8-K/A 1 h92947ae8-ka.txt ASCENT ENERGY INC - AMENDMENT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): September 28, 2001 ASCENT ENERGY INC. (Exact name of registrant as specified in its charter) DELAWARE (State of formation) 333-57746* 72-1493233 (Commission File Number) (IRS Employer Identification No.) 1700 Redbud, Suite 450, McKinney, Texas 75069 (Address of Registrant's principal executive offices) Registrant's telephone number, including area code (972) 547-7150 Not Applicable (Former name or former address, if changed since last report) The commission file number refers to a registration statement on Form S-4 filed by the Company under the Securities Act of 1933, which became effective June 29, 2001. ITEM 7. FINANCIAL STATEMENT AND EXHIBITS (a) Financial Statements of Business Acquired ASCENT ENERGY INC. STATEMENTS OF OIL AND GAS REVENUE AND DIRECT OPERATING AND PRODUCTION EXPENSES OF CERTAIN ACQUIRED PROPERTIES FOR THE YEAR ENDED DECEMBER 31, 2000 AND THE PERIOD FROM JANUARY 1, 2001 THROUGH MAY 15, 2001 TOGETHER WITH AUDITORS' REPORT REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders and Board of Directors of Ascent Energy Inc.: We have audited the accompanying statements of oil and gas revenue and direct operating and production expenses relating to the Company's interest in certain oil and gas producing properties (the Properties) for the year ended December 31, 2000 and for the period from January 1, 2001 through May 15, 2001 (the Statements). These statements are the responsibility of management. Our responsibility is to express an opinion on these statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the Statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Statements. We believe that our audits provide a reasonable basis for our opinion. The accompanying statements were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in a Form 8-K/A filed by Ascent Energy Inc.) and are not intended to be a complete presentation of the revenue and expenses of the Properties mentioned above. In our opinion, the statements referred to above present fairly, in all material respects, the oil and gas revenue and direct operating and production expenses of the Properties for the year ended December 31, 2000 and for the period from January 1, 2001 through May 15, 2001, in conformity with accounting principles generally accepted in the United States. /s/ ARTHUR ANDERSEN LLP New Orleans, Louisiana, December 14, 2001 ASCENT ENERGY INC.'S INTEREST IN CERTAIN OIL AND GAS PRODUCING PROPERTIES STATEMENTS OF OIL AND GAS REVENUE AND DIRECT OPERATING AND PRODUCTION EXPENSES

See accompanying notes to financial statements. ASCENT ENERGY INC.'S INTEREST IN CERTAIN OIL AND GAS PRODUCING PROPERTIES NOTES TO STATEMENTS OF OIL AND GAS REVENUE AND DIRECT OPERATING AND PRODUCTION EXPENSES 1. BASIS OF PRESENTATION: Ascent Energy Inc. (Ascent) acquired Devo Holding Company, LLC (Devo) and its subsidiary, Devo Operating Company, LLC through a statutory merger under Delaware law on September 28, 2001. The assets of Devo and its subsidiary consist primarily of South Texas producing oil and gas properties. Ascent issued $75 million principal amount of its 11 3/4% Senior Notes due April 30, 2006 (the Notes) for the acquisition. Approximately $65.7 million of the Notes were issued in exchange for all the principal and accrued interest outstanding under Devo's Senior Secured Notes, as consideration for the acquisition approximately $6.5 million were issued and approximately $2.8 million were issued as a financial advisory fee to Jefferies & Co., Inc. (Jefferies) who, together with Trust Company of the West (TCW) and its affiliates hold substantially all of Devo's Senior Secured Notes and equity, and are the principal stockholders of Ascent. Approximately $6.5 million of the Notes were issued to the members of Devo who are also the controlling stockholders of Ascent in the acquisition. The Notes were issued at a 1% discount with interest payable semiannually beginning April 30, 2002. Devo was organized on May 9, 2001 by the majority stockholders of Ascent to facilitate the acquisition of properties from Devonian Energy Partners, LP (Devonian), which was completed on May 15, 2001. The properties were acquired by certain of Devo's members and their affiliates and contributed to Devo in exchange for Devo's Senior Secured Notes. Devonian was paid approximately $64.5 million for interests in oil and gas properties located in South Texas. Devo paid debt issuance costs of $1.5 million to Jefferies and $0.4 million to TCW in connection with the acquisition of the properties. The accompanying statements of oil and gas revenue and direct operating and production expenses, which are prepared on the accrual basis of accounting, relate to the interests in producing oil and gas properties described above and may not be representative of future operations. For example, oil and natural gas prices have declined significantly since December 31, 2000. The statements do not include federal and state income taxes, interest, depletion, depreciation and amortization or general and administrative expenses because such amounts would not be indicative of those expenses which would be incurred by the Company. The statements include oil and gas revenue and direct operating and production expenses, including production taxes of $796,000 and $740,000 in 2000 and 2001, respectively. Revenues are recorded upon the sale and delivery of product. Gas imbalances are not significant. Routine operation of the Properties was performed by a contract operator during the periods presented. Amounts included in direct operating and production expenses related to this contract were $112,000 and $49,000 in 2000 and 2001, respectively. The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses during the reported periods. Actual results could differ from those estimates. 2. SUPPLEMENTAL INFORMATION ON OIL AND GAS RESERVES (UNAUDITED): The net proved oil and gas reserves for the periods shown were derived from the estimates of the future net oil and gas reserves of the properties as of September 30, 2001, adjusted for pricing, production and development activities. The future net oil and gas reserves of the properties as of September 30, 2001, were estimated by independent petroleum engineers in accordance with guidelines established by the Securities and Exchange Commission ("SEC"). Accordingly, the following reserve estimates are based upon existing economic and operating conditions at the respective dates. There are numerous uncertainties inherent in estimating quantities of proved reserves and in providing the future rates of production and timing of development expenditures. The following reserve data represents estimates only and should not be construed as being exact. In addition, the present values should not be construed as the market value of the oil and gas properties or the cost that would be incurred to obtain equivalent reserves. The following table sets forth an analysis of the estimated quantities of net proved and proved developed oil and natural gas reserves, all of which are located onshore in the continental United States:

