EX-99.1 2 exhibit991.htm PRO FORMA FINANCIAL INFORMATION Exhibit 99.1


Exhibit 99.1

PRO FORMA FINANCIAL INFORMATION

The following unaudited pro forma condensed consolidated financial statements are based on the historical consolidated financial statements of PDC Energy, Inc. (the "Company") and have been adjusted to give effect to the divestiture of its Piceance, Northeastern Colorado and certain other non-core Colorado oil and gas properties (the “Divestiture”). The unaudited pro forma condensed consolidated balance sheet as of March 31, 2013 gives effect to the Divestiture as if it had occurred on March 31, 2013. The unaudited pro forma condensed consolidated statements of operations for the years ended December 31, 2012, 2011 and 2010 and the three month periods ended March 31, 2013 and 2012 give effect to the Divestiture as if it had occurred on January 1, 2010. The unaudited pro forma condensed consolidated information has been prepared using estimates based on preliminary amounts and is subject to customary post-closing adjustments.

The unaudited pro forma condensed consolidated information should be read in conjunction with the Company's historical consolidated financial statements and accompanying notes which are included in its Annual Report on Form 10-K for the year ended December 31, 2012, as filed on February 27, 2013 with the U.S. Securities and Exchange Commission (the “SEC”), and its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013, as filed on May 1, 2013 with the SEC.

The pro forma condensed consolidated statements of operations for the years ended December 31, 2012, 2011 and 2010 and the three month periods ended March 31, 2013 and 2012 include the following adjustments:

•
Natural gas, NGL and crude oil sales, sales from natural gas marketing, and well operations, pipeline and other income have been adjusted downward to reflect the reduction in revenue related to assets being divested;

•
Production costs, cost of natural gas marketing, exploration expense, impairment of natural gas and crude oil properties, depreciation, depletion and amortization and accretion of asset retirement obligations have been adjusted downward to reflect the costs and expenses associated with the assets being divested; and

•
Income taxes are reflected using the Company's long-term deferred tax rate.

The pro forma condensed consolidated balance sheet as of March 31, 2013 includes the following adjustments:

•
Cash as been increased by the sales price, which reflects preliminary adjustments, of 185.2 million, net of repayment of our revolving credit facility outstanding balance of $57 million and selling fees of $2.4 million;

•
The adjustment to assets and liabilities held for sale, other assets and liabilities and deferred taxes reflects a reduction in the book value of the assets and related liabilities being divested; and

•
The net gain on the transaction, which has not been tax effected, is reflected as an adjustment to retained earnings.



















PDC ENERGY, INC.
Pro Forma Condensed Consolidated Statements of Operations
(unaudited; in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
2013
 
2012
 
As Reported
 
Pro Forma Adjustments - Divestiture
 
Pro Forma
 
As Reported
 
Pro Forma Adjustments - Divestiture
 
Pro Forma
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Natural gas, NGLs and crude oil sales
$
79,439

 
$
(349
)
 
$
79,090

 
$
66,955

 
$
(463
)
 
$
66,492

Sales from natural gas marketing
13,670

 
—

 
13,670

 
11,381

 
—

 
11,381

Commodity price risk management gain (loss), net
(22,355
)
 
—

 
(22,355
)
 
11,501

 
—

 
11,501

Well operations, pipeline income and other
1,072

 
(2
)
 
1,070

 
1,169

 
(2
)
 
1,167

Total revenues
71,826

 
(351
)
 
71,475

 
91,006

 
(465
)
 
90,541

Costs, expenses and other:
 
 
 
 
 
 
 
 
 
 
 
Production costs
15,858

 
(39
)
 
15,819

 
12,936

 
(62
)
 
12,874

Cost of natural gas marketing
13,736

 
—

 
13,736

 
11,091

 
—

 
11,091

Exploration expense
1,689

 
—

 
1,689

 
1,872

 
—

 
1,872

Impairment of natural gas and crude oil properties
46,459

 
—

 
46,459

 
588

 
—

 
588

General and administrative expense
15,115

 
—

 
15,115

 
14,708

 
—

 
14,708

Depreciation, depletion, and amortization
27,949

 
—

 
27,949

 
27,912

 
—

 
27,912

Accretion of asset retirement obligations
1,148

 
—

 
1,148

 
727

 
—

 
727

Gain on sale of properties and equipment
(38
)
 
