Falcon Reverse Merger

12 Months Ended

Dec. 31, 2024

In June 2022, the Company completed the acquisition of approximately 34,000 NRAs in the Eagle Ford and Appalachian Basin from Falcon Minerals Corporation in the Falcon Merger. See “Note 1 – Description of Business and Basis of Presentation” for additional information.

The following table summarizes the consideration for the Falcon Merger:


Falcon Common Stock — issued and outstanding as of June 7, 2022:	21,935,492
Class A Common Stock price on June 7, 2022	$	29.12
Total consideration and fair value	$	638,761,527

Purchase Price Allocation

The Falcon Merger was accounted for as a business combination using the acquisition method, 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 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. The purchase price allocation was finalized during the year ended December 31, 2022.

The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed (in thousands):


	June 7, 2022		Adjustments		December 31, 2022
Falcon fair values:
Cash	$	4,484	$	—	$	4,484
Accrued revenue and accounts receivable	12,054		6,696		18,750
Unproved oil and gas properties	495,803		(4,572)		491,231
Proved oil and gas properties	200,773		—		200,773
Property and equipment	278		—		278
Current liabilities	(22,315)		(1,106)		(23,421)
Long-term debt	(43,105)		—		(43,105)
Deferred tax liability	(2,598)		(1,018)		(3,616)
Warrant liability	(6,612)		—		(6,612)
Total consideration and fair value	$	638,762	$	—	$	638,762

In connection with the Falcon Merger, the Company assumed, and immediately repaid, $43.1 million of borrowings under Falcon’s credit facility. The repayment of Falcon’s long-term debt was funded using cash on hand and borrowings on the Sitio Revolving Credit Facility, see “Note 8 – Debt” for further information.

Transaction costs associated with the Falcon Merger incurred for the years ended December 31, 2023 and December 31, 2022 were $705,000 and $3.4 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 consolidated statements of operations.

The results of Falcon’s operations have been included in our consolidated financial statements since the June 7, 2022 acquisition date. The amount of revenue and direct operating expenses resulting from the acquisition included in our Consolidated Statements of Operations from June 7, 2022 through December 31, 2022 was approximately $43.5 million and $2.9 million, respectively.

Pro Forma Financial Information

See “Note 3 – Brigham Merger” for the pro forma financial information.