The following tables present the standardized measure of future net cash flows related to proved oil and gas reserves together with changes therein, as defined by the Financial Accounting Standards Board (FASB). The future net cash flows or the discounted future net cash flows, referred to in the table below, do not necessarily represent the fair value of our estimated oil and gas reserves. As required by the Securities and Exchange Commission (SEC), we determine future cash flows using market prices for oil and gas on the last day of the fiscal period. The weighted average product prices used for the properties in the above tables at May 15, 2001 were $18.38 per barrel of oil and $4.15 per Mcf of gas and at December 31, 2000 was $17.79 per barrel of oil and $9.79 per Mcf of gas. Future production and development costs are based on current costs with no escalations. Estimated future cash flows have been discounted to their present values based on a 10% annual discount rate. The tables below do not include the effect of income taxes on the Properties future cash flows because the Properties are not a separate tax paying entity.

Costs incurred in oil and natural gas activities for the periods were as follows:

(b) Financial Statements of Business Acquired DEVO HOLDING COMPANY, LLC CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 28, 2001 CONSOLIDATED STATEMENT OF OPERATIONS FOR THE PERIOD FROM INCEPTION (MAY 9, 2001) THROUGH SEPTEMBER 28, 2001 CONSOLIDATED STATEMENT OF MEMBERS' EQUITY FOR THE PERIOD FROM INCEPTION (MAY 9, 2001) THROUGH SEPTEMBER 28, 2001 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD MAY 15, 2001 TO SEPTEMBER 28, 2001 TOGETHER WITH AUDITORS' REPORT REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders and Board of Directors of Ascent Energy Inc.: We have audited the accompanying consolidated balance sheet of Devo Holding Company, LLC (a Delaware limited liability company) and subsidiary as of September 28, 2001 and the related consolidated statements of operations, changes in members' equity and cash flows for the period from inception (May 9, 2001) through September 28, 2001. These statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation of the statement. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Devo Holding Company, LLC as of September 28, 2001 and the results of its operations and its cash flows for the period from inception (May 9, 2001) through September 28, 2001, in conformity with accounting principles generally accepted in the United States. /s/ ARTHUR ANDERSEN LLP New Orleans, Louisiana, December 14, 2001 DEVO HOLDING COMPANY, LLC CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 28, 2001 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 5,834,398 Accounts receivable 363,944 Prepaid expenses 18,294 Fair value of derivatives 2,638,233 ------------ Total current assets 8,854,869 PROPERTY AND EQUIPMENT, at cost: Oil and gas properties, full cost method, net of accumulated depreciation, depletion, and amortization of $3,246,965 62,413,050 OTHER ASSETS: Debt issue costs, net of amortization of $403,027 1,529,973 ------------ TOTAL ASSETS $ 72,797,892 ============ LIABILITIES AND MEMBERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 102,121 Accrued liabilities 470,829 Accrued interest 663,558 ------------ Total current liabilities 1,236,508 Senior Secured Notes, net of discount of $792,244 61,207,757 Senior Secured Payment-in-Kind Notes 2,384,877 ------------ Total liabilities 64,829,142 MEMBERS' EQUITY: Paid in capital 6,000,000 Accumulated deficit (354,483) Other comprehensive income 2,323,233 ------------ Total members' equity 7,968,750 TOTAL LIABILITIES AND MEMBERS' EQUITY $ 72,797,892 ============

