1. Organization and Basis of Presentation

Nature of Business

     American Midstream Partners, LP (the “Partnership”) was formed on August 20, 2009 (“date of inception”) as a Delaware limited partnership for the purpose of acquiring and operating certain natural gas pipeline and processing businesses. We provide natural gas gathering, treating, processing, marketing and transportation services in the Gulf Coast and Southeast regions of the United States. We hold our assets in a series of wholly owned limited liability companies as well as a limited partnership. Our capital accounts consist of general partner interests and limited partner interests.

     On August 1, 2011, we closed our initial public offering (“IPO”) of 3,750,000 common units at an offering price of $21 per unit. After deducting underwriting discounts and commissions of approximately $4.9 million paid to the underwriters, estimated offering expenses of approximately $4.1 million and a structuring fee of approximately $0.6 million, the net proceeds from our initial public offering were approximately $69.1 million. We used all of the net offering proceeds from our initial public offering for the uses described in our final prospectus dated July 26, 2011 (the “Prospectus”) filed with the Securities and Exchange Commission pursuant to Rule 424 on July 27, 2011.

     Immediately following the repayment of the outstanding balance under our $85 million credit facility with net proceeds of the IPO we terminated our $85 million credit facility and entered into a new $100 million revolving credit facility.

     We are controlled by our general partner, American Midstream GP, LLC, which is a wholly owned subsidiary of AIM Midstream Holdings, LLC.

     Our interstate natural gas pipeline assets transport natural gas through Federal Energy Regulatory Commission (the “FERC”) regulated interstate natural gas pipelines in Louisiana, Mississippi, Alabama and Tennessee. Our interstate pipelines include:

	•		American Midstream (Midla), LLC, which owns and operates approximately 370 miles of interstate pipeline that runs from the Monroe gas field in northern Louisiana south through Mississippi to Baton Rouge, Louisiana.
	•		American Midstream (AlaTenn), LLC, which owns and operates more than approximately 295 miles of interstate pipeline that runs through the Tennessee River Valley from Selmer, Tennessee to Huntsville, Alabama and serves an eight county area in Alabama, Mississippi and Tennessee.

Basis of Presentation

     These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The year-end balance sheet data was derived from audited financial statements but does not include disclosures required by GAAP for annual periods. The unaudited consolidated financial statements for the three months and six months ended June 30, 2011 and 2010 include all adjustments and disclosures that we believe are necessary for a fair statement of the results for the interim periods.

     Our financial results for the three months and six months ended June 30, 2011 are not necessarily indicative of the results that may be expected for the full years ending December 31, 2011. These unaudited consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our prospectus.

     We have made reclassifications to amounts reported in prior period consolidated financial statements to conform to our current period presentation. We made a reclassification $0.2 million from “selling, general and administrative expenses” to “direct operating expenses” in our consolidated statement of operations for the three months ended March 31, 2010. We made a reclassification of ($0.1) million from “revenue” to “unrealized gain (loss) on commodity derivatives” in our consolidated statements of income for the three month periods ended March 31, 2011. Neither of these reclassifications had an impact on net income for the periods previously reported.

2. Summary of Significant Accounting Policies

Revenue Recognition and the Estimation of Revenues and Cost of Natural Gas

     We recognize revenue when all of the following criteria are met: (1) persuasive evidence of an exchange arrangement exists, (2) delivery has occurred or services have been rendered, (3) the price is fixed or determinable and (4) collectability is reasonably assured. We record revenue and cost of product sold on a gross basis for those transactions where we act as the principal and take title to natural gas, NGLs or condensates that are purchased for resale. When our customers pay us a fee for providing a service such as gathering, treating or transportation, we record those fees separately in revenues. For the three months and six months ended June 30, 2011 and 2010, respectively, the Partnership recognized the following revenues by category:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2011				2010				2011				2010
Revenue
Transportation – firm		$	2,177			$	2,051			$	5,495			$	5,362
Transportation – interruptible			818				837				1,783				1,568
Sales of natural gas, NGL’s and condensate			62,781				44,767				125,677				95,428
Other			254				135				414				144
Realized gain (loss) on early termination of commodity derivatives			(2,998	)			—				(2,998	)			—
Unrealized gain (loss) on commodity derivatives			2,602				—				(972	)			—
Total revenue		$	65,634			$	47,790			$	129,399			$	102,502

