VALUEx Vail 2014
June 18-20
Thomas A. “Tomas” Stone
Newstone Investments, L.L.C.
© June 20, 2014 All rights reserved

• Upstream MLP with 11% current distribution yield that is tax advantaged
• Oil weighted production profile: 59% of production but 82% of revenue
• Strong sponsor in Quantum Energy (36.4% owner); CoB Don Wolf has
history of value creation
• Buyout of GP (and its incentive payments) eliminates non-pro rata returns,
lowers cost of capital
• Production hedged: >90% in ’14, >75% in ’15, >70% in 16, 50% in ‘17: Cash
Flow well protected
• Assets exclusively very mature fields with low and predictable production
declines (8-10% baseline)
• Company has grown reserves at >10% CAGR and production at >7% CAGR
since IPO, overcoming natural decline
• Horizontal drilling, downspacing & waterflood opportunities offer reserve
and production upside
• Recent incremental $80 million increase in 2014 CAPEX will lead to
increased production/FCF in 2015
• Distribution has increased from $1.65/year at 2010 IPO to current $1.95, 6%
• Distribution coverage ratio is 1.0x; increase in CAPEX likely leads to stronger
coverage and increased distribution

• Distribution Coverage ratio is only 1.0x
• Upstream MLPs are non-traditional and inherently more risky than traditional “toll
booth” MLPs, natural production decline means dilution & acquisition risk
• Until April 2014 buyout of GP incentive payments, sponsor overpaid: caveat emptor!
• Dilution coming: general partner buyout will cost 11.6 MM partnership units over next
4 years
• Potential Overhang: Sponsor and affiliates own almost 37% of QRE
• Recent incremental $80 million increase in 2014 CAPEX will not lead to increased FCF
until 2015
• Distribution has not increased for 8 quarters, Discretionary Cash Flow did not grow in
2013 and convertible preferred distribution steps up in 2015
• Oil and natural gas production mostly hedged for next three years: will not fully
participate in any near-term commodity price upside
• Commodity risk in out years: If oil, natural gas liquids and or natural gas prices fall, so
will Cash Flow
• Distribution Coverage and Maintenance Capital are malleable and potentially
controversial concepts
• Mr. Market has spoken: QRE has 11% distribution yield and punished $80 MM increase

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