EX-99.2 4 dex992.htm EXCERPTS FROM CONFIDENTIAL PRELIMINARY OFFERING MEMORANDUM Excerpts from Confidential Preliminary Offering Memorandum

Exhibit 99.2

GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION

Not all of our subsidiaries will guarantee the notes. We expect that, as of the issue date of the notes, the subsidiaries that are guarantors of our senior secured revolving credit facility will also be guarantors of the notes. We also expect that, as of the issue date of the notes, the subsidiaries that will not guarantee the notes will be the following subsidiaries that generally operate our non-U.S. business, which is concentrated in Colombia as of the date of this offering memorandum:

 

   

Pioneer Services Holdings, LLC

 

   

Pioneer Latina Group SDAD, Ltda.

 

   

Pioneer de Colombia SDAD, Ltda. (Panama)

 

   

Pioneer de Colombia SDAD, Ltda. (Colombia)

 

   

Proveedora Internacional de Taladros S.A.S.

 

   

PDC Holdings de Mexico, S. de R.L. de C.V.

 

   

PDC Logistics de Mexico, S. de R.L. de C.V.

 

   

PDC Drilling Mexicana, S. de R.L. de C.V.

The non-guarantor subsidiaries will not have any payment obligations under the notes, the guarantees or the indenture. In the event of a bankruptcy, liquidation or reorganization of any non-guarantor subsidiary, such non-guarantor subsidiary will pay the holders of its debt and other liabilities, including its trade creditors, before it will be able to distribute any of its assets to us. As of December 31, 2009, these non-guarantor subsidiaries had total assets representing approximately 13% of our consolidated total assets and held approximately $9.7 million of cash and cash equivalents. For the year ended December 31, 2009, these non-guarantor subsidiaries had revenues of approximately $56.6 million and income from operations of approximately $6.2 million. In the future, any non-U.S. subsidiaries, immaterial subsidiaries and subsidiaries that we designate as unrestricted subsidiaries under the indenture will not guarantee the notes.

As a result of the guarantee arrangements, we are presenting the following condensed consolidated financial information of the issuer, the guarantor subsidiaries and the non-guarantor subsidiaries.

Condensed Consolidating Balance Sheet

 

December 31, 2009

   Parent     Guarantor
Subsidiaries
   Non-
Guarantor
Subsidiaries
    Eliminations     Consolidated
     (in thousands)

ASSETS

           

Current assets:

           

Cash and cash equivalents

   $ 9,958      $ 20,678    $ 9,743      $ —        $ 40,379

Receivables

     —          76,490      4,977        —          81,467

Intercompany receivable (payable)

     (66,076     66,297      (221     —          —  

Deferred income taxes

     —          3,909      1,651        —          5,560

Inventory

     —          1,791      3,744        —          5,535

Prepaid expenses and other current assets

     874        3,358      1,967        —          6,199
                                     

Total current assets

     (55,244     172,523      21,861        —          139,140
                                     

Net property and equipment

     1,898        550,730      85,143        (749     637,022

Investment in subsidiaries

     712,983        104,256      —          (817,239     —  

Deferred income taxes

     980        11      2,339        (3,330     —  

Intangible assets, net of amortization

     863        24,530      —          —          25,393

Other long-term assets

     18,957        1,611      493        —          21,061
                                     

Total assets

   $ 680,437      $ 853,661    $ 109,836      $ (821,318   $ 822,616
                                     


December 31, 2009

   Parent     Guarantor
Subsidiaries
   Non-
Guarantor
Subsidiaries
   Eliminations     Consolidated
     (in thousands)
LIABILITIES AND SHAREHOLDERS’ EQUITY             

Current liabilities:

            

