ACQUISITIONS AND DIVESTITURES

Acquisitions

On April 3, 2017, we closed on an acquisition of certain oil and natural gas assets located primarily in Grady and Caddo Counties in western Oklahoma. The preliminary adjusted value of consideration given was $54.0 million.

As of January 1, 2017, the effective date of the acquisition, the estimated proved oil and gas reserves of the acquired properties were 3.2 million barrels of oil equivalent (MMBoe). The acquisition adds approximately 8,300 net oil and gas leasehold acres to our core Hoxbar area in southwestern Oklahoma including approximately 47 proved developed producing wells. Of the acreage acquired, approximately 71% is held by production. We also received one gathering system as part of the transaction.

We accounted for this acquisition using the acquisition method under ASC 805, Business Combinations, which requires that the acquired assets and liabilities be recorded at their fair values as of the acquisition date. The following table summarizes the preliminary purchase price and the preliminary estimated values of assets acquired and liabilities assumed. It is based on information available to us at the time these unaudited condensed consolidated financial statements were prepared. We believe these estimates are reasonable; however, the estimates are subject to change as additional information becomes available and is assessed by us (in thousands):



Preliminary Purchase Price
Total consideration given	$	54,000

Preliminary Allocation of Purchase Price
Oil and natural gas properties included in the full cost pool:
Proved oil and natural gas properties	$	43,413
Undeveloped oil and natural gas properties	8,650
Total oil and natural gas properties included in the full cost pool ⁽¹⁾	52,063
Gas gathering equipment and other	2,340
Asset retirement obligation	(403		)
Fair value of net assets acquired	$	54,000

(1) We used a discounted cash flow model and made market assumptions as to future commodity prices, projections of estimated quantities of oil and natural gas reserves, expectations for timing and amount of future development and operating costs, projections of future rates of production, expected recovery rates, and risk adjusted discount rates.

The pro forma effects of this acquired business is immaterial to the results of operations.

Divestitures

We sold non-core oil and natural gas assets, net of related expenses, for $17.8 million during the first six months of 2017, compared to $43.6 million during the first six months of 2016. Proceeds from those sales reduced the net book value of our full cost pool with no gain or loss recognized.