—

 
(38
)
 
(154
)
 
—

 
(154
)
Total cost, expenses and other
121,916

 
(39
)
 
121,877

 
69,680

 
(62
)
 
69,618

Income (loss) from operations
(50,090
)
 
(312
)
 
(50,402
)
 
21,326

 
(403
)
 
20,923

Interest expense
(13,357
)
 
—

 
(13,357
)
 
(10,444
)
 
—

 
(10,444
)
Interest income
—

 
—

 
—

 
2

 
—

 
2

Income (loss) from continuing operations before income taxes
(63,447
)
 
(312
)
 
(63,759
)
 
10,884

 
(403
)
 
10,481

Provision for income taxes
22,492

 
126

 
22,618

 
(4,120
)
 
154

 
(3,966
)
Income (loss) from continuing operations attributable to shareholders
$
(40,955
)
 
$
(186
)
 
$
(41,141
)
 
$
6,764

 
$
(249
)
 
$
6,515

 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share from continuing operations:
 
 
 
 
 
 
 
 
 
 
 
Basic
$
(1.35
)
 
 
 
$
(1.36
)
 
$
0.29

 
 
 
$
0.28

Diluted
$
(1.35
)
 
 
 
$
(1.36
)
 
$
0.28

 
 
 
$
0.27

 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
Basic
30,270

 
 
 
30,270

 
23,609

 
 
 
23,609

Diluted
30,270

 
 
 
30,270

 
23,889

 
 
 
23,889






PDC ENERGY, INC.
Pro Forma Condensed Consolidated Statements of Operations
(unaudited; in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December, 31
 
2012
 
2011
 
2010
 
As Reported
 
Pro Forma Adjustments - Divestiture
 
Pro Forma
 
As Reported
 
Pro Forma Adjustments - Divestiture
 
Pro Forma
 
As Reported
 
Pro Forma Adjustments - Divestiture
 
Pro Forma
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Natural gas, NGL and crude oil sales
$
270,327

 
$
(33,343
)
 
$
236,984

 
$
276,605

 
$
(56,966
)
 
$
219,639

 
$
205,029

 
$
(58,981
)
 
$
146,048

Sales from natural gas marketing
47,079

 
(1,708
)
 
45,371

 
66,419

 
(2,949
)
 
63,470

 
69,071

 
(3,836
)
 
65,235

Commodity price risk management gain, net
32,339

 
—

 
32,339

 
46,090

 
—

 
46,090

 
59,891

 
—

 
59,891

Well operations, pipeline income and other
6,388

 
(1,861
)
 
4,527

 
6,846

 
(2,410
)
 
4,436

 
9,030

 
(3,595
)
 
5,435

Total revenues
356,133

 
(36,912
)
 
319,221

 
395,960

 
(62,325
)
 
333,635

 
343,021

 
(66,412
)
 
276,609

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs, expenses and other:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Production costs
75,485

 
(20,989
)
 
54,496

 
67,352

 
(22,946
)
 
44,406

 
63,543

 
(33,676
)
 
29,867

Cost of natural gas marketing
46,552

 
(1,529
)
 
45,023

 
65,465

 
(2,634
)
 
62,831

 
68,015

 
(3,282
)
 
64,733

Exploration expense
22,605

 
(2,254
)
 
20,351

 
6,253

 
(519
)
 
5,734

 
13,675

 
(4,468
)
 
9,207

Impairment of natural gas and crude oil properties
168,149

 
(162,254
)
 
5,895

 
25,159

 
(22,858
)
 
2,301

 
6,481

 
(2,111
)
 
4,370

General and administrative expense
58,815

 
—

 
58,815

 
61,454

 
—

 
61,454

 
42,188

 
—

 
42,188

Depreciation, depletion and amortization
146,879

 
(48,101
)
 
98,778

 
128,907

 
(41,274
)
 
87,633

 
108,095

 
(41,977
)
 
66,118

Accretion of asset retirement obligations
4,060

 
(373
)
 
3,687

 
1,733

 
(335
)
 
1,398

 
1,329

 
(285
)
 
1,044

Gain on sale of properties and equipment
(4,353
)
 
—

 
(4,353
)
 
(196
)
 
—

 
(196
)
 
(174
)
 
—

 
(174
)
Total costs, expenses and other
518,192

 
(235,500
)
 
