EX-99.3 3 dex993.txt UNAUDITED PRO FORMA FINANCIAL STATEMENTS EXHIBIT 99.3 SELECTED UNAUDITED PRO FORMA FINANCIAL DATA Our unaudited pro forma condensed consolidated balanced sheet as of December 31, 2000 gives effect to the purchase of Classic Resources, Inc. ("Classic") as if it had occurred on that date. Classic was acquired on January 30, 2001 for approximately $53.5 million. Our unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2000 gives effect to the acquisition by 3TEC of the CWR Properties and Classic (the "Purchases") as if they occurred January 1, 2000. The columns headed "CWR Properties" and "Classic Resources" in the Unaudited Pro Forma Condensed Consolidated Statement of Operations give effect to the revenues and expenses of the respective acquisitions for the periods they were not included in our historical financial statements. The CWR Properties were acquired effective June 1, 2000. There are no adjustments at December 31, 2000 to the Unaudited Pro Forma Condensed Consolidated Balance Sheet related to the CWR Properties, as the effect of the acquisition is already included in the Company's balance sheet. The Purchases were accounted for by 3TEC using the purchase method of accounting. The following unaudited pro forma financial data have been included as required by the rules of the SEC and are provided for comparative purposes only. The unaudited pro forma financial data presented are based upon the historical consolidated financial statements of 3TEC and Classic and the historical statements of revenues and direct operating expenses of the CWR Properties and should be read in conjunction with such financial statements and related notes thereto included in this report. The pro forma financial data are based upon assumptions and include adjustments as explained in the notes to the unaudited pro forma condensed consolidated financial statements, and the actual recording of the transactions could differ. The unaudited pro forma financial data are not necessarily indicative of the financial results that would have occurred had the Purchases been effective on and as of the date indicated and should not be viewed as indicative of operations in future periods. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET As of December 31, 2000
3TEC CLASSIC PRO FORMA PRO FORMA CONSOLIDATED RESOURCES ADJUSTMENTS CONSOLIDATED -------------- ------------- --------------- --------------- Current Assets Cash and cash equivalents $ 4,436,497 $ 2,360,193 $ (503,065)(f) $ 6,293,625 Accounts receivable 26,137,738 4,449,852 - 30,587,590 Other current assets 5,389,848 456 - 5,390,304 -------------- ------------- ----------- ------------ Total current assets 35,964,083 6,810,501 $ (503,065) 42,271,519 Properties and Equipment, at cost: Oil and gas properties, successful efforts method 270,277,796 25,099,176 55,806,721 (e) 351,183,693 Other property and equipment 2,030,310 50,978 (50,973)(e) 2,030,310 Accumulated depreciation, depletion & amortization (56,170,333) (3,847,537) 3,847,537 (e) (56,170,333) -------------- ------------- ------------ ------------ Net Properties and Equipment 216,137,773 21,302,617 59,603,280 297,043,670 Other assets 2,662,201 286,317 (286,317)(e) 2,662,201 -------------- ------------- ------------ ------------ Total assets $ 254,764,057 $ 28,399,455 $(58,813,898) $341,977,390 ============== ============= ============ ============ Current liabilities Accounts payable 10,746,140 4,999,210 - 15,745,350 Accrued liabilities 2,191,826 - - 2,191,826 Series C Preferred stock redemption 2,855,521 - - 2,855,521 Income taxes payable 4,461,928 - - 4,461,928 Other current liabilities 467,152 - 1,500,000(e) 1,967,152 -------------- ------------- ---------- ------------ Total current liabilities 20,722,567 6,499,210 - 27,221,777 Long-term debt 63,000,000 503,065 52,996,935 (e)(f) 116,500,000 Senior subordinated notes 13,223,844 - - 13,223,844 Deferred income taxes 6,770,981 2,582,155 24,631,968 (e) 33,985,104 Other liabilities 58,424 - - 58,424 Minority interest 1,393,578 - - 1,393,578 Stockholders' equity Preferred stock, $.02 par value, 20,000,000 shares authorized 266,667 designated Series B, 2,300,000 shares designated Series C and 725,167 shares designated Series D, none other designated - - Convertible preferred stock Series B, $7.50 stated value, 266,667 shares issued and outstanding. $2,000,000 aggregate liquidation preference 3,627,000 3,627,000 Convertible preferred stock Series D, 5% $24.00 stated value, 621,930 shares issued and outstanding at December 31, 2000, $14,926,320 aggregate liquidation preference. 7,571,553 7,571,553 Common stock, $.02 par value, 60,000,000 shares authorized, 14,687,906 shares issued at December 31, 2000 293,758 - - 293,758 Common stock, $.01 par value, 10,000,000 authorized, 1,526,000 shares outstanding at December 31, 2000 - 15,260 (15,260)(g) - Additional paid-in capital 136,382,775 20,117,624 (20,117,624)(g) 136,382,775 Retained earnings 2,768,417 182,121 (182,121)(g) 2,768,417 Treasury stock (1,048,840) - - (1,048,840) -------------- ------------- ----------- ------------ Total stockholders' equity 149,594,663 20,315,005 - 149,594,663 -------------- ------------- ----------- ------------ Total liabilities and stockholders' equity $ 254,764,057 $ 28,339,435 $58,813,898 $341,977,390 ============== ============= =========== ============ See accompanying notes to unaudited pro forma condensed consolidated financial data.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS For the Year Ended December 31, 2000