Accounts payable

   $ 286      $ 12,277    $ 2,761    $ —        $ 15,324

Current portion of long-term debt

     2,100        1,941      —        —          4,041

Prepaid drilling contracts

     —          324      84      —          408

Accrued expenses

     226        26,070      2,735      —          29,031
                                    

Total current liabilities

     2,612        40,612      5,580      —          48,804

Long-term debt, less current portion

     255,628        2,445      —        —          258,073

Other long-term liabilities

     —          6,457      —        —          6,457

Deferred income taxes

     —          91,164      —        (3,330     87,834
                                    

Total liabilities

     258,240        140,678      5,580      (3,330     401,168
                                    

Total shareholders’ equity

     422,197        712,983      104,256      (817,988     421,448
                                    

Total liabilities and shareholders’ equity

   $ 680,437      $ 853,661    $ 109,836    $ (821,318   $ 822,616
                                    

 

Condensed Consolidating Balance Sheet

 

December 31, 2008

   Parent     Guarantor
Subsidiaries
   Non-
Guarantor
Subsidiaries
   Eliminations     Consolidated
     (in thousands)
ASSETS             

Current assets:

            

Cash and cash equivalents

   $ 858      $ 13,896    $ 12,067    $ —        $ 26,821

Receivables

     —          94,139      6,631      (1,347     99,423

Intercompany receivable (payable)

     (50,412     50,412      —        —          —  

Deferred income taxes

     —          6,232      38      —          6,270

Inventory

     —          1,633      2,241      —          3,874

Prepaid expenses and other current assets

     1,734        4,925      2,243      —          8,902
                                    

Total current assets

     (47,820     171,237      23,220      (1,347     145,290
                                    

Net property and equipment

     2,338        541,577      84,396      (749     627,562

Investment in subsidiaries

     713,075        101,703      —        (814,778     —  

Deferred income taxes

     719        —        —        (719     —  

Intangible assets, net of amortization

     1,086        28,883      —        —          29,969

Other long-term assets

     19,302        2,356      —        —          21,658
                                    

Total assets

   $ 688,700      $ 845,756    $ 107,616    $ (817,593   $ 824,479
                                    
LIABILITIES AND SHAREHOLDERS’ EQUITY             

Current Liabilities

            

Accounts payable

   $ 392      $ 19,047    $ 2,391    $ —        $ 21,830

Current portion of long-term debt

     15,152        2,146      —        —          17,298

Prepaid drilling contracts

     —          —        1,171      —          1,171

Accrued expenses

     561        39,092      2,313      (1,347     40,619
                                    

Total current liabilities

     16,105        60,285      5,875      (1,347     80,918

Long-term debt, less current portion

     257,728        4,387      —        —          262,115

Other long-term liabilities

     —          6,413      —        —          6,413

Deferred income taxes

     —          61,596      38      (719     60,915
                                    

Total liabilities

     273,833        132,681      5,913      (2,066     410,361
                                    

Total shareholders’ equity

     414,867        713,075      101,703      (815,527     414,118
                                    

Total liabilities and shareholders’ equity

   $ 688,700      $ 845,756    $ 107,616    $ (817,593   $ 824,479
                                    


Condensed Consolidating Statement of Operations

 

Year Ended December 31, 2009

   Parent     Guarantor
Subsidiaries
    Non-
Guarantor
Subsidiaries
    Eliminations     Consolidated  
     (in thousands)  

Revenues

   $ —        $ 268,920      $ 56,617      $ —        $ 325,537   
                                        

Costs and expenses:

          

Operating costs

     —          174,579        41,091        (315     215,355   

Depreciation and amortization

     1,478        96,752        7,956        —          106,186   

Selling, general and administrative

     12,222        25,293        1,379        (1,416     37,478   

Bad debt (recovery) expense

     —          (1,642     —          —          (1,642
                                        

Total costs and expenses

     13,700        294,982        50,426        (1,731     357,377   
                                        

Income (loss) from operations

     (13,700     (26,062     6,191        1,731        (31,840
                                        

Other income (expense):

          

