Quarterly report pursuant to Section 13 or 15(d)

Acquisitions

v2.4.0.6
Acquisitions
 3 Months Ended
Mar. 31, 2012
Acquisitions [Abstract]  
Acquisitions

2. Acquisitions

2012 Acquisitions. There were no acquisitions completed during the three months ended March 31, 2012.

2011 Acquisitions. On May 11, 2011, we completed the acquisition of approximately 24,500 gross acres (21,900 net acres) of oil and gas leasehold interests in the West Texas Permian Basin from Opal Resources LLC and Opal Resources Operating Company LLC (collectively, "Opal"). In addition, in 2011 we acquired additional undeveloped leased acreage in the West Texas Permian Basin (collectively, with the properties acquired from Opal, the "Yellow Rose Properties"). The acquisitions were funded from cash on hand and borrowings under our revolving bank credit facility.

The following table presents the purchase price allocation for the acquisitions of the Yellow Rose Properties (in thousands):

 

Oil and natural gas properties and equipment

    $     396,902   

Asset retirement obligations – non-current

      (382 ) 

Long-term liability

      (2,143 ) 
  

 

 

  

Total cash paid

    $ 394,377   
  

 

 

  

On August 10, 2011, we completed the acquisition from Shell Offshore Inc. ("Shell") of its 64.3% interest in the Fairway Field along with a like interest in the associated Yellowhammer gas treatment plant (collectively, the "Fairway Properties"). The purchase price is subject to further post-effective date adjustments and final settlement is expected to occur in the first half of 2012. The acquisition was funded from borrowings under our revolving bank credit facility.

The following table presents the purchase price allocation for the acquisition of the Fairway Properties (in thousands):

 

Oil and natural gas properties and equipment

    $     50,682   

Asset retirement obligations – non-current

      (7,812 ) 
  

 

 

  

Total cash paid

    $ 42,870   
  

 

 

  

Revenues and estimated net income for the three months ended March 31, 2012 related to the Yellow Rose Properties and the Fairway Properties were $27.4 million and $4.7 million, respectively. The estimated net income attributable to these properties does not reflect certain expenses, such as general and administrative expenses and interest expense; therefore, this information is not intended to report results as if these operations were managed on a stand-alone basis. In addition, the Yellow Rose Properties and the Fairway Properties are not recorded in a separate entity for tax purposes; therefore, income tax was estimated using the federal statutory tax rate.