Supplementary Information | Supplementary Information Quarterly data (unaudited) Quarters Ended March 31 June 30 September 30 December 31 (In thousands, except per unit amounts) 2016 Oil and natural gas sales $ 11,269 $ 14,777 $ 14,410 $ 15,642 Gain (loss) on derivatives, net $ 2,568 $ (10,088 ) $ (444 ) $ (4,238 ) Total revenues and other $ 13,837 $ 4,689 $ 13,966 $ 11,404 Gain (loss) on sale of properties $ — $ 13 $ (530 ) $ (43 ) Total expenses (1) $ 17,150 $ 20,471 $ 15,857 $ 14,672 Net loss $ (3,313 ) $ (15,769 ) $ (2,421 ) $ (3,311 ) Net loss per limited partner unit (basic and diluted) $ (0.11 ) $ (0.52 ) $ (0.09 ) $ (0.14 ) 2015 Oil and natural gas sales $ 17,571 $ 21,611 $ 18,493 $ 16,239 Gain (loss) on derivatives, net $ 1,644 $ (8,871 ) $ 19,771 $ 9,822 Total revenues and other $ 19,215 $ 12,740 $ 38,264 $ 26,061 Total expenses (1) $ 23,327 $ 20,684 $ 63,742 $ 84,022 Net loss $ (4,112 ) $ (7,944 ) $ (25,478 ) $ (57,961 ) Net loss per limited partner unit (basic and diluted) $ (0.14 ) $ (0.26 ) $ (0.85 ) $ (1.93 ) (1) Includes the following expenses: lease operating, production taxes, impairment, depreciation, depletion and amortization, accretion, general and administrative and net other income (expense). Supplementary oil and natural gas activities Costs incurred in oil and natural gas property acquisitions and development activities are as follows: Year Ended December 31, 2016 2015 2014 (in thousands) Property acquisition costs: Proved $ 18,722 $ 1 $ 241,355 Unproved — — — Exploration — — — Development 6,963 13,415 34,320 Asset retirement obligations 902 4,924 3,171 Total costs incurred $ 26,587 $ 18,340 $ 278,846 Estimated proved oil and natural gas reserves (unaudited) The Partnership'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, 2016, 2015 and 2014 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: Oil Natural Gas MBoe Proved developed and undeveloped reserves: As of December 31, 2013 13,714 1,321 13,934 Revisions of previous estimates (1) 211 924 364 Extensions, discoveries and other additions 1,241 52 1,250 Purchases of reserves in place 8,086 4,402 8,820 Production (1,112 ) (157 ) (1,138 ) As of December 31, 2014 22,140 6,542 23,230 Revisions of previous estimates (1) 596 856 739 Extensions, discoveries and other additions — — — Purchases of reserves in place 1 — 1 Production (1,623 ) (571 ) (1,718 ) As of December 31, 2015 21,114 6,827 22,252 Revisions of previous estimates (1) 58 (262 ) 14 Extensions, discoveries and other additions — — — Purchases of reserves in place (2) 1,517 211 1,552 Sales of reserves in place (3) (3,093 ) (98 ) (3,109 ) Production (1,386 ) (554 ) (1,478 ) As of December 31, 2016 18,210 6,124 19,231 Proved developed reserves: December 31, 2014 17,046 5,327 17,933 December 31, 2015 14,368 4,762 15,162 December 31, 2016 11,733 4,141 12,423 Proved undeveloped reserves: December 31, 2014 5,094 1,215 5,297 December 31, 2015 6,746 2,065 7,090 December 31, 2016 6,477 1,983 6,808 (1) Revisions represent changes in the previous reserves estimates, either upward or downward, resulting from new information normally obtained from development drilling and production history or resulting from a change in economic factors, such a commodity prices, operating costs or development costs. (2) Represents the purchase of proved reserves as part of our Permian Bolt-On acquisition. (3) Decrease due to the sale of our Hugoton core area oil and natural gas properties. The change in quantities of proved reserves from December 31, 2013 to December 31, 2014, was due to the acquisitions of additional properties in Oklahoma and Texas from our affiliate Mid-Con Energy III, LLC, the acquisition of additional working interest in some of our Southern Oklahoma properties, the acquisition of the waterflood unit in Liberty County, Texas and 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 Northeastern Oklahoma area, which increased proved developed producing and proved undeveloped reserves from new reservoirs from portions of older fields. The change in quantities of proved reserves from December 31, 2014 to December 31, 2015, was due to a significant commodity price decrease that resulted in a