6. Earnings Per Unit

Earnings in excess of distributions are allocated to the limited partners based on their respective ownership interests. Payments made to our unitholders are determined in relation to actual distributions declared and are not based on the net income allocations used in the calculation of earnings per unit.

Diluted earnings per unit includes the effects of potentially dilutive units of our common units that consist of unvested phantom units. These units are non-participating securities due to the forfeitable nature of their associated distribution equivalent rights, prior to vesting. We do not consider these units in the two-class method when calculating earnings per unit. Basic and diluted earnings per unit applicable to subordinated limited partners are the same because there are no potentially dilutive subordinated units outstanding.

In addition to the common and subordinated units, we have identified the general partner interest, incentive distribution rights and distributions associated with the TexNew Mex Units as participating securities and use the two-class method when calculating earnings per unit applicable to limited partners that is based on the weighted-average number of common units outstanding during the period. We make incentive distribution payments to our General Partner when our per unit distribution amount exceeds the target distribution. During the year ended December 31, 2015, we made incentive distribution right payments of $1.1 million to our General Partner. We made no incentive distribution right payments to our General Partner prior to 2015. Refer to Note 15, Equity, for further information regarding incentive distribution rights.

The holder of the TexNew Mex Units will be entitled to receive a distribution equal to 80% of the excess of TexNew Mex Shared Segment Distributable Cash Flow over the TexNew Mex Base Amount. The TexNew Mex Unit distributions are preferential to all other unit holder distributions. During the year ended December 31, 2015, we declared distributions to TexNew Mex unitholders in the amount of $0.3 million. We made no distributions prior to 2015. Refer to Note 15, Equity, for further information.

The calculation of net income (loss) per unit for the years ended December 31, 2015 and 2014, and the period subsequent to the Offering in 2013 is as follows:



	Period Ended December 31,
	2015			2014			2013
	(In thousands, except per unit data)
Net income (loss)	$	63,625		$	67,596		$	(42,727	)
Net income (loss) attributable to General Partner (1)	1,052			14,604			(51,255		)
Net income attributable to limited partners	62,573			52,992			8,528
Distributions on TexNew Mex Units (2)	(310		)	—			—
General Partner distributions	(1,085		)	—			—
Limited partners' distributions on common units	(34,436		)	(26,902		)	—
Limited partners' distributions on subordinated units	(32,563		)	(26,534		)	—
Distributions less than (greater than) earnings	$	(5,821	)	$	(444	)	$	8,528

General Partners' earnings:
Distributions	$	1,085		$	—		$	—
Net income (loss) attributable to General Partner (1)	1,052			14,604			(51,255		)
Total General Partners' earnings	$	2,137		$	14,604		$	(51,255	)

Limited partners' earnings on common units:
Distributions	$	34,436		$	26,902		$	—
Allocation of distributions less than (greater than) earnings	(2,990		)	(223		)	4,264
Total limited partners' earnings on common units	$	31,446		$	26,679		$	4,264

Limited partners' earnings on subordinated units:
Distributions	$	32,563		$	26,534		$	—
Allocation of distributions less than (greater than) earnings	(2,831		)	(221		)	4,264
Total limited partners' earnings on subordinated units	$	29,732		$	26,313		$	4,264

Weighted average limited partner units outstanding:
Common units - basic	24,084			23,059			22,811
Common units - diluted	24,099			23,107			22,813
Subordinated units - basic and diluted	22,811			22,811			22,811

Net income per limited partner unit:
Common - basic	$	1.31		$	1.16		$	0.19
Common - diluted	1.30			1.15			0.19
Subordinated - basic and diluted	1.30			1.15			0.19


(1)	We apply the two-class method to calculate earnings per unit and allocate the results of operations of WRW prior to the Wholesale Acquisition and the TexNew Mex Pipeline System prior to the TexNew Mex Pipeline Acquisition entirely to our general partner. The limited partners had no rights to the results of operations before these acquisitions.


(2)	The TexNew Mex Units entitle Western to participate in 80% of the operating results attributable to the TexNew Mex Shared Segment resulting from crude oil throughput on the TexNew Mex pipeline above 13,000 barrels per day. See Note 4, Acquisitions, for further information.