Unit-Based Compensation

9 Months Ended

Sep. 30, 2012

Unit-Based Compensation [Abstract]

Unit-Based Compensation

NOTE 13 – UNIT-BASED COMPENSATION

The QRE GP, LLC Long-Term Incentive Plan (the “Plan”) was established for employees, officers, consultants and directors and consultants of QRE GP and its affiliates, including QRM, who perform services for us. The Plan consists of unit options, restricted units, phantom units, unit appreciation rights, distribution equivalent rights, other unit-based awards and unit awards. The purpose of awards under the Plan is to provide additional incentive compensation to employees providing services to us and to align the economic interests of such employees with the interests of our unitholders. The Plan limits the number of common units that may be delivered pursuant to awards under the Plan to 1.8 million units.

Restricted Units

During 2012, we issued restricted stock units with a service condition (“Restricted Units”) and restricted units with a performance condition (“Performance Units”). The fair value of the restricted units is based on the closing price of our common units at the grant date.

Service Restricted Units

For Restricted Units, we recognize compensation expense using a straight-line amortization of the grant date fair value over the vesting period of the award. On July 25, 2012, we granted an additional 392,149 Restricted Units to employees of QRM with a grant date per unit value of $18.19. For the three and nine months ended September 30, 2012, we recognized compensation expense related to the outstanding awards of $1.4 million and $2.2 million. For the three and nine months ended September 30, 2011 we recognized compensation expense of $0.4 million and $1.0 million. As of September 30, 2012, we had 645,563 of Restricted Units outstanding with unrecognized grant date fair value compensation expense of $11.9 million, which we expect to be recognized over a weighted-average period of approximately 3 years. 

Performance Restricted Units.

In July 2012, we granted a target number of performance shares under a performance unit award agreement to members of our senior management. The performance awards will be earned over a three year period based on the Partnership’s performance relative to its peers, with details to be determined and approved by our board in accordance with the Plan.

At each reporting period, we will assess the probability of meeting the performance conditions to determine the final units to be issued for each Performance Unit and estimate compensation expense based on this probability. For the three and nine months ended September 30, 2012, we recognized compensation expense related to the Performance Units on a straight-line method within the Restricted Units until the performance conditions are approved. There were no Performance Units outstanding in 2011.

The following table summarizes our restricted unit-based awards for nine months endedSeptember 30, 2012:

		Weighted			Weighted
		Average			Average
	Number of	Grant-Date		Number of	Grant-Date
	Service Restricted units	Fair Value		Performance units	Fair Value
Unvested units, December 31, 2011	271	$	20.33	-	$	-
Granted	428		18.18	121		18.06
Forfeited	(35)		20.23	-		-
Vested	(18)		20.16	-		-
Unvested units, September 30, 2012	646	$	18.80	121	$	18.06