIABILITIES AND EQUITY
Current liabilities:
Trade accounts payable	$	459		$	9,192		$	(9,192	)(c)	$	459
Accrued liabilities:
Lease operating	6,563			—			—			6,563
Production, severance, and ad valorem taxes	2,550			—			—			2,550
Development capital	68,059			—			—			68,059
Interest	7,790			217			(217		)(c)	7,790
Derivatives, at fair value	8,354			—			—			8,354
Revenue payable	20,513			3			(3		)(c)	20,513
Other	4,035			—			—			4,035
Total current liabilities	118,323			9,412			(9,412		)	118,323
Asset retirement obligations, net of current portion	6,795			724			65		(c)	7,584
Long-term debt	500,000			45,000			667,700		(b)	1,167,700
							(45,000		)(c)
Deferred taxes	92,397			—			—			92,397
Other	101			738			(738		)(c)	101
Total liabilities	717,616			55,874			612,615			1,386,105
Commitments and contingencies
Equity:
Members’ equity	—			72,161			(72,161		)(c)	—
Preferred stock	—			—			—			—
Common stock	821			—			—			821
Additional paid-in capital	593,943			—			—			593,943
Retained earnings	32,283			—			(2,100		)(d)	30,183
Total stockholders’ equity	627,047			72,161			(74,261		)	624,947
Noncontrolling interest	10,788			—			—			10,788
Total equity	637,835			72,161			(74,261		)	635,735
Total liabilities and equity	$	1,355,451		$	128,035		$	538,354		$	2,021,840

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

2

ATHLON ENERGY INC.

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

For the Year Ended December 31, 2013

(in thousands, except per share amounts)

	Athlon Historical			Hibernia Historical			Piedra Historical		Pro Forma Adjustments			Pro Forma as Adjusted
Oil and natural gas revenues	$	299,373		$	17,595		$	28,862	$	2,006	(a)	$	347,836
Expenses:
Production	53,046			2,564			5,640		692		(a)	61,942
Depletion, depreciation, and amortization	87,171			3,417			—		4,889		(b)	95,477
General and administrative	21,331			3,340			—		—			24,671
Contract termination fee	2,408			—			—		—			2,408
Acquisitions costs	421			—			—		—			421
Derivative fair value loss	18,115			1,821			—		—			19,936
Accretion of discount on asset retierment obligations	675			19			—		73		(c)	767
Total expenses	183,167			11,161			5,640		5,654			205,622
Operating income	116,206			6,434			23,222		(3,648		)	142,214
Other income (expenses):
Interest expense	(36,669		)	(1,160		)	—		(16,663		)(d)	(54,492		)
Other	35			160			—		—			195
Total other expenses	(36,634		)	(1,000		)	—		(16,663		)	(54,297		)
Income before income taxes	79,572			5,434			23,222		(20,311		)	87,917
Income tax provision	19,150			—			—		2,011		(e)	21,161
Consolidated net income	60,422			5,434			23,222		(22,322		)	66,756
Less: net income attributable to noncontrolling interest	1,359			—			—		93		(f)	1,452
Net income attributable to stockholders	$	59,063		$	5,434		$	23,222	$	(22,415	)	$	65,304
Net income per common share:
Basic	$	0.80										$	0.89
Diluted	$	0.80										$	0.88
Weighted average common shares outstanding:
Basic	72,915											72,915
Diluted	74,771											74,771

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

3

ATHLON ENERGY INC.