Limited Partners’ Net Income (loss) Per Common Unit

     We compute limited partners’ net income (loss) per common unit by dividing our limited partners’ interest in net income (loss) by the weighted average number of common units outstanding during the period. The overall computation, presentation and disclosure All per unit computation give effect to the retroactive application of the reverse unit split as described in Note 14, “Subsequent Events”, requirements for our limited partners’ net income (loss) per common unit are made in accordance with the “Earnings per Share” Topic of the Codification.

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendment, which becomes effective during interim and annual periods beginning after December 15, 2011, requires additional disclosures with regard to fair value measurements categorized within Level 3 of the fair value hierarchy. Early adoption is not permitted.

     In June 2011, the FASB issued Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The amendment, which becomes effective during interim and annual periods beginning after December 15, 2011, stipulates the financial statement presentation requirements for other comprehensive income.

3. Concentration of Credit Risk and Trade Accounts Receivable

     We maintain allowances for potentially uncollectible accounts receivable. For the six month period ended June 30, 2011 and 2010, no allowances on accounts receivable or write-offs were recorded.

     Enbridge Marketing (US) L.P., ConocoPhillips Corporation and ExxonMobil Corporation were significant customers, representing at least 10% of our consolidated revenue, accounting for $10.9 million, $25.7 million and $10.1 million, respectively, of our consolidated revenue in the consolidated statement of operations in the three months ended June 30, 2011 and $23.0 million, $54.2 million and $19.7 million, respectively, for the six months ended June 30, 2011.

4. Derivatives

Commodity Derivatives

     In June 2011, the Board of Directors of our general partner determined that we would gain operational and strategic flexibility from cancelling our then-existing swap contracts and entering into new swap contracts with an existing counterparty that extends through the end of 2012. A $3.0 million realized loss resulting from the early termination of these swap contracts was recorded in the three and six months ended June 30, 2011.

     The Partnership may be required to post collateral with its counterparty in connection with its derivative positions. As of June 30, 2011, the Partnership had no posted collateral with this counterparty. The counterparty is not required to post collateral with us in connection with their derivative positions. Netting agreements are in place with the Partnership’s counterparty allowing the Partnership to offset its commodity derivative asset and liability positions.

     As of June 30, 2011, the aggregate notional volumes of our commodity derivates was 17.8 million gallons.

Interest Rate Derivatives

     The Partnership also utilizes interest rate caps to protect against changes in interest rates on its floating rate debt.

     At June 30, 2011, the Partnership had $60.7 million outstanding under its credit facility, with interest accruing at a rate plus an applicable margin. In order to mitigate the risk of changes in cash flows attributable to changes in market interest rates, the Partnership has entered into interest rate caps that mitigate the risk of increases in interest rates. As of June 30, 2011, we had interest rate caps with a notional amount of $23.5 million that effectively fix the base rate on that portion of our debt, with a fixed maximum rate of 4%.

     For accounting purposes, no derivative instruments were designated as hedging instruments and were instead accounted for under the mark-to-market method of accounting, with any changes in the mark-to-market value of the derivatives recorded in the balance sheets and through earnings, rather than being deferred until the anticipated transactions affect earnings. The use of mark-to-market accounting for financial instruments can cause noncash earnings volatility due to changes in the underlying commodity prices indices or interest rates.

     As of June 30, 2011 and December 31, 2010, the fair value associated with the Partnership’s derivative instruments were recorded in our financial statements, under the caption Risk management assets and Risk management liabilities, as follows:

		June 30,				December 31,
		2011				2010
		(in thousands)
Risk management assets:
Commodity derivatives		$	392			$	—
Interest rate derivatives			—				—
		$	392			$	—
Risk management liabilities:
Commodity derivatives		$	694			$	—
Interest rate derivatives			—				—
		$	694			$	—

     We recorded the following unrealized mark-to-market gains (losses):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2011				2010				2011				2010
						(in thousands)
Commodity derivatives		$	2,602			$	—			$	(972	)		$	—
Interest rate derivatives			—				(7	)			—				(15	)
		$	2,602			$	(7	)		$	(972	)		$	(15	)

Fair Value Measurements

     The Partnership’s interest rate caps and commodity derivatives discussed above were classified as Level 3 derivatives for all periods presented.

