Acquisitions, Divestitures, and Assets Held for Sale (Notes)

6 Months Ended

Jun. 30, 2015

Divestiture Activity [Abstract]

Acquisitions, Divestitures, and Assets Held for Sale

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

Divestitures

During the second quarter of 2015, the Company divested its Mid-Continent assets in separate packages for total cash proceeds received at closing, which reflects gross purchase price net of closing adjustments (referred to throughout this report as “divestiture proceeds”), of $316.5 million and an estimated total net gain of $107.8 million. These assets were classified as held for sale as of March 31, 2015, and certain of these assets were written down by $30.0 million during the three months ended March 31, 2015, to reflect fair value less estimated costs to sell. This write-down is reflected in the total net gain of $107.8 million discussed above. These divestitures are subject to normal post-closing adjustments.

In conjunction with the Company’s efforts to divest its Mid-Continent assets, the Company had previously announced the planned closure of its Tulsa, Oklahoma office in 2015, with the relocation of certain personnel to other Company offices. The Company expects to incur a total of approximately $10 million of exit and disposal costs associated with the severance, retention and relocation of employees, and other related matters, excluding the lease expenses discussed in the next paragraph. The majority of these exit and disposal activities are expected to be completed by the end of the third quarter of 2015. For the three and six months ended June 30, 2015, the Company recorded $5.0 million and $8.5 million, respectively, of exit and disposal costs, the majority of which were recorded as general and administrative expense in the accompanying condensed consolidated statements of operations (“accompanying statements of operations”).

Additionally, subsequent to June 30, 2015, the Company vacated its office space in Tulsa and is currently attempting to sublease the remaining space. As of June 30, 2015, the Company is obligated to pay approximately $7 million, net of expected income from office space currently subleased, which will be expensed over the duration of the lease, which expires in 2022. This obligation will decrease if the Company successfully executes additional sublease agreements.

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. Any subsequent decreases to the estimated fair value less the costs to sell impact the measurement of assets held for sale.

As of June 30, 2015, the accompanying condensed consolidated balance sheets (“accompanying balance sheets”) present $7.4 million of assets held for sale, net of accumulated depletion, depreciation, and amortization expense, which primarily consists of certain assets in exploratory areas that the Company no longer intends to explore and develop in light of the low commodity price environment. There is a corresponding asset retirement obligation liability of approximately $200,000 for assets held for sale recorded in the asset retirement obligation liability financial statement line item in the accompanying balance sheets. For the three months ended June 30, 2015, the Company recorded write-downs to fair value less estimated costs to sell of $66.0 million for certain of these assets held for sale. For the six months ended June 30, 2015, write-downs on certain assets held for sale totaled $99.9 million, which included the $30.0 million write-down recorded on certain Mid-Continent assets in the first quarter 2015 as discussed above. These write-downs are recorded in the net gain on divestiture activity line item in the accompanying statements of operations.     

The Company determined that neither these planned nor executed asset sales qualify for discontinued operations accounting under financial statement presentation authoritative guidance.