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 U.S. 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, 2017 2016 2015 (in thousands) Acquisition Costs of Properties: 1 Proved $ 96,596 $ 40,242 $ 2,302 Unproved 383,535 100,888 60,994 Exploration Costs 618 645 2,592 Development Costs 81,056 73,316 60,056 Total $ 561,805 $ 215,091 $ 125,944 1. See Note 4 – Oil and Natural Gas Properties 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, 2017 2016 (in thousands) Proved properties $ 2,258,893 $ 2,091,337 Unproved properties 988,720 605,736 Total 3,247,613 2,697,073 Accumulated depreciation, depletion, amortization, and impairment (1,766,842 ) (1,652,930 ) Oil and natural gas properties, net $ 1,480,771 $ 1,044,143 Oil and Natural Gas Reserve Information 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, 2014 17,067 204,256 51,109 Revisions of previous estimates 1 (197 ) (17,043 ) (3,037 ) Purchases of minerals in place 2 8 367 69 Extensions, discoveries and other additions 3 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 Revisions of previous estimates 1 3,007 29,024 7,844 Purchases of minerals in place 4 1,322 5,683 2,269 Extensions, discoveries and other additions 5 1,877 79,455 15,120 Production (3,680 ) (47,498 ) (11,596 ) Net proved reserves at December 31, 2016 18,368 270,339 63,425 Revisions of previous estimates 1 (1,234 ) 21,067 2,277 Purchases of minerals in place 6 2,267 30,250 7,309 Extensions, discoveries and other additions 7 2,050 38,397 8,449 Production (3,552 ) (59,779 ) (13,515 ) Net proved reserves at December 31, 2017 17,899 300,274 67,945 Net Proved Developed Reserves 8 December 31, 2015 15,497 174,555 44,590 December 31, 2016 18,150 223,057 55,327 December 31, 2017 17,891 233,017 56,727 Net Proved Undeveloped Reserves 9 December 31, 2015 345 29,120 5,198 December 31, 2016 218 47,282 8,098 December 31, 2017 8 67,257 11,218 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-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. 3 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. 4 Includes the acquisition of mineral-and-royalty reserves primarily in the Marcellus and Wolfcamp plays. 5 Includes discoveries and additions primarily related to active drilling in the Haynesville/Bossier, Bakken/Three Forks, Wilcox, Eagle Ford, and Fayetteville plays. 6 Includes the acquisition of mineral-and-royalty reserves primarily in East Texas and the Permian and Williston basins. 7 Includes extensions and additions related to drilling activities within multiple basins. 8 Proved developed reserves of 61 MBoe, 74 MBoe, and 84 MBoe as of December 31, 2017, 2016, and 2015, respectively, were attributable to noncontrolling interests in the Partnership’s consolidated subsidiaries. 9 As of December 31, 2017, 2016, and 2015, no proved undeveloped reserves were attributable to noncontrolling interests. Standardized Measure of Discounted Future Net Cash Flows 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, 2017 2016 2015 (in thousands) Future cash inflows $ 1,643,582 $ 1,267,179 $ 1,211,290 Future production costs (211,064 ) (193,749 ) (205,861 ) Future development costs (70,111 ) (36,509 ) (84,746 ) Future income tax expense (2,655 ) (3,516 ) — Future net cash flows (undiscounted) 1,359,752 1,033,405 920,683 Annual discount 10% for estimated timing (497,103 ) (430,390 ) (365,711 ) Total 1 $ 862,649 $ 603,015 $ 554,972 1 Includes standardized measure of discounted future net cash flows of approximately $0.5 million , $0.6 million , and $0.7 million for December 31, 2017, 2016, and 2015, 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, 2017 2016 2015 (in thousands) Standardized measure, beginning of year $ 603,015 $ 554,972 $ 1,143,094 Sales, net of production costs (295,941 ) (210,354 ) (222,206 ) Net changes in prices and production costs related to future production 169,608 (81,456 ) (621,065 ) Extensions, discoveries and improved recovery, net of future production and development costs 113,199 86,606 165,020 Previously estimated development costs incurred during the period 11,118 28,909 7,084 Revisions of estimated future development costs 2,653 — 669 Revisions of previous quantity estimates, net of related costs 86,228 147,507 (67,911 ) Accretion of discount 60,512 55,662 114,309 Purchases of reserves in place, less related costs 107,891 34,751 584 Other 4,366 (13,582 ) 35,394 Net increase (decrease) in standardized measures 259,634 48,043 (588,122 ) Standardized measure, end of year $ 862,649 $ 603,015 $ 554,972 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. |