EX-99.3 7 exhibit993-8xk.htm EX-99.3 Document
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
On July 30, 2024, Crescent Energy Company, a Delaware corporation (“Crescent”), consummated the merger contemplated by the Agreement and Plan of Merger (the “Merger Agreement”), dated May 15, 2024, between Crescent, SilverBow Resources, Inc., a Delaware corporation (“SilverBow”), Artemis Acquisition Holdings Inc., a Delaware corporation and a direct wholly owned subsidiary of Crescent, Artemis Merger Sub Inc., a Delaware corporation and a direct wholly owned subsidiary of Crescent, and Artemis Merger Sub II LLC, a Delaware limited liability company, pursuant to which, among other things, Crescent has agreed to acquire SilverBow (the “SilverBow Merger”).
Subject to the terms and conditions of the Merger Agreement, each share of SilverBow common stock, par value $0.01 per share (“SilverBow Common Stock”), issued and outstanding immediately prior to the Initial Merger Effective Time (other than the Excluded Shares), was converted into the right to receive, pursuant to an election, one of the following forms of consideration: (A) a combination of 1.866 shares of Crescent’s Class A common stock, par value $0.0001 per share (“Crescent Class A Common Stock”) and $15.31 in cash (the “Mixed Consideration”), (B) $38.00 in cash (the “Cash Election Consideration”), or (C) 3.125 shares of Crescent Class A Common Stock (the “Stock Election Consideration,” and together with the Mixed Consideration and the Cash Election Consideration, the “Merger Consideration”).
The unaudited pro forma condensed combined statements of operations (the “pro forma statements of operations”) have been prepared from the respective historical consolidated statements of operations of Crescent and SilverBow, adjusted to give effect to (i) the SilverBow Merger, (ii) the issuance of $750 million aggregate principal amount of 7.375% Senior Notes due 2033 on June 14, 2024 (the “2033 Notes Offering”), borrowings of $724.0 million under Crescent’s Revolving Credit Facility (the “Crescent Revolving Credit Facility Borrowing”) and the amendment to Crescent’s Revolving Credit Facility entered into in connection with the closing of the SilverBow Merger (the “Crescent Revolving Credit Facility Amendment”), (iii) the July Western Eagle Ford Acquisition and (iv) SilverBow's acquisition of the South Texas Rich Properties (the “Chesapeake Transaction” and together with the 2033 Notes Offering, the Crescent Revolving Credit Facility Borrowing, and the Crescent Revolving Credit Facility Amendment, the “Pro Forma Transactions”) as if each of the Pro Forma Transactions had occurred on January 1, 2023. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2023 is based in part on, and should be read in conjunction with, the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2023 included in Crescent’s Current Report on Form 8-K dated March 6, 2024 which gives effect to the July Western Eagle Ford Acquisition. The pro forma statement of operations for the nine months ended September 30, 2024 reflects no impact from the July Western Eagle Ford Acquisition and the Chesapeake Transaction, as these transactions are already reflected in the historical statements of operations of Crescent and SilverBow, respectively, for this period. The pro forma statements of operations contain certain reclassification adjustments to conform SilverBow's historical financial statement presentation with Crescent’s historical financial statement presentation.
The following pro forma statements of operations are based on, and should be read in conjunction with:
•the historical audited consolidated financial statements of Crescent for the year ended December 31, 2023 and the unaudited condensed consolidated financial statements of Crescent as of and for the nine months ended September 30, 2024, and the related notes thereto;
•the historical audited consolidated financial statements of SilverBow for the year ended December 31, 2023 and the unaudited condensed consolidated financial statements of SilverBow as of and for the six months ended June 30, 2024, and the related notes thereto;
•the unaudited statement of revenues and direct operating expenses of the July Western Eagle Ford Assets for the six months ended June 30, 2023 included as Exhibit 99.1 in Crescent's Current Report on Form 8-K/A dated September 6, 2023;


•the unaudited statement of revenues and direct operating expenses of the South Texas Rich Properties for the nine months ended September 30, 2023 included as Exhibit 99.1 in SilverBow's Current Report on Form 8-K/A dated December 5, 2023;
•the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2023 included as Exhibit 99.1 in Crescent's Current Report on Form 8-K dated March 6, 2024;
•the “Management’s discussion and analysis of financial condition and results of operations” included in the respective Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q of Crescent and SilverBow; and
•the “Risk factors” and other cautionary statements included elsewhere in Crescent’s prospectus filed pursuant to Rule 424(b)(3) on June 28, 2024.
