ACQUISITION AND DISPOSITIONS OF OIL AND GAS PROPERTIES

On December 27, 2011, Energen completed the purchase of certain properties in the Permian Basin for a cash purchase price of $56 million (subject to closing adjustments). This purchase had an effective date of July 1, 2011. Energen acquired total proved reserves of approximately 3.4 million barrels of oil equivalent (MMBOE). Of the proved reserves acquired, an estimated 77 percent are undeveloped. Approximately 61 percent of the proved reserves are oil, 24 percent are natural gas liquids and natural gas comprises the remaining 15 percent. Energen Resources used its credit facilities and internally generated cash flows to finance the acquisition. Pro forma financial information for this acquisition is not presented because it would not be materially different from the information presented in the consolidated statements of income.

The following table summarizes the consideration paid and the amounts of the assets acquired and liabilities assumed recognized as of December 27, 2011. The purchase price allocation is preliminary and subject to adjustment as the final closing statement is not complete.



(in thousands)
Consideration given
Cash (net)	$	55,994
Recognized amounts of identifiable assets acquired and liabilities assumed
Proved properties	$	32,045
Unproved leasehold properties	23,686
Accounts receivable	680
Accounts payable	(244		)
Asset retirement obligation	(173		)
Total identifiable net assets	$	55,994

The impact to operating revenues and operating income from this acquisition was not material for the year ended December 31, 2011.

On November 16, 2011, Energen completed the purchase of certain liquids-rich properties in the Permian Basin for a cash purchase price of $162 million (subject to closing adjustments). This purchase had an effective date of August 1, 2011. Energen acquired total proved reserves of approximately 13.6 million MMBOE. Of the proved reserves acquired, an estimated 76 percent are undeveloped. Approximately 59 percent of the proved reserves are oil, 25 percent are natural gas liquids and natural gas comprises the remaining 16 percent. Energen Resources used its credit facilities and internally generated cash flows to finance the acquisition. Pro forma financial information for this acquisition is not presented because it would not be materially different from the information presented in the consolidated statements of income.

The following table summarizes the consideration paid and the amounts of the assets acquired and liabilities assumed recognized as of November 16, 2011. The purchase price allocation is preliminary and subject to adjustment as the final closing statement is not complete.



(in thousands)
Consideration given
Cash (net)	$	162,092
Recognized amounts of identifiable assets acquired and liabilities assumed
Proved properties	$	151,544
Unproved leasehold properties	7,883
Accounts receivable	3,151
Accounts payable	(344		)
Asset retirement obligation	(142		)
Total identifiable net assets	$	162,092

The impact to operating revenues and operating income from this acquisition was not material for the year ended December 31, 2011.

In July 2011, Energen completed the purchase of liquids-rich properties in the Permian Basin for a cash purchase price of approximately $20 million. In April 2011, Energen completed the purchase of unproved leasehold properties for a cash purchase price of approximately $37 million covering an estimated 11,000 net acres in the Permian Basin.

During 2010, Energen Resources incurred write-offs of unproved capitalized leasehold costs associated with its Alabama shale acreage. The non-cash costs totaled $39.7 million pre-tax and were charged to exploration expense, which is included in O&M expense, after the Company determined that the shale acreage was not economically viable. During the year ended December 31, 2010, Energen Resources also recorded $15.5 million pre-tax in write-offs of well costs related to Alabama shale leasehold. During 2009, Energen Resources was unsuccessful in the completion of a Chattanooga shale well. The costs related to this well of approximately $5.6 million pre-tax were expensed during the fourth quarter of 2009. Also expensed during the fourth quarter, was approximately $1.2 million pre-tax of costs associated with a well originally drilled by Chesapeake in an area of the Chattanooga shale. In addition, the Company recognized unproved leasehold impairments of approximately $2.1 million pre-tax during 2009 related to the Alabama shales.

On December 15, 2010, Energen completed the purchase of certain properties in the Permian Basin for a cash purchase price of $74 million. This purchase had an effective date of December 1, 2010. Energen acquired proved reserves of approximately 7.6 MMBOE. Of the proved reserves acquired, an estimated 92 percent are undeveloped. Approximately 62 percent of the acquisition’s estimated proved reserves are oil, 24 percent are natural gas liquids and natural gas comprises the remaining 14 percent. Energen Resources used its credit facilities and internally generated cash flows to finance the acquisition. Pro forma financial information for this acquisition is not presented because it would not be materially different from the information presented in the consolidated statements of income.

