•	Total estimated proved reserves: 9.9 MMBoe, 98% oil and 69% proved developed, both on a Boe basis.

	•	272 gross producing oil and natural gas wells (174 net wells) and 139 gross injection wells (85 net wells), 21 gross wells (14 net wells) shut-in or waiting on completion, 99% of our properties are operated by us, and 92% of our reserves were being produced under waterflood, both on a Boe basis.

 

This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including “Risk Factors” and the historical and unaudited pro forma financial statements and the notes to those financial statements. The information presented in this prospectus assumes that the underwriters do not exercise their option to purchase up to an additional 810,000 common units, unless otherwise indicated. As used in this prospectus, unless we indicate otherwise:

 

 

We include a glossary of some of the oil and natural gas terms used in this prospectus in Appendix B. Our estimated proved reserve information as of December 31, 2010 and September 30, 2011 is based on a report prepared by our reservoir engineering staff and audited by Cawley, Gillespie & Associates, Inc., our independent reserve engineers. A summary of our estimated proved reserve information as of September 30, 2011 prepared by our reservoir engineering staff and audited by Cawley, Gillespie & Associates, Inc. is included in this prospectus in Appendix C.

 

Overview

 

We are a Delaware limited partnership formed in July 2011 to own, operate, acquire, exploit and develop producing oil and natural gas properties in North America, with a focus on the Mid-Continent region of the United States. Our management team has significant industry experience, especially with waterflood projects and, as a result, our operations focus primarily on enhancing the development of producing oil properties through waterflooding. Through the continued development of our existing properties and through future acquisitions, we will seek to

increase our reserves and production in order to maintain and, over time, increase distributions to our unitholders. Also, in order to enhance the stability of our cash flow for the benefit of our unitholders, we will seek to hedge a significant portion of our production volumes through various commodity derivative contracts.

 

As of September 30, 2011, our total estimated proved reserves were 9.9 MMBoe, of which approximately 98% were oil and 69% were proved developed, both on a Boe basis. As of September 30, 2011, we operated 99% of our properties through our affiliate, Mid-Con Energy Operating, and 92% of our properties were being produced under waterflood, in each instance on a Boe basis. Our average net production for the month ended September 30, 2011 was approximately 1,343 Boe per day and our total estimated proved reserves had a reserve-to-production ratio of approximately 20 years. Our management team developed approximately 60% of our total reserves through new waterflood projects.

 

Our Properties

 

Our properties are located in the Mid-Continent region of the United States and primarily consist of mature, legacy onshore oil reservoirs with long-lived, relatively predictable production profiles and low production decline rates. Our core areas of operation are located in Southern Oklahoma, Northeastern Oklahoma and parts of Oklahoma and Colorado within the Hugoton Basin. As of September 30, 2011, approximately 91% of the properties associated with our estimated reserves, on a Boe basis, have been producing continuously since 1982 or earlier. Through the application of waterflooding, we believe these mature properties have attractive upside potential. Waterflooding, a form of secondary oil recovery, works by repressuring a reservoir through water injection and pushing or “sweeping” oil to producing wellbores. Based on the production estimates from our September 30, 2011 reserve report, the average estimated decline rate for our proved developed producing reserves is approximately 8.5% for 2012 and, on a compounded average decline basis, approximately 11% for the subsequent five years and approximately 10% thereafter.

 

The following table summarizes information by core area regarding our estimated oil and natural gas reserves as of September 30, 2011 and our average net production for the month ended September 30, 2011.

 

 

The following chart summarizes our pro forma total average net Boe production volumes on a monthly basis, and illustrates the 100% increase in our production volumes over the twelve months ended September 30, 2011. We achieved approximately 75% of this production increase primarily through ongoing waterflood response from existing development activities and approximately 25% of this production increase from workovers and acquisitions.

 

 

Our Hedging Strategy

 

Our hedging strategy seeks to reduce the impact to our cash flow from commodity price volatility. We intend to enter into commodity derivative contracts at times and on terms designed to maintain, over the long-term, a portfolio covering approximately 50% to 80% of our estimated oil production from proved reserves over a three-to-five year period at any given point in time. For the years ending December 31, 2011, 2012 and 2013, we have commodity derivative contracts covering approximately 37%, 53% and 30%, respectively, of our estimated oil production from proved reserves as of September 30, 2011. All of our derivative contracts for 2012 and 2013 are either swaps with fixed settlements or collars. The weighted average minimum prices on all of our derivative contracts for 2012 and 2013 are $101.18 and $100.14, respectively. A “collar” is a combination of a put option we purchase and a call option we sell. The put option portion of a collar is also referred to as a “floor.” A floor establishes a minimum average sale price for future oil production. In 2012, we have collars with a floor of $100.00 and swaps with fixed price settlements ranging from $100.97 to $104.28 covering approximately 11% and 42%, respectively, of our total proved estimated oil production. In 2013, we have collars with a floor of $100.00 and swaps with fixed price settlements ranging from $96.00 to $105.80 covering 9% and 21%, respectively, of our total proved estimated oil production.