The pro forma statements of operations were derived by making certain transaction accounting adjustments to the historical and pro forma statements of operations noted above. The adjustments are based on currently available information and certain estimates and assumptions. Therefore, the actual impact of the Pro Forma Transactions may differ from the adjustments made to the pro forma statements of operations. However, management believes that the assumptions provide a reasonable basis for presenting the significant effects for the period presented as if the Pro Forma Transactions had been consummated earlier, and that all adjustments necessary to fairly present the pro forma statements of operations have been made.
As of the date of this Current Report on Form 8-K, Crescent has not completed the detailed valuation study necessary to arrive at the required final estimates of the fair value of the assets to be acquired and the liabilities to be assumed and the related allocations of purchase price, nor has it identified all adjustments necessary to conform SilverBow’s accounting policies to Crescent’s accounting policies. A final determination of the fair value of SilverBow’s assets and liabilities based on the actual assets and liabilities of SilverBow that existed as of July 30, 2024 (the “Closing Date”) will be finalized during the measurement period not to exceed twelve months from the Closing Date. As a result of the foregoing, the pro forma adjustments are preliminary and are subject to change as additional information becomes available and as additional analysis is performed.
The preliminary pro forma adjustments have been made solely for the purpose of providing the unaudited pro forma statements of operations presented below. Crescent estimated the fair value of SilverBow’s assets and liabilities based on discussions with SilverBow’s management, preliminary valuation studies, due diligence, and information presented in SilverBow’s SEC filings. Any increases or decreases in the fair value of assets acquired and liabilities assumed upon completion of the final valuations will result in adjustments to the pro forma statements of operations. The final purchase price allocation may be materially different than that reflected in the preliminary pro forma purchase price allocation presented herein.
The pro forma statements of operations and related notes are presented for illustrative purposes only and should not be relied upon as an indication of the operating results that Crescent would have achieved if the Merger Agreement had been entered into and the Pro Forma Transactions had taken place on the assumed dates. The pro forma statements of operations do not reflect future events that may occur after the consummation of the SilverBow Merger, including, but not limited to, the anticipated realization of ongoing savings from potential operating efficiencies, asset dispositions, cost savings, or economies of scale that Crescent may achieve with respect to the combined operations. As a result, future results may vary significantly from the results reflected in the pro forma statements of operations and should not be relied on as an indication of the future results of Crescent.

Unaudited Pro Forma Condensed Combined Statement of Operations
For the Nine Months Ended September 30, 2024
(in thousands, except per share data)
Crescent
(Historical)
SilverBow As Adjusted
(See Note 3)
SilverBow Transaction Adjustments Crescent Pro Forma Combined
Revenues:
Oil
$1,521,946 $405,549 $— $1,927,495 
Natural gas
210,008 112,294 — 322,302 
Natural gas liquids
221,103 85,270 — 306,373 
Midstream and other
102,573 592 — 103,165 
Total revenues
2,055,630 603,705 — 2,659,335 
Expenses:
Lease operating expense
382,688 77,117 — 459,805 
Workover expense
45,230 3,158 — 48,388 
Asset operating expense
82,020 — — 82,020 
Gathering, transportation and marketing
224,825 82,932 — 307,757 
Production and other taxes
106,759 38,309 — 145,068 
Depreciation, depletion and amortization
640,444 217,624 (135,321)(a)722,747 
Exploration expense
14,758 — — 14,758 
Midstream and other operating expense
82,829 — — 82,829 
General and administrative expense
249,532 66,900 20,673 (b)337,105 
Gain on sale of assets
(19,437)— — (19,437)
Total expenses
1,809,648 486,040 (114,648)2,181,040 
Income (loss) from operations
245,982 117,665 114,648 478,295 
Other income (expense):
Loss on derivatives
(4,589)8,040 — 3,451 
Interest expense
(146,885)(76,987)33,240 (c)(219,744)
(29,112)(d)
Loss from extinguishment of debt
(59,095)— — (59,095)
Other income (expense)
2,405 108 — 2,513 
Income from equity affiliates
122 — — 122 
Total other income (expense)
(208,042)(68,839)4,128 (272,753)
Income (loss) before taxes
37,940 48,826 118,776 205,542 
Income tax benefit (expense)
(5,678)2,294 (28,520)(e)(31,904)
Net income (loss)
32,262 51,120 90,256 173,638 
Less: net income attributable to noncontrolling interests
(916)— — (916)
Less: net (income) loss attributable to redeemable noncontrolling interests
(27,912)— (46,036)(f)(73,948)
Net income (loss) attributable to Crescent Energy
$3,434 $51,120 $44,220 $98,774 
Net loss per share:
Class A common stock – basic
$0.03 $0.62 (g)
Class A common stock – diluted
$0.03 $0.62 (g)
Class B common stock – basic and diluted
$— $— 
Weighted average common shares outstanding:
Class A common stock – basic
117,749 158,131 (g)
Class A common stock – diluted
119,597 159,979 (g)
Class B common stock – basic and diluted
72,054 72,054 
The accompanying notes are an integral part of these unaudited pro forma condensed combined statements of operations.

Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2023
(in thousands, except per share data)
Crescent Pro Forma Combined Prior to SilverBow Merger
SilverBow As Adjusted
(See Note 3)
SilverBow Transaction Adjustments Crescent Pro Forma Combined
Revenues:
Oil
$1,860,549 $635,213 $— $2,495,762 
Natural gas
388,291 242,884 — 631,175 
Natural gas liquids
216,014 142,633 — 358,647 
Midstream and other
60,988 — — 60,988 
Total revenues
2,525,842 1,020,730 — 3,546,572 
Expenses:
Lease operating expense
524,034 118,968 — 643,002 
Workover expense
58,441 3,754 — 62,195 
Asset operating expense
86,593 — — 86,593 
Gathering, transportation and marketing
280,976 153,326 — 434,302 
Production and other taxes
171,353 59,084 — 230,437 
Depreciation, depletion and amortization
699,890 300,673 (167,562)(a)833,001 
Impairment expense
153,495 — — 153,495 
Exploration expense
9,328 — — 9,328 
Midstream and other operating expense
39,809 — — 39,809 
General and administrative expense
140,918 24,520 65,890 (b)231,328 
Total expenses
2,164,837 660,325 (101,672)2,723,490 
Income (loss) from operations
361,005 360,405 101,672 823,082 
Other income (expense):
Gain (loss) on derivatives
166,980 241,309 — 408,289 
Interest expense
(166,900)(138,072)86,155 (c)(281,356)
(62,539)(d)
Other income (expense)
(282)197 — (85)
Loss from equity affiliates
(413)— — (413)
Total other income (expense)
(615)103,434 23,616 126,435 
Income (loss) before taxes
360,390 463,839 125,288 949,517 
Income tax (expense) benefit
(24,217)(101,971)21,075 (e)(105,113)
Net income (loss)
336,173 361,868 146,363 844,404 
Less: net income attributable to noncontrolling interests
(472)— — (472)
Less: net (income) loss attributable to redeemable noncontrolling interests
(263,168)— (194,003)(f)(457,171)
Net income (loss) attributable to Crescent Energy
$72,533 $361,868 $(47,640)$386,761 
Net income per share:
Class A common stock – basic
$1.09 $3.26 (g)
Class A common stock – diluted
$1.09 $3.26 (g)
Class B common stock – basic and diluted
$— $— 
Per Share Amounts:
Basic: Net Income (Loss)
$15.48 
Diluted: Net Income (Loss)
$15.35 
Weighted average common shares outstanding:
Class A common stock – basic
66,598118,790(g)
Class A common stock – diluted
67,402119,594(g)
Class B common stock – basic and diluted
104,271104,271
Weighted-Average Shares Outstanding:

Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2023
(in thousands, except per share data)
Weighted Average Shares Outstanding - Basic
23,371
Weighted Average Shares Outstanding - Diluted
23,571
The accompanying notes are an integral part of these unaudited pro forma condensed combined statements of operations.


Notes to unaudited pro forma condensed combined statements of operations
NOTE 1 – Basis of pro forma presentation
The pro forma statements of operations have been derived from the historical statements of operations of Crescent and SilverBow and the statements of revenues and direct operating expenses for the July Western Eagle Ford Assets and the South Texas Rich Properties. Additionally, the pro forma statement of operations for the year ended December 31, 2023 has been derived from the pro forma statement of operations included in Crescent's Current Report on Form 8-K dated March 6, 2024. The pro forma statements of operations for the nine months ended September 30, 2024 and for the year ended December 31, 2023 give effect to the Pro Forma Transactions as if each had occurred on January 1, 2023.
The pro forma statements of operations reflect pro forma adjustments that are based on available information and certain assumptions that management believes are reasonable. However, actual results may differ from those reflected in these pro forma statements of operations. In management’s opinion, all adjustments known to date that are necessary to fairly present the pro forma information have been made. The pro forma statements of operations do not purport to represent what the combined entity’s results of operations would have been if the Pro Forma Transactions had actually occurred on the dates indicated above, nor are they indicative of Crescent’s future results of operations.
These pro forma statements of operations should be read in conjunction with the historical financial statements, and related notes thereto, of Crescent, SilverBow, the July Western Eagle Ford Assets, and the South Texas Rich Properties for the periods presented.
