Business Combination Purchase Price Transaction Details (Tables)

9 Months Ended

Sep. 30, 2020

Business Combination, Separately Recognized Transactions [Line Items]

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

BUSINESS COMBINATION

In January 2020, we merged with SRC in a transaction valued at $1.7 billion, inclusive of SRC's net debt (the "SRC Acquisition"). Upon closing, we issued approximately 39 million shares of our common stock to SRC shareholders and holders of SRC equity awards, reflecting the issuance of 0.158 of a share of our common stock in exchange for each outstanding share of SRC common stock and the cancellation of outstanding SRC equity awards pursuant to the merger agreement that we entered into with SRC (the "Merger Agreement"). During the nine months ended September 30, 2020, we recorded transaction costs related to the SRC Acquisition of $20.2 million. These expenses were accounted for separately from the assets and liabilities assumed and are included in general and administrative expense in the condensed consolidated statements of operations.

The details of the estimated purchase price and the preliminary allocation of the purchase price are as follows:

	Nine Months Ended September 30, 2020
	(in thousands)
Consideration:
Cash	$	40
Retirement of seller's credit facility	166,238
Total cash consideration	166,278
Common stock issued	1,009,015
Shares withheld in lieu of taxes	6,299
Total consideration	$	1,181,592
Recognized amounts of identifiable assets acquired and liabilities assumed:
Assets acquired:
Current assets	$	149,538
Properties and equipment, net - proved	1,607,175
Properties and equipment, net - unproved	109,615
Properties and equipment, net - other	16,242
Deferred tax asset	193,410
Other assets	13,266
Total assets acquired	2,089,246
Liabilities assumed:
Current liabilities	(257,285)
Senior notes	(555,500)
Asset retirement obligations	(41,901)
Other liabilities	(52,968)
Total liabilities assumed	(907,654)
Total identifiable net assets acquired	$	1,181,592

This acquisition was accounted for under the acquisition method of accounting for business combinations. Accordingly, we conducted assessments of the net assets acquired and recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values, while transaction and integration costs associated with the acquisition were expensed as incurred. The fair value measurements of assets acquired and liabilities assumed are based on inputs that are not observable in the market, and therefore represent Level 3 inputs. The fair values of crude oil and natural gas properties and asset retirement obligations were measured using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation of proved and unproved crude oil and natural gas properties include estimates of reserves, future operating and development costs, future commodity prices, estimated future cash flows, lease

terms and expirations and a market-based weighted-average cost of capital rate of 10 percent. These inputs require significant judgments and estimates by management at the time of the valuation. As of the date of this report, we expect that the measurement period will extend into the fourth quarter of 2020, and the value of the assets and liabilities may be revised as appropriate.

The results of operations for the SRC Acquisition since the closing date have been included in our condensed consolidated financial statements for the three and nine months ended September 30, 2020 and include approximately $82.0 million and $233.8 million of total revenue, respectively, and $20.7 million and $19.3 million of loss from operations for the three and nine months ended September 30, 2020, respectively.

Pro Forma Information. The following unaudited pro forma financial information represents a summary of the consolidated results of operations for the nine months ended September 30, 2020 and for the three and nine months ended September 30, 2019, assuming the acquisition had been completed as of January 1, 2019. The financial information for the three months ended September 30, 2020 is included in our condensed consolidated statements of operations and therefore does not require a pro forma disclosure. The pro forma amounts for the nine months ended September 30, 2020 include an immaterial non-recurring adjustment which was not included in our pro forma information disclosed in our six months ended June 30, 2020 and our three months ended March 31, 2020 footnotes. The pro forma financial information includes certain non-recurring pro forma adjustments that were directly attributable to the business combination. The pro forma financial information is not necessarily indicative of the results of operations that would have been achieved if the acquisition had been effective as of these dates, or of future results.

	Three Months Ended September 30,		Nine Months Ended September 30,
	2019		2020		2019
	(in thousands, except per share data)
Total revenue	$	511,110	$	1,082,003	$	1,373,739
Net income (loss)	63,092		(677,636)		128,337
Earnings (loss) per share:
Basic	$	0.62	$	(6.79)	$	1.23
Diluted	0.62		(6.79)		1.23

Business Combination, Separately Recognized Transactions [Table Text Block]

The details of the estimated purchase price and the preliminary allocation of the purchase price are as follows:

	Nine Months Ended September 30, 2020
	(in thousands)
Consideration:
Cash	$	40
Retirement of seller's credit facility	166,238
Total cash consideration	166,278
Common stock issued	1,009,015
Shares withheld in lieu of taxes	6,299
Total consideration	$	1,181,592
Recognized amounts of identifiable assets acquired and liabilities assumed:
Assets acquired:
Current assets	$	149,538
Properties and equipment, net - proved	1,607,175
Properties and equipment, net - unproved	109,615
Properties and equipment, net - other	16,242
Deferred tax asset	193,410
Other assets	13,266
Total assets acquired	2,089,246
Liabilities assumed:
Current liabilities	(257,285)
Senior notes	(555,500)
Asset retirement obligations	(41,901)
Other liabilities	(52,968)
Total liabilities assumed	(907,654)
Total identifiable net assets acquired	$	1,181,592

Business Acquisition, Pro Forma Information [Table Text Block]

	Three Months Ended September 30,		Nine Months Ended September 30,
	2019		2020		2019
	(in thousands, except per share data)
Total revenue	$	511,110	$	1,082,003	$	1,373,739
Net income (loss)	63,092		(677,636)		128,337
Earnings (loss) per share:
Basic	$	0.62	$	(6.79)	$	1.23
Diluted	0.62		(6.79)		1.23