QR Energy Announces Third Quarter 2013 Results, Full-Year Outlook and Increased Borrowing Base to $950 Million

QR Energy Announces Third Quarter 2013 Results, Full-Year Outlook and Increased 
Borrowing Base to $950 Million 
HOUSTON, TX -- (Marketwired) -- 11/06/13 --  QR Energy, LP ("QRE" or
"QR Energy") (NYSE: QRE) announced today its operating and financial
results for the third quarter of 2013 and provided fourth quarter and
full-year guidance. 
Highlights for the Third Quarter 2013 


 
--  Revenue was $126.0 million and Adjusted EBITDA was $69.0 million for
    the third quarter of 2013, up 20% and 13% from the second quarter of
    2013, respectively
    
    
--  Average production of 18,043 Boe per day, comprised of approximately
    70% crude oil and natural gas liquids, in-line with stated guidance of
    18,000 to 18,400 Boe per day, and up 5% from the second quarter of
    2013
    
    
--  Distributable Cash Flow was $35.0 million, an approximate 26% increase
    over the second quarter of 2013, resulting primarily from increased
    crude oil production and cash operating margins
    
    
--  Distribution Coverage Ratio of 1.1x
    
    
--  On August 6, 2013, QR Energy closed an acquisition of primarily oil
    properties located in East Texas (the "2013 East Texas Acquisition")
    from a private seller for $107.3 million, subject to customary
    purchase price adjustments. The transaction is a bolt-on acquisition
    of mature, legacy properties contiguous with existing QR Energy assets
    in the East Texas oil field.

  
Note: Adjusted EBITDA, Distributable Cash Flow and Distribution
Coverage Ratio are non-GAAP measures. Please see the definitions of
these measures and the reconciliation to the most comparable measures
calculated in accordance with GAAP in the "Non-GAAP Reconciliation"
section of this press release.  
Chief Executive Officer Alan L. Smith commented on the third quarter
results, "Our team did a great job executing the game plan of
maximizing performance from existing assets, managing costs and
assimilating the 2013 East Texas Acquisition assets into our
portfolio. The result of these efforts is evident in our increased
distribution coverage ratio compared to the second quarter of 2013.
For the remainder of the year, we will continue to enhance production
by targeting low-risk, oil-weighted capital projects, remain focused
on managing operating expenses, and actively pursue accretive
acquisition opportunities that fit our investment criteria of lower
decline assets."  
Results for the Third Quarter 2013  


 
--  Realized prices excluding commodity derivatives were $106.44 per
    barrel of oil, $3.48 per Mcf of natural gas and $38.02 per barrel of
    NGLs; Realized prices including commodity derivatives were $99.18 per
    barrel of oil and $5.87 per Mcf of natural gas
    
    
--  Achieved stated production guidance despite a pipeline force majeure
    event in our Ark-La-Tex area which negatively impacted production from
    mid-August through mid-October by approximately 2.4 Mmcfe per day (400
    Boe per day). The pipeline system is back in operation and is expected
    to have a minimal impact on fourth quarter cash flows.
    
    
--  Oil and natural gas production was 83% hedged with average price
    floors of $98.55 per barrel of oil and $6.03 per mmbtu of natural gas;
    NGLs are not currently hedged
    
    
--  Lease operating expenses were $21.59 per Boe, approximately $0.40 per
    Boe lower than the second quarter of 2013 as a result of operating
    efficiencies in the field and increased production
    
