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Related Party Transactions
12 Months Ended
Dec. 31, 2015
Related Party Transactions [Abstract]  
Related Party Transactions

11. RELATED PARTY TRANSACTIONS

Sanchez-Related Agreements 

We are controlled by our general partner.  The sole member of our general partner is Manager, which has no officers. In May 2014, we entered into the Services Agreement with Manager pursuant to which Manager provides services that we require to operate our business, including overhead, technical, administrative, marketing, accounting, operational, information systems, financial, compliance, insurance, professionals and acquisition, disposition and financing services.  In connection with providing the services under the Services Agreement, Manager receives compensation as discussed above in “Item 13. Certain Relationships.”  The Services Agreement has a ten-year term and will be automatically renewed for an additional ten years unless both Manager and the Company provide notice to terminate the agreement.  During the year ended December 31, 2015, we paid approximately $9.9 million to Manager pursuant to the Services Agreement.  During the year ended December 31, 2014, we paid $6.0 million to Manager under the Services Agreement and issued 5,956 common units to Manager pursuant to the Services Agreement in connection with Manager’s election to receive payment of its fee for the quarter ended September 30, 2014 in common units rather than cash, with such issuance being in lieu of paying a fee of $165,582 in cash, or $12.78 per common unit.

Manager utilizes SOG to provide the services under the Services Agreement.  In May 2014, we entered into a Contract Operating Agreement with SOG pursuant to which SOG either provides services to operate, develop and produce our oil and natural gas properties or engages a third-party operator to do so, other than with respect to our properties in the Mid-Continent Region.  We also have entered into the Geophysical Seismic Data Use License Agreement with SOG pursuant to which SOG provides us a non-exclusive, royalty-free license to use seismic, geophysical and geological information relating to our oil and natural gas properties that is proprietary to SOG and not restricted by agreements that SOG has with landowners or seismic data vendors.

In May 2014, we entered into the Transition Agreement with SOG and Manager pursuant to which we agreed to make available to Manager and SOG certain of our employees for SOG or Manager to provide services under the Services Agreement and Operating Agreement.  No compensation was paid by any party for the provision or use of employees under the Transition Agreement. 

On May 8, 2014, the Company and SOG entered into a Contract Operating Agreement, the Company, Manager and SOG entered into a Transition Agreement, and the Company, SOG and certain subsidiaries of the Company entered into the License Agreement.  For further discussion of these agreements, refer to our Annual Report on Form 10-K for the year ended December 31, 2014.

In connection with the closing of the Western Catarina Midstream Divestiture, the Partnership entered into a Firm Gathering and Processing Agreement on October 14, 2015 for an initial term of 15 years under which production from approximately 35,000 acres in Dimmit County and Webb County, Texas will be dedicated for gathering by Catarina Midstream, LLC (“Catarina Midstream”). In addition, for the first five years of the Gathering Agreement, SN Catarina, LLC will be required to meet a minimum quarterly volume delivery commitment of 10,200 barrels per day of crude oil and condensate and 142,000 Mcf per day of natural gas, subject to certain adjustments. 

As of December 31, 2015 and December 31, 2014, the Partnership had a net receivable from related parties of $1.5 million and $1.0 million, respectively, which are included in “Accounts receivable – related entities” in the condensed consolidated balance sheets. As of December 31, 2015, the Partnership also had a net payable from related parties of $1.0 million. The net receivables/payable as of December 31, 2015 and December 31, 2014 consist primarily of revenues receivable from oil and natural gas production, offset by costs associated with that production and obligations for general and administrative costs. 

Sanchez-Related Transactions

We have entered into several transactions with Sanchez Energy since January 1, 2014.  Antonio R. Sanchez, Jr. is a director and Executive Chairman of the Board of Sanchez Energy, and Antonio R. Sanchez, III, is a director and Chief Executive Officer of Sanchez Energy. In addition, Eduardo Sanchez is the President of Sanchez Energy.  The employees of SOG, including Kirsten A. Hink, our Chief Accounting Officer, provide common services to both us and Sanchez Energy. 

On March 31, 2015, the Partnership and Sanchez Energy entered into a Purchase and Sale Agreement for the Eagle Ford acquisition for total consideration of $85.0 million. After $1.4 million in normal and customary closing adjustments, consideration paid at closing consisted of $81.6 million cash paid by us to Sanchez Energy and 105,263 of our common units issued to Sanchez Energy with an aggregate consideration value of $2,000,000.  In connection with the purchase agreement, we entered into a registration rights agreement with Sanchez Energy pursuant to which we granted certain registration rights related to the common unit consideration received.  As of December 31, 2015, there were no common units held by Sanchez Energy or related subsidiaries thereof.  All 105,263 common units issued as consideration for the Eagle Ford acquisition were repurchased in connection with the Western Catarina Midstream acquisition in October 2015. See further discussion of the transaction in Note 3, “Acquisitions.”

In October 2015, the Partnership and Sanchez Energy consummated the Western Catarina Midstream acquisition for total consideration of approximately $345.8 million in cash, subject to closing and post-closing adjustments. Concurrently with the signing of the Western Catarina Midstream acquisition purchase and sale agreement, we entered into a 15-year gas gathering and processing agreement with Sanchez Energy. For the year ended December 31, 2015, Sanchez Energy paid us approximately $7.5 million pursuant to the terms of the gathering and processing agreement. See further discussion of the transaction in Note 3, “Acquisitions.”