(16) CONDENSED CONSOLIDATING FINANCIAL INFORMATION

As of December 16, 2013, following the release of all guarantees under the 7.15%, 7.5%, 7.35%, 7.125%, and 4.10% Senior Notes and our former revolving credit facility upon entering into the new Credit Facility, all of our wholly-owned subsidiaries have been released of their guarantees.

Prior to that date, the Company’s obligation under registered public debt and outstanding senior notes as listed in Note 10 were fully and unconditionally guaranteed, jointly and severally, by all of our wholly-owned subsidiaries, other than minor subsidiaries, on a senior unsecured basis, and the Company, as a parent company, had no independent assets or operations. The subsidiary guarantees (i) rank equally in right of payment with all of the existing and future senior debt of the subsidiary guarantors; (ii) rank senior to all of the existing and future subordinated debt of the subsidiary guarantors; (iii) were effectively subordinated to any future secured obligations of the subsidiary guarantors to the extent of the value of the assets securing such obligations; and (iv) were structurally subordinated to all debt and other obligations of the subsidiaries of the guarantors. In the case of each series of notes, if no default or event of default had occurred and was continuing, these guarantees would be released (i) automatically upon any sale, exchange or transfer of all the Company’s interest in the guarantor; (ii) automatically upon the liquidation and dissolution of a guarantor; (iii) following delivery of notice to the trustee of the release of the guarantor of its obligation under the Company’s revolving credit facility; and (iv) upon legal or covenant defeasance or other satisfaction of the obligations under the notes, in addition, there were no significant restrictions on the ability of the Company or a guarantor to obtain funds from its subsidiaries by dividend or loan, and none of the assets of the Company or a guarantor represented restricted net assets pursuant to rule 4-08(e)(3) of Regulation S-X under the Securities Act.

The company is providing condensed consolidating financial information for SEECO, SEPCO, and SES, its subsidiaries that were guarantors of the Company’s registered public debt and outstanding senior notes, and for its other subsidiaries that are not guarantors of such debt for the three months ended March 31, 2013, as applicable. The company has not provided comparative financial statements for 2014 because all guarantees were released in 2013. The Company has not presented separate financial and narrative information for each of the former subsidiary guarantors because it believes that such financial and narrative financial information would not provide any additional information that would be material in evaluating the sufficiency of the guarantees. The following condensed consolidating financial information summarizes the results of operations, financial position and cash flow for the Company’s former guarantor and other subsidiaries.


CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(Unaudited)
	Parent		Former Guarantors		Other Subsidiaries		Eliminations		Consolidated
	(in thousands)
Three months ended March 31, 2013:
Operating revenues	$	–	$	690,144	$	121,369	$	(77,864)	$	733,649
Operating costs and expenses:
Gas purchases		–		180,164		–		(208)		179,956
Operating expenses		–		110,541		31,322		(77,639)		64,224
General and administrative expenses		–		31,866		5,366		(17)		37,215
Depreciation, depletion and amortization		–		167,522		11,945		–		179,467
Taxes, other than income taxes		–		17,715		3,112		–		20,827
Total operating costs and expenses		–		507,808		51,745		(77,864)		481,689
Operating income		–		182,336		69,624		–		251,960
Other loss, net		–		(376)		(157)		–		(533)
Loss on Derivatives		–		(29,794)		–		–		(29,794)
Equity in earnings of subsidiaries		127,515		–		–		(127,515)		–
Interest expense		–		6,938		2,083		–		9,021
Income (loss) before income taxes		127,515		145,228		67,384		(127,515)		212,612
Provision for income taxes		–		58,046		27,051		–		85,097
Net income		127,515		87,182		40,333		(127,515)		127,515
Comprehensive income (loss)	$	33,318	$	(6,253)	$	39,304	$	(33,051)	$	33,318


CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(Unaudited)

	Parent		Former Guarantors		Other Subsidiaries		Eliminations		Consolidated
	(in thousands)

Three months ended March 31, 2013:
Net cash provided by (used in) operating activities	$	(55,189)	$	289,060	$	138,267	$	–	$	372,138
Investing activities:
Capital investments		(17,873)		(453,651)		(12,110)		–		(483,634)
Transfers from restricted cash		1,434		–		–		–		1,434
Other		6,607		(5,762)		193		–		1,038
Net cash used in investing activities		(9,832)		(459,413)		(11,917)		–		(481,162)
Financing activities:
Intercompany activities		(38,036)		164,365		(126,329)		–		–
Payments on revolving long-term debt		(369,700)		–		–		–		(369,700)
Borrowing under revolving long-term debt		404,800		–		–		–		404,800
Other Items		37,845		–		–		–		37,845
Net cash provided by (used in) financing activities		34,909		164,365		(126,329)		–		72,945
Effect of exchange rate changes on cash		–		–		4		–		4
Increase (decrease) in cash and cash equivalents		(30,112)		(5,988)		25		–		(36,075)
Cash and cash equivalents at beginning of year		47,491		5,988		104		–		53,583
Cash and cash equivalents at end of period	$	17,379	$	–	$	129	$	–	$	17,508