EXHIBIT 20.2
NEW ANADARKO PETROLEUM CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial statements
should be read in conjunction with the historical consolidated financial
statements, including the notes thereto, of Anadarko and Union Pacific
Resources, which are incorporated by reference in this document. The unaudited
pro forma financial statements are presented for illustration purposes only, in
accordance with the assumptions set forth below, and are not necessarily
indicative of the operating results or financial position that would have
occurred if the merger had been completed. Nor is it necessarily indicative of
future operating results or the financial position of the combined enterprise.
The unaudited pro forma condensed combined financial statements do not reflect
any adjustments to conform accounting practices, other than to conform Union
Pacific Resources' accounting for oil and gas activities to the full-cost method
of accounting, or to reflect any cost savings or other synergies anticipated as
a result of the merger or any future merger related expenses.
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
<PAGE>
NEW ANADARKO PETROLEUM CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
UNION PACIFIC PRO FORMA PRO FORMA
ANADARKO RESOURCES ADJUSTMENTS COMBINED
-------- ------------- ----------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
REVENUES
<S> <C> <C> <C> <C>
Gas sales................................ $357,530 $ 854,933 $ -- $1,212,463
Oil and condensate sales................. 249,666 504,933 -- 754,599
Natural gas liquid sales................. 88,039 113,386 -- 201,425
Minerals................................. -- 120,494 -- 120,494
Other.................................... 5,869 133,726 (92,663)(a) 46,932
-------- ---------- --------- ----------
Total............................... 701,104 1,727,472 (92,663) 2,335,913
-------- ---------- --------- ----------
COSTS AND EXPENSES
Operating expenses....................... 141,719 668,491 (249,960)(b) 383,256
(176,994)(c)
Administrative and general............... 102,946 86,928 63,654 (c) 207,520
(46,008)(d)
Minerals................................. -- (2,797) 2,797 (c) --
Depreciation, depletion and
amortization........................... 218,091 827,710 (827,710)(e) 978,690
760,599 (f)
Other taxes.............................. 35,407 -- 110,543 (c) 145,950
Restructuring charge..................... -- 11,375 -- 11,375
Impairments related to international
properties............................. 24,000 -- -- 24,000
Amortization of goodwill................. -- -- 52,530 (g) 52,530
-------- ---------- --------- ----------
Total............................... 522,163 1,591,707 (310,549) 1,803,321
-------- ---------- --------- ----------
Operating Income......................... 178,941 135,765 217,886 532,592
OTHER INCOME (EXPENSE)................... -- 31,722 -- 31,722
INTEREST EXPENSE......................... 74,124 218,658 (167,565)(h) 125,217
-------- ---------- --------- ----------
Income (Loss) Before Income Taxes........ 104,817 (51,171) 385,451 439,097
INCOME TAXES............................. 62,238 (140,348) 145,480 (i) 67,370
-------- ---------- --------- ----------
NET INCOME FROM CONTINUING OPERATIONS.... $ 42,579 $ 89,177 $ 239,971 $ 371,727
Preferred stock dividends................ 10,920 -- -- 10,920
-------- ---------- --------- ----------
NET INCOME FROM CONTINUING OPERATIONS
AVAILABLE TO COMMON STOCKHOLDERS....... $ 31,659 $ 89,177 $ 239,971 $ 360,807
-------- ---------- --------- ----------
Earnings per share -- basic.............. $ 0.25 $ 1.51
Earnings per share -- diluted............ $ 0.25 $ 1.50
-------- ----------
AVERAGE SHARES OUTSTANDING............... 125,187 113,459 (j) 238,646
AVERAGE SHARES OUTSTANDING -- DILUTED.... 125,906 113,862 (k) 239,768
-------- --------- ----------
</TABLE>
See accompanying notes to unaudited pro forma condensed combined
financial statements.