Equity in earnings of subsidiaries

     (1,987     9,245        —          (7,258     —     

Interest expense

     (8,585     (555     (5     —          (9,145

Interest income

     1        111        105        —          217   

Other

     1,056        1,362        (91     (1,731     596   
                                        

Total other income (expense)

     (9,515     10,163        9        (8,989     (8,332
                                        

Income (loss) before income taxes

     (23,215     (15,899     6,200        (7,258     (40,172

Income tax benefit (expense)

     —          13,912        3,045        —          16,957   
                                        

Net earnings (loss)

   $ (23,215   $ (1,987   $ 9,245      $ (7,258   $ (23,215
                                        

Condensed Consolidating Statement of Operations

 

Year Ended December 31, 2008

   Parent     Guarantor
Subsidiaries
    Non-
Guarantor
Subsidiaries
    Eliminations     Consolidated  
     (in thousands)  

Revenues

   $ —        $ 559,470      $ 51,414      $ —        $ 610,884   
                                        

Costs and expenses:

          

Operating costs

     —          313,319        37,254        (630     349,943   

Depreciation and amortization

     830        82,252        5,063        —          88,145   

Selling, general and administrative

     17,483        27,011        1,435        (1,095     44,834   

Bad debt (recovery) expense

     —          423        —          —          423   

Impairment of goodwill

     —          118,646        —          —          118,646   

Impairment of intangible assets

     —          52,847        —          —          52,847   
                                        

Total costs and expenses

     18,313        594,498        43,752        (1,725     654,838   
                                        

Income (loss) from operations

     (18,313     (35,028     7,662        1,725        (43,954
                                        

Other income (expense):

          

Equity in earnings of subsidiaries

     (32,531     5,483        —          27,048        —     

Interest expense

     (12,523     (547     (2     —          (13,072

Interest income

     5        1,143        108        —          1,256   

Other

     675        1,647        (1,451     (1,789     (918
                                        

Total other income (expense)

     (44,374     7,726        (1,345     25,259        (12,734
                                        

Income (loss) before income taxes

     (62,687     (27,302     6,317        26,984        (56,688

Income tax benefit (expense)

     6        (5,229     (834     —          (6,057
                                        

Net earnings (loss)

   $ (62,681   $ (32,531   $ 5,483      $ 26,984      $ (62,745
                                        


Condensed Consolidating Statement of Operations

 

Nine Months Ended December 31, 2007

   Parent     Guarantor
Subsidiaries
    Non-
Guarantor
Subsidiaries
    Eliminations     Consolidated  
     (in thousands)  

Revenues

   $ —        $ 303,358      $ 10,526      $ —        $ 313,884   
                                        

Costs and expenses:

          

Operating costs

     —          184,811        6,563        —          191,374   

Depreciation and amortization

     274        47,301        1,277        —          48,852   

Selling, general and administrative

     8,139        6,900        747        —          15,786   

Bad debt (recovery) expense

     —          2,612        —          —          2,612   
                                        

Total costs and expenses

     8,413        241,624        8,587        —          258,624   
                                        

Income (loss) from operations

     (8,413     61,734        1,939        —          55,260   
                                        

Other income (expense):

          

Equity in earnings of subsidiaries

     48,737        2,505        —          (51,242     —     

Interest expense

     —          (15     (1     —          (16

Interest income

     —          2,376        25        —          2,401   

Other

     —          757        58        (686     129   
                                        

Total other income (expense)

     48,737        5,623        82        (51,928     2,514   
                                        

Income (loss) before income taxes

     40,324        67,357        2,021        (51,928     57,774   

Income tax benefit (expense)

     7        (18,620     484        —          (18,129
                                        

Net earnings (loss)

   $ 40,331      $ 48,737      $ 2,505      $ (51,928   $ 39,645   
                                        

Condensed Consolidating Statement of Cash Flows

 

Year Ended December 31, 2009

   Parent     Guarantor
Subsidiaries
    Non-
Guarantor
Subsidiaries
    Eliminations    Consolidated  
     (in thousands)  

