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Acquisitions
 12 Months Ended
Dec. 31, 2022
Business Combination and Asset Acquisition [Abstract]  
Acquisitions Acquisitions
On November 2, 2022, we executed a definitive purchase agreement to acquire the assets and certain related liabilities of Ensign Natural Resources (“Ensign”) in the Eagle Ford resource play in Texas and the transaction was closed on December 27, 2022 (“the closing date”) for cash consideration of $3.0 billion, which was subject to customary closing adjustments. The assets acquired primarily consisted of approximately 130,000 net proved and unproved acres, with an average 97% working interest, and approximately 700 existing wells. We funded the acquisition using a combination of cash on hand and borrowings under our new Term Loan Facility and Revolving Credit Facility. See Note 17 for further information related to the Term Loan Facility and Revolving Credit Facility.
The transaction was accounted for as a business combination. Our results of operations for the year ended December 31, 2022 include Ensign’s result of operations from the closing date through December 31, 2022. Revenue and net income attributable to Ensign during this period were immaterial. For the year ended December 31, 2022, transaction costs related to the acquisition were $18 million. These costs were associated with advisory, legal, consulting and financing services and were primarily recorded to general and administrative expense within our consolidated statement of operations.
The transaction was accounted for under the acquisition method, which requires that the assets acquired and liabilities assumed be recognized at their fair values as of the closing date. Fair values assigned to the assets acquired and liabilities assumed as of the closing date were as follows:
(In millions)December 27, 2022
Assets:
Inventories$4 
Total current assets acquired4 
Property, plant and equipment3,159 
Total assets acquired$3,163 
Liabilities:
Other current liabilities$36 
Total current liabilities assumed36 
Asset retirement obligations41 
Other noncurrent liabilities 58 
Total liabilities assumed135 
Net assets acquired$3,028 
The fair values of assets acquired and liabilities assumed were measured primarily using an income approach, specifically utilizing a discounted cash flow analysis. The estimated fair values were based on significant inputs not observable in the market, and therefore represent Level 3 measurements. Significant inputs included the expected future production volumes (including proved reserves), estimated realized commodity prices and assumptions regarding the amount and timing of future operating and development costs, and discount rate.
The following table summarizes the unaudited pro forma condensed financial information of the Company as if the business combination had occurred on January 1, 2021.
Year Ended December 31,
(In millions)20222021
Revenues$9,116 $5,757 
Net income$3,974 $941 
The pro forma earnings include adjustments to depreciation expense associated with the recognition of the fair value of assets acquired, additional interest expense as a result of incurring new debt, and incremental income tax expense. The pro forma financial information does not include any cost savings or other synergies from the acquisition or any estimated costs that have been incurred to integrate the assets. The pro forma information is not intended to reflect the actual results of operations that would have occurred if the business combination had been completed at the beginning of fiscal year 2021 and is not intended to be a projection of our financial results of operations for any future periods.    
In addition, during the fourth quarter of 2022, we increased our ownership interest in operated Eagle Ford resource play acreage for cash consideration of approximately $135 million. This transaction was funded using a combination of cash on hand and borrowings under our Credit Facility and was accounted for as an asset acquisition.