Quarterly report pursuant to Section 13 or 15(d)

Acquisitions and Divestitures (Tables)

v2.4.0.8
Acquisitions and Divestitures (Tables) (Newfield Properties)
9 Months Ended
Sep. 30, 2013
Newfield Properties
 
Purchase Price Allocation for Acquisition

The following table presents the purchase price allocation, including adjustments, for the acquisition of the Newfield Properties (in thousands):

 

Oil and natural gas properties and equipment

$

  237,396

 

Asset retirement obligations – current

 

(7,250

)

Asset retirement obligations – non-current

 

(24,414

)

Total cash paid

$

  205,732

 

 

Summary of Proforma Financial Information for Acquisition

The following table presents a summary of our pro forma financial information (in thousands except earnings per share):

 

 

Three Months Ended
September 30, 2012

 

 

Nine Months Ended
September 30, 2012

 

Revenues

$

  217,714

  

 

$

  741,808

 

Net income

 

  508

 

 

 

  59,897

 

Basic and diluted earnings per common share

 

  0.01

 

 

 

  0.79

 

 

Business Acquisition Pro Forma Information Incremental Items

 

The following table presents incremental items included in the pro forma information reported above for the Newfield Properties (in thousands):

 

 

Three Months Ended
September 30, 2012

  

 

Nine Months Ended
September 30, 2012

 

Revenues (a)

$

  31,768

 

 

$

  104,463

 

Direct operating expenses (a)

 

  9,026

 

 

 

  33,089

 

Insurance and acquisition costs, net (b)

 

  128

 

 

 

  444

 

DD&A (c)

 

  15,757

 

 

 

  52,634

 

Interest expense (d)

 

  3,960

 

 

 

  11,881

 

Capitalized interest (e)

 

  148

 

 

 

  634

 

Income tax expense (f)

 

  1,066

 

 

 

  2,467

 

 

 

The sources of information and significant assumptions are described below:

 

(a)

Revenues and direct operating expenses for the Newfield Properties were derived from the historical financial records of Newfield. 

 

(b)

Incremental costs for insurance were estimated using the incremental costs to add the Newfield Properties to W&T’s insurance programs.  The direct operating expenses for the Newfield Properties described above exclude insurance costs.  Expenses were reduced for acquisition costs incurred. 

 

(c)

DD&A was estimated using the full-cost method and determined as the incremental DD&A expense due to adding the Newfield Properties’ costs, reserves and production into our currently existing full cost pool in order to compute such amounts.  The purchase price allocation included $13.1 million that was allocated to the pool of unevaluated properties for oil and natural gas interests.  Accordingly, no DD&A expense was estimated for the unevaluated properties.  ARO was estimated by W&T management

 

(d)

The acquisition was assumed to be funded entirely with borrowed funds.  Interest expense was computed using assumed borrowings of $205.7 million, which equates to the cash paid including purchase price adjustments and an interest rate of 7.7%, which equates to the effective yield on net proceeds for the additional senior notes issued shortly after the acquisition closed. 

 

(e)

Incremental capitalized interest was computed for the addition to the pool of unevaluated properties and the capitalization interest rate was adjusted for the assumed borrowings. 

 

(f)

Income tax expense was computed using the 35% federal statutory rate.