UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On December 28, 2023, Evolve Transition Infrastructure LP (the "Partnership") completed the sale of its 50% membership interest (the "Carnero Interest") in Carnero G&P LLC ("Carnero") to Targa LP Inc. (the "Buyer") pursuant to a membership interest purchase agreement, dated as of December 28, 2023 (the "Agreement"), between the Partnership and the Buyer. The purchase price for the Carnero Interest was $27.0 million (the "Cash Consideration"). In addition to the Cash Consideration, the Buyer will make an additional cash payment to the Partnership, which will equal 20% of any cash award, less costs and expenses actually incurred by Carnero, received by Carnero with respect to claims asserted by Carnero pursuant to a third-party commercial agreement. The Partnership intends to use the net proceeds from the transaction to repay borrowings outstanding under the Partnership's credit facility and for general working capital purposes. The Agreement contains customary representations, warranties, covenants and indemnification provisions, subject to specified limitations.
The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by the full text of the Agreement, a copy of which will be filed by the Partnership with its Annual Report on Form 10-K for the year ended December 31, 2023.
The unaudited pro forma condensed consolidated statements of operations for each of the nine months ended September 30, 2023 and the year ended December 31, 2022 as if the sale had occurred on January 1, 2022. All adjustments shown on the unaudited pro forma condensed consolidated financial statements of operations are transaction accounting adjustments.
The following unaudited pro forma condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 is presented as if the sale had occurred on January 1, 2022.


EVOLVE TRANSITION INFRASTRUCTURE LP and SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statements of Operations
(In thousands, except unit data)
Nine Months Ended
September 30, 2023
As Reported Pro Forma Adjustments Pro Forma
Revenues
Gathering and transportation lease revenues $ 18,332 $ - $ 18,332
Total revenues 18,332 - 18,332
Expenses
Operating expenses
Transportation operating expenses 7,450 - 7,450
General and administrative expenses 6,313 - 6,313
General and administrative (benefit) expense - related entities (1,163) 42 (a) (1,121)
Unit-based compensation expense 33 - 33
Depreciation and amortization 13,296 - 13,296
Accretion expense 340 - 340
Total operating expenses 26,269 42 26,311
Other (income) expense
Interest expense, net 1,435 (930) (b) 505
Interest expense, net - related entities 43,751 - 43,751
(Earnings) loss from equity investment (1,436) 1,436 (c) -
Other income (2) - (2)
Total other expenses 43,748 506 44,254
Total expenses 70,017 548 70,565
Loss before income taxes (51,685) (548) (52,233)
Income tax expense 54 - 54
Net loss $ (51,739) $ (548) $ (52,287)
Net loss per unit prior to conversion
Common units - Basic and Diluted $ (0.23) $ - $ (0.23)
Weighted Average Units Outstanding prior to conversion
Common units - Basic and Diluted 228,596,208 228,596,208 228,596,208
Net loss per unit after conversion(1)
Common units - Basic and Diluted $ (6.82) $ (0.07) $ (6.89)
Weighted Average Units Outstanding after conversion(1)
Common units - Basic and Diluted 7,589,082 7,589,082 7,589,082
(1)Amounts adjusted for the Reverse Split on July 17, 2023.



EVOLVE TRANSITION INFRASTRUCTURE LP and SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statements of Operations
(In thousands, except unit data)
Year Ended
December 31, 2022
As Reported Pro Forma Adjustments Pro Forma
Revenues
Gathering and transportation lease revenues $ 36,109 $ - $ 36,109
Total revenues 36,109 - 36,109
Expenses
Operating expenses
Transportation operating expenses 9,877 - 9,877
General and administrative expenses 12,404 - 12,404
General and administrative benefit - related entities (6,375) (110) (a) (6,485)
Unit-based compensation expense 53 - 53
Loss (gain) on sale of assets 4,408 (6,802) (d) (2,394)
Depreciation and amortization 18,516 - 18,516
Accretion expense 421 - 421
Total operating expenses 39,304 (6,912) 32,392
Other (income) expense
Interest expense, net 1,924 (967) (b) 957
Interest expense, net - related entities 53,306 - 53,306
(Earnings) loss from equity investment (6,139) 6,139 (e) -
Other expense 719 - 719
Total other expenses 49,810 5,172 54,982
Total expenses 89,114 (1,740) 87,374
Loss before income taxes (53,005) 1,740 (51,265)
Income tax expense 132 54 (f) 186
Net loss $ (53,137) $ 1,686 $ (51,451)
Net loss per unit prior to conversion
Common units - Basic and Diluted $ (0.35) $ 0.01 $ (0.34)
Weighted Average Units Outstanding prior to conversion
Common units - Basic and Diluted 152,638,640 152,638,640 152,638,640
Net loss per unit after conversion(1)
Common units - Basic and Diluted $ (10.44) $ 0.33 $ (10.11)
Weighted Average Units Outstanding after conversion(1)
Common units - Basic and Diluted 5,087,955 5,087,955 5,087,955
(1)Amounts adjusted for the Reverse Split on July 17, 2023.


