18. 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 natural gas, NGLs and crude oil. 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 (“CODM”) 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 present financial information for each operating segment for the periods indicated based on our operating segments (in thousands):


	Years Ended December 31,
	2019				2018
	Production		Midstream		Production		Midstream
Segment revenues
Natural gas sales	$	683	$	—	$	953	$	—
Oil sales		9,512		—		21,272		—
Natural gas liquid sales		539		—		1,709		—
Gathering and transportation sales		—		6,825		—		6,651
Gathering and transportation lease revenues		—		59,090		—		53,025
Total segment revenues		10,734		65,915		23,934		59,676

Segment operating costs
Lease operating expenses		5,879		1,499		6,719		1,145
Transportation operating expenses		—		11,553		—		12,316
Production taxes		621		—		1,104		—
Gain on sale of assets		—		—		(3,186)		—
Depreciation, depletion and amortization		3,942		21,391		4,798		21,189
Asset impairments		—		32,119		—		—
Accretion expense		200		326		198		299
Total segment operating costs		10,642		66,888		9,633		34,949

Segment other income
Earnings from equity investments		—		2,831		—		12,859
Total segment other income		—		2,831		—		12,859
Segment operating income	$	92	$	1,858	$	14,301	$	37,586


	Years Ended
	December 31,
	2019		2018
Reconciliation of segment operating income to net income (loss)
Total production operating income	$	92	$	14,301
Total midstream operating income		1,858		37,586
Total segment operating income		1,950		51,887

General and administrative expense		(17,610)		(23,653)
Unit-based compensation expense		(1,351)		(1,938)
Interest expense, net		(39,789)		(10,961)
Other income		5,860		546
Income tax expense		(202)		(190)
Net income (loss)	$	(51,142)	$	15,691

The following table summarizes the total assets and capital expenditures by operating segment as of December 31, 2019 and 2018 (in thousands):


	December 31, 2019
	Production		Midstream		Corporate (a)		Total
Other financial information
Total assets	$	45,550	$	362,961	$	5,929	$	414,440
Capital expenditures(b)	$	130	$	775	$	—	$	905


	December 31, 2018
	Production		Midstream		Corporate (a)		Total
Other financial information
Total assets	$	53,556	$	429,523	$	3,606	$	486,685
Capital expenditures(b)	$	11	$	4,856	$	—	$	4,867

(a)

Corporate assets not reviewed by the CODM on a segment basis consists of cash, certain prepaid expenses, office furniture and other assets.

(b)

Inclusive of capital contributions made to equity method investments.

Revenue from Sanchez Energy earned in our Midstream segment accounted for 86% and 71% of total revenue for the years ended December 31, 2019 and 2018, respectively. Because all remaining production properties are non-operated, there are no customers in the Production segment that exceed 10% of the Partnership’s consolidated revenue.