The accompanying notes are an integral part of these financial statements. DEVO HOLDING COMPANY, LLC CONSOLIDATED STATEMENT OF OPERATIONS FOR THE PERIOD FROM INCEPTION (MAY 9, 2001) THROUGH SEPTEMBER 28, 2001 Revenues: Oil sales and gas sales $ 7,464,022 Other income 61,749 ----------- Total revenues 7,525,771 Costs and expenses: Production taxes 520,587 Lease operating expenses 377,643 General and administrative expenses 96,598 Interest expense 3,638,461 Depreciation, depletion and amortization 3,246,965 ----------- Total expenses 7,880,254 ----------- Net (loss) attributed to members (354,483) ===========

DEVO HOLDING COMPANY, LLC STATEMENT OF CHANGES IN MEMBERS' EQUITY FOR THE PERIOD FROM INCEPTION (MAY 9, 2001) THROUGH SEPTEMBER 28, 2001 Members' Equity Balance at inception May 9, 2001 -- Capital contribution $ 6,000,000 Net loss attributed to members (354,483) Accumulated other comprehensive income: Fair value of derivatives adjustment 2,323,233 ----------- Comprehensive income 1,968,750 ----------- Members' Equity Balance at September 28, 2001 $ 7,968,750 ===========

The accompanying notes are an integral part of these financial statements. DEVO HOLDING COMPANY, LLC CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD FROM INCEPTION (MAY 9, 2001) THROUGH SEPTEMBER 28, 2001 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (354,483) Adjustments to reconcile net loss to net cash provided by operating activities- Depreciation, depletion and amortization 3,836,991 Change in assets and liabilities- Accounts receivable and other assets (382,238) Accounts payable and accrued liabilities 1,236,510 Amount paid for puts (315,000) Noncash interest expense funded through PIK Notes 2,384,877 ----------- Net cash provided by operating activities 6,406,657 CASH FLOWS FROM INVESTING ACTIVITIES: Net cash paid for Devonian (1,550,883) Purchase of other property and equipment (3,088,376) ----------- Net cash used in investing activities (4,639,259) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of equity 6,000,000 Debt issue costs (1,933,000) ----------- Net cash provided by financing activities 4,067,000 ----------- NET INCREASE IN CASH AND CASH EQUIVALENTS 5,834,398 CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD -- CASH AND CASH EQUIVALENTS - END OF PERIOD $ 5,834,398 SUPPLEMENTAL DISCLOSURES: Cash paid for- Interest $ --

The accompanying notes are an integral part of these financial statements. DEVO HOLDING COMPANY, LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 28, 2001 1. ORGANIZATION AND MERGERS Devo Holding Company, LLC (Devo) was organized on May 9, 2001 by the principal stockholders of Ascent Energy Inc. (Ascent) to facilitate the acquisition of oil and gas properties from Devonian Energy Partners, LP (Devonian). The properties were acquired by certain of Devo's members and their affiliates and contributed to Devo in exchange for Devo's Senior Secured Notes. Devo completed the acquisition of the Devonian properties and Devo began its operations on May 15, 2001. Devonian was paid approximately $64.5 million for interests in oil and gas properties located in South Texas. Devo financed the acquisition of the Devonian properties by issuing $62.0 million, principal amount in two-year 7.7% notes that provided for interest to be paid in kind (PIK Notes), semiannually beginning August 31, 2001, at Devo's election and were issued at a 1.5% discount. In addition, Devo issued 10,000 membership units for $6,000,000. The notes and equity issued by Devo were issued to the principal shareholders of Ascent. Of the $1.9 million debt issuance costs, $1.5 million was paid to Jefferies and $0.4 million was paid to TCW (see "Ascent Merger" below). Net assets acquired in the transaction were as follows (in thousands): ~~Oil and gas properties 62,572 Working capital 49 Senior Secured Notes issued (61,070) ------- Net cash paid 1,551~~

