Exhibit 99.1
Unaudited Pro forma Condensed Consolidated Statements of Operations
and Balance Sheet to Reflect Sale of Nockatunga Fields Assets
The following unaudited pro forma condensed consolidated balance sheet as of September 30, 2009 and statements of operations for the year ended June 30, 2009 and the three months ended September 30, 2009, give effect to the following transaction:
On December 22, 2009, Magellan Petroleum Australia Limited (“MPAL”), the wholly-owned Australian subsidiary of Magellan Petroleum Corporation, and a wholly-owned subsidiary of MPAL (collectively, the “Company”) entered into an Asset Sale Agreement (the “Nockatunga Asset Sale Agreement”), dated December 22, 2009, with Santos QNT Pty Ltd. (the “Buyer”) and Vamgas Pty Ltd., and simultaneously closed the transactions described therein on December 22, 2009 (the “Closing Date”). The effective date of the Nockatunga asset sale transaction is January 1, 2010.
Under the Nockatunga Asset Sale Agreement, the Company sold to the Buyer all of its ownership interests in five petroleum production leases covering the Nockatunga oil fields and an adjacent exploration authority to prospect (41% working interest) and the related agreements. The Company received cash consideration for the sale of its Nockatunga assets of Aus. $6.3 million, or approximately U.S. $5.6 million, on the Closing Date. The Company expects to apply the proceeds into ongoing near-term strategic efforts.
The following unaudited pro forma condensed consolidated financial statements and explanatory notes present how the consolidated financial statements of the Company may have appeared had the sale of the Nockatunga assets occurred as of September 30, 2009 (with respect to the balance sheet) and as of July 1, 2008 (with respect to the income statements).
This pro form condensed consolidated financial information should be read together with the Company’s audited historical consolidated financial statements and related notes included in the Annual Report on Form 10-K for the year ended June 30, 2009 and its Quarterly Report filed on Form 10-Q for the quarter ended September 30, 2009. The unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes and do not purport to represent what the results of operations or financial position of the Company would actually have been had the transaction described above occurred on the dates note above, or to project the results of operations or financial position of the Company for any future periods. The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable. The pro forma adjustments are directly attributable to the transaction and are expected to have a continuing impact on the results of operations of the Company. In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma financial information have been made.
MAGELLAN PETROLEUM CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
| September 30, 2009 | ||||||||||||
| Magellan Petroleum Corporation Historical |
Pro Forma Adjustments | Magellan Petroleum Corporation Pro Forma |
||||||||||
| (UNAUDITED) | (NOTE) | (UNAUDITED) | ||||||||||
| ASSETS |
||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 42,287,365 | $ | 5,499,270 | (a) | $ | 47,786,635 | |||||
| Accounts receivable — Trade (net of allowance for doubtful accounts of $97,726) |
4,567,838 | (283,018 | )(a) | 4,284,820 | ||||||||
| Accounts receivable — working interest partners |
239,215 | — | 239,215 | |||||||||
| Marketable securities |
2,496,846 | — | 2,496,846 | |||||||||
| Inventories |
439,999 | (56,840 | )(a) | 383,159 | ||||||||
| Deferred income taxes |
534,923 | 16,224 | (a) | 551,147 | ||||||||
| Securities available for sale (at fair value) |
8,032,791 | — | 8,032,791 | |||||||||
| Other assets |
306,228 | — | 306,228 | |||||||||
| Total current assets |
58,905,205 | 5,175,636 | 64,080,841 | |||||||||
| Deferred income taxes |
6,069,563 | (1,811,061 | )(a) | 4,258,502 | ||||||||
| Property and equipment, net: |
||||||||||||
| Oil and gas properties (successful efforts method) |
127,954,942 | (17,344,404 | )(a) | 110,610,538 | ||||||||
| Land, buildings and equipment |