     The table below includes a roll forward of the balance sheet amounts (including the change in fair value) for financial instruments classified by us within Level 3 of the valuation hierarchy. When a determination is made to classify a financial instrument within Level 3 of the valuation hierarchy, the determination is based upon the significance of the unobservable factors to the overall fair value measurement. Level 3 financial instruments typically include, in addition to the unobservable or Level 3 components, observable components (that is, components that are actively quoted and can be validated to external sources). Contracts classified as level 3 are valued using price inputs available from public markets to the extent that the markets are liquid for the relevant settlement periods.

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2011				2010				2011				2010
						(in thousands)
Fair value asset (liability), beginning		$	(2,904	)		$	57			$	—			$	77
Total realized gain (loss) on early termination of commodity derivatives			(2,998	)			—				(2,998	)			(20	)
Total unrealized gain (loss) on commodity derivatives			2,602				—				(972	)			—
Purchases			—				308				670				308
Settlements			2,998				(21	)			2,998				(21	)
Fair value asset (liability), ending		$	(302	)		$	344			$	(302	)		$	344

     Also included in revenue were ($0.6) million and ($0.9) million in realized gains (losses) for the three and six months ended June 30, 2011, respectively, representing our monthly swap settlements. No such losses were recorded for the three and six months ended June 30, 2010.

5. Property, Plant and Equipment, Net

     Property, plant and equipment, net, as of June 30, 2011 and December 31, 2010 were as follows:

						June 30,				December 31,
		Useful Life				2011				2010
						(in thousands)
Land						$	41			$	41
Buildings and improvements			4 to 40				2,527				2,523
Processing and treating plants			8 to 40				11,960				11,954
Pipelines			5 to 40				146,078				143,805
Compressors			4 to 20				7,407				7,163
Equipment			8 to 20				1,966				1,711
Computer software			5				1,463				1,390
Total property, plant and equipment							171,442				168,587
Accumulated depreciation							(31,306	)			(21,779	)
Property, plant and equipment, net						$	140,136			$	146,808

     Of the gross property, plant and equipment balances at June 30, 2011 and December 31, 2010, $24.3 million was related to AlaTenn and Midla, our FERC regulated interstate assets.

6. Asset Retirement Obligations

     We record a liability for the fair value of asset retirement obligations and conditional asset retirement obligations that we can reasonably estimate, on a discounted basis, in the period in which the liability is incurred. We collectively refer to asset retirement obligations and conditional asset retirement obligations as ARO. Typically, we record an ARO at the time the assets are installed or acquired, if a reasonable estimate of fair value can be made. In connection with establishing an ARO, we capitalize the costs as part of the carrying value of the related assets. We recognize an ongoing expense for the interest component of the liability as part of depreciation expense resulting from changes in the value of the ARO due to the passage of time. We depreciate the initial capitalized costs over the useful lives of the related assets. We extinguish the liabilities for an ARO when assets are taken out of service or otherwise abandoned.

     During the year ended December 31, 2010, we recognized $6.1 million of AROs included in other liabilities for specific assets that we intend to retire for operational purposes. We recorded accretion expense, which is included in depreciation expense, of $0.3 million and $0.3 million in our consolidated statements of operations for the three months ended June 30, 2011 and 2010, respectively, and $0.7 million and $0.6 million in our consolidated statements of operations for the six months ended June 30, 2011 and 2010, respectively, related to these AROs.

     No assets were legally restricted for purposes of settling our ARO during the six months ended June 30, 2011 and 2010. Following is a reconciliation of the beginning and ending aggregate carrying amount of our ARO liabilities for the three and six months ended June 30, 2011 and 2010, respectively.