    
--  Cash general and administrative expenses were $9.3 million
    
    
--  Total capital expenditures were $24.8 million

  
Borrowing Base Increase 
On October 15, 2013, QR Energy's borrowing base was increased by its
lenders from $900 million to $950 million. This increase was a result
of the recent 2013 East Texas Acquisition in August 2013 and positive
performance revisions in the first half of the year.  
As of November 1, 2013, QR Energy had $600 million outstanding under
its revolving credit facility, not including $23.5 million of letters
of credit outstanding, resulting in $326.5 million of borrowing
availability. The next scheduled borrowing base redetermination under
the Credit Agreement is May 1, 2014. 
Cash Distribution 
On November 14, 2013, QR Energy will pay a cash distribution
attributable to the third quarter of 2013 of $0.4875 per unit for all
outstanding common units. This represents an annualized distribution
of $1.95 per common unit. 
Guidance 
The guidance set forth below is subject to all cautionary statements
and limitations described below and under the "Forward-Looking
Statements" section of this press release. In addition, estimates for
QR Energy's future production volumes are based on, among other
things, assumptions of capital expenditure levels and the assumption
that market demand and prices for oil and natural gas will continue
at levels that allow for economic production of these products. The
production, transportation and marketing of oil and natural gas are
extremely complex and are subject to disruption due to transportation
and processing availability, mechanical failure, human error, weather
and numerous other factors. Estimates are based on certain other
assumptions, such as well performance, which may vary significantly
from QR Energy's assumptions. Operating costs, which include major
maintenance costs, vary in response to changes in prices of services
and materials used in the operation of properties and the amount of
maintenance required. Operating costs, including taxes, utilities and
service company costs, move directionally with increases and
decreases in commodity prices and QR Energy cannot fully predict such
future commodity prices or operating costs. Capital expenditures are
based on current expectations as to the level of capital expenditures
that will be justified based upon the other assumptions set forth
below as well as expectations about other operating and economic
factors not set forth below. The guidance set forth below does not
constitute any form of guarantee, assurance or promise that the
matters indicated will actually be achieved. Rather, the guidance
simply sets forth QR Energy's best estimate today for these matters.
Estimates are based upon current expectations about the future and
based upon both stated and unstated assumptions. Actual conditions
and assumptions may change over the course of the year. 
Based upon current estimates, QR Energy expects the following
operating results for the fourth quarter and full year of 2013: 


 
                                                                            
                                             4Q 2013        Full Year 2013  
                                       ------------------ ------------------
Average net daily production (Boed)      18,500 - 18,900    17,900 - 18,000 
LOE and workover expenses (per Boe)      $20.50 - $22.50    $21.00 - $22.00 
Estimated maintenance capital                                               
 expenditures ($ millions)                    $17.5              $68.8      
Estimated total capital expenditures                                        
 ($ millions)                                  $21                $97       
Cash general and Administrative                                             
 expenses ($ millions)                      $9 - $10           $35 - $36    

 
Quarterly Report on Form 10-Q 
QR Energy's financial statements and related footnotes will be
available in the 10-Q for the quarter ended September 30, 2013, which
QR Energy will file with the Securities and Exchange Commission
("SEC") today. The 10-Q will be available on QR Energy's Investor
Relations website at http://ir.qrenergylp.com or on the SEC website
at www.sec.gov. 
Webcast and Conference Call 
QR Energy will host a webcast and conference call today at 9:00 a.m.
central time to discuss these results. 
Interested parties may join the webcast by visiting QR Energy's
Investor Relations website at http://ir.qrenergylp.com and clicking
on the webcast link or the conference call by dialing (877) 861-4516
or (706) 679-6295 five minutes before the call begins and providing
the conference ID 88061054.  
The webcast will be available on QR Energy's Investor Relations
website at http://ir.qrenergylp.com for 14 days following the call
and a telephonic replay will be available for 7 days following the
call by dialing (855) 859-2056 or (404) 537-3406 and providing the
conference ID 88061054. 
About QR Energy, LP 
QR Energy, LP is a publicly traded partnership engaged in the
acquisition, production and development of onshore crude oil and
natural gas properties in the United States. QR Energy is
headquartered in Houston, Texas. For more information, visit QR
Energy's website at www.qrenergylp.com.  
Forward-Looking Statements 
This press release may contain forward-looking statements within the
meaning of federal securities laws. QR Energy believes that its
expectations and forecasts are based on reasonable assumptions;
however, no assurance can be given that such expectations and
forecasts will prove to be correct. A number of factors could cause
actual results to differ materially from the expectations and
forecasts, anticipated results or other forward-looking information
expressed in this press release, including risks and uncertainties
regarding future results, capital expenditures, liquidity and
financial market conditions, sufficiency of cash from operations,
adverse market conditions and governmental regulations. For a more
complete list of these risk factors, please read QR Energy's filings
with the SEC, which are available on QR Energy's Investor Relations
website at http://ir.qrenergylp.com or on the SEC website at
www.sec.gov. 
Commodity Derivatives 
As of November 5, 2013, the notional volumes and prices of QR
Energy's commodity derivative contracts were as follows: 


 
                                                                            
