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United States securities and exchange commission logo





                               August 10, 2022

       Bob R. Simpson
       Chief Executive Officer
       MorningStar Partners, L.P.
       400 West 7th Street
       Fort Worth, Texas 76102

                                                        Re: MorningStar
Partners, L.P.
                                                            Draft Registration
Statement on Form S-1
                                                            Submitted July 14,
2022
                                                            CIK 0001559432

       Dear Mr. Simpson:

              We have reviewed your draft registration statement and have the
following comments. In
       some of our comments, we may ask you to provide us with information so
we may better
       understand your disclosure.

              Please respond to this letter by providing the requested
information and either submitting
       an amended draft registration statement or publicly filing your
registration statement on
       EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
       believe an amendment is appropriate, please tell us why in your
response.

             After reviewing the information you provide in response to these
comments and your
       amended draft registration statement or filed registration statement, we
may have additional
       comments.

       Draft Registration Statement on Form S-1

       Prospectus Summary
       Overview, page 3

   1.                                                   We note your disclosure
on page 3 that you intend to make quarterly distributions on your
                                                        common units of all of
your    cash available for distribution    at the end of each such
                                                        quarter. If your policy
will be to distribute all    available cash    you generate each quarter,
                                                        as defined in your
partnership agreement and as described on page 81, please revise your
                                                        disclosure on page 3
accordingly.
   2.                                                   We note your disclosure
that you believe the low decline nature of your reserves and the
                                                        relatively low-cost
expense to maintain production combined with your zero to low
 Bob R. Simpson
FirstName LastNameBob
MorningStar Partners, L.P.R. Simpson
Comapany
August 10, NameMorningStar
           2022               Partners, L.P.
August
Page 2 10, 2022 Page 2
FirstName LastName
         leverage profile will allow you to make relatively consistent
quarterly distributions.
         Please balance such disclosure with your disclosure on page 31 that
future quarterly
         distributions paid to your unitholders will vary significantly from
quarter to quarter and
         may be zero.
3.       Please balance your disclosure regarding your management team's
background with a
         reference to your disclosure on page 169-170 regarding the Southland
Royalty Company
         LLC bankruptcy in 2020. Please also include disclosure cautioning
potential investors
         that the prior performance of companies, acquisitions or business
initiatives in which your
         management team were involved may not be indicative of your future
performance.
4.       The tabular presentation of SEC and NYMEX proved reserves, PV-10,
active well count
         and development locations includes a line item    Other    for areas
outside the Permian and
         San Juan Basins. Please expand your disclosure to clarify the location
of these    Other
         properties.
Reorganization Transactions and Partnership Structure, page 12

5.       Please revise to also include a diagram of your ownership structure
prior to the offering
         and related reorganization transactions. We also note that your
post-closing diagram
         shows "Existing Owners" and "Founders" holding ownership interests in
your parent
         company, MorningStar Partners II, L.P, as separate groups. Please
clarify the difference
         between these two owner groups.
Risk Factors
Declining general economic, business or industry conditions and inflation may
have a material
adverse effect on our results of operations, page 38

6.       You disclose that supply chain constraints and inflationary pressures
will likely continue
         to adversely impact your operating costs. You also disclose here and
on page 106 that
         global, industry-wide supply chain disruptions have resulted in
widespread shortages of
         labor, materials and services, and that such shortages have resulted
in your facing
         significant cost increases for labor, materials and services. Please
expand to identify the
         principal factors contributing to the supply chain constraints and
inflationary pressures
         you have experienced and clarify the resulting impact to the company.
7.       You also disclose that you continue to undertake actions and implement
plans to
         strengthen your supply chain to address these pressures and protect
the requisite access to
         commodities and services. Please revise to identify the actions and
plans taken to mitigate
         your supply chain and inflationary pressures. Please also revise to
discuss known trends
         or uncertainties resulting from mitigation efforts undertaken, if any.
Explain whether any
         mitigation efforts introduce new material risks.
 Bob R. Simpson
FirstName LastNameBob
MorningStar Partners, L.P.R. Simpson
Comapany
August 10, NameMorningStar
           2022               Partners, L.P.
August
Page 3 10, 2022 Page 3
FirstName LastName
We use derivative instruments to economically hedge exposure to changes in
commodity price,
page 40

