TELLURIAN INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Exhibit 99.1
TELLURIAN INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
On May 28, 2024, Tellurian Production LLC (“Tellurian Production Company”) and Tellurian Operating LLC (together with Tellurian Production Company, “Seller”), each an indirect wholly owned subsidiary of Tellurian Inc. (“Tellurian” or the “Company”), entered into a purchase and sale agreement (the “PSA”) with Aethon United BR LP and Aethon III BR LLC (collectively, “Buyer”), pursuant to which Seller agreed to sell its upstream and related midstream assets in the Louisiana region of the Haynesville Shale to Buyer for an aggregate purchase price of $260.0 million, subject to certain customary adjustments (the “Asset Sale”). In connection with the Asset Sale, the Company was required to use the net cash proceeds from the Asset Sale to repay the outstanding principal amount and associated accrued expenses (the “Debt Payoff”) of the Company’s 10% Senior Secured Notes due 2025 (the “Senior Notes”). The Company closed the Asset Sale and completed the Debt Payoff (collectively, the “Transactions”), on June 28, 2024.
The unaudited pro forma consolidated financial statements were derived from the Company’s historical consolidated financial statements for the respective periods. The unaudited pro forma consolidated balance sheet as of March 31, 2024 gives effect to the Transactions as if they had occurred on March 31, 2024. The unaudited pro forma consolidated financial statements of operations for the years ended December 31, 2023, 2022, and 2021 and the three months ended March 31, 2024 give effect to the Transactions as if they had occurred on January 1, 2021.
The unaudited pro forma adjustments are based on available information and certain assumptions that we believe are reasonable as of the date of this Current Report on Form 8-K. Assumptions underlying the pro forma adjustments related to the Transactions are described in the accompanying notes. The pro forma adjustments reflected herein are based on management’s expectations regarding the Transactions. The unaudited pro forma consolidated financial statements are presented for illustrative purposes only and do not purport to indicate the results of operations of future periods or the results of operations that actually would have been realized had the Transactions been executed on the dates or for the periods presented.
The unaudited pro forma consolidated financial statements should be read in conjunction with the audited December 31, 2023 consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K filed on February 23, 2024 and the unaudited March 31, 2024 condensed consolidated financial statements contained in the Company’s Quarterly Report on Form 10-Q filed on May 2, 2024.
TELLURIAN INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
As of March 31, 2024
| (in thousands, except share and per share amounts) | Historical | Transaction accounting adjustments - Asset Sale | Other transaction accounting adjustments - Debt Payoff | Pro forma | ||||||||||||||
| ASSETS | ||||||||||||||||||
| Current assets: | ||||||||||||||||||
| Cash and cash equivalents | $ | 51,804 | $ | 250,803 | (a) | $ | (268,344 | ) | (d) | $ | 34,263 | |||||||
| Accounts receivable | 17,965 | — | — | 17,965 | ||||||||||||||
| Prepaid expenses and other current assets | 3,894 | — | — | 3,894 | ||||||||||||||
| Total current assets | 73,663 | 250,803 | (268,344 | ) | 56,122 | |||||||||||||
| Property, plant and equipment, net | 1,124,087 | (359,010 | ) | (b) | — | 765,077 | ||||||||||||
| Other non-current assets | 68,925 | — | 35,000 | (e) | 103,925 | |||||||||||||
| Total assets | $ | 1,266,675 | $ | (108,207 | ) | $ | (233,344 | ) | $ | 925,124 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||
| Current liabilities: | ||||||||||||||||||
| Accounts payable | $ | 55,291 | $ | — | $ | — | $ | 55,291 | ||||||||||
| Accrued and other liabilities | 79,189 | (9,124 | ) | (b) | (7,801 | ) | (f) | 62,264 | ||||||||||
| Borrowings | 25,000 | — | — | 25,000 | ||||||||||||||