downward revision of 4,084 MBoe, improved recovery of 1,417 MBoe from our proved developed reserves in addition to 994 MBoe transferred from proved undeveloped reserves to proved developed reserves and the addition of recompletions, infill drilling, new waterflood projects, and expansion of existing waterflood projects in our Hugoton, Northeastern Oklahoma, Southern Oklahoma and Permian core areas resulting in a positive revision of proved undeveloped reserves of 3,405 MBoe. The upward revision of our proved developed reserves is largely attributable to a positive oil production response in 2015 to recently established water injection in the Cleveland Unit (Northeastern Oklahoma), Ona Morrow Unit (Hugoton) and Midwell Unit (Hugoton). The change in quantities of proved reserves from December 31, 2015 to December 31, 2016, was due in part to commodity price decreases which shortened the economic lives of certain producing properties and caused certain development projects to become uneconomic which had an adverse impact on our proved reserves estimates, resulting in downward reserve revisions of 1,801 MBoe in 2016. In response to the continued decrease in commodity prices throughout 2016, we further refined our development plans to concentrate on our Northeastern Oklahoma and Permian core areas. This included infill drills and recompletions resulting in positive revisions in production performance of 569 MBoe. In addition, we saw positive oil production responses to water injection in our Northeastern Oklahoma and Permian core areas, resulting in upward revisions to our proved reserves of 1,246 MBoe. During 2016, the divestiture of our Hugoton core area properties resulted in a downward revision of 3,109 MBoe and the acquisition of the Permian Bolt-On properties resulted in a positive revision of 1,552 MBoe. 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, 2016, 2015 and 2014, 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: Year Ended December 31, 2016 2015 2014 (in thousands) Future cash inflows $ 741,077 $ 1,011,096 $ 2,084,005 Future production costs (389,138 ) (581,314 ) (825,318 ) Future development costs, including abandonment costs (65,195 ) (109,669 ) (76,783 ) Future net cash flow 286,744 320,113 1,181,904 10% discount for estimated timing of cash flow (129,459 ) (128,693 ) (517,627 ) Standardized measure of discounted cash flow $ 157,285 $ 191,420 $ 664,277 The prices utilized in calculating our total proved reserves were $42.75 , $50.28 and $94.99 per Bbl of oil and $2.49 , $2.58 and $4.35 per MMBtu of natural gas for December 31, 2016, 2015 and 2014, 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 $40.03 , $47.23 and $92.45 per Bbl of oil and $1.99 , $2.02 and $5.67 per Mcf of natural gas for December 31, 2016, 2015 and 2014, respectively. Adjusted natural gas price includes the sale of associated NGLs. We do not extract NGLs from our natural gas production prior to the sale and transfer of title of the natural gas stream to our purchasers. While some of our purchasers extract NGLs from the natural gas stream sold by us to them, we have no ownership in such NGLs; therefore, we do not report NGLs in our production or proved reserves. 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: Year Ended December 31, 2016 2015 2014 (in thousands) Standardized measure of discounted future net cash flow, beginning of period $ 191,420 $ 664,277 $ 391,263 Changes in the year resulting from: Sales, less production costs (30,513 ) (36,836 ) (64,495 ) Revisions of previous quantity estimates 133 8,047 11,712 Extensions, discoveries and improved recovery — — 44,727 Net change in prices and production costs (16,138 ) (454,669 ) 22,068 Net change in income taxes — — — Changes in estimated future development costs 22,685 (6,080 ) (18,125 ) Previously estimated development costs incurred during the period 3,526 8,103 22,526 Purchases of reserves in place 22,223 19 264,921 Sales of reserves in place (11,124 ) — — Accretion of discount 19,142 66,428 39,126 Timing differences and other (44,069 ) (57,869 ) (49,446 ) Standardized measure of discounted future net cash flow, end of year $ 157,285 $ 191,420 $ 664,277 |