Acquisitions and Divestitures

12 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

During the three years ended December 31, 2021, we completed the following acquisitions and divestitures:

Contango Merger

In December 2021, we acquired all of Contango's outstanding common stock through the issuance of 39,834,461 shares of Crescent Class A Common Stock and settled Contango's equity-based compensation plans through the issuance of 3,270,915 shares of Crescent Class A Common Stock, of which 1,150,991 shares of treasury stock were repurchased to meet employee payroll tax withholding obligations. Contango's properties are primarily located in Oklahoma, Texas, Wyoming and Louisiana. We accounted for the Contango Merger as a business combination using the acquisition method under GAAP. The fair value of consideration transferred totaled $654.6 million based on the closing share price of Contango's common stock on the date of the

Merger Transactions as shares of Crescent Class A common stock were not yet publicly traded. The purchase price allocation for the acquisition is preliminary for assets acquired and liabilities assumed. We expect to complete a final valuation analysis during the second half of 2022. As a result of the acquisition, we recognized $76.6 million of goodwill that is primarily attributable to deferred tax liabilities associated with the transaction and expected synergies from our combined operations. This goodwill is not expected to be deductible for income tax reporting purposes.

From the date of the Contango acquisition through December 31, 2021, revenues and net income associated with the operations acquired through the acquisition were $36.4 million and $5.6 million, respectively. We recognized transaction related expenses of $12.9 million for the year ended December 31, 2021.

The following table summarizes our unaudited pro forma financial information for the years ended December 31, 2021 and 2020 as if the Contango acquisition occurred on January 1, 2020 (unaudited):


	Year Ended December 31,
	2021		2020
	(in thousands)
Revenues	$	1,943,741	$	970,921
Net loss	$	(432,328)	$	(507,837)

The unaudited pro forma information is presented for illustration purposes only and is not necessarily indicative of the operating results that would have occurred had the acquisition been completed on January 1, 2020, nor is it necessarily indicative of future operating results of the combined entity.

Central Basin Platform Acquisition

In December 2021, we acquired from an unrelated third-party certain operated producing oil and natural gas properties predominately located in the Central Basin Platform in Texas and New Mexico, with additional properties in the southwestern Permian and Powder River Basins, for total cash consideration of $60.4 million, including customary purchase price adjustments. The purchase price was funded using cash on hand and borrowings under our Revolving Credit Facility (as defined in NOTE 8 – Debt). We accounted for the Central Basin Platform Acquisition as an asset acquisition and recorded an additional $73.7 million of proved oil and natural gas properties, including an ARO asset of $12.6 million.

DJ Basin Acquisition

In March 2021, we acquired a portfolio of oil and natural gas mineral assets located in the DJ Basin from an unrelated third-party operator for total consideration of $60.8 million (the "DJ Basin Acquisition"). The DJ Basin Acquisition was funded using cash on hand and borrowings under our Prior Credit Agreements. We accounted for the DJ Basin Acquisition as an asset acquisition and the purchase price was allocated 35.6% to proved oil and natural gas properties and 64.4% to unproved oil and natural gas properties. In conjunction with the DJ Basin Acquisition, we issued equity-based compensation, a portion of which is classified within permanent equity as noncontrolling interest and the remainder of which is classified as other liabilities, to certain parties of the transaction. See NOTE 13 – Incentive Compensation Arrangements.

Titan Acquisition

In August 2020, through a series of transactions, we consummated the acquisition of all of the outstanding membership interests in Liberty Energy LLC (and the oil and natural gas assets owned thereby) pursuant to the Contribution Agreement, dated as of July 19, 2020, by and among Independence Energy LLC, Liberty Energy Holdings, LLC (“Liberty Holdco”) and the other parties thereto, in consideration for the issuance of certain membership interests in Independence Energy LLC to an entity substantially owned by Liberty Holdco. Subsequent to the acquisition, we changed the name of Liberty Energy, LLC to Titan. Titan owns certain working interests in non-operated producing and non-producing oil and natural gas properties in the Permian, Rockies, Eagle Ford and Arkoma Basins, which includes a 50% interest in the DJ Basin Erie Hub Gathering System. During the year ended December 31, 2020, we transferred $455.1 million of equity consideration in the form of 0.4 million Class A units of our Predecessor. During the year ended December 31, 2021, due to post-closing adjustments that increased the purchase price, we issued an additional $7.2 million in equity consideration in our Predecessor. We recognized transaction related expenses of $8.7 million for the year ended December 31, 2020.

The following table summarizes the consideration transferred and the estimated fair value of identified assets acquired and liabilities assumed for the Contango and Titan business combinations:


	Contango		Titan
	(in thousands)
Consideration transferred:
Equity consideration	$	654,616	$	461,983
Total	$	654,616	$	461,983
Assets acquired and liabilities assumed:
Cash and cash equivalents	$	14,202	$	482
Accounts receivable, net	145,727		29,044
Derivative assets – current	—		12,000
Prepaid and other current assets	8,275		49,079

Oil and natural gas properties - proved	1,002,165		375,014

Field and other property and equipment	6,955		30,232
Derivative assets – noncurrent	—		114
Goodwill	76,564		—
Investment in equity affiliates	15,047		—
Other assets	3,514		—
Accounts payable and accrued liabilities	(186,689)		(6,539)
Derivative liabilities – current	(44,002)		(4,550)
Long-term debt	(140,000)		—
Deferred tax liability	(83,250)		—
Derivative liabilities – noncurrent	(14,592)		(1,484)
Asset retirement obligations	(142,100)		(21,409)
Other liabilities	(7,200)		—
Fair value of net assets acquired	$	654,616	$	461,983

Claiborne Parish Divestiture

Certain producing properties and oil and natural gas leases in Claiborne Parish, Louisiana were acquired in the Contango Merger and were classified as held for sale and included within “Oil and natural gas properties – proved” in our preliminary purchase price allocation. In December 2021, we entered into a purchase and sale agreement with an unaffiliated third-party that encompassed the sale of certain producing properties and oil and natural gas leases in Claiborne Parish, Louisiana in exchange for cash consideration, net of closing adjustments, of $4.3 million. We did not recognize a gain or loss for the year ended December 31, 2021 as a result of the transaction.

Arkoma Basin Divestiture

In May 2021, we executed a purchase and sale agreement with an unaffiliated third-party that encompassed the sale of certain producing properties and oil and natural gas leases in the Arkoma Basin in exchange for cash consideration, net of closing adjustments, of $22.1 million. We recognized a $8.8 million gain on sale of assets in our combined and consolidated statements of operations for the year ended December 31, 2021, as a result of the transaction.

Midland and Ector County Divestiture

In March 2020, we received the remaining $3.9 million from the deep rights sale, described further below, and recognized the reduction to our oil and gas properties for the full sale of $7.9 million.

In December 2019, we entered into a Term Assignment of Oil and Gas Lease conveying all of our interest in the Midland and Ector county leases between the top of the Mississippian formation down to the base of the Woodford formation, “deep rights”, for total bonus consideration of $7.9 million and a primary term of four years from the effective date, January 1, 2020. We received $4.0 million in December 2019 when the agreement was signed and the remainder was received in March 2020.

Eagle Ford Divestiture

In September 2019, we entered into a purchase, sale and exchange agreement with an unaffiliated third party, which encompassed the sale of certain producing properties and exchange of oil and gas leases in the Eagle Ford area of South Texas in exchange for cash consideration of $15.2 million and additional post-closing settlement consideration of $1.8 million, $1.2 million of which was received in 2021.