The following table summarizes the consideration paid and the amounts of the assets acquired and liabilities assumed recognized as of December 15, 2010, (including the effects of closing adjustments).



(in thousands)
Consideration given
Cash (net)	$	73,630
Recognized amounts of identifiable assets acquired and liabilities assumed
Proved properties	$	41,066
Unproved leasehold properties	32,500
Accounts receivable	143
Asset retirement obligation	(79		)
Total identifiable net assets	$	73,630

The impact to operating revenues and operating income from this acquisition was not material for the year ended December 31, 2010.

On December 9, 2010, Energen completed the asset purchase of certain liquids-rich properties in the Permian Basin from SandRidge Energy, Inc. for a cash purchase price of $103 million (including the effects closing adjustments). This purchase had an effective date of December 9, 2010. Energen acquired no proved reserves related to this acquisition. Energen Resources used its credit facilities and internally generated cash flows to finance the acquisition.

On September 30, 2010, Energen completed the purchase of certain properties in the Permian Basin for a cash price of $188 million. This purchase had an effective date of September 1, 2010. Energen acquired proved reserves of approximately 18 MMBOE. Of the proved reserves acquired, an estimated 89 percent are undeveloped. Approximately 65 percent of the proved reserves are oil, 22 percent are natural gas liquids and natural gas comprises the remaining 13 percent. Energen Resources used its internally generated cash flows to finance the acquisition. Pro forma financial information for this acquisition is not presented because it would not be materially different from the information presented in the consolidated statements of income.

The following table summarizes the consideration paid and the amounts of the assets acquired and liabilities assumed recognized as of September 30, 2010, (including the effects of closing adjustment).



(in thousands)
Consideration given
Cash (net)	$	188,314
Recognized amounts of identifiable assets acquired and liabilities assumed
Proved properties	$	151,747
Unproved leasehold properties	35,360
Accounts receivable	1,461
Asset retirement obligation	(142		)
Accounts payable	(112		)
Total identifiable net assets	$	188,314

Included in the Company’s consolidated results of operations for the year ended December 31, 2010, is $5 million of operating revenues and $2.1 million in operating income resulting from the operation of the properties acquired above.

In September 2009, Energen Resources recorded a $4.9 million pre-tax gain in other operating revenues from the sale of certain oil properties in the Permian Basin. The Company received approximately $6.5 million pre-tax in cash from the sale of this property.

On June 30, 2009, Energen completed the purchase of certain oil properties in the Permian Basin from Range Resources for a cash price of $181 million. This purchase had an effective date of May 1, 2009. Energen acquired proved reserves of approximately 15.2 MMBOE. Of the proved reserves acquired, an estimated 24 percent are undeveloped. Approximately 76 percent of the proved reserves are oil, 16 percent are natural gas liquids and natural gas comprises the remaining 8 percent. Energen Resources used its short-term credit facilities and internally generated cash flows to finance the acquisition.

The following table summarizes the consideration paid to Range Resources and the amounts of the assets acquired and liabilities assumed recognized as of June 30, 2009 (including the effects of closing adjustments).



(in thousands)
Consideration given to Range Resources
Cash (net)	$	181,249
Recognized amounts of identifiable assets acquired and liabilities assumed
Proved properties	$	182,668
Unproved leasehold properties	3,800
Accounts receivable	4,987
Inventory and other	455
Asset retirement obligation	(6,590		)
Environmental liabilities	(3,124		)
Accounts payable	(947		)
Total identifiable net assets	$	181,249

Included in the Company’s consolidated results of operations for the year ended December 31, 2009, is $22.3 million of operating revenues and $8.9 million in operating income resulting from operation of the properties acquired from Range Resources.

Summarized below are the consolidated results of operations for the year ended December 31, 2009, on an unaudited pro forma basis as if the acquisition had occurred at the beginning of the period presented. The pro forma information is based on the Company's consolidated results of operations for the year ended December 31, 2009, and on the data provided by the seller. The pro forma financial information does not purport to be indicative of results of operations that would have occurred had the transaction occurred on the basis assumed above, nor are they indicative of results of the future operations of the combined enterprises.



Year ended December 31, (in thousands)	2009
Operating revenues	$	1,458,995
Operating income	$	439,624