Variable Interest Entities (Tables)

3 Months Ended

Mar. 31, 2014

Open Oil and Natural Gas Commodity Derivative Contracts

At March 31, 2014, the Company’s open commodity derivative contracts consisted of the following:

Oil Price Swaps

Natural Gas Price Swaps

Oil Collars - Three-way



	Notional (MBbls)	Sold Put	Purchased Put	Sold Call
April 2014 - December 2014	6,066	$70.00	$90.21	$100.00
January 2015 - December 2015	2,920	$73.13	$90.82	$103.13

Natural Gas Collars



	Notional (MMcf)	Collar Range
April 2014 - December 2014	706	$4.00	—	$7.78
January 2015 - December 2015	1,010	$4.00	—	$8.55

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 thousands)	$	336,893		$	580,635		$	587,087
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

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(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-month periods ended March 31, 2014 and 2013 as follows (in thousands):



	Three Months Ended March 31,
	2014(1)		2013
Total distributions	$	68,313	$	76,361
Distributions to third-party unitholders	$	53,118	$	51,256

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(1)	Subordination thresholds were not met for the Mississippian Trust I’s and Mississippian Trust II’s distributions, resulting in reduced distributions to the Company on its subordinated units for this period.

The following distributions are expected to be paid on or before May 30, 2014 to holders of record as of the close of business on May 15, 2014 (in thousands):



Royalty Trust	Total Distribution		Amount to be Distributed to Third-Party Unitholders
Mississippian Trust I	$	8,952	$	8,727
Permian Trust	29,871		23,940
Mississippian Trust II	20,849		17,357
Total	$	59,672	$	50,024

Open Oil and Natural Gas Commodity Derivative Contracts

The tables below present the open oil and natural gas commodity derivative contracts at March 31, 2014 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 Royalty Trust Derivatives Agreements

Natural Gas Collars Underlying the Royalty Trust Derivatives Agreements



	Notional (MMcf)	Collar Range
April 2014 - December 2014	706	$	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

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 March 31, 2014 and December 31, 2013 consisted of the following (in thousands):



	March 31, 2014			December 31, 2013
Cash and cash equivalents(1)	$	7,241		$	7,912
Accounts receivable, net	22,453			22,540
Derivative contracts	3,300			4,983
Total current assets	32,994			35,435
Investment in royalty interests(2)	1,325,942			1,325,942
Less: accumulated depletion and impairment(3)	(243,971		)	(186,095		)
	1,081,971			1,139,847
Derivative contracts	—			1,476
Total assets	$	1,114,965		$	1,176,758
Accounts payable and accrued expenses	$	2,157		$	3,393
Total liabilities	$	2,157		$	3,393

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(1)	Includes $3.0 million held by the trustee at March 31, 2014 and December 31, 2013 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.


(3)	Accumulated depletion and impairment at March 31, 2014 includes full cost ceiling limitation impairment allocated to the Royalty Trusts of $42.3 million. There was no full cost ceiling limitation impairment allocated to the Royalty Trusts as of December 31, 2013.

Royalty Trusts Ownership Interest

The Company’s beneficial interests in the Royalty Trusts at March 31, 2014 and December 31, 2013 were as follows:



	March 31, 2014		December 31, 2013
Mississippian Trust I	26.9	%	26.9	%
Permian Trust	25.0	%	28.5	%
Mississippian Trust II	37.6	%	37.6	%

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 sheet at December 31, 2013 consisted of the following (in thousands):



	December 31, 2013
Cash and cash equivalents	$	132
Accounts receivable, net	16
Prepaid expenses	32
Other current assets	109
Total current assets	289
Other property, plant and equipment, net	1,163
Total assets	$	1,452

Accounts payable and accrued expenses	$	129
Total liabilities	$	129

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 March 31, 2014 and December 31, 2013 included in the accompanying unaudited condensed consolidated balance sheets are as follows (in thousands):



	March 31, 2014		December 31, 2013
Accounts receivable due from PGC	$	1,050	$	741
Accounts payable due to PGC	$	3,827	$	3,634

Notional (MBbls)

Weighted Average
Fixed Price

April 2014 - December 2014

January 2015 - December 2015