Cash flows from operating activities

   $ 3,204      $ 114,826      $ 5,283      $ —      $ 123,313   
                                       

Cash flows from investing activities:

           

Purchases of property and equipment

     (404     (106,628     (7,680     —        (114,712

Proceeds from sale of property and equipment

     —          694        73        —        767   

Proceeds from insurance recoveries

     —          36        —          —        36   
                                       
     (404     (105,898     (7,607     —        (113,909
                                       

Cash flows from financing activities:

           

Payments of debt

     (15,152     (2,146     —          —        (17,298

Debt issuance costs

     (2,560     —          —          —        (2,560

Proceeds from common stock, net of offering costs of $454

     24,043        —          —          —        24,043   

Purchase of treasury stock

     (31     —          —          —        (31
                                       
     6,300        (2,146     —          —        4,154   
                                       

Net increase (decrease) in cash and cash equivalents

     9,100        6,782        (2,324     —        13,558   

Beginning cash and cash equivalents

     858        13,896        12,067        —        26,821   
                                       

Ending cash and cash equivalents

   $ 9,958      $ 20,678      $ 9,743      $ —      $ 40,379   
                                       


Condensed Consolidating Statement of Cash Flows

 

Year Ended December 31, 2008

   Parent     Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
    Eliminations    Consolidated  
     (in thousands)  

Cash flows from operating activities

   $ 98,393      $ 71,444      $ 16,554      $ —      $ 186,391   
                                       

Cash flows from investing activities:

           

Acquisition of production services business of WEDGE

     (313,621     —          —          —        (313,621

Acquisition of production services business of Competition

     (26,772     —          —          —        (26,772

Acquisition of other production services businesses

     (9,301     —          —          —        (9,301

Purchases of property and equipment

     (1,831     (133,598     (12,026     —        (147,455

Purchase of auction rate securities, net

     (15,900     —          —          —        (15,900

Proceeds from sale of property and equipment

     —          4,008        —          —        4,008   

Proceeds from insurance recoveries

     —          3,426        —          —        3,426   
                                       
     (367,425     (126,164     (12,026     —        (505,615
                                       

Cash flows from financing activities:

           

Payments of debt

     (87,305     (462     —          —        (87,767

Proceeds from issuance of debt

     359,400        —          —          —        359,400   

Debt issuance costs

     (3,319     —          —          —        (3,319

Proceeds from exercise of options

     784        —          —          —        784   

Excess income tax effect of stock option exercises

     244        —          —          —        244   
                                       
     269,804        (462     —          —        269,342   
                                       

Net increase (decrease) in cash and cash equivalents

     772        (55,182     4,528        —        (49,882

Beginning cash and cash equivalents

     86        69,078        7,539        —        76,703   
                                       

Ending cash and cash equivalents

   $ 858      $ 13,896      $ 12,067      $ —      $ 26,821   
                                       

Condensed Consolidating Statement of Cash Flows

 

Nine Months Ended December 31, 2007

   Parent     Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
    Eliminations    Consolidated  
     (in thousands)  

Cash flows from operating activities

   $ 190      $ 69,403      $ 45,862      $ —      $ 115,455   
                                       

Cash flows from investing activities:

           

Purchases of property and equipment

     (279     (87,556     (38,323     —        (126,158

Proceeds from sale of property and equipment

     —          2,300        —          —        2,300   
                                       
     (279     (85,256     (38,323     —        (123,858
                                       

Cash flows from financing activities:

           

Proceeds from exercise of options

     107        —          —          —        107   

Excess income tax effect of stock option exercises

     54        —          —          —        54   
                                       
     161        —          —          —        161   
                                       

Net increase (decrease) in cash and cash equivalents

     72        (15,853     7,539        —        (8,242

Beginning cash and cash equivalents

     14        84,931        —          —        84,945   
                                       

Ending cash and cash equivalents

   $ 86      $ 69,078      $ 7,539      $ —      $ 76,703