Devo's financial statements at September 28, 2001 and for the period then ended include the results of Devo's wholly owned subsidiary Devo Operating Company, LLC on a consolidated basis. All material intercompany balances have been eliminated. ASCENT MERGER Ascent Energy Inc. (Ascent) acquired Devo Holding Company, LLC (Devo) and its subsidiary, Devo Operating Company, LLC, through a statutory merger under Delaware law on September 28, 2001. The assets of Devo and its subsidiary consist primarily of South Texas producing oil and gas properties. Ascent issued $75 million principal amount of its 11 3/4% Senior Notes due April 30, 2006 (the Notes) for the acquisition. Approximately $65.7 million of the Notes were issued in exchange for all the principal and accrued interest outstanding under Devo's Senior Secured Notes as consideration for the acquisition approximately $2.8 million were issued as a financial advisory fee to Jefferies & Co., Inc. (Jefferies) who, together with Trust Company of the West (TCW) and its affiliates hold substantially all of Devo's Senior Secured Notes and equity, and are the principal stockholders of Ascent. Approximately $6.5 million of the Notes were issued to the members of Devo who are also the controlling stockholders of Ascent as consideration in the acquisition. The Notes were issued at a 1% discount with interest payable semiannually beginning April 30, 2002. The Notes are redeemable after April 30, 2004 at 105%. Prior to that date, Ascent may redeem up to 35% of the Notes at 111%. The Notes subject Ascent to certain covenants which, among other things, limit Ascent's ability to pay dividends, incur additional indebtedness and certain lease obligations, issue preferred stock, and exchange or transfer assets. 2. SIGNIFICANT ACCOUNTING POLICIES Pervasiveness of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents Devo considers all highly liquid investments in overnight securities through our commercial bank accounts to be cash and cash equivalents. Oil and Gas Properties The Company's exploration and production activities are accounted for under the full cost method. Accordingly, all costs associated with development of oil and gas properties are capitalized, including dry hole costs, delay rentals, and geological and geophysical costs. No internal costs associated with the development of oil and gas properties have been capitalized as such activity has not been significant. Devo uses a contract operator to perform operational accounting responsibilities with respect to its oil and gas properties. Depreciation, depletion and amortization of oil and gas properties are computed using the unit-of-production method based on estimated proved reserves. Under the full cost method of accounting, Devo is required to periodically compare the present value (discounted at 10%) of the estimated future net cash flows from proved reserves (based on posted prices at September 28, 2001) to the net capitalized costs of proved oil and gas properties and writedown the value of oil and gas property costs to the value of discounted estimated future net cash flows for the amount by which the property costs exceed the discounted future cash flows. Due to low commodity prices at September 28, 2001, as compared to the pricing scenarios used in the acquisition of the properties from Devonian, Devo's net capitalized oil and gas property costs exceeded its discounted estimated future net cash flows by $27.7 million at September 28, 2001. This potential impairment is not reflected in the accompanying financial statements because of the Ascent merger which closed on September 28, 2001, which provided full consideration for the book value of the properties. In addition, subsequent to September 28, 2001, gas prices rose significantly. Oil and Gas Revenue The Company records oil and gas revenue on the sales method. Gas volumes sold in excess of its entitled share of production were insignificant. Ascent's customers are primarily larger purchasers with significant liquidity and financial resources; thus, management believes credit risk related to these purchasers is not significant. Fair Value of Financial Instruments The fair value of the Company's accounts receivable and accounts payable approximates the book values at September 28, 2001. The fair value of Devo's Senior Secured Notes is not determinable due to the exchange transaction described above being executed primarily by and among parties who controlled Devo and Ascent and held the exchanged debt instruments. Income Taxes Income taxes are an obligation of the individual members and, accordingly, are not included in the accompanying financial statements. There are differences in accounting policies for financial and tax reporting purposes. Such differences include depreciation and amortization periods. As a result, income for financial reporting purposes is not representative of income for tax reporting purposes. Policies followed by the partnership in the determination of income or loss for Federal income tax purposes are subject to review by the Internal Revenue Service. Any change which may occur as a result of such a review could affect the taxable income of the members, but would not affect the accompanying financial statements. New Accounting Standards In July 2001, SFAS No. 143 Accounting for Asset Retirement Obligations was approved, requiring the fair value of liabilities for asset retirement obligations to be recorded in the period incurred. The standard is effective for fiscal years beginning after June 15, 2002, with earlier application permitted. Upon adoption of the standard, we will be required to use a cumulative-effect approach to recognize transition amounts for any existing asset retirement obligation liabilities, asset retirement costs and accumulated depreciation. We have not yet determined the transition amounts. 3. NOTES AND EXCHANGE On May 15, 2001, Devo issued $62.0 million in principal amount of its in two-year notes providing for interest to be paid in kind (PIK Notes), at Devo's discretion, and were issued at a 1.5% discount. Subsequently, Ascent issued $75.0 million in principal amount of its unsecured 11 3/4 % Senior Notes due April 30, 2006 (the Notes) in a private transaction. Approximately $65.7 million of the Notes were issued to Devo's Senior Secured Note holders for all of the principal and accrued interest outstanding under Devo's Senior Secured Notes due 2003. Approximately $6.5 million of the Notes were issued to Devo's equity holders as consideration in the acquisition. Interest expense for the period includes $590,000 of amortization of debt issue costs and amortization of debt discount on Devo's Senior Secured Notes. 4. LEGAL PROCEEDINGS From time to time, we may be a party to various legal proceedings. We are not currently party to any lawsuits which management expects could have a material adverse effect on our financial position or results of operations. 5. DERIVATIVES We enter into hedging transactions to secure a price for a portion of future production that is acceptable to us at the time the transaction is entered into. The primary objective of these activities is to reduce our exposure to the possibility of declining oil and gas prices during the term of the hedge. We do not enter into hedging transactions for trading purposes. We primarily use four forms of hedging contracts: fixed price swaps, puts, collars and physical futures contracts. Fixed price swaps typically provide monthly payments by us (if prices rise) or to us (if prices fall) based on the difference between the strike price and the agreed-upon average of Houston Ship Channel (HSC) prices. Put contracts are not costless; they are purchased at a rate per unit of hedged production that fluctuates with the commodity futures market. The historical cost of the put contracts represents our maximum cash exposure. We are not obligated to make any further payments under the put contracts regardless of future commodity price fluctuations. Under put contracts, monthly payments are made to us if HSC prices fall below the agreed upon floor price, while allowing us to fully participate in commodity prices above that floor. We believe that fluctuations in HSC prices closely match changes in market prices for our production and thus ineffectiveness is not significant. Oil contracts typically settle using the average of the daily closing prices for a calendar month. Natural gas contracts typically settle using the average closing prices of near month HSC futures contracts for the three days prior to the settlement date. Our hedge positions as of September 28, 2001 are summarized as follows:

At September 28, 2001, the unsettled contracts were recorded as assets totaling $2.6 million. All changes in fair values of the puts and swaps were recorded in equity through other comprehensive income, amounting to $2.3 million. 6. SUPPLEMENTAL INFORMATION ON OIL AND GAS RESERVES (UNAUDITED): The net proved oil and gas reserves at September 30, 2001 have been estimated by independent petroleum engineers in accordance with guidelines established by the Securities and Exchange Commission ("SEC"). Accordingly, the following reserve estimates are based upon existing economic and operating conditions at the respective dates. There are numerous uncertainties inherent in estimating quantities of proved reserves and in providing the future rates of production and timing of development expenditures. The following reserve data represents estimates only and should not be construed as being exact. In addition, the present values should not be construed as the market value of the oil and gas properties or the cost that would be incurred to obtain equivalent reserves. The following table sets forth an analysis of the estimated quantities of net proved and proved developed oil and natural gas reserves, all of which are located onshore in the continental United States:

The following tables present the standardized measure of future net cash flows related to proved oil and gas reserves together with changes therein, as defined by the FASB. You should not assume that the future net cash flows or the discounted future net cash flows, referred to in the table below, represent the fair value of our estimated oil and gas reserves. As required by the SEC, we determine future cash flows using market prices for oil and gas on the last day of the fiscal period. The weighted average product prices used in the above tables at May 15, 2001 were $18.38 per barrel of oil and $4.15 per Mcf of gas. The weighted average product prices used for the properties in the above tables at September 30, 2001 was $16.96 per barrel of oil and $2.08 per Mcf of gas. Subsequent to September 30, 2001, market prices for gas have increased, and prices for oil have decreased which would result in a change in future cash flows if recomputed using those prices. Future production and development costs are based on current costs with no escalations. Estimated future cash flows have been discounted to their present values based on a 10% annual discount rate. The tables below do not include the effect of income taxes on Devo's future cash flows because Devo's members are responsible for any potential tax liabilities resulting from Devo's operations and Devo is not a tax paying entity.

The following is an analysis of the sources of changes in standardized measure of discounted future net cash flows relating to proved reserves on the pricing basis described above for the period from May 15, 2001 to September 30, 2001. Standardized measure at beginning of year -- Purchase of reserves 62,572,000 Sales of oil and gas, net of production costs (6,565,792) Net change in sales price (24,039,080) Previously estimated development costs incurred 2,641,665 ----------- Standardized measure at end of period 34,608,793 ===========

Costs incurred in oil and natural gas activities for the period were as follows: Acquisition costs 62,572,000 Development costs 3,088,376 ---------- Total 65,660,376 ==========