----------------------------------------------------------------------------
                                                                            
                                Crude Oil                                   
               -------------------------------------------------------------
                                                                      Avg.  
                                                           WTS/WTI  Discount
                            Average         Floor  Ceiling  Basis  to NYMEX-
                      Swaps  Price Collars  Price   Price   Swaps     WTI   
     Term      Index Bbls/d ($/Bbl) Bbls/d ($/Bbl) ($/Bbl)  Bbl/d   ($/Bbl) 
----------------------------------------------------------------------------
Oct - Dec 2013  WTI   8,282  $98.34   -       -       -     2,400   ($1.90) 
Oct - Dec 2013  LLS   1,400  $99.51   -       -       -       -        -    
     2014       WTI   7,815  $95.65  425    $90.00 $106.50  2,400   ($2.10) 
     2014       LLS   1,900  $98.77   -       -       -       -        -    
     2015       WTI   7,356  $93.74 1,025   $90.00 $110.00    -        -    
     2016       WTI   6,293  $90.03 1,500   $80.00 $102.00    -        -    
     2017       WTI   5,547  $86.23   -       -       -       -        -    
                                                                            
----------------------------------------------------------------------------

 
Note: "WTI" is West Texas Intermediate crude oil; "LLS" is Louisiana
Light Sweet crude oil; "WTS" is West Texas Sour crude oil. 


 
                                                                            
----------------------------------------------------------------------------
                                                                            
                                           Natural Gas                      
                    --------------------------------------------------------
                                       Average            Floor    Ceiling  
                               Swaps    Price   Collars   Price     Price   
        Term          Index   MMBtu/d ($/MMBtu) MMBtu/d ($/MMBtu) ($/MMBtu) 
----------------------------------------------------------------------------
        2013        Henry Hub  30,337   $6.05     2,446   $6.50     $8.65   
        2014        Henry Hub  26,622   $6.18     4,966   $5.74     $7.51   
        2015        Henry Hub   7,191   $5.34    18,000   $5.00     $7.48   
        2016        Henry Hub  11,350   $4.27       630   $4.00     $5.55   
        2017        Henry Hub  10,445   $4.47       595   $4.00     $6.15   
                                                                            
----------------------------------------------------------------------------
                                                                            
 
                                                         
---------------------------------------------------------
                                                         
                                 Natural Gas             
                   --------------------------------------
                                                 Avg.    
                                               Discount  
                            Average   Basis       to     
                     Puts    Price    Swaps  NYMEX - HHub
        Term       MMBtu/d ($/MMBtu) MMBtu/d   ($/MMBtu) 
---------------------------------------------------------
        2013          -        -      18,446    ($0.17)  
        2014          -        -      17,066    ($0.19)  
        2015           420   $4.00    14,400    ($0.19)  
        2016        11,350   $4.00      -          -     
        2017        10,445   $4.00      -          -     
                                                         
---------------------------------------------------------

 
Selected Operating Data  


 
                                                                            
                      Three months                Nine months   Nine months 
                         ended      Three months     ended         ended    
                     September 30,     ended     September 30, September 30,
                          2013     June 30, 2013      2013          2012    
                     ------------- ------------- ------------- -------------
Production data:                                                            
  Oil (MBbls)                  992           872         2,777         2,251
  Natural gas (MMcf)         2,977         2,823         8,776        10,331
  NGLs (MBbls)                 172           228           592           555
                     ------------- ------------- ------------- -------------
Total production                                                            
 (MBoe)                      1,660         1,571         4,832         4,528
Production by area                                                          
 (Boed):                                                                    
  Permian Basin              6,063         5,959         6,071         6,561
  Ark-La-Tex                 6,503         6,660         6,554         5,088
  Mid-Continent              1,352         1,522         1,421         1,504
  Gulf Coast                 4,045         3,037         3,572         3,315
  Michigan                      80            86            82            58
                     ------------- ------------- ------------- -------------
Average daily                                                               
 production (Boed)          18,043        17,264        17,700        16,526
Prices:                                                                     
  Average NYMEX:                                                            
  Crude oil (per                                                            
   Bbl)              $      105.82 $       94.14 $       98.17 $       96.16
  Natural gas (per                                                          
   Mcf)              $        3.55 $        4.02 $        3.69 $        2.58
  Average realized including                                                
   commodity derivatives:                                                   
  Crude Oil (per                                                            
   Bbl)              $       99.18 $       99.35 $       98.73 $       99.78
  Natural gas (per                                                          
   Mcf)              $        5.87 $        6.40 $        5.99 $        5.54
  NGLs (per Bbl)     $       38.02 $       32.37 $       35.74 $       46.12
  Average realized excluding                                                
   commodity derivatives:                                                   
  Crude oil (per                                                            
   Bbl)              $      106.44 $       97.09 $      100.23 $       97.09
  Natural gas (per                                                          
   Mcf)              $        3.48 $        4.46 $        3.62 $        2.67
  NGLs (per Bbl)     $       38.02 $       32.37 $       35.74 $       46.12
                     ============= ============= ============= =============

