Supplemental Oil and Gas Information (Unaudited) | NOTE 10—SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) Oil and Gas Reserve Information . The preparation of our natural gas, oil and NGL reserve estimates was completed in accordance with the prescribed guidelines established by the SEC. In accordance with our internal policies and procedures related to reserve estimates, annually we engage an independent petroleum engineering firm to audit our reserves. For the year ended December 31, 2018, we engaged VSO Petroleum Consultants, Inc. and for the years ended December 31, 2017 and 2016, we engaged Wright & Company, Inc. The reserve disclosures that follow reflect estimates of proved reserves, proved developed reserves and proved undeveloped reserves, net of royalty interests, of natural gas, crude oil and NGLs owned at year end and changes in proved reserves during the last year. Proved oil, gas and NGL reserves are those quantities of oil, gas and NGLs, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible – from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations – prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. Proved developed reserves are those reserves of any category that can be expected to be recovered through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well. Proved undeveloped reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. Reserves on undrilled acreage are limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances. Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances justify a longer time. Estimates for undeveloped reserves cannot be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, or by other evidence using reliable technology establishing reasonable certainty. The proved reserves quantities and future net cash flows were estimated using an unweighted 12-month average pricing based on the prices on the first day of each month during the years ended December 31, 2018, 2017 and 2016, including adjustments related to regional price differentials and energy content. There are numerous uncertainties inherent in estimating quantities of proven reserves and in projecting future net revenues and the timing of development expenditures. The reserve data presented represents estimates only and should not be construed as being exact. In addition, the standardized measures of discounted future net cash flows may not represent the fair market value of our oil, gas and NGL reserves or the present value of future cash flows of equivalent reserves, due to anticipated future changes in oil, gas and NGL prices and in production and development costs and other factors, for their effects have not been proved. Reserve quantity information and a reconciliation of changes in proved reserve quantities were as follows: Gas (MMcf) Oil (MBbls) NGLs (MBbls) Total (MMcfe) Balance, January 1, 2016 3,108 7,779 626 53,539 Extensions, discoveries and other additions — — — — Sales of reserves in-place — — — — Purchase of reserves in-place — — — — Revisions of previous estimates ( 1 ) (1,521 ) (4,099 ) (332 ) (28,107 ) Production (154 ) (293 ) (27 ) (2,074 ) Balance, December 31, 2016 1,432 3,387 267 23,356 Extensions, discoveries and other additions — — — — Sales of reserves in-place — — — — Purchase of reserves in-place — — — — Revisions of previous estimates ( 1 ) 548 1,231 169 8,949 Production (114 ) (143 ) (20 ) (1,092 ) Balance, December 31, 2017 1,866 4,475 416 31,213 Extensions, discoveries and other additions (1) 89 355 21 2,343 Sales of reserves in-place — — — — Purchase of reserves in-place — — — — Revisions of previous estimates (1) (739 ) (818 ) (157 ) (6,589 ) Production (114 ) (145 ) (21 ) (1,110 ) Balance, December 31, 2018 1,102 3,867 259 25,857 Proved developed reserves at: January 1, 2016 802 1,645 154 11,596 December 31, 2016 652 925 100 6,802 December 31, 2017 613 788 121 6,069 December 31, 2018 292 676 69 4,762 Proved undeveloped reserves at: January 1, 2016 2,306 6,134 472 41,942 December 31, 2016 780 2,462 167 16,554 December 31, 2017 1,253 3,687 295 25,144 December 31, 2018 810 3,191 190 21,095 ( 1 ) See “Changes in Proved Reserves Changes in Proved Reserves The following represents the unweighted average of the first-day-of-the-month prices for each of the previous twelve months from the periods presented above: December 31, 2018 2017 2016 Unadjusted Prices Natural gas (per MMBtu) $ 3.10 $ 2.98 $ 2.48 Oil (per Bbl) $ 65.56 $ 51.34 $ 42.75 Natural gas liquids (per Bbl) $ 25.57 $ 20.33 $ 19.57 For the year ended December 31, 2018, we had extensions, discoveries and other additions of 2,343 MMcfe due to the addition of two proved undeveloped wells resulting from our well that was drilled and completed in May 2018. For the year ended December 31, 2018, we had positive revisions of 720 MMcfe due to increases in pricing, offset by negative revisions of 6,062 MMcfe due to updated type curves based on well results located closer to our Eagle Ford positions, 1,509 MMcfe due to actual production underperforming previous year’s forecast and 848 MMcfe due to operating expenses. For the year ended December 31, 2017, we had positive revisions of 8,585 MMcfe due to modifications in our Eagle Ford development plan, focusing on longer