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS

Note 1.   Basis of Presentation, the Offering, and Other Transactions

Athlon’s historical financial information is derived from Athlon’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2013, which is incorporated by reference into this Current Report on Form 8-K/A.  Hibernia Energy LLC’s historical financial information is derived from Hibernia’s audited consolidated financial statements as of and for the year ended December 31, 2013, which is included as an exhibit to this Current Report on Form 8-K/A.  Piedra’s historical financial information is derived from Piedra’s audited Schedule of Direct Operating Revenues and Direct Operating Expenses of Certain Oil and Natural Gas Properties, which is incorporated by reference into this Current Report on Form 8-K/A.  Piedra’s Schedule of Direct Operating Revenues and Direct Operating Expenses of Certain Oil and Natural Gas Properties is not intended to be a complete presentation of the results of operations of the properties, as they do not include general and administrative expenses, effects of derivative transactions, interest income or expense, depreciation, depletion, and amortization, any provision for income tax expenses, and other income and expense items not directly associated with direct operating revenues from natural gas, natural gas liquids, and crude oil.  As such, they are not indicative of the operating results of the Piedra assets going forward.

For purposes of the unaudited pro forma balance sheet, it is assumed that the Acquisitions and related transactions occurred on December 31, 2013.  For purposes of the unaudited pro forma statement of operations, it is assumed that the Acquisitions and related transactions occurred on January 1, 2013.

Note 2.   Pro Forma Adjustments and Assumptions

Athlon made the following adjustments and assumptions in the preparation of the unaudited pro forma balance sheet:

(a)On April 11, 2014, Athlon received firm commitments from the lenders under its credit agreement to increase the borrowing base from $525 million to $1.0 billion.  Reflects estimated debt issuance costs associated with this borrowing base redetermination.

(b)Reflects borrowings under Athlon’s credit agreement to fund the purchase price of the Acquisitions.

(c)To eliminate the assets, liabilities, and members’ equity not acquired or assumed from Hibernia in the Acquisitions, to record the Acquisitions for $667.7 million in cash, and to allocate the purchase price to the assets acquired and liabilities assumed.  The allocation of the purchase price to the assets acquired and liabilities assumed is preliminary and, therefore, subject to change.  Any future adjustments to the allocation of the purchase price are not expected to have a material effect on Athlon’s financial condition, results of operations, or cash flows.

The allocation of the purchase price of the Acquisitions to the fair value of the assets acquired and liabilities assumed is as follows (in thousands):

Evaluated oil and natural gas properties, including wells and related equipment	$	309,282
Unevaluated oil and natural gas properties	359,207
Total assets acquired	668,489
Asset retirement obligations	789
Total liabilities assumed	789
Fair value of net assets acquired	$	667,700

(d)Reflects estimated acquisition costs incurred in connection with the consummation of the Acquisitions.

Athlon made the following adjustments and assumptions in the preparation of the unaudited pro forma statement of operations:

(a)A portion of the assets acquired by Hibernia were acquired by them during May 2013.  Reflects the incremental oil and natural gas revenues and production costs associated with those assets Hibernia from January 1, 2013 through the date of acquisition.

(b)Reflects incremental depletion, depreciation, and amortization of oil and natural gas properties associated with the Acquisitions.  Costs associated with evaluated properties are amortized using a unit-of-production basis under the full cost method of accounting for oil and natural gas properties.

4

ATHLON ENERGY INC.

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS — Continued

(c)Reflects incremental accretion of discount on asset retirement obligations associated with the Acquisitions.

(d)Reflects estimated incremental interest expense associated with borrowings under Athlon’s credit agreement to fund the purchase price of the Acquisitions and amortization of incremental debt issuance costs associated with the aforementioned borrowing base redetermination.

If the LIBOR rate increased 1/8%, we would have incurred approximately $1.0 million more of interest expense and if the rate decreased 1/8%, we would have incurred approximately $1.0 million less.

(e)Reflects estimated incremental income tax provision associated with the additional operating income from the Acquisitions and the pro forma adjustments using Athlon’s effective tax rate for 2013 of 24.1%.  This rate is inclusive of federal, state, and local income taxes and differs from the statutory rate as Athlon has only been subject to federal income tax as a subchapter C corporation since the date of its incorporation.

(f)Reflects estimated increase in net income attributable to noncontrolling interest associated with the additional operating income from the Acquisitions and the pro forma adjustments.  Athlon is the sole managing partner of Athlon Holdings LP and owns less than 100% of the economic interest in Athlon Holdings LP, but has 100% of the voting power and controls the management of Athlon Holdings LP.