 

We intend to enter into additional commodity derivative contracts in connection with material increases in our estimated production and at times when we believe market conditions or other circumstances suggest that it is prudent to do so as opposed to entering into commodity

derivative contracts at predetermined times or on prescribed terms. Additionally, we may take advantage of opportunities to modify our commodity derivative portfolio to change the percentage of our hedged production volumes or the duration of our hedge contracts when circumstances suggest that it is prudent to do so.

 

By removing a significant portion of price volatility associated with our estimated future oil production, we have mitigated, but not eliminated, the potential effects of changing oil prices on our cash flow from operations for those periods. For a further description of our commodity derivative contracts, please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Derivative Contracts.”

 

Our Business Strategies

 

Our primary business objective is to generate stable cash flow, which will allow us to make quarterly cash distributions to our unitholders at the initial quarterly distribution rate and, over time, to increase our quarterly cash distributions. To achieve our objective, we intend to execute the following business strategies:

 

 

For a more detailed description of our business strategies, please read “Business and Properties—Our Business Strategies.”

 

Our Competitive Strengths

 

We believe that the following competitive strengths will allow us to successfully execute our business strategies and achieve our objective of generating and growing cash available for distribution:

 

 

 

For a more detailed discussion of our competitive strengths, please read “Business and Properties—Our Competitive Strengths.”

 

Our Relationship with the Mid-Con Affiliates

 

In June 2011, management and Yorktown formed two limited liability companies, which we refer to collectively as the Mid-Con Affiliates, to acquire and develop oil and natural gas properties that are either undeveloped or that may require significant capital investment and development efforts before they meet our criteria for ownership. As these development projects mature, we expect to have the opportunity to acquire certain of these properties from the Mid-Con Affiliates. Through this relationship with the Mid-Con Affiliates, we plan to avoid much of the capital, engineering and geological risks associated with the early development of any of these properties we may acquire. However, the Mid-Con Affiliates may not be successful in indentifying or consummating acquisitions or in successfully developing the new properties they acquire. Further, the Mid-Con Affiliates are not obligated to sell any properties to us and they are not prohibited from competing with us to acquire oil and natural gas properties. Please read “Certain Relationships and Related Party Transactions—Review, Approval or Ratification of Transactions with Related Persons.”

 

Our Relationship with Yorktown

 

We have a valuable relationship with Yorktown, a private investment firm founded in 1991 and focused on investments in the energy sector. Since 2004, Yorktown has made several equity investments in our predecessor. Immediately following the consummation of this offering, Yorktown will own an approximate 49.9% limited partner interest in us, making it our largest unitholder, and will own a 50% interest in our affiliate Mid-Con Energy Operating. Also, Peter A. Leidel, a principal of Yorktown, will serve on our board of directors.

 

Yorktown currently has more than $3.0 billion in assets under management and Yorktown’s employees have extensive investment experience in the oil and natural gas industry. Yorktown’s employees review a large number of potential acquisitions and are involved in decisions relating to the acquisition and disposition of oil and natural gas assets by the various portfolio companies in which Yorktown owns interests. With their extensive investment experience in the oil and natural gas industry and their extensive network of industry relationships, we believe that Yorktown’s employees are well positioned to assist us in identifying and evaluating acquisition opportunities and in making strategic decisions. Yorktown is not obligated to sell any properties to us and they are not prohibited from competing with us to acquire oil and natural gas properties. Investment funds managed by Yorktown manage numerous other portfolio companies that are engaged in the oil and natural gas industry and, as a result, Yorktown may present acquisition opportunities to other Yorktown portfolio companies that compete with us.

 

An investment in our common units involves risks. Below is a summary of certain key risk factors that you should consider in evaluating an investment in our common units. This list is not exhaustive. Please read the full discussion of these risks and other risks described under “Risk Factors.”

