Organization And Business

9 Months Ended

Sep. 30, 2016

Organization And Business

Organization And Business

1. ORGANIZATION AND BUSINESS

Organization

Sanchez Production Partners LP, a Delaware limited partnership (together with our consolidated subsidiaries “SPP”, “we”, “us”, “our” or the “Partnership”), is a publicly-traded limited partnership focused on the acquisition, development, ownership and operation of midstream and production assets in North America. SPP completed its initial public offering on November 20, 2006, as Constellation Energy Partners LLC (“CEP” or the “Company”). We have entered into a shared services agreement (the “Services Agreement”) with SP Holdings, LLC (the “Manager”), the sole member of our general partner, pursuant to which the Manager provides services that the Partnership requires to operate its business, including overhead, technical, administrative, marketing, accounting, operational, information systems, financial, compliance, insurance, acquisition, disposition and financing services.  On March 6, 2015, the Company’s unitholders approved the conversion of Sanchez Production Partners LLC to a Delaware limited partnership and the name was changed to Sanchez Production Partners LP. The Manager owns the general partner of SPP and all of SPP’s incentive distribution rights.  Our common units are currently listed on the NYSE MKT under the symbol “SPP.”

Historically, our operations have consisted of the production of proved reserves located in the Cherokee Basin in Oklahoma and Kansas, the Woodford Shale in the Arkoma Basin in Oklahoma, the Central Kansas Uplift in Kansas, the Eagle Ford Shale in South Texas and in other areas of Texas and Louisiana.  In October 2015, we consummated the acquisition of midstream assets in the Eagle Ford Shale from Sanchez Energy Corporation (“SN”) and entered into a 15-year gathering and processing agreement with SN.  In July 2016, we sold a portion of our oil and gas properties in the Mid-Continent region and acquired a 50% interest in a gathering system owned by Carnero Gathering. 

As a result of the acquisition of midstream assets from SN and the disposition of our oil and gas properties located in the Mid-Continent region, our financial statements beginning with the quarter ending December 31, 2015 (including those in this Form 10-Q) differ substantially from our historical financial statements, principally because a significant portion of our revenues now come from the long-term, fee-based gathering and processing agreement with SN rather than from oil and natural gas production.