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Acquisitions | 12 Months Ended
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Dec. 31, 2022
Business Combination and Asset Acquisition [Abstract] |
Acquisitions | Acquisitions Business Combination Between REP LLC and Tengasco Immediately prior to the closing of the Merger on February 26, 2021, REP LLC converted all of its issued and outstanding Series A Preferred Units into common units of REP LLC. In connection with the Merger, holders of common units of REP LLC were entitled to receive, in exchange for each common unit, shares of common stock of Tengasco (which was renamed Riley Exploration Permian, Inc.), par value $0.001 per share (“Tengasco common stock”) based on the exchange ratio set forth in the Merger Agreement (the “Exchange Ratio”), with cash paid in lieu of the issuance of any fractional shares. The Exchange Ratio was 97.796467 shares of Tengasco common stock for each common unit of REP LLC (as adjusted for the reverse stock split). Immediately prior to the closing of the Merger, Tengasco effected a one-for-twelve reverse stock split resulting in outstanding common stock of approximately 17.8 million shares including shares of Tengasco common stock issued in the Merger. The combination between REP LLC and Tengasco qualified as a business combination with REP LLC being treated as the accounting acquirer. The assets acquired and liabilities assumed were recognized on the consolidated balance sheet at fair value as of the acquisition date. The consideration paid in the Merger by REP LLC as the accounting acquirer totaled approximately $26.4 million and was determined based on the closing price of Tengasco’s common stock on February 26, 2021 and the total number of shares outstanding immediately prior to the Merger. The Merger was structured as a tax-free reorganization for United States federal income tax purposes. The following table summarizes the consideration for the Merger (presented in thousands, except stock price):
Tengasco common stock price | $ | 29.64 |
Tengasco common stock - issued and outstanding as of February 26, 2021 | 891 |
Total consideration | $ | 26,392 |
The Company incurred approximately $5.0 million of related costs for the Merger, of which $3.6 million was expensed for the year ended September 30, 2021 as transaction costs on the consolidated statements of operations. The Company completed the determination of the fair value attributable to the assets acquired and liabilities assumed as of September 30, 2021. The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values on February 26, 2021 (in thousands):
Assets |
Cash and cash equivalents | $ | 860 |
Accounts receivable | 325 |
Prepaid and other current assets | 759 |
Total current assets | 1,944 |
Oil and gas properties | 4,525 |
Other property and equipment | 91 |
Right of use assets | 42 |
Other non-current assets | 4 |
Deferred tax assets | 2,987 |
Total assets acquired | $ | 9,593 |
Liabilities |
Accounts payable | $ | 130 |
Accrued liabilities | 409 |
Current lease liabilities, operating | 42 |
Current lease liabilities, financing | 68 |
Total current liabilities | 649 |
Asset retirement obligations | 1,565 |
Total liabilities assumed | 2,214 |
Net identifiable assets acquired | 7,379 |
Goodwill | 19,013 |
Net assets acquired | $ | 26,392 |
The goodwill recognized was primarily attributable to a substantial increase in the stock price of Tengasco on the Closing Date, which increased the amount of the consideration transferred. The Company does not expect goodwill to be deductible for tax purposes. Pro Forma Operating Results (Unaudited) The following unaudited pro forma combined results for the year ended September 30, 2021 reflect the consolidated results of operations of the Company as if the Merger had occurred on October 1, 2019. Subsequent to the Merger, the Company changed its fiscal year period from October 1st through September 30th each year to January 1st to December 31st each year commencing with the 2022 calendar year. The unaudited pro forma information includes adjustments for $3.6 million of transaction costs being reclassified to the fourth quarter of calendar year 2019 which were incurred during the year ended September 30, 2021. Additionally, the Company adjusted for $0.9 million of oil and natural gas property impairment that Tengasco recognized under the full-cost method of accounting, which would not have been recognized under the successful efforts method, during the three months ended December 31, 2020. Also, the unaudited pro forma information has been tax effected using a 21% tax rate. The common stock was also adjusted for the conversion of the REP LLC preferred units into common units and retroactively adjusted for the Exchange Ratio and one-for-twelve reverse stock split.
| For the year ended September 30, 2021 |  |
| (In thousands, except per share/unit amounts) |  |
| (Unaudited) |  |
Total Revenues | $ | 151,036 |  |  |
Pro Forma Net Loss before Taxes | (29,871) |  |  |
Pro forma income tax benefit | 6,273 |  |  |
Pro Forma Net Loss | $ | (23,598) |  |  |
Net Loss per Share/Unit from Continuing Operations: |  |  |
Basic | $ | (1.88) |  |  |
Diluted | $ | (1.88) |  |  |
Net Income per Share/Unit from Discontinued Operations: |  |  |
Basic | $ | 0.02 |  |  |
Diluted | $ | 0.02 |  |  |
The unaudited pro forma combined financial information is for informational purposes only and was based off of the fiscal year period October 1st through September 30th as this was the fiscal year in effect at the time of the Merger. The unaudited pro forma financial information was not modified for the change in the Company's fiscal year. It is not intended to represent or to be indicative of the combined results of operations that the Company would have reported had the Merger been completed as of October 1, 2019 and should not be taken as indicative of the Company's future combined results of operations. The actual results may differ significantly from that reflected in the unaudited pro forma combined financial information for a number of reasons, including, but not limited to, differences in assumptions used to prepare the unaudited pro forma combined financial information and actual results. Divestitures On April 2, 2021, the Company closed on the sale of the Kansas Reporting Unit for an agreed upon purchase price of $3.5 million, less approximately $0.2 million of closing adjustments. See further discussion in Note 12 - Discontinued Operations and Assets Held for Sale. Transaction Costs Transaction costs consist of those costs associated with investment banking, accounting, legal and other diligence costs related to unsuccessful acquisitions or successful acquisitions accounted for as business combinations. The Company recognized transaction costs for the periods presented below:
|  | Year Ended December 31, 2022 |  | Three Months Ended December 31, 2021 |  | Year Ended September 30, 2021
|  | (In thousands)
Business combination acquisition costs |  | $ | 2,638 |  |  | $ | 1,258 |  |  | $ | 3,572 |
Other |  | — |  |  | — |  |  | 160 |
Total transaction costs |  | $ | 2,638 |  |  | $ | 1,258 |  |  | $ | 3,732 |
The transaction costs of $2.6 million and $1.3 million for the year ended December 31, 2022 and three months ended December 31, 2021, respectively, primarily related to a potential business combination and related financing that the Company pursued but ultimately chose not to consummate. During the year ended September 30, 2021, the transaction costs of $3.6 million primarily relate to costs incurred on the Merger with Tengasco in February 2021.

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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 -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 + Details
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