Asset Exchange Transaction

12 Months Ended

Dec. 31, 2019

Nonmonetary Transactions [Abstract]

Asset Exchange Transaction

Asset Exchange Transaction

During the third quarter of 2019, the Company closed on an acreage trade agreement and purchase and sale agreement with a third party (Asset Exchange Transaction), pursuant to which the Company exchanged approximately 16,000 net revenue interest acres primarily in Tyler and Wetzel Counties, West Virginia for approximately 16,000 net revenue interest acres primarily in Wetzel and Marion Counties, West Virginia. Under the terms of the purchase and sale agreement, the Company assigned to the third party a gas gathering agreement covering a portion of Tyler County and provided a firm gathering commitment, and the Company was released from its remaining obligations under the gas gathering agreement. As consideration for the third party's assumption of the Tyler County gas gathering agreement, the Company agreed to reimburse the third party for certain firm gathering costs under the gas gathering agreement through December 2022 and assign the third party an additional approximately 3,000 net revenue interest acres in Tyler and Wetzel Counties, West Virginia. During the third quarter of 2019, as a result of the Asset Exchange Transaction, the Company recorded a net loss of $13.9 million in impairment/loss on sale/exchange of long-lived assets in the Statement of Consolidated Operations for the year ended December 31, 2019. As of December 31, 2019, the liability for the reimbursement of certain firm gathering costs was $38.1 million, which is included in other current liabilities and other liabilities and credits in the Consolidated Balance Sheet.

The fair values of leases acquired and the liability for the reimbursement of certain firm gathering costs were based on significant inputs that are not observable in the market and, as such, are considered to be Level 3 fair value measurements. See Note 5 for a description of the fair value hierarchy. Key assumptions included in the calculation of fair values included market-based prices for comparable acreage and a calculation of net present value of the expected payments due for reimbursement.