OREANDA-NEWS. Memorial Production Partners LP (NASDAQ:MEMP) announced today its operating and financial results for the three months ended June 30, 2016.  In addition, MEMP provided an update of its commodity hedge positions along with updated 2016 guidance.

Key Highlights

  • Net Cash Provided by Operating Activities of $79.0 million for the second quarter of 2016
  • Adjusted EBITDA(1) of $84.1 million for the second quarter of 2016
  • Reduced debt outstanding by $197 million since year-end 2015 including a $113 million reduction in borrowings under MEMP’s revolving credit facility and a $84 million reduction in senior notes
  • Revolver availability of approximately $200 million, as of July 29, 2016
  • Lease operating expenses of $1.39 per Mcfe, or $29.4 million, in the second quarter of 2016
  • Closed divestitures on properties in the Permian and non-core Rockies for a total of approximately $55.3 million, subject to customary post-closing adjustments
  • Strong commodity hedge portfolio with 92% of current expected total production hedged in 2016, 81% in 2017, 74% in 2018 and 57% in 2019
  • Mark-to-market hedge book value of approximately $524 million as of July 29, 2016 
  • Closed the transaction acquiring Memorial Production Partners GP LLC (“MEMP GP”), the general partner of MEMP, for $0.75 million in cash from Memorial Resource Development Corp.
  • On July 27, 2016, announced second quarter distribution of $0.03 per unit, the same distribution paid for the first quarter 2016.

“We are pleased to have delivered a strong operational quarter while also making material progress in meeting our goals of reducing MEMP’s outstanding debt and generating free cash,” said John Weinzierl, Chairman and Chief Executive Officer of MEMP GP.  “Our focus on operational efficiencies was reflected in a 30% year-over-year reduction in operating costs as measured by LOE/Mcfe, which is also reflected in MEMP’s updated guidance for full year 2016.  Further, MEMP used free cash generated from operations and proceeds from its recently completed Permian and non-core Rockies divestitures to repurchase $84 million of its senior notes and to reduce its revolver balance by $113 million from year-end.”

Review of Second Quarter 2016

  • Average daily production decreased 5% to 231.5 MMcfe for the second quarter 2016, compared to 243.3 MMcfe for the first quarter 2016, primarily due to a scaled back development program, a planned maintenance turnaround of MEMP’s Bairoil facility, and the loss of volumes attributable to the divestiture of Permian assets. 
  • Crude oil, natural gas and NGLs sales, excluding commodity derivatives settlements, were $67.8 million in the second quarter of 2016, compared to $60.6 million in the first quarter of 2016.  On an Mcfe basis, crude oil, natural gas and NGLs represented 27%, 56% and 17%, respectively, of sales volumes.  On a revenue basis, crude oil, natural gas and NGLs sales represented 54%, 34% and 12%, respectively, of total oil and natural gas revenues.
  • Average realized prices, excluding commodity derivatives settlements:
         
    Q2 2016 Q1 2016 % Increase/(Decrease)
Oil (per Bbl)   $ 38.73   $ 27.89     39  
Natural gas (per Mcf)     1.94     2.01     (3 )
NGL (per Bbl)     13.45     10.94     23  
Total (per Mcfe)   $  3.22   $ 2.74     18  
         
