ACQUISITIONS

12 Months Ended

Dec. 31, 2022

ACQUISITION

ACQUISITION

3.ACQUISITIONS

Boulders

On October 13, 2021, we acquired approximately 1,480 oil & gas net royalty acres in the Delaware Basin from Boulders for a purchase price of $31.0 million, which was funded with cash on hand. This acquisition gives us increased exposure to a prolific area of the Delaware Basin and is within close proximity to reserves acquired in previous acquisitions.  The acreage acquired in the Boulders Acquisition was mostly undeveloped.  Because more than 90% of the mineral interests acquired in the acquisition represent undeveloped properties, including proved undeveloped, we have determined that the Boulders Acquisition should be accounted for as an asset acquisition. We have allocated the purchase price to the acquired reserves as follows:

	(in thousands)
Mineral interests in proved properties	$	12,542
Mineral interests in unproved properties		18,418
	$	30,960

Belvedere

On September 9, 2022 (the "Belvedere Acquisition Date"), we acquired approximately 394 oil & gas net royalty acres in the Delaware Basin from Belvedere for a cash purchase price of $11.4 million, which was funded with cash on hand. This acquisition gives us additional exposure to a productive area of the Delaware Basin and is within close proximity to reserves that we currently own.  Because the mineral interests acquired in the Belvedere Acquisition include royalty interests in both developed properties and undeveloped properties, we have determined that the acquisition should be accounted for as a business combination and the underlying assets should be recorded at fair value as of the Belvedere Acquisition Date on our consolidated balance sheet.

The following table summarizes the fair value allocation of assets acquired as of the Belvedere Acquisition Date:

	(in thousands)
Mineral interests in proved properties	$	7,724
Mineral interests in unproved properties		3,667
	$	11,391

The fair value of the mineral interests was determined using an income approach consisting of a discounted cash flow model.  The assumptions used in the discounted cash flow model included estimated production, projected cash flows, forward oil & gas prices and risk adjusted discount rates.  Certain assumptions used are not observable in active markets; therefore, the fair value measurements represent Level 3 fair value measurements.  

The amounts of revenue and earnings from the mineral interests acquired in the Belvedere Acquisition included in our consolidated statements of operations since the Belvedere Acquisition Date are as follows:

	Year Ended
	December 31,
	2022
	(in thousands)
Revenue	$	722
Net income		488

The following represents our supplemental pro forma consolidated revenues and net income for the years ended December 31, 2022 and 2021 as if the mineral interests acquired in the Belvedere Acquisition had been included in our consolidated results since January 1, 2021.  These amounts have been calculated after applying our accounting policies.

	Year Ended
	December 31,
	2022		2021
	(in thousands)
	(unaudited)
Revenues	$	2,407,368	$	1,571,119
Net income		579,906		179,747

Jase

On October 26, 2022 (the "Jase Acquisition Date"), we acquired approximately 3,928 oil & gas net royalty acres in the Midland and Delaware Basins from Jase for a cash purchase price of $81.2 million which was funded with cash on hand.  This acquisition further enhanced our ownership position in the Permian Basin.  Because the mineral interests acquired in the Jase Acquisition include royalty interests in both developed properties and undeveloped properties, we have determined that the acquisition should be accounted for as a business combination and the underlying assets should be recorded at fair value as of the Jase Acquisition Date on our consolidated balance sheet.

The following table summarizes the fair value allocation of assets acquired as of the Jase Acquisition Date:

	(in thousands)
Mineral interests in proved properties	$	35,918
Mineral interests in unproved properties		43,740
Receivables		1,569
Net assets acquired	$	81,227

The fair value of the mineral interests was determined using an income approach consisting of a discounted cash flow model.  The assumptions used in the discounted cash flow model included estimated production, projected cash flows, forward oil & gas prices and risk adjusted discount rates.  The fair value of the receivables was determined using estimated production during the period between the Jase Acquisition Date and the effective date of the agreement and observable sales prices during the period.  Certain assumptions used are not observable in active markets; therefore, the fair value measurements represent Level 3 fair value measurements.  

The amounts of revenue and earnings from the mineral interests acquired in the Jase Acquisition included in our consolidated statements of operations since the Jase Acquisition Date are as follows:

	Year Ended
	December 31,
	2022
	(in thousands)
Revenue	$	1,689
Net income		854

The following represents our supplemental pro forma consolidated revenues and net income for the years ended December 31, 2022 and 2021 as if the mineral interests acquired in the Jase Acquisition had been included in our consolidated results since January 1, 2021.  These amounts have been calculated after applying our accounting policies.

	Year Ended
	December 31,
	2022		2021
	(in thousands)
	(unaudited)
Revenues	$	2,417,278	$	1,579,660
Net income		587,749		186,151