Note 3. Pro Forma Earnings Per Share

The following table reflects the pro forma allocation of net income to Athlon’s common stockholders and earnings per share (“EPS”) computations for 2013 (in thousands, except per share amounts):

Basic EPS
Numerator:
Undistributed net income attributable to stockholders	$	65,304
Participation rights of unvested RSUs in undistributed earnings	(698		)
Basic undistributed net income attributable to stockholders	$	64,606
Denominator:
Basic weighted average shares outstanding	72,915
Basic EPS attributable to stockholders	$	0.89
Diluted EPS
Numerator:
Undistributed net income attributable to stockholders	$	65,304
Participation rights of unvested RSUs in undistributed earnings	(681		)
Effect of conversion of New Holdings Units to shares of Athlon’s common stock	1,452
Diluted undistributed net income attributable to stockholders	$	66,075
Denominator:
Basic weighted average shares outstanding	72,915
Effect of conversion of New Holdings Units to shares of Athlon’s common stock	1,856
Diluted weighted average shares outstanding	74,771
Diluted EPS attributable to stockholders	$	0.88

Note 4.Supplementary Information

There are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting future rates of production and timing of development expenditures.  Oil and natural gas reserve engineering is and must be recognized as a subjective process of estimating underground accumulations of oil and natural gas that cannot be measured in any exact way, and estimates of other engineers might differ materially from those included herein.  The accuracy of any reserve estimate is a function of the quality of available data and engineering, and estimates may justify revisions based on the results of drilling, testing, and production activities.  Accordingly, reserve estimates are often materially different from the quantities of oil and natural gas that are ultimately recovered.  Reserve estimates are integral to management’s analysis of impairment of oil and natural gas properties and the calculation of depletion, depreciation, and amortization on these properties.  Natural gas volumes include natural gas liquids.

5

ATHLON ENERGY INC.

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS — Continued

Athlon’s estimated pro forma net quantities of proved reserves were as follows as of December 31, 2013:

	Athlon Historical	Hibernia Historical	Piedra Historical	Total Pro Forma
Proved developed reserves:
Oil (MBbls)	26,436	4,159	2,414	33,009
Natural gas (MMcf)	121,820	10,067	8,242	140,129
Combined (MBOE)	46,740	5,837	3,787	56,364
Proved undeveloped reserves:
Oil (MBbls)	44,738	9,695	6,868	61,301
Natural gas (MMcf)	214,718	23,012	23,247	260,977
Combined (MBOE)	80,524	13,530	10,743	104,797
Proved reserves:
Oil (MBbls)	71,174	13,854	9,282	94,310
Natural gas (MMcf)	336,538	33,079	31,489	401,106
Combined (MBOE)	127,264	19,367	14,530	161,161

The changes in Athlon’s pro forma proved reserves were as follows for 2013:

	Athlon Historical						Hibernia Historical						Piedra Historical						Total Pro Forma
			Natural		Oil				Natural		Oil				Natural		Oil				Natural		Oil
	Oil		Gas		Equivalent		Oil		Gas		Equivalent		Oil		Gas		Equivalent		Oil		Gas		Equivalent
	(MBbls)		(MMcf)		(MBOE)		(MBbls)		(MMcf)		(MBOE)		(MBbls)		(MMcf)		(MBOE)		(MBbls)		(MMcf)		(MBOE)
Balance, December 31, 2012	49,423		219,333		85,979		3,176		6,991		4,341		9,688		23,624		13,625		62,287		249,948		103,945
Purchases of minerals-in-place	495		2,059		838		8,288		18,262		11,332		—		—		—		8,783		20,321		12,170
Extensions and discoveries	23,895		102,820		41,031		2,248		4,977		3,078		—		—		—		26,143		107,797		44,109
Revisions of previous estimates	43		22,977		3,874		304		3,220		840		(139	)	8,527		1,282		208		34,724		5,996
Production	(2,682	)	(10,651	)	(4,458	)	(162	)	(371	)	(224	)	(267	)	(662	)	(377	)	(3,111	)	(11,684	)	(5,059	)
Balance, December 31, 2013	71,174		336,538		127,264		13,854		33,079		19,367		9,282		31,489		14,530		94,310		401,106		161,161