| Total current liabilities | 159,480 | (9,124 | ) | (7,801 | ) | 142,555 | ||||||||||||
| Long-term liabilities: | ||||||||||||||||||
| Borrowings | 316,221 | — | (211,271 | ) | (f) | 104,950 | ||||||||||||
| Finance lease liabilities | 121,221 | — | — | 121,221 | ||||||||||||||
| Other non-current liabilities | 24,230 | (3,164 | ) | (b) | (1,633 | ) | (f) | 19,433 | ||||||||||
| Total long-term liabilities | 461,672 | (3,164 | ) | (212,904 | ) | 245,604 | ||||||||||||
| Commitments and Contingencies (Note 10) | ||||||||||||||||||
| Stockholders’ equity: | ||||||||||||||||||
| Preferred stock, $0.01 par value, 100,000,000 shares authorized: 6,123,782 and 6,123,782 shares outstanding, respectively | 7,848 | — | — | 7,848 | ||||||||||||||
| Common stock, $0.01 par value, 1,600,000,000 and 800,000,000 shares authorized: 703,739,585 and 564,567,568 shares outstanding, respectively | 61 | — | — | 61 | ||||||||||||||
| Additional paid-in capital | 1,828,675 | — | — | 1,828,675 | ||||||||||||||
| Accumulated deficit | (1,191,061 | ) | (95,919 | ) | (c) | (12,639 | ) | (g) | (1,299,619 | ) | ||||||||
| Total stockholders’ equity | 645,523 | (95,919 | ) | (12,639 | ) | 536,965 | ||||||||||||
| Total liabilities and stockholders’ equity | $ | 1,266,675 | $ | (108,207 | ) | $ | (233,344 | ) | $ | 925,124 | ||||||||
Refer to Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
TELLURIAN INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31, 2024
| (in thousands, except share and per share amounts) | Historical | Transaction accounting adjustments - Asset Sale | Other transaction accounting adjustments - Debt Payoff | Pro forma | ||||||||||||
| (1.) | (2.) | |||||||||||||||
| Revenues: | ||||||||||||||||
| Natural gas sales | $ | 25,472 | $ | (25,472 | ) | $ | — | $ | — | |||||||
| LNG sales | — | — | — | — | ||||||||||||
| Total revenue | 25,472 | (25,472 | ) | — | — | |||||||||||
| Operating costs and expenses: | ||||||||||||||||
| LNG cost of sales | — | — | — | — | ||||||||||||
| Operating expenses | 13,121 | (13,121 | ) | — | — | |||||||||||
| Development expenses | 5,550 | — | — | 5,550 | ||||||||||||
| Depreciation, depletion and amortization | 21,234 | (20,147 | ) | — | 1,087 | |||||||||||
| General and administrative expenses | 14,761 | (2,967 | ) | — | 11,794 | |||||||||||
| Total operating costs and expenses | 54,666 | (36,235 | ) | — | 18,431 | |||||||||||
| Loss from operations | (29,194 | ) | 10,763 | — | (18,431 | ) | ||||||||||
| Interest (expense) income, net | (4,317 | ) | (161 | ) | 1,809 | (2,669 | ) | |||||||||
| Loss on extinguishment of debt, net | (4,591 | ) | — | — | (4,591 | ) | ||||||||||
| Other income (expense), net | (5,912 | ) | 1,698 | — | (4,214 | ) | ||||||||||
| Loss before income taxes | (44,014 | ) | 12,300 | 1,809 | (29,905 | ) | ||||||||||
| Income tax benefit (provision) | — | — | — | — | ||||||||||||
| Net loss | $ | (44,014 | ) | $ | 12,300 | $ | 1,809 | $ | (29,905 | ) | ||||||
| Net loss per common share: | ||||||||||||||||
| Basic and diluted | $ | (0.06 | ) | $ | — | $ | — | $ | (0.04 | ) | ||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic and diluted | 754,204 | — | — | 754,204 | ||||||||||||
Refer to Notes to Unaudited Pro Forma Consolidated Financial Statements
TELLURIAN INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31, 2023
| (in thousands, except share and per share amounts) | Historical | Transaction accounting adjustments - Asset Sale | Other transaction accounting adjustments - Debt Payoff | Pro forma | ||||||||||||
| (1.) | (2.) | |||||||||||||||
| Revenues: | ||||||||||||||||
| Natural gas sales | $ | 166,128 | $ | (166,128 | ) | $ | — | $ | — | |||||||
| LNG sales | — | — | — | — | ||||||||||||
| Total revenue | 166,128 | (166,128 | ) | — | — | |||||||||||
| Operating costs and expenses: | ||||||||||||||||
| LNG cost of sales | — | — | — | — | ||||||||||||
| Operating expenses | 78,186 | (78,186 | ) | — | — | |||||||||||
| Development expenses | 35,616 | — | — | 35,616 | ||||||||||||
| Depreciation, depletion and amortization | 98,426 | (95,202 | ) | — | 3,224 | |||||||||||
