Acquisitions and Divestitures

Acquisitions

On April 24, 2013 (the “Date of Acquisition”), we acquired producing properties and undeveloped leasehold interests in the Eagle Ford Shale play (the “Acquisition”) from Magnum Hunter Resources Corporation (“MHR”). The Acquisition was originally valued at $401 million with an effective date of January 1, 2013 (the “Effective Date”). On the Date of Acquisition, we paid approximately $380 million in cash, including approximately $19 million of initial purchase price adjustments related to the period from the Effective Date to the Date of Acquisition, and issued to MHR 10 million shares of our common stock (the “Shares”) with a fair value of $4.23 per share. See Note 11 for a description of the rights and obligations related to the Shares. Shortly thereafter, certain of our joint interest partners exercised preferential rights related to the Acquisition. We received approximately $21 million from the exercise of these rights, which was recorded as a decrease to our purchase price for the Acquisition.

We incurred $2.4 million of transaction costs associated with the Acquisition, including advisory, legal, due diligence and other professional fees. These costs, as well as fees that we are paying to MHR for certain transition services, are included in the General and administrative caption on our Condensed Consolidated Statements of Operations.

We accounted for the Acquisition by applying the acquisition method of accounting as of the Date of Acquisition. The initial accounting for the Acquisition as presented below is based upon preliminary information and was not complete as of the date our Condensed Consolidated Financial Statements were issued. A final settlement, including the effect of any additional purchase price adjustments, has been scheduled for the end of August 2013 at which time we will have 60 days to complete an audit and propose any adjustments. Accordingly, adjustments to the initial accounting for the acquired net assets will likely be completed during the fourth quarter of 2013 as we obtain additional information regarding the facts and circumstances that existed as of the Date of Acquisition.

The following table represents the preliminary fair values assigned to the net assets acquired as of the Date of Acquisition and the consideration transferred:



Assets
Oil and gas properties - proved	$	282,034
Oil and gas properties - unproved	124,232
Accounts receivable, net	50,726
Other assets	100
	457,092
Liabilities
Accounts payable and accrued expenses	(55,053		)
Other liabilities	(1,500		)
	(56,553		)
Net assets acquired	$	400,539

Cash, net of amounts received for preferential rights	$	358,239
Fair value of the Shares issued to MHR	42,300
Consideration transferred	$	400,539

The fair values of the net assets acquired were measured using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to valuation of oil and natural gas properties include estimates of: (i) reserves, (ii) future operating and development costs, (iii) future commodity prices, (iv) future cash flows and (v) a market-based weighted-average cost of capital. Because many of these inputs are not observable, we have classified the initial fair value estimates as Level 3 inputs as that term is defined in U.S. GAAP.

The results of operations attributable to the Acquisition have been included in our Condensed Consolidated Financial Statements from the Date of Acquisition. The following table presents unaudited summary pro forma financial information for the periods presented assuming the Acquisition and the related financing occurred as of January 1, 2012. The pro forma financial information does not purport to represent what our results of operations would have been if the Acquisition had occurred as of this date, or the results of operations for any future periods.



	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Total revenues	$	113,735		$	93,553		$	219,196		$	191,252
Net loss	$	(44,222	)	$	(13,904	)	$	(70,241	)	$	(26,862	)
Loss per share - basic and diluted	$	(0.68	)	$	(0.25	)	$	(1.07	)	$	(0.48	)

Divestitures

In July 2012, we sold our natural gas assets in West Virginia, Kentucky and Virginia for approximately $100 million. During the three months ended June 30, 2012, we recognized an impairment of $28.6 million related to these assets.