Reporting Segments | 17. REPORTING SEGMENTS “Midstream” and “Production” best describe the operating segments of the businesses that we separately report. The factors used to identify these reporting segments are based on the nature of the operations that are undertaken by each segment. The Midstream segment operates the gathering, processing and transportation of crude oil, natural gas and NGLs. The Production segment operates to produce crude oil and natural gas. These segments are broadly understood across the petroleum and petrochemical industries. These functions have been defined as the operating segments of the Partnership because they are the segments (1) that engage in business activities from which revenues are earned and expenses are incurred; (2) whose operating results are regularly reviewed by the Partnership’s chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and to assess its performance; and (3) for which discrete financial information is available. Operating segments are evaluated for their contribution to the Partnership’s consolidated results based on operating income, which is defined as segment operating revenues less expenses. The following tables present financial information for each operating segment for the periods indicated based on our operating segments (in thousands): Three Months Ended June 30, 2019 2018 Production Midstream Production Midstream Segment revenues Natural gas sales $ 256 $ — $ 226 $ — Oil sales 3,811 — 1,584 — Natural gas liquid sales 117 — 400 — Gathering and transportation sales — 1,702 — 1,661 Gathering and transportation lease revenues — 15,969 — 13,168 Total segment revenues 4,184 17,671 2,210 14,829 Segment operating costs Lease operating expenses 1,688 377 1,644 363 Transportation operating expenses — 3,048 — 3,071 Production taxes 141 — 287 — Gain on sale of assets — — (2,388) — Depreciation, depletion and amortization 828 5,346 1,251 5,294 Accretion expense 46 80 49 74 Total segment operating costs 2,703 8,851 843 8,802 Segment other income Earnings from equity investments — 791 — 3,111 Total segment other income — 791 — 3,111 Segment operating income $ 1,481 $ 9,611 $ 1,367 $ 9,138 Six Months Ended June 30, 2019 2018 Production Midstream Production Midstream Segment revenues Natural gas sales $ 366 $ — $ 699 $ — Oil sales 3,072 — 5,046 — Natural gas liquid sales 296 — 995 — Gathering and transportation sales — 3,385 — 3,349 Gathering and transportation lease revenues — 32,226 — 25,486 Total segment revenues 3,734 35,611 6,740 28,835 Segment operating costs Lease operating expenses 3,007 773 3,396 582 Transportation operating expenses — 5,724 — 5,918 Production taxes 324 — 609 — Gain on sale of assets — — (2,388) — Depreciation, depletion and amortization 1,923 10,680 2,614 10,559 Accretion expense 100 159 103 146 Total segment operating costs 5,354 17,336 4,334 17,205 Segment other income Earnings from equity investments — 2,233 — 7,383 Total segment other income — 2,233 — 7,383 Segment operating income (loss) $ (1,620) $ 20,508 $ 2,406 $ 19,013 Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Reconciliation of segment operating income (loss) to net income (loss) Total production operating income (loss) $ 1,481 $ 1,367 $ (1,620) $ 2,406 Total midstream operating income 9,611 9,138 20,508 19,013 Total segment operating income 11,092 10,505 18,888 21,419 General and administrative expense (4,171) (6,919) (8,920) (12,084) Unit-based compensation expense (175) (1,347) (810) (2,785) Interest expense, net (2,814) (2,780) (5,600) (5,379) Other income (expense) 21 (1,254) 67 (1,524) Income tax expense (76) — (122) — Net income (loss) $ 3,877 $ (1,795) $ 3,503 $ (353) The following table summarizes the total assets by operating segment as of June 30, 2019 and December 31, 2018 and total capital expenditures for the six months ended June 30, 2019 and the year ended December 31, 2018 (in thousands): June 30, 2019 Production Midstream Corporate (a) Total Other financial information Total assets $ 48,162 $ 414,129 $ 2,105 $ 464,396 Capital expenditures (b) $ 103 $ 679 $ — $ 782 December 31, 2018 Production Midstream Corporate (a) Total Other financial information Total assets $ 53,556 $ 429,523 $ 3,606 $ 486,685 Capital expenditures (b) $ 11 $ 4,856 $ — $ 4,867 (a) Corporate assets not reviewed by the CODM on a segment basis consists of cash, certain prepaid expenses, office furniture, and other assets. (b) Inclusive of capital contributions made to equity method investments. |