Units Outstanding

The table below details the units outstanding as of June 30, 2012 and December 31, 2011, and the changes in outstanding units for the six months ended June 30, 2012. As of June 30, 2012, the Fund owns all preferred units and all subordinated units.




	Preferred Units	General Partner	Public Common	Affiliated Common	Subordinated
Balance - December 31, 2011	16,666,667	35,729	17,292,279	11,297,737	7,145,866
Vested units awarded under our Long Term Incentive
Performance Plan	-	-	5,990	-	-
Reduction in units to cover individuals' tax withholdings	-	-	(918)	-	-
Issuance of units to General Partner	-	6,018	-	-	-
Affiliated unit sale to the public	-	-	11,297,737	(11,297,737)	-
Unit offering	-	-	8,827,263	-	-
Balance - June 30, 2012	16,666,667	41,747	37,422,351	-	7,145,866

On April 17, 2012, we issued 6,202,263 common units representing limited partnership interests in us, and the Fund sold 11,297,737 of its common units it held in us to the public pursuant to a registration statement filed with the SEC. In conjunction with the Equity Offering, the Partnership granted the underwriters an over-allotment option for 30 days to purchase up to an additional 2,625,000 common units from the Partnership, which they exercised in full. The common units, including the units issued pursuant to the underwriters’ full exercise of their option, were issued by us or sold by the Fund at $19.18 per unit. Proceeds from the Equity Offering, net of transaction costs of $0.5 million and underwriter’s discount of $6.8 million, were approximately $162 million.

On April 25, 2012, QRE GP purchased 6,018 general partner units in order to maintain their 0.1% ownership percentage in us. The units were purchased at a price of $19.18 per unit.

On June 1, 2012, we filed a registration statement on Form S-3 with the SEC to register, among other securities, our debt securities, which may be co-issued by QRE FC. The registration statement also registered guarantees of debt securities by OLLC. Refer to Note 16 – Subsidiary Guarantors for details

Allocations of Net Income (Loss)

Net income (loss) is allocated to the preferred unitholders to the extent distributions are made or accrued to them during the period with the remaining income being allocated between QRE GP and the common and subordinated unitholders in proportion to their pro rata ownership during the period.

Cash Distributions

We intend to continue to make regular cash distributions to unitholders on a quarterly basis, although there is no assurance as to the future cash distributions since they are dependent upon future earnings, cash flows, capital requirements, financial condition and other factors. Our credit facility prohibits us from making cash distributions if any potential default or event of default, as defined in our credit facility, occurs or would result from the cash distribution.

Our partnership agreement, as amended, requires us to distribute all of our available cash on a quarterly basis. Our available cash is our cash on hand at the end of a quarter after the payment of our expenses and the establishment of reserves for future capital expenditures and operational needs, including cash from working capital borrowings. We intend to fund a portion of our capital expenditures with additional borrowings or issuances of additional units. We may also borrow to make distributions to unitholders, for example, in circumstances where we believe that the distribution level is sustainable over the long term, but short term factors have caused available cash from operations to be insufficient to pay the distribution at the current level. Our cash distribution policy reflects a basic judgment that our unitholders will be better served by us distributing our available cash, after expenses and reserves, rather than retaining it.

As of June 30, 2012, QRE GP owns a 0.1% general partner interest in us, represented by 41,747 general partner units. QRE GP has the right, but not the obligation, to contribute a proportionate amount of capital to us to maintain its current general partner interest. QRE GP’s 0.1% interest in these distributions will be reduced if we issue additional units in the future and QRE GP does not contribute a proportionate share of capital to us to maintain its 0.1% general partnership interest.

Our partnership agreement, as amended, requires that within 45 days after the end of each quarter, we distribute all of our available cash to preferred unitholders, in arrears, and common unitholders of record on the applicable record date, as determined by QRE GP.

Distribution activities are as follows:



						Limited Partners
							Affiliated
Payment Date	For the period ended	Distributions to Preferred Unitholders		Distributions per Preferred Unit⁽¹⁾	General Partner	Public Common	Common	Subordinated	Total Distributions to Other Unitholders	Distributions per other units
(In thousands, except per unit amounts)
February 10, 2012	December 31, 2011	3,424	$	0.2054	16	8,344	5,368	3,393	17,121	0.4750
May 11, 2012	March 31, 2012	3,500	$	0.21	20	17,892	-	3,394	21,306	0.4750
August 10, 2012	June 30, 2012	3,500	$	0.21	20	18,604	-	3,484	22,108	0.4875

(1) Preferred units paid in February 2012 were prorated a quarterly distribution for the portion of the fourth quarter beginning on October 3, 2011 through December 31, 2011 in accordance with the Partnership Agreement.

On March 29, 2012, the board of directors of QRE GP declared a $0.4875 per unit cash distribution for the second quarter 2012 which is payable on August 10, 2012 to unitholders of record at the close of business on July 30, 2012. The aggregate amount of the second quarter common and preferred unit holder distribution accrued, as of June 30, 2012, was $25.6 million.