Acquisitions and divestitures

2019 Acquisitions and divestitures

For 2019, we did not enter into any material divestitures of oil and gas assets. During the year, we incurred $23,107 in acquisition costs, which consisted primarily of leasing and pooling of acreage and capitalized interest.

2018 Acquisitions and divestitures

For 2018, we received total cash proceeds of $50,523 on various non-core oil and gas assets, property and equipment disposals. Included in these disposals were:


•	A divestiture of certain properties in the Oklahoma/Texas Panhandle for gross cash proceeds before selling costs of $17,000 and the conveyance of $629 in liabilities to the buyer, all of which are subject to customary post-close adjustments. The purchaser of these assets is a company affiliated with Mark A. Fischer, our former Chief Executive Officer and former Chairman of the Board.


•	A divestiture of certain saltwater disposal infrastructure where we received proceeds of $11,841. In conjunction with this divestiture, we entered into a service agreement for salt water disposal with the purchaser of these assets, as discussed further below.


•	Disposals of various other non-core assets resulting in proceeds of approximately $22,637.

As the properties above did not represent a material portion of our oil and natural gas reserves, individually or in the aggregate, no gain or loss was recognized on these disposals and instead, we reduced our full cost pool by the amount of the net proceeds without significant alteration to our depletion rate.

In conjunction with our divestiture of saltwater disposal infrastructure discussed above, we entered into service agreements with two providers to dispose, via pipeline or truck, salt water produced by our wells within areas that encompass Kingfisher, Garfield and Canadian Counties, Oklahoma. The agreements covering Kingfisher and Garfield Counties, Oklahoma are for 15 years and specify fixed rates per barrel according to age of the well. The agreement covering Canadian County, Oklahoma is for 5 years and specifies per barrel rates that vary according to volume of water disposed.

During 2018, we incurred acquisition costs of $122,309. The amount includes costs to acquire approximately 24,600 acres of leasehold, capitalized interest of $10,925 and $10,913 in non-monetary acreage trades.

2017 Acquisitions and divestitures

In November 2017, we closed on the sale of our EOR assets along with some minor assets within geographic proximity for cash proceeds, net of preliminary post-closing adjustments, of $163,630 plus certain contingent payments through December 2020. As these properties represented a material portion of our oil and natural gas reserves and our assessment indicated that our depletion rate would be significantly altered subsequent to the sale, in accordance with the full cost method of accounting for conveyances, we recognized a loss of $25,163 on the sale. The loss is recognized in “Loss (gain) on sale of assets” in the consolidated statements of operations.

In December 2017, we closed on the sale of certain producing properties located in Osage County, Oklahoma, for proceeds, net of preliminary post-closing adjustments, of $14,117. In addition, we had various other divestitures of non-core oil and gas properties throughout the year ended December 31, 2017 resulting in proceeds of approximately $9,200. Other than our EOR asset sale, these transactions did not individually, or in the aggregate, represent a material portion of our oil and natural gas reserves and therefore we did not record any gain or loss on the sale and instead, reduced our full cost pool by the amount of the net proceeds.

In December 2017, we entered into purchase and sale agreements to acquire acreage in the STACK play in Kingfisher County, Oklahoma. In early January 2018, immediately prior to closing the purchase, we amended the transaction to include additional acreage. The final purchase closed for $60,643 encompassing 7,000 acres. Under the terms of the agreements, the Company is required to drill and complete 10 wells on such leasehold in each of 2019, 2020, and 2021 and 15 wells in 2022. To the extent the company does not drill and complete the minimum number of wells in a given year, it is required to pay the sellers of the acreage $250 for each deficient well. Taking into account current commodity price conditions, the company does not intend to drill wells on the subject acreage in 2020 as it focuses on higher return opportunities. No determination has been made with respect to 2021 or 2022; however, if the company fails to drill the prescribed number of wells in either year, it would be obligated to make additional payments to the sellers.