Reporting Segments

12 Months Ended

Dec. 31, 2016

Reporting Segments

Reporting Segments

17. REPORTING SEGMENTS

“Midstream” and “Production” best describe the operating segments of the businesses that we separately report. The factors used to identify these reportable segments are based on the nature of the operations that are undertaken by each segment. The Midstream segment operates the gathering, processing and transportation of crude oil, natural gas and NGLs. The Production segment operates to produce crude oil and natural gas. These segments are broadly understood across the petroleum and petrochemical industries.

These functions have been defined as the operating segments of the Partnership because they are the segments (1) that engage in business activities from which revenues are earned and expenses are incurred; (2) whose operating results are regularly reviewed by the Partnership’s chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance; and (3) for which discrete financial information is available.  Operating segments are evaluated for their contribution to the Partnership’s consolidated results based on operating income, which is defined as segment operating revenues less expenses.

The following tables set forth our segment information for the periods indicated (in thousands):

	For the Year Ended December 31, 2016
	Production		Midstream		Total
Operating revenues
Natural gas sales	$	10,408	$	—	$	10,408
Oil sales		5,138		—		5,138
Natural gas liquids sales		1,167		—		1,167
Gathering and transportation sales		—		53,972		53,972
Total operating revenues		16,713		53,972		70,685
Operating expenses:
Lease operating expenses		14,327		654		14,981
Transportation operating expenses		—		12,478		12,478
Cost of sales		328		—		328
Production taxes		1,167		—		1,167
General and administrative		17,178		5,723		22,901
Unit compensation expense		1,941		—		1,941
Loss on sale of assets		219		—		219
Depreciation, depletion and amortization		6,722		27,077		33,799
Asset impairments		7,646		—		7,646
Accretion expense		875		252		1,127
Total operating expenses		50,403		46,184		96,587
Operating income (loss)	$	(33,690)	$	7,788	$	(25,902)

	For the Year Ended December 31, 2015
	Production		Midstream		Total
Operating revenues
Natural gas sales	$	19,809	$	—	$	19,809
Oil sales		35,297		—		35,297
Natural gas liquids sales		1,597		—		1,597
Gathering and transportation sales		—		11,725		11,725
Total operating revenues		56,703		11,725		68,428
Operating expenses:
Lease operating expenses		19,890		98		19,988
Transportation operating expenses		—		2,176		2,176
Cost of sales		595		—		595
Production taxes		1,792		—		1,792
General and administrative		23,655		—		23,655
Unit-based compensation expense		2,454		—		2,454
Exploration costs		1,866		—		1,866
Loss on sale of assets		(111)		—		(111)
Depreciation, depletion and amortization		10,330		4,206		14,536
Asset impairments		123,860		—		123,860
Accretion expense		1,048		51		1,099
Total operating expenses		185,379		6,531		191,910
Operating income (loss)	$	(128,676)	$	5,194	$	(123,482)

The following table summarizes the total assets by operating segment as of December 31, 2016 and 2015 (in thousands):

	December 31,
		2016		2015
Segment Assets
Production	$	207,219	$	118,083
Midstream		332,486		353,217
Total assets	$	539,705	$	471,300

The following table summarizes the percentage of revenue earned from those customers in each segment that exceed 10% of the Partnership's consolidated revenue for the periods presented below:

	For the Years Ended
	December 31,
	2016			2015
Production
Macquarie Cook Energy, LLC.		6	%		17	%
All other		18			66
Midstream
Sanchez Energy		76	%		17	%
Total		100	%		100	%