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ACQUISITIONS AND DIVESTITURES | 9 Months Ended
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Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
ACQUISITIONS AND DIVESTITURES | ACQUISITIONS AND DIVESTITURES All mergers and acquisitions disclosed below are accounted for under the acquisition method of accounting for business combinations under ASC Topic 805, Business Combinations. Accordingly, we conducted assessments of the net assets acquired and recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values, while transaction and integration costs associated with the acquisition were expensed as incurred. The fair value measurements of assets acquired, and liabilities assumed were based on inputs that are not observable in the market, and therefore represent Level 3 inputs. The fair values of crude oil and natural gas properties were measured using valuation techniques that converted future cash flows to a single discounted amount. Significant inputs to the valuation of the crude oil and natural gas properties included estimates of reserves, future operating and development costs, future commodity prices, estimated future cash flows, reserve adjustment factors, and a market-based weighted-average cost of capital. These inputs required significant judgments and estimates by management at the time of the valuation. Vencer Acquisition On January 2, 2024, we completed the acquisition of certain crude oil and natural gas assets from Vencer Energy, LLC (“Vencer”) for adjusted aggregate consideration of approximately $2.0 billion, inclusive of customary post-closing adjustments and $550 million in cash to be paid on or before January 3, 2025 (the “Vencer Acquisition”). In connection with and upon execution of the Vencer purchase and sale agreement, we deposited cash of $161.3 million with an escrow agent. This deposit, along with interest accrued thereon, was credited against the cash payable at closing. The following tables present the consideration transferred and preliminary purchase price allocation of the assets acquired and the liabilities assumed in the Vencer Acquisition:
Consideration (in thousands, except shares and per share amount) |
Cash consideration | $ | 996,420 |
Deferred acquisition consideration(1)(3) | $ | 532,284 |
Shares of common stock issued | 7,181,527 |
Closing price per share(2) | $ | 68.08 |
Equity consideration(4) | $ | 488,918 |
Total consideration | $ | 2,017,622 |
_______________________ (1)Based on discounted fixed and determinable future payments of cash. (2)Based on the closing stock price of Civitas common stock on January 2, 2024. (3)Amounts represent non-cash investing activities until such time payments are made, as applicable. Refer to Note 5 - Debt for additional information. (4)Amounts represent non-cash financing activities.
Preliminary Purchase Price Allocation (in thousands) |
Assets Acquired |
Proved properties | $ | 1,855,909 |
Unproved properties | 231,627 |
Other property and equipment | 666 |
Right-of-use assets | 4,049 |
Total assets acquired | $ | 2,092,251 |
Liabilities Assumed |
Accounts payable and accrued expenses | $ | 2,000 |
Crude oil and natural gas revenue distribution payable | 28,423 |
Asset retirement obligations | 40,157 |
Lease liability | 4,049 |
Total liabilities assumed | 74,629 |
Net assets acquired | $ | 2,017,622 |
Through September 30, 2024, there have been immaterial adjustments made to the allocation presented in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, filed with the SEC on May 2, 2024. The purchase price allocation for the Vencer Acquisition is preliminary, and we continue to assess the fair values of certain of the Vencer assets acquired and liabilities assumed. We expect to finalize the purchase price allocation as soon as practicable, which will not extend beyond the one-year measurement period. Hibernia Acquisition On August 2, 2023, we acquired all of the issued and outstanding equity ownership interests of Hibernia Energy III, LLC (“HE3”) and Hibernia Energy III-B, LLC (“HE3-B”, and together with HE3, “Hibernia”) for aggregate consideration of approximately $2.2 billion in cash, inclusive of customary post-closing adjustments (the “Hibernia Acquisition”). The following table presents the final purchase price allocation of the assets acquired and the liabilities assumed in the Hibernia Acquisition:
Final Purchase Price Allocation (in thousands) |
Assets Acquired |
Cash and cash equivalents | $ | 30,671 |
Accounts receivable - crude oil and natural gas sales | 86,262 |
Accounts receivable - joint interest and other | 4,463 |
Proved properties | 2,150,872 |
Unproved properties | 115,802 |
Other property and equipment | 520 |
Right-of-use assets | 30,393 |
Total assets acquired | $ | 2,418,983 |
Liabilities Assumed |
Accounts payable and accrued expenses | $ | 110,022 |
Production taxes payable | 10,320 |
Crude oil and natural gas revenue distribution payable | 75,267 |
Asset retirement obligations | 8,299 |
Lease liability | 30,393 |
Total liabilities assumed | 234,301 |
Net assets acquired | $ | 2,184,682 |
The purchase price allocation for the Hibernia Acquisition was finalized as of the third quarter of 2024 with immaterial adjustments made to the allocation presented in the Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed with the SEC on November 7, 2023. Tap Rock Acquisition On August 2, 2023, we acquired all of the issued and outstanding equity ownership interests of Tap Rock AcquisitionCo, LLC (“Tap Rock AcquisitionCo”), Tap Rock Resources II, LLC (“Tap Rock Resources II”), and Tap Rock NM10 Holdings, LLC (“Tap Rock NM10” and, together with Tap Rock AcquisitionCo and Tap Rock NM10, “Tap Rock”) for aggregate consideration of approximately $2.5 billion, inclusive of customary post-closing adjustments (the “Tap Rock Acquisition”). The following tables present the consideration transferred and final purchase price allocation of the assets acquired and the liabilities assumed in the Tap Rock Acquisition:
