Common use of Preliminary Purchase Price Clause in Contracts

Preliminary Purchase Price. The preliminary allocation of the total Purchase Price in the NRO Acquisition, on a relative fair value basis, is based upon management’s estimates of and assumptions related to the fair value of assets to be acquired and liabilities to be assumed as of the date of the Closing of the transaction using currently available information. Because the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final purchase price allocation and the resulting effect on our financial position and results of operations may differ significantly from the pro forma amounts included herein. The preliminary purchase price allocation is subject to change due to several factors, including but not limited to changes in the estimated fair value of assets acquired and liabilities assumed as of the date of the Closing of the transaction, which could result from changes in future oil and natural gas commodity prices, reserve estimates, interest rates, as well as other factors. The consideration transferred, assets acquired and liabilities assumed by the Company are expected to be initially recorded as follows: Cash consideration (1) $ 74,000,000 Deposit on oil and gas properties (2) 9,000,000 Deferred cash consideration (3) 9,979,340 Direct transaction costs (4) 175,000 Total consideration $ 93,154,340 Oil and gas properties $ 93,989,761 Asset retirement obligation, long-term $ 835,421 (1) Includes preliminary customary purchase price adjustments. (2) Represents the Deposit paid by the Company to NRO (See Note 3). (3) Represents the estimated fair value of $11.5 million of deferred cash consideration to be paid to NRO over a period of up to 18 months from the date of the Closing. (4) Represents estimated transaction costs associated with the NRO Acquisition which have been capitalized in accordance with ASC 805-50. The consideration will be allocated to the assets acquired and liabilities assumed on a relative fair value basis. The fair value measurements of assets acquired and liabilities assumed, on a relative fair value basis, are based on inputs that are not observable in the market and therefore represent Level 3 inputs. The fair value of oil and gas properties and asset retirement obligations were measured using the discounted cash flow technique of valuation. Significant inputs to the valuation of oil and gas properties include estimates of: (i) reserves, (ii) future operating and development costs, (iii) future commodity prices, (iv) future plugging and abandonment costs, (v) estimated future cash flows, and (vi) a market-based weighted average cost of capital rate. These inputs require significant judgments and estimates and are the most sensitive and subject to change.

Preliminary Purchase Price. The preliminary allocation of the total Purchase Price in the NRO Acquisition, on a relative fair value basis, is based upon management’s estimates of and assumptions related to the fair value of assets to be acquired and liabilities to be assumed as of the date of the Closing of the transaction using currently available information. Because the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final purchase price allocation and the resulting effect on our financial position and results of operations may differ significantly from the pro forma amounts included herein. The preliminary purchase price allocation is subject to change due to several factors, including but not limited to changes in the estimated fair value of assets acquired and liabilities assumed as of the date of the Closing of the transaction, which could result from changes in future oil and natural gas commodity prices, reserve estimates, interest rates, as well as other factors. The consideration transferred, assets acquired and liabilities assumed by the Company are expected to be initially recorded as follows: Cash consideration (1) $ 74,000,000 Deposit on oil and gas properties (2) 9,000,000 Deferred cash consideration (3) 9,979,340 Direct transaction costs (4) 175,000 Total consideration $ 93,154,340 Oil and gas properties $ 93,989,761 93,904,482 Asset retirement obligation, long-term $ 835,421750,142 (1) Includes preliminary customary purchase price adjustments. (2) Represents the Deposit paid by the Company to NRO (See Note 32). (3) Represents the estimated fair value of $11.5 million of deferred spud fee cash consideration payments to be paid to NRO over a period of up to 18 months from the date of the Closing. (4) Represents estimated transaction costs associated with the NRO Acquisition which have been capitalized in accordance with ASC 805-50. The consideration will be allocated to the assets acquired and liabilities assumed on a relative fair value basis. The fair value measurements of assets acquired and liabilities assumed, on a relative fair value basis, are based on inputs that are not observable in the market and therefore represent Level 3 inputs. The fair value of oil and gas properties and asset retirement obligations were measured using the discounted cash flow technique of valuation. Significant inputs to the valuation of oil and gas properties include estimates of: (i) reserves, (ii) future operating and development costs, (iii) future commodity prices, (iv) future plugging and abandonment costs, (v) estimated future cash flows, and (vi) a market-based weighted average cost of capital rate. These inputs require significant judgments and estimates and are the most sensitive and subject to change.