lateral lengths, and 1,208 MMcfe due to increases in pricing, partially offset by negative revisions of 844 MMcfe due to production underperforming previous year’s forecast. For the year ended December 31, 2016, we had negative revisions of 23,794 MMcfe due to the removal of proved undeveloped properties that became uneconomic due to pricing, 3,582 MMcfe due to production underperforming previous year’s forecast and 731 MMcfe due to decreases in pricing. Capitalized Costs Related to Oil and Gas Producing Activities . The components of our capitalized costs related to oil and gas producing activities as of the periods indicated were as follows (in thousands): December 31, 2018 2017 Natural gas and oil properties: Proved properties $ 154,954 $ 147,932 Unproved properties — — Support equipment 29 29 154,983 147,961 Accumulated depreciation, depletion and amortization (132,814 ) (85,328 ) Net capitalized costs $ 22,169 $ 62,633 Results of Operations from Oil and Gas Producing Activities. The results of operations related to our oil and gas producing activities during the periods indicated were as follows (in thousands): Years Ended December 31, 2018 2017 2016 Gas and oil production revenues $ 10,441 $ 7,841 $ 11,851 Production costs (3,486 ) (2,528 ) (2,660 ) Depletion (5,724 ) (3,410 ) (14,694 ) Asset impairment (1) (41,762 ) — (41,879 ) $ (40,531 ) $ 1,903 $ (47,382 ) (1) For the year ended December 31, 2018, we recognized $41.8 million of impairment related to our proved oil and gas properties in the Eagle Ford operating area, which were impaired due to lower forecasted production performance and commodity prices. For the year ended December 31, 2016, we recognized $25.4 million and $16.5 million of asset impairment related to our proved and unproved oil and gas properties in the Eagle Ford operating area, respectively, which were impaired due to lower forecasted commodity prices and timing of capital financing and deployment for the development of our undeveloped properties. Costs Incurred in Oil and Gas Producing Activities . The costs incurred by our oil and gas activities during the periods indicated are as follows (in thousands): Years Ended December 31, 2018 2017 2016 Property acquisition costs: Proved properties $ — $ — $ 143 Unproved properties — — — Exploration costs (1) — — — Development costs 6,873 — 5,946 Total costs incurred in oil & gas producing activities $ 6,873 $ — $ 6,089 (1) There were no exploratory wells drilled during the periods presented. Standardized Measure of Discounted Future Cash Flows . The following schedule presents the standardized measure of estimated discounted future net cash flows relating to our proved oil and gas reserves. The estimated future production was priced at a twelve-month average for the periods presented, adjusted only for regional price differentials and energy content. The resulting estimated future cash inflows were reduced by estimated future costs to develop and produce the proved reserves based on year-end cost levels and includes the effect on cash flows of settlement of asset retirement obligations on gas and oil properties. The future net cash flows were reduced to present value amounts by applying a 10% discount factor. The standardized measure of future cash flows was prepared using the prevailing economic conditions existing at the dates presented and such conditions continually change. Accordingly, such information should not serve as a basis in making any judgment on the potential value of recoverable reserves or in estimating future results of operations (in thousands): Years Ended December 31, 2018 2017 2016 Future cash inflows $ 271,705 $ 243,644 $ 145,857 Future production costs (88,148 ) (73,792 ) (53,738 ) Future development costs (78,835 ) (68,321 ) (51,942 ) Future net cash flows 104,722 101,531 40,177 Less 10% annual discount for estimated timing of cash flows (53,007 ) (61,082 ) (22,796 ) Standardized measure of discounted future net cash flows $ 51,715 $ 40,449 $ 17,381 Change in Standardized Discounted Cash Flows . The following table summarizes the changes in the standardized measure of discounted future net cash flows from estimated production of proved oil, gas and NGL reserves (in thousands), including amounts related to asset retirement obligations. Since we allocate taxable income to our unitholders, no recognition has been given to income taxes: Years Ended December 31, 2018 2017 2016 Balance, beginning of year $ 40,449 $ 17,381 $ 72,462 Increase (decrease) in discounted future net cash flows (1) Sales of oil and gas produced, net of related costs (6,955 ) (5,403 ) (8,758 ) Net changes in estimated future prices and production costs 32,438 22,401 (19,173 ) Revisions of previous quantity estimates (26,896 ) 15,568 (32,119 ) Development costs incurred 6,873 — — Changes in future development costs — (11,236 ) (2,267 ) Extensions, discoveries, and improved recovery less related costs 1,761 — — Sales of reserves in-place — — — Accretion of discount 4,045 1,738 7,246 Estimated settlement of asset retirement obligations — — — Estimated proceeds on disposals of well equipment — — (9 ) Balance, end of year $ 51,715 $ 40,449 $ 17,381 (1) See “ Reserve Quantity Information Revisions of Previous Estimates |