8.       We note your disclosure regarding the hedging restrictions in your
credit facility. We also
         note your disclosure on page 126 that you were in compliance with all
financial and other
         covenants of your credit facility as of March 31, 2022, except the
covenant regarding
         hedge volumes required as of March 31, 2022, and that you received a
waiver for this
         exception in June 2022. Please revise this risk factor to disclose the
breach of this
         covenant.
We depend upon several significant purchasers for the sale of most of our oil,
natural gas and
NGL production, page 42

9.       You disclose here that for the year ended December 31, 2021, Phillips
66 Company,
         Tenaska Marketing and Eco-Energy, Inc. accounted for more than 40% of
your total
         revenues, excluding the impact of your commodity derivatives, and that
you sell the
         substantial majority of your production under arm   s length contracts
with terms of 12
         months or less, including on a month-to-month basis, to a relatively
small number of
         customers. You also disclose that the loss of any one of these
purchasers, the inability or
         failure of your significant purchasers to meet their obligations to
you or their insolvency
         or liquidation could materially adversely affect your financial
condition, results of
         operations and ability to make distributions to our unitholders. To
the extent you are
         substantially dependent on any agreements with these customers, please
describe the
         material terms of such agreements and file the agreements as exhibits
to your registration
         statement. Refer to Item 601(b)(10) of Regulation S-K. If you believe
you are not
         substantially dependent on the agreements, please provide us an
analysis to explain your
         basis for such belief.
Once our common units are publicly traded, the Existing Owners may sell common
units in the
public markets, page 67

10.      You disclose on page 203 that, under your partnership agreement, you
have agreed to
         register for resale under the Securities Act and applicable state
securities laws any
         common units or other partnership interests proposed to be sold by
your general partner or
         any of its affiliates or their assignees if an exemption from the
registration requirements is
         not otherwise available. Please revise this risk factor to disclose
the amount of common
         units which will be subject to these registration rights.
Our partnership agreement will designate the Court of Chancery of the State of
Delaware as the
exclusive forum for certain types of actions , page 67

11.      We note your disclosure that your partnership agreement includes a
waiver of the right to
         trial by jury. Please revise to address any uncertainty about
enforceability. If the
         provision extends to claims under the federal securities laws, please
revise to state that
         investors cannot waive compliance with the federal securities laws and
rules and
 Bob R. Simpson
FirstName LastNameBob
MorningStar Partners, L.P.R. Simpson
Comapany
August 10, NameMorningStar
           2022               Partners, L.P.
August
Page 4 10, 2022 Page 4
FirstName LastName
         regulations promulgated thereunder. If the provision does not apply to
claims under the
         federal securities laws, your disclosure should clearly state so.
Please also disclose this
         provision in your summary of material provisions of your partnership
agreement which
         begins on page 189.
12.      We note your disclosure regarding your exclusive forum provision for
certain claims, and
         your disclosure that if any unitholder brings any of the
aforementioned claims, suits,
         actions or proceedings and such person does not obtain a judgment on
the merits that
         substantially achieves, in substance and amount, the full remedy
sought, then such person
         shall be obligated to reimburse you and your affiliates for all fees,
costs and expenses of
         every kind and description, including but not limited to all
reasonable attorneys    fees and
         other litigation expenses, that the parties may incur in connection
with such claim, suit,
         action or proceeding. Please revise to clarify the level of recovery
required by the
         plaintiff to avoid payment. For example, please revise to explain the
meaning of
         obtaining a judgment on the merits that    substantially achieves, in
substance and amount,
         the full remedy sought," and revise to clarify who would be allowed to
recover under this
         provision. In addition, please revise to clarify whether your
disclosure that    this
         provision    would not apply to claims brought to enforce a duty or
liability created by the
         Exchange Act, the Securities Act or any other claim for which the
federal courts have
         exclusive jurisdiction refers to this fee-shifting provision, your
exclusive forum provision,
         or both. Please also included related disclosures in your description
of your partnership
         agreement on page 191.
Use of Proceeds, page 78

