Reporting Segments

3 Months Ended

Mar. 31, 2017

Reporting Segments

Reporting Segments

16. REPORTING SEGMENTS

“Midstream” and “Production” best describe the operating segments of the businesses that we separately report. The factors used to identify these reporting 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):

	Three Months Ended March 31, 2017
	Production		Midstream		Total
Operating revenues
Natural gas sales	$	2,779	$	—	$	2,779
Oil sales		11,350		—		11,350
Natural gas liquids sales		467		—		467
Gathering and transportation sales		—		11,211		11,211
Total operating revenues		14,596		11,211		25,807
Operating expenses:
Lease operating expenses		4,724		259		4,983
Transportation operating expenses		—		3,296		3,296
Cost of sales		37		—		37
Production taxes		473		—		473
General and administrative		4,104		1,505		5,609
Unit-based compensation expense		540		—		540
Depreciation, depletion and amortization		3,281		8,900		12,181
Asset impairments		4,688		—		4,688
Accretion expense		192		66		258
Total operating expenses		18,039		14,026		32,065
Operating loss	$	(3,443)	$	(2,815)	$	(6,258)

	Three Months Ended March 31, 2016
	Production		Midstream		Total
Operating revenues
Natural gas sales	$	3,675	$	—	$	3,675
Oil sales		5,343		—		5,343
Natural gas liquids sales		276		—		276
Gathering and transportation sales		—		13,875		13,875
Total operating revenues		9,294		13,875		23,169
Operating expenses:
Lease operating expenses		4,875		98		4,973
Transportation operating expenses		—		3,054		3,054
Cost of sales		130		—		130
Production taxes		221		—		221
General and administrative		4,434		1,285		5,719
Unit-based compensation expense		438		—		438
Depreciation, depletion and amortization		2,114		5,074		7,188
Asset impairments		1,309		—		1,309
Accretion expense		254		61		315
Total operating expenses		13,775		9,572		23,347
Operating income (loss)	$	(4,481)	$	4,303	$	(178)

The following table summarizes the total assets by operating segment as of March 31, 2017 and December 31, 2016 (in thousands):

	March 31,		December 31,
		2017		2016
Segment Assets
Production	$	201,991	$	207,219
Midstream		333,986		332,486
Total assets	$	535,977	$	539,705