 
Please see the financial statements and related footnotes in QR
Energy's 10-Q, as filed with the SEC. 
Consolidated Statements of Operations  


 
                                                                            
                    Three months                 Nine months   Nine months  
                       ended       Three months     ended         ended     
                   September 30,      ended     September 30, September 30, 
                        2013      June 30, 2013      2013          2012     
                   -------------  ------------- ------------- ------------- 
Revenues:                               (In thousands)                      
    Oil sales      $     105,586  $      84,666 $     278,327 $     218,539 
    Natural gas                                                             
     sales                10,353         12,592        31,798        27,604 
    NGLs sales             6,539          7,380        21,159        25,596 
    Disposal,                                                               
     processing                                                             
     and other             3,529            792         5,039         2,849 
                   -------------  ------------- ------------- ------------- 
  Total Revenue          126,007        105,430       336,323       274,588 
                   -------------  ------------- ------------- ------------- 
Operating                                                                   
 Expenses:                                                                  
  Lease operating                                                           
   expenses               35,835         34,541       104,953        82,506 
  Production and                                                            
   other taxes             7,785          7,083        22,573        19,018 
  Processing and                                                            
   transportation            811            865         2,142         2,535 
                   -------------  ------------- ------------- ------------- 
    Total                                                                   
     production                                                             
     expenses             44,431         42,489       129,668       104,059 
  Disposal and                                                              
   related                                                                  
   expenses                2,825              -         2,825             - 
  Depreciation,                                                             
   depletion and                                                            
   amortization           28,018         26,663        85,496        75,941 
  Accretion of                                                              
   asset                                                                    
   retirement                                                               
   obligations             1,921          1,758         5,411         4,109 
  General and                                                               
   administrative                                                           
   and other              11,204         10,098        31,398        30,906 
  Acquisition and                                                           
   transaction                                                              
   costs                     435             59         1,055         1,286 
                   -------------  ------------- ------------- ------------- 
    Total                                                                   
     operating                                                              
     expenses             88,834         81,067       255,853       216,301 
                   -------------  ------------- ------------- ------------- 
    Operating                                                               
     income               37,173         24,363        80,470        58,287 
Other income                                                                
 (expense):                                                                 
  Gain (loss) on                                                            
   commodity                                                                
   derivative                                                               
   contracts, net        (45,377)        49,523       (11,860)       52,001 
  Interest                                                                  
   expense, net          (14,624)       (10,270)      (35,947)      (31,946)
  Other income,                                                             
   net                     1,373              -         1,373             - 
                   -------------  ------------- ------------- ------------- 
Total other income                                                          
 (loss), net             (58,628)        39,253       (46,434)       20,055 
                   -------------  ------------- ------------- ------------- 
Income (loss)                                                               
 before income                                                              
 taxes                   (21,455)        63,616        34,036        78,342 
Income tax expense           (42)            (2)          (93)         (528)
Net income (loss)  $     (21,497) $      63,614 $      33,943 $      77,814 
                   -------------  ------------- ------------- ------------- 
Less: Net income                                                            
 attributable to                                                            
 noncontrolling                                                             
 interest          $         222  $           - $         222 $           - 
Net income (loss)                                                           
 attributable to                                                            
 QR Energy, LP     $     (21,719) $      63,614 $      33,721 $      77,814 
                   =============  ============= ============= ============= 
Net income (loss)                                                           
 per common unit   $       (0.57) $        0.89 $        0.01 $        0.49 
Adjusted EBITDA    $      68,991  $      61,073 $     193,368 $     201,013 
Distributable Cash                                                          
 Flow              $      34,952  $      27,813 $      94,492 $     113,225 
                   -------------  ------------- ------------- ------------- 

 
Note: Please see the financial statements and related footnotes in QR
Energy's 10-Q, as filed with the SEC. Adjusted EBITDA and
Distributable Cash Flow are non-GAAP measures. Please see the
definitions of these measures and the reconciliation to the most
comparable measures calculated in accordance with GAAP in the
"Non-GAAP Reconciliation" section of this press release. 
Consolidated Balance Sheet  