13.      We note you disclose that you currently intend use the expected net
proceeds from this
         offering to repay in full amounts outstanding under your revolving
credit facility, with any
         remaining amounts to be used for working capital and general
partnership
         purposes. Please revise to more specifically identify the intended
uses of the remaining
         amounts of net proceeds after repaying in full amounts outstanding
under your revolving
         credit facility and provide the estimated amounts you intend to
allocate to each identified
         purpose. In that regard, we note you disclose on pages 7 and 133 that
you expect to be
         able to fund your 2022 and 2023 capital development programs from cash
flow from
         operations and the net proceeds of this offering. We further note you
disclose on page 7
         that during 2022, you expect to spend approximately $20 million to
drill 33 gross wells
         (18 net wells) and related equipment, $4 million on recompletions of
existing wells and
         $6 million on remedial workovers and other maintenance projects, and
you expect to
         spend approximately $20 million in the Permian Basin and approximately
$10 million in
         the San Juan Basin in 2022. Refer generally to Item 504 of Regulation
S-K.
Our Cash Distribution Policy and Restrictions on Distributions, page 81

14.      Please revise this section to provide the definition of    available
cash    set forth in your
         partnership agreement.
 Bob R. Simpson
FirstName LastNameBob
MorningStar Partners, L.P.R. Simpson
Comapany
August 10, NameMorningStar
           2022               Partners, L.P.
August
Page 5 10, 2022 Page 5
FirstName LastName
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital Resources
Revolving Credit Agreement, page 125

15.      We note that interest expense on borrowings under your Credit Facility
is determined, at
         your option, by reference to either the secured overnight financing
rate plus an applicable
         margin or an alternate base rate plus an applicable margin.

         Please expand your disclosures to describe the circumstances under
which such elections
         may be made or changed, also to describe provision that allow you to
designate or change
         the amounts of borrowings under the facility that are subject to
either rate, and to explain
         how the alternate base rate is determined and the frequency with which
redeterminations
         of either rate applicable to borrowings are made.
Critical Accounting Policies and Estimates
Oil and Natural Gas Reserves, page 130

16.      We note you include disclosure that states    although improved
technology often can
         identify possible and probable reserves other than by drilling, under
current SEC rules,
         these reserves cannot be estimated or disclosed." Your disclosure
refers to proved reserves
         as defined by FASB ASC 932, but infers that estimates of probable and
possible reserves
         may not be disclosed under current SEC rules. Refer to the definitions
of probable and
         possible reserves under Rule 4-10(a)(18) and (a)(17) of Regulation S-X
and Instruction 2
         to Item 1202(a)(2) of Regulation S-K and revise your disclosure
accordingly or tell us
         why a revision is not needed.
Business and Properties
Oil, Natural Gas and NGL Data
Proved Undeveloped Reserves (PUDs), page 143