  • Averaged realized prices, including commodity derivatives settlements, were $6.43 per Mcfe in the second quarter of 2016, compared to $6.36 per Mcfe in the first quarter of 2016.
  • Net Cash Provided by Operating Activities increased to $79.0 million for the second quarter of 2016 from $77.0 million in the first quarter of 2016, primarily due to lower cash operating expenses.
  • Adjusted EBITDA(1) increased to $84.1 million for the second quarter of 2016 from $81.3 million for the first quarter of 2016. The increase was primarily due to lower operating expenses.
  • Distributable cash flow(1) available to limited partners was $44.9 million for the second quarter of 2016, compared to $29.1 million for the first quarter of 2016.
  • Total lease operating expenses decreased 18% to $29.4 million in the second quarter of 2016 compared to $35.7 million in the first quarter of 2016. The decrease was primarily due to further service provider cost discounts, optimization of compression facilities in East Texas, prudent management of discretional activities such as well workovers, better than expected performance of the saltwater disposal system in East Texas, and the sale of the Permian assets in June.  On a per unit basis, despite the lower production rate in the second quarter, total lease operating expenses decreased 14% to $1.39 per Mcfe in the second quarter of 2016 compared to $1.61 per Mcfe in the first quarter of 2016.
  • Total gathering, processing and transportation fees were $0.42 per Mcfe in the second quarter of 2016 and in line with the $0.42 per Mcfe in the first quarter of 2016. 
  • Taxes other than income were $0.17 per Mcfe in the second quarter of 2016 compared to $0.18 per Mcfe in the first quarter of 2016. 
  • General and administrative expenses ("G&A") were $15.2 million for the second quarter of 2016 compared to $13.5 million for the first quarter of 2016. The increase in G&A was largely attributable to a non-cash recognition of $1.6 million in non-recurring bad debt expense primarily related to the divestitures in the Permian and Rockies regions. The $15.2 million also included $2.7 million of non-cash unit-based compensation expense, compared to $2.6 million in the first quarter of 2016. 
  • Losses of $124.6 million on commodity derivatives were recorded during the second quarter of 2016, which included a $106.9 million gain on cash settlements received on expired or terminated positions.  This compared to total gains of $51.7 million recorded during the first quarter of 2016, which included $80.2 million of cash settlements received on expired positions.  Total hedged production in the second quarter of 2016 was 20.3 Bcfe, or 96% of second quarter production of 21.1 Bcfe, at an average hedge price of $7.21 per Mcfe.   
  • Net interest expense was $32.1 million during the second quarter of 2016, including $1.9 million of non-cash amortization of deferred financing fees and accretion of senior notes discount. 
  • Total capital expenditures for the second quarter of 2016 were $10.4 million.

Divestitures Update

MEMP recently closed non-core divestitures in the Permian and Rockies for aggregate proceeds of approximately $55.3 million, subject to customary post-closing adjustments.  Total proved reserves as of December 31, 2015 associated with these divestitures was 44.1 Bcfe (47% oil, 48% natural gas and 5% NGLs) and average net daily production was 17.9 MMcfe/d for the first three months of 2016.  Proceeds from these transactions were used to pay down a portion of the amount outstanding under MEMP’s revolving credit facility. 

The Permian divestiture, which represented a complete exit of the basin for MEMP, closed on June 14, 2016 for approximately $37.2 million, subject to customary post-closing adjustments, and included assets with total proved reserves of 18.6 Bcfe (99% oil, 1% gas) and average net daily production of 7.3 MMcfe/d.  The Rockies divestitures closed in July 2016 for approximately $18.1 million, subject to customary post-closing adjustments, and included assets in Wyoming and Colorado with total proved reserves of 25.5 Bcfe (9% oil, 82% natural gas and 9% NGLs) and average net daily production of 10.6 MMcfe/d.

Hedging Update

Consistent with its hedging policy, MEMP has entered into natural gas, crude oil and NGL derivatives contracts covering the period from 2016 through December 2019.  MEMP's hedging policy is designed to reduce the impact to cash flows from commodity price and interest rate volatility. 

The following table reflects the volumes of MEMP’s expected production covered by commodity derivative contracts and the average fixed or floor prices at which that production is hedged.  Targeted average net production estimate represents the mid-point of the annual production range in MEMP’s updated 2016 full year guidance.

