Acquisition

On July 3, 2013, the Company acquired from several third party sellers certain shallow water Gulf of Mexico shelf oil and gas properties (the “Acquired Assets”), for an aggregate cash purchase price of $191.8 million, subject to customary adjustments to reflect an effective date of January 1, 2013 (collectively, the "Gulf of Mexico Acquisition"). The Acquired Assets include 14 producing wells and two wells awaiting completion, which are located on seven platforms.

The aggregate cash purchase price of the Gulf of Mexico Acquisition was financed with the net proceeds from the sale in a private offering under Rule 144A and Regulation S of the Securities Act of 1933, as amended (the "Securities Act"), of $200 million aggregate principal amount of the Company's 10% Senior Notes due 2017 (the "New Notes"). The New Notes have terms that, subject to certain exceptions, are substantially identical to the Company's existing $150 million aggregate principal amount of 10% Senior Notes due 2017. The Company recorded $0.5 million of deferred financing costs related to the New Notes in the second quarter of 2013 and an additional $4.0 million of deferred financing costs related to the underwriting fee paid to the initial purchasers of the New Notes on the closing date of July 3, 2013.

In connection with the Gulf of Mexico Acquisition, the Company obtained a bridge commitment from a group of lenders to arrange certain senior unsecured bridge loans in an aggregate amount up to $185 million. As part of the agreement, the lenders under the bridge commitment were due a commitment fee of $0.3 million at the date of the agreement and $2.3 million if the Gulf of Mexico Acquisition closed. The bridge commitment was terminated upon the issuance of the New Notes and the closing of the Gulf of Mexico Acquisition, at which time the lenders under the bridge commitment were paid the commitment fee. The Company recognized $0.3 million of the commitment fee as an acquisition-related cost in general and administrative expenses in the second quarter of 2013 with the remaining $2.3 million to be recognized as an acquisition-related cost in general and administrative expenses in the third quarter of 2013.

The Gulf of Mexico Acquisition will be accounted for under the purchase method of accounting, which involves determining the fair value of the assets acquired and liabilities assumed. The following purchase price allocation is preliminary and based on management's best estimates of the fair value of the assets acquired and liabilities assumed as of the date of this Form 10-Q. The preliminary purchase price allocation is subject to change based on numerous factors, including the final adjusted purchase price and the final estimated fair value of the assets acquired and liabilities assumed. Any such adjustments to the preliminary estimates of fair value could be material. The Company also incurred $1 million of acquisition-related costs, including $0.3 million of the bridge commitment fee, which were recognized as general and administrative expenses in the second quarter 2013.

The following table summarizes the estimated acquisition date fair values of the net assets acquired (in thousands):



Oil and gas properties	$	188,778
Unevaluated oil and gas properties	19,036
Asset retirement obligations	(16,049		)
Net assets to be acquired	$	191,765