 
                                                                            
                                                          September 30, 2013
                                                          ------------------
                                                            (In thousands)  
                          ASSETS                                            
Current assets:                                                             
  Total current assets                                    $          119,881
Noncurrent assets:                                                          
  Total property and equipment, net                                1,575,808
  Derivative instruments                                              63,070
  Other assets                                                        39,778
                                                          ------------------
    Total noncurrent assets                                        1,678,656
                                                          ------------------
    Total assets                                          $        1,798,537
                                                          ==================
                                                                            
                                                                            
            LIABILITIES AND PARTNERS' CAPITAL                               
Current liabilities:                                                        
  Total current liabilities                               $           81,620
Noncurrent liabilities:                                                     
  Long-term debt                                                     896,464
  Derivative instruments                                               9,247
  Asset retirement obligations                                       140,853
  Other liabilities                                                   18,934
                                                          ------------------
    Total noncurrent liabilities                                   1,065,498
Partners' capital:                                                          
  Total QR Energy, LP partners' capital                              645,162
  Noncontrolling interest                                              6,257
                                                          ------------------
    Total liabilities and partners' capital               $        1,798,537
                                                          ==================

 
Note: Please see the financial statements and related footnotes in QR
Energy's 10-Q, as filed with the SEC. 
Non-GAAP Reconciliation  
QR Energy defines Adjusted EBITDA as net income from which it adds or
subtract net interest expense (including gains and losses on interest
rate derivative contracts), depreciation, depletion and amortization,
accretion of asset retirement obligations, gains or losses due to
effects of change in prices on natural gas imbalances, net gains or
losses on commodity derivative contracts, net cash received or paid
on the settlement of commodity derivative contracts, income tax
expense or benefit, other income or expense, interest expense,
impairments, non-cash general and administrative expense and
acquisition and transaction costs, non-cash pension and
postretirement expense or credit, and beginning with the third
quarter 2013, noncontrolling interest amounts attributable to each of
these items, which revert the calculation to the Adjusted EBITDA
attributable QR Energy. Prior period results have been revised to
conform to the current presentation. 
QR Energy defines Distributable Cash Flow as Adjusted EBITDA less
cash interest expense (including cash received or paid on interest
rate derivative contracts), distributions on its preferred units,
payments to its general partner in respect of its management
incentive fee and estimated maintenance capital expenditures, which
is calculated based on our estimate of the capital required to
maintain QR Energy's current production for five years, on average.
This estimate is made at least annually and whenever an event occurs
that is likely to result in a material adjustment to the amount of
our maintenance capital expenditures, such as a major acquisition or
the introduction of new governmental regulations that will impact our
business. 
QR Energy defines the Distribution Coverage Ratio for a given quarter
as the ratio of Distributable Cash Flow per outstanding unit
(including general partner units and Class B units and excluding
preferred units) to the actual cash distribution payable per
outstanding unit (including general partner units and Class B units
and excluding preferred units). Holders of the preferred units may
elect to convert the preferred units into common units at any time
after October 3, 2013, or sooner upon QR Energy's achievement of
certain trading price criteria. Please see QR Energy's 10-K for a
more fulsome description of the terms of the preferred units. 
Adjusted EBITDA, Distributable Cash Flow and the Distribution
Coverage Ratio are used by management of QR Energy to provide
additional information related to the performance of QR Energy's
business. Adjusted EBITDA provides information about the cash flow
generated by our assets, without regard to financing methods or
historical cost basis and the ability of our assets to generate
sufficient cash to pay interest costs and support our indebtedness.
Distributable Cash Flow and the Distribution Coverage Ratio provide
information comparing cash flows generated by us to cash
distributions we expect to pay to our unitholders and indicates to
investors whether or not we are generating cash flow at a level that
can sustain or support an increase in our quarterly distribution
rates. In addition, Adjusted EBITDA, Distributable Cash Flow and the
Distribution Coverage Ratio are quantitative standards used by
external users of our financial statements such as investors,
research analysts and others to assess QR Energy's performance and
liquidity without regard to capital structure. Adjusted EBITDA,
Distributable Cash Flow and the Distribution Coverage Ratio are not
presentations made in accordance with GAAP. Because Adjusted EBITDA,
Distributable Cash Flow and the Distribution Coverage Ratio exclude
some, but not all, items that affect net income and are defined
differently by different companies in our industry, our definitions
may not be comparable to similarly titled measures of other
companies. Adjusted EBITDA, Distributable Cash Flow and the
Distribution Coverage Ratio have important limitations as analytical
tools, and you should not consider them in isolation, or as a
substitute for net income, operating income, cash flow from operating
activities or any other measure of financial performance or liquidity
presented in accordance with GAAP.  


