EXHIBIT 99.1
Viking Energy Group, Inc.
Unaudited Pro Forma Condensed Combined Financial Statements
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VIKING ENERGY GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS |
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The following sets forth unaudited pro forma condensed consolidated financial information of Viking Energy Group, Inc. (the “Company”) prepared in accordance with Article 8-05 of Regulation S-X. You should read this information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations, “Risk Factors” and the Company’s consolidated financial statements and related notes and other financial information included in its most recent Annual Report on Form 10-K, and Quarterly Reports on Form 10-Q. The unaudited pro forma condensed consolidated financial information is based on and has been derived from the Company’s historical consolidated financial statements.
On October 5, 2021, the Company entered into an Assignment of Membership Interests (the “Ichor Assignment Agreement”) with TO Ichor 2021, L.L.C. (“Ichor Assignee”), pursuant to which the Company assigned all of its membership interests in Ichor Energy Holdings, L.L.C. (“Ichor Holdings”) to the Ichor Assignee, effective October 5, 2021 (the “Ichor Assignment”).
On October 12, 2021, the Company entered into an Assignment of Membership Interests (the “Elysium Assignment Agreement”) with TO Elysium 2021, L.L.C. (“Elysium Assignee”), pursuant to which the Company assigned all of its membership interests in Elysium Energy Holdings, L.L.C. (“Elysium Holdings”) to the Elysium Assignee, effective October 12, 2021 (the “Elysium Assignment”).
The unaudited pro forma condensed consolidated balance sheet as of June 30, 2021 and statements of operations for the year ended December 31, 2020 and the six months ended June 30, 2021 give pro forma effect to the elimination of certain assets and liabilities associated with the Ichor Assignment and Elysium Assignment as if they occurred on June 30, 2021 (in the case of the balance sheet) or January 1, 2020 (in the case of the statement of operations). The unaudited pro forma effects of the disposition on the Company’s oil and gas reserves and the standardized measure of future net cash flows, give pro forma effect to the dispositions of the reserves based on the information disclosed in the Company’s annual report as of and for the year ended December 31, 2020.
The unaudited pro forma condensed consolidated financial information includes unaudited pro forma adjustments that are factually supportable and directly attributable to the respective transactions. In addition, the unaudited pro forma adjustments are expected to have a continuing impact on the Company’s results. The Company has prepared the unaudited pro forma condensed consolidated financial information for illustrative purposes only and it does not purport to represent what the results of operations or financial condition would have been had the respective transactions actually occurred on the dates indicated, nor does the Company purport to project the results of operations or financial condition for any future period or as of any future date. The actual results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.
2 |
VIKING ENERGY GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS |
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VIKING ENERGY GROUP, INC. | ||||||||||||||||
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET | ||||||||||||||||
AS OF JUNE 30, 2021 | ||||||||||||||||
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| Historical, June 30, 2021 |
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| Pro Forma Ichor Adjustments |
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| Pro Forma Elysium Adjustments |
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| Pro Forma June 30, 2021 |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
| $ | 7,471,030 |
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| (3,525,933 | )(a) |
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| (2,910,181 | )(a) |
| $ | 1,034,916 |
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Accounts receivable |
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| 5,836,331 |
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| (2,449,384 | )(a) |
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| (2,482,221 | )(a) |
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| 904,727 |
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Total current assets |
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| 13,307,361 |
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| 1,939,643 |
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Oil and gas properties, net |
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| 97,656,287 |
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| (56,955,136 | )(a) |
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| (25,333,763 | )(a) |
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| 15,367,388 |
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Fixed assets, net |
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| 357,770 |
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| 357,770 |
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Deposits |
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| 57,896 |
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| (47,596 | )(a) |
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| 10,300 |
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TOTAL ASSETS |
| $ | 111,379,314 |
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| $ | 17,675,101 |
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LIABILITIES AND MEMBERS' EQUITY |
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Current liabilities |
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Accounts payable and accrued expenses |
| $ | 5,328,304 |
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| (1,622,859 | )(a) |
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| (2,412,563 | )(a) |
| $ | 1,292,882 |
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Derivative liability |
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| 12,649,422 |
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| (8,844,538 | )(a) |
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| (3,804,884 | )(a) |
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| - |
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Undistributed revenue and royalties |
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| 5,833,882 |
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| (2,192,997 | )(a) |
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| (1,144,132 | )(a) |
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| 2,496,753 |
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Current portion of long term debt |
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| 44,325,164 |
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| (2,301,067 | )(a) |
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| (29,506,906 | )(a) |
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| 12,517,191 |
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Total current liabilities |
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| 68,136,772 |
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| 16,306,826 |
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Long term debt - net of current portion |
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| 51,636,447 |
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| (48,740,242 | )(a) |
| (a) |
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| 2,896,205 |
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Operating lease liability |
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| 204,714 |
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| 204,714 |
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Asset retirement obligations |
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| 6,455,705 |
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| (2,000,485 | )(a) |
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| (2,545,685 | )(a) |
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| 1,909,535 |
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Total Liabilities |
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| 126,433,638 |
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| 21,317,280 |
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Stockholders' Equity |
