The book value of the Company’s crude oil and natural gas properties consists of all acquisition costs (including cash expenditures and the value of stock consideration), drilling costs and other associated capitalized costs. Acquisitions are accounted for as purchases and, accordingly, the results of operations are included in the accompanying statements of operations from the closing date of the acquisition. Acquired assets and liabilities assumed are recorded based on their estimated fair value at the time of the acquisition. Acquisitions have been funded with internal cash flow, bank borrowings and the issuance of debt and equity securities. Development capital expenditures and purchases of properties that were in accounts payable and not yet paid in cash at December 31, 2019 and 2018 were approximately $161.7 million and $129.5 million, respectively.

During 2019, excluding the VEN Bakken Acquisition described below, the Company acquired oil and natural gas properties through a number of independent transactions for a total of $53.4 million. This amount includes $22.6 million of development costs that occurred prior to the closings of the acquisitions.

On July 1, 2019, the Company completed its acquisition (the “VEN Bakken Acquisition”) of certain oil and gas properties and interests from VEN Bakken, LLC (“VEN Bakken”), effective as of July 1, 2019. VEN Bakken is a wholly-owned subsidiary of Flywheel Bakken, LLC. At closing the acquired assets consisted of approximately 90.1 net producing wells and 3.3 net wells in process, as well as approximately 18,000 net acres substantially all in North Dakota. The Company also assumed certain crude oil derivative contracts from VEN Bakken as part of the acquisition. The VEN Bakken Acquisition was completed pursuant to the purchase and sale agreement between the Company and VEN Bakken, dated as of April 18, 2019.

The total estimated consideration paid by the Company was $315.9 million, consisting of (i) $175.5 million in cash, (ii) 5,602,147 shares of Company common stock valued at $11.7 million, based on the $2.09 per share closing price of Company common stock on the closing date of the acquisition and (iii) $128.7 million of value attributable to a 6.0% unsecured promissory note due July 1, 2022 issued by the Company to VEN Bakken in the aggregate principal amount of $130.0 million (the “Unsecured VEN Bakken Note”). The results of operations from the July 1, 2019 closing date through December 31, 2019, represented approximately $54.1 million of revenue and $16.1 million of income from operations. The Company incurred $1.8 million of transactions costs in connection with the acquisition, which are included in general and administrative expense in the condensed statement of operations. The following table reflects the fair values of the net assets and liabilities as of the date of acquisition:


	(In thousands)
Fair value of net assets:
Proved oil and natural gas properties	$	325,572
Asset retirement cost	2,680
Total assets acquired	328,252
Asset retirement obligations	(2,680)
Derivative instruments	(9,694)
Net assets acquired	$	315,878

Fair value of consideration paid for net assets:
Cash consideration	$	175,510
Issuance of common stock (5.6 million shares at $2.09 per share)	11,708
Unsecured VEN Bakken Note	128,660
Total fair value of consideration transferred	$	315,878

The following summarized unaudited pro forma statement of operations information for the years ended December 31, 2019 and 2018 assumes that the VEN Bakken Acquisition, W Energy Acquisition and Pivotal Acquisition each occurred as of January 1, 2018. The Company prepared the following summarized unaudited pro forma financial results for comparative purposes only. The summarized unaudited pro forma information may not be indicative of the results that would have occurred had the Company completed these acquisitions on the dates indicated, or that would be attained in the future.

On July 27, 2018, the Company entered into a purchase and sale agreement, which was subsequently amended on September 25, 2018 (as amended, the “W Energy Purchase Agreement”), with WR Operating LLC (“W Energy”), to acquire, effective as of July 1, 2018, approximately 27.2 net producing wells and 5.9 net wells in progress, as well as approximately 10,633 net acres in North Dakota (the “W Energy Acquisition”). On October 1, 2018, the Company closed on the acquisition for total estimated consideration of $341.6 million, consisting of (i) $97.8 million in cash (which reflects the $117.1 million in cash consideration under the W Energy Purchase Agreement, less $2.2 million of working capital adjustments made at closing and $17.0 million of additional estimated post-closing working capital adjustments), (ii) 51,476,961 shares of Company common stock valued at $220.8 million, based on the $4.29 per share closing price of Company common stock on the closing date of the acquisition, and (iii) $23.0 million in value attributable to potential additional contingent consideration in the future (described in more detail below). No material transaction costs were incurred in connection with this acquisition. The following table reflects the fair values of the net assets and liabilities as of the date of acquisition:


	(In thousands)
Fair value of net assets:
Proved oil and natural gas properties	$	341,633
Asset retirement cost	939
Total assets acquired	342,572
Asset retirement obligations	(939)
Net assets acquired	$	341,633
Fair value of consideration paid for net assets:
Cash consideration	$	97,838
Issuance of common stock (51.5 million shares at $4.29 per share)	220,836
Contingent consideration	22,959
Total fair value of consideration transferred	$	341,633

A contingent consideration liability arising from potential additional consideration in connection with the W Energy Acquisition has been recognized at its fair value. The amount of additional contingent consideration payable by the Company, if any, was dependent upon the performance of the Company’s share price over a thirteen month period ending with October 2019. The acquisition date fair value of the potential additional consideration, totaling $23.0 million, was recorded within contingent consideration liabilities on the Company’s balance sheets. Changes in the fair value of the liability (that were not accounted for as revisions of the acquisition date fair value) were recorded in other income (expense) on the Company’s statement of operations. As of December 31, 2019, there was no remaining contingent consideration liability associated with the W Energy Acquisition.

