Acquisitions and Divestitures

Acquisitions

On April 24, 2013 (the “Acquisition Date”), we acquired producing properties and undeveloped leasehold interests in the Eagle Ford Shale play in connection with the 2013 EF Acquisition. The 2013 EF Acquisition was originally valued at $401 million with an effective date of January 1, 2013 (the “Effective Date”). On the Acquisition Date, 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 Acquisition Date utilizing a portion of the proceeds from the private placement of $775 million of 8.5% Senior Notes due 2020 (the “2020 Senior Notes”), and issued to the seller 10 million shares of our common stock (the “Shares”) with a fair value of $4.23 per Share. Shortly after the Acquisition Date, certain of our joint interest partners exercised preferential rights related to the 2013 EF Acquisition. We received approximately $21 million from the exercise of these rights, which was recorded as a decrease to our purchase price for the 2013 EF Acquisition.

We incurred $2.6 million of transaction costs associated with the 2013 EF Acquisition, including advisory, legal, due diligence and other professional fees. These costs, as well as fees that we paid to the seller for certain transition services, have been included in the General and administrative caption on our Consolidated Statements of Operations.

Since 2013, we have been involved in an arbitration with Magnum Hunter Resources Corporation (“MHR”), the seller in our 2013 EF Acquisition. The arbitration relates to disputes we have with MHR regarding contractual adjustments to the purchase price for the 2013 EF Acquisition and suspense funds that we believe MHR is obligated to transfer to us. On February 3, 2014, both we and MHR submitted initial briefs describing our respective positions to the arbitrator. MHR has acknowledged that it owes us approximately $26.5 million; we believe the amount is higher. Both parties are scheduled to submit rebuttals to the initial briefs on March 3, 2014. We expect this matter to be resolved early during the second quarter of 2014.

We accounted for the 2013 EF Acquisition by applying the acquisition method of accounting as of the Acquisition Date. The initial accounting for the 2013 EF Acquisition as presented below is based upon preliminary information and was not complete, due primarily to the aforementioned arbitration, as of the date our Consolidated Financial Statements were issued.

In the three months ended December 31, 2013, we recorded certain measurement period adjustments based on the receipt of additional information which had the effect of decreasing the fair value of our oil and gas properties by $14 million offset by increases to accounts receivable of $46 million and accounts payable and accrued expenses of $32 million. Accordingly, we have updated the preliminary fair values of net assets acquired from those that were disclosed in our Quarterly Report on Form 10-Q for the period ended September 30, 2013. The following table represents the fair values assigned to the net assets acquired as of the Acquisition Date and the consideration transferred:



Assets
Oil and gas properties - proved	$	277,888
Oil and gas properties - unproved	119,709
Accounts receivable, net	97,145
Other current assets	2,068
	496,810
Liabilities
Accounts payable and accrued expenses	94,771
Other liabilities	1,500
	96,271
Net assets acquired	$	400,539

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

The fair values of the acquired net assets were measured using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to valuation of oil and 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 2013 EF Acquisition have been included in our Consolidated Financial Statements from the Acquisition Date. The following table presents unaudited summary pro forma financial information for the periods presented assuming the 2013 EF 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 2013 EF Acquisition had occurred as of this date or the results of operations for any future periods.



	Year Ended December 31,
	2013			2012
Total revenues	$	457,811		$	389,260
Net loss attributable to common shareholders	$	(148,272	)	$	(106,059	)
Loss per share - basic and diluted	$	(2.27	)	$	(1.83	)

Divestitures

In December 2013, we entered into an agreement to sell our natural gas gathering assets in South Texas. The transaction closed in January 2014 and resulted in the receipt of proceeds of approximately $94 million, net to our working interest.

In July 2012, we sold substantially all of our natural gas assets in West Virginia, Kentucky and Virginia, which comprised a significant portion of our operations in Appalachia, for approximately $100 million, excluding transaction costs and before customary purchase and sale adjustments. We received proceeds of $95.7 million, net of transaction costs and customary closing adjustments, and recognized a gain of $3.3 million in connection with the transaction. An impairment charge of $28.6 million was recognized in the second quarter of 2012 with respect to these assets.

In December 2011, we sold approximately 2,700 net undeveloped acres in Butler and Armstrong Counties in Pennsylvania for proceeds of $8.1 million, net of transaction costs. We recognized a gain of $3.3 million in connection with this transaction. In August 2011, we sold a substantial portion of our Arkoma Basin assets, including primarily natural gas and coal bed methane properties in Oklahoma and Texas, for approximately $30 million, excluding transaction costs and customary purchase and sale adjustments. Upon the final settlement, we recognized an insignificant loss in connection with the transaction, following an impairment of approximately $71 million in the second quarter of 2011.

During 2013, the payment of post-closing adjustments attributable to sales of properties from prior years were partially offset by net proceeds from the sale of individually insignificant oil and gas properties and tubular inventory and well materials resulting in net payments of $0.1 million and a recognized loss on the sale of assets of $0.3 million. During 2012 and 2011, we also received net proceeds of $1.0 million and $1.2 million and recognized a net gain of $1.0 million and a net loss of $0.7 million, respectively, from the sale of various non-core oil and gas properties and tubular inventory and well materials.