NOTE 2 – Pro forma acquisition accounting
The SilverBow Merger was accounted for using the acquisition method of accounting for business combinations in accordance with ASC 805 with Crescent considered to be the accounting acquirer. The allocation of the preliminary estimated purchase price for SilverBow is based upon management’s estimates of and assumptions related to the fair value of assets acquired and liabilities assumed as of the Closing Date using currently available information. Because the pro forma statements of operations have been prepared based on these preliminary estimates, the final purchase price allocation and the resulting effect on Crescent’s financial position and results of operations may differ significantly from the pro forma amounts included in this Current Report on Form 8-K. Crescent expects to finalize its allocation of the purchase price as soon as practicable but no later than twelve months after the Closing Date. The cash paid pursuant to the Mixed Consideration and Cash Election Consideration was funded through cash on hand and borrowings under Crescent's Revolving Credit Facility.
The preliminary purchase price allocation is subject to change as a result of several factors, including but not limited to:
•changes in the estimated fair value of SilverBow’s assets acquired and liabilities assumed as of the Closing Date of the SilverBow Merger;
•the tax basis of SilverBow’s assets and liabilities as of the Closing Date; and
•certain of the factors described in “Risk Factors” included elsewhere within Crescent’s prospectus filed pursuant to Rule 424(b)(3) on June 28, 2024.


The preliminary determination of consideration transferred and the fair value of assets acquired and liabilities assumed are as follows (in thousands, except exchange ratio, share, and per share data):
Consideration transferred:
Equity consideration:
Shares of SilverBow Common Stock outstanding
25,539,615 
Weighted-average exchange ratio
1.972 
Shares of Crescent Class A Common Stock issued
50,363,304 
Closing price of Crescent Class A Common Stock on July 30, 2024
$11.82 
Crescent Class A Common Stock issued for outstanding shares of SilverBow Common Stock
$595,294 
Settlement of SilverBow Equity Awards
34,987 
Cash consideration
358,092 
Consideration transferred
$988,373 
Fair value of assets acquired:
Cash and cash equivalents
$5,200 
Accounts receivable
140,073 
Derivatives assets – current
100,601 
Prepaid expenses and other current assets
7,099 
Oil and natural gas properties - proved
1,980,500 
Oil and natural gas properties - unproved
207,191 
Field and other property and equipment
4,586 
Derivative assets – noncurrent
37,870 
Other assets
25,199 
Total assets acquired
2,508,319 
Fair value of liabilities assumed:
Accounts payable and accrued liabilities
(196,963)
Acquired deferred acquisition consideration
(76,550)
Other current liabilities
(10,029)
Debt
(1,140,625)
Deferred tax liability
(58,670)
Asset retirement obligations
(25,683)
Other liabilities
(11,426)
Total liabilities assumed
(1,519,946)
Fair value of assets acquired and liabilities assumed
$988,373 



NOTE 3 – Adjustments to SilverBow’s historical statements of operations
Pro forma statement of operations reclassification adjustments for the nine months ended September 30, 2024
Certain reclassification adjustments were made to SilverBow's historical statement of operations in order to conform with Crescent’s financial statement presentation. A reconciliation of amounts derived and presented as "SilverBow As Adjusted" within the pro forma statement of operations for the nine months ended September 30, 2024 is as follows (in thousands, except per share data):
SilverBow
(Historical)(1)
SilverBow
(Historical)(2)
SilverBow
Reclassification Adjustments
SilverBow As Adjusted
Revenues:
Oil and gas sales
$510,510 $93,195 $(603,705)$— 
Oil
— — 405,549 405,549 
Natural gas
— — 112,294 112,294 
Natural gas liquids
— — 85,270 85,270 
Midstream and other
— — 592 592 
Operating Expenses:
Lease operating expense
64,446 12,671 — 77,117 
Workovers
2,561 597 (3,158)— 
Workover expense
— — 3,158 3,158 
Transportation and gas processing
69,204 13,728 (82,932)— 
Gathering, transportation and marketing
— — 82,932 82,932 
Severance and other taxes
32,354 5,955 (38,309)— 
Production and other taxes
— — 38,309 38,309 
Depreciation, depletion and amortization
184,857 32,031 736 217,624 
Accretion of asset retirement obligations
629 107 (736)— 
General and administrative, net
33,373 33,527 (66,900)— 
General and administrative expense
— — 66,900 66,900 
Total Operating Expenses
387,424 158,284 — 486,040 
Operating Income
123,086 (5,421)— 117,665 
Non-Operating Income (Expense)
Gain (loss) on commodity derivatives, net
(63,012)71,052 (8,040)— 
Gain on derivatives
— — 8,040 8,040 
Interest expense, net
(69,744)(7,243)76,987 — 
Interest expense
— — (76,987)(76,987)
Other income (expense), net
337 (229)(108)— 
Other income
— — 108 108 
Income (Loss) Before Income Taxes
(9,333)58,159 — 48,826 
Provision (Benefit) for Income Taxes
(2,298)4 2,294 — 
Income tax benefit
— — 2,294 2,294 
Net Income (Loss)
$(7,035)$58,155 $— $51,120 
Per Share Amounts:
Basic Earnings (Loss) Per Share
$(0.28)
Diluted Earnings (Loss) Per Share
$(0.28)
Weighted-Average Shares Outstanding:
Weighted-Average Shares Outstanding - Basic
25,491 
Weighted-Average Shares Outstanding - Diluted
25,491 
______________
(1)    Reflects the historical operations of SilverBow for the six months ended June 30, 2024.