Risks Related to Our Business

 

 

Risks Inherent in an Investment in Us

 

 

 

Tax Risks to Unitholders

 

 

The following transactions, which we refer to as the formation transactions, will occur at, or immediately prior to, the closing of this offering:

 

 

The number of common units that we will issue to the public and the Contributing Parties, as reflected in the fourth and fifth bullet points above, assume that the underwriters do not exercise their option to purchase up to an additional 810,000 common units. To the extent the underwriters exercise this option, the number of common units issued to the public (as reflected in the fourth bullet above) will increase by the aggregate number of common units purchased by the underwriters pursuant to such exercise, and the number of common units issued to the Contributing Parties (as reflected in the fifth bullet above) will decrease by the aggregate number of common units purchased by the underwriters pursuant to such exercise.

 

The diagram below depicts our organization and ownership after giving effect to the offering and the related formation transactions and assumes that the underwriters do not exercise their option to purchase additional common units.

 

 

 

 

We are managed and operated by the board of directors and executive officers of our general partner, Mid-Con Energy GP, LLC. Our unitholders will not be entitled to elect our general partner or its directors or otherwise participate in our management or operation. All of the executive officers of our general partner are also officers and/or directors of the Mid-Con Affiliates. For information about the executive officers and directors of our general partner, please read “Management.”

 

S. Craig George, the Executive Chairman of the board of directors of our general partner, Charles R. Olmstead, the Chief Executive Officer and a director of our general partner, and Jeffrey R. Olmstead, the President and Chief Financial Officer and a director of our general

partner, or collectively, the “Founders,” will each own one-third of the member interests in our general partner. As the holders of all of the member interests of our general partner, the Founders will control our general partner, will be entitled to appoint its entire board of directors and will receive all of the distributions our general partner receives in respect of its 2.0% general partner interest in us. Please see “Security Ownership of Certain Beneficial Owners and Management.”

 

Neither we, our general partner, nor our subsidiary have any employees. In connection with the closing of this offering, we and our general partner will enter into a services agreement with Mid-Con Energy Operating, pursuant to which Mid-Con Energy Operating will provide management, administrative and operational services to us. Although all of the employees that conduct our business are employed by Mid-Con Energy Operating, we sometimes refer to these individuals in this prospectus as our employees.

 

We will initially have one subsidiary, Mid-Con Energy Properties, that will hold title to our properties.

 

Our headquarters are located at 2501 North Harwood Street, Suite 2410, Dallas, Texas 75201. Our principal operating office is located at 2431 East 61st Street, Suite 850, Tulsa, Oklahoma 74136, and our telephone number is (918) 743-7575. Our website address is www.midconenergypartners.com and will be activated in connection with the closing of this offering. We expect to make our periodic reports and other information filed with or furnished to the Securities and Exchange Commission, which we refer to as the SEC, available free of charge through our website as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. Information on our website or any other website is not incorporated by reference into, and does not constitute a part of, this prospectus.

 

Under our partnership agreement, our general partner has a legal duty to manage us in a manner that is in, or not opposed to, the best interests of the holders of our common units. This legal duty, as modified by our partnership agreement, originates in statutes and judicial decisions and is commonly referred to as a “fiduciary duty.” However, the officers and directors of our general partner also have a fiduciary duty to manage the business of our general partner in a manner beneficial to its owners, the Founders. All of the executive officers of our general partner are also officers and/or directors of the Mid-Con Affiliates and will have economic interests in the Mid-Con Affiliates. In addition, Peter A. Leidel, a principal of Yorktown, will serve on our board of directors. Mr. Leidel has economic interests in Yorktown and its affiliates that manage, hold and own investments in other funds and companies that may compete with us. As a result of these relationships, conflicts of interest may arise in the future between us and our unitholders, on the one hand, and our general partner and its owners and affiliates, on the other hand. For example, our general partner is entitled to make determinations that affect our ability to generate the cash flow necessary to make cash distributions to our unitholders, including determinations related to:

 

 

 

For a more detailed description of the conflicts of interest and fiduciary duties of our general partner, please read “Risk Factors—Risks Inherent in an Investment in Us” and “Conflicts of Interest and Fiduciary Duties.”

 

Our partnership agreement can be amended with the consent of our general partner and the approval of the holders of a majority of our outstanding common units (including any common units held by affiliates of our general partner). Upon consummation of this offering, our general partner will continue to be owned by the Founders, and the Founders and Yorktown collectively will own and control the voting of an aggregate of approximately 58.6% of our outstanding common units. Assuming that we do not issue any additional common units and the Founders and Yorktown do not transfer their units, they will have the ability to amend our partnership agreement, including our policy to distribute all of our available cash to our unitholders, without the approval of any other unitholders. Please see “Risk Factors—Risks Inherent in an Investment in Us” and “The Partnership Agreement—Amendment of the Partnership Agreement.”

