UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 8.01 | Other Information. |
On October 1, 2020, Riviera Resources, Inc. (the “Company”) completed the sale of its interest in Mid-Continent properties located in Oklahoma (the “Mid-Continent Asset Sale”) to Staghorn Petroleum II, LLC under a Purchase and Sale Agreement dated August 4, 2020, for a purchase price of approximately $13 million. During the six months ended June 30, 2020, the Company recorded a noncash impairment charge of approximately $88 million to reduce the carrying value of these assets to fair value.
This Current Report on Form 8-K provides the following additional financial information, which is filed as Exhibit 99.1 to this Current Report on Form 8-K:
• | Unaudited Pro Forma Condensed Consolidated Balance Sheet of the Company as of June 30, 2020 to give pro forma effect to the Mid-Continent Asset Sale as if it was completed as of June 30, 2020. |
• | Unaudited Pro Forma Condensed Consolidated Statements of Operations of the Company for the six months ended June 30, 2020, and for the year ended December 31, 2019 to give pro forma effect to the Mid-Continent Asset Sale as if it was completed as of January 1, 2019. |
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
Exhibit |
Description | |
99.1 | The Unaudited Pro Forma Condensed Consolidated Balance Sheet of the Company as of June 30, 2020 and Pro Forma Condensed Consolidated Statements of Operations of the Company for the six months ended June 30, 2020, and for the year ended December 31, 2019. | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: October 5, 2020 | RIVIERA RESOURCES, INC. | |||||
By: | /s/ David B. Rottino | |||||
Name: | David B. Rottino | |||||
Title: | President and Chief Executive Officer |
Exhibit 99.1
RIVIERA RESOURCES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On October 1, 2020, the Company completed the sale of its interest in Mid-Continent properties located in Oklahoma (the Mid-Continent Asset Sale) to Staghorn Petroleum II, LLC under a Purchase and Sale Agreement dated August 4, 2020, for a purchase price of approximately $13 million. During the six months ended June 30, 2020, the Company recorded a noncash impairment charge of approximately $88 million to reduce the carrying value of these assets to fair value.
The unaudited pro forma condensed consolidated balance sheet as of June 30, 2020, gives effect to the Mid-Continent Asset Sale as if it was completed as of June 30, 2020. The unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2020, and for the year ended December 31, 2019, give effect to the Mid-Continent Asset Sale as if it was completed as of January 1, 2019.
The following unaudited pro forma condensed consolidated financial statements are derived from historical consolidated financial statements of the Company. The unaudited pro forma condensed consolidated financial statements are for informational and illustrative purposes only and are not necessarily indicative of the financial results that would have occurred if the transactions reflected therein had occurred on the dates indicated, nor are such financial statements necessarily indicative of the results of operations in future periods. The pro forma condensed consolidated financial statements do not include realization of cost savings expected to result from these transactions. The assumptions and estimates underlying the adjustments to the unaudited pro forma condensed consolidated financial statements are described in the accompanying notes. The unaudited pro forma condensed consolidated financial information should also be read in conjunction with the Companys historical financial statements and the notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2019, and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.
The preparation of the unaudited pro forma condensed consolidated financial information is based on financial statements prepared in accordance with accounting principles generally accepted in the United States of America. These principles require the use of estimates that effect the reported amounts of revenues and expenses. Actual results could differ from those estimates.
The unaudited pro forma condensed consolidated financial information does not purport to represent what the actual results of operations would have been had the transaction occurred on the date assumed, nor is it necessarily indicative of the Companys future operating results. However, the pro forma adjustments reflected in the accompanying unaudited pro forma condensed financial information reflect estimates and assumptions that Company management believes to be reasonable.