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Equity and accumulated income (loss) |
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| (15,054,324 | ) |
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| 2,771,736 | (a) |
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| 8,640,409 | (a) |
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| (3,642,179 | ) |
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Total Stockholders' Equity (Deficit) |
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| (15,054,324 | ) |
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| (3,642,179 | ) |
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
| $ | 111,379,314 |
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| $ | 17,675,101 |
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3 |
VIKING ENERGY GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS |
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VIKING ENERGY GROUP, INC. | ||||||||||||||||
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS | ||||||||||||||||
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2021 | ||||||||||||||||
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| Historical Six Months Ended June 30, 2021 |
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| Pro Forma Ichor Adjustments |
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| Pro Forma Elysium Adjustments |
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| Pro Formal Six Months Ended June 30, 2021 |
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REVENUE |
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Oil and gas sales |
| $ | 21,190,712 |
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| (8,919,858 | )(b) |
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| (9,967,483 | )(b) |
| $ | 2,303,371 |
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OPERATING EXPENSES |
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Lease operating costs |
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| 9,974,748 |
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| (3,863,816 | )(b) |
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| (4,679,372 | )(b) |
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| 1,431,560 |
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General and administrative |
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| 2,320,934 |
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| (590,960 | )(b) |
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| (360,812 | )(b) |
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| 1,369,162 |
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Stock based compensation |
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| 388,543 |
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| 388,543 |
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Depreciation, depletion and amortization |
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| 4,663,227 |
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| (2,017,637 | )(b) |
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| (1,550,822 | )(b) |
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| 1,094,768 |
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Accretion - ARO |
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| 289,674 |
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| (92,348 | )(b) |
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| (117,504 | )(b) |
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| 79,822 |
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TOTAL OPERATING EXPENSES |
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| 17,637,126 |
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| 4,363,855 |
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INCOME (LOSS) FROM OPERATIONS |
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| 3,553,586 |
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| (2,060,484 | ) |
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OTHER INCOME (EXPENSE) |
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Interest expense |
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| (6,431,875 | ) |
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| 3,505,183 | (b) |
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| 2,229,395 | (b) |
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| (697,297 | ) |
Amortization of debt discount |
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| (2,145,036 | ) |
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| 435,414 | (b) |
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| 982,425 | (b) |
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| (727,197 | ) |
Change in fair value of derivatives |
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| (12,976,173 | ) |
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| 10,064,747 | (b) |
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| 2,911,426 | (b) |
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| - |
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Loss on financing settlements |
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| (926,531 | ) |
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| (926,531 | ) |
Other income (expense) |
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| 22,002 |
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| (273 | ) |
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| 21,729 |
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TOTAL OTHER INCOME (EXPENSE) |
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| (22,457,613 | ) |
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| (2,329,296 | ) |
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NET INCOME (LOSS) |
| $ | (18,904,027 | ) |
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| $ | (4,389,780 | ) |
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EARNINGS (LOSS) PER COMMON SHARE |
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Basic and Diluted |
| $ | (0.28 | ) |
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| $ | (0.07 | ) |
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING |
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Basis and Diluted |
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| 67,350,993 |
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| 67,350,993 |
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4 |
VIKING ENERGY GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS |
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VIKING ENERGY GROUP, INC. |
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS |
FOR THE YEAR ENDED DECEMBER 31, 2020 |
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| Historical Year Ended December 31, 2020 |
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| Pro Forma Ichor Adjustments |
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| Pro Forma Elysium Adjustments |
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| Pro Forma Year Ended December 31, 2020 |
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REVENUE |
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Oil and gas sales |
| $ | 40,266,780 |
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| (20,897,507 | )(b) |
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| (15,810,766 | )(b) |
| $ | 3,558,507 |
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OPERATING EXPENSES |
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Lease operating costs |
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| 19,075,749 |
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| (8,048,969 | )(b) |
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| (9,253,781 | )(b) |
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| 1,772,999 |
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Impairment of oil and gas properties |
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| 37,500,000 |
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| (20,568,275 | )(b) |
| (b) |
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| 16,931,725 |
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General and administrative |
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| 4,966,059 |
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| (1,027,404 | )(b) |
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| (791,968 | )(b) |
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| 3,146,687 |
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Stock based compensation |
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| 5,625,302 |