 
Hedge Summary (1)
        Year Ending December 31,
        2016 (2)   2017     2018     2019  
               
Natural Gas Derivative Contracts:        
Total weighted-average fixed/floor price $ 4.14   $ 4.06   $ 4.18   $ 4.31  
Percent of expected 2016 production hedged   99 %   93 %   85 %   78 %
               
Crude Oil Derivative Contracts(3):        
Total weighted-average fixed/floor price $ 65.85   $ 85.00   $ 83.74   $ 85.52  
Percent of expected 2016 production hedged   77 %   96 %   99 %   51 %
               
Natural Gas Liquids Derivative Contracts:      
Total weighted-average fixed/floor price $ 34.01   $ 37.55     –     –  
Percent of expected 2016 production hedged   97 %   22 %   –     –  
               
Total Derivative Contracts:          
Total weighted-average fixed/floor price $ 6.04   $ 7.54   $ 7.89   $ 6.84  
Percent of expected 2016 production hedged   92 %   81 %   74 %   57 %
(1) Updated hedge schedule as of August 3, 2016        
(2) Represents July to December 2016        
(3) 2016 price and volumes include $40 crude oil puts purchased on 60,000 bbls/month  with deferred premiums averaging $0.86 / bbl 
 

Since the last hedging update on May 5, 2016, MEMP has liquidated certain crude oil and NGL hedges for the period July 2016 – December 2016 and utilized the proceeds to buy back senior notes.  Subsequent to these transactions, MEMP partially re-hedged the oil volumes with swaps and puts for the period July 2016 – December 2016.  The swap contracts were executed at strip pricing and cover approximately 2,000 Bbls/d.  The put contracts are at a floor price of $40.00 and also cover approximately 2,000 Bbls/d. In addition, basis hedges related to the divested properties in 2016 and 2017 have been terminated and settled. 

Financial Update

As of July 29, 2016, MEMP had total debt of $1.8 billion, which included $1.1 billion of senior notes and $723 million under its revolving credit facility.  The borrowing base on the revolving credit facility is $925 million with available borrowing capacity of $200 million (including $2.1 million in letters of credit).

During the second quarter, MEMP retired approximately $84.2 million in aggregate principal amount of senior notes for total consideration of $41.5 million, which included $1.0 million of accrued interest, at a repurchase price of approximately 48% of par value.  This was partially funded by $1.6 million from sales of common units under MEMP’s at-the-market program.  The balance of $39.8 million in senior notes repurchases was funded through the monetization of 2016 oil and NGL hedges.

MEMP’s total debt outstanding as of each of the respective dates are as follows:  

             
(Amounts in $000s)   12/31/2015   6/30/2016   7/29/2016
             
Credit Facility due 2018   $   836,000     $   739,358     $   723,000  
7.625% Senior Notes due 2021       700,000         647,787         647,787  
6.875% Senior Notes due 2022       496,990         464,965          464,965  
Total Debt Outstanding   $   2,032,990     $   1,852,110     $   1,835,752  
                         

As of June 30, 2016, MEMP was in compliance with the financial covenants under its revolving credit facility.  These covenants include a first lien coverage test of 3.25x, an interest coverage ratio of 2.5x and a current ratio of 1.0x. 

Updated 2016 Guidance (1)

The updated 2016 guidance included in this press release is subject to the cautionary statements and limitations described under the "Forward-Looking Statements" caption at the end of this press release.  MEMP’s updated 2016 guidance is based on its current expectations regarding capital expenditure levels and on the assumption that market demand and prices for oil and natural gas will continue at levels that allow for economic production of these products. It reflects the impact of forecasted capital spending as well as the impact of the oil and natural gas producing properties divested through today.  A summary of the guidance, assuming no additional divestitures or acquisitions, is presented below:

   
  2016 FY Guidance
  August 3, 2016
  Low   High
       
Net Average Daily Production      
Oil (MBbls/d)   10.1   -   10.9  
NGL (MBbls/d)   6.4   -   6.9  
Natural Gas (MMcf/d)   116   -   124  
Total (MMcfe/d)   215   -   230  
       
Commodity Price Differential / Realizations (Unhedged)      
Crude Oil Differential ($ / Bbl) $ 6.00   - $ 6.75  
NGL Realized Price (% of WTI NYMEX)   32 % -   36 %
Natural Gas Realized Price (% of NYMEX to Henry Hub)   96 % -   100 %
       