(c) Pro Forma Financial Data CONDENSED UNAUDITED COMBINED PRO FORMA FINANCIAL DATA The following condensed unaudited pro forma combined financial information combines the historical statements of operations of Ascent Energy, Inc., Pontotoc Production, Inc. (Pontotoc) and the acquisition of Devo Holding Company, LLC (Devo). No pro forma balance sheet presentation has been made because the acquisitions of Pontotoc and Devo are reflected in Ascent's Form 10-Q for the quarter ended September 30, 2001 previously filed with the Securities and Exchange Commission. Prior to the consummation of the acquisitions described below, our predecessor contributed all of its assets and recorded liabilities to us in exchange for shares of our common stock. For financial reporting purposes, the contribution of assets and recorded liabilities was accounted for using reorganization accounting for entities under common control, which resulted in the retroactive restatement of all financial information about us and our predecessor to reflect the restructuring as if it had occurred at the beginning of the earliest period presented. The terms "Ascent," the "Company," "we," "us" and "our" refer to Ascent Energy Inc. and, unless the context requires otherwise, includes our predecessor and current subsidiaries, including those acquired in Ascent's acquisition of Pontotoc and Devo. The condensed unaudited pro forma combined financial statements should be read in conjunction with the description of the merger incorporated by reference in this filing, the historical financial statements and related notes of Pontotoc and Devo and the historical financial statements and related notes of Ascent. PONTOTOC ACQUISITION On July 31, 2001, we acquired approximately 91% of Pontotoc's outstanding common stock. We acquired the remaining Pontotoc shares on August 14, 2001 in a second-step merger when we merged Pontotoc into one of our wholly-owned subsidiaries. The purchase price for all the outstanding Pontotoc common stock was approximately $48.5 million in cash and 5.3 million shares of our Series B convertible preferred stock. We financed the cash portion of the purchase price for the Pontotoc acquisition through: (i) borrowing $30 million under our credit facility with Fortis Capital Corp.; (ii) a portion of the proceeds from the private sale of 21,100 shares of our Series A redeemable preferred stock and warrants to purchase approximately 4.1 million shares of our common stock; and (iii) existing internal cash resources. The proceeds from the sale of our Series A redeemable preferred stock were approximately $21.1 million. We are required to redeem our Series A redeemable preferred stock at 100% of its liquidation preference, or $21.1 million (plus any unpaid dividends), in July 2006. DEVO ACQUISITION Ascent Energy Inc. (Ascent) acquired Devo Holding Company, LLC (Devo) and its subsidiary, Devo Operating Company, LLC, through a statutory merger under Delaware law on September 28, 2001. The assets of Devo and its subsidiary consist primarily of South Texas producing oil and gas properties. Ascent issued $75 million principal amount of its 11 3/4% Senior Notes due April 30, 2006 (the Notes) for the acquisition. Approximately $65.7 million of the Notes were issued in exchange for all the principal and accrued interest outstanding under Devo's Senior Secured Notes as consideration for the acquisition approximately $2.8 million were issued as a financial advisory fee to Jefferies & Co., Inc. (Jefferies) who, together with Trust Company of the West (TCW) and its affiliates hold substantially all of Devo's Senior Secured Notes and equity, and are the principal stockholders of Ascent. Approximately $6.5 million of the Notes were issued to the members of Devo who are also the controlling stockholders of Ascent as consideration in the acquisition. The Notes were issued at a 1% discount with interest payable semiannually beginning April 30, 2002. The historical income statement data for Devo for the year ended December 31, 2000, and for the period from January 1, 2001 through the date of Devo's acquisition of its properties (May 15, 2001) represent only the revenues and direct operating and production expenses of the properties acquired by Devo for those periods. For the period from May 15, 2001 to September 28, 2001, the historical operating data for Devo includes interest expense related to the notes issued by Devo to fund the acquisition, depreciation and depletion of the Devo property costs and other general and administrative costs related to the operations of Devo. PERIODS OF PRESENTATION Pontotoc's fiscal year ended on March 31, Ascent's fiscal year ends on December 31. The combined company utilizes December 31 as its fiscal year end. The following pro forma data was prepared using the adjustments and assumptions described in the notes to the unaudited pro forma combined financial information. The pro forma combined income statement for the twelve months ended December 31, 2000 combines the latest similar twelve-month periods reported by Ascent and Pontotoc, using Ascent's fiscal year end of December 31 and adjusting Pontotoc's results to reflect the twelve months ended December 31, 2000. The pro forma combined income statement for the nine months ended September 30, 2001 combines the nine month period ended September 30, 2001 reported by Ascent and the period from January 1, 2001 through July 28, 2001 for Pontotoc. This factor affects comparisons of the historical financial information of Ascent, Pontotoc and Devo to the unaudited pro forma combined financial information. The unaudited pro forma information is for illustrative purposes only. If the acquisitions had occurred in the past, our combined financial position and operating results might have been different from those presented in the selected unaudited pro forma financial information. You should not rely on the unaudited pro forma information as an indication of the financial position or operating results that the combined company would have achieved if the acquisition had occurred in the past, nor should you rely on the unaudited pro forma information as an indication of future results that we will achieve after the acquisitions. The prices reflected in the historical statements of Ascent, Pontotoc and Devo are not reflective of current prices. ASCENT ENERGY INC. CONDENSED UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 --------------------------------------------------------------------------------

