CHK » Topics » NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
This excerpt taken from the CHK 8-K filed Apr 21, 2006.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
To reflect the reversal of Columbias historical exploration costs that are expensed under the successful efforts method of accounting and are capitalized under the full cost
method of accounting used by Chesapeake.
To record depreciation, depletion and amortization expense of oil and gas properties using a rate of $2.41 per mcfe in 2005. These rates reflect the impact of the allocation of
purchase price to Columbias proved oil and gas properties and the impact that the addition of these properties would have had on our historical DD&A rate.
To reflect depreciation expense related to the incremental increase in the value of the property and equipment (non-oil and gas properties) acquired over an estimated useful life of
To reflect the reversal of Columbias historical gain related to the sale of oil and gas properties which are reflected as a reduction of oil and gas properties under the full
cost method of accounting.
To eliminate interest expense related to the approximately $714 million of borrowings under Columbias credit facility that was paid by the seller from the purchase price
consideration and was not assumed by Chesapeake in the acquisition.
To reflect interest expense incurred related to $690 million of 2.75% Convertible Senior Notes and $500 million of 6.875% Senior Notes issued to finance a portion of the purchase
To adjust interest expense for the interest capitalized on the acquired oil and gas properties not subject to amortization.
To record taxes for Columbia (previously a non-taxable entity) and the tax effects of the pro forma adjustments at a statutory rate of 40%.
To record the dividends on the 5% convertible preferred stock issued to finance a portion of the purchase price.