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Acquisition and Dispositions of Oil and Gas Properties
12 Months Ended
Dec. 31, 2012
Acquisition and Dispositions of Oil and Gas Properties [Abstract]  
Acquisition and Dispositions of Oil and Gas Properties
ACQUISITION AND DISPOSITION OF OIL AND GAS PROPERTIES
 

During the first quarter of 2012, Energen Resources recognized a noncash impairment writedown on certain properties in East Texas of $21.5 million pre-tax to adjust the carrying amount of these properties to their fair value based on expected future discounted cash flows. Significant assumptions in valuing the proved reserves included the reserve quantities, anticipated operating costs, anticipated production taxes, future expected natural gas prices and basis differentials, anticipated production declines, and a discount rate of 10 percent commensurate with the risk of the underlying cash flow estimates. The impairment was caused by the impact of lower future natural gas prices. During the first quarter of 2012, future natural gas price curves shifted significantly lower, especially in the next 5 years. This nonrecurring impairment writedown is classified as Level 3 fair value.

On February 21, 2012, Energen Resources entered into a definitive agreement with BHP Billiton (BHP) to buy a 50 percent undivided interest in three existing wells in Reeves County, Texas, from Energen Resources for approximately $18 million. Following the purchase of the wells, BHP completed two of the wells and earned a 50 percent undivided interest in 4,829 net acres. The agreement also included the option for BHP to purchase from Energen Resources a 50 percent undivided interest in 51,720 net acres in the Permian Basin. On May 1, 2012, BHP elected not to exercise the option.
On February 14, 2012, Energen completed the purchase of certain properties in the Permian Basin for a cash purchase price of $68 million. This purchase had an effective date of December 1, 2011. Energen acquired total proved reserves of approximately 8.2 MMBOE. Of the proved reserves acquired, an estimated 81 percent are undeveloped. Approximately 64 percent of the proved reserves are oil, 22 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 February 14, 2012 (including the effects of closing adjustments).

(in thousands)
 
Consideration given
 
    Cash (net)
$
67,615

Recognized amounts of identifiable assets acquired and liabilities assumed
 
    Proved properties
$
65,581

    Unproved leasehold properties
911

    Accounts receivable
1,358

    Accounts payable
(25
)
    Asset retirement obligation
(210
)
     Total identifiable net assets
$
67,615



Included in the Company’s consolidated results of operations for the year ended December 31, 2012, were $11.7 million of operating revenues and $3.1 million in operating income resulting from the operation of the properties acquired above.

In December 2012, Energen completed the purchase of liquids-rich properties in the Permian Basin for a cash purchase price of approximately $18.7 million. During 2012, Energen also completed a total of approximately $18 million in various purchases of unproved leasehold properties.
 
On December 27, 2011, Energen completed the purchase of certain properties in the Permian Basin for a cash purchase price of $60 million. This purchase had an effective date of July 1, 2011. Energen acquired total proved reserves of approximately 3.4 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 (including the effects of closing adjustments).

(in thousands)
 
Consideration given
 
    Cash (net)
$
60,017

Recognized amounts of identifiable assets acquired and liabilities assumed
 
    Proved properties
$
36,068

    Unproved leasehold properties
23,686

    Accounts receivable
680

    Accounts payable
(244
)
    Asset retirement obligation
(173
)
     Total identifiable net assets
$
60,017




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 properties in the Permian Basin for a cash purchase price of $162 million. This purchase had an effective date of August 1, 2011. Energen acquired total proved reserves of approximately 13.6 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, (including the effects of closing adjustments).

(in thousands)
 
Consideration given
 
    Cash (net)
$
161,967

Recognized amounts of identifiable assets acquired and liabilities assumed
 
    Proved properties
$
151,544

    Unproved leasehold properties
7,883

    Accounts receivable
3,070

    Accounts payable
(388
)
    Asset retirement obligation
(142
)
     Total identifiable net assets
$
161,967



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 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.

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 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.