(2)    Reflects the historical operations of the SilverBow for the period from July 1, 2024 through July 29, 2024.
Pro forma statement of operations reclassification and transaction adjustments for the year ended December 31, 2023
Certain reclassification adjustments were made to SilverBow's historical statement of operations and the statement of revenues and direct operating expenses for the South Texas Rich Properties in order to conform each with Crescent’s financial statement presentation. Additionally, certain transaction adjustments were recorded to give pro forma effect to the Chesapeake Transaction. A reconciliation of amounts derived and presented as "SilverBow As Adjusted" within the pro forma statement of operations for the year ended December 31, 2023 is as follows (in thousands, except per share data):
SilverBow
(Historical)
SilverBow
Reclassification Adjustments
South Texas Rich Properties
(Historical)(1)
South Texas Rich Properties
(Historical)(2)
Chesapeake Reclassification AdjustmentsChesapeake Transaction AdjustmentsSilverBow As Adjusted
Revenues:
Oil and gas sales
$652,358 $(652,358)$— $— $— $— $— 
Revenues
— — 291,807 76,565 (368,372)— — 
Oil
— 402,728 — — 232,485 — 635,213 
Natural gas
— 187,340 — — 55,544 — 242,884 
Natural gas liquids
— 62,290 — — 80,343 — 142,633 
Direct operating expenses
— — 122,371 24,966 (147,337)— — 
Operating Expenses:
Lease operating expense
87,368 — — — 31,600 — 118,968 
Workovers
2,694 (2,694)— — — — — 
Workover expense
— 2,694 — — 1,060 — 3,754 
Transportation and gas processing
59,032 (59,032)— — — — — 
Gathering, transportation and marketing
— 59,032 — — 94,294 — 153,326 
Severance and other taxes
38,701 (38,701)— — — — — 
Production and other taxes
— 38,701 — — 20,383 — 59,084 
Depreciation, depletion and amortization
219,116 985 — — — 80,572 (aa)300,673 
Accretion of asset retirement obligations
985 (985)— — — — — 
General and administrative, net
24,520 (24,520)— — — — — 
General and administrative expense
— 24,520 — — — — 24,520 
Total Operating Expenses
432,416 — — — 147,337 80,572 660,325 
Operating Income (Loss)
219,942 — — — 221,035 (80,572)360,405 
Excess of revenues over direct operating expenses
— — 169,436 51,599 (221,035)— — 
Non-Operating Income (Expense)
Net gain (loss) on commodity derivatives
241,309 (241,309)— — — — — 
Gain on derivatives
— 241,309 — — — — 241,309 
Interest expense
(80,119)— — — — (57,953)(bb)(138,072)
Other income (expense), net
197 (197)— — — — — 
Other income
— 197 — — — — 197 
Income (Loss) Before Income Taxes
381,329 — — — 221,035 (138,525)463,839 


SilverBow
(Historical)
SilverBow
Reclassification Adjustments
South Texas Rich Properties
(Historical)(1)
South Texas Rich Properties
(Historical)(2)
Chesapeake Reclassification AdjustmentsChesapeake Transaction AdjustmentsSilverBow As Adjusted
Provision (Benefit) for Income Taxes
83,613 (83,613)— — — — — 
Income tax expense
— (83,613)— — — (18,358)(cc)(101,971)
Net Income (Loss)
$297,716 $— $— $— $221,035 $(156,883)$361,868 
Per Share Amounts:
Basic: Net Income (Loss)
$12.74 $2.74 (dd)$15.48 
Diluted: Net Income (Loss)
$12.63 $2.72 (dd)$15.35 
Weighted-Average Shares Outstanding:
Weighted Average Shares Outstanding - Basic
23,371 23,371 
Weighted Average Shares Outstanding - Diluted
23,571 23,571 
______________
(1)    Reflects the historical operations of the South Texas Rich Properties for the nine months ended September 30, 2023.