17.      We note the disclosure that you expect all currently scheduled PUD
locations to be drilled
         within seven years of December 31, 2021. Please expand your disclosure
to include an
         explanation of the reasons why you disclose proved undeveloped
reserves for locations
         that will not be drilled and completed within five years of initial
disclosure at December
         31, 2021. Refer Item 1203(d) of Regulation S-K, Rule 4-10(a)(31)(ii)
of Regulation S-X,
         and question 131.03 in our Compliance and Disclosure Interpretations
(C&DIs) regarding
         Oil and Gas Rules for further clarification or guidance.
18.      Please provide us with your development schedule, indicating for each
future annual
         period, the number of gross wells drilled and completed, the net
quantities of reserves and
         estimated capital expenditures necessary to convert all of the proved
undeveloped reserves
         disclosed as of December 31, 2021 to developed status. Please refer to
Rule 4-
         10(a)(31)(ii) of Regulation S-X and question 131.04 in our Compliance
and Disclosure
         Interpretations (C&DIs) regarding Oil and Gas Rules, and tell us if
all of the proved
 Bob R. Simpson
FirstName LastNameBob
MorningStar Partners, L.P.R. Simpson
Comapany
August 10, NameMorningStar
           2022               Partners, L.P.
August
Page 6 10, 2022 Page 6
FirstName LastName
         undeveloped locations in the foregoing annual schedule are part of a
development plan
         adopted by the management including approval by the Board, if such
approval is required.
Drilling Results, page 147

19.      Disclosure on page F-19 indicates you had expenditures of $2.4 million
related to wells in
         the process of drilling as of December 31, 2021. Please expand the
disclosure of your
         drilling activities to provide the number of gross and net wells in
the process of being
         drilled, completed, or waiting on completion and any other related
activities of material
         importance at fiscal year-end. Refer to the disclosure requirements in
Item 1206 of
         Regulation S-K.
Security Ownership of Certain Beneficial Owners and Management, page 174

20.      Please revise your security ownership table to disclose the natural
persons or persons who
         directly or indirectly exercise sole or shared voting or investment
control over the
         common units held by each of Diamond S. Energy Company, GEF-DTOE,
Inc., GEF-
         PUE, LP, and PDLP MorningStar LLC. Refer to Item 403 of Regulation S-K
and
         Exchange Act Rule 13d-3.
Certain Relationships and Related Party Transactions
Agreements with Affiliates in Connection with the Reorganization Transactions,
page 176

21.      We note your disclosure that in connection with the closing of the
offering your existing
         equity holders will contribute all of your outstanding equity
interests in the company to a
         newly formed parent company, MorningStar Partners II, L.P., pursuant
to a contribution
         agreement, and that you expect to enter into a services agreement with
a subsidiary of
         MorningStar Partners II, L.P. (the    Services Company   ), pursuant
to which the Services
         Company will provide management, administrative and operating services
to you. Please
         revise to describe all material terms of the Contribution Agreement
and Services
         Agreement. Please also file the Contribution Agreement as an exhibit
to your registration
         statement. Refer to Item 601(b)(2) of Regulation S-K.
Financial Statements, page F-1

22.      Please update your historical and pro forma financial statements and
related disclosures to
         comply with Rules 3-12 and 11-02(c) of Regulation S-X when filing the
next amendment
         to your registration statement.
TXO Energy Partners, L.P.
Pro Forma Financial Statements, page F-2

23.      We see that you refer to Note 2 of the MorningStar audited financial
statements for a
         description of    the Vacuum properties    for which you intend to
provide pro forma
         financial information. However, none of the recent acquisitions
described on pages F-22
         and F-23 are identified as the Vacuum properties. Please revise your
disclosure under this
 Bob R. Simpson
FirstName LastNameBob
MorningStar Partners, L.P.R. Simpson
Comapany
August 10, NameMorningStar
           2022               Partners, L.P.
August
Page 7 10, 2022 Page 7
FirstName LastName
         heading to describe the particular acquisition(s) for which you will
provide pro forma
         financial information.
24.      We understand from your disclosures on pages 21 and 102 that your pro
forma financial
         statements will pertain to the    Chevron Vacuum Acquisition
completed in November
         2021, but not the    Chevron Andrews Parker Acquisition    completed
in December 2021.
         Provide us with the significance testing that you performed pursuant
to Rules 3-05(b)(2)
         and (3), 11-01(b)(3)(i) and (ii), and Rule 3-05(a)(3) of Regulation
S-X in determining that
         your historical and pro forma financial statements would not encompass
both of these
         transactions, and that you would limit the historical periods depicted
in your Statement of
         Revenues and Direct Operating Expenses on page F-60 to one year.
TXO Energy, LLC
Notes to Pro Forma Financial Statements
3. Supplementary Disclosure of Oil and Natural Gas Operations, page F-8

