Supplementary Information | 12 Months Ended |
Dec. 31, 2014 |
Extractive Industries [Abstract] | |
Supplementary Information | Supplementary Information |
Quarterly data (unaudited) |
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| Quarters Ended |
| March 31 | | June 30 | | September 30 | | December 31 |
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| (In thousands, except per unit amounts) |
2014 | | | | | | | |
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Oil and natural gas sales | $ | 21,807 | | | $ | 24,335 | | | $ | 26,173 | | | $ | 24,596 | |
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Net settlements on derivatives | (921 | ) | | (2,072 | ) | | (760 | ) | | 4,644 | |
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Gain (loss) on unsettled derivatives, net | (1,127 | ) | | (2,819 | ) | | 10,040 | | | 22,376 | |
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Total revenues and other | 19,759 | | | 19,444 | | | 35,453 | | | 51,616 | |
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Total expenses (1) | 18,198 | | | 15,597 | | | 18,451 | | | 51,534 | |
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Net income | 1,561 | | | 3,847 | | | 17,002 | | | 82 | |
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Net income per limited partner unit (basic) | $ | 0.08 | | | $ | 0.18 | | | $ | 0.75 | | | $ | — | |
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Net income per limited partner unit (diluted) | $ | 0.08 | | | $ | 0.18 | | | $ | 0.74 | | | $ | — | |
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2013 | | | | | | | |
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Oil and natural gas sales | $ | 20,176 | | | $ | 21,110 | | | $ | 22,982 | | | $ | 21,468 | |
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Net settlements on derivatives | 673 | | | 709 | | | (1,293 | ) | | 199 | |
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Gain (loss) on unsettled derivatives, net | (1,793 | ) | | 960 | | | (5,501 | ) | | 371 | |
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Total revenues and other | 19,056 | | | 22,779 | | | 16,188 | | | 22,038 | |
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Total expenses (1) | 14,997 | | | 12,241 | | | 11,931 | | | 12,703 | |
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Net income | 4,059 | | | 10,538 | | | 4,257 | | | 9,335 | |
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Net income per limited partner unit (basic) | $ | 0.21 | | | $ | 0.54 | | | $ | 0.22 | | | $ | 0.47 | |
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Net income per limited partner unit (diluted) | $ | 0.21 | | | $ | 0.54 | | | $ | 0.22 | | | $ | 0.47 | |
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-1 | Includes the following expenses: lease operating, production taxes, impairment, depreciation, depletion and amortization, accretion, general and administrative, and net other expense. | | | | | | | | | | | | | | |
Supplementary oil and natural gas activities |
Costs incurred in oil and natural gas property acquisitions and development activities are as follows: |
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| Year Ended December 31, | | | | |
| 2014 | | 2013 | | 2012 | | | | |
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| (in thousands) | | | | |
Property acquisition costs: | | | | | | | | | |
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Proved | $ | 241,355 | | | $ | 28,057 | | | $ | 48,578 | | | | | |
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Unproved | — | | | — | | | — | | | | | |
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Exploration | — | | | — | | | — | | | | | |
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Development | 34,320 | | | 22,287 | | | 21,639 | | | | | |
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Asset retirement obligations | 3,171 | | | 879 | | | 679 | | | | | |
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Total costs incurred | $ | 278,846 | | | $ | 51,223 | | | $ | 70,896 | | | | | |
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Estimated proved oil and natural gas reserves (unaudited) |
The Company's proved oil and natural gas reserves are all located in the United States. The proved oil and natural gas reserves for the years ended December 31, 2014, 2013, and 2012 were prepared by our reservoir engineers and audited by Cawley, Gillespie & Associates, Inc., independent third party petroleum consultants. These reserve estimates have been prepared in compliance with the rules of the SEC. We emphasize that reserve estimates are inherently imprecise and that estimates of new discoveries are more imprecise than those of producing oil and natural gas properties. Accordingly, the estimates are expected to change as future information becomes available. An analysis of the change in estimated quantities of oil and natural gas reserves are presented below for the periods indicated: |
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| Oil | | Gas | | MBoe (1) | | | | | | | |
(MBbls) | (MMcf) | | | | | | | |
Proved developed and undeveloped reserves: | | | | | | | | | | | | |
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As of December 31, 2011 | 9,936 | | | 676 | | | 10,049 | | | | | | | | |
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Revisions of previous estimates | (784 | ) | | (143 | ) | | (808 | ) | | | | | | | |
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Extensions, discoveries and other additions | 1,572 | | | — | | | 1,572 | | | | | | | | |
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Purchases of minerals in place | 3,028 | | | 18 | | | 3,031 | | | | | | | | |
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Production | (678 | ) | | (122 | ) | | (698 | ) | | | | | | | |
