NOTE 3 – ACQUISITIONS

On December 4, 2012, we closed the acquisition of primarily oil properties located in East Texas (the “2012 East Texas Properties”) from a private seller for $214 million in cash, after customary purchase price adjustments (the “2012 East Texas 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 2012 East Texas 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 business combinations are not finalized, and are subject to adjustments to the provisional fair value amounts, for one full year from their respective acquisition dates due to further analysis of information that was available at the acquisition date. On April 20, 2013, we finalized the accounting for the Prize Acquisition with no adjustments to the purchase price discussed above.

The following unaudited consolidated income statement information provides actual results for the three and six months ended June 30, 2013 and pro forma income statement information for the three and six months ended June 30, 2012, which assumes the Prize Acquisition and the 2012 East Texas 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				Six Months Ended
		(Unaudited)				(Unaudited)
	June 30, 2013		June 30, 2012		June 30, 2013		June 30, 2012
	Actual		Pro Forma		Actual		Pro Forma
Total revenues	$	105,430	$	103,498	$	210,316	$	219,761
Operating income	$	24,363	$	21,162	$	43,297	$	56,153
Net income	$	63,614	$	135,216	$	55,440	$	134,832
Net income per unit:
Common unitholders' (basic)	$	0.89	$	2.17	$	0.58	$	1.95
Common unitholders' (diluted)	$	0.77	$	1.70	$	0.58	$	1.66
Subordinated units (basic)	$	-	$	2.16	$	-	$	1.95
Subordinated units (diluted)	$	-	$	1.69	$	-	$	1.65