Gathering, Processing and Transportation Costs      
Crude Oil ($ / Bbl) $ 0.20   - $ 0.25  
NGL ($ / Bbl) $ 3.05   - $ 3.20  
Natural Gas ($ / Mcf) $ 0.50   - $ 0.60  
       
Average Costs      
Lease Operating ($ / Mcfe) $ 1.55   - $ 1.65  
Taxes (% of Revenue) (2)   6.0 % -   6.5 %
Cash General and Administrative ($ / Mcfe) $ 0.45   - $ 0.50  
       
Net Cash Provided by Operating Activities (3) $ 202  
       
Adjusted EBITDA ($MM) (4) $ 305   - $ 320  
Cash Interest Expense ($MM) $ 108   - $ 113  
Capital Expenditures ($MM) (5) $ 55   - $ 65  
Distributable Cash Flow ($MM) (4) (5) $ 137   - $ 147  
               

(1) Guidance based on NYMEX strip pricing as of July 29, 2016; Average prices of $41.54 / Bbl for crude oil and $2.51 / Mcf for natural gas for 2016

(2) Includes production, ad valorem and franchise taxes

(3) Assumes no changes in working capital

(4) Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures. Please see “Use of Non-GAAP Financial Measures” for a description of Adjusted EBITDA and Distributable Cash Flow and the reconciliation to the most comparable GAAP financial measure

(5) On June 1, 2016 MEMP acquired its general partner from Memorial Resource Development Corp. In connection with that acquisition, the MEMP general partner interest was converted into a non-economic interest and the MEMP incentive distribution rights (“IDRs”) were cancelled. Prior to that acquisition, MEMP’s calculation of quarterly distributions required the calculation of Operating Surplus under the MEMP partnership agreement, which required the use of “estimated maintenance capital expenditures” for such calculation. Accordingly, in previous periods MEMP used estimated maintenance capital expenditures to calculate Distributable Cash Flow for each period. Beginning with its acquisition of its general partner and cancellation of the IDRs, Operating Surplus is no longer relevant to the calculation of distributions. Accordingly, MEMP no longer uses estimated maintenance capital expenditures to calculate Distributable Cash Flow. In addition, in the current commodity price environment all of MEMP’s capital expenditures are maintenance capital expenditures. Accordingly, MEMP presents Distributable Cash Flow as using capital expenditures rather than estimated maintenance capital expenditures in such calculation. Distributable Cash Flow has been recalculated for the historical periods presented in this press release for consistency.

These estimates reflect management’s best judgment based on current expectations about the future and anticipated market conditions based upon both stated and unstated assumptions and other factors.  Although management believes such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks that are beyond MEMP’s control.  Actual conditions and assumptions may change over the course of the year.

Second Quarter 2016 Cash Distribution

As announced on July 27, 2016, the board of directors of MEMP’s general partner approved and declared a cash distribution of $0.03 per unit for the second quarter of 2016.  This distribution represents an annualized amount of $0.12 per unit and will be paid on August 12, 2016 to unitholders of record as of the close of business on August 5, 2016.

Quarterly Report on Form 10-Q

MEMP’s financial statements and related footnotes will be available in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, which MEMP expects to file with the SEC on or before August 9, 2016.

About Memorial Production Partners LP

Memorial Production Partners LP is a publicly traded partnership engaged in the acquisition, production and development of oil and natural gas properties in the United States.  MEMP’s properties consist of mature, legacy oil and natural gas fields.  MEMP is headquartered in Houston, Texas. 

Use of Non-GAAP Financial Measures

This press release and accompanying schedules include the non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow. The accompanying schedules provide a reconciliation of these non-GAAP financial measures to their most directly comparable financial measure calculated and presented in accordance with GAAP. MEMP’s non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income, operating income, net cash flows provided by operating activities or any other measure of financial performance calculated and presented in accordance with GAAP. MEMP’s non-GAAP financial measures may not be comparable to similarly-titled measures of other companies because they may not calculate such measures in the same manner as MEMP does.

