Acquisitions and Divestitures

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 (the Permian Basin Acquisition). The acquired properties consisted 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 $40.1 million and $69.6 million and net income of $2.4 million and $0.9 million were generated from the acquired properties during the three and six months ended June 30, 2015. Revenues of $61.9 million and net income of $14.0 million were generated from the acquired properties from February 25, 2014, to June 30, 2014, and are included in QEP's Condensed Consolidated Statements of Operations.

The following table presents a summary of the Company's purchase accounting entries (in millions):



Consideration:
Total consideration	$	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 six months ended June 30, 2014. Pro forma results are not provided for the three months ended June 30, 2014, or the three and six months ended June 30, 2015, because the Permian Basin Acquisition occurred during the first quarter of 2014, and therefore there is no pro forma impact on the these periods. 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 six months ended June 30, 2014, 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 Permian Basin Acquisition or any estimated costs that have been or will be incurred by the Company to integrate the acquired properties.



		Six Months Ended
		June 30, 2014
		Actual			Pro forma
	(in millions, except per share data)
Revenues		$	1,704.7		$	1,730.8
Net income		$	(52.6	)	$	(45.6	)
Earnings per common share
Basic		$	(0.29	)	$	(0.25	)
Diluted		$	(0.29	)	$	(0.25	)

Divestitures

In December 2014, QEP Energy sold its interest in certain non-core properties in southern Oklahoma for aggregate proceeds of $96.3 million, subject to post-closing purchase price adjustments, and recorded a pre-tax gain on sale of $53.3 million for the year ended December 31, 2014. QEP Energy recorded a pre-tax loss on sale of $1.1 million and $2.9 million for the three and six months ended June 30, 2015, respectively, due to post-closing purchase price adjustments.

In June 2014, QEP Energy sold its interest in certain non-core properties in the Midcontinent area and other non-core assets in the Williston Basin for aggregate proceeds of $668.2 million, subject to post-closing purchase price adjustments, and recorded a pre-tax loss of $199.4 million for the year ended December 31, 2014. QEP recorded a pre-tax gain on sale of $0.4 million and a pre-tax loss on sale of $26.4 million for the three and six months ended June 30, 2015, respectively, due to post-closing purchase price adjustments. These gains and losses are reported on the Condensed Consolidated Statements of Operations in "Net gain (loss) from asset sales".