NOTE 3 – ACQUISITIONS

On December 4, 2012, we closed the acquisition of primarily oil properties located in East Texas (the “East Texas Oil Field Properties”) from a private seller for $214 million in cash, after customary purchase price adjustments (the “East Texas Oil Field Acquisition”). The acquisition had an effective date of November 1, 2012. During the first quarter 2013, we received the $2.3 million receivable from the seller that was recorded as a purchase price adjustment at the date of the sale.

On April 20, 2012, we closed the acquisition of primarily oil properties, almost all of which are located in the Ark-La-Tex area, from Prize Petroleum, LLC and Prize Petroleum Pipeline, LLC (collectively “Prize”) for $225 million in cash after customary purchase price adjustments (the “Prize Acquisition”). The acquisition had an effective date of January 1, 2012.

The Prize Acquisition and the East Texas Oilfield Acquisition qualified as business combinations and were accounted for under the purchase method of accounting. Accordingly, we recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values. The fair value measurements of the oil and gas properties and asset retirement obligations were measured using valuation techniques and unobservable inputs that convert future cash flows to a single discounted amount. The initial accounting for the business combinations is not complete and adjustments to the provisional fair value amounts may occur due to further analysis of information that was available at the acquisition date. We expect to finalize the valuation of the business combinations no later than one year from the respective acquisition dates.

The following unaudited consolidated income statement information provides actual results for the three months ended March 31, 2013 and pro forma income statement information for the three months ended March 31, 2012, which assumes the Prize Acquisition and the East Texas Oil Field Acquisition had occurred on January 1, 2011. The unaudited pro forma results reflect certain adjustments related to the acquisitions, such as increased depreciation and amortization expense on the fair value of the assets acquired. The unaudited pro forma financial results may not be indicative of the results that would have occurred had the acquisition been completed at the beginning of the periods presented, nor are they indicative of future results of operations.


		Three Months Ended
		(Unaudited)
		March 31, 2013		March 31, 2012
		Actual		Pro Forma
Total revenues	$	104,886	$	116,264
Operating income	$	18,934	$	34,720
Net loss	$	(8,174)	$	(656)
Net loss per unit:
Common unitholders' (basic and diluted)	$	(0.33)	$	(0.22)
Subordinated units (basic and diluted)	$	-	$	(0.22)