Annual report pursuant to Section 13 and 15(d)

Acquisitions and Dispositions

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Acquisitions and Dispositions
12 Months Ended
Dec. 31, 2018
Business Combinations [Abstract]  
Acquisitions and Dispositions
Acquisitions and Dispositions

2018 Acquisitions

On August 31, 2018, the Company completed the acquisition of approximately 28,000 net surface acres in the Spur operating area, located in the Delaware Basin, from Cimarex Energy Company, for $539,519, including customary purchase price adjustments (the “Delaware Asset Acquisition”). The Company issued debt and equity to fund, in part, the Delaware Asset Acquisition. See Notes 6 and 11 for additional information regarding the Company’s debt obligations and equity offerings. The following table summarizes the estimated acquisition date fair values of the acquisition:
Evaluated oil and natural gas properties
$
253,089

Unevaluated oil and natural gas properties
287,000

Asset retirement obligations
(570
)
Net assets acquired
$
539,519



The preliminary purchase price allocations are subject to change based on numerous factors, including the final adjusted purchase price and the final estimated fair value of the assets acquired and liabilities assumed. Any such adjustments to the preliminary estimates of fair value could be material.

In addition, the Company completed various acquisitions of additional working interests and mineral rights, and associated production volumes, in the Company’s existing core operating areas within the Permian Basin. In the first quarter of 2018, the Company completed acquisitions within Monarch and WildHorse operating areas for $37,770, including customary purchase price adjustments. In the fourth quarter of 2018, the Company completed acquisitions of leasehold interests and mineral rights within its WildHorse and Spur operating areas for $87,865, including 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 11 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 $52,014, including 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 (“6.125% Senior Notes”) (see Note 6 for additional information regarding the Company’s debt obligations).

2016 Acquisitions

On October 20, 2016, the Company completed the acquisition of 6,904 gross (5,952 net) acres primarily located in Howard County, Texas from Plymouth Petroleum, LLC and additional sellers that exercised their “tag-along” sales rights, for total cash consideration of $339,687, excluding customary purchase price adjustments (the “Plymouth Transaction”). The Company funded the cash purchase price with the net proceeds of an equity offering (see Note 11 for additional information regarding the equity offering). The Company acquired an 82% average working interest (62% average net revenue interest) in the properties acquired in the Plymouth Transaction. The following table summarizes the estimated acquisition date fair values of the net assets acquired in the acquisition: 
໿
Evaluated oil and natural gas properties
$
65,043

Unevaluated oil and natural gas properties
274,664

Asset retirement obligations
(20
)
Net assets acquired
$
339,687



On May 26, 2016, the Company completed the acquisition of 17,298 gross (14,089 net) acres primarily located in Howard County, Texas from BSM Energy LP, Crux Energy LP and Zaniah Energy LP, for total cash consideration of $220,000 and 9.3 million shares of common stock (at an assumed offering price of $11.74 per share, which is the last reported sale price of our common stock on the New York Stock Exchange on that date) for a total purchase price of $329,573, excluding customary purchase price adjustments (the “Big Star Transaction”). The Company acquired an 81% average working interest (61% average net revenue interest) in the properties acquired in the Big Star Transaction. The following table summarizes the estimated acquisition date fair values of the net assets acquired in the acquisition: 
໿
໿
Evaluated oil and natural gas properties
$
96,194

Unevaluated oil and natural gas properties
233,387

Asset retirement obligations
(8
)
Net assets acquired
$
329,573



During 2016, the Company also closed on various acquisitions in the Midland Basin for an aggregate total purchase price of approximately $73,240, net of $23,045 in sales of working interest. The acquisitions included the purchase of additional working interest and acreage in the Company’s existing core operating area. 

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 Delaware Asset Acquisition, Ameredev Transaction, Plymouth Transaction, and Big Star Transaction had occurred as presented, or to project the Company’s results of operations for any future periods:
 
 
Twelve Months Ended December 31,
 
 
2018
(a) 
 
2017
(a) 
 
2016
(a) 
Revenues
 
$
668,759

 
 
$
472,949

 
 
$
243,273

 
Income (loss) from operations
 
295,738

 
 
212,381

 
 
(39,730
)
 
Income (loss) available to common stockholders
 
336,730

 
 
184,064

 
 
(82,612
)
 

 
 
 
 
 
 
 
 
 
Net income (loss) per common share:
 
 
 
 
 
 
 
 
 
Basic
 
$
1.55

 
 
$
0.91

 
 
$
(0.50
)
 
Diluted
 
$
1.55

 
 
$
0.91

 
 
$
(0.50
)
 
(a)
The pro forma financial information was prepared assuming the Delaware Asset Acquisition occurred as of January 1, 2017, and the Ameredev Transaction, Plymouth Transaction, and Big Star 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 Delaware Asset Acquisition, Ameredev Transaction, Big Star Transaction, and the Plymouth Transaction have been commingled with our existing properties and it is impractical to provide the stand-alone operational results related to these properties.