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 (the “EF Acquisition”). The 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 closing, 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 closing, certain of our joint interest partners exercised preferential rights related to the 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 EF Acquisition.

Since December 2013, we have been involved in an arbitration with Magnum Hunter Resources Corporation (“MHR”), the seller in our EF Acquisition. The arbitration relates to disputes we have with MHR regarding contractual adjustments to the purchase price for the EF Acquisition and suspense funds that we believe MHR is obligated to transfer to us. MHR has indicated that it owes us approximately $26.5 million; we believe the amount is higher. Both parties submitted rebuttals to initial briefs on March 3, 2014 and submitted additional responses and replies on April 4, 2014. We expect the arbitration to be resolved in the second quarter of 2014.

We accounted for the EF Acquisition by applying the acquisition method of accounting as of the Acquisition Date. The initial accounting for the 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 Condensed Consolidated Financial Statements were issued.

The following table represents the preliminary fair values assigned to the net assets acquired as of the closing and the consideration paid:



Assets
Oil and gas properties - proved	$	277,888
Oil and gas properties - unproved	119,709
Accounts receivable, net	97,145
Other 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 MHR	42,300
Consideration paid	$	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 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 EF Acquisition have been included in our Condensed Consolidated Financial Statements from the Acquisition Date. The following table presents unaudited summary pro forma financial information for the period presented assuming the 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 EF Acquisition had occurred as of this date or the results of operations for any future periods.



	Three Months
	Ended
	March 31, 2013
Total revenues	$	109,064
Net loss attributable to common shareholders	$	(15,204	)
Loss per share - basic and diluted	$	(0.23	)

Divestitures

In December 2013, we entered into an agreement to sell our natural gas gathering assets in South Texas. Concurrent with the sale, we entered into a long-term agreement in which the buyer will provide us natural gas gathering and compression services for a substantial portion of our natural gas and NGL production in the South Texas region. The transaction closed in January 2014 and resulted in the receipt of proceeds of approximately $96 million. We realized a gain of $67.3 million of which $56.7 million was recognized at the closing of the transaction and the remaining $10.6 million was deferred and is being recognized over a twenty-five year period. We amortized $0.1 million of the deferred gain during the three months ended March 31, 2014. As of March 31, 2014, $0.4 million of the remaining deferred gain is included as a component of Accounts payable and accrued expenses and $10.1 million, representing the noncurrent portion, is included as a component of Other liabilities on our Condensed Consolidated Balance Sheets.