3,194,525 | (33,350 | )(a) | 3,161,175 | ||||||||
| Field equipment |
941,995 | — | 941,995 | |||||||||
| 132,091,462 | (17,377,754 | ) | 114,713,708 | |||||||||
| Less accumulated depletion, depreciation and amortization |
(113,177,657 | ) | 15,430,252 | (a) | (97,747,405 | ) | ||||||
| Net property and equipment |
18,913,805 | (1,947,502 | ) | 16,966,303 | ||||||||
| Goodwill |
4,020,706 | — | 4,020,706 | |||||||||
| Total assets |
$ | 87,909,279 | $ | 1,417,073 | $ | 89,326,352 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Current liabilities: |
||||||||||||
| Accounts payable |
$ | 2,712,468 | $ | (377,457 | )(a) | $ | 2,335,011 | |||||
| Accrued liabilities |
1,528,513 | — | 1,528,513 | |||||||||
| Income taxes payable |
1,998,273 | 62,680 | (a) | 2,060,953 | ||||||||
| Total current liabilities |
6,239,254 | (314,777 | ) | 5,924,477 | ||||||||
| Long term liabilities: |
||||||||||||
| Deferred income taxes |
1,854,422 | (50,435 | )(a) | 1,803,987 | ||||||||
| Other long term liabilities |
97,440 | — | 97,440 | |||||||||
| Asset retirement obligations |
10,827,520 | (1,848,450 | )(a) | 8,979,070 | ||||||||
| Warrants |
3,517,765 | — | 3,517,765 | |||||||||
| Total long term liabilities |
16,297,147 | (1,898,885 | ) | 14,398,262 | ||||||||
| Stockholders’ equity: |
||||||||||||
| Common stock, par value $.01 per share: Authorized 200,000,000 shares outstanding 50,225,977 and 41,500,325, respectively |
501,958 | — | 501,958 | |||||||||
| Capital in excess of par value |
81,253,295 | — | 81,253,295 | |||||||||
| Accumulated deficit |
(23,490,183 | ) | 3,630,735 | (a) | (19,859,448 | ) | ||||||
| Accumulated other comprehensive income |
7,107,808 | — | 7,107,808 | |||||||||
| Total stockholders’ equity |
65,372,878 | 3,630,735 | 69,003,613 | |||||||||
| Total liabilities and stockholders’ equity |
$ | 87,909,279 | $ | 1,417,073 | $ | 89,326,352 | ||||||
See accompanying notes to the unaudited proforma condensed consolidated financial statements.
MAGELLAN PETROLEUM CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
| THREE MONTHS ENDED September 30, 2009 |
||||||||||||
| Magellan Petroleum Corporation Historical |
Pro Forma Adjustments |
Magellan Petroleum Corporation Pro Forma |
||||||||||
| REVENUES: |
||||||||||||
| Oil sales |
$ | 2,786,826 | $ | (892,152 | )(b) | $ | 1,894,674 | |||||
| Gas sales |
5,408,946 | — | 5,408,946 | |||||||||
| Other production related revenues |
683,014 | — | 683,014 | |||||||||
| Total revenues |
8,878,786 | (892,152 | ) | 7,986,634 | ||||||||
| COSTS AND EXPENSES: |
||||||||||||
| Production costs |
3,330,606 | (450,513 | )(b) | 2,880,093 | ||||||||
| Exploration and dry hole costs |
339,113 | (69,619 | )(b) | 269,494 | ||||||||
| Salaries and employee benefits |
1,743,508 | (11,819 | )(b) | 1,731,689 | ||||||||
| Depletion, depreciation and amortization |
1,163,006 | (246,128 | )(b) | 916,878 | ||||||||
| Auditing, accounting and legal services |
384,388 | (10,002 | )(b) | 374,386 | ||||||||
| Accretion expense |
174,767 | (26,586 | )(b) | 148,181 | ||||||||
| Shareholder communications |
78,527 | (1,085 | )(b) | 77,442 | ||||||||
| Loss on sale of assets |
5,190 | — | 5,190 | |||||||||
| Other administrative expenses |
2,362,309 | (115,295 | )(b) | 2,247,014 | ||||||||
| Total costs and expenses |
9,581,414 | (931,047 | ) | 8,650,367 | ||||||||
| Operating (loss) income |
(702,628 | ) | 38,895 | (663,733 | ) | |||||||
| Warrant expense |
(1,392,471 | ) | — | (1,392,471 | ) | |||||||
| Investment income |
1,496,537 | (371 | )(b) | 1,496,166 | ||||||||
| (Loss) income before income taxes |
(598,562 | ) | 38,524 | (560,038 | ) | |||||||
| Income tax provision |
(698,702 | ) | (11,557 | )(b) | (710,259 | ) | ||||||
| NET (LOSS) INCOME |
$ | (1,297,264 | ) | $ | 26,967 | $ | (1,270,297 | ) | ||||
| Average number of shares outstanding |
||||||||||||
| Basic |
49,545,601 | 49,545,601 | ||||||||||
| Diluted |
49,545,601 | 49,545,601 | ||||||||||
| NET (LOSS) INCOME PER SHARE (BASIC AND DILUTED) |
$ | (0.03 | ) | $ | (0.03 | ) | ||||||
See accompanying notes to the unaudited proforma condensed consolidated financial statements.
