CRESCENT ENERGY COMPANY Item 2.02. Results of Operations and Financial Condition.
As reported in a Current Report on Form 8-K filed with the
This Current Report on Form 8-K provides certain historical and pro forma
financial statements, as described in Item 9.01 below, each of which are
incorporated into this Item 2.02 by reference. The historical financial
statements of Contango are consistent with the historical financial statements
of Contango filed on the Original Crescent Form 8-K and the pro forma financial
statements are consistent with the pro forma financial statements furnished by
the Company on
Item 7.01. Regulation FD Disclosure.
The information contained in Item 8.01 of this Current Report on Form 8-K is incorporated into this Item 7.01 by reference.
The information contained in this Item 7.01 shall not be deemed to be "filed" for purposes of Section 18 of the Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing under the Securities Act of 1933, as amended , or the Exchange Act.
Item 8.01 Other Events.
Historical and Pro Forma Financial Statements
This Current Report on Form 8-K provides certain historical and pro forma
financial statements, as described in Item 9.01 below, each of which are
incorporated into this Item 8.01 by reference. The historical financial
statements of Contango are consistent with the historical financial statements
of Contango filed on the Original Crescent Form 8-K and the pro forma financial
statements are consistent with the pro forma financial statements furnished by
the Company on
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Registration Statement Disclosures
On or about the date of this Current Report on Form 8-K, the Company intends to
file a Registration Statement on Form S-1 (the "Registration Statement")
relating to the proposed offering by the Company of
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Summary Reserve Data based on SEC Pricing
The following table provides historical reserves, PV-0, and PV-10 as of
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Uinta Acquisition(1)
As of December 31, 2021
Net Proved Reserves:
Oil (MBbls) 42,924
Natural gas (MMcf) 139,329
NGLs (MBbls) (2) -
Total Proved Reserves (MBoe) 66,146
Standardized Measure (millions) (3) $ 1,027
PV-0 (millions) (3) $ 1,524
PV-10 (millions) (3) $ 1,054
Net Proved Developed Reserves:
Oil (MBbls) 24,871
Natural gas (MMcf) 92,094
NGLs (MBbls) (2) -
Total Proved Developed Reserves (MBoe) 40,220
PV-0 (millions) (3) $ 954
PV-10 (millions) (3) $ 733
Net Proved Undeveloped Reserves:
Oil (MBbls) 18,054
Natural gas (MMcf) 47,235
NGLs (MBbls) (2) -
Total Proved Undeveloped Reserves (MBoe) 25,926
PV-0 (millions) (3) $ 571
PV-10 (millions) (3) $ 321
(1) The Uinta Acquisition's reserves and present value (discounted at ten
percent, or PV-10) were determined using average first-day-of-the-month
prices for the prior 12 months in accordance with SEC guidance. The base SEC
oil and gas prices calculated for December 31, 2021 were $66.56 per Bbl and
$3.598 per MMBtu, respectively. As specified by the SEC , a company must use a
12-month average price, calculated as the unweighted arithmetic average of
the first-day-of-the-month price for each month within the 12-month period
prior to the end of the reporting period. The base oil price is based upon
WTI-Cushing spot prices (EIA) during 2021 and the base gas price is based
upon Henry Hub spot prices (Gas Daily ) during 2021. Adjustments to oil and
gas prices were calculated by the Company and applied as received by CG&A.
For all properties, oil price differentials were forecast at -$10.26 per Bbl
and gas price differentials were forecast at -$1.51 per Mcf. Adjustments may
include treating costs, transportation charges, plant processing, and/or
crude quality and gravity corrections. After these adjustments, the net
realized prices over the life of the proved properties was estimated to be
$56.30 per Bbl for oil and $2.088 per Mcf for gas. All economic factors were
held constant in accordance with SEC guidelines.
(2) Natural gas reserves acquired in the Uinta Acquisition are shown in "wet"
MMcf, which includes NGLs. The Company uses three-stream reserve information,
with NGL reserves reported separately. As a result, reserve estimates of the
Company are not comparable to reserve estimates for the Uinta Acquisition.
(3) Present value (discounted at PV-0 and PV-10) is not a financial measure
calculated in accordance with U.S. generally accepted accounting principles
("GAAP") because it does not include the effects of income taxes on future
net revenues. None of PV-0 and PV-10 represent an estimate of the fair market
value of our oil and natural gas properties. Our PV-0 measurement does not
provide a discount rate to estimated future cash flows. PV-0 therefore does
not reflect the risk associated with future cash flow projections like PV-10
does. PV-0 should therefore only be evaluated in connection with an
evaluation of our PV-10 of discounted future net cash flows. We believe that
the presentation of PV-0 and PV-10 is relevant and useful to its investors as
supplemental disclosure to the standardized measure of future net cash flows,
or after tax amount, because it presents the discounted future net cash flows
attributable to our reserves prior to taking into account future income taxes
and our specific tax characteristics. Standardized measure for the Uinta
Acquisition is shown pro forma as if the assets acquired in the Uinta
Acquisition had been owned by Crescent Energy Company as of December 31,
2021 . The PV-0 and PV-10 income tax amounts included in the net proved
standardized measure but not included in PV-0 and PV-10 were $39.8 million
and $27.1 million , respectively. We and others in our industry use PV-0 and
PV-10 as a measure to compare the relative size and value of proved reserves
without regard to specific tax characteristics. Investors should be cautioned
that none of PV-0 and PV-10 represent an estimate of the fair market value of
our proved reserves.
