Supplemental Oil and Natural Gas Disclosure - Unaudited | Geographic Area of Operation All of the Partnership’s proved reserves are located within the continental U.S., with the majority concentrated in Kentucky, Louisiana, North Dakota, Oklahoma, Pennsylvania, Texas, West Virginia, and Wyoming. However, the Partnership also owns mineral and royalty interests and non-operated working interests in various producing and non-producing oil and natural gas properties in several other areas throughout the United States. Therefore, the following disclosures about the Partnership’s costs incurred and proved reserves are presented on a consolidated basis. Costs Incurred in Oil and Natural Gas Property Acquisitions, Exploration, and Development Activities Costs incurred in oil and natural gas property acquisition, exploration and development, whether capitalized or expensed, are presented below: Year Ended December 31, 2015 2014 2013 (In thousands) Acquisition Costs of Properties: 1 Proved $ 2,302 $ 13,215 $ 77,580 Unproved 60,994 35,706 264,710 Exploration Costs 2,592 631 174 Development Costs 60,056 50,595 50,440 Total $ 125,944 $ 100,147 $ 392,904 1 See Note 4 – Acquisitions for further discussion. Unproved properties also include purchases of leasehold prospects. Property acquisition costs include costs incurred to purchase, lease, or otherwise acquire a property. Development costs include costs incurred to gain access to and prepare development well locations for drilling, to drill and equip development wells, and to provide facilities to extract, treat, and gather natural gas. Refer below for total capitalized costs and associated accumulated DD&A and impairment. Oil and Natural Gas Capitalized Costs Aggregate capitalized costs related to oil and natural gas production activities with applicable accumulated depreciation, depletion, and amortization, including impairments, are presented below: As of December 31, 2015 2014 (In thousands) Proved properties $ 1,957,648 $ 1,753,167 Unproved properties 524,563 626,376 Total 2,482,211 2,379,543 Accumulated depreciation, depletion, amortization, and impairment (1,543,796 ) (1,191,861 ) Oil and natural gas properties, net $ 938,415 $ 1,187,682 Oil and Natural Gas Reserve Information—Unaudited The following table sets forth estimated net quantities of the Partnership’s proved, proved developed, and proved undeveloped oil and natural gas reserves. These reserve estimates exclude insignificant natural gas liquid quantities owned by the Partnership. Estimated reserves for the periods presented are based on the unweighted average of first-day-of-the-month commodity prices over the period January through December for the year in accordance with definitions and guidelines set forth by the SEC and the FASB. Crude Oil (MBbl) Natural Gas (MMcf) Total (MBoe) Net proved reserves at December 31, 2012 14,811 273,800 60,444 Revisions of previous estimates 1 1,616 (16,760 ) (1,177 ) Purchases of minerals in place 2 883 5,472 1,795 Extensions, discoveries and other additions 3 4,265 22,848 8,073 Production (2,626 ) (45,400 ) (10,193 ) Net proved reserves at December 31, 2013 18,949 239,960 58,942 Revisions of previous estimates 1 (1,904 ) (20,764 ) (5,365 ) Purchases of minerals in place 4 89 7,439 1,329 Extensions, discoveries and other additions 5 2,938 19,894 6,254 Production (3,005 ) (42,273 ) (10,051 ) Net proved reserves at December 31, 2014 17,067 204,256 51,109 Revisions of previous estimates 1 (197 ) (17,043 ) (3,037 ) Purchases of minerals in place 6 8 367 69 Extensions, discoveries and other additions 7 2,529 57,484 12,110 Production (3,565 ) (41,389 ) (10,463 ) Net proved reserves at December 31, 2015 15,842 203,675 49,788 Net Proved Developed Reserves 8 December 31, 2013 17,290 232,777 56,086 December 31, 2014 16,700 202,888 50,514 December 31, 2015 15,497 174,555 44,590 Net Proved Undeveloped Reserves 9 December 31, 2013 1,659 7,183 2,856 December 31, 2014 367 1,368 595 December 31, 2015 345 29,120 5,198 1 Revisions of previous estimates include technical revisions due to changes in commodity prices, historical and projected performance and other factors. The most notable technical revisions are related to well performance in certain Haynesville/Bossier wells. 2 Includes the acquisition of mineral interests primarily in the Haynesville/Bossier plays as part of the Predecessor Exchange Offer and additional mineral acreage located in the Eagle Ford Shale in Texas. Additionally, this line includes adjustments to reserves related to the pro rata distribution of assets to unrelated third-party investors who chose to take their interests in-kind rather than participate in the Predecessor Exchange Offer. 