On July 17, 2018, the Company entered into purchase and sale agreements with Pivotal Williston Basin, LP and Pivotal Williston Basin II, LP, to acquire approximately 20.8 net producing wells and 2.2 net wells in process, as well as approximately 444 net acres in North Dakota (the “Pivotal Acquisition”). On September 17, 2018, the Company closed on the acquisition for total estimated consideration of $146.1 million, consisting of (i) $48.2 million in cash (which reflects the $68.4 million of aggregate cash consideration provided for in the purchase agreements, less $7.8 million of working capital adjustments made at closing and $12.4 million of additional estimated post-closing working capital adjustments), (ii) 25,753,578 shares of the Company’s common stock valued at $88.6 million, based on the $3.44 per share closing price of the Company’s common stock on the closing date of the acquisition, and (iii) $9.4 million in value attributable to potential additional contingent consideration (described in more detail below). No material transaction costs were incurred in connection with this acquisition. The following table reflects fair values of the net assets and liabilities as of the date of acquisition:


	(In thousands)
Fair value of net assets:
Proved oil and natural gas properties	$	146,134
Asset retirement cost	$	644
Total assets acquired	$	146,778
Asset retirement obligations	$	(644)
Net assets acquired	$	146,134

Fair value of consideration paid for net assets:
Cash consideration	$	48,189
Issuance of common stock (25.8 million shares at $3.44 per share)	$	88,592
Contingent consideration	$	9,353
Total fair value of consideration transferred	$	146,134

A contingent consideration liability arising from potential additional consideration in connection with the Pivotal Acquisition has been recognized at its fair value. The amount of additional contingent consideration payable by the Company, if any, was dependent upon the performance of the Company’s share price over a thirteen month period ending with October 2019. The acquisition date fair value of the potential additional consideration, totaling $9.4 million, was recorded within contingent consideration liabilities on the Company’s balance sheets. Changes in the fair value of the liability (that were not accounted for as revisions of the acquisition date fair value) were recorded in other income (expense) on the Company’s statement of operations. As of December 31, 2019, there was no remaining contingent consideration liability associated with the Pivotal Acquisition.

On April 25, 2018, the Company entered into a purchase and sale agreement with Salt Creek Oil and Gas, LLC, to acquire 64 gross, 5.5 net producing (PDP) wells, 31 gross, 1.5 net drilling and completing (PDNP) wells and 1,319 net acres located in McKenzie and Mountrail counties of North Dakota. On June 4, 2018, the Company closed the transaction for consideration of $60.0 million which is comprised of $44.7 million of cash consideration and $15.2 million of common stock consideration. No material transaction costs were incurred in connection with this acquisition. The following table reflects the fair values of the net assets and liabilities as of the date of acquisition:


	(In thousands)
Fair value of net assets:
Proved oil and natural gas properties	$	59,978
Asset retirement cost	154
Total assets acquired	60,132
Asset retirement obligations	(154)
Net assets acquired	$	59,978
Fair value of consideration paid for net assets:
Cash consideration	$	44,738
Issuance of common stock (6.0 million shares at $2.54 per share)	15,240
Total fair value of consideration transferred	$	59,978

The following summarized unaudited pro forma statement of operations information for the years ended December 31, 2018 and 2017 assumes that the W Energy Acquisition and Pivotal Acquisition each occurred as of January 1, 2017. The Company prepared the following summarized unaudited pro forma financial results for comparative purposes only. The summarized unaudited pro forma information may not be indicative of the results that would have occurred had the Company completed these acquisitions on the dates indicated, or that would be attained in the future.

Unproved properties not being amortized comprise approximately 16,464 net acres and 11,054 net acres of undeveloped leasehold interests at December 31, 2019 and 2018, respectively. The Company believes that the majority of its unproved costs will become subject to depletion within the next five years by proving up reserves relating to the acreage through exploration and development activities, by impairing the acreage that will expire before the Company can explore or develop it further or by determining that further exploration and development activity will not occur. The timing by which all other properties will become subject to depletion will be dependent upon the timing of future drilling activities and delineation of its reserves.

Excluded costs for unproved properties are accumulated by year. Costs are reflected in the full cost pool as the drilling costs are incurred or as costs are evaluated and deemed impaired. The Company anticipates these excluded costs will be included in the depletion computation over the next five years. The Company is unable to predict the future impact on depletion rates. The following is a summary of capitalized costs excluded from depletion at December 31, 2019 by year incurred.

All properties that are not classified as proved properties are considered unproved properties and, thus, the costs associated with such properties are not subject to depletion. Once a property is classified as proved, all associated acreage and drilling costs are subject to depletion.

The Company historically has acquired unproved properties by purchasing individual or small groups of leases directly from mineral owners, landmen or lease brokers, which leases historically have not been subject to specified drilling projects, and by purchasing lease packages in identified project areas controlled by specific operators. The Company generally participates in drilling activities on a heads up basis by electing whether to participate in each well on a well-by-well basis at the time wells are proposed for drilling.