Adjusted EBITDA. MEMP defines Adjusted EBITDA as net income or loss, plus interest expense; income tax expense; depreciation, depletion and amortization; impairment of goodwill and long-lived assets; accretion of asset retirement obligations; losses on commodity derivative instruments; cash settlements received on expired commodity derivative instruments; losses on sale of assets; unit-based compensation expenses; exploration costs; acquisition and divestiture related costs; bad debt expense; and other non-routine items, less interest income; gain on extinguishment of debt; income tax benefit; gains on commodity derivative instruments; cash settlements paid on expired commodity derivative instruments; gains on sale of assets and other, net; and other non-routine items. Adjusted EBITDA is commonly used as a supplemental financial measure by management and external users of MEMP’s financial statements, such as investors, research analysts and rating agencies, to assess: (1) its operating performance as compared to other companies and partnerships in MEMP’s industry without regard to financing methods, capital structures or historical cost basis; (2) the ability of its assets to generate cash sufficient to pay interest, support MEMP’s indebtedness and make distributions on its units; and (3) the viability of projects and the overall rates of return on alternative investment opportunities. Since Adjusted EBITDA excludes some, but not all, items that affect net income or loss and because these measures may vary among other companies, the Adjusted EBITDA data presented in this press release may not be comparable to similarly titled measures of other companies. The GAAP measure most directly comparable to Adjusted EBITDA is net cash provided by operating activities.

Distributable Cash Flow.  MEMP defines distributable cash flow as Adjusted EBITDA, less cash income taxes; cash interest expense; and total capital expenditures.  Management compares the distributable cash flow MEMP generates to the cash distributions it expects to pay MEMP’s partners. Using this metric, management computes MEMP’s distribution coverage ratio. Distributable cash flow is an important non-GAAP financial measure for MEMP’s limited partners since it serves as an indicator of MEMP’s success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not MEMP is generating cash flows at a level that can sustain or support an increase in its quarterly cash distributions. Distributable cash flow is also a quantitative standard used by the investment community with respect to publicly traded partnerships because the value of a partnership unit is, in part, measured by its yield, which is based on the amount of cash distributions a partnership can pay to a unitholder. The GAAP measure most directly comparable to distributable cash flow is net cash provided by operating activities. On June 1, 2016 MEMP acquired its general partner from Memorial Resource Development Corp. In connection with that acquisition, the MEMP general partner interest was converted into a non-economic interest and the MEMP incentive distribution rights (“IDRs”) were cancelled. Prior to that acquisition, MEMP’s calculation of quarterly distributions required the calculation of Operating Surplus under the MEMP partnership agreement, which required the use of “estimated maintenance capital expenditures” for such calculation. Accordingly, in previous periods MEMP used estimated maintenance capital expenditures to calculate Distributable Cash Flow for each period. Beginning with its acquisition of its general partner and cancellation of the IDRs, Operating Surplus is no longer relevant to the calculation of distributions. Accordingly, MEMP no longer uses estimated maintenance capital expenditures to calculate Distributable Cash Flow. In addition, in the current commodity price environment all of MEMP’s capital expenditures are maintenance capital expenditures. Accordingly, MEMP presents Distributable Cash Flow as using capital expenditures rather than estimated maintenance capital expenditures in such calculation. Distributable Cash Flow has been recalculated for the historical periods presented in this press release for consistency.

Selected Operating and Financial Data (Tables)

Selected Operating and Financial Data (Tables)      
             
Memorial Production Partners LP        
Selected Financial Data - Unaudited        
Statements of Operations Data        
             
        For the Three Months Ended
  (Amounts in $000s, except per unit data)   6/30/2016   3/31/2016
             
  Revenues:        
    Oil & natural gas sales   $   67,780     $   60,623  
    Pipeline tariff income and other       286         243  
      Total revenues       68,066         60,866  
             
