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Variable Interest Entities (Tables) | 9 Months Ended
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Sep. 30, 2013
Variable Interest Entity |
Open Oil and Natural Gas Commodity Derivative Contracts | At September 30, 2013, the Company’s open commodity derivative contracts consisted of the following: Oil Price Swaps
| Notional (MBbls) |  | Weighted Average Fixed Price
October 2013 - December 2013 | 3,494 |  |  | $ | 99.48 |
January 2014 - December 2014 | 8,813 |  |  | $ | 92.98 |
January 2015 - December 2015 | 6,614 |  |  | $ | 85.25 |
Natural Gas Price Swaps
| Notional (MMcf) |  | Weighted Average Fixed Price
October 2013 - December 2013 | 12,420 |  |  | $ | 4.11 |
Oil Collars - Two-way
| Notional (MBbls) |  | Collar Range
October 2013 - December 2013 | 42 |  |  | $80.00 | — | $102.50
Oil Collars - Three-way
| Notional (MBbls) |  | Sold Put | Purchased Put | Sold Call
January 2014 - December 2014 | 8,213 |  |  | $70.00 | $90.20 | $100.00
January 2015 - December 2015 | 2,920 |  |  | $73.13 | $90.82 | $103.13
Natural Gas Collars
| Notional (MMcf) |  | Collar Range
October 2013 - December 2013 | 1,716 |  |  | $3.78 | — | $6.71
January 2014 - December 2014 | 937 |  |  | $4.00 | — | $7.78
January 2015 - December 2015 | 1,010 |  |  | $4.00 | — | $8.55
Grey Ranch Plant, L.P |
Variable Interest Entity |
Assets and Liabilities Included in Unaudited Condensed Consolidated Balance Sheets | GRLP’s assets and liabilities, after considering the effects of intercompany eliminations, included in the accompanying unaudited condensed consolidated balance sheets at September 30, 2013 and December 31, 2012 consisted of the following (in thousands):
| September 30, 2013 |  | December 31, 2012
Cash and cash equivalents | $ | 111 |  |  | $ | 1,080 |
Accounts receivable, net | 16 |  |  | 20 |
Prepaid expenses | 33 |  |  | 64 |
Other current assets | 109 |  |  | 109 |
Total current assets | 269 |  |  | 1,273 |
Other property, plant and equipment, net | 1,184 |  |  | 1,246 |
Total assets | $ | 1,453 |  |  | $ | 2,519 |
Accounts payable and accrued expenses | $ | 165 |  |  | $ | 274 |
Total liabilities | $ | 165 |  |  | $ | 274 |
Royalty Trusts |
Variable Interest Entity |
Royalty Trust Initial Public Offerings | The following table summarizes information about each Royalty Trust upon completion of its initial public offering:
|  | Mississippian Trust I |  | Permian Trust |  | Mississippian Trust II
Net proceeds of offering (in millions) |  | $ | 336.9 |  |  | $ | 580.6 |  |  | $ | 587.1 |
Total outstanding common units |  | 21,000,000 |  |  | 39,375,000 |  |  | 37,293,750 |
Total outstanding subordinated units |  | 7,000,000 |  |  | 13,125,000 |  |  | 12,431,250 |
Beneficial interest owned by Company(1) |  | 38.4 | % |  | 34.3 | % |  | 39.9 | %
Liquidation date(2) |  | 12/31/2030 |  |  | 3/31/2031 |  |  | 12/31/2031 |
____________________
(1) | Subsequent to the initial public offerings, the Company sold common units of the Royalty Trusts it owned in transactions exempt from registration under Rule 144 under the Securities Act. These transactions decreased the Company’s beneficial interests in the Royalty Trusts. See further discussion of the unit sales below.
(2) | At the time each Royalty Trust terminates, 50% of the royalty interests conveyed to the Royalty Trust will automatically revert to the Company, and the remaining 50% will be sold with the proceeds distributed to the Royalty Trust unitholders.
Royalty Trusts Distributions | The Royalty Trusts declared and paid quarterly distributions during the three and nine-month periods ended September 30, 2013 and 2012 as follows (in thousands):
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2013(1) |  | 2012 |  | 2013(1) |  | 2012(2)
Total distributions |  | $ | 81,594 |  |  | $ | 75,246 |  |  | $ | 226,404 |  |  | $ | 193,262 |
Distributions to third-party unitholders |  | $ | 54,287 |  |  | $ | 50,222 |  |  | $ | 153,002 |  |  | $ | 127,023 |
____________________
(1) | Subordination thresholds were not met for the Mississippian Trust I’s second and third quarter 2013 distributions and for the Permian Trust’s second quarter 2013 distribution, resulting in reduced distributions to the Company on its subordinated units for these periods.