EVOLVE TRANSITION INFRASTRUCTURE LP and SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Balance Sheets
(In thousands, except unit data)
September 30,
2023
As Reported Pro Forma Adjustments Pro Forma
ASSETS
Current assets
Cash and cash equivalents $ 2,122 $ 1,897 (b) $ 4,019
Accounts receivable 4,117 - 4,117
Prepaid expenses 606 - 606
Deferred lease incentive 1,122 - 1,122
Total current assets 7,967 1,897 9,864
Gathering and transportation assets, net 83,962 - 83,962
Intangible assets, net 98,541 - 98,541
Equity investments 14,696 (14,696) (c)(g) -
Deferred lease incentive, net 8,972 - 8,972
Right of use assets, net 3,938 - 3,938
Other non-current assets 50 - 50
Total assets $ 218,126 $ (12,799) $ 205,327
LIABILITIES AND PARTNERS' DEFICIT
Current liabilities
Accounts payable and accrued liabilities $ 3,399 $ 54 (f) $ 3,453
Other current liabilities 359 - 359
Short-term debt, net of debt issuance costs - - -
Class C preferred units - related entities 442,157 - 442,157
Short-term lease liabilities 2,286 - 2,286
Total current liabilities 448,201 54 448,255
Other liabilities
Accrued shared services fees - related entities 2,677 (68) (a) 2,609
Asset retirement obligation 5,461 - 5,461
Long-term debt, net of discount and debt issuance costs 17,049 (13,923) (g) 3,126
Long-term lease liabilities 1,048 - 1,048
Stonepeak warrant - related entities 1,328 - 1,328
Other liabilities 303 - 303
Total other liabilities 27,866 (13,991) 13,875
Total liabilities 476,067 (13,937) 462,130
Commitments and contingencies
Partners' deficit
Common units, 8,443,516(1) units issued and outstanding as of September 30, 2023
(257,941) 1,138 (h) (256,803)
Total partners' deficit
(257,941) 1,138 (256,803)
Total liabilities and partners' deficit
$ 218,126 $ (12,799) $ 205,327
(1)Amounts adjusted for the Reverse Split on July 17, 2023.



EVOLVE TRANSITION INFRASTRUCTURE LP and SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Balance Sheets
(In thousands, except unit data)
December 31,
2022
As Reported Pro Forma Adjustments Pro Forma
ASSETS
Current assets
Cash and cash equivalents $ 2,785 $ 967 (b) $ 3,752
Accounts receivable 2,415 - 2,415
Prepaid expenses 371 - 371
Deferred lease incentive 1,122 - 1,122
Total current assets 6,693 967 7,660
Gathering and transportation assets, net 87,478 - 87,478
Intangible assets, net 106,752 - 106,752
Equity investments 14,964 (14,964) (d)(e)(i)(j) -
Deferred lease incentive, net 9,813 - 9,813
Right of use assets, net 5,899 - 5,899
Other non-current assets 75 - 75
Total assets $ 231,674 $ (13,997) $ 217,677
LIABILITIES AND PARTNERS' DEFICIT
Current liabilities
Accounts payable and accrued liabilities $ 4,675 $ 54 (f) $ 4,729
Other current liabilities 438 - 438
Short-term debt, net of debt issuance costs 19,793 (15,627) (d)(i)(j) 4,166
Class C preferred units - related entities 411,800 - 411,800
Short-term lease liabilities 2,204 - 2,204
Total current liabilities 438,910 (15,573) 423,337
Other liabilities
Accrued shared services fees - related entities 3,839 (110) (a) 3,729
Asset retirement obligation 5,121 - 5,121
Long-term lease liabilities 2,773 - 2,773
Stonepeak warrant - related entities 2,853 - 2,853
Other liabilities 287 - 287
Total other liabilities 14,873 (110) 14,763
Total liabilities 453,783 (15,683) 438,100
Commitments and contingencies
Partners' deficit
Common units, 7,510,186(1)units issued and outstanding as of December 31, 2022
(222,109) 1,686 (h) (220,423)
Total partners' deficit
(222,109) 1,686 (220,423)
Total liabilities and partners' deficit
$ 231,674 $ (13,997) $ 217,677
(1)Amounts adjusted for the Reverse Split on July 17, 2023.


NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following items resulted in transaction accounting adjustments in the unaudited pro forma condensed consolidated financial information:
(a) Adjustment represents removal of Carnero JV from the shared services fee.
(b) Adjustment represents reduction of interest paid as a result of debt reduction.
(c) Adjustment represents income recorded during 2023 from the Targa JV.
(d) Adjustment represents the sale of the Targa JV on January 1, 2022.
(e) Adjustment represents income recorded during 2022 from the Targa JV.
(f) Adjustment reflects the income tax impact on the sale of the Targa JV.
(g) Adjustment represents distributions received during 2023 from the Targa JV.
(h) Represents the effect of adjustments in notes (a) through (f) on partners' deficit.
(i) Adjustment represents distributions received during 2022 from the Targa JV.
(j) Adjustment represents contributions made during 2022 to the Targa JV.

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Evolve Transition Infrastructure LP published this content on 02 January 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 January 2024 21:22:37 UTC.