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2011				2010				2011				2010
						(in thousands)
Balance at beginning of period		$	7,574			$	6,361			$	7,249			$	—
Additions			—				—				—				6,084
Expenditures			—				(5	)			(8	)			(5	)
Accretion expense			347				290				680				567
Balance at end of period		$	7,921			$	6,646			$	7,921			$	6,646

7. Long-Term Debt

     On November 4, 2009, we entered into an $85 million secured credit facility (“credit facility”) with a consortium of lending institutions. The credit facility is composed of a $50 million term loan facility and a $35 million revolving credit facility.

     Our outstanding borrowings under the credit facility at June 30, 2011 and December 31, 2010, respectively, were:

		June 30,				December 31,
		2011				2010
		(in thousands)
Term loan facility		$	42,000			$	45,000
Revolving loan facility			18,700				11,370
			60,700				56,370
Less: current portion			8,000				6,000
		$	52,700			$	50,370

     At June 30, 2011 and December 31, 2010, letters of credit outstanding under the credit facility were $0.6 million.

     The credit facility provides for a maximum borrowing equal to the lesser of (i) $85 million less the required amortization of term loan payments and (ii) 3.50 times adjusted consolidated EBITDA. We may elect to have loans under the credit facility bear interest either (i) at a Eurodollar-based rate with a minimum of 2.0% plus a margin ranging from 3.25% to 4.0% depending on our total leverage ratio then in effect, or (ii) at a base rate (the greater of (i) the daily adjusting LIBOR rate and (ii) a Prime-based rate which is equal to the greater of (A) the Prime Rate and (B) an interest rate per annum equal to the Federal Funds Effective Rate in effect that day, plus one percent) plus a margin ranging from 2.25% to 3.00% depending on the total leverage ratio then in effect. We also pay a facility fee of 1.0% per annum. In December 2009, we entered into an interest rate cap with participating lenders with a $23.5 million notional amount at June 30, 2011 that effectively caps our Eurodollar-based rate exposure on that portion of our debt at a maximum of 4.0%. For the six months ended June, 2011 and 2010, the weighted average interest rate on borrowings under our credit facility was approximately7.70% and 7.41%, respectively.

     Our obligations under the credit facility are secured by a first mortgage in favor of the lenders in our real property. The terms of the credit facility include covenants that restrict our ability to make cash distributions and acquisitions in some circumstances. The remaining principal balance of loans and any accrued and unpaid interest will be due and payable in full on the maturity date, November 3, 2012. The term loan facility also provides for quarterly principal installment payments as described below:

Year		Amount
		(in thousands)
2011		$	3,000
2012			39,000
		$	42,000

     The credit facility also contains customary representations and warranties (including those relating to organization and authorization, compliance with laws, absence of defaults, material agreements and litigation) and customary events of default (including those relating to monetary defaults, covenant defaults, cross defaults and bankruptcy events). The primary financial covenants contained in the credit facility are (i) a total leverage ratio test (not to exceed 3.50 times) and a minimum interest coverage ratio test (not less than 2.50 times). We were in compliance with all of the covenants under our credit facility as of June 30, 2011.

     As described in Note 14, “Subsequent Events”, on August 1, 2011 and in connection with the IPO, we paid off the amounts outstanding under our $85 million credit facility and entered into a $100 million revolving credit facility with Bank of America, and other financial institutions party thereto. This new credit facility matures August 1, 2016.

Fair Market Value of Financial Instruments

     The Partnership used various assumptions and methods in estimating the fair values of its financial instruments. The carrying amounts of cash and cash equivalents and accounts receivable approximated their fair value due to the short-term maturity of these instruments. The carrying amount of the Partnership’s credit facility approximates fair value, because the interest rate on the facility is variable.

8. Partners’ Capital

     Our capital accounts are comprised of a 2% general partner interest and 98% limited partner interests. Our limited partners have limited rights of ownership as provided for under our partnership agreement and, as discussed below, the right to participate in our distributions. Our general partner manages our operations and participates in our distributions, including certain incentive distributions pursuant to the incentive distribution rights that are nonvoting limited partner interests held by our general partner.

     The number of units outstanding were as follows:

		June 30,				December 31,
		2011				2010
		(in thousands)
Common units			5,378				5,363
General partner units			109				109

The outstanding units noted above reflect the retroactive treatment of the reverse unit split described in Note 14, “Subsequent Events”.

