Members' Equity/Partners' Capital | 13. MEMBERS’ EQUITY /PARTNERS’ CAPITAL Outstanding Units As of June 30, 2015, we had 10,859,375 Class A preferred units outstanding and 31,450,596 common units outstanding (approximately 3,145,060 common units after adjusting for reverse unit split) , which included 256,410 unvested restricted common units ( 25,641 common units after adjusting for reverse unit split) issued under the LTIP. Conversion The Company’s board of managers approved a Plan of Conversion (the “Conversion”) providing for the Conversion of the Company from a limited liability company formed under the laws of the State of Delaware into Sanchez LP, a limited partnership formed under the laws of the State of Delaware. This plan was approved by the vote of the unitholders of the Company on March 6, 2015. After the Conversion, all of the rights, privileges and obligations of the Company prior to the Conversion were transferred and are now held by the Partnership. The Conversion converted each outstanding common unit of the Company into one common unit of the Partnership. The outstanding Class A units of the Company were converted into common units of the Partnership in a number equal to 2% of the Partnership’s common units outstanding immediately after the Conversion (after taking into account the conversion of such Class A units), and the outstanding Class Z unit of the Company was cancelled. In addition, a non-economic general partner interest in the Partnership was issued to our general partner, and the incentive distribution rights of the Partnership were issued to the Manager. Common Unit Issuances The Partnership issued a total of 28,700 common units ( 2,870 common units after adjusting for reverse unit split) under its at-the-market facility during the three months ended June 30, 2015, for total net proceeds of less than $0.1 million. Preferred Unit Issuance Class A Preferred Unit Offerings: On March 31, 2015, the Partnership entered into a Class A Preferred Unit Purchase Agreement (the “Preferred Unit Purchase Agreement”) with the purchasers named on Schedule A thereto (collectively, the “Purchasers”), pursuant to which the Partnership sold, and the Purchasers purchased, 10,625,000 of the Partnership’s newly created Class A Preferred Units (the “Class A Preferred Units”) in a privately negotiated transaction (the “Private Placement”) for an aggregate cash purchase price of $1.60 per Class A Preferred Unit resulting in gross proceeds to the Partnership of $17 million. The Partnership used the net proceeds from this transaction, together with common units issued to SN, borrowings under the Credit Agreement, and available cash on hand, to pay the consideration in the Eagle Ford acquisition. Additionally, on April 15, 2015, the Partnership entered into a Class A Preferred Unit Purchase Agreement (the “April Preferred Unit Purchase Agreement”) with the purchasers named on Schedule A thereto (colle ctively, the “ April Purchasers”), pursuant to which the Partnership sold, and the April Purchasers purchased, 234,375 of the Partnership’s Class A Preferred Units in a privately negotiated transaction for an aggregate cash purchase price of $1.60 per Class A Preferred Unit resulting in gross proceeds to the Partnership of $375,000 . The Partnership plans to use the proceeds for general working capital purposes. Commencing with the three months ended June 30, 2015 and through the date on which the Class A Preferred Units are converted into common units, the holders of the Class A Preferred Units shall be entitled to receive distributions. For the three months ended June 30, 2015, through and including the three months ending June 30, 2016, the distributions will be paid in kind with additional Class A Preferred Units; thereafter, distributions will be paid in-kind or in cash at the discretion of the board of directors of our general partner. For the first year after the issuance date, the distribution rate will be 10% per annum, or 2.5% per quarter; for the second year after the issuance date, the distribution rate will be 11.5% per annum, or 2.875% per quarter; and thereafter, the distribution rate will be 12.5% per annum, or 3.125% per quarter. Distributions will be made on or about the last day of each of February, May, August and November following the end of each quarter commencing with the three months ended June 30, 2015. On August 10, 2015, the board of directors of our general partner declared a distribution to holders of Class A Preferred Units as of August 14, 2015 to be paid in kind and distributed to the holders on August 31, 2015. Earnings per Unit For the period prior to our conversion, the basic net income per unit was computed from the two-class method by dividing net income (loss) attributable to unitholders by the weighted average number of units outstanding during each