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Note 2 - Acquisitions and Divestitures | 12 Months Ended
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Dec. 31, 2023
Notes to Financial Statements |
Mergers, Acquisitions and Dispositions Disclosures [Text Block] | 2. ACQUISITIONS AND DIVESTITURES 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 as of the closing date: |  |  |  |
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 in tank batteries at the leases of $1,286. 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 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 as of the closing date: |  |  |  |
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(1) |  | $ | 12,959 |
| (1) | Included in the above purchase price adjustments is settlement for oil in temporary storage in tank batteries at the leases of $557. 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 Consolidated Balance Sheet.
Divestitures During the year ended December 31, 2023, the Company closed on a series of individual divestitures for a total of $7.0 million in net proceeds before transaction costs of $0.4 million. The divestitures included the Company’s non-operated interests in 152 wells across North Dakota, New Mexico, and Texas, and overriding royalty interests in seven wells in Karnes County, Texas. These divestitures did not have a significant impact to reserves volumes or the full cost pool depletion rate. As such, the Company recorded the proceeds, net of transaction costs and purchase price adjustments, to the full cost pool, with no gain or loss recognized. Relief of associated asset retirement obligations of $0.5 million were also recorded to the full cost pool. During the year ended December 31, 2022, the Company divested of the Wildhorse Waterflood Unit in Osage County, Oklahoma, which was included in the assets acquired on January 5, 2022. Net proceeds from sale of the waterflood unit were $1.2 million. In addition, the Company sold its approximately 30% interest in two non-operated wells in Zavala County, Texas and associated acreage of approximately 4,500 acres for $1.1 million. These divestitures did not have a significant impact to reserves volumes or the full cost pool depletion rate. As such, the Company recorded the proceeds, net of transaction costs and purchase price adjustments, to the full cost pool, with no gain or loss recognized. Relief of associated asset retirement obligations of $0.2 million were also recorded to the full cost pool.

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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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