Note 3 — Acquisitions and Divestitures

Permian Property Acquisitions

On December 21, 2012, the Company purchased properties in Denton Field in the Northwest Shelf in Lea County, New Mexico, and in the Spraberry trend in the Midland Basin portion of the Permian Basin in Howard County, Texas, for a purchase price of approximately $117 million. Additionally, on December 28, 2012, the Company purchased properties in the Wolfberry play in the Midland Basin portion of the Permian Basin in Midland and Ector counties, Texas, for a purchase price of approximately $133 million. Concurrently with the latter transaction, the Company acquired, for additional consideration of $6 million, the option to buy the balance of the working interest in and operatorship of the properties under substantially the same terms as the initial transaction, (the “Option Properties”). On March 22, 2013, the Company exercised the option and acquired the Option Properties for $258 million, net of the option fee after customary purchase price adjustments, which were estimated at closing. Revenue and expenses related to the acquired properties are included in the consolidated statement of operations beginning on the closing date of the respective transaction. The properties acquired under the December and March acquisitions, which the Company refers to as the “Permian Acquisitions,” were accounted for using the acquisition method.

The purchase price of the Permian Acquisitions was comprised of the following (in thousands):

 

		2013				2012
Purchase price		$	258,000			$	250,000

The Company has completed its assessment of the fair values of the assets acquired and liabilities assumed. Accordingly, the following table presents the final purchase price allocation of the Permian Acquisitions at December 31, 2013 and 2012, based on the fair values of assets acquired and liabilities assumed (in thousands):

 

		2013				2012
Proved oil and gas properties		$	93,000			$	131,000
Unproved oil and gas properties			167,000				122,000
Asset retirement obligations assumed			(2,000	)			(3,000	)
Total purchase price		$	258,000			$	250,000

Pro Forma Financial Information

The unaudited pro forma consolidated financial information in the table below summarizes the results of operations of the Company as though the purchase of the Option Properties in March 2013 had occurred on January 1, 2012, and the purchase of the properties in the Permian Basin in December 2012 had occurred on January 1, 2012. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the Permian Acquisitions had taken place at the beginning of the earliest periods presented or that may result in the future. The pro forma adjustments made utilize certain assumptions that Resolute believes are reasonable based on the available information.

The unaudited pro forma financial information for the years ended December 31, 2013 and 2012 combine the historical results of the Permian Acquisitions and Resolute (in thousands, except per share amounts):

 

		2013				2012
Revenue		$	360,837			$	362,355
Revenue in excess of operating expenses			215,273				218,815
Net income (loss)			(111,243	)			30,381
Basic net income (loss) per share		$	(1.63	)		$	0.51
Diluted net income (loss) per share		$	(1.63	)		$	0.51

Aneth Field Transactions

During the second quarter of 2012, Resolute and Navajo Nation Oil and Gas Company (“NNOGC”) entered into two transactions regarding the Aneth Field Properties.

 

In the first transaction, effective January 1, 2012, Resolute and NNOGC together, on a 50%/50% basis, acquired from affiliates of Denbury Resources Inc. (“Denbury”) a 13% working interest in the Aneth Unit and an 11% working interest in the Ratherford Unit for a total cash consideration of $75 million. The acquisition from Denbury was accounted for using the acquisition method. After closing adjustments, the $37.7 million net purchase price was allocated to proved oil and gas properties. Revenue and expenses associated with the acquired interests are included in the consolidated statements of income concurrent with the closing of the transaction in April 2012.

Contemporaneously with this transaction, Resolute and NNOGC also entered into an amendment to their Cooperative Agreement. Among other changes, this amendment allowed NNOGC to exercise options to purchase 10% of the Company’s interest in the Aneth Field Properties, as they existed before giving effect to the Denbury transaction discussed above. These options were exercised for cash consideration of $100 million. Resolute entered into a purchase and sale agreement relating to the exercise of the options which provided that the transaction be closed and paid for in two equal transfers, each for 5% of Resolute’s interest in the properties. The first transfer took place in July 2012 and the second transfer took place in January 2013, each with an effective date of January 1, 2012.

The Cooperative Agreement amendment also provides for the cancellation of a second set of options held by NNOGC to purchase an additional 10% interest in the Aneth Field Properties and stipulates that NNOGC has one remaining option to purchase an additional 10% of Resolute’s interest in the Aneth Field Properties. The remaining option is exercisable in July 2017 at the then current fair market value of such interest at that time. No gain or loss was recognized upon these sales as it did not represent a significant portion of the Company’s oil and gas properties and did not significantly alter the relationship of capitalized costs and proved reserves.

The net effect of the acquisition of properties from Denbury and the sale of properties to NNOGC, following full consummation, is that the Company’s working interests in the Aneth Unit and the Ratherford Unit remain essentially unchanged at 62% and 59%, respectively, and its working interest in the McElmo Creek Unit was reduced from 75% to 67.5%. Resolute remains the operator of its Aneth Field Properties.

Sale of New Home Properties

On June 27, 2013, the Company entered into a purchase and sale agreement with HRC Energy, LLC, a Colorado limited liability company, and a wholly-owned subsidiary of Halcón Resources Corporation, a Delaware corporation, effective March 1, 2013, to dispose of certain Bakken properties located in Williams County, North Dakota (the “New Home Properties”) and other non-operated Bakken properties for proceeds of $70.1 million. The transaction closed on July 15, 2013 and net proceeds received were recorded as a reduction to the capitalized costs of the Company’s oil and gas properties.