Acquisitions and Divestitures

2012 Acquisitions

On September 12, 2012, the Company completed the acquisition of approximately 14,000 net acres contiguous to the Company's Brundage Canyon asset in the Uinta for an aggregate purchase price of $39.6 million, including usual and customary post-closing adjustments. Disclosures of purchase price allocation and also of pro forma revenues and net earnings for this acquisition are not material and have not been presented.

On April 13, 2012, the Company completed the acquisition of approximately 2,000 net acres and one well in the Wolfberry trend in the Permian for an aggregate purchase price of $14.9 million including usual and customary post-closing adjustments. Disclosures of purchase price allocation and also of pro forma revenues and net earnings for the acquisition are not material and have not been presented.

2012 Divestiture

On December 21, 2011, the Company entered into an agreement to sell its assets related to proved developed properties in Elko, Eureka and Nye Counties, Nevada (Nevada Assets), which closed on January 31, 2012, for total cash consideration of $15.6 million. The Company recorded a $1.6 million gain in conjunction with the sale. The gain was recorded in the December 31, 2012 Statements of Operations under the caption gain on sale of assets.

At December 31, 2011, the Nevada Assets were classified as held for sale and recorded in the balance sheets at $14.6 million. The Company received a deposit of $3.3 million on December 22, 2011 for the sale of these assets, which is recorded under accrued liabilities on the Balance Sheets at December 31, 2011. The asset retirement obligation related to the Nevada Assets was $0.7 million at December 31, 2011 and is included in the asset retirement obligations liability on the December 31, 2011 Balance Sheets.

2011 Acquisition

On May 25, 2011, the Company acquired interests in producing properties on approximately 6,000 net acres in the Wolfberry trend in the Permian for an aggregate purchase price of $128.4 million (the Wolfberry Acquisition). The acquisition was financed using the Company's credit facility. The Company has not presented pro forma information for the properties acquired in the Wolfberry Acquisition, as the impact of the acquisition was insignificant to the Company's Statements of Operations for the year ended December 31, 2011. Revenues of $7.8 million from properties acquired in the Wolfberry Acquisition have been included in the accompanying Statements of Operations for the year ended December 31, 2011, and earnings from the acquired properties were insignificant.

The following table summarizes the consideration paid to the sellers and the amounts of the assets acquired and liabilities assumed in the Wolfberry Acquisition:



	(in thousands)
Consideration paid to sellers:
Cash consideration	$	128,398
Recognized amounts of identifiable assets acquired and liabilities assumed:
Proved developed and undeveloped properties	128,697
Asset retirement obligation	(119		)
Other liabilities assumed	(180		)
Total identifiable net assets	$	128,398

2010 Acquisitions

In March, April and November 2010, the Company completed three separate acquisitions of producing properties located in the Wolfberry trend in the Permian for an aggregate purchase price of approximately $327.0 million (the Permian Acquisitions). The Permian Acquisitions were financed with net proceeds from the issuance in January 2010 of 8 million shares of the Company's Class A Common Stock, cash generated from operations and net proceeds from the issuance in November 2010 of $300 million aggregate principal amount of the Company's 6.75% senior notes due 2020 (2020 Notes).

In the first quarter of 2011, the Company recorded a $1.0 million gain (net of deferred income taxes of $0.7 million) in conjunction with usual and customary post-closing adjustments to the purchase price of the November 2010 Permian acquisition. The gain was recorded in the Statements of Operations under the caption gain on purchase.

Acquisition costs of $2.6 million were recorded for the Permian Acquisitions in the Statements of Operations under the caption transaction costs on acquisitions for the year ended December 31, 2010. The Company has not presented pro forma information for the properties acquired in the Permian Acquisition, as the impact of the acquisition was insignificant to the Company's Statements of Operations for the year ended December 31, 2010. Revenues of $28.7 million were included in the accompanying Statements of Operations for the year ended December 31, 2010, and earnings from the acquired properties in 2010 were insignificant.

The following table summarizes the consideration paid to the sellers and the amounts of the assets acquired and liabilities assumed in the Permian Acquisitions:



	(in thousands)
Consideration paid to sellers:
Cash consideration	$	327,032
Recognized amounts of identifiable assets acquired and liabilities assumed:
Proved developed and undeveloped properties	332,214
Other assets acquired	342
Asset retirement obligation	(3,498		)
Deferred income tax liability	(647		)
Other liabilities assumed	(333		)
Total identifiable net assets	$	328,078

The acquisitions described above qualify as business combinations and, as such, the Company estimated the fair value of each property as of each acquisition date (the date on which the Company obtained control of the properties). The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements also utilize assumptions of market participants. The Company used a discounted cash flow model based on an income approach and made market assumptions as to future commodity prices, projections of estimated quantities of oil and natural gas reserves, expectations for timing and amount of future development and operating costs, projections of future rates of production, expected recovery rates and risk adjusted discount rates. Given the unobservable nature of the inputs, nonrecurring measurements of business combinations are deemed to use Level 3 inputs.