CWR CLASSIC 3TEC PROPERTIES CLASSIC PRO FORMA PRO FORMA PRO FORMA CONSOLIDATED OF CWR RESOURCES ADJUSTMENTS ADJUSTMENTS CONSOLIDATED ------------ ---------- ----------- ----------- -------------- ------------- REVENUES: Oil and gas sales and plant income $103,210,199 $4,891,080 $11,079,080* $ - $ - $119,180,359 Gain on sale of properties 800,338 - 633,743 - - 1,434,081 Other 812,616 - 293,618* - - 1,106,234 ------------ ---------- ----------- ----------- ----------- ------------ Total Revenues 104,823,153 4,891,080 12,006,441 - - 121,720,674 EXPENSES: Lease operations 15,326,014 876,490 1,031,499 - - 17,234,003 Production, severance and ad valorem 6,691,508 - 542,558 - - 7,234,066 Gathering, transportation and other 2,223,396 - 166,058* - - 2,389,454 Geological and geophysical 666,089 - - - - 666,089 Dry hole and impairment 29,261 - 1,665,664 - - 1,694,925 General and administrative 6,141,297 - 850,184 190,000(a) - 7,181,481 Non-cash compensation expense - - 4,869,884 - - 4,869,884 Interest 7,555,529 - 26,917 1,764,967(b) 4,403,534 (b) 13,750,947 Depreciation, depletion and amortization 19,779,218 - 2,190,203 1,347,560(c) 3,357,036 (c) 26,674,017 ------------ ---------- ----------- ----------- ----------- ------------ Total expenses 58,412,312 876,490 11,342,967 3,302,527 7,760,570 81,694,866 ------------ ---------- ----------- ----------- ----------- ------------ Income (loss) before inc taxes & minority interest 46,410,841 4,014,590 663,474 (3,302,527) (7,760,570) 40,025,808 ------------ ---------- ----------- ----------- ----------- ------------ Minority interest (304,534) - - - (304,534) Income tax provision (14,442,267) - (1,881,342) (223,018)(d) 2,578,904 (d) 13,967,723 ------------ ---------- ----------- ----------- ----------- ------------ Net income (loss) 31,664,040 4,014,590 (1,217,868) (3,525,545) (5,181,665) 25,753,552 ------------ ---------- ----------- ----------- ----------- ------------ Dividends to preferred shareholders 1,487,561 - - - - 1,487,561 ------------ ---------- ----------- ----------- ----------- ------------ Net income (loss) attributable to common shareholders $30,176,479 $4,014,590 $(1,217,868) $(3,525,545) $(5,181,665) $ 24,265,991 ============ ========== =========== =========== =========== ============ Net income (loss) per common share (basic) $ 2.91 $ 2.34 ------------ ------------ Weighted average common shares outstanding (basic) 10,382,836 10,382,836 ------------ ------------ * Incorporates reclassifications made to conform to 3TEC presentation. See accompanying notes to unaudited pro forma condensed consolidated financial data.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA The unaudited pro forma financial data has been prepared to give effect to the acquisition by 3TEC of the CWR Properties and Classic Resources, Inc. The columns headed "CWR Properties" and "Classic Resources" in the Unaudited Pro Forma Condensed Consolidated Statement of Operations give effect to the revenues and direct operating expenses of the respective acquisitions for the periods they were not included in our historical financial statements. There are no adjustments at December 31, 2000 to the Unaudited Pro Forma Condensed Consolidated Balance Sheet related to the CWR Properties, as the effect of this acquisition is already included in the Company's balance sheet. The unaudited pro forma condensed consolidated statements are not necessarily indicative of the results of our future operations. (a) To record additional general and administrative expenses relating to additional costs anticipated to be incurred related to the acquisition of the CWR Properties. (b) To record the net change in interest expense (at 8.28% for Classic and 8.15% for the CWR Properties) as a result of the increased borrowings under the Company's credit facility. (c) To adjust depreciation, depletion and amortization expense to give effect to the purchase price allocated to the CWR Properties and to Classic Resources using the unit of production method under the successful effort method of accounting. (d) To record income tax expense on the pro forma adjustments based on 3TEC's effective tax rate. (e) To record the acquisition of Classic Resources and related assets, liabilities and borrowings under our credit facility, at fair market value. (f) To record the pay down of the existing bank debt of Classic Resources at the closing of the acquisition. (g) Reflects the elimination of the historical equity of Classic in applying the purchase price.