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As of December 31, 2012 | 13,074 | | | 429 | | | 13,146 | | | | | | | | |
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Revisions of previous estimates | 264 | | | 827 | | | 401 | | | | | | | | |
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Extensions, discoveries and other additions | 76 | | | — | | | 76 | | | | | | | | |
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Purchases of minerals in place | 1,207 | | | 193 | | | 1,239 | | | | | | | | |
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Production | (907 | ) | | (128 | ) | | (928 | ) | | | | | | | |
As of December 31, 2013 | 13,714 | | | 1,321 | | | 13,934 | | | | | | | | |
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Revisions of previous estimates | 211 | | | 924 | | | 364 | | | | | | | | |
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Extensions, discoveries and other additions | 1,241 | | | 52 | | | 1,250 | | | | | | | | |
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Purchases of minerals in place | 8,086 | | | 4,402 | | | 8,820 | | | | | | | | |
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Production | (1,112 | ) | | (157 | ) | | (1,138 | ) | | | | | | | |
As of December 31, 2014 | 22,140 | | | 6,542 | | | 23,230 | | | | | | | | |
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Proved developed reserves: | | | | | | | | | | | | |
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December 31, 2012 | 8,727 | | | 429 | | | 8,799 | | | | | | | | |
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31-Dec-13 | 10,397 | | | 1,321 | | | 10,617 | | | | | | | | |
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31-Dec-14 | 17,046 | | | 5,327 | | | 17,933 | | | | | | | | |
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Proved undeveloped reserves: | | | | | | | | | | | | |
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December 31, 2012 | 4,347 | | | — | | | 4,347 | | | | | | | | |
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December 31, 2013 | 3,317 | | | — | | | 3,317 | | | | | | | | |
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31-Dec-14 | 5,094 | | | 1,215 | | | 5,297 | | | | | | | | |
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-1 | Estimated quantities of oil and natural gas reserves in Mboe equivalents at a rate of six Mcf per Bbl. | | | | | | | | | | | | | | |
Revisions represent changes in the previous reserves estimates, either upward of downward, resulting from new information normally obtained from development drilling and production history or resulting from a change in economic factors, such as commodity prices, operating costs or development costs. |
The change in quantities of proved reserves from December 31, 2011 to December 31, 2012 is due to (i) the acquisitions of additional interests in our Southern Oklahoma units; (ii) the acquisition of additional working interest in our War Party I and II Units in the Hugoton Basin area; (iii), the acquisition of the Clawson Ranch Waterflood Unit in the Hugoton Basin area;, and (iv) the acquisition of additional properties in the Northeastern Oklahoma area. For this period, proved reserve volumes attributed to extensions, discoveries, and other additions changed from 1,704 Mboe in 2011 to 1,572 Mboe in 2012. During 2012, additional reserves were attributed to our Southern Oklahoma and Northeastern Oklahoma areas due to extensions, discoveries, and additions based on drilling and recompletion activities. The majority of this year-end 2012 volume resulted from the extension of the proved acreage in our Southern Oklahoma Highlands waterflood unit. Additional volumes were attributable to the development of behind pipe reserves in the Cleveland Field in Northeastern Oklahoma. These volumes resulted in a year-to-year change in extensions, discoveries, and other additions of approximately eight percent. |
The change in quantities of proved reserves from December 31, 2012 to December 31, 2013 is due to the acquisitions of additional interests in our Southern Oklahoma units and Northeastern Oklahoma properties and revisions on prior estimates. For this period, proved reserve volumes attributed to extensions, discoveries, and other additions changed from 1,572 Mboe in 2012 to 76 Mboe in 2013. During the period of 2013, there were no significant extensions, discoveries, or other additions except for a small extension in the Hugoton area in our Clawson Ranch waterflood unit due to drilling activity extending the proved reservoir acreage. This is in contrast to the 2012 period, where drilling in our Southern Oklahoma waterflood units extended the proved acreage while recompletion activities in our Northeast Oklahoma properties added proved reserves in new reservoirs in old fields resulting in substantial extensions, discoveries, and other additions. |
The change in quantities of proved reserves from December 31, 2013 to December 31, 2014 is due to (i) the acquisitions of additional properties in Oklahoma and Texas from our affiliate Mid-Con Energy III, LLC; (ii) the acquisition of additional working interest in some of our Southern Oklahoma properties; (iii) the acquisition of the waterflood unit in Liberty County, Texas; and (iv) the acquisition of multiple properties located in West Texas within the Eastern Shelf of the Permian. For this period, proved reserve volumes attributed to extensions, discoveries, and other additions changed from 76 Mboe in 2013 to 1,250 Mboe in 2014. During the period of 2014, extensions, discoveries and other additions increased over the prior year primarily from development work in the Northeast Oklahoma area, which increased proved developed producing and proved undeveloped reserves from new reservoirs from portions of older fields. |
