(3)	ACQUISITIONS AND DISPOSITIONS

Conger Exchange Transaction

In April 2014, we entered into an exchange agreement with EQT Corporation and certain of its affiliates (collectively, “EQT”) in which we sold our Conger assets in Glasscock and Sterling Counties, Texas in exchange for producing properties and other EQT assets in Virginia and $145.0 million in cash, before closing adjustments (the “Conger Exchange”). We closed the exchange transaction on June 16, 2014. The assets exchanged met the definition of a business under accounting standards and was recorded at fair value. We recognized a pre-tax gain of $272.7 million related to this exchange, after selling expenses of $5.0 million, which is recognized as a gain on sale of assets in our consolidated statements of income for the year ended December 31, 2014. For the period from January 1, 2014 through June 16, 2014, we recognized $21.9 million of field net operating net income (defined as natural gas, oil and NGLs sales and net brokered margin, less direct operating expenses, production and ad valorem taxes and transportation expenses), compared to $48.7 million in the year ended December 31, 2013 and $40.2 million in the year ended December 31, 2012 for our Conger assets. The combined carrying amount of our Conger assets prior to the exchange was $271.8 million. The following table presents the fair value of assets acquired and liabilities assumed in the transaction (in thousands):


	Conger Exchange
Consideration
Fair value of net assets transferred	$	550,273

Fair value of assets acquired and liabilities assumed
Cash	$	151,675
Working capital – Nora Gathering, LLC		12,731
Natural gas and oil properties		402,176
Transportation and field assets		7,793
Other liabilities-firm transportation contract		(12,175	)
Asset retirement obligations		(11,927	)
Fair value of net assets acquired and liabilities assumed	$	550,273

In connection with the Conger Exchange, we acquired the remaining 50% interest held by EQT in Nora Gathering, LLC (“NGLLC”), a natural gas gathering operation, which we had previously accounted for using the equity method of accounting. As of June 16, 2014, we have consolidated NGLLC into our consolidated financial statements. Our previous 50% membership interest in NGLLC was remeasured to fair value of $134.8 million on the acquisition date, resulting in a gain of $10.0 million which is recognized in gain on sale of assets in our consolidated statements of income for the year ended December 31, 2014. We assumed trade receivables as part of the acquisition of NGLLC of $5.5 million, all of which we collected.

For the period from June 16, 2014 through December 31, 2014, we recognized $33.8 million of natural gas, oil and NGLs sales and we recognized $25.7 million of field net operating income (defined as natural gas, oil and NGLs sales less direct operating expenses, production and ad valorem taxes and transportation expenses) from the property interests acquired in the Conger Exchange.

Conger Exchange Fair Value

Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (often referred to as the “exit price”). The fair value measurement is based on the assumptions of market participants and not those of the reporting entity. Therefore, entity-specific intentions do not impact the measurement of fair value unless those assumptions are consistent with market participant views.

The fair value of the Conger Exchange described above was based on an income approach which was supplemented by a market approach. For the natural gas and oil properties, the income approach uses significant inputs not observable in the market, which are Level 3 inputs. The significant inputs assumed include future production, costs and capital, commodity prices, risk-adjusted discount rates, natural gas and oil pricing differentials, and projected reserve recovery factors. The market approach uses inputs such as recent market transactions in a similar geographic region and with similar production. The income approach for the natural gas gathering operations was based on a discounted future net cash flow model, which uses Level 3 inputs and was supplemented by a market approach.

Dispositions

We recognized an aggregate gain on the sale of assets of $285.6 million in the year ended December 31, 2014 compared to $92.3 million in 2013 and $49.1 million in 2012. The following describes the significant divestitures that are included in income from operations:

—	As detailed above, we completed the Conger Exchange in June 2014 and we recognized a pre-tax gain of $287.7 million, before selling expenses of $5.0 million, which includes a $10.0 million gain on the remeasurement of our membership interest in NGLLC.

—	In April 2013, we completed the sale of our Delaware and Permian Basin properties in southeast New Mexico and West Texas for a price of $275.0 million and we recognized a pre-tax gain of $83.3 million, before selling expenses of $4.2 million.

—	In November 2012, we completed the sale of our Ardmore Woodford properties in Southern Oklahoma for cash proceeds of $135.0 million and we recognized a pre-tax gain of $55.2 million related to this sale.

—	During 2014, 2013 and 2012, we sold miscellaneous proved and unproved oil and gas properties, inventory, and other property and equipment and recorded a pre-tax gain of $2.9 million in 2014, compared to a pre-tax gain of $13.2 million in 2013 and a pre-tax loss of $6.1 million in 2012.