78
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
<PAGE>
NEW ANADARKO PETROLEUM CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
QUARTER ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
UNION PACIFIC PRO FORMA PRO FORMA
ANADARKO RESOURCES ADJUSTMENTS COMBINED
-------- ------------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenues
<S> <C> <C> <C> <C>
Gas sales................................. $102,143 $243,674 $ -- $345,817
Oil and condensate sales.................. 101,751 188,311 -- 290,062
Natural gas liquids sales................. 41,602 47,852 -- 89,454
Minerals.................................. -- 37,516 -- 37,516
Other..................................... 1,555 4,949 (168)(a) 6,336
-------- -------- --------- --------
Total................................ 247,051 522,302 (168) 769,185
-------- -------- --------- --------
COSTS AND EXPENSES
Operating expenses........................ 42,939 138,205 (25,157)(b) 106,501
(49,486)(c)
Administrative and general................ 30,086 18,803 13,700 (c) 52,391
(10,198)(d)
Minerals.................................. -- 540 (540)(c) --
Depreciation, depletion and
amortization............................ 57,308 176,230 (176,230)(e) 237,606
180,298 (f)
Other taxes............................... 11,321 -- 36,326 (c) 47,647
Amortization of goodwill.................. -- -- 13,132 (g) 13,132
-------- -------- --------- --------
Total................................ 141,654 333,778 (18,155) 457,277
-------- -------- --------- --------
Operating Income.......................... 105,397 188,524 17,987 311,908
OTHER INCOME (EXPENSE).................... -- (14,839) -- (14,839)
INTEREST EXPENSE.......................... 21,094 48,925 (37,862)(h) 32,157
-------- -------- --------- --------
Income Before Income Taxes................ 84,303 124,760 55,849 264,912
INCOME TAXES.............................. 42,504 32,049 21,424 (i) 95,977
-------- -------- --------- --------
NET INCOME FROM CONTINUING OPERATIONS..... $ 41,799 $ 92,711 $ 34,425 $168,935
Preferred stock dividends................. 2,730 -- -- 2,730
-------- -------- --------- --------
NET INCOME FROM CONTINUING OPERATIONS
AVAILABLE TO COMMON STOCKHOLDERS........ $ 39,069 $ 92,711 $ 34,425 $166,205
-------- -------- --------- --------
Earnings per share -- basic............... $ 0.31 $ 0.69
Earnings per share -- diluted............. $ 0.30 $ 0.68
-------- --------
AVERAGE SHARES OUTSTANDING................ 128,046 113,459 (j) 241,505
AVERAGE SHARES OUTSTANDING -- DILUTED..... 131,464 113,862 (k) 245,326
-------- --------- --------
</TABLE>
See accompanying notes to unaudited pro forma condensed
combined financial statements.
79
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
<PAGE>
NEW ANADARKO PETROLEUM CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF MARCH 31, 2000
<TABLE>
<CAPTION>
UNION PACIFIC PRO FORMA PRO FORMA
ANADARKO RESOURCES ADJUSTMENTS COMBINED
---------- ------------- ------------ -----------
(IN THOUSANDS)
ASSETS
<S> <C> <C> <C> <C>
Current assets..................... $ 322,726 $ 470,102 $ 40,000 (l) $ 832,828
---------- ----------- ------------ -----------
Properties and equipment........... 6,095,154 11,084,333 (11,084,333)(m) 14,416,354
8,321,200 (n)
Less accumulated depreciation,
depletion and amortization....... 2,287,451 5,670,830 (5,670,830)(m) 2,287,451
---------- ----------- ------------ -----------
Net properties and equipment....... 3,807,703 5,413,503 2,907,697 12,128,903
---------- ----------- ------------ -----------
Deferred charges................... 89,412 175,887 52,000 (o) 317,299
Goodwill........................... -- -- 1,050,593 (p) 1,050,593
---------- ----------- ------------ -----------
Total......................... $4,219,841 $ 6,059,492 $ 4,050,290 $14,329,623
========== =========== ============ ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities................ $ 297,165 $ 549,553 $ 193,700 (l) $ 1,175,344
134,926 (q)
Long-term debt..................... 1,573,217 2,606,073 (203,000)(r) 3,976,290
Deferred income taxes.............. 614,997 1,334,818 1,120,471 (s) 3,070,286
Deferred credits................... 147,833 548,537 (283,400)(t) 412,970
Preferred stock.................... 200,000 -- -- 200,000
Stockholders' equity............... 1,386,629 1,020,511 3,087,593 (u) 5,494,733
---------- ----------- ------------ -----------
Total......................... $4,219,841 $ 6,059,492 $ 4,050,290 $14,329,623
========== =========== ============ ===========
CAPITALIZATION RATIOS
Long-term debt..................... 50% 72% 41%
Stockholders' equity............... 50% 28% 59%
</TABLE>
See accompanying notes to unaudited pro forma condensed
combined financial statements.
80
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
<PAGE>
NEW ANADARKO PETROLEUM CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(a) To record the pro forma reversal of historical Union Pacific Resources
gains and losses related to the sale of oil and gas properties to conform
to the full-cost method of accounting for oil and gas activities.
(b) To record the pro forma capitalization of historical Union Pacific
Resources exploration expense to conform to the full-cost method of
accounting for oil and gas activities.
(c) To reclassify certain amounts in Union Pacific Resources historical
financial statements to conform to Anadarko's presentation.
(d) To record the pro forma capitalization of Union Pacific Resources
exploration and development overhead costs to conform to the full-cost
method of accounting for oil and gas activities.
