Variable Interest Entities (Tables)

9 Months Ended

Sep. 30, 2013

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

Oil Collars - Two-way

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

Notional (MMcf)

Weighted Average
Fixed Price

October 2013 - December 2013