Property Acquisitions and Divestitures |
12 Months Ended |
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Dec. 31, 2020 | |
| Business Combinations [Abstract] | |
| Property Acquisitions and Divestitures | Note 2—Property Acquisitions and Divestitures 2020 Dispositions On February 24, 2020, the Company entered into a purchase and sale agreement (the “Agreement”) to sell certain of its water disposal assets. On May 15, 2020, the Agreement was terminated after the purchaser failed to close the transaction as set forth in the Agreement. The purchaser deposited $10.0 million of cash in an escrow account (the “Deposit”) which, in the event of termination of the Agreement, was to be distributed to the Company or the purchaser in accordance with the remedy provisions of the Agreement. Centennial believes it has a right to receive the Deposit pursuant to the terms of the Agreement. However, the purchaser advised the Company that it disputes this position, and as a result, the distribution of the Deposit is under ongoing litigation between the Company and the purchaser. 2018 Acquisitions On February 8, 2018, the Company completed the acquisition of approximately 4,000 undeveloped net acres, as well as certain minor 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 purchase price encompasses certain minor producing properties that were also included in the acquisitions. All acquisitions during 2018 were recorded as asset acquisitions under Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. Accordingly, the purchase consideration for these assets has been allocated to the proved and unproved oil and gas properties based on their relative fair values measured as of the acquisition dates. After 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 Accounting Standard Codification (“ASC”) 932, Extractive Activities - Oil and Gas. The Company used the net proceeds from the sale to fund the 2018 acquisitions discussed above.
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