MAGELLAN PETROLEUM CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
| YEAR ENDED June 30, 2009 |
||||||||||||
| Magellan Petroleum Corporation Historical |
Pro Forma Adjustments | Magellan Petroleum Corporation Pro Forma |
||||||||||
| REVENUES: |
||||||||||||
| Oil sales |
$ | 11,479,660 | $ | (4,195,992 | )(b) | $ | 7,283,668 | |||||
| Gas sales |
14,740,296 | — | 14,740,296 | |||||||||
| Other production related revenues |
1,970,621 | — | 1,970,621 | |||||||||
| Total revenues |
28,190,577 | (4,195,992 | ) | 23,994,585 | ||||||||
| COSTS AND EXPENSES: |
||||||||||||
| Production costs |
8,153,263 | (1,401,800 | )(b) | 6,751,463 | ||||||||
| Exploration and dry hole costs |
3,475,937 | (1,483,152 | )(b) | 1,992,785 | ||||||||
| Salaries and employee benefits |
1,708,997 | (35,981 | )(b) | 1,673,016 | ||||||||
| Depletion, depreciation and amortization |
6,785,952 | (2,438,747 | )(b) | 4,347,205 | ||||||||
| Auditing, accounting and legal services |
1,576,509 | (22,452 | )(b) | 1,554,057 | ||||||||
| Accretion expense |
531,405 | (102,999 | )(b) | 428,406 | ||||||||
| Shareholder communications |
633,112 | — | 633,112 | |||||||||
| Loss (gain) on sale of assets |
12,072 | (2,377,697 | )(c) | (2,365,625 | ) | |||||||
| Impairment loss |
63,740 | — | 63,740 | |||||||||
| Other administrative expenses |
3,969,658 | 223,730 | (b) | 4,193,388 | ||||||||
| Total costs and expenses |
26,910,645 | (7,639,098 | ) | 19,271,547 | ||||||||
| Operating (loss) income |
1,279,932 | 3,443,106 | 4,723,038 | |||||||||
| Interest income |
1,583,065 | (7,812 | )(b) | 1,575,253 | ||||||||
| Income before income taxes |
2,862,997 | 3,435,294 | 6,298,291 | |||||||||
| Income tax provision |
(2,198,422 | ) | (1,030,588 | )(b)/(c) | (3,229,010 | ) | ||||||
| NET INCOME |
$ | 664,575 | $ | 2,404,706 | $ | 3,069,281 | ||||||
| Average number of shares outstanding |
||||||||||||
| Basic |
41,500,325 | 41,500,325 | ||||||||||
| Diluted |
41,500,325 | 41,500,325 | ||||||||||
| NET (LOSS) INCOME PER SHARE (BASIC AND DILUTED) |
$ | 0.02 | $ | 0.07 | ||||||||
See accompanying notes to the unaudited proforma condensed consolidated financial statements.
MAGELLAN PETROLEUM CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 1. | Pro Forma Adjustments and Assumptions |
| (a) | Reflects proceeds from the sale of Nockatunga assets of Aus. $6.3 million at a U.S. exchange rate at September 30, 2009 of .8729 and the elimination of net assets and liabilities related to the Nockatunga operations. The difference between these amounts represents the financial gain on the sale of approximately U.S. $5.3 million net of a related tax liability of $1.6 million calculated at 30%, assuming the sale had closed on September 30, 2009. |
| (b) | Reflects elimination of sales and all expenses and interest income related to Nockatunga operations for the three months ended September 30, 2009 and the year ended June 30, 2009, assuming the sale had closed July 1, 2008. |
| (c) | Reflects gain from the sale of Nockatunga assets assuming the sale had closed on July 1, 2008, calculated on proceeds of Aus. $6.3 million at a U.S. exchange rate at July 1, 2008 of .9615 for a net gain of approximately $2.4 million. The related tax of approximately $720,000 is calculated at 30%. |