282,692

 
356,127

 
(90,566
)
 
265,561

 
303,152

 
(85,799
)
 
217,353

Income (loss) from operations
(162,059
)
 
198,588

 
36,529

 
39,833

 
28,241

 
68,074

 
39,869

 
19,387

 
59,256

Loss on extinguishment of debt
(23,283
)
 
—

 
(23,283
)
 
—

 
—

 
—

 
—

 
—

 
—

Interest expense
(48,287
)
 
—

 
(48,287
)
 
(36,985
)
 
—

 
(36,985
)
 
(33,250
)
 
—

 
(33,250
)
Interest income
8

 
—

 
8

 
47

 
—

 
47

 
71

 
—

 
71

Income (loss) from continuing operations before income taxes
(233,621
)
 
198,588

 
(35,033
)
 
2,895

 
28,241

 
31,136

 
6,690

 
19,387

 
26,077

Provision for income taxes
88,835

 
(75,871
)
 
12,964

 
183

 
(10,754
)
 
(10,571
)
 
(652
)
 
(7,365
)
 
(8,017
)
Income (loss) from continuing operations
(144,786
)
 
122,717

 
(22,069
)
 
3,078

 
17,487

 
20,565

 
6,038

 
12,022

 
18,060

Net loss attributable to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
(280
)
 
—

 
(280
)
Income (loss) from continuing operations attributable to shareholders
$
(144,786
)
 
$
122,717

 
$
(22,069
)
 
$
3,078

 
$
17,487

 
$
20,565

 
$
6,318

 
$
12,022

 
$
18,340

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share from continuing operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
(5.23
)
 
 
 
$
(0.80
)
 
$
0.13

 
 
 
$
0.87

 
$
0.33

 
 
 
$
0.94

Diluted
$
(5.23
)
 
 
 
$
(0.80
)
 
$
0.13

 
 
 
$
0.86

 
$
0.32

 
 
 
$
0.93

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
27,677

 
 
 
27,677

 
23,521

 
 
 
23,521

 
19,674

 
 
 
19,674

Diluted
27,677

 
 
 
27,677

 
23,871

 
 
 
23,871

 
19,821

 
 
 
19,821





PDC ENERGY, INC.
Pro Forma Condensed Consolidated Balance Sheet
(unaudited; in thousands, except share and per share data)
 
 
 
 
 
 
 
March 31, 2013
 
As Reported
 
Pro Forma Adjustments - Divestiture
 
Pro Forma
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
2,494

 
$
125,871

 
$
128,365

Other current assets
150,165

 
(37,091
)
 
113,074

Total current assets
152,659

 
88,780

 
241,439

Properties and equipment, net
1,375,473

 
—

 
1,375,473

Assets held for sale
216,802

 
(184,305
)
 
32,497

Other assets
36,879

 
(3,055
)
 
33,824

Total Assets
$
1,781,813

 
$
(98,580
)
 
$
1,683,233

 
 
 
 
 
 
Liabilities and Shareholders' Equity
 
 
 
 
 
Liabilities
 
 
 
 
 
Current liabilities
$
194,753

 
$
(12,104
)
 
$
182,649

Long-term debt
687,970

 
(57,000
)
 
630,970

Deferred income taxes
128,699

 
(20,875
)
 
107,824

Asset retirement obligations
34,296

 
—

 
34,296

Liabilities held for sale
28,346

 
(6,303
)
 
22,043

Other liabilities
41,844

 
(5,046
)
 
36,798

Total liabilities
1,115,908

 
(101,328
)
 
1,014,580

 
 
 
 
 
 
Commitments and contingent liabilities
 
 
 
 
 
 
 
 
 
 
 
Equity
 
 
 
 
 
Shareholders' equity:
 
 
 
 
 
Preferred shares, par value $0.01 per share; authorized 50,000,000 shares; issued: none
—

 
—

 
—

Common shares, par value $0.01 per share; 100,000,000 authorized shares; issued: 30,294,224
303

 
—

 
303

Additional paid-in capital
389,831

 
—

 
389,831

Retained earnings
276,150

 
2,748

 
278,898

Treasury shares, at cost 5,059
(379
)
 
—

 
(379
)
Total shareholders' equity
665,905

 
2,748

 
668,653

Total Liabilities and Equity
$
1,781,813

 
$
(98,580
)
 
$
1,683,233