Consideration (in thousands, except shares and per share amount) |
Cash consideration | $ | 1,502,880 |
Shares of common stock issued | 13,538,472 |
Closing price per share(1) | $ | 73.14 |
Equity consideration | $ | 990,204 |
Total consideration | $ | 2,493,084 |
_______________________ (1)Based on the closing stock price of Civitas common stock on August 2, 2023.
Final Purchase Price Allocation (in thousands) |
Assets Acquired |
Cash and cash equivalents | $ | 6,543 |
Accounts receivable - crude oil and natural gas sales | 105,509 |
Accounts receivable - joint interest and other | 30,415 |
Prepaid expenses and other | 17,930 |
Proved properties | 2,334,678 |
Unproved properties | 300,859 |
Other property and equipment | 12,827 |
Right-of-use assets | 626 |
Total assets acquired | $ | 2,809,387 |
Liabilities Assumed |
Accounts payable and accrued expenses | $ | 157,606 |
Production taxes payable | 9,692 |
Crude oil and natural gas revenue distribution payable | 68,094 |
Ad valorem taxes | 1,407 |
Asset retirement obligations | 28,612 |
Lease liability | 626 |
Deferred revenue | 50,266 |
Total liabilities assumed | 316,303 |
Net assets acquired | $ | 2,493,084 |
The purchase price allocation for the Tap Rock Acquisition was finalized as of the third quarter of 2024 with immaterial adjustments made to the allocation presented in the Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed with the SEC on November 7, 2023. Revenue and earnings of the acquiree The results of operations for the Vencer Acquisition since the closing date have been included on our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2024. The amount of revenue of Vencer included in our accompanying unaudited condensed consolidated statements of operations (“statements of operations”) was approximately $186.9 million and $584.9 million during the three and nine months ended September 30, 2024, respectively. We determined that disclosing the amount of Vencer-related net income included in the accompanying statements of operations is impracticable as the operations from the acquisition were integrated into our operations from the date of the acquisition. Supplemental pro forma financial information The results of operations for the Vencer, Hibernia, and Tap Rock acquisitions since their respective closing dates have been included in our unaudited condensed consolidated financial statements and therefore do not require pro forma disclosure for the three and nine months ended September 30, 2024. The following unaudited pro forma financial information (in thousands, except per share amounts) represents a summary of the consolidated results of operations for the three and nine months ended September 30, 2023, assuming the Vencer Acquisition had been completed as of January 1, 2023 and the Hibernia and Tap Rock acquisitions had been completed as of January 1, 2022. The pro forma financial information is not necessarily indicative of the results of operations that would have been achieved if the Vencer, Hibernia, and Tap Rock acquisitions had been effective as of those dates, or of future results, and includes certain nonrecurring pro forma adjustments that were directly related to these business combinations.
|  | Three Months Ended September 30, 2023 |  |  |  | Nine Months Ended September 30, 2023
Total revenue |  | $ | 1,448,735 |  |  |  |  | $ | 3,886,210 |
Net income |  | 278,564 |  |  |  |  | 843,161 |
Earnings per common share - basic |  | $ | 2.74 |  |  |  |  | $ | 8.35 |
Earnings per common share - diluted |  | 2.72 |  |  |  |  | 8.29 |
Transaction costs Transaction costs related to the aforementioned acquisitions are accounted for separately from the assets acquired and liabilities assumed and are included in transaction costs in the accompanying statements of operations. Transaction costs also include costs associated with our efforts to divest of certain non-core assets in the DJ Basin, completed in early 2024. We incurred transaction costs of $0.1 million and $28.5 million during the three months ended September 30, 2024 and 2023, respectively, and $30.7 million and $60.1 million during the nine months ended September 30, 2024 and 2023, respectively.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent + Details
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