(2)    Reflects the historical operations of the South Texas Rich Properties for the period from October 1, 2023 through November 30, 2023.
The transaction adjustments included above related to the Chesapeake Transaction for the year ended December 31, 2023 are as follows:
(aa)    Reflects the pro forma depletion expense calculated using the unit-of-production method under the full cost method of accounting, and adjusts depletion expense for (i) the increase in depletion reflecting the relative fair values and production volumes attributable to the Chesapeake Transaction and (ii) the revision to SilverBow’s depletion rate reflecting the reserve volumes acquired in the Chesapeake Transaction.
(bb)    Reflects the pro forma interest expense related to borrowings under SilverBow’s Second Lien Notes and Credit Facility to fund the Chesapeake Transaction.
(cc)    Reflects the income tax effect of the pro forma adjustments presented using SilverBow’s effective tax rate of 22.25%.
(dd)    Reflects the impact of the pro forma adjustments on basic and diluted net income (loss) as a result of the Chesapeake Transaction.
NOTE 4 – Adjustments to the pro forma statements of operations
The pro forma statements of operations have been prepared to illustrate the effects of the Pro Forma Transactions and have been prepared for informational purposes only.
The preceding pro forma statements of operations have been prepared in accordance with Article 11 of Regulation S-X which requires the presentation of adjustments to account for the pro forma transactions (“Transaction Accounting Adjustments”) and allows for supplemental disclosure of the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management Adjustments”). Management has elected not to present Management Adjustments.


Pro forma statements of operations adjustments for the nine months ended September 30, 2024 and for the year ended December 31, 2023
The adjustments included in the pro forma statements of operations for the nine months ended September 30, 2024 and for the year ended December 31, 2023 are as follows:
(a)    Reflects pro forma depreciation expense and depletion expense calculated in accordance with the successful efforts method of accounting for oil and gas properties.
(b)    Reflects the impact on general and administrative expense related to increases in Crescent's Management Fee and the Management Incentive Plan related to the issuance of additional shares of Crescent Class A Common Stock as Merger Consideration.
(c)    Reflects the decrease in interest expense related to the repayment of SilverBow’s credit facility borrowings due 2026 and Second Lien Notes due 2028 using a portion of the proceeds from the 2033 Notes Offering and proceeds from the Crescent Revolving Credit Facility Borrowing.
(d)    Reflects the pro forma interest expense related to the 2033 Notes Offering to fund a portion of the repayment of SilverBow’s credit facility borrowings due 2026 and Second Lien Notes due 2028 and the cash payments for the Cash Election Consideration and Mixed Consideration portions of the Merger Consideration, including cash of $24.5 million to settle SilverBow's Equity Awards.
(e)    Reflects the income tax effect of the pro forma adjustments presented. The tax rates applied to the pro forma adjustments for the nine months ended September 30, 2024 and for the year ended December 31, 2023 were the estimated combined federal and state statutory rate, after the effect of noncontrolling interests, of 15.3% and 11.8%, respectively. The effective rate of Crescent could be significantly different (either higher or lower) depending on a variety of factors.
(f)    Reflects the impact of the allocation of net income attributable to redeemable noncontrolling interests related to the change in Crescent's ownership of Crescent Energy OpCo LLC resulting from the issuance of additional shares of Crescent Class A Common Stock.
(g)    Reflects the impact of the allocation of net income attributable to Crescent and the issuance of additional shares of Crescent Class A Common Stock on the computation of basic and diluted net income (loss) per share.
NOTE 5 – Supplemental unaudited pro forma oil and natural gas reserves information
Oil and natural gas reserves
The following tables present the estimated unaudited pro forma net proved developed and undeveloped oil, natural gas, and NGL reserves information as of December 31, 2023 for Crescent's consolidated operations, along with a summary of changes in quantities of net remaining proved reserves for the year ended December 31, 2023. Crescent's equity affiliates had no proved oil, natural gas, and NGL reserves as of December 31, 2022 and 2023. The disclosures below are derived from the “Oil and natural gas reserves” for the year ended December 31, 2023 reported in Crescent’s Current Report on Form 8-K dated March 6, 2024 and SilverBow’s Annual Report on Form 10-K. The estimates below are in certain instances presented on a “barrels of oil equivalent or “Boe” basis. To determine Boe in the following tables, natural gas is converted to a crude oil equivalent at the ratio of six Mcf of natural gas to one barrel of crude oil equivalent.
The unaudited pro forma oil and natural gas reserves information is not necessarily indicative of the results that might have occurred had the Pro Forma Transactions been completed on January 1, 2023 and is not intended to be a projection of future results. Future results may vary significantly from the results reflected because of various factors, including those discussed in “Risk Factors” included in Crescent’s and SilverBow’s Annual Reports on Form 10-K.