  Costs and Expenses:        
    Lease operating       29,354         35,696  
    Gathering, processing & transportation        8,823         9,209  
    Exploration       15         122  
    Taxes other than income       3,485         4,008  
    Depreciation, depletion and amortization       44,413         44,429  
    Impairment of proved oil and natural gas properties       -          8,342  
    General and administrative       15,246         13,524  
    Accretion of asset retirement obligations       2,712         2,707  
    (Gain) loss on commodity derivative instruments       124,580         (51,745 )
    Gain on sale of properties       (3,539 )       (96 )
    Other, net       (52 )       119  
      Total costs and expenses       225,037         66,315  
             
      Operating income (loss)       (156,971 )       (5,449 )
             
  Other Income (Expense):        
    Interest expense, net       (32,143 )       (32,552 )
    Other income (expense)       -          -   
    Gain on extinguishment of debt       41,664         -   
    Total other income (expense)       9,521         (32,552 )
             
    Income (loss) before income taxes       (147,450 )       (38,001 )
  Income tax benefit (expense)       (100 )       (96 )
    Net income (loss)   $   (147,550 )   $   (38,097 )
    Net income (loss) attributable to noncontrolling interest   $   -      $   -   
    Net income (loss) attributable to Memorial Production Partners LP   $   (147,550 )   $   (38,097 )
             
  Allocation of Net Income (Loss) to:        
    Net income (loss) attributable to Memorial Production Partners LP       (147,550 )       (38,097 )
    Net (income) loss allocated to general partner       128         40  
    Limited partners' interest in net income (loss)    $   (147,422 )   $   (38,057 )
             
  Earnings per unit:        
    Basic and diluted earnings per limited partner unit   $   (1.78 )   $   (0.46 )
             
  Cash distribution declared per unit   $   0.03     $   0.03  
             
  Weighted average number of limited partner units outstanding       83,007         82,935  
             
             
  Oil and natural gas revenue:        
    Oil sales   $   36,973     $   29,777  
    NGL sales       7,928         7,255  
    Natural gas sales       22,879         23,591  
      Total oil and natural gas revenue   $   67,780     $   60,623  
             
  Production volumes:        
    Oil (MBbls)       954         1,068  
    NGLs (MBbls)       590         663  
    Natural gas (MMcf)       11,799         11,753  
      Total (MMcfe)       21,063         22,138  
      Average net production (MMcfe)     231.5       243.3  
             
  Average sales price (excluding commodity derivatives):        
    Oil (per Bbl)   $   38.73     $   27.89  
    NGL (per Bbl)   $   13.45     $   10.94  
    Natural gas (per Mcf)   $   1.94     $   2.01  
      Total (per Mcfe)   $   3.22     $   2.74  
             
  Average unit costs per Mcfe:        
    Lease operating expense   $   1.39     $   1.61  
    Gathering, processing and transportation   $   0.42     $   0.42  
    Taxes other than income   $   0.17     $   0.18  
    General and administrative expenses   $   0.72     $   0.61  
    Depletion, depreciation, and amortization   $   2.11     $   2.01  
             
Selected Financial Data - Unaudited        
Balance Sheet Data        
             
        June 30, 2016
    Total current assets   $   198,619      
    Oil and natural gas properties, net       1,820,243      
    Total assets       2,540,083      
    Total current liabilities       90,869      
    Long-term debt       1,824,604      
    Total liabilities       2,085,840      
    Total partners' equity       454,243      
             
Selected Financial Data - Unaudited        
Statements of Cash Flows Data        
             
        For the Three Months Ended
        6/30/2016 3/31/2016
    Net cash provided by operating activities   $   78,966     $   77,006  
    Net cash provided by (used in) investing activities       14,301         (24,443 )
    Net cash provided by (used in) financing activities       (94,103 )       (52,326 )
             
             
Selected Operating and Financial Data (Tables)        
Reconciliation of Unaudited GAAP Financial Measures to Non-GAAP Financial Measures
Adjusted EBITDA        
             