(2) | The Company received incentive distributions from the Mississippian Trust I during the nine-month period ended September 30, 2012.
Open Oil and Natural Gas Commodity Derivative Contracts | The tables below present the open oil and natural gas commodity derivative contracts at September 30, 2013 underlying the derivatives agreements. The combined volume in the tables below reflects the total volume of the Royalty Trusts’ open oil and natural gas commodity derivative contracts. Oil Price Swaps Underlying the Derivatives Agreements
| Notional (MBbls) |  | Weighted Average Fixed Price
October 2013 - December 2013 | 413 |  |  | $ | 103.04 |
January 2014 - December 2014 | 1,862 |  |  | $ | 100.70 |
January 2015 - December 2015 | 630 |  |  | $ | 101.03 |
Natural Gas Collars Underlying the Derivatives Agreements
| Notional (MMcf) |  | Collar Range
October 2013 - December 2013 | 216 |  |  | $ | 4.00 |  | — | $ | 7.15 |
January 2014 - December 2014 | 937 |  |  | $ | 4.00 |  | — | $ | 7.78 |
January 2015 - December 2015 | 1,010 |  |  | $ | 4.00 |  | — | $ | 8.55 |
Oil Price Swaps Underlying the Derivatives Agreements and Novated to the Royalty Trusts
| Notional (MBbls) |  | Weighted Average Fixed Price
October 2013 - December 2013 | 302 |  |  | $ | 103.27 |
January 2014 - December 2014 | 991 |  |  | $ | 100.79 |
January 2015 - March 2015 | 141 |  |  | $ | 100.90 |
Assets and Liabilities Included in Unaudited Condensed Consolidated Balance Sheets | The Royalty Trusts’ assets and liabilities, after considering the effects of intercompany eliminations, included in the accompanying unaudited condensed consolidated balance sheets at September 30, 2013 and December 31, 2012 consisted of the following (in thousands):
| September 30, 2013 |  | December 31, 2012
Cash and cash equivalents(1) | $ | 8,816 |  |  | $ | 7,445 |
Accounts receivable, net | 25,518 |  |  | 28,596 |
Derivative contracts | 3,776 |  |  | 10,286 |
Total current assets | 38,110 |  |  | 46,327 |
Investment in royalty interests(2) | 1,325,942 |  |  | 1,325,942 |
Less: accumulated depletion | (168,569 | ) |  | (103,746 | )
| 1,157,373 |  |  | 1,222,196 |
Derivative contracts | 3,389 |  |  | 7,660 |
Total assets | $ | 1,198,872 |  |  | $ | 1,276,183 |
Accounts payable and accrued expenses | $ | 3,788 |  |  | $ | 1,101 |
Total liabilities | $ | 3,788 |  |  | $ | 1,101 |
____________________
(1) | Includes $3.0 million held by the trustee at September 30, 2013 and December 31, 2012 as reserves for future general and administrative expenses.
(2) | Investment in royalty interests is included in oil and natural gas properties in the accompanying unaudited condensed consolidated balance sheets, and was determined by allocating the historical net book value of the Company’s full cost pool based on the fair value of each Royalty Trust’s royalty interests relative to the fair value of the Company’s full cost pool.
Royalty Trusts Ownership Interest | The Company’s beneficial interests in the Royalty Trusts at September 30, 2013 and December 31, 2012 were as follows:
| September 30, 2013 |  | December 31, 2012
Mississippian Trust I | 26.9 | % |  | 26.9 | %
Permian Trust | 28.5 | % |  | 30.5 | %
Mississippian Trust II | 37.6 | % |  | 39.9 | %
Pinon Gathering Company LLC |
Variable Interest Entity |
Schedule Of Amounts Due To/From Variable Interest Entities | Amounts due from and due to PGC as of September 30, 2013 and December 31, 2012 included in the accompanying unaudited condensed consolidated balance sheets are as follows (in thousands):
| September 30, 2013 |  | December 31, 2012
Accounts receivable due from PGC | $ | 1,496 |  |  | $ | 1,976 |
Accounts payable due to PGC | $ | 4,249 |  |  | $ | 5,053 |

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