| General and administrative expenses | 101,902 | (10,091 | ) | — | 91,811 | |||||||||||
| Related party charges | 660 | — | — | 660 | ||||||||||||
| Total operating costs and expenses | 314,790 | (183,479 | ) | — | 131,311 | |||||||||||
| Loss from operations | (148,662 | ) | 17,351 | — | (131,311 | ) | ||||||||||
| Interest expense, net | (18,047 | ) | (194 | ) | 5,615 | (12,626 | ) | |||||||||
| Loss on extinguishment of debt, net | (32,295 | ) | — | — | (32,295 | ) | ||||||||||
| Other income (expense), net | 32,827 | (1,193 | ) | — | 31,634 | |||||||||||
| Loss before income taxes | (166,177 | ) | 15,964 | 5,615 | (144,598 | ) | ||||||||||
| Income tax benefit (provision) | — | — | — | — | ||||||||||||
| Net loss | $ | (166,177 | ) | $ | 15,964 | $ | 5,615 | $ | (144,598 | ) | ||||||
| Net loss per common share: | ||||||||||||||||
| Basic and diluted | $ | (0.29 | ) | $ | — | $ | — | $ | (0.26 | ) | ||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic and diluted | 565,678 | — | — | 565,678 | ||||||||||||
Refer to Notes to Unaudited Pro Forma Consolidated Financial Statements
TELLURIAN INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31, 2022
| (in thousands, except share and per share amounts) | Historical | Transaction accounting adjustments - Asset Sale | Other transaction accounting adjustments - Debt Payoff | Pro forma | ||||||||||||
| (1.) | ||||||||||||||||
| Revenues: | ||||||||||||||||
| Natural gas sales | $ | 270,975 | $ | (270,975 | ) | $ | — | $ | — | |||||||
| LNG sales | 120,951 | — | — | 120,951 | ||||||||||||
| Total revenue | 391,926 | (270,975 | ) | — | 120,951 | |||||||||||
| Operating costs and expenses: | ||||||||||||||||
| LNG cost of sales | 131,663 | — | — | 131,663 | ||||||||||||
| Operating expenses | 37,886 | (37,886 | ) | — | — | |||||||||||
| Development expenses | 68,782 | (2,734 | ) | — | 66,048 | |||||||||||
| Depreciation, depletion and amortization | 44,357 | (43,966 | ) | — | 391 | |||||||||||
| General and administrative expenses | 126,386 | (13,345 | ) | — | 113,041 | |||||||||||
| Related party charges | 625 | — | — | 625 | ||||||||||||
| Total operating costs and expenses | 409,699 | (97,931 | ) | — | 311,768 | |||||||||||
| Loss from operations | (17,773 | ) | (173,044 | ) | — | (190,817 | ) | |||||||||
| Interest expense, net | (13,860 | ) | — | — | (13,860 | ) | ||||||||||
| Other (expense) income, net | (18,177 | ) | 3,770 | — | (14,407 | ) | ||||||||||
| Loss before income taxes | (49,810 | ) | (169,274 | ) | — | (219,084 | ) | |||||||||
| Income tax benefit (provision) | — | — | — | |||||||||||||
| Net loss | $ | (49,810 | ) | $ | (169,274 | ) | $ | — | $ | (219,084 | ) | |||||
| Net loss per common share: | ||||||||||||||||
| Basic and diluted | $ | (0.09 | ) | $ | — | $ | — | $ | (0.42 | ) | ||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic and diluted | 526,946 | — | — | 526,946 | ||||||||||||
Refer to Notes to Unaudited Pro Forma Consolidated Financial Statements
TELLURIAN INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31, 2021
| (in thousands, except share and per share amounts) | Historical | Transaction accounting adjustments - Asset Sale | Other transaction accounting adjustments - Debt Payoff | Pro forma | ||||||||||||
| (1.) | ||||||||||||||||
| Revenues: | ||||||||||||||||
| Natural gas sales | $ | 51,499 | $ | (51,499 | ) | $ | — | $ | — | |||||||
| LNG sales | 19,776 | — | — | 19,776 | ||||||||||||
| Total revenue | 71,275 | (51,499 | ) | — | 19,776 | |||||||||||
| Operating costs and expenses: | ||||||||||||||||
| LNG cost of sales | 24,745 | — | — | 24,745 | ||||||||||||
| Operating expenses | 11,693 | (11,693 | ) | — | — | |||||||||||
| Development expenses | 50,186 | (4,097 | ) | — | 46,089 | |||||||||||
| Depreciation, depletion and amortization | 11,481 | (11,080 | ) | — | 401 | |||||||||||
| General and administrative expenses | 85,903 | (7,608 | ) | — | 78,295 | |||||||||||
| Related party charges | — | — | — | — | ||||||||||||
| Total operating costs and expenses | 184,008 | (34,478 | ) | — | 149,530 | |||||||||||
