Property Acquisitions and Divestitures |
12 Months Ended |
|---|---|
Dec. 31, 2019 | |
| Business Combinations [Abstract] | |
| Property Acquisitions and Divestitures | Note 2—Property Acquisitions and Divestitures 2018 Acquisitions On February 8, 2018, the Company completed the acquisition of approximately 4,000 undeveloped net acres, as well as certain producing properties, in Lea County, New Mexico for an unadjusted purchase price of $94.7 million. The operated acreage position contains an approximate 92% average working interest and is largely contiguous to Centennial’s existing positions in the northern Delaware Basin. During the fourth quarter of 2018, the Company completed several acquisitions totaling approximately 2,900 net acres, which are located adjacent to the Company’s existing acreage in Lea County, New Mexico and Reeves County, Texas for an aggregate unadjusted purchase price of $87.9 million. This value encompasses certain producing properties included in the acquisitions. All acquisitions during 2018 were recorded as asset acquisitions under ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASC 2017-11”). Accordingly, the purchase consideration for these assets has been allocated to the oil and natural gas properties based on their relative fair values measured as of the acquisition dates. After aggregate settlement statement adjustments of $0.3 million, the Company paid an aggregate purchase price of $182.3 million. On a relative fair value basis, $142.5 million was allocated to unproved properties and $39.8 million to proved properties. Transaction costs incurred and capitalized amounted to $0.2 million and mainly consisted of advisory and legal fees. 2018 Disposition On March 2, 2018, the Company completed the sale of approximately 8,600 undeveloped net acres and 12 gross producing wells located in Reeves County, Texas for a total unadjusted sales price of $140.7 million. The divested acreage represents a largely non-operated position (32% average working interest) on the western portion of Centennial’s position in Reeves County. There was no gain or loss recognized as a result of this divestiture, which constituted a partial sale of oil and gas properties in accordance with ASC 932, Extractive Activities - Oil and Gas. The Company used the net proceeds from the sale to fund the 2018 acquisitions discussed above. 2017 Acquisition On June 8, 2017, the Company completed the GMT Acquisition and acquired interests in 36 gross producing horizontal wells plus undeveloped acreage on approximately 11,850 net acres (14,770 gross acres) in Lea County, New Mexico for an unadjusted purchase price of $350.0 million. The Company operates approximately 79% of, and has an approximate 85% average working interest in, this acreage. The acquired acres are located in the Northern Delaware Basin with drilling locations in the Avalon Shale, 2nd Bone Spring Sand, 3rd Bone Spring Sand and Wolfcamp A formations. The GMT Acquisition was recorded as an asset acquisition under ASU 2017-01. Accordingly, the GMT purchase consideration has been allocated to the GMT oil and natural gas properties based on their relative fair values measured as of the acquisition date. After settlement statement adjustments of $0.1 million, the Company paid a net purchase price of $350.1 million. On a relative fair value basis, $296.9 million was allocated to unproved properties and $53.2 million to proved properties. Transaction costs as they relate to the GMT Acquisition mainly consist of advisory, legal and accounting fees and are capitalized as incurred, and the Company has incurred $0.5 million in transaction costs related to this acquisition.
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