mrd-ex994_2015070810.htm

Memorial Resource Development Corp. (the “Company”) is a Delaware corporation engaged in the acquisition, exploration, and development of natural gas and oil properties primarily in North Louisiana. The Company controls Memorial Production Partners LP (“MEMP”) through the ownership of Memorial Production Partners GP LLC (“MEMP GP”). MEMP is a publicly traded limited partnership engaged in the acquisition, production and development of oil and natural gas properties in the United States. Due to our control of MEMP through the ownership of MEMP GP, the Company is required to consolidate MEMP for accounting and financial reporting purposes.

On July 1, 2014, MEMP consummated its acquisition of oil and natural gas liquids properties in Wyoming from Merit Energy Company, LLC and certain of its affiliates (the “Wyoming Acquisition”). The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2014 is based on the audited statement of operations of the Company for the year ended December 31, 2014 and the unaudited statement of revenues and direct operating expenses of the Wyoming Acquisition for the six months ended June 30, 2014, and includes pro forma adjustments to give effect to the Wyoming Acquisition as if the transaction occurred on January 1, 2014.

The pro forma adjustments to the historical combined financial statements are based on currently available information and certain estimates and assumptions. The actual effect of the transactions discussed in the accompanying notes ultimately may differ from the unaudited pro forma adjustments included herein. However, management believes that the assumptions utilized to prepare the pro forma adjustments provide a reasonable basis for presenting the significant effects of the transactions and that the unaudited pro forma adjustments are factually supportable, give appropriate effect to the impact of events that are directly attributable to the transactions, and reflect those items expected to have a continuing impact on the Partnership.

The unaudited pro forma combined statement of operations should be read in conjunction with the notes thereto and with our historical financial statements and the historical financial statements of the Wyoming Acquisition, included elsewhere in this prospectus.

The Company’s unaudited pro forma condensed combined statement of operations is not necessarily indicative of the results that actually would have occurred if MEMP had completed the Wyoming Acquisition or the related financing transactions on the dates indicated or which could be achieved in the future because they necessarily exclude various operating expenses.

	For the Year Ended December 31, 2014			For the Six Months Ended June 30, 2014
	Company Historical			Wyoming Acquisition Historical		Pro Forma Adjustments				Company Pro Forma Combined
Revenues:
Oil & natural gas sales	$	894,967		$	91,199	$	—			$	986,166
Pipeline tariff income and other		4,378			—		—				4,378
Total revenues		899,345			91,199		—				990,544
Costs and expenses:
Lease operating		161,303			24,608		—				185,911
Pipeline operating		2,068			—		—				2,068
Exploration		16,603			—		—				16,603
Production and ad valorem taxes		45,751			11,943		—				57,694
Depreciation, depletion, and amortization		314,193			—		29,383		(a)		343,576
Impairment of proved oil and natural gas properties		432,116			—		—				432,116
Incentive unit compensation expense		943,949			—		—				943,949
General and administrative		87,673			—		—				87,673
Accretion of asset retirement obligations		6,306			—		163		(a)		6,469
(Gain) loss on sale of property		3,057			—		—				3,057
(Gain) loss on commodity derivative instruments		(749,988	)		—		—				(749,988	)
Other, net		(12	)		—		—				(12	)
Total costs and expenses		1,263,019			36,551		29,546				1,329,116
Operating income		(363,674	)		54,648		(29,546	)			(338,572	)
Other income (expense):
Interest expense, net		(133,833	)		—		(11,319	)	(b)		(145,374	)
							(222	)	(c)		—
Loss on extinguishment of debt		(37,248	)		—		—				(37,248	)
Other, net		(337	)		—		—				(337	)
Total other income (expense)		(171,418	)		—		(11,541	)			(182,959	)
Income (loss) before income taxes		(535,092	)		54,648		(41,087	)			(521,531	)
Income tax benefit (expense)		(100,971	)		—		—				(100,971	)
Net income (loss)	$	(636,063	)	$	54,648	$	(41,087	)		$	(622,502	)
Historical and pro forma net income (loss) available to common stockholders:
Net income (loss) available to common stockholders	$	(784,581	)							$	(784,581	)
Earnings per unit:
Basic and diluted earnings per unit	$	(4.08	)							$	(4.08	)
Weighted average common and common equivalent shares outstanding:
Basic and diluted		192,498									192,498

On July 1, 2014, MEMP consummated its acquisition of oil and natural gas liquids properties in Wyoming from Merit Energy Company, LLC and certain of its affiliates (the “Wyoming Acquisition”). MEMP funded the Wyoming Acquisition through borrowings under its revolving credit facility. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2014 is based on the audited statement of operations of the Company for the year ended December 31, 2014 and the unaudited statement of revenues and direct operating expenses of the Wyoming Acquisition for the six months ended June 30, 2014, and includes pro forma adjustments to give effect to the Wyoming Acquisition as if the transaction occurred on January 1, 2014.

The Company believes that the assumptions used in the preparation of these unaudited pro forma condensed combined statement of operations for the year ended December 31, 2014 provide a reasonable basis for presenting the effects directly attributable to the transactions described above.

The unaudited pro forma combined statement of operations and the notes thereto should be read in conjunction with the Company’s historical financial statements and the historical financial statements of the Wyoming Acquisition, included elsewhere in this prospectus.

The following adjustments were made in the preparation of the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2014: