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ACQUISITIONS

9 Months Ended

Sep. 30, 2022

ACQUISITION

3.ACQUISITION

Belvedere

On September 9, 2022 (the "Belvedere Acquisition Date"), our subsidiary, Alliance Royalty, LLC acquired approximately 394 net oil & gas royalty acres in the Delaware Basin from Belvedere for a cash purchase price of $11.4 million, which was funded with cash on hand. This acquisition gives us increased exposure to a prolific area of the Delaware Basin and is within close proximity to reserves that we currently own. Because the mineral interests acquired in the Belvedere Acquisition include royalty interests in both developed properties and undeveloped properties, we have determined that the acquisition should be accounted for as a business combination and the underlying assets should be recorded at fair value as of the Belvedere Acquisition Date on our condensed consolidated balance sheet.

The following table summarizes the fair value allocation of assets acquired as of the Belvedere Acquisition Date:


		(in thousands)


Mineral interests in proved properties		$	7,724
Mineral interests in unproved properties			3,667
		$	11,391

The fair value of the mineral interests was determined using an income approach consisting of a discounted cash flow model. The assumptions used in the discounted cash flow model included estimated production, projected cash flows, forward oil & gas prices and risk adjusted discount rates. Certain assumptions used are not observable in active markets; therefore, the fair value measurements represent Level 3 fair value measurements.

The amounts of revenue and earnings from the mineral interests acquired in the Belvedere Acquisition included in our condensed consolidated statements of income since the Belvedere Acquisition Date are as follows:


	Three Months Ended
	September 30,
	2022

	(in thousands)

Revenue	$	112
Net income		78

The following represents our pro forma revenues and net income for the three and nine months ended September 30, 2022 and 2021 as if the mineral interests acquired in the Belvedere Acquisition had been included in our consolidated results since January 1, 2021. These amounts have been calculated after applying our accounting policies.


		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2022			2021			2022			2021

		(in thousands)
Total revenues
As reported		$	628,420		$	415,439		$	1,705,784		$	1,096,504
Pro forma			628,645			415,943			1,706,641			1,097,261

Net income
As reported		$	164,971		$	57,724		$	363,714		$	126,715
Pro forma			165,168			58,154			364,472			127,375