The unaudited pro forma net proved developed and undeveloped oil, natural gas, and NGL reserves as of December 31, 2023 and 2022 and the changes in the pro forma quantities of net remaining proved reserves for the year ended December 31, 2023 are as follows:
Oil and Condensate (MBbls)
Crescent Pro Forma Combined Prior to SilverBow Merger
SilverBow
(Historical)
Chesapeake Transaction AdjustmentsSilverBow As AdjustedCrescent Pro Forma Combined
Proved Developed and Undeveloped Reserves as of:
December 31, 2022275,553 52,189 30,506 82,695 358,248 
Revisions of previous estimates
(21,192)(12,875)(6,397)(19,272)(40,464)
Extensions, discoveries, and other additions
3,616 16,355 23,511 39,866 43,482 
Sales of reserves in place
(1,655)— — — (1,655)
Purchases of reserves in place
19,562 44,636 (44,636)— 19,562 
Production
(25,419)(5,347)(2,984)(8,331)(33,750)
December 31, 2023250,465 94,958 — 94,958 345,423 
Proved Developed Reserves as of:
December 31, 2022183,350 23,360 22,277 45,637 228,987 
December 31, 2023176,546 40,738 — 40,738 217,284 
Proved Undeveloped Reserves as of:
December 31, 202292,203 28,829 8,229 37,058 129,261 
December 31, 202373,919 54,220 — 54,220 128,139 
Natural Gas (MMcf)
Crescent Pro Forma Combined Prior to SilverBow Merger
SilverBow
(Historical)
Chesapeake Transaction AdjustmentsSilverBow As AdjustedCrescent Pro Forma Combined
Proved Developed and Undeveloped Reserves as of:
December 31, 20221,687,160 1,725,552 315,063 2,040,615 3,727,775 
Revisions of previous estimates
(494,997)(420,648)(103,650)(524,298)(1,019,295)
Extensions, discoveries, and other additions
20,599 119,845 145,872 265,717 286,316 
Sales of reserves in place
(15,075)— — — (15,075)
Purchases of reserves in place
115,488 333,090 (333,090)— 115,488 
Production
(136,759)(79,900)(24,195)(104,095)(240,854)
December 31, 20231,176,416 1,677,939 — 1,677,939 2,854,355 
Proved Developed Reserves as of:
December 31, 20221,544,998 695,482 229,554 925,036 2,470,034 
December 31, 20231,032,578 736,075 — 736,075 1,768,653 
Proved Undeveloped Reserves as of:
December 31, 2022142,162 1,030,070 85,509 1,115,579 1,257,741 
December 31, 2023143,838 941,864 — 941,864 1,085,702 


NGLs (MBbls)
Crescent Pro Forma Combined Prior to SilverBow Merger
SilverBow
(Historical)
Chesapeake Transaction AdjustmentsSilverBow As AdjustedCrescent Pro Forma Combined
Proved Developed and Undeveloped Reserves as of:
December 31, 2022106,798 32,656 41,344 74,000 180,798 
Revisions of previous estimates
(14,653)(8,363)(14,295)(22,658)(37,311)
Extensions, discoveries, and other additions
2,330 7,358 18,647 26,005 28,335 
Sales of reserves in place
(1,774)— — — (1,774)
Purchases of reserves in place
18,407 42,588 (42,588)— 18,407 
Production
(9,476)(3,003)(3,108)(6,111)(15,587)
December 31, 2023101,632 71,236 — 71,236 172,868 
Proved Developed Reserves as of:
December 31, 202289,614 19,523 30,179 49,702 139,316 
December 31, 202387,316 38,702 — 38,702 126,018 
Proved Undeveloped Reserves as of:
December 31, 202217,184 13,133 11,165 24,298 41,482 
December 31, 202314,316 32,534 — 32,534 46,850 
Total (MBoe)
Crescent Pro Forma Combined Prior to SilverBow Merger
SilverBow
(Historical)
Chesapeake Transaction AdjustmentsSilverBow As AdjustedCrescent Pro Forma Combined
Proved Developed and Undeveloped Reserves as of:
December 31, 2022663,545 372,437 124,361 496,798 1,160,343 
Revisions of previous estimates
(118,346)(91,346)(37,967)(129,313)(247,659)
Extensions, discoveries, and other additions
9,380 43,687 66,470 110,157 119,537 
Sales of reserves in place
(5,942)— — — (5,942)
Purchases of reserves in place
57,217 142,739 (142,739)— 57,217 
Production
(57,688)(21,667)(10,125)(31,792)(89,480)
December 31, 2023548,166 445,850 — 445,850 994,016 
Proved Developed Reserves as of:
December 31, 2022530,465 158,797 90,715 249,512 779,977 
December 31, 2023435,958 202,120 — 202,120 638,078 
Proved Undeveloped Reserves as of:
December 31, 2022133,080 213,640 33,646 247,286 380,366 
December 31, 2023112,208 243,730 — 243,730 355,938 
Standardized measure of discounted future net cash flows
The following tables present the estimated unaudited pro forma standardized measure of discounted future net cash flows (the “pro forma standardized measure”) at December 31, 2023. The pro forma standardized measure information set forth below gives effect to the Pro Forma Transactions as if they had been completed on January 1, 2023. Transaction Adjustments reflect adjustments related to the tax effects resulting from the Pro Forma


Transactions. The disclosures below are derived from the “Standardized measure of discounted future net cash flows” for the year ended December 31, 2023 reported in Crescent’s Current Report on Form 8-K dated March 6, 2024 and SilverBow’s Annual Report on Form 10-K. An explanation of the underlying methodology applied, as required by SEC regulations, can be found within the historical financial statements included in Crescent’s and SilverBow’s Annual Report on Form 10-K. The calculations assume the continuation of existing economic, operating and contractual conditions at December 31, 2023.