The following pro forma standardized measure of the discounted net future cash flows and changes applicable to proved reserves reflect the effect of income taxes assuming the Acquisitions had been subject to federal income tax.  The future net cash flows are discounted at 10% per year and assume continuation of existing economic conditions.

The standardized measure of discounted future net cash flows, in management’s opinion, should be examined with caution.  The basis for this table is the reserve studies prepared by independent petroleum engineering consultants, which contain imprecise estimates of quantities and rates of production of reserves.  Revisions of previous year estimates can have a significant impact on these results.  Also, exploration costs in one year may lead to significant discoveries in later years and may significantly change previous estimates of proved reserves and their valuation.  Therefore, the standardized measure of discounted future net cash flows is not necessarily indicative of the fair value of Athlon’s proved oil and natural gas properties.

The data presented should not be viewed as representing the expected cash flow from or current value of, existing proved reserves since the computations are based on a large number of estimates and arbitrary assumptions.  Reserve quantities cannot be measured with precision and their estimation requires many judgmental determinations and frequent revisions.  Actual future prices and costs are likely to be substantially different from the prices and costs utilized in the computation of reported amounts.

Athlon’s pro forma standardized measure of discounted future net cash flows was as follows as of December 31, 2013:

	Athlon Historical			Hibernia Historical			Piedra Historical			Pro Forma Adjustments			Pro Forma as Adjusted
	(in thousands)
Future cash inflows	$	8,053,437		$	1,491,194		$	1,073,809		$	—		$	10,618,440
Future production costs	(2,421,186		)	(326,331		)	(321,907		)	—			(3,069,424		)
Future development costs	(1,242,817		)	(202,159		)	(160,555		)	—			(1,605,531		)
Future income taxes	(1,347,259		)	(10,438		)	(7,517		)	(310,683		)	(1,675,897		)
Future net cash flows	3,042,175			952,266			583,830			(310,683		)	4,267,588
10% annual discount	(1,942,501		)	(605,100		)	(369,043		)	197,568			(2,719,076		)
Standardized measure of discounted estimated future net cash flows	$	1,099,674		$	347,166		$	214,787		$	(113,115	)	$	1,548,512

7

ATHLON ENERGY INC.

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS — Continued

The changes in Athlon’s pro forma standardized measure of discounted estimated future net cash flows were as follows for 2013:

	Athlon Historical			Hibernia Historical			Piedra Historical			Pro Forma Adjustments			Pro Forma as Adjusted
	(in thousands)
Net change in prices and production costs	$	250,716		$	40,254		$	1,918		$	—		$	292,888
Purchases of minerals-in-place	11,601			127,844			—			—			139,445
Extensions, discoveries, and improved recovery	448,208			60,044			—			—			508,252
Revisions of previous quantity estimates	50,202			15,232			19,199			—			84,633
Production, net of production costs	(246,327		)	(16,345		)	(23,223		)	—			(285,895		)
Previously estimated development costs incurred during the period	130,900			6,292			23,238			—			160,430
Accretion of discount	86,658			13,315			17,172			—			117,145
Change in estimated future development costs	(17,389		)	31,100			554			—			14,265
Net change in income taxes	(520,162		)	(2,968		)	(343		)	(113,115		)	(636,588		)
Change in timing and other	54,353			14,664			6,974			—			75,991
Net change in standardized measure	248,760			289,432			45,489			(113,115		)	470,566
Standardized measure, beginning of year	850,914			57,734			169,298			—			1,077,946
Standardized measure, end of year	$	1,099,674		$	347,166		$	214,787		$	(113,115	)	$	1,548,512

8