Exhibit 99.3
Exhibit 99.3
QR Energy, LP
General Partner Buy-out Presentation
March 2014
Disclosures
This presentation contains forward-looking statements relating to QR Energy’s operations that are based on management’s current expectations, estimates and projections about its operations. Words and phrases such as “expect,” “estimates,” “guidance,” “opportunities,” “potential,” “may,” “believe” and “target,” references to future years, and variations of such words and similar expressions are intended to identify forward-looking statements. QR Energy believes that its expectations and forecasts are based on reasonable assumptions, however, no assurance can be given that such expectations and forecasts will prove to be correct. A number of risks and uncertainties, many of which are beyond our control, could cause actual results to differ materially from the expectations and forecasts, anticipated results and other forward-looking information expressed in this presentation, including risks relating to QR Energy’s financial performance and results, availability of sufficient cash flow to execute our business plan, our level of indebtedness, a significant reduction in the borrowing base under our bank credit facility, our ability to raise capital, prices and demand for oil and natural gas, our ability to replace reserves and efficiently develop our current reserves, adverse market conditions, competition and governmental regulations. For a more complete list of these risks, please read QR Energy’s filings with the Securities and Exchange Commission (the “SEC”), which are available on QR Energy’s Investor Relations website at http://ir.qrenergylp.com or on the SEC’s website at www.sec.gov.
The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Unless legally required, QR Energy undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Unpredictable or unknown factors not discussed herein could also have material adverse effects on forward-looking statements.
NYSE: QRE www.QREnergyLP.com 2
Transaction Summary
The board of directors of QR Energy, L.P. (“QRE”) has simplified its capital structure by purchasing QRE GP, LLC (“GP”) in a 100% conditional unit exchange
Terms of the transaction were approved by the conflicts committee and the board of directors
The transaction is expected to result in immediate accretion to QRE’s distributable cash flow per unit of approximately 7% in 2014 (1)
GP unitholders will have the right to earn up to 11.6 Class B units as consideration in exchange for the GP’s economic interest and Management Incentive Fee (“MIF”)
Ability to earn payments over four years at the anniversary of the first issuance, with the first issuance occurring on the same date as the distribution payment date for the year ended December 31, 2014 The GP may earn units in any 4 of the next 6 calendar years provided QRE meets the conditions listed below in such year:
Cash distribution to unitholders met or exceeded Target Distribution, as defined in the partnership agreement, in each of the previous four quarters (at least $0.4744/unit per quarter) Distribution Coverage, as defined in the partnership agreement, is 1.0x or greater on a calendar annual basis Maximum 4.0x Debt / LTM EBITDA, on a quarterly basis (if greater than 4.0x, the independent directors must agree to such exceptions)
Demonstrates management’s commitment to long-term value creation and the partnership’s prospect for growth
(1) Assuming (a) 2013 distributable cash flow and MIF held constant during 2014 and (b) QR Energy had paid sufficient cash distributions and earned sufficient operating surplus to pay the full amount of the MIF in 2014.
NYSE: QRE www.QREnergyLP.com 3
Transaction Benefits
Lowers cost of capital by removing MIF
Eliminates MIF payments related to future acquisitions
Lower Cost of
Capital Deferred payment enhances competitiveness for acquisitions
100% equity transaction, earned over time, maintains balance sheet flexibility and
liquidity
Simplified
Provides a capital structure more easily understood by the investing public
Structure
Removal of the MIF increases potential for accelerated growth given enhanced
Enhances competitive position
Distribution
Growth Profile Buyout of the GP and associated MIF results in greater economic return for QRE
unitholders from capital expansion projects and acquisitions
Governance Unitholders to vote on directors going forward
NYSE: QRE www.QREnergyLP.com 4
Pre-Transaction Structure
Management and Affiliates
of Quantum
Member Energy Partners
Interest
Quantum Resources The Fund
Management, LLC Preferred Units
QRE GP, LLC
General Partner Units Limited
Services Management Incentive Fee Partner Interest
Agreement
0.1% General
Partner Interest
Public Unitholders
Common Units
Limited
Partner Interest
QR Energy, LP
(NYSE: QRE)
QRE Operating, LLC
NYSE: QRE www.QREnergyLP.com 5
Post-Transaction Structure
Management and Affiliates
of Quantum
Member Energy Partners
Interest
Quantum Resources The Fund
Management, LLC Limited Preferred Units
Partner Interest
Limited
Partner Interest
Services QR Energy, LP
Agreement
(NYSE: QRE) Limited
Partner Public Unitholders
Interest Common Units
0% Non-Economic
General Partner Interest
QRE GP, LLC QRE Operating, LLC
NYSE: QRE www.QREnergyLP.com 6
QR Energy, LP
Investor Relations
Josh Wannarka (713) 452-2990 or ir@qracq.com