period. To determine net income (loss) allocated to each class of ownership (Class A and Class B), we first allocated net income (loss) in accordance with the amount of distributions made for the period by each class, if any. The remaining net income (loss) was allocated to each class in proportion to the class weighted average number of units outstanding for the period, as compared to the weighted average number of units for all classes for the period. Post conversion, net income (loss) per common unit for the period is based on any distributions that are made to the unitholders (common units) plus an allocation of undistributed net income based on provisions of the partnership agreement, divided by the weighted average number of common units outstanding. The two-class method dictates that net income for a period be reduced by the amount of distributions and that any residual amount representing undistributed net income be allocated to common unitholders and other participating unitholders to the extent that each unit may share in net income as if all of the net income for the period had been distributed in accordance with the partnership agreement. Unit-based awards granted but unvested are eligible to receive distributions. The underlying unvested restricted unit awards are considered participating securities for purposes of determining net income per unit. Undistributed income is allocated to participating securities based on the proportional relationship of the weighted average number of common units and unit-based awards outstanding. Undistributed losses (including those resulting from distributions in excess of net income) are allocated to common units based on provisions of the partnership agreement. Undistributed losses are not allocated to unvested restricted unit awards as they do not participate in net losses. Distributions declared and paid in the period are treated as distributed earnings in the computation of earnings per common unit even though cash distributions are not necessarily derived from current or prior period earnings. Our general partner does not have an economic interest in the Partnership and, therefore, does not participate in the Partnership’s net income. The following table presents the weighted average basic and diluted units outstanding for the periods indicated: Three Months Ended Three Months Ended March 6 - June 30 January 1 - March 6 June 30, June 30, 2015 2015 2015 2014 Class A units - Basic and diluted - - Class B Common units - Basic and diluted - - Common units - Basic and diluted - - Weighted Average basic and diluted units prior to reverse split Adjustment for reverse split Weighted Average basic and diluted units after reverse split At June 30 , 2015, we had 256,410 common units that were restricted unvested common units granted and outstanding. No losses were allocated to participating restricted unvested units because such securities do not have a contractual obligation to share in the Partnership’s losses. The following table presents our basic and diluted loss per unit for the period from January 1, 2015 to March 6, 2015 (the date of conversion to a limited partnership) (in thousands, except for per unit amounts): Total Class A Units Class B Units Assumed net loss to be allocated January 1 - March 6 $ $ $ Basic and diluted loss per unit prior to reverse split $ $ Basic and diluted loss per unit after reverse split $ $ The following table presents our basic and diluted loss per unit for the period from March 6, 2015 through June 30, 2015 (the period after conversion to a limited partnership) (in thousands, except for per unit amounts): Total Common Units Assumed net loss attributable to common unitholders to be allocated March 6 - June 30 $ $ Basic and diluted loss per unit prior to reverse split $ Basic and diluted loss per unit after reverse split $ Net loss per unit increased significantly for the period from March 6, 2015 through June 30, 2015 as compared to the period from January 1, 2015 through March 5, 2015 as it included non-cash impairment charges of $83.7 million. There was no impairment charge recorded for the period from January 1, 2015 through March 5, 2015. The following table presents our basic and diluted loss per unit for the three months ended June 30, 2014 (in thousands, except for per unit amounts): Total Class A Units Class B Units Assumed net loss to be allocated $ $ $ Basic and diluted loss per unit prior to reverse split $ $ Basic and diluted loss per unit after reverse split $ $ The following table presents our basic and diluted loss per unit for the six months ended June 30, 2014 (in thousands, except for per unit amounts): Total Class A Units Class B Units Assumed net loss to be allocated $ $ $ Basic and diluted loss per unit prior to reverse split $ $ Basic and diluted loss per unit after reverse split $ $ |