ASCENT ENERGY INC. CONDENSED UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2000 --------------------------------------------------------------------------------

NOTES TO CONDENSED UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS BASIS OF PRESENTATION The condensed unaudited pro forma combined financial statements combine the historical statements of operations of Ascent, Pontotoc and Devo (giving effect to the merger using the purchase method of accounting for business combinations). For accounting purposes, Ascent is treated as the acquirer. The historical results of Pontotoc include its 45% interest in Pontotoc Holdings, Inc. (Holdings), the holding company for Pontotoc Gathering, LLC (Gathering), using the equity method of accounting. On March 1, 2001 Pontotoc acquired the remaining 55% of interest in Holdings from a director of Pontotoc and two other directors of Holdings in exchange for 110,000 shares of Pontotoc common stock, making Holdings a consolidated entity for financial reporting purposes. The condensed unaudited pro forma combined statements of operations are presented as if the Pontotoc and Devo acquisitions were effective as of January 1, 2000. Under the terms of the Pontotoc merger agreement, Ascent paid $9.00 in cash and one share of Ascent's Series B mandatorily convertible preferred stock having a liquidation preference of $2.50 per share for each outstanding share of Pontotoc common stock and $508,888 to redeem outstanding options (based on $10.50 per share less the exercise price of each option). The estimated fair value of the Series B mandatorily convertible preferred stock was $2.6 million ($.49 per share). The Series B mandatorily convertible preferred stock is convertible into one million shares of common stock, which represents 10% of the outstanding common stock of Ascent Energy on a fully-diluted basis, at the option of the holder up to two years from the date of issuance, unless previously redeemed. Each share of Series B mandatorily convertible preferred stock is convertible into shares of our common stock at a conversion rate of 0.1878395 shares of common stock per share of Series B mandatorily convertible preferred stock. The Series B mandatorily convertible preferred stock is redeemable at the option of the issuer at any time at a redemption price of $2.50 per share plus accrued, unpaid dividends, and is mandatorily convertible upon two years from the date of issuance. For purposes of diluted earnings per share, the Series B mandatorily convertible preferred stock, as well as the 4,050,000 warrants to purchase common stock (exercisable at $5.21 per share), are viewed as antidilutive. The historical financial statements of Ascent for the nine months ended September 30, 2001 include Pontotoc from the date of acquisition (July 31, 2001) through September 30, 2001. The historical financial statements of Ascent for this nine month period include a full cost ceiling writedown as of September 30, 2001 of $4.25 million (based on prices in effect as of November 9, 2001). See Ascent's September 30, 2001 Form 10-Q for further discussion. Devo Holding Company, LLC (Devo) was organized on May 9, 2001 by the controlling stockholders of Ascent Energy Inc. (Ascent) to facilitate the acquisition of oil and gas properties from Devonian Energy Partners, LP (Devonian). The properties were acquired by certain of Devo's members and their affiliates and contributed to Devo in exchange for the Senior Secured Notes. The Devonian acquisition was completed, and Devo began its operations, on May 15, 2001. Devonian was paid approximately $64.5 million for interests in oil and gas properties located in South Texas. We acquired Devo and its subsidiary concurrently with the private placement of $75 million 11 3/4% Senior Notes due April 30, 2006, on September 28, 2001. The historical income statement data for Devo for the year ended December 31, 2000, and for the period from January 1, 2001 through May 15, 2001 represents only the revenues and direct operating and production expenses of the properties for those periods. Only for the period from May 15, 2001 to June 30, 2001, the historical operating data for Devo includes interest expense related to the Senior Secured Notes issued by Devo to fund the acquisition, depreciation and depletion of the properties, and other general and administrative costs related to the operations of Devo. In the opinion of management, these pro forma combined financial statements include all adjustments necessary for a fair presentation of the condensed unaudited pro forma combined financial statements. Accounting policies used in the preparation of the pro forma statements are those disclosed in the Forman and Pontotoc historical consolidated financial statements, previously filed with the SEC, and those disclosed in Devo's financial statements included elsewhere in this filing. The condensed unaudited pro forma combined financial statements are not necessarily indicative either of the results that actually would have been achieved if the transactions reflected therein had been effective during the periods presented or of the results that may be obtained in the future. In preparing these pro forma statements, no adjustments have been made to reflect transactions that have occurred since the dates of the pro forma financial statements. The condensed unaudited pro forma combined financial statements should be read in conjunction with the description of the merger incorporated by reference in this filing, the historical financial statements and related notes of Pontotoc and Devo and the historical financial statements and related notes of Ascent. The condensed unaudited pro forma combined financial statements give effect to the following assumptions and adjustments: PONTOTOC ACQUISITION PRO FORMA ADJUSTMENTS FINANCING 1. Increase in interest resulting from increased debt balance (6.15% of $30,000,000 or $1,845,000), net of additional capitalized interest of $307,881 for the twelve months ended December 31, 2000 and a proportionate amount for the period ended July 31, 2001. 2. To reflect an effective tax rate of 35.5% 3. To record dividends on Series A mandatorily redeemable preferred stock, at 8% of $21,100,000. GATHERING ACQUISITION 1. To eliminate affiliated sales to Gathering and related production taxes. 2. To record the reversal of Pontotoc's equity method investment in Gathering, the related equity in income of Gathering, and the equity of Gathering. 3. To reflect an effective tax rate of 35.5%. PONTOTOC ACQUISITION 1. Prior to January 1, 2001, Pontotoc recorded as revenue production in inventory at the end of each month. This adjustment conforms Pontotoc's revenue recognition policy to Forman's policy of recognizing revenue. The result is to record the reversal of inventory and related costs at the end of the respective periods. 2. To convert Pontotoc's method for computing depreciation, depletion and amortization to the future gross revenue method and to adjust the provision for depreciation, depletion and amortization based on the pro forma consolidated full cost pool, using the future gross revenue method. 3. To eliminate interest on Pontotoc debt. 4. To reflect an effective tax rate of 35.5%. 5. To record dividends on the Series B mandatorily convertible preferred stock outstanding, at 8% annually on the liquidation preference of the Series B mandatorily convertible preferred stock of $2.50 per share. 6. Warrants to purchase 4,050,000 shares of common stock and 1 million shares of common stock issuable upon conversion of the Series B mandatorily convertible preferred stock were not included in the computation of diluted earnings per share because the effect of the assumed exercise of these stock warrants and conversion of these preferred shares as of the beginning of the year would have been antidilutive. The exercise price for the warrants is $5.21 per share and, for purposes of both the earnings per share computation and valuing the Series B mandatorily convertible preferred shares, exceeds the estimated fair value of our common stock. Pontotoc maintains its accounting records and reports financial information on a March 31 fiscal year basis. The condensed unaudited pro forma calendar year results of operations for Pontotoc were derived from its previously filed reports as follows (certain reclassifications have been made to the financial information presented to conform with the year ended March 31, 2001 presentation):

