SWSI » Topics » Quantum Drilling Motors

This excerpt taken from the SWSI 8-K filed Dec 24, 2008.
Quantum Drilling Motors
 
On December 16, 2005, Diamondback acquired substantially all of the assets of Quantum Drilling Motors, L.L.C. (an Oklahoma limited liability company). The acquisition formed the platform for Diamondback’s drilling technology services and applications segment and is included in Diamondback’s results of operations from December 1, 2005, the designated effective date. The purchase price was allocated to the assets acquired, including intangible assets, and liabilities assumed at estimated fair values. The Company engaged an independent third party to appraise certain of the assets acquired. That appraisal was not complete at December 31, 2005. As a result, the value allocated to the assets subject to appraisal were based on preliminary values. During 2006, the Company received the final appraisal of assets acquired and completed a review of liabilities assumed. As a result, goodwill, customer relationships, property and equipment and current liabilities were adjusted. The excess of cost of the acquisition over the net of amounts assigned to fair value of the assets acquired and liabilities assumed is recorded as goodwill.
 
The purchase price has been allocated as follows:
 
         
    Final
 
    Allocation  
 
Accounts receivable
  $ 4,637,732  
Inventories
    454,201  
Other current assets
    216,877  
Property and equipment
    7,189,620  
Other assets
    65,042  
Amortizable intangible assets
    13,097,000  
Goodwill
    4,887,562  
Accounts payable and accrued and other current liabilities
    (4,525,802 )
Notes payable
    (73,959 )
         
Total purchase price
  $ 25,948,273  
         


F-16


 

 
DIAMONDBACK ENERGY SERVICES AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The value assigned to amortizable intangible assets represents primarily customer relationships. The amortization period of the customer relationships is sixteen years.
 
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