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Summary Reserve Data based on NYMEX Pricing
The following table provides historical reserves, PV-0, and PV-10 as of
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forward-looking expectations of oil and natural gas prices as of a certain date.
In addition, we believe strip pricing provides relevant and useful information
because it is widely used by investors in our industry as a basis for comparing
the relative size and value of our proved reserves to our peers and in
particular addresses the impact of differentials compared with our peers. Our
estimated historical reserves, PV-0, and PV-10 based on NYMEX futures were
otherwise prepared on the same basis as our
Crescent Energy Company Uinta Acquisition
As of December 31, 2021(1)
Net Proved Reserves:
Oil (MBbls) 211,497 43,252
Natural gas (MMcf) 1,533,009 141,439
NGLs (MBbls) (3) 78,790 -
Total Proved Reserves (MBoe) 545,788 66,825
PV-0 (millions) (2) $ 11,931 $ 2,025
PV-10 (millions) (2) $ 6,781 $ 1,466
Net Proved Developed Reserves:
Oil (MBbls) 159,332 25,162
Natural gas (MMcf) (3) 1,467,322 94,028
NGLs (MBbls) (3) 68,653 -
Total Proved Developed Reserves
(MBoe) 472,539 40,833
PV-0 (millions) (2) $ 9,681 $ 1,300
PV-10 (millions) (2) $ 5,658 $ 1,029
Net Proved Undeveloped Reserves:
Oil (MBbls) 52,164 18,090
Natural gas (MMcf) 65,687 47,411
NGLs (MBbls) (3) 10,137 -
Total Proved Undeveloped Reserves
(MBoe) 73,429 25,992
PV-0 (millions) (2) $ 2,249 $ 725
PV-10 (millions) (2) $ 1,123 $ 437
(1) The NYMEX reserves, PV-0, and PV-10 of the Company and the Uinta Acquisition
were determined using index prices for oil and natural gas, respectively,
without giving effect to derivative transactions and were calculated based on
settlement prices to better reflect the market expectations as of that date,
as adjusted for our estimates of quality, transportation fees, and market
differentials. The five-year average strip pricing for the reserve
calculations based on NYMEX futures pricing at closing on March 31, 2022 were
$79.71 per Bbl of oil and $4.267 per MMBtu of natural gas. We believe that
the use of forward prices provides investors with additional useful
information about our reserves, as the forward prices are based on the
market's forward-looking expectations of oil and natural gas prices as of a
certain date. NYMEX futures prices are not necessarily a projection of future
oil and gas prices. Investors should be careful to consider forward prices in
addition to, and not as a substitute for, SEC prices, when considering our
oil, natural gas and NGL reserves. While we believe the NYMEX forward-month
contract pricing is the most accurate indicator of commodity prices as of the
applicable date, commodity prices are volatile. As a result, actual future
prices may vary significantly from the NYMEX prices used herein. The future
value of the reserves eventually recovered and the amounts of reserves
actually recovered may be more or less than the estimated amounts.
(2) Present value (discounted at PV-0 and PV-10) is not a financial measure
calculated in accordance with GAAP because it does not include the effects of
income taxes on future net revenues. Neither PV-0 nor PV-10 represent an . . .
Item 9.01 Financial Statements and Exhibits.
(b) Financial Statements of Businesses Acquired
• Audited consolidated financial statements of Contango as of and for
the years ended December 31, 2020 and 2019, and the related notes to
the consolidated financial statements, included in Contango's Annual
Report on Form 10-K for the year ended December 31, 2020 , attached as
Exhibit 99.1 hereto;
• Unaudited consolidated financial statements of Contango as of
September 30, 2021 and December 31, 2020 and for the three and nine
months ended September 30, 2021 and 2020, and the related notes to the
condensed consolidated financial statements, included in Contango's
Quarterly Report on Form 10-Q for the quarter ended September 30,
2021 , attached as Exhibit 99.2 hereto;
(b) Pro Forma Financial Information
The following unaudited pro forma condensed combined financial information of the Company, giving effect to the Transactions, attached as Exhibit 99.3 hereto:
• Unaudited Pro Forma Condensed Combined Statement of Operations for the
year ended December 31, 2021 ; and
• Notes to the Unaudited Pro Forma Condensed Combined Financial Statements.
(d) Exhibits.
Exhibit Description
23.1 Consent of Grant Thornton LLP , relating to the financial statements
of Contango Oil & Gas Company .
23.2 Consent of Cawley, Gillespie & Associates, Inc.
23.3 Consent of William M. Cobb & Associates, Inc.
23.4 Consent of W.D. Von Gonten and Company .
99.1 Historical audited consolidated financial statements of Contango
Oil & Gas Company as of December 31, 2020 and 2019 and for the years
ended December 31, 2020 and 2019.
99.2 Historical unaudited consolidated financial statements of Contango
Oil & Gas Company as of September 30, 2021 and December 31, 2020 and
for the three and nine months ended September 30, 2021 and 2020.
99.3 Unaudited pro forma condensed combined financial information for the
year ended December 31, 2021 .
99.4 Report of Cawley, Gillespie & Associates, Inc. - Uinta, as of
December 31, 2021 .
99.5 Report of William M. Cobb & Associates, Inc.
99.6 Report of W.D. Von Gonten and Company .
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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