
3.	Acquisitions and Divestitures

Property Acquisitions

Eagle Ford Property Acquisitions

In December 2011, we entered into an agreement with an industry partner to jointly explore a 13,500 acre area of mutual interest ("AMI") in Lavaca County, Texas. Under the terms of the agreement, we must commence drilling on six wells by September 1, 2012 to earn our entire interest in the acreage and must carry our partner on its working interest share of the costs of the first three wells. We drilled four (3.8 net) successful exploratory wells on the acreage in the six months ended June 30, 2012. Depending upon the future participation elections made by our partners, our ultimate working interest in wells drilled in the AMI is expected to be at least 57%.

Divestitures

Oil and Gas Properties

On July 31, 2012, we sold all of our assets in the Appalachian region, with the exception of the Marcellus Shale, for $100 million, prior to deducting transaction costs and customary purchase and sale adjustments. The transaction had an effective date of January 1, 2012. The properties sold included vertical and horizontal coalbed methane and conventional properties as well as royalty interests. The properties had net production of approximately 20 million cubic feet of natural gas equivalent per day during June 2012, almost 100 percent of which was natural gas. Estimated proved reserves associated with the properties, as determined by our third party reserve engineers as of December 31, 2011, were approximately 106 billion cubic feet of natural gas equivalent, of which 96 percent were proved developed and 100 percent were natural gas. Also included in the group of assets sold was a gathering system. During the quarter ended June 30, 2012, we recognized an impairment of $28.6 million with respect to these assets.

In January 2012, we sold our remaining undeveloped acreage in Butler and Armstrong counties in Pennsylvania for proceeds of $1.0 million, net of transaction costs. We recognized a gain of $0.6 million in connection with this transaction.