RIVIERA RESOURCES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 2020
(in thousands, except per share amounts)
Riviera Resources, Inc. Historical |
Mid-Continent Assets Sale Pro Forma Adjustments |
Riviera Resources, Inc. Pro Forma |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | 55,641 | $ | 13,418 | (a) | $ | 69,059 | |||||||
Accounts receivable trade, net |
22,551 | (6,453 | ) | (b) | 16,098 | |||||||||
Derivative instruments |
7,059 | | 7,059 | |||||||||||
Restricted cash |
24,139 | | 24,139 | |||||||||||
Other current assets |
13,057 | (943 | ) | (c) | 12,114 | |||||||||
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Total current assets |
122,447 | 6,022 | 128,469 | |||||||||||
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Noncurrent assets: |
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Oil and natural gas properties (successful efforts method), net |
37,333 | (11,554 | ) | (d) | 25,779 | |||||||||
Other property and equipment, net |
324,185 | (1,887 | ) | (d) | 322,298 | |||||||||
Other noncurrent assets |
5,555 | | 5,555 | |||||||||||
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Total noncurrent assets |
367,073 | (13,441 | ) | 353,632 | ||||||||||
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Total assets |
$ | 489,520 | $ | (7,419 | ) | $ | 482,101 | |||||||
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LIABILITIES AND EQUITY |
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Current liabilities: |
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Accounts payable and accrued expenses |
$ | 36,294 | $ | (5,191 | ) | (b) | $ | 31,103 | ||||||
Derivative instruments |
766 | | 766 | |||||||||||
Other accrued liabilities |
9,490 | (1,131 | ) | (c) | 8,359 | |||||||||
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Total current liabilities |
46,550 | (6,322 | ) | 40,228 | ||||||||||
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Noncurrent liabilities: |
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Credit facilities |
75,400 | | 75,400 | |||||||||||
Asset retirement obligations and other noncurrent liabilities |
19,317 | (13,189 | ) | (d) | 6,128 | |||||||||
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Total noncurrent liabilities |
94,717 | (13,189 | ) | 81,528 | ||||||||||
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Commitments and contingencies |
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Equity: |
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Preferred Stock, $0.01 par value |
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Common Stock, $0.01 par value |
579 | | 579 | |||||||||||
Additional paid-in capital |
759,186 | | 759,186 | |||||||||||
Accumulated deficit |
(411,512 | ) | 12,092 | (e) | (399,420 | ) | ||||||||
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Total equity |
348,253 | 12,092 | 360,345 | |||||||||||
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Total liabilities and equity |
$ | 489,520 | $ | (7,419 | ) | $ | 482,101 | |||||||
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The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.
2
RIVIERA RESOURCES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2020
(in thousands, except per share amounts)
Riviera Resources, Inc. Historical |
Mid-Continent Assets Sale Pro Forma Adjustments |
Riviera Resources, Inc. Pro Forma |
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Revenues and other: |
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Oil, natural gas and natural gas liquids sales |
$ | 25,732 | $ | (11,665 | ) | (f) | $ | 14,067 | ||||||
Gains on commodity derivatives |
6,721 | | 6,721 | |||||||||||
Marketing revenues |
55,786 | | 55,786 | |||||||||||
Other revenues |
40 | (8 | ) | (f) | 32 | |||||||||
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88,279 | (11,673 | ) | 76,606 | |||||||||||
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Expenses: |
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Lease operating expenses |
7,845 | (4,904 | ) | (f) | 2,941 | |||||||||
Transportation expenses |
3,383 | (2,191 | ) | (f) | 1,192 | |||||||||
Marketing expenses |
38,147 | | 38,147 | |||||||||||
General and administrative expenses |
21,123 | | 21,123 | |||||||||||
Depreciation, depletion and amortization |
15,112 | (4,763 | ) | (g) | 10,349 | |||||||||
Impairment of assets held for sale and long-lived assets |
121,658 | (87,683 | ) | (h) | 33,975 | |||||||||
Taxes, other than income taxes |
2,590 | (819 | ) | (i) | 1,771 | |||||||||
Gains (losses) on sale of assets and other, net |
(2,031 | ) | | (2,031 | ) | |||||||||
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207,827 | (100,360 | ) | 107,467 | |||||||||||
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Operating loss |
(119,548 | ) | 88,687 | (30,861 | ) | |||||||||
Other income and (expenses): |
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Interest expense, net of amounts capitalized |
(1,668 | ) | | (1,668 | ) | |||||||||
Other, net |
(1,008 | ) | | (1,008 | ) | |||||||||
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(2,676 | ) | | (2,676 | ) | ||||||||||
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Reorganization items, net |
(494 | ) | | (494 | ) | |||||||||
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Loss before income taxes |
(122,718 | ) | 88,687 | (34,031 | ) | |||||||||
Income tax expense |
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Net loss |
$ | (122,718 | ) | $ | 88,687 | $ | (34,031 | ) | ||||||
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Loss per share: |
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Basic and diluted |
$ | (2.11 | ) | $ | (0.59 | ) | ||||||||
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Weighted average shares outstanding basic and diluted |
58,098 | 58,098 | ||||||||||||
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The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.
