Permian Basin Acquisition

On February 25, 2014, QEP Energy acquired oil and gas properties in the Permian Basin of Texas for an aggregate purchase price of $941.8 million, subject to post-closing purchase price adjustments (the Permian Basin Acquisition). The acquired properties consist of approximately 26,500 net acres of producing and undeveloped oil and gas properties and approximately 270 vertical producing wells in the Permian Basin, which created a new core area of operation for QEP Energy. The acquisition was funded with $50.0 million of restricted cash, $300.0 million from the Company's expanded term loan and the remainder was funded from its revolving credit facility.

The Permian Basin Acquisition meets the definition of a business combination under ASC 805, Business Combinations, as it included significant proved properties. QEP allocated the cost of the Permian Basin Acquisition to assets acquired and liabilities assumed based on fair values as of the acquisition date. Revenues of $159.5 million and a net loss of $438.3 million were generated from the acquired properties from February 25, 2014, to December 31, 2014, and are included in QEP's Consolidated Statements of Operations. The net loss is primarily due to an impairment on proved properties of $467.7 million recognized in 2014 due to the decrease in the future oil prices. During the year ended December 31, 2014, QEP Energy incurred acquisition-related costs of $0.6 million, which are included in "General and administrative" on the Consolidated Statement of Operations for the year ended December 31, 2014. QEP incurred $1.1 million of debt issuance costs associated with increasing the size of term loan borrowings to fund a portion of the acquisition, which was subsequently written off when the term loan was repaid in December 2014 with proceeds from the Midstream Sale.

The Consolidated Balance Sheet as of December 31, 2014 includes the Permian Basin Acquisition. The following table presents a summary of the Company's purchase accounting entries:



	As of December 31, 2014
	(in millions)
Consideration:
Total consideration paid	$	941.8

Amounts recognized for fair value of assets acquired and liabilities assumed:
Proved properties	$	472.1
Unproved properties	480.6
Asset retirement obligations	(9.7		)
Liabilities assumed	(1.2		)
Total fair value	$	941.8

The following unaudited, pro forma results of operations are provided for the years ended December 31, 2014 and 2013. These supplemental pro forma results of operations are provided for illustrative purposes only and may not be indicative of the actual results that would have been achieved by the acquired properties for the period presented, or that may be achieved by such properties in the future. Future results may vary significantly from the results reflected in this pro forma financial information because of future events and transactions, as well as other factors. The pro forma information is based on QEP's consolidated results of operations for the years ended December 31, 2014 and 2013, the acquired properties' historical results of operations, and estimates of the effect of the transaction on the combined results. The pro forma results of operations have been prepared by adjusting the historical results of QEP to include the historical results of the acquired properties based on information provided by the seller and the impact of the preliminary purchase price allocation. The pro forma results of operations do not include any cost savings or other synergies that may result from the Permian Basin Acquisition or any estimated costs that have been or will be incurred by the Company to integrate the acquired properties.



	Year ended December 31,
	2014				2013
	Actual		Pro forma		Actual		Pro forma
	(in millions, except per share data)

Revenues	$	3,414.3	$	3,440.4	$	2,685.1	$	2,858.8
Net income attributable to QEP	$	784.4	$	791.4	$	159.4	$	195.3
Earnings per common share attributable to QEP
Basic	$	4.36	$	4.40	$	0.89	$	1.09
Diluted	$	4.36	$	4.40	$	0.89	$	1.09

Williston Basin Acquisition

On September 27, 2012, QEP Energy acquired oil and gas properties in the Williston Basin for an aggregate purchase price of $1.4 billion (the Williston Basin Acquisition). The properties are located in Williams and McKenzie counties of North Dakota, approximately 12 miles west of QEP's then-existing core acreage in the Williston Basin.

The Williston Basin Acquisition meets the definition of a business combination under ASC 805, Business Combinations, as it included proved properties. QEP allocated the cost of the Williston Basin Acquisition to assets acquired and liabilities assumed based on fair values as of the acquisition date. Revenues of $767.3 million, $300.0 million and $63.7 million and net income of $402.1 million, $67.0 million and $14.9 million were generated from the acquired properties during the years ended December 31, 2014, 2013 and 2012, respectively, and are included in QEP's Consolidated Statements of Operations. During the year ended December 31, 2012, QEP Energy's acquisition-related costs of $1.1 million are included in "General and administrative" on the Consolidated Statements of Operations.

The following unaudited, pro forma results of operations are provided for the year ended December 31, 2012. These supplemental pro forma results of operations are provided for illustrative purposes only and may not be indicative of the actual results that would have been achieved by the acquired properties for the periods presented, or that may be achieved by such properties in the future. Future results may vary significantly from the results reflected in this pro forma financial information because of future events and transactions, as well as other factors. The pro forma information is based on QEP's consolidated results of operations for the year ended December 31, 2012, the acquired properties' historical results of operations and estimates of the effect of the transaction on the combined results. The pro forma results of operations have been prepared by adjusting the historical results of QEP to include the historical results of the acquired properties based on information provided by the seller and the impact of the purchase price allocation. The pro forma results of operations do not include any cost savings or other synergies that may result from the Williston Basin Acquisition or any estimated costs that have been or will be incurred by the Company to integrate the acquired properties.



	Year ended December 31,
	2012
	Actual		Pro forma
	(in millions, except per share data)
Revenues	$	2,071.7	$	2,207.2
Net income attributable to QEP	$	128.3	$	143.0
Earnings per common share attributable to QEP
Basic	$	0.72	$	0.80
Diluted	$	0.72	$	0.80

Divestitures

In June 2014, QEP Energy sold its interests in certain non-core properties in the Midcontinent area and other non-core assets in the Williston Basin for aggregate proceeds of $692.9 million, subject to post-closing purchase price adjustments, and recorded a pre-tax loss of $199.4 million. In December 2014, QEP sold its interest in certain non-core properties in southern Oklahoma for aggregate proceeds of $94.9 million, subject to post-closing purchase price adjustments, and recorded a pre-tax gain on sale of $53.3 million.

In June 2013, QEP Energy sold its interests in several non-core oil and gas properties located in QEP's Northern Region for aggregate proceeds of $138.5 million and recorded a pre-tax gain on sale of $96.2 million. In September 2013, QEP Energy sold its interests in several non-core properties located in QEP's Southern Region for aggregate proceeds of $67.3 million and recorded a pre-tax gain on sale of $9.5 million.

These gains and losses are reported on the Consolidated Statements of Operations in "Net gain (loss) from asset sales".