In June 2022, the Company completed the acquisition of approximately 34,000 NRAs in the Eagle Ford Shale and Appalachian Basin from Falcon Minerals Corporation in a reverse merger. At closing, subject to the terms and conditions of the Merger Agreement, Falcon merged with and into Desert Peak, with Desert Peak continuing as the surviving entity in the Merger as a wholly owned subsidiary of Sitio OpCo. On June 3, 2022, prior to the consummation of the Merger, Falcon effected the four-to-one Reverse Stock Split. As a result of the Reverse Stock Split, every four shares of the Company’s issued and outstanding Class C Common Stock were automatically converted into one share of Class C Common Stock, without any change in the par value per share, and every four shares of the Company’s Class A Common Stock were automatically converted into one share of Class A Common Stock, without any change in the par value per share. No fractional shares were outstanding following the Reverse Stock Split. Additionally, as a result of the Reverse Stock Split, the Warrants were adjusted such that four whole Warrants became exercisable for one share of Class A Common Stock at an exercise price of $44.84 per share of Class A Common Stock.

Pursuant to the terms of the Merger Agreement, following the closing of the Merger and the Reverse Stock Split, the issued and outstanding limited liability company interests in Desert Peak were converted into the right to receive aggregate Merger Consideration of (a) 61,905,339 shares of Class C Common Stock and (b) 61,905,339 Sitio OpCo Partnership Units.

The Merger was accounted for as a business combination and, therefore, the acquired interests were recorded based on the fair value of the total assets acquired and liabilities assumed on the acquisition date.

The Merger has been accounted for as a business combination using the acquisition method. The Company completed the determination of the fair value attributable to the identifiable assets acquired and liabilities assumed based on the fair value at the acquisition date. Certain data necessary to complete the purchase price allocation is subject to change, and includes, but is not limited to, settlement of pre-acquisition working capital balances and assessments of deferred tax assets and liabilities acquired. We expect to complete the purchase price allocation during the 12-month period following the acquisition date, during which time the value of the assets and liabilities may be revised as appropriate.

The following table presents the preliminary allocation of the purchase price to the assets acquired and liabilities assumed on June 7, 2022 (in thousands):


Falcon fair values:
Cash	$	4,484
Accrued revenue and accounts receivable		12,054
Unproved oil and gas properties		495,803
Proved oil and gas properties		200,773
Property and equipment		278
Current liabilities		(22,315	)
Long-term debt		(43,105	)
Deferred tax liability		(2,598	)
Warrant liability		(6,612	)
Total consideration and fair value	$	638,762

In connection with the Merger, we assumed, and immediately repaid, $43.1 million of credit facility borrowings. The repayment of Falcon's long-term debt was funded using cash on hand and borrowings on our Revolving Credit Facility, see "Note 7 – Debt" for further information.

Transaction costs associated with the Merger incurred for the three and six months ended June 30, 2022 were $2.0 million and $3.2 million, respectively. These costs, which are comprised primarily of advisory, legal, and other professional and consulting fees, are included in General and administrative expense on our condensed consolidated statements of income.

The unaudited pro forma financial information for the three and six months ended June 30, 2022 and 2021, respectively, gives effect to the Merger as if it had occurred on January 1, 2021 (in thousands, except per share amounts):


	Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
Total revenues	$	104,824	$	35,832	$	193,492	$	65,385
Pro forma income available to common stockholders		10,253		1,827		16,572		2,577

Net income per share:
Basic	$	0.82	$	0.15	$	1.32	$	0.21
Diluted	$	0.12	$	0.02	$	0.20	$	0.03

The unaudited pro forma combined financial information is for informational purposes only and is not intended to represent or to be indicative of the combined results of operations that the Company would have reported had the Merger been completed as of January 1, 2021 and should not be taken as indicative of the Company's future combined results of operations. The actual results may differ significantly from that reflected in the unaudited pro forma combined financial information for a number of reasons, including, but not limited to, differences in assumptions used to prepare the unaudited pro forma combined financial information and actual results.