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| 5,625,302 |
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Depreciation, depletion and amortization |
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| 13,513,735 |
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| (6,029,318 | )(b) |
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| (3,727,044 | )(b) |
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| 3,757,373 |
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Accretion - asset retirement obligations |
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| 1,111,266 |
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| (5,797 | )(b) |
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| (913,853 | )(b) |
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| 191,616 |
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TOTAL OPERATING EXPENSES |
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| 81,792,111 |
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| 31,425,702 |
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INCOME (LOSS) FROM OPERATIONS |
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| (41,525,331 | ) |
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| (27,867,195 | ) |
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OTHER INCOME (EXPENSE) |
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Interest expense |
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| (19,697,942 | ) |
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| 7,234,611 | (b) |
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| 4,228,947 | (b) |
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| (8,234,384 | ) |
Amortization of debt discount |
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| (7,321,178 | ) |
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| 880,449 | (b) |
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| 1,618,760 | (b) |
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| (4,821,969 | ) |
Change in fair value of derivatives |
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| 5,485,573 |
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| (6,227,391 | )(b) |
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| 893,458 | (b) |
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| 151,640 |
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Loss on financing settlements |
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| (931,894 | ) |
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| (931,894 | ) |
Other income (expense) |
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| 2,527 |
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| (23,583 | )(b) |
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| (1,297 | )(b) |
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| (22,353 | ) |
TOTAL OTHER INCOME (EXPENSE) |
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| (22,462,914 | ) |
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| (13,858,960 | ) |
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NET INCOME (LOSS) |
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| (63,988,245 | ) |
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| (41,726,155 | ) |
Net loss attributable to noncontrolling interest |
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| 1,996,511 |
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| 1,996,511 |
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NET INCOME (LOSS) ATTRIBUTABLE TO VIKING ENERGY GROUP, INC. |
| (61,991,734 | ) |
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| (39,729,644 | ) | ||
Preferred stock deemed dividend |
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| - |
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| (42,002,301 | ) |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS |
| $ | (61,991,734 | ) |
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| $ | (81,731,945 | ) |
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EARNINGS (LOSS) PER COMMON SHARE |
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Basis and Diluted |
| $ | (2.42 | ) |
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| $ | (3.09 | ) |
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING |
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Basis and Diluted |
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| 26,459,006 |
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| 26,459,006 |
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5 |
VIKING ENERGY GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS |
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VIKING ENERGY GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
Ichor Holdings and Elysium Holdings Assignment Adjustments to the Unaudited Pro Forma Condensed Consolidated Balance Sheet
The following adjustments have been made to the accompanying unaudited pro forma condensed consolidated balance sheet as of June 30, 2021.
| (a) | Reflects the elimination of assets and liabilities and resulting gain on membership interest assignment of the properties sold. |
Ichor Holdings and Elysium Holdings Assignment Adjustments to the Unaudited Pro Forma Condensed Consolidated Statements of Operations
The following adjustments have been made to the accompanying unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2021, and the year ended December 31, 2020.
| (b) | Represents the elimination of gas and oil production revenue and expenses for the properties sold. |
6 |
VIKING ENERGY GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
VIKING ENERGY GROUP, INC. | ||||||||
UNAUDITED PRO FORMA EFFECT OF THE DISPOSITION OF OIL AND GAS RESERVES | ||||||||
AS OF DECEMBER 31, 2020 |
Estimated Quantities of Proved Reserves *(BOE) - 12/31/2020 |
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| Oil and Gas Dispositions |
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| Total Company |
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| Ichor Energy Holdings, LLC |
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| Elysium Energy Holdings, LLC |
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| Pro forma balances post disposition |
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Proved Developed, Producing |
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| 12,483,138 |
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| 5,994,750 |
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|
| 5,339,220 |
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|
| 1,149,168 |
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Proved Developed, Non Producing |
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| 3,471,570 |
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|
| 1,306,080 |
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|
| 1,926,270 |
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|
| 239,220 |
|
Total Proved Developed |
|
| 15,954,708 |
|
|
| 7,300,830 |
|
|
| 7,265,490 |
|
|
| 1,388,388 |
|
Proved Undeveloped |
|
| 3,340,107 |
|
|
| 1,579,820 |
|
|
| 650,370 |
|
|
| 1,109,917 |
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|
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|
|
|
|
|
|
| 19,294,815 |
|
|
| 8,880,650 |
|
|
| 7,915,860 |
|
|
| 2,498,305 |
|
* BOE is calculated on a 6 to 1 ratio (mcf to bbl)
Standardized Measure of Disocunted Future Net Cash Flows - 12/31/2020 |
|
| Oil and Gas Dispositions |
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| Total Company |
|
| Ichor Energy Holdings, LLC |
|
| Elysium Energy Holdings, LLC |
|
| Pro forma balances post disposition |
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|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Future cash inflows |
| $ | 457,438,654 |
|
| $ | 252,990,920 |
|
| $ | 146,258,880 |
|
| $ | 58,188,854 |
|
Future production costs |
|
| (202,285,561 | ) |
|
| (101,418,180 | ) |
|
| (73,427,200 | ) |
|
| (27,440,181 | ) |
Future development costs |
|
| (32,860,370 | ) |
|
| (12,862,070 | ) |
|
| (8,234,290 | ) |
|
| (11,764,010 | ) |
Future income tax expense |
|
| (8,424,790 | ) |
|
| (5,257,134 | ) |
|
| (2,448,241 | ) |
|
| (719,415 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Future net cash flows |
|
| 213,867,933 |
|
|
| 133,453,536 |
|
|
| 62,149,149 |
|
|
| 18,265,248 |
|
10% annual discount for estimated timing of cash flows |
|
| (96,141,109 | ) |
|
| (60,054,091 | ) |
|
| (27,967,117 | ) |
|
| (8,119,901 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 117,726,824 |
|
| $ | 73,399,445 |
|
| $ | 34,182,032 |
|
| $ | 10,145,347 |
|
7 |