25.      Expand your discussion to include an explanation for the apparent
differences in the net
         quantities shown as individual line item changes in the reserves
reconciliation for
         MorningStar Partners, L.P. Historical on pages F-9 and F-10 and the
reserves
         reconciliation presented elsewhere for MorningStar Partners, L.P. on
page F-39 for the
         period ending December 31, 2021.
MorningStar Partners, L.P.
Notes to Consolidated Financial Statements
16. Supplementary Financial Information for Oil and Gas Producing Activities
(Unaudited)
Proved Reserves, page F-38

26.      Please expand the tabular presentation of proved developed and proved
undeveloped
         reserves by individual product type to additionally provide the net
quantities at the
         beginning of the initial period shown in the reserves reconciliation,
e.g. December 31,
         2019. Refer to FASB ASC 932-235-50-4.
27.      Please expand your disclosure to explain the reasons for significant
changes in the net
         quantities of total proved reserves for each line in the reserves
reconciliation, other than
         production, for each period to comply with FASB ASC 932-235-50-5. Your
revised
         disclosure should separately identify and quantify each factor,
including offsetting factors,
         such that the change to each line item is fully explained. In
particular, disclosure relating
         to revisions in previous estimates should indicate the extent to which
changes were caused
         by economic factors, such as costs and commodity prices, well
performance, uneconomic
         proved undeveloped locations, or the removal of proved undeveloped
locations due to
         changes in a previously adopted development plan.
 Bob R. Simpson
MorningStar Partners, L.P.
August 10, 2022
Page 8
Financial Statements
Vacuum Properties
Note 1 - Basis of Presentation, page F-61

28.    We note that you refer to the Statements of Revenues and Direct
Operating Expenses
       associated with the properties acquired in Chevron Vacuum Acquisition as
being audited
       though without providing an audit opinion. Please obtain and file an
audit opinion for all
       financial statements that are required pursuant to Rule 3-05 of
Regulation S-X.
Appendix C, page C-1

29.    We note references in your filing to a third-party reserve report as of
December 31, 2021
       prepared by Cawley, Gillespie & Associates. Please obtain and file the
third-party reserve
       report. Refer to the disclosure requirements in Item 1202(a)(8) of
Regulation S-K.
General

30.    Please provide us with supplemental copies of all written
communications, as defined in
       Rule 405 under the Securities Act, that you, or anyone authorized to do
so on your behalf,
       have presented or expect to present to potential investors in reliance
on Section 5(d) of the
       Securities Act, whether or not you retained, or intend to retain, copies
of the
       communications.
       You may contact Joseph Klinko, Staff Accountant, at 202-551-3824 or Lily
Dang, Staff
Accountant, at 202-551-3867 if you have questions regarding comments on the
financial
statements and related matters. You may contact John Hodgin, Petroleum
Engineer, at (202)
551-3699 or Sandra Wall, Petroleum Engineer, at 202-551-4727 with questions
about
engineering comments. Please contact Irene Barberena-Meissner, Staff Attorney,
at 202-551-
6548 or Laura Nicholson, Special Counsel, at 202-551-3584 with any other
questions.



                                                             Sincerely,
FirstName LastNameBob R. Simpson
                                                             Division of
Corporation Finance
Comapany NameMorningStar Partners, L.P.
                                                             Office of Energy &
Transportation
August 10, 2022 Page 8
cc:       Mollie Duckworth, Esq.
FirstName LastName
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