Note 3 – Acquisitions, Divestitures, and Assets Held for Sale

Gooseneck Prospect Acquisition

On September 24, 2014, the Company acquired approximately 61,000 net acres of proved and unproved oil and gas properties in the Company’s Gooseneck prospect area in North Dakota, along with other related equipment, contracts, records and other assets (collectively the “Assets”). Total consideration paid by the Company was $325.2 million in cash and the effective date for the acquisition was July 1, 2014.

It was determined that this acquisition met the definition of a business combination under ASC 805, Business Combinations, as it included proved properties. The Company allocated the preliminary adjusted purchase price to the acquired assets and liabilities based on fair values as of the acquisition date of September 24, 2014, as summarized in the following table. This acquisition is subject to normal post-closing adjustments, which are expected to be completed in early 2015. Refer to Note 11 - Fair Value Measurements for additional discussion on the valuation techniques used in determining the fair value of acquired properties.



Purchase Price	As of September 24, 2014
	(in thousands)
Cash consideration	$	325,230

Fair value of assets acquired:
Proved oil and gas properties	$	201,842
Unproved oil and gas properties	125,562
Total fair value of oil and gas properties acquired	327,404

Working capital	(61		)
Asset retirement obligation	(2,113		)
Total fair value of net assets acquired	$	325,230

Rocky Mountain Acquisitions

In addition to the Gooseneck prospect acquisition discussed above, the Company acquired other proved and unproved properties in its Rocky Mountain region during the nine months ended September 30, 2014, from multiple sellers for approximately $134.1 million in total cash consideration plus approximately 7,000 net acres of non-core assets in the Company’s Rocky Mountain region. These acquisitions are subject to normal post-closing adjustments, which are expected to be completed in late 2014 and early 2015.

Subsequent to September 30, 2014, the Company closed an acquisition of proved and unproved properties in its Gooseneck prospect area for total cash consideration of approximately $84.8 million. This acquisition is subject to normal post-closing adjustments, which are expected to be completed in early 2015.

Divestitures

During the second quarter of 2014, the Company divested certain non-strategic assets in the Williston Basin located in its Rocky Mountain region. Total cash proceeds received at closing (referred throughout this report as “divestiture proceeds”) were $50.2 million and the estimated net gain is $26.8 million. This divestiture is subject to normal post-closing adjustments, which are expected to be completed during the fourth quarter of 2014.

Assets Held for Sale

Assets are classified as held for sale when the Company commits to a plan to sell the assets and there is reasonable certainty the sale will take place within one year. Upon classification as held for sale, long-lived assets are no longer depreciated or depleted, and a measurement for impairment is performed to identify and expense any excess of carrying value over fair value less estimated costs to sell. Subsequent decreases to the estimated fair value less the costs to sell impact the measurement of assets held for sale.

As of September 30, 2014, the accompanying condensed consolidated balance sheets (“accompanying balance sheets”) present $19.9 million of oil and gas properties held for sale, net of accumulated depletion, depreciation, and amortization expense. A corresponding asset retirement obligation liability of $0.5 million is separately presented. Assets held for sale are recorded at the lesser of their respective carrying value or fair value less estimated costs to sell. Certain assets classified as held for sale as of September 30, 2014, were written down to fair value less estimated costs to sell, which was recorded as a loss on divestiture activity and is included within the other operating revenues line item in the accompanying condensed consolidated statements of operations (“accompanying statements of operations”).

The Company determined that these planned asset sales do not qualify for discontinued operations accounting under financial statement presentation authoritative guidance.