Distributions

     The Partnership made distributions of $7.3 million and $5.3 million for the six months ended June 30, 2011 and 2010, respectively. The Partnership made no distributions in respect of our general partner’s incentive distribution rights.

     In August 2011, the partnership made on aggregate distribution of $33.7 million, on a Prorata basis, to participants in our long-term incentive program holding common units AIM Midstream Holdings and our general Partner. See Note 14 “Subsequent Events.”

9. Long-Term Incentive Plan

     Our general partner manages our operations and activities and employs the personnel who provide support to our operations. On November 2, 2009, the board of directors of our general partner adopted a long-term incentive plan for its employees and consultants and directors who perform services for it or its affiliates. On May 25, 2010, the board of directors of our general partner adopted an amended and restated long-term incentive plan (as amended, the “LTIP”). The LTIP currently permits the grant of awards in the form of Partnership units, which may include distribution equivalent rights (“DER“s), covering an aggregate of 303,601 of our units. A DER entitles the grantee to a cash payment equal to the cash distribution made by the Partnership with respect to a unit during the period such DER is outstanding. At June 30, 2011 and December 31, 2010, 34,514 and 53,928 units, respectively, were available for future grant under the LTIP giving retroactive treatment to the reverse unit split in advance of our IPO as discussed in Note 14 “Subsequent Events”.

     Ownership in the awards is subject to forfeiture until the vesting date. The LTIP is administered by the board of directors of our general partner. The board of directors of our general partner, at its discretion, may elect to settle such vested phantom units with a number of units equivalent to the fair market value at the date of vesting in lieu of cash. Although, our general partner has the option to settle in cash upon the vesting of phantom units, our general partner does not intend to settle these awards in cash. Although other types of awards are contemplated under the LTIP, all currently outstanding awards are phantom units without DERs.

     Grants issued under the LTIP veste in increments of 25% on each of the first four anniversary dates of the date of the grant and do not contain any other restrictive conditions related to vesting other than continued employment.

     During 2011, the fair value of the grants issued was calculated by the general partner based on several valuation models, including: a DCF model, a comparable company multiple analysis and a comparable recent transaction multiple analysis. As it relates to the DCF model, the model includes certain market assumptions related to future throughput volumes, projected fees and/or prices, expected costs of sales and direct operating costs and risk adjusted discount rates. Both the comparable company analysis and recent transaction analysis contain significant assumptions consistent with the DCF model, in addition to assumptions related to comparability, appropriateness of multiples (primarily based on EBITDA and DCF) and certain assumptions in the calculation of enterprise value.

     The following table summarizes our unit-based awards for each of the periods indicated, in units:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2011				2010				2011				2010
Outstanding at beginning of period			209,824				237,054				205,864				175,236
Granted			—				—				19,414				61,818
Converted			—				—				(15,454	)			—
Outstanding at end of period			209,824				237,054				209,824				237,054
Grant date fair value per share		$	10.00 to $13.67			$	10.00			$	10.00 to $13.67			$	10.00

     The fair value of our phantom units, which are subject to equity classification, is based on the fair value of our units at each balance sheet date. Compensation costs related to these awards for the three months ended June 30, 2011 and 2010 was $2.2 million and $0.5 million, respectively, and for the six months ended June 30, 2011 and 2010 was $2.7 million and $0.8 million, respectively, which is classified as equity compensation expense in the consolidated statement of operations and the noncash portion in partners’ capital on the consolidated balance sheet.

     The total compensation cost related to nonvested awards not yet recognized on June 30, 2011 and December 31, 2010 was $2.4 million and $3.8 million, respectively, and the weighted average period over which this cost is expected to be recognized is approximately 3 years.

10. Commitments and Contingencies

     We are subject to federal and state laws and regulations relating to the protection of the environment. Environmental risk is inherent to natural gas pipeline operations and we could, at times, be subject to environmental cleanup and enforcement actions. We attempt to manage this environmental risk through appropriate environmental policies and practices to minimize any impact our operations may have on the environment.

