Quarterly report pursuant to Section 13 or 15(d)

Acquisitions and Divestitures

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Acquisitions and Divestitures
 6 Months Ended
Jun. 30, 2012
Acquisitions and Divestitures

2. Acquisitions and Divestitures

2012 Acquisitions. There were no material acquisitions completed during the six months ended June 30, 2012.

2012 Divestitures. On May 15, 2012, we sold our 40%, non-operating working interest in the South Timbalier 41 field located in the Gulf of Mexico for $30.5 million with an effective date of April 1, 2012. The transaction was structured as a like-kind exchange under the Internal Revenue Service Code (“IRC”) Section 1031 and other applicable regulations, with funds held by a qualified intermediary until a replacement purchase is executed. Funds from this sale are included in current assets as restricted cash and cash equivalents on the balance sheet as of June 30, 2012. In connection with this sale, we reversed $4.0 million of asset retirement obligations (“ARO”).

2011 Acquisitions. On May 11, 2011, we completed the acquisition of approximately 24,500 gross acres (21,900 net acres) of oil and gas leasehold interests in the West Texas Permian Basin from Opal Resources LLC and Opal Resources Operating Company LLC (collectively, “Opal”) and, in 2011, we acquired minor amounts of undeveloped leasehold acreage in the related geography from another third party (collectively, with the properties acquired from Opal, the “Yellow Rose Properties”). The acquisitions were funded from cash on hand and borrowings under our revolving bank credit facility.

 

The following table presents the purchase price allocation for the acquisitions of the Yellow Rose Properties (in thousands):

 

Oil and natural gas properties and equipment

    $     396,902   

Asset retirement obligations – non-current

      (382 ) 

Long-term liability

      (2,143 ) 
  

 

 

  

Total cash paid

    $ 394,377   
  

 

 

  

On August 10, 2011, we completed the acquisition from Shell Offshore Inc. (“Shell”) of its 64.3% interest in the Fairway Field along with a like interest in the associated Yellowhammer gas treatment plant (collectively, the “Fairway Properties”). During the six months ended June 30, 2012, the purchase price was reduced by $3.7 million. The purchase price is subject to further post-effective date adjustments and final settlement is expected to occur in the third quarter of 2012. The acquisition was funded from borrowings under our revolving bank credit facility.

The following table presents the purchase price allocation for the acquisition of the Fairway Properties (in thousands):

 

Oil and natural gas properties and equipment

    $     46,993   

Asset retirement obligations – non-current

      (7,812 ) 
  

 

 

  

Total cash paid

    $ 39,181   
  

 

 

  

2011 Divestitures. There were no divestitures completed during the six months ended June 30, 2011.