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 September 30, 2019 2018 Production Midstream Production Midstream Segment revenues Natural gas sales $ 177 $ — $ 166 $ — Oil sales 4,769 — 2,848 — Natural gas liquid sales 115 — 408 — Gathering and transportation sales — 1,720 — 1,582 Gathering and transportation lease revenues — 14,135 — 13,148 Total segment revenues 5,061 15,855 3,422 14,730 Segment operating costs Lease operating expenses 1,636 469 1,597 308 Transportation operating expenses — 2,752 — 3,061 Production taxes 165 — 292 — Gain on sale of assets — — (238) — Depreciation, depletion and amortization 1,077 5,364 1,202 5,305 Accretion expense 49 83 48 75 Total segment operating costs 2,927 8,668 2,901 8,749 Segment other income Earnings from equity investments — 780 — 2,313 Total segment other income — 780 — 2,313 Segment operating income $ 2,134 $ 7,967 $ 521 $ 8,294 Nine Months Ended September 30, 2019 2018 Production Midstream Production Midstream Segment revenues Natural gas sales $ 543 $ — $ 865 $ — Oil sales 7,841 — 7,894 — Natural gas liquid sales 411 — 1,403 — Gathering and transportation sales — 5,105 — 4,931 Gathering and transportation lease revenues — 46,361 — 38,634 Total segment revenues 8,795 51,466 10,162 43,565 Segment operating costs Lease operating expenses 4,643 1,242 4,993 890 Transportation operating expenses — 8,476 — 8,979 Production taxes 489 — 901 — Gain on sale of assets — — (2,626) — Depreciation, depletion and amortization 3,000 16,044 3,816 15,864 Accretion expense 149 242 151 221 Total segment operating costs 8,281 26,004 7,235 25,954 Segment other income Earnings from equity investments — 3,013 — 9,696 Total segment other income — 3,013 — 9,696 Segment operating income (loss) $ 514 $ 28,475 $ 2,927 $ 27,307 Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Reconciliation of segment operating income to net income (loss) Total production operating income $ 2,134 $ 521 $ 514 $ 2,927 Total midstream operating income 7,967 8,294 28,475 27,307 Total segment operating income 10,101 8,815 28,989 30,234 General and administrative expense (4,317) (5,109) (13,237) (17,193) Unit-based compensation expense (271) (155) (1,081) (2,940) Interest expense, net (12,141) (2,786) (17,741) (8,165) Other income (expense) 31 (352) 98 (1,876) Income tax expense (213) — (335) — Net income (loss) $ (6,810) $ 413 $ (3,307) $ 60 The following table summarizes the total assets by operating segment as of September 30, 2019 and December 31, 2018 and total capital expenditures for the nine months ended September 30, 2019 and the year ended December 31, 2018 (in thousands): September 30, 2019 Production Midstream Corporate (a) Total Other financial information Total assets $ 48,418 $ 404,967 $ 5,340 $ 458,725 Capital expenditures (b) $ 130 $ 728 $ — $ 858 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. |