NOTE 15 – PREDECESSOR'S UNCONSOLIDATED INVESTMENT IN UTE ENERGY, LLC

Ute Energy, LLC (“Ute”), a Delaware limited liability company, was formed on February 2, 2005 for the purpose of developing the mineral and surface estate of the Ute Indian Tribe by participating in oil and gas exploration and development, as well as the construction and operation of gas gathering and transportation facilities. Ute's properties are located on the Uintah and Ouray Reservation in northeastern Utah. On July 9, 2007, the Predecessor initially acquired an interest in Ute and accounts for the investment using the equity method of accounting.

There were no impairments during the period from January 1, 2010 to December 21, 2010 or during 2009.

During 2009, the Predecessor purchased additional ownership interests in Ute bringing their total ownership percentage to 25% as of December 31, 2009.

In March 2010, as part of the wider recapitalization of Ute, the Predecessor exchanged its 2,929,471 redeemable units for 2,929,471 common units and was issued an additional 175,126 redeemable units. This share-for-share exchange resulted in a gain of $4,064,000The non-cash recapitalization converted certain of the redeemable units into Class A common units at a valuation of $10 per unit with the remaining 175,126 redeemable units that will accrue a return equal to 12% per annum being retained by the Predecessor. The overall recapitalization resulted in a decrease in the Predecessor's common unit class ownership from 25to 23.8%.

The Predecessor's equity in earnings of Ute was $3.8 million and $2.7 millionfor the period of January 1, 2010 through December 21, 2010, and for the year ended December 31, 2009. The Predecessor's unconsolidated investment in Ute was $41.6 million as of December 31, 2009.

The following table shows summarized financial information of the Predecessor's investment in Ute for the periods indicated:

	January 1 to December 21, 2010			2009
Revenues	$	37,818		$	10,025
Operating expenses		(27,071	)		(14,059	)
Operating profit (loss)		10,747			(4,034	)
Interest expense		(2,192	)		(2,275	)
Other income/(expense)		7,163			4,999
Net income (loss)	$	15,718		$	(1,310	)

	December 31,
	2009
Current assets	$	2,288
Net oil and gas properties		34,417
Equity method investments		94,248
Other assets		1,978
Total assets	$	132,931

Current liabilities	$	5,538
Long-term liabilities		52,010
Members' equity		75,383
Total liabilities and members' equity	$	132,931