3
RIVIERA RESOURCES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2019
(in thousands, except per share amounts)
Riviera Resources, Inc. Historical |
Mid-Continent Assets Sale Pro Forma Adjustments |
Riviera Resources, Inc. Pro Forma |
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Revenues and other: |
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Oil, natural gas and natural gas liquids sales |
$ | 236,053 | $ | (43,036 | ) | (f) | $ | 193,017 | ||||||
Gains on commodity derivatives |
10,091 | | 10,091 | |||||||||||
Marketing revenues |
214,280 | (7 | ) | (f) | 214,273 | |||||||||
Other revenues |
19,355 | (93 | ) | (f) | 19,262 | |||||||||
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479,779 | (43,136 | ) | 436,643 | |||||||||||
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Expenses: |
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Lease operating expenses |
77,719 | (16,319 | ) | (f) | 61,400 | |||||||||
Transportation expenses |
64,149 | (4,830 | ) | (f) | 59,319 | |||||||||
Marketing expenses |
166,651 | | 166,651 | |||||||||||
General and administrative expenses |
61,671 | | 61,671 | |||||||||||
Exploration costs |
5,122 | | 5,122 | |||||||||||
Depreciation, depletion and amortization |
77,089 | (10,171 | ) | (g) | 66,918 | |||||||||
Impairment of assets held for sale and long-lived assets |
208,376 | | 208,376 | |||||||||||
Taxes, other than income taxes |
15,374 | (1,966 | ) | (i) | 13,408 | |||||||||
(Gains) losses on sale of assets and other, net |
(20,743 | ) | | (20,743 | ) | |||||||||
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655,408 | (33,286 | ) | 622,122 | |||||||||||
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Operating loss |
(175,629 | ) | (9,850 | ) | (185,479 | ) | ||||||||
Other income and (expenses): |
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Interest expense, net of amounts capitalized |
(6,997 | ) | | (6,997 | ) | |||||||||
Other, net |
(444 | ) | | (444 | ) | |||||||||
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(7,441 | ) | | (7,441 | ) | ||||||||||
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Reorganization items, net |
13,359 | | 13,359 | |||||||||||
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Loss from continuing operations before income taxes |
(169,711 | ) | (9,850 | ) | (179,561 | ) | ||||||||
Income tax expense |
127,859 | (33,275 | ) | (j) | 94,584 | |||||||||
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Loss from continuing operations |
$ | (297,570 | ) | $ | 23,425 | $ | (274,145 | ) | ||||||
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Loss per share from continuing operations: |
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Basic and diluted |
$ | (4.71 | ) | $ | (4.34 | ) | ||||||||
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Weighted average shares outstanding basic and diluted |
63,118 | 63,118 | ||||||||||||
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The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.
4
RIVIERA RESOURCES, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Historical Riviera Resources, Inc.
These amounts represent the Companys condensed consolidated historical balance sheet and statements of operations. Amounts as of June 30, 2020, and for the six months ended June 30, 2020, were derived from the Companys Quarterly Report on Form 10-Q for the quarter ended June 30, 2020. Amounts for the year ended December 31, 2019, were derived from the Companys Annual Report on Form 10-K for the year ended December 31, 2019.
The historical consolidated financial statements have been adjusted in the unaudited pro forma condensed consolidated financial statements to give effect to pro forma events that are (i) directly attributable to the transaction, (ii) factually supportable and (iii) with respect to the unaudited pro forma condensed consolidated statements of operations, expected to have a continuing impact on the results following the transactions and events.
Pro Forma Adjustments
(a) | Reflects cash proceeds received of approximately $13 million. |
(b) | Reflects elimination of outstanding accounts receivable trade, net and accounts payable and accrued expenses. |
(c) | Reflects elimination of other current assets and other accrued liabilities. |
(d) | Reflects elimination of oil and natural gas properties, property, plant and equipment, other noncurrent assets, asset retirement obligations and other noncurrent liabilities. |
(e) | Reflects net impact recognized from the Mid-Continent Asset Sale. |
(f) | Reflects elimination of revenues and direct operating expenses associated with these assets. |
(g) | Reflects reduction of depreciation, depletion and amortization expenses as a result of the Mid-Continent Asset Sale. |
(h) | Reflects elimination of noncash impairment charge recorded during the six months ended June 30, 2020, to reduce the carrying value of assets to fair value. |
(i) | Reflects elimination of taxes, other than income taxes. |
(j) | Reflects elimination of income tax expense, determined using the Companys effective tax rate, associated with recording a full valuation allowance against Mid-Continent deferred tax assets. There is no adjustment for the six months ended June 30, 2020, because a full valuation allowance was recorded in 2019. |
5