BUSINESS COMBINATIONS BUSINESS COMBINATIONS (Notes)

12 Months Ended

Dec. 31, 2016

Business Acquisition [Line Items]

Business Combination Disclosure [Text Block]

BUSINESS COMBINATION

Delaware Basin Acquisition completed December 6, 2016. On December 6, 2016, we closed on an acquisition which has been accounted for as a business combination. The transaction was for the purchase of approximately 57,900 net acres, approximately 30 wells and related midstream infrastructure in Reeves and Culberson Counties, Texas, for an aggregate consideration to the sellers of approximately $1.64 billion, comprised of approximately $952.1 million in cash, including the repayment of $40.0 million of debt from the seller at closing and other purchase price adjustments, and 9.4 million shares of our common stock valued at approximately $690.7 million at the time the acquisition closed.

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The details of the purchase price and the preliminary allocation of the purchase price for the first transaction are presented below (in thousands):

	Year Ended December 31, 2016
Acquisition costs:
Cash, net of cash acquired	$	912,142
Retirement of seller's debt	40,000
Total cash consideration	952,142
Common stock, 9.4 million shares	690,702
Other purchase price adjustments	1,026
Total acquisition costs	$	1,643,870
Recognized amounts of identifiable assets acquired and liabilities assumed:
Assets acquired:
Current assets	$	8,201
Crude oil and natural gas properties - proved	216,000
Crude oil and natural gas properties - unproved	1,721,334
Infrastructure, pipeline, and other	32,590
Construction in progress	12,148
Goodwill	62,041
Total assets acquired	2,052,314
Liabilities assumed:
Current liabilities	(24,844		)
Asset retirement obligations	(3,705		)
Deferred tax liabilities, net	(379,895		)
Total liabilities assumed	(408,444		)
Total identifiable net assets acquired	$	1,643,870

The estimated fair value of assets acquired and liabilities assumed in the acquisition presented above are preliminary and subject to post-closing adjustments as more detailed analysis associated with the acquired properties are completed. As of the date of this report, we expect that it may take into mid-2017 until all post-closing adjustments are finalized.

The fair value measurements of assets acquired and liabilities assumed are based on inputs that are not observable in the market, and therefore represent Level 3 inputs. The fair values of crude oil and natural gas properties and asset retirement obligations were measured using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation of crude oil and natural gas properties include estimates of reserves, future operating and development costs, future commodity prices, estimated future cash flows, and a market-based weighted-average cost of capital rate. These inputs require significant judgments and estimates by management at the time of the valuation and are the most sensitive and subject to change.

This acquisition was accounted for under the acquisition method. Accordingly, we conducted assessments of net assets acquired and recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values, while transaction and integration costs associated with the acquisition were expensed as incurred.

Goodwill is calculated as the excess of the purchase price over the fair value of net assets acquired and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Among the factors that contributed to a purchase price in excess of the fair value of the net tangible and intangible assets acquired were the acquisition of an element of a workforce and the expected value from operations of the Delaware Basin acquisition to be derived in the future. Goodwill related to the Delaware Basin acquisition was recorded in our oil and gas exploration and production segment. Any value assigned to goodwill is not expected to be deductible for income tax purposes.

Pro Forma Information. The results of operations for the Delaware Basin acquisition have been included in our consolidated financial statements since the December 6, 2016 closing date, including approximately $5.6 million of total revenue and $1.7 million of loss from operations. The following unaudited pro forma financial information represents a summary of the consolidated results of operations for the years ended December 31, 2016 and December 31, 2015, assuming the acquisition had been completed as of January 1, 2015. This pro forma financial information includes the Securities Issuances in September 2016, the shares issued to the sellers, and other acquisition costs. The pro forma financial information is not necessarily indicative of the results of operations that would have been achieved if the acquisition had been effective as of these dates, or of future results.

	Years Ended December 31,
	2016			2015
	(in thousands, except per share amounts)
Total revenue	$	412,746		$	598,932
Net loss	$	(270,942	)	$	(138,904	)
Earnings (loss) per share:
Basic and diluted	$	(4.22	)	$	(2.41	)