Quarterly report pursuant to Section 13 or 15(d)

Acquisitions

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Acquisitions
6 Months Ended
Jun. 30, 2018
Business Combinations [Abstract]  
Acquisitions
Acquisitions 

Acquisitions were accounted for under the acquisition method of accounting, which involves determining the fair value of the assets acquired and liabilities assumed under the income approach.

2018 Acquisitions

On May 23, 2018, the Company entered into a definitive purchase and sale agreement with Cimarex Energy Company for the acquisition of approximately 47,538 gross (28,657 net) acres in the Spur operating area, located in the Delaware Basin, for an aggregate cash purchase price of $570,000, subject to customary purchase price adjustments (the “Cimarex Acquisition”). In connection with the execution of the purchase and sale agreement, the Company paid a deposit in the amount of $28,500, which was recorded as Acquisition deposit on the balance sheet as of June 30, 2018. The Company issued debt and equity to fund, in part, the Cimarex Acquisition. See Notes 5 and 10 for additional information regarding the Company’s debt obligations and equity offerings.

The Company plans to file separate financial statements and pro forma financial information, as required by SEC rules, in a Current Report on Form 8-K within the prescribed 75 day period following consummation of the Cimarex Acquisition.

During the first quarter of 2018, the Company completed acquisitions of additional working interests and acreage in the Company’s existing core operating areas of Monarch and Wildhorse, located in the Permian Basin, for an aggregate total purchase price of approximately $35,900 excluding customary purchase price adjustments.

2017 Acquisitions

On February 13, 2017, the Company completed the acquisition of 29,175 gross (16,688 net) acres in the Delaware Basin, primarily located in Ward and Pecos Counties, Texas from American Resource Development, LLC, for total cash consideration of $646,559 excluding customary purchase price adjustments (the “Ameredev Transaction”). The Company funded the cash purchase price with the net proceeds of an equity offering (see Note 10 for additional information regarding the equity offering). The Company obtained an 82% average working interest (75% average net revenue interest) in the properties acquired in the Ameredev Transaction. In December 2016, in connection with the execution of the purchase and sale agreement for the Ameredev Transaction, the Company paid a deposit in the amount of $46,138 to a third party escrow agent, which was recorded as Acquisition deposit on the balance sheet as of December 31, 2016. The following table summarizes the estimated acquisition date fair values of the acquisition:
Evaluated oil and natural gas properties
$
137,368

Unevaluated oil and natural gas properties
509,359

Asset retirement obligations
(168
)
Net assets acquired
$
646,559


On June 5, 2017, the Company completed the acquisition of 7,031 gross (2,488 net) acres in the Delaware Basin, located near the acreage acquired in the Ameredev Transaction discussed above, for total cash consideration of $52,500 excluding customary purchase price adjustments. The Company funded the cash purchase price with its available cash and proceeds from the issuance of an additional $200,000 of its 6.125% senior notes due 2024 (see Note 5 for additional information regarding the Company’s debt obligations).

Unaudited pro forma financial statements

The following unaudited summary pro forma financial information for the periods presented is for illustrative purposes only and does not purport to represent what the Company’s results of operations would have been if the Ameredev Transaction had occurred as presented, or to project the Company’s results of operations for any future periods:
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
June 30, 2017
(a) 
 
June 30, 2017
(a) 
Revenues
 
$
82,283

 
 
$
166,699

 
Income from operations
 
23,743

 
 
58,650

 
Income available to common stockholders
 
31,566

 
 
79,529

 
 
 
 
 
 
 
 
Net income per common share:
 
 
 
 
 
 
Basic
 
$
0.16

 
 
$
0.40

 
Diluted
 
$
0.16

 
 
$
0.40

 

(a)
The pro forma financial information was prepared assuming the Ameredev Transaction occurred as of January 1, 2016.

The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable, including revenue, lease operating expenses, production taxes, depreciation, depletion and amortization expense, accretion expense, interest expense and capitalized interest.

The properties associated with the Ameredev Transaction have been commingled with the Company’s existing properties and it is impractical to provide the stand-alone operational results related to these properties.