Adjustments to reflect net income per weighted average common share outstanding have been calculated based upon the pro forma weighted average number of shares outstanding during the period presented. To compute the combined pro forma basic and diluted net income per share, Ascent's historical weighted average number of basic and diluted shares outstanding were used. DEVO ACQUISITION PRO FORMA ADJUSTMENTS DEVO ACQUISITION 1. To adjust the provision for depreciation, depletion and amortization based on the pro forma consolidated full cost pool, using the future gross revenue method. 2. To eliminate general and administrative expense of Devo not expected to be incurred subsequent to the acquisition. 3. To reflect an effective tax rate of 35.5%. The Devonian historical income statement information includes activity solely for the acquired properties from January 1, 2000 through the formation of Devo on May 15, 2001. FINANCING 1. To eliminate interest on the Senior Secured Notes. 2. To record interest on 11-3/4% Senior Notes, including amortization of deferred financing costs of $338,892 for the year ended December 31, 2000 and $254,169 for the nine months ended September 30, 2001. 3. To reflect an effective tax rate of 35.5%. 4. Warrants to purchase 4,050,000 shares of common stock and 1 million shares of common stock issuable upon conversion of the Series B mandatorily convertible preferred stock were not included in the computation of diluted earnings per share because the effect of the assumed exercise of these stock warrants and conversion of these preferred shares as of the beginning of the year would have been antidilutive. The exercise price for the warrants is $5.21 per share and, for purposes of both the earnings per share computation and valuing the Series B mandatorily convertible preferred shares, exceeds the estimated fair value of our common stock.

ASCENT ENERGY INC 8-K/A