Divestitures

9 Months Ended

Sep. 30, 2021

Property, Plant and Equipment Impairment or Disposal [Abstract]

Divestitures

DIVESTITURES

Oil and Natural Gas

The company initiated an asset divestiture program at the beginning of 2021 to sell certain non-core oil and gas properties and reserves (the “Divestiture Program”). On October 4, 2021, the company announced that it is expanding the Divestiture Program to now include the potential sale of additional properties, including up to all of UPC’s oil and gas properties and reserves. The company expects to enhance various severance and certain other related benefits in response to the Divestiture Program.

On June 25, 2021, the company entered into a purchase and sale agreement in which we agreed to sell substantially all of our wells and the leases related thereto located near Oklahoma City, Oklahoma for $19.5 million, subject to customary closing and post-closing adjustments. The divestiture closed on August 16, 2021, with an effective date of May 1, 2021. The sale of these assets did not result in a significant alteration of the full cost pool, and therefore no gain or loss was recognized.

On March 30, 2021, the company entered into a purchase and sale agreement in which we agreed to sell substantially all of our wells and the leases related thereto located in Reno and Stafford Counties, Kansas for $7.1 million, subject to customary closing and post-closing adjustments. This divestiture closed on May 6, 2021, with an effective date of February 1, 2021. The sale of these assets did not result in a significant alteration of the full cost pool, and therefore no gain or loss was recognized.

We sold $5.0 million of other non-core oil and natural gas assets, net of related expenses, during the nine months ended September 30, 2021, compared to $1.2 million during the eight months ended August 31, 2020 and none during the one month ended September 30, 2020. These proceeds reduced the net book value of our full cost pool with no gain or loss recognized.

Contract Drilling

We sold non-core contract drilling assets for proceeds of $4.3 million and $8.2 million, net of related expenses, during the three and nine months ended September 30, 2021, compared to $2.0 million and $4.8 million during the two and eight months ended August 31, 2020, and $0.6 million during the one month ended September 30, 2020. These proceeds resulted in net gains of $3.1 million and $5.2 million during the three and nine months ended September 30, 2021, compared to $1.3 million and $1.4 million during the two and eight months ended August 31, 2020, and $0.2 million during the one month ended September 30, 2020.

Corporate and Other

On September 17, 2021, we closed the sale of our corporate headquarters building and land for $35.0 million, subject to customary closing and post-close adjustments resulting in a gain of $0.9 million net of $2.2 million of transaction costs. In conjunction with the closing, we entered into a multi-year lease for a portion of the building.