     Future non-cancelable commitments related to certain contractual obligations as of June 30, 2011 are presented below:

		Payments Due by Period (in thousands)
		Total				2011				2012				2013				2014				2015				Thereafter
Operating leases and service contract		$	2,061			$	287			$	415			$	361			$	377			$	367			$	254
ARO			7,921				—				—				—				—				—				7,921
Total		$	9,982			$	287			$	415			$	361			$	377			$	367			$	8,175

     Total expenses related to operating leases, asset retirement obligations, land site leases and right-of-way agreements were:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2011				2010				2011				2010
						(in thousands)
Operating leases		$	152			$	211			$	401			$	318
ARO			—				5				8				5
		$	152			$	216			$	409			$	323

     Employees of our general partner are assigned to work for us. Where directly attributable, the costs of all compensation, benefits expenses and employer expenses for these employees are charged directly by our general partner to American Midstream, LLC which, in turn, charges the appropriate subsidiary. Our general partner does not record any profit or margin for the administrative and operational services charged to us. During the three months ended June 30, 2011 and 2010, administrative and operational services expenses of $3.4 million and $1.8 million, respectively, were charged to us by our general partner. During the six months ended June 30, 2011 and 2010, administrative and operational services expenses of less than $5.4 million and $3.3 million, respectively, were charged to us by our general partner.

     We have entered into an advisory services agreement with American Infrastructure MLP Management, L.L.C., American Infrastructure MLP PE Management, L.L.C., and American Infrastructure MLP Associates Management, L.L.C., as the advisors. The agreement provides for the payment of $0.3 million in 2010 and annual fees of $0.3 million plus annual increases in proportion to the increase in budgeted gross revenues thereafter. In exchange, the advisors have agreed to provide us services in obtaining equity, debt, lease and acquisition financing, as well as providing other financial, advisory and consulting services. For each of the three months ended June 30, 2011 and 2010, less than $0.1 million, had been recorded to selling, general and administrative expenses under this agreement. For each of the six months ended June 30, 2011 and 2010, less than $0.1 million, had been recorded to selling, general and administrative expenses under this agreement.

     As described in Note 14, “Subsequent Events”, on August 1, 2011 and in connection with our IPO, we terminated the advisory services agreement between our subsidiary, American Midstream, LLC, and affiliates of American Infrastructure MLP Fund, L.P. in exchange for a payment of $2.5 million.

12. Reporting Segments

     Our operations are located in the United States and are organized into two reporting segments: (1) Gathering and Processing, and (2) Transmission.

Gathering and Processing

     Our Gathering and Processing segment provides “wellhead to market” services to producers of natural gas and oil, which include transporting raw natural gas from the wellhead through gathering systems, treating the raw natural gas, processing raw natural gas to separate the NGLs and selling or delivering pipeline quality natural gas and NGLs to various markets and pipeline systems.

Transmission

     Our Transmission segment transports and delivers natural gas from producing wells, receipt points or pipeline interconnects for shippers and other customers, including local distribution companies, or LDCs, utilities and industrial, commercial and power generation customers.

     These segments are monitored separately by management for performance and are consistent with internal financial reporting. These segments have been identified based on the differing products and services, regulatory environment and the expertise required for these operations. Gross margin is a performance measure utilized by management to monitor the business of each segment.

     The following tables set forth our segment information:

		Gathering
		and
		Processing				Transmission				Total
						(in thousands)
Three months ended June 30, 2011
Revenue		$	49,111			$	16,919			$	66,030
Segment gross margin (a),(b)			7,926				2,691				10,617
Realized gain (loss) on early termination of commodity derivatives			(2,998	)			—				(2,998	)
Unrealized gain (loss) on commodity derivatives			2,602				—				2,602
Direct operating expenses											3,105
Selling, general and administrative expenses											2,663
Equity compensation expense											2,184
Depreciation expense											5,170
Interest expense											1,281
Net income (loss)											(4,182	)

		Gathering
		and
		Processing				Transmission				Total
						(in thousands)
Three months ended June 30, 2010
Revenue		$	38,039			$	9,751			$	47,790
Segment gross margin (a)			5,639				3,308				8,947
Direct operating expenses											3,346
Selling, general and administrative expenses											1,560
Equity compensation expense											537
Depreciation expense											4,982
Interest expense											1,375
Net income (loss)											(2,853	)