| Loss from operations | (112,733 | ) | (17,021 | ) | — | (129,754 | ) | |||||||||
| Interest expense, net | (9,378 | ) | 1,642 | — | (7,736 | ) | ||||||||||
| Gain on extinguishment of debt, net | 1,422 | 665 | — | 2,087 | ||||||||||||
| Other income (expense), net | 5,951 | 1,284 | — | 7,235 | ||||||||||||
| Loss before income taxes | (114,738 | ) | (13,430 | ) | — | (128,168 | ) | |||||||||
| Income tax benefit (provision) | — | — | — | |||||||||||||
| Net loss | $ | (114,738 | ) | $ | (13,430 | ) | $ | — | $ | (128,168 | ) | |||||
| Net loss per common share: | ||||||||||||||||
| Basic and diluted | $ | (0.28 | ) | $ | — | $ | — | $ | (0.31 | ) | ||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic and diluted | 407,615 | — | — | 407,615 | ||||||||||||
Refer to Notes to Unaudited Pro Forma Consolidated Financial Statements
Notes to Unaudited Pro Forma Condensed Consolidated
Financial Statements
1. Basis of Pro Forma Presentation
The accompanying unaudited pro forma financial statements of Tellurian Inc. (the “Company”) were prepared in accordance with Article 11 of Regulation S-X and are based on the historical consolidated financial information of the Company. The consolidated financial information has been adjusted in the accompanying pro forma financial statements to give effect to the disposition of the Company’s upstream natural gas assets.
The unaudited pro forma consolidated balance sheet as of March 31, 2024 gives effect to the Asset Sale and associated Debt Payoff as if they had occurred on March 31, 2024. The Asset Sale gross proceeds do not reflect all settlement statement adjustments contemplated by the PSA.
The unaudited pro forma consolidated financial statements of operations for the years ended December 31, 2023, 2022, and 2021 and three months ended March 31, 2024 give effect to the Asset Sale and associated Debt Payoff as if they had occurred on January 1, 2021.
2. Adjustments to the Pro Forma Consolidated Balance Sheet
Explanations of the adjustments to the pro forma consolidated balance sheet are as follows:
| a. | The Asset Sale gross consideration of $260.0 million (net proceeds of $250.8 million after deducting direct financial advisor costs of $3.0 million and transferred suspense funds of approximately $6.2 million). | |
| b. | Divestiture of the upstream natural gas properties and certain transferred liabilities. | |
| c. | Estimated loss on Asset Sale. | |
| d. | Repayment of the Senior Notes outstanding principal of approximately $223.9 million, accrued interest of approximately $6.0 million and estimated share coupon cash shortfall of approximately $3.4 million, as well as transfer of $35.0 million to a restricted deposit account. | |
| e. | Transfer of $35.0 million to a restricted deposit account as required by the indenture governing the Company’s 6% Senior Secured Convertible Notes (the “Convertible Notes”), which requirement replaced the minimum liquidity requirement in the Convertible Notes indenture following the Asset Sale. | |
| f. | Settlement of the Senior Notes outstanding principal, accrued interest and share coupon cash shortfall. | |
| g. | Estimated loss on extinguishment of the Senior Notes unamortized deferred financing costs. |
3. Adjustments to the Pro Forma Consolidated Statements of Operations
Explanations of the adjustments to the pro forma consolidated statements of operations are as follows:
| 1. | To remove the direct historical results of operations of the Company’s upstream natural gas assets. |
The loss on Asset Sale and the loss on the extinguishment of the Senior Notes are not included as pro forma adjustments in the pro forma consolidated statements of operations as they are nonrecurring items. Such amounts are only presented as adjustments to retained deficit in the pro forma consolidated balance sheet.
| 2. | To reflect the elimination of the Senior Notes interest expense, the associated capitalized interest and deferred financing costs amortization expense for the three months ended March 31, 2024 and year ended December 31, 2023. The Senior Notes were issued on August 15, 2023. |