 

Partnership Agreement Modification of Fiduciary Duties

 

Our partnership agreement limits the liability of our general partner and reduces the fiduciary duties it owes to our unitholders. Our partnership agreement also restricts the remedies available to our unitholders for actions that might otherwise constitute a breach of the fiduciary duties that our general partner owes to our unitholders. By purchasing a common unit, our unitholders agree to be bound by the terms of our partnership agreement and, pursuant to the terms of our partnership agreement, are treated as having consented to various actions contemplated in our partnership agreement and conflicts of interest that might otherwise be considered a breach of fiduciary or other duties under Delaware law. Please read “Conflicts of Interest and Fiduciary Duties—Fiduciary Duties” for a description of the fiduciary duties imposed on our general partner by Delaware law, the material modifications of these duties contained in our partnership agreement and certain legal rights and remedies available to our unitholders.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

We were formed in July 2011 and do not have historical financial operating results. Therefore, in this prospectus, we present the historical financial statements of our predecessor, which consist of the consolidated historical financial statements of Mid-Con Energy Corporation through June 30, 2009 and the combined historical financial statements of Mid-Con Energy I, LLC and Mid-Con Energy II, LLC, thereafter. The following table presents summary historical financial data of our predecessor and summary pro forma financial data of Mid-Con Energy Partners, LP as of the dates and for the periods indicated. The summary historical financial data as of December 31, 2009 and 2010 and for the years ended June 30, 2008 and 2009, the six months ended December 31, 2009 and the year ended December 31, 2010 are derived from the audited historical financial statements of our predecessor included elsewhere in this prospectus. The summary historical financial data as of September 30, 2011 and for the nine months ended September 30, 2010 and 2011 are derived from the unaudited historical combined financial statements of our predecessor included elsewhere in this prospectus. These historical financial statements have been restated to correct errors discovered in the calculation of depreciation, depletion, and amortization and impairment of proved properties for all periods prior to September 30, 2011, as well as the expensing of certain geological and geophysical costs by Mid-Con Energy I, LLC for the six months ended December 31, 2009.

 

The summary unaudited pro forma financial data as of September 30, 2011 and for the nine months ended September 30, 2011 and the year ended December 31, 2010 are derived from the unaudited pro forma condensed financial statements of our predecessor included elsewhere in this prospectus. Our unaudited pro forma condensed financial statements give pro forma effect to the following:

 

The unaudited pro forma balance sheet data assume the events listed above occurred as of September 30, 2011. The unaudited pro forma statement of operations data for the nine months ended September 30, 2011 and the year ended December 31, 2010 assume the items listed above occurred as of January 1, 2010. We have not given pro forma effect to incremental general and administrative expenses of approximately $3.0 million that we expect to incur annually as a result of being a publicly traded partnership.

 

You should read the following table in conjunction with “—Formation Transactions and Partnership Structure,” “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the historical combined financial statements of our predecessor and the unaudited pro forma condensed financial statements of Mid-Con Energy Partners, LP and the notes thereto included elsewhere in this prospectus. Among other things, those historical financial statements and unaudited pro forma condensed financial statements include more detailed information regarding the basis of presentation for the following information.

The following table presents a non-GAAP financial measure, Adjusted EBITDA, which we use in evaluating the financial performance and liquidity of our business. This measure is not calculated or presented in accordance with generally accepted accounting principles, or GAAP. We explain this measure below and reconcile it to the most directly comparable financial measures calculated and presented in accordance with GAAP.

 

 

 

 

We include in this prospectus the non-GAAP financial measure Adjusted EBITDA and provide our calculation of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income and net cash from operating activities, our most directly comparable financial measures calculated and presented in accordance with GAAP. We define Adjusted EBITDA as net income (loss):

 

 

 

 

 

Adjusted EBITDA is used as a supplemental financial measure by our management and by external users of our financial statements, such as industry analysts, investors, lenders, rating agencies and others, to assess:

 

 

In addition, management uses Adjusted EBITDA to evaluate actual cash flow available to pay distributions to our unitholders, develop existing reserves or acquire additional oil properties.

 

Adjusted EBITDA should not be considered an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Our Adjusted EBITDA may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted EBITDA in the same manner. The following table presents our reconciliation of Adjusted EBITDA to Net Income. The table below further presents a reconciliation of Adjusted EBITDA to cash flow from operating activities, our most directly comparable GAAP financial measure, for each of the periods indicated.

Reconciliation of Adjusted EBITDA to Net Income