		Gathering
		and
		Processing				Transmission				Total
						(in thousands)
Six months ended June 30, 2011
Revenue		$	97,269			$	36,100			$	133,369
Segment gross margin (a),(b)			16,167				6,836				23,003
Realized gain (loss) on early termination of commodity derivatives			(2,998	)			—				(2,998	)
Unrealized gain (loss) on commodity derivatives			(972	)			—				(972	)
Direct operating expenses											6,163
Selling, general and administrative expenses											5,152
Equity compensation expense											2,658
Depreciation expense											10,207
Interest expense											2,545
Net income (loss)											(7,692	)

		Gathering
		and
		Processing				Transmission				Total
						(in thousands)
Six months ended June 30, 2010
Revenue		$	84,663			$	17,839			$	102,502
Segment gross margin (a)			11,737				6,958				18,695
Direct operating expenses											6,273
Selling, general and administrative expenses											3,258
Equity compensation expense											791
Depreciation expense											9,948
Interest expense											2,732
Net income (loss)											(4,307	)

     Asset information including capital expenditures, by segment is not included in reports used by our management in its monitoring of performance and therefore is not disclosed.

     For the purposes of our Gathering and Processing segment, for the three months ended June 30, 2011 and 2010, Enbridge Marketing (US) L.P., ConocoPhillips Corporation and Dow Hydrocarbons and Resources represented significant customers, each representing more than 10% of our segment revenue for our Gathering and processing segment. Our segment revenue derived from Enbridge Marketing (US) L.P., ConocoPhillips Corporation and Dow Hydrocarbons and Resources represented $7.2 million, $25.7 million and $3.9 million of segment revenue for the three months ended June 30, 2011 and $12.9 million, $5.6 million and $4.3 million for the three months ended June 30, 2010, respectively.

     For the six months ended June 30, 2011 and 2010, Enbridge Marketing (US) L.P., ConocoPhillips Corporation and Dow Hydrocarbons and Resources represented significant customers, each representing more than 10% of our segment revenue in Gathering and Processing segment. Our segment revenue derived from Enbridge Marketing (US) L.P., ConocoPhillips Corporation and Dow Hydrocarbons and Resources represented $14.8 million, $54.2 million and $7.7 million of segment revenue for the six months ended June 30, 2011 and $37.1 million, $12.7 million and $10.0 million for the six months ended June 30, 2010, respectively

     For the three months ended June 30, 2011 and 2010, Enbridge Marketing (US) L.P., ExxonMobil Corporation and Calpine Corporation represented significant customers, each representing more than 10% of our segment revenue in our Transmision segment. Our segment revenue derived from Enbridge Marketing (US) L.P., ExxonMobil Corporation and Calpine Corporation represented $3.7 million, $10.1 million and $0.9 million of segment revenue for the three months ended June 30, 2011 and $3.6 million, $3.4 million and $1.3 million for the three months ended June 30, 2010, respectively.

     For the six months ended June 30, 2011 and 2010, Enbridge Marketing (US) L.P., ExxonMobil Corporation and Calpine Corporation represented significant customers, each representing more than 10% of our segment revenue in our Transmission segment. Our segment revenue derived from Enbridge Marketing (US) L.P., ExxonMobil Corporation and Calpine Corporation represented $8.1 million, $19.7 million and $1.7 million of segment revenue for the six months ended June 30, 2011 and $9.1 million, $3.5 million and $2.1 million for the six months ended June 30, 2010, respectively.

13. Net Income (Loss) per Limited Common and General Partner Unit

     Net income (loss) is allocated to the general partner and the limited partners (common unitholders) in accordance with their respective ownership percentages, after giving effect to incentive distributions paid to the general partner. Basic and diluted net income (loss) per limited partner common unit is calculated by dividing limited partners’ interest in net income (loss) by the weighted average number of outstanding limited partner common units during the period.

     Unvested share-based payment awards that contain non-forfeitable rights to distributions (whether paid or unpaid) are classified as participating securities and are included in our computation of basic and diluted net income per limited partner unit.

