Note 2. Acquisition

Fair Value

The FASC Fair Value Measurement topic defines fair value as 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 (often referred to as the "exit price"). The fair value measurement is based on the assumptions of market participants and not those of the reporting entity. Therefore, entity-specific intentions do not impact the measurement of fair value unless those assumptions are consistent with market participant views.

The fair value of oil and natural gas properties is based on significant inputs not observable in the market, which the FASC Fair Value Measurement topic defines as Level 3 inputs. Key assumptions may include (1) NYMEX oil and natural gas futures prices (this input is observable); (2) dollar-per-acre values of recent sale transactions (this input is observable); (3) projections of the estimated quantities of oil and natural gas reserves, including those classified as proved, probable and possible; (4) estimated oil and natural gas pricing differentials; (5) projections of future rates of production; (6) timing and amount of future development and operating costs; (7) projected costs of CO₂ (to a market participant); (8) projected reserve recovery factors; and (9) risk-adjusted discount rates.

2013 Acquisition

On March 27, 2013, we acquired producing assets in the Cedar Creek Anticline ("CCA") of Montana and North Dakota from a wholly-owned subsidiary of ConocoPhillips for $1.0 billion after final closing adjustments. This acquisition was not reflected as an Investing Activity on our Consolidated Statement of Cash Flows for the year ended December 31, 2013 due to the movement of the cash used to acquire these assets through a qualified intermediary to facilitate a like-kind-exchange treatment under federal income tax rules. This acquisition meets the definition of a business under the FASC Business Combinations topic. The fair value of assets acquired and liabilities assumed in this acquisition have been finalized, and no adjustments have been made to fair value amounts previously disclosed in our financial statements for the year ended December 31, 2013. The following table presents a summary of the fair value of assets acquired and liabilities assumed in the CCA acquisition:



In thousands
Consideration
Cash consideration ⁽¹⁾	$	1,001,707

Fair value of assets acquired and liabilities assumed
Oil and natural gas properties
Proved properties	783,507
Unevaluated properties	222,820
Other assets	2,589
Asset retirement obligations	(7,209		)
	$	1,001,707


(1)	See Note 6, Income Taxes, for additional information regarding the like-kind-exchange transaction utilized to fund this purchase and Note 13, Supplemental Cash Flow Information, for supplemental cash flow information regarding the cash payment.

For the period from March 27, 2013, to December 31, 2013, we recognized $268.3 million of oil, natural gas, and related product sales from the property interests acquired in the CCA acquisition; during that same period, we recognized $194.2 million of net field operating income (defined as oil, natural gas, and related product sales less lease operating expenses, production and ad valorem taxes, and marketing expenses) related to the CCA acquisition.

Unaudited Pro Forma Acquisition Information. The following combined pro forma total revenues and other income and net income are presented as if the previously discussed CCA acquisition had occurred on January 1, 2013:



	Year Ended
In thousands, except per-share data	December 31, 2013
Pro forma total revenues and other income	$	2,599,301
Pro forma net income	439,801
Pro forma net income per common share
Basic	$	1.20
Diluted	1.19