        For the Three Months Ended
        6/30/2016 3/31/2016
             
  Reconciliation of Adjusted EBITDA to Net Income (Loss):        
    Net income (loss)   $   (147,550 )   $   (38,097 )
    Interest expense, net       32,143         32,552  
    Gain on extinguishment of debt       (41,664 )       -   
    Income tax expense (benefit)       100         96  
    Depreciation, depletion and amortization       44,413         44,429  
    Impairment of oil and gas properties       -          8,342  
    Accretion of asset retirement obligations       2,712         2,707  
    (Gains) losses on commodity derivative instruments       124,580         (51,745 )
    Cash settlements received (paid) on expired commodity derivatives       67,638         80,221  
    Acquisition and divestiture related expenses       927         86  
    Unit-based compensation expense       2,731         2,568  
    Exploration        15         122  
    Gain on sale of properties       (3,539 )       (96 )
    (Gain) loss on settlement of AROs       (52 )       121  
    Bad debt expense       1,601         -   
             
    Adjusted EBITDA   $   84,055     $   81,306  
             
             
  Reconciliation of Adjusted EBITDA and Distributable Cash Flow to         
  Net Cash Provided by Operating Activities:        
             
    Net cash provided by operating activities   $   78,966     $   77,006  
    Changes in working capital       14,341         (24,268 )
    Interest expense, net       32,143         32,552  
    Gain (loss) on interest rate swaps       (1,844 )       (3,682 )
    Cash settlements paid (received) on interest rate swaps       513         530  
    Cash settlements received on terminated derivatives       (39,299 )       -   
    Amortization of deferred financing fees       (1,348 )       (1,202 )
    Accretion of senior notes discount       (596 )       (605 )
    Acquisition and divestiture related expenses       927         86  
    Exploration        15         122  
    Plugging and abandonment costs       201         736  
    Current income tax expense (benefit) - current portion       36         31  
    Adjusted EBITDA   $   84,055     $   81,306  
             
             
             
Selected Operating and Financial Data (Tables)        
Reconciliation of Unaudited GAAP Financial Measures to Non-GAAP Financial Measures 
Distributable Cash Flow        
             
        For the Three Months Ended
        6/30/2016   3/31/2016
    Net income (loss)   $   (147,550 )   $   (38,097 )
    Interest expense, net       32,143         32,552  
    Gain on extinguishment of debt       (41,664 )       -   
    Income tax expense (benefit)       100         96  
    Depreciation, depletion and amortization       44,413         44,429  
    Impairment of oil and gas properties       -          8,342  
    Accretion of asset retirement obligations       2,712         2,707  
    (Gains) losses on commodity derivative instruments       124,580         (51,745 )
    Cash settlements received (paid) on expired commodity derivatives       67,638         80,221  
    Acquisition and divestiture related expenses       927         86  
    Unit-based compensation expense       2,731         2,568  
    Exploration       15         122  
    Gain on sale of properties       (3,539 )       (96 )
    (Gain) loss on  settlement of AROs       (52 )       121  
    Bad debt expense       1,601         -   
    Adjusted EBITDA   $   84,055     $   81,306  
    Less:  Cash interest expense       28,726         27,775  
    Less:  Capital expenditures       10,406         24,467  
    Total Distributable cash flow   $   44,923     $   29,064  
    Less: Distribution to GP       -          3  
    Distributable cash flow available to Limited Partners   $   44,923     $   29,061  
             
    Cash distribution to limited partners   $   2,505     $   2,487  
             
    Distribution coverage ratio     17.94x     11.69x
             
 2016 Adjusted EBITDA and Distributable Cash Flow Guidance Reconciliation Table
    Mid-Point
    For Year Ended
  (in millions) 12/31/2016
     
  Calculation of Adjusted EBITDA:  
  Net income $ 30  
  Interest expense   111  
  Depletion, depreciation, and amortization   172  
  Adjusted EBITDA $ 313  
     
  Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA:  
  Net cash provided by operating activities $ 202  
  Changes in working capital   -  
  Interest expense   111  
  Adjusted EBITDA $ 313  
     
  Reconciliation of Adjusted EBITDA to Distributable Cash Flow:  
  Adjusted EBITDA $ 313  
  Cash Interest Expense   (111 )
  Capital expenditures   (60 )
  Distributable Cash Flow $ 142