 
                                                                            
                                                                            
                  Three months   Three months   Nine months    Nine months  
                     ended          ended          ended          ended     
                 September 30,                 September 30,  September 30, 
                      2013      June 30, 2013       2013           2012     
                 -------------  -------------  -------------  ------------- 
Reconciliation                  (In thousands, except ratios)               
 of net income                                                              
 to Adjusted                                                                
 EBITDA,                                                                    
 Distributable                                                              
 Cash Flow and                                                              
 Distribution                                                               
 Coverage Ratio:                                                            
                                                                            
Net income       $     (21,497) $      63,614  $      33,943  $      77,814 
  Plus:                                                                     
Loss (gain) on                                                              
 commodity                                                                  
 derivative                                                                 
 contracts, net         45,377        (49,523)        11,860        (52,001)
Cash received                                                               
 (paid) to                                                                  
 settle                                                                     
 commodity                                                                  
 derivative                                                                 
 contracts, net            (85)         7,435         16,660         35,668 
Loss (gain) on                                                              
 effect of                                                                  
 change in                                                                  
 prices on gas                                                              
 imbalances               (137)        (1,365)          (576)            73 
Depletion,                                                                  
 depreciation                                                               
 and                                                                        
 amortization           28,018         26,663         85,496         75,941 
Accretion of                                                                
 asset                                                                      
 retirement                                                                 
 obligations             1,921          1,758          5,411          4,109 
Interest expense        14,624         10,270         35,947         31,946 
Other income            (1,373)             -         (1,373)             - 
Income tax                                                                  
 expense                    42              2             93            528 
Non-cash general                                                            
 and                                                                        
 administrative                                                             
 expense and                                                                
 acquisition and                                                            
 transaction                                                                
 costs                   2,369          2,219          6,175         26,935 
Noncontrolling                                                              
 interest                 (268)             -           (268)             - 
                 -------------  -------------  -------------  ------------- 
Adjusted EBITDA  $      68,991  $      61,073  $     193,368  $     201,013 
                                                                            
  Less:                                                                     
Cash interest                                                               
 expense               (11,764)       (11,494)       (34,335)       (24,417)
Estimated                                                                   
 maintenance                                                                
 capital                                                                    
 expenditures                                                               
 (1)                   (17,334)       (17,000)       (51,334)       (46,750)
Distributions to                                                            
 preferred                                                                  
 unitholders            (3,500)        (3,500)       (10,500)       (10,500)
Management                                                                  
 incentive fee          (1,441)        (1,266)        (2,707)        (6,121)
                 -------------  -------------  -------------  ------------- 
Distributable                                                               
 Cash Flow(2)    $      34,952  $      27,813  $      94,492  $     113,225 
                                                                            
Distributions to                                                            
 unitholders                                                                
 (other than                                                                
 holders of                                                                 
 preferred                                                                  
 units) (3)      $      31,970  $      31,975         95,935         65,542 
Distribution                                                                
 Coverage Ratio           1.1x           0.9x           1.0x           1.7x 
                                                                            
                 -------------  -------------  -------------  ------------- 
(1) Maintenance capital expenditures are those needed on average to         
 maintain production over a five-year period.                               
(2) Prior to any retained cash reserves established by QR Energy's general  
 partner's board of directors.                                              
(3) Nine month 2012 distributions exclude $4.2 million related to our first 
 quarter distribution on units issued in April 2012 because units were      
 issued to fund an acquisition for which QRE had no revenue in 1Q12. The    
 inclusion of the first quarter distribution on the units issued in April   
 would have resulted in a Distribution Coverage Ratio of 1.1x for the nine  
 months ended September 30, 2012.                                           

 
Note: Please see the financial statements and related footnotes in QR
Energy's 10-Q, as filed with the SEC. 
Investor Contacts: 
Josh Wannarka
Director of Investor Relations 
(713) 452-2990 
Cedric W. Burgher
Chief Financial Officer 
(713) 452-2200 
 
 
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