3 Includes discoveries and additions primarily related to active drilling in the Haynesville/Bossier, Bakken/Three Forks, Wilcox, Granite Wash, and Fayetteville plays. 4 Includes the acquisition of mineral-and-royalty reserves primarily located throughout Texas, including in the Eagle Ford Shale and Wolfcamp plays and working interest reserves, the substantial majority of which is located in the Haynesville/Bossier play in San Augustine County, Texas. 5 Includes discoveries and additions primarily related to active drilling in the Haynesville/Bossier, Bakken/Three Forks, Eagle Ford Shale, Wilcox, Granite Wash, and Fayetteville plays. 6 7 8 Proved developed reserves of 84 MBoe, 87 MBoe, and 119 MBoe as of December 31, 2015, 2014, and 2013, respectively, were attributable to noncontrolling interests in the Partnership’s consolidated subsidiaries. 9 As of December 31, 2015, 2014, and 2013, no proved undeveloped reserves were attributable to noncontrolling interests. Standardized Measure of Discounted Future Net Cash Flows—Unaudited Future cash inflows represent expected revenues from production of period-end quantities of proved reserves based on the 12-month unweighted average of first-day-of-the-month commodity prices for the periods presented. All prices are adjusted by field for quality, transportation fees, energy content and regional price differentials. Future cash inflows are computed by applying applicable prices relating to the Partnership’s proved reserves to the year-end quantities of those reserves. Future production, development, site restoration and abandonment costs are derived based on current costs assuming continuation of existing economic conditions. There are no future income tax expenses deducted from future production revenues in the calculation of the standardized measure because the Partnership is not subject to federal income taxes. The Partnership is subject to certain state based taxes; however, these amounts are not material. See Note 2 – Summary of Significant Accounting Policies for further discussion. Year Ended December 31, 2015 2014 2013 (In thousands) Future cash inflows $ 1,211,290 $ 2,493,294 $ 2,693,511 Future production costs (205,861 ) (405,833 ) (393,347 ) Future development costs (84,746 ) (64,968 ) (53,160 ) Future net cash flows (undiscounted) 920,683 2,022,493 2,247,004 Annual discount 10% for estimated timing (365,711 ) (879,399 ) (1,061,747 ) Total 1 $ 554,972 $ 1,143,094 $ 1,185,257 1 Includes standardized measure of discounted future net cash flows of approximately $0.7 million for December 31, 2015 and $1.4 million for both December 31, 2014 and 2013, attributable to noncontrolling interests in the Partnership’s consolidated subsidiaries. The following summarizes the principal sources of change in the standardized measure of discounted future net cash flows: Year Ended December 31, 2015 2014 2013 (In thousands) Standardized measure, beginning of year $ 1,143,094 $ 1,185,257 $ 928,518 Sales, net of production costs (222,206 ) (391,983 ) (373,655 ) Net changes in prices and production costs related to future production (621,065 ) 75,284 208,291 Extensions, discoveries and improved recovery, net of future production and development costs 165,020 209,651 223,482 Previously estimated development costs incurred during the period 7,084 12,162 22,456 Revisions of estimated future development costs 669 7,854 1,620 Revisions of previous quantity estimates, net of related costs (67,911 ) (110,431 ) (22,687 ) Accretion of discount 114,309 118,526 92,852 Purchases of reserves in place, less related costs 584 24,210 62,887 Other 35,394 12,564 41,493 Standardized measure, end of year $ 554,972 $ 1,143,094 $ 1,185,257 The data presented should not be viewed as representing the expected cash flow from, or current value of, existing proved reserves since the computations are based on a significant amount of estimates and assumptions. The required projection of production and related expenditures over time requires further estimates with respect to pipeline availability, rates of demand and governmental control. Actual future prices and costs are likely to be substantially different from historical prices and costs utilized in the computation of reported amounts. Any analysis or evaluation of the reported amounts should give specific recognition to the computational methods utilized and the limitations inherent therein. |