The pro forma standardized measure is not necessarily indicative of the results that might have occurred had the Pro Forma Transactions been completed on January 1, 2023 and is not intended to be a projection of future results. Future results may vary significantly from the results reflected because of various factors, including those discussed in “Risk Factors” included in Crescent’s and SilverBow’s Annual Reports on Form 10-K.
The pro forma standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves as of December 31, 2023 is as follows:
(in thousands)
Crescent Pro Forma Combined Prior to SilverBow Merger
SilverBow
(Historical)
Chesapeake Transaction AdjustmentsSilverBow As AdjustedSilverBow Transaction AdjustmentsCrescent Pro Forma Combined
Future cash inflows
$24,267,134 $12,969,683 $— $12,969,683 $— $37,236,817 
Future production costs
(11,897,791)(4,847,117)— (4,847,117)— (16,744,908)
Future development costs (1)
(2,713,247)(2,664,248)— (2,664,248)— (5,377,495)
Future income taxes
(410,721)(735,545)— (735,545)329,502 (816,764)
Future net cash flows
$9,245,375 $4,722,773 $— $4,722,773 $329,502 $14,297,650 
Annual discount of 10% for estimated timing
(3,956,193)(2,403,331)— (2,403,331)(174,992)(6,534,516)
Standardized measure of discounted future net cash flows as of December 31, 2023
$5,289,182 $2,319,442 $— $2,319,442 $154,510 $7,763,134 
______________
(1)    Future development costs include future abandonment and salvage costs.
Changes in standardized measure
The disclosures below are derived from the “Changes in standardized measure” for the year ended December 31, 2023 reported in Crescent’s Current Report on Form 8-K dated March 6, 2024 and SilverBow’s Annual Report


on Form 10-K. The changes in the pro forma standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves for the year ended December 31, 2023 are as follows:
(in thousands)
Crescent Pro Forma Combined Prior to SilverBow Merger
SilverBow
(Historical)
Chesapeake Transaction AdjustmentsSilverBow As AdjustedSilverBow Transaction AdjustmentsCrescent Pro Forma Combined
Balance at December 31, 2022
$10,240,244 $4,040,246 $1,477,829 $5,518,075 $514,509 $16,272,828 
Net change in prices and production costs
(3,222,493)(2,933,837)(444,040)(3,377,877)— (6,600,370)
Net change in future development costs
(141,382)(50,504)110,363 59,859 — (81,523)
Sales and transfers of oil and natural gas produced, net of production expenses
(1,415,229)(464,199)(221,035)(685,234)— (2,100,463)
Extensions, discoveries, additions and improved recovery, net of related costs
156,147 340,307 373,979 714,286 — 870,433 
Purchases of reserves in place
568,869 1,166,443 (1,166,443)— — 568,869 
Sales of reserves in place
(90,157)— — — — (90,157)
Revisions of previous quantity estimates
(2,478,577)(1,132,376)(498,397)(1,630,773)— (4,109,350)
Previously estimated development costs incurred
331,125 224,052 104,000 328,052 — 659,177 
Net change in taxes
207,095 579,378 — 579,378 (411,450)375,023 
Accretion of discount
1,070,766 496,401 166,143 662,544 51,451 1,784,761 
Changes in timing and other
62,774 53,531 97,601 151,132 — 213,906 
Balance at December 31, 2023
$5,289,182 $2,319,442 $— $2,319,442 $154,510 $7,763,134