(e) To record the reversal of historical Union Pacific Resources depreciation,
depletion and amortization expense recorded in accordance with the
successful efforts method of accounting for oil and gas activities and the
reversal of historical Union Pacific Resources impairment of oil and gas
properties recorded in accordance with Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of."
(f) To record pro forma depreciation, depletion and amortization expense (i) in
accordance with the full-cost method of accounting for oil and gas
activities and (ii) on the estimated fair value of the depreciable and
depletable assets. Full-cost ceiling tests were performed on the combined
basis resulting in no incremental impairment of oil and gas properties for
the periods presented.
(g) To record the pro forma amortization of goodwill, which will be amortized
over a period of 20 years.
(h) To record pro forma capitalization of interest on significant investments
in unevaluated properties and major development projects and to adjust
Union Pacific Resources historical interest expense to reflect the
estimated fair value of historical debt pursuant to the purchase method of
accounting, including the reversal of amortization of historical debt
issuance costs.
(i) To record income tax expense on the pro forma adjustments based on the
applicable statutory tax rates.
(j) To reflect the issuance of Anadarko common stock pursuant to the merger
agreement.
(k) To reflect the issuance of Anadarko common stock pursuant to the merger
agreement and common stock equivalents related to stock options issued in
accordance with the merger agreement.
(l) To record the estimated fair value of derivatives and other current
liabilities in accordance with the purchase method of accounting.
(m) To reverse historical Union Pacific Resources property and equipment
balances and the related accumulated depreciation, depletion and
amortization.
(n) To record the estimated pro forma allocation of the purchase price of the
acquisition of Union Pacific Resources, including estimated merger costs,
to properties and equipment in accordance with the
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
<PAGE>
NEW ANADARKO PETROLEUM CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(CONTINUED)
purchase method of accounting. The following is a calculation and
allocation of the purchase price to the assets acquired and liabilities
assumed based on their relative fair values.
CALCULATION OF PURCHASE PRICE (IN THOUSANDS EXCEPT SHARES)
Estimated number of shares of common stock to be issued..... 113,459,310
Average of Anadarko common stock price five days before and
after the merger announcement............................. $ 35.58
------------
Fair value of estimated common stock to be issued........... $ 4,036,667
Add: Fair value of vested Union Pacific Resources employee
stock options to be assumed by Anadarko................... 71,437
------------
4,108,104
Add: Estimated merger related costs (See note (q)).......... 134,926
------------
Purchase Price.............................................. $ 4,243,030
============
ALLOCATION OF PURCHASE PRICE (IN THOUSANDS)
Current assets.............................................. $ 510,102
Properties and equipment.................................... 8,321,200
Deferred charges............................................ 227,887
Goodwill.................................................... 1,050,593
Current liabilities......................................... 878,179
Long-term debt.............................................. 2,403,073
Deferred income taxes....................................... 2,455,289
Deferred credits............................................ 265,137
------------
Stockholders' equity........................................ $ 4,108,104
============
The purchase price allocation is subject to changes in:
- the number of actual shares issued;
- the fair value of Union Pacific Resources working capital and other
assets and liabilities on the effective date; and
- the actual merger costs incurred.
These items will not be known until the effective date of the merger.
Management does not believe the final purchase price allocation will differ
materially from the estimated purchase price allocation.
(o) To record the reversal of the capitalized debt issuance costs related to
Union Pacific Resources historical long-term debt and record deferred
charges at fair value pursuant to the purchase method of accounting.
(p) To record goodwill associated with the acquisition of Union Pacific
Resources pursuant to the purchase method of accounting. Goodwill will be
amortized over a period of 20 years.
(q) To record the liabilities associated with estimated merger related costs,
consisting primarily of bankers' and other professional fees, as well as
costs associated with relocation and severance of Union Pacific Resources
employees and closing the Union Pacific Resources office in Fort Worth,
Texas.
(r) To adjust historical Union Pacific Resources long-term debt to the
estimated fair value using the purchase method of accounting.
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
<PAGE>
NEW ANADARKO PETROLEUM CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(CONTINUED)
(s) To record the pro forma deferred income tax effect of the fair value
adjustments related to the merger in accordance with the purchase method of
accounting.
(t) To adjust the historical Union Pacific Resources deferred credits to
estimated fair value in accordance with the purchase method of accounting.
(u) To record the pro forma adjustments to stockholders' equity in accordance
with the purchase method of accounting. The adjustment amount is calculated
as follows (in thousands):
Fair value of estimated common stock to be issued, as
calculated in note (n) above.............................. $4,036,667
Add: Fair value of vested Union Pacific Resources employee
stock options to be assumed by Anadarko................... 71,437
----------
4,108,104
Less: Union Pacific Resources historical stockholders'
equity.................................................... 1,020,511
----------
Adjustment to stockholders' equity.......................... $3,087,593
==========
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
