NOTE 2 — ACQUISITIONS

On December 13, 2023, the Company entered into a purchase and sale agreement to acquire rights, titles and interest in and to certain leases, wells and personal property in the central shelf region of the Gulf of America, among other assets, for $72.0 million. The transaction closed on January 16, 2024 for $77.3 million (including closing fees and other transaction costs) and was funded using cash on hand. The Company also assumed the related AROs associated with these assets.

On September 20, 2023, the Company entered into a purchase and sale agreement to acquire working interests in certain oil and natural gas producing assets in the central and eastern shelf region of the Gulf of America for $32.0 million, subject to normal and customary post-effective date adjustments (including net operating cash flow attributable to the properties from the effective date of June 1, 2023 to the close date). The transaction closed on September 20, 2023 for $27.4 million and was funded with cash on hand. The Company also assumed the related AROs associated with these assets. In February 2024, the Company received a final settlement statement for this acquisition and recorded an additional $3.3 million of oil and natural gas properties.

The Company determined that the assets acquired did not meet the definition of a business, and these transactions were accounted for as asset acquisitions. An acquisition qualifying as an asset acquisition requires, among other items, that the total purchase price, including transaction costs, be allocated to the assets acquired and liabilities based on their relative fair values. The fair value measurements of the oil and natural gas properties acquired and AROs assumed were derived utilizing an income approach and based, in part, on significant inputs not observable in the market. These inputs represent Level 3 measurements in the fair value hierarchy and include, but are not limited to, estimates of reserves, future operating and development costs, future commodity prices, estimated future cash flows and appropriate discount rates. These inputs required judgments and estimates by the Company’s management at the time of the valuation. Transaction costs incurred on an asset acquisition are capitalized as a component of the assets acquired.

The following tables represent the Company’s allocation of total purchase price consideration to the identifiable assets acquired and liabilities assumed based on the fair values on the date of acquisition (in thousands):

​

​