Estimates of economically recoverable oil and natural gas reserves and of future net revenues are based upon a number of variable factors and assumptions, all of which are to some degree subjective and may vary considerably from actual results. Therefore, actual production, revenues, development and operating expenditures may not occur as estimated. The reserve data are estimates only, are subject to many uncertainties and are based on data gained from production histories and on assumptions as to geologic formations and other matters. Actual quantities of oil and natural gas may differ materially from the amounts estimated. |
Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Natural Gas Reserves (Unaudited) |
The standardized measure represents the present value of estimated future cash inflows from proved oil and natural gas reserves, less future development, production, plugging and abandonment costs, discounted at the rate prescribed by the SEC. The standardized measure of discounted future net cash flow does not purport to be, nor should it be interpreted to represent, the fair market value of our proved oil and natural gas reserves. The following assumptions have been made: |
•In the determination of future cash inflows, sales prices used for oil and natural gas for the years ended December 31, 2014, 2013 and 2012, were estimated using the average price during the 12-month period, determined as the unweighted arithmetic average of the first-day-of-the-month price for each month in such period. |
•Future costs of developing and producing the proved oil and natural gas reserves were based on costs determined at each such period-end, assuming the continuation of existing economic conditions, including abandonment costs. |
•No future income tax expenses are computed for Mid-Con Energy Partners, LP because we are a non-taxable entity. |
•Future net cash flows were discounted at an annual rate of 10%. |
The standardized measure of discounted future net cash flow relating to estimated proved oil and natural gas reserves is presented below for the periods indicated: |
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| Year Ended December 31, | | | | |
| 2014 | | 2013 | | 2012 | | | | |
| (in thousands) | | | | |
Future cash inflows | $ | 2,084,005 | | | $ | 1,295,435 | | | $ | 1,191,410 | | | | | |
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Future production costs | (825,318 | ) | | (542,389 | ) | | (417,362 | ) | | | | |
Future development costs, including abandonment costs | (76,783 | ) | | (49,458 | ) | | (47,490 | ) | | | | |
Future net cash flow | 1,181,904 | | | 703,588 | | | 726,558 | | | | | |
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10% discount for estimated timing of cash flow | (517,627 | ) | | (312,325 | ) | | (323,136 | ) | | | | |
Standardized measure of discounted cash flow | $ | 664,277 | | | $ | 391,263 | | | $ | 403,422 | | | | | |
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The prices utilized in calculating our total proved reserves were $94.99, $96.78, and $94.71 per Bbl of oil and $4.35, $3.67, and $2.75 per MMBtu of natural gas for December 31, 2014, 2013, and 2012, respectively. These prices were adjusted by lease for quality, transportation fees, location differentials, marketing bonuses or deductions or other factors affecting the price received at the wellhead. Average adjusted prices used were $92.45, $93.98, and $91.03 per Bbl of oil and $5.67, $5.00, and $2.87 per Mcf of natural gas for December 31, 2014, 2013 and 2012, respectively. Adjusted natural gas price includes the sale of associated natural gas liquids. All wellhead prices are held flat over the life of the properties for all reserve categories. |
Changes in the standardized measure of discounted future net cash flow relating to proved oil and natural gas reserves is presented below for the periods indicated: |
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| Year Ended December 31, | | | | |
| 2014 | | 2013 | | 2012 | | | | |
Standardized measure of discounted future net cash flow, beginning of period | $ | 391,263 | | | $ | 403,422 | | | $ | 328,231 | | | | | |
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Changes in the year resulting from: | | | | | | | | | |
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Sales, less production costs | (64,495 | ) | | (65,553 | ) | | (48,648 | ) | | | | |
Revisions of previous quantity estimates | 11,712 | | | 12,006 | | | (26,796 | ) | | | | |
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Extensions, discoveries and improved recovery | 44,727 | | | 1,863 | | | 51,098 | | | | | |
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Net change in prices and production costs | 22,068 | | | (28,324 | ) | | (15,328 | ) | | | | |
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Net change in income taxes | — | | | — | | | — | | | | | |
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Changes in estimated future development costs | (18,125 | ) | | (17,155 | ) | | (11,515 | ) | | | | |
Previously estimated development costs incurred during the period | 22,526 | | | 22,257 | | | 21,629 | | | | | |
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Purchases of minerals in place | 264,921 | | | 38,170 | | | 81,602 | | | | | |
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Accretion of discount | 39,126 | | | 40,342 | | | 32,823 | | | | | |
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Timing differences and other | (49,446 | ) | | (15,765 | ) | | (9,674 | ) | | | | |
Standardized measure of discounted future net cash flow, end of year | $ | 664,277 | | | $ | 391,263 | | | $ | 403,422 | | | | | |
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