
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 were required to commence drilling on six wells by September 1, 2012 to earn our entire interest in the acreage as well as carry our partner for its working interest share of the costs of the first three wells. During the quarter ended September 30, 2012 we fulfilled this requirement and through the nine months ended September 30, 2012, we drilled a total of seven (6.2 net) successful wells on the acreage. Depending upon the future participation elections made by our partners, our working interest in wells drilled in the AMI is expected to be at least 57 percent.

In October 2012, we acquired approximately 4,100 net acres in the Eagle Ford Shale in Gonzales and Lavaca Counties for approximately $10 million. Under existing joint venture agreements, other non-operated working interest owners are expected to acquire approximately 17 percent of the net acreage in Gonzales County and approximately 46 percent of the net acreage in Lavaca County, increasing our net Eagle Ford Shale acreage position by approximately 3,000 net acres to a total of approximately 30,000 net acres.

Divestitures

Oil and Gas Properties

On July 31, 2012, we sold substantially all of our assets in the Appalachian region, with the exception of the Marcellus Shale, for approximately $100 million, prior to deducting transaction costs and customary purchase and sale adjustments. Certain leases subject to the sale, representing approximately $4 million of value, are awaiting consent by the underlying property or mineral owners to be transferred. Such consents are expected to be obtained by the end of 2012. Through September 30, 2012, we received proceeds of $92.2 million, net of transaction costs and customary closing adjustments, and recognized a gain of $1.7 million in connection with the transaction. The sold assets included vertical and horizontal coalbed methane and vertical conventional properties, a gathering system and royalty interests. The sold assets had net production of approximately 20 million cubic feet of natural gas equivalent per day, almost 100 percent of which was dry natural gas. Estimated proved reserves associated with the assets, as determined by our third party reserve engineer as of December 31, 2011, were approximately 106 billion cubic feet of natural gas equivalent, of which 96 percent were proved developed. An impairment charge of $28.6 million was recognized in the second quarter of 2012 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.