Members' Equity/Partners' Capital | 14. MEMBERS’ EQUITY/PARTNERS’ CAPITAL Outstanding Units As of June 30, 2016, we had no Class A Preferred Units outstanding, 19,444,445 Class B Preferred Units outstanding, and 4,279, 517 common units outstanding. Common Unit Issuances On March 31, 2016, the Partnership converted all remaining outstanding Class A Preferred Units into common units of the Partnership on a one for one basis, adjusted for the 1-for-10 unit split in August 2015. In April 2015, we entered into an at-the-market sales agreement with MLV & Co. LLC to sell from time-to-time up to $100 million of our common units, with any proceeds from such sales to be used for general limited partnership purposes. We did not sell any common units during the six months ended June 30 , 2016. On August 3, 2015, the Partnership effected a 1 -for-10 reverse split on its common units, pursuant to which common unitholders received one common unit for every ten common units held at the close of trading on August 3, 2015. All fractional units created by the reverse split were rounded to the nearest whole unit. Each unitholder received at least one unit. Post-split units of the Partnership began trading on August 4, 2015. Immediately prior to the reverse unit split, there were 31,495,506 common units of the Partnership issued and outstanding , with a per unit closing trading price on the NYSE MKT on August 3, 2015 of $1.55 . Immediately after the reverse unit split, the number of issued and outstanding common units of the Partnership decreased to 3,149,551 , not inclusive of common units required by DTCC due to the rounding up of fractional units at the beneficial level, and the per unit opening trading price on the NYSE MKT was $15.50 . Preferred Unit Issuance Class A Preferred Unit Offerings: On March 31, 2015, the Partnership entered into a Class A Preferred Unit Purchase Agreement with the purchasers named on Schedule A thereto (collectively, the “March Purchasers”), pursuant to which the Partnership sold, and the March 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 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 of $17 million from this transaction, together with common units issued to SN, borrowings under our credit facility, and available cash on hand, to pay the consideration for the Eagle Ford acquisition. Additionally, on April 15, 2015, the Partnership entered into a Class A Preferred Unit Purchase Agreement with the purchasers named on Schedule A thereto (collectively, 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 and net proceeds to the Partnership of $375,000 . The Partnership used the proceeds for general working capital purposes. On March 31, 2016, the Partnership converted all remaining outstanding Class A Preferred Units into common units of the Partnership on a one for one basis, adjusted for 1-for-10 unit split in August 2015. Class B Preferred Unit Offering: On October 14, 2015, pursuant to that certain Class B Preferred Unit Purchase Agreement dated September 25, 2015 between the Partnership and Stonepeak Catarina Holdings LLC (the “October Purchaser”), the Partnership sold and the October Purchaser purchased 19,444,445 of the Partnership’s newly created Class B Preferred Units (the “Class B Preferred Units”) in a privately negotiated transaction for an aggregate cash purchase price of $18.00 per Class B Preferred Unit, which resulted in gross proceeds to the Partnership of $350,000,010 . The Partnership used the net proceeds to pay a portion of the consideration for the Western Catarina Midstream acquisition, along with the payment to the October Purchaser of a fee equal to 2.25% of the consideration paid for the Class B Preferred Units. Under the terms of our partnership agreement, commencing with the quarter ended on December 31, 2015, the Class B Preferred Units will receive a quarterly distribution, at the election of the board of directors of our general partner, of 10.0% per annum if paid in full in cash or 12.0% per annum if paid in part cash ( 8.0% per annum) and in part paid-in-kind units ( 4.0% per annum). In the event the Partnership does not raise at least $75,000,000 through the issuance of additional common units prior to September 30, 2016 (with the conversion of the Class A Preferred Units of the Partnership counting toward such amount), the cash portion of the distribution rate will increase by 4.0% per annum until the end of the quarter in which such issuance is consummated. Distributions are to be paid on or about the last day of each of February, May, August and November after the end of each quarter. The holders of Class B Preferred Units have the right at any time to request conversion in whole or in part of their Class B Preferred Units at the Conversion Rate, subject to the requirement to convert a minimum of $17,500,000 of Class B Preferred Units. The “Conversion Rate” is equal to the quotient of (i) the aggregate purchase price for the Class B Preferred Units plus accrued and unpaid distributions thereon, divided by (ii) the lesser of (a) the purchase price for the Class B Preferred Units and (b) the volume weighted average price for which common units are issued by the Partnership during the period beginning on the private placement closing date and ending on the date on which the Partnership has issued common units (other than issuances pursuant to the LTIP) in exchange for cash in an aggregate amount equal to at least $75 million. The Class B Preferred Units are accounted for as mezzanine equity in the consolidated balance sheet consisting of the following (in thousands): June 30, December 31, 2016 2015 Mezzanine equity beginning balance $ $ — Private placement of Class B Preferred Units — Discount Amortization of discount Distributions Distributions paid — Total mezzanine equity $ $ 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 Six Months Ended June 30, June 30, June 30, March 6 - June 30 January 1 - March 6 2016 2015 2016 2015 2015 Class A units - Basic and Diluted — — — — Class B Common units - Basic and Diluted — — — — Common units - Basic and Diluted — Weighted Common units - Basic and Diluted At June 30, 2016, we had 328,715 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 six months ended June 30, 2016 (in thousands, except for per unit amounts): Total Common Units Assumed net loss to be allocated $ $ Basic and diluted loss per unit $ The following table presents our basic and diluted loss per unit for the three months ended June 30, 2016 (in thousands, except for per unit amounts): Total Common Units Assumed net loss to be allocated $ $ Basic and diluted loss per unit $ 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 $ $ 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 $ 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 a non-cash impairment charge of $ 83.7 million. There was no impairment charge recorded for the period from January 1, 2015 through March 5, 2015. |