Quarterly report pursuant to Section 13 or 15(d)

Acquisitions (Tables)

v3.8.0.1
Acquisitions (Tables)
9 Months Ended
Sep. 30, 2017
Business Acquisition [Line Items]  
Schedule of Business Acquisitions, by Acquisition [Table Text Block]
Acquisitions
Eagle Ford Acquisition
On July 30, 2017, we entered into a purchase and sale agreement (the “Purchase Agreement”) with Devon Energy Corporation (“Devon”) to acquire all of Devon’s right, title and interest in and to certain oil and gas assets (the “Devon Properties”), including oil and gas leases covering approximately 19,600 net acres located primarily in Lavaca County, Texas for aggregate consideration of $205.0 million in cash, subject to customary purchase price adjustments (the “Acquisition”). Upon execution of the Purchase Agreement, we deposited $10.3 million as earnest money into an escrow account (the “Escrow Account”). The Acquisition has an effective date of March 1, 2017 (the “Effective Date”) and closed on September 29, 2017 (the “Date of Acquisition”), at which time we paid cash consideration of $189.9 million and $7.1 million was released from the Escrow Account to Devon. On the Date of Acquisition we also identified and applied $3.2 million of preliminary purchase price adjustments to net working capital items attributable to the period from the Effective Date through the Date of Acquisition (the “Post-Effective Period”). The $3.2 million remaining in the Escrow Account as of September 30, 2017, which is included as a component of noncurrent “Other assets” on our Condensed Consolidated Balance Sheet, is attributable to certain properties for which title defects have been identified. To the extent that Devon is successful in curing these title defects, funds will be transferred from the Escrow Account to Devon and we will reclassify corresponding amounts from Other assets to Property and equipment, net on our Condensed Consolidated Balance Sheet.
On November 1, 2017, we acquired additional working interests in the Devon Properties for $0.7 million from parties that had tag-along rights to sell their interests under the Purchase Agreement.
The Acquisition was financed with the net proceeds received from borrowings under a new $200 million second lien credit agreement (the “Second Lien Facility”) (see Note 8 for terms of the Second Lien Facility) and incremental borrowings under our credit agreement (the “Credit Facility”).
We incurred $1.5 million of transaction costs associated with the Acquisition, including advisory, legal, due diligence and other professional fees. These costs have been recognized as a component of our “General and administrative” expenses.
We accounted for the Acquisition by applying the acquisition method of accounting as of the Date of Acquisition. In accordance with the Purchase Agreement, the Acquisition is deemed to have occurred on September 30, 2017. Accordingly, no production, revenues and expenses attributable to the Devon Properties have been included in our results of operations for the periods ended September 30, 2017. The initial accounting for the Acquisition as presented below is based upon preliminary information available to us and was not complete as of the date our Condensed Consolidated Financial Statements were issued. The final purchase price will be subject to additional post-closing adjustments for the Post-Effective Period to be identified by Devon and agreed to by us in a final settlement.
The following table represents the preliminary fair values assigned to the net assets acquired as of the Date of Acquisition and the consideration transferred:
Assets
 
 
Oil and gas properties - proved
 
$
42,795

Oil and gas properties - unproved
 
142,817

Other property and equipment
 
8,642

Liabilities
 
 
Asset retirement obligations (“AROs”)
 
491

Net assets acquired
 
$
193,763

 
 
 
Cash consideration paid to Devon on the Date of Acquisition
 
$
189,911

Amount transferred to Devon from the Escrow Account
 
7,049

Application of working capital adjustments, net
 
(3,197
)
Preliminary purchase price
 
$
193,763


The fair values of the oil and gas properties acquired were measured using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation include estimates of: (i) reserves, (ii) future operating and development costs, (iii) future commodity prices, (iv) future cash flows and (v) a market-based weighted-average cost of capital. The fair value of the other property and equipment acquired was measured primarily with reference to replacement costs for similar assets adjusted for the age and normal use of the underlying assets. Because many of these inputs are not observable, we have classified the initial fair value estimates as Level 3 inputs as that term is defined in GAAP.
The following table presents unaudited summary pro forma financial information for the periods presented assuming the Acquisition and the related entry into the Second Lien Facility occurred as of January 1, 2017. The pro forma financial information does not purport to represent what our actual results of operations would have been if the Acquisition and the entry into the Second Lien Facility had occurred as of this date, or the results of operations for any future periods. We have excluded any pro forma presentations for the Predecessor periods as they are not comparable.
 
 
Three Months
 
Nine Months
 
 
Ended
 
Ended
 
 
September 30,
 
September 30,
 
 
2017
 
2017
Total revenues
 
$
41,865

 
$
130,504

Net income (loss) attributable to common shareholders
 
$
(8,657
)
 
$
38,947

Net income (loss) per share - basic
 
$
(0.58
)
 
$
2.60

Net income (loss) per share - diluted
 
$
(0.58
)
 
$
2.58

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]
The following table represents the preliminary fair values assigned to the net assets acquired as of the Date of Acquisition and the consideration transferred:
Assets
 
 
Oil and gas properties - proved
 
$
42,795

Oil and gas properties - unproved
 
142,817

Other property and equipment
 
8,642

Liabilities
 
 
Asset retirement obligations (“AROs”)
 
491

Net assets acquired
 
$
193,763

 
 
 
Cash consideration paid to Devon on the Date of Acquisition
 
$
189,911

Amount transferred to Devon from the Escrow Account
 
7,049

Application of working capital adjustments, net
 
(3,197
)
Preliminary purchase price
 
$
193,763

Business Acquisition, Pro Forma Information [Table Text Block]
The following table presents unaudited summary pro forma financial information for the periods presented assuming the Acquisition and the related entry into the Second Lien Facility occurred as of January 1, 2017. The pro forma financial information does not purport to represent what our actual results of operations would have been if the Acquisition and the entry into the Second Lien Facility had occurred as of this date, or the results of operations for any future periods. We have excluded any pro forma presentations for the Predecessor periods as they are not comparable.
 
 
Three Months
 
Nine Months
 
 
Ended
 
Ended
 
 
September 30,
 
September 30,
 
 
2017
 
2017
Total revenues
 
$
41,865

 
$
130,504

Net income (loss) attributable to common shareholders
 
$
(8,657
)
 
$
38,947

Net income (loss) per share - basic
 
$
(0.58
)
 
$
2.60

Net income (loss) per share - diluted
 
$
(0.58
)
 
$
2.58