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ACQUISITIONS
 3 Months Ended
Mar. 31, 2023
Business Combination and Asset Acquisition [Abstract]  
ACQUISITIONS

2. ACQUISITIONS

 

January 2022 Acquisition

 

On January 5, 2022 (the “Closing Date”), the Company closed the acquisitions (the “Acquisition”) contemplated by three separate Purchase and Sale Agreements (the “Purchase Agreements” and the “Closing”), entered into by the Company on October 4, 2021, with each of (a) Lubbock Energy Partners LLC (“Lubbock”); (b) Banner Oil & Gas, LLC, Woodford Petroleum, LLC and Llano Energy LLC (collectively, “Banner”), and (c) Synergy Offshore LLC (“Synergy”, and collectively with Lubbock and Banner, the “Sellers”). Pursuant to the Purchase Agreements, the Company acquired certain oil and gas properties from the Sellers, representing a diversified portfolio of primarily operated, producing, oil-weighted assets located across the Rockies, West Texas, Eagle Ford, and Mid-Continent. The acquisition also included certain wells, contracts, technical data, records, personal property and hydrocarbons associated with the acquired assets (collectively with the oil and gas properties acquired, the “Acquired Assets”).

 

 

The Company accounted for the acquisition of the Acquired Assets as an asset acquisition. The purchase price for the Acquired Assets was (a) $125,000 in cash and 6,568,828 shares of our common stock, as to Lubbock; (b) $1,000,000 in cash, the assumption of $3.3 million of debt, and 6,790,524 shares of common stock, as well as the novation of certain hedges which had a mark to market loss of approximately $3.1 million as of the Closing Date, as to Banner; and (c) $125,000 in cash and 6,546,384 shares of common stock, as to Synergy. The aggregate purchase price under all the Purchase Agreements was $66.4 million, representing $1.25 million in cash, the value of 19,905,736 shares of our common stock on the Closing Date of $64.7 million and purchase price adjustments of $0.5 million. In addition, we assumed various liabilities, including the repayment of $3.3 million in debt, as well as a derivative liability from the novation of the hedges discussed above of $3.1 million, suspense accounts and asset retirement obligations.

 

   Amount 
   (in thousands) 
Amounts incurred:     
Cash  $1,250 
Value of 19,905,736 shares issued   64,694 
Purchase price adjustments   487 
Transaction costs   1,267 
Total consideration paid   67,698 
      
Debt assumed   3,347 
Commodity derivative liabilities assumed   3,152 
Suspense accounts assumed   1,276 
Employee obligations assumed   100 
Asset retirement obligations assumed   9,614 
Deferred tax liabilities   2,819 
Total liabilities assumed   20,308 
      
Total consideration paid and liabilities assumed  $88,006 
      
Allocation to acquired assets:     
Proved oil and gas properties(1)   87,672 
Vehicles   165 
Deposit account   169 
      
Total allocation to acquired assets  $88,006 

 

(1) Included in the above purchase price adjustments is settlement for oil in temporary storage at the lease in tank batteries. The Company does not separately account for oil in temporary storage until the oil is sold and title transfers to the purchaser. Consistent with the Company’s accounting policy and reporting of similar transactions this amount was recorded within Evaluated Properties on the Company’s condensed consolidated balance sheet.

 

Liberty County, Texas Acquisition

 

On May 3, 2022, the Company acquired certain operated oil and gas producing properties in Liberty County, Texas, adjacent to its existing assets in the area, for $1.0 million in an all-cash transaction. The effective date of the transaction was April 1, 2022. The assets include approximately 1,022 acres, which are 100% held by production, a gas pipeline and associated infrastructure. In addition, the Company assumed suspense accounts of $0.2 million and asset retirement obligations of $0.5 million. The Company accounted for the acquisition as an asset acquisition.

 

East Texas Acquisition

 

On July 27, 2022, the Company closed a purchase and sale agreement for the acquisition of properties from ETXENERGY, LLC (“ETXENERGY”). The properties are located in Henderson and Anderson Counties, Texas (the “East Texas Assets”). The properties consist of approximately 16,600 net acres, all of which are held by production and certain wells and gathering systems. The initial purchase price for the East Texas Assets was $11.9 million in cash. The effective date of the acquisition of the East Texas Assets was June 1, 2022. The Company accounted for the acquisition as an asset acquisition.

 

   Amount 
   (in thousands) 
Amounts incurred:     
Cash  $11,875 
Purchase price adjustments   (1,048)
Transaction costs   63 
Total consideration paid   10,890 
      
Suspense accounts assumed   380 
Asset retirement obligations assumed   1,689 
Total liabilities assumed   2,069 
      
Total consideration paid and liabilities assumed  $12,959 
      
Allocation to acquired assets:     
Proved oil and gas properties  $12,959