     We compute earnings per unit using the two-class method. The two-class method requires that securities that meet the definition of a participating security be considered for inclusion in the computation of basic earnings per unit. Under the two-class method, earnings per unit is calculated as if all of the earnings for the period were distributed under the terms of the partnership agreement, regardless of whether the general partner has discretion over the amount of distributions to be made in any particular period, whether those earnings would actually be distributed during a particular period from an economic or practical perspective, or whether the general partner has other legal or contractual limitations on its ability to pay distributions that would prevent it from distributing all of the earnings for a particular period.

     The two-class method does not impact our overall net income or other financial results; however, in periods in which aggregate net income exceeds our aggregate distributions for such period, it will have the impact of reducing net income per limited partner unit. This result occurs as a larger portion of our aggregate earnings, as if distributed, is allocated to the incentive distribution rights of the general partner, even though we make distributions on the basis of available cash and not earnings. In periods in which our aggregate net income does not exceed our aggregate distributions for such period, the two-class method does not have any impact on our calculation of earnings per limited partner unit. We have no dilutive securities, therefore basic and diluted net income per unit are the same.

     We determined basic and diluted net income per general partner unit and limited partner unit as follows:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2011				2010				2011				2010
Net loss attributable to general partner and limited partners		$	(4,182	)		$	(2,853	)		$	(7,692	)		$	(4,307	)
Weighted average general partner and limited partner units outstanding(a)(b)			5,634				5,090				5,655				5,070
Earnings per general partner and limited partner unit (basic and diluted)		$	(0.74	)		$	(0.56	)		$	(1.36	)		$	(0.85	)
Net loss attributable to limited partners		$	(4,098	)		$	(2,796	)		$	(7,538	)		$	(4,221	)
Weighted average limited partner units outstanding(a)(b)			5,525				4,993				5,546				4,973
Earnings per limited partner unit (basic and diluted)		$	(0.74	)		$	(0.56	)		$	(1.36	)		$	(0.85	)
Net loss attributable to general partner		$	(84	)		$	(57	)		$	(154	)		$	(86	)
Weighted average general partner units outstanding			109				97				109				97
Earnings per general partner unit (basic and diluted)		$	(0.77	)		$	(0.59	)		$	(1.41	)		$	(0.89	)

14. Subsequent Events

Initial Public Offering

     On August 1, 2011, we closed our IPO of 3,750,000 common units at an offering price of $21 per unit. After deducting underwriting discounts and commissions of approximately $4.9 million paid to the underwriters, estimated offering expenses of approximately $4.1 million and a structuring fee of approximately $0.6 million, the net proceeds from our initial public offering were approximately $69.1 million. We used all of the net offering proceeds from our initial public offering for the uses described in the Prospectus. These uses included the following:

	•		repayment in full of the outstanding balance under our $85 million credit facility of approximately $58.6 million;
	•		termination, in exchange for a payment of $2.5 million, of the advisory services agreement between our subsidiary, American Midstream, LLC, and affiliates of American Infrastructure MLP Fund, L.P.;
	•		establishment of a cash reserve of $2.2 million related to our non-recurring deferred maintenance capital expenditures for the twelve months ending June 30, 2012; and
	•		the making of an aggregate distribution of approximately $5.8 million, on a pro rata basis, to participants in our LTIP holding common units, AIM Midstream Holdings, LLC and our general partner. The distribution to AIM Midstream Holdings and our general partner was a reimbursement for certain capital expenditures incurred with respect to assets previously contributed to us.

          Immediately prior to the closing of our IPO the following recapitalization transactions occurred:

	•		each general partner unit held by our general partner reverse split into 0.485 general partner units, resulting in the ownership by our general partner of an aggregate of 108,718 general partner units, representing a 2.0% general partner interest in us;
	•		each common unit held by participants in our LTIP, reverse split into 0.485 common units, resulting in their ownership of an aggregate of 50,946 common units, representing an aggregate 0.9% limited partner interest in us;
	•		each outstanding phantom unit granted to participants in our LTIP reverse split into 0.485 phantom units, resulting in their holding an aggregate of 209,824 phantom units;

	•		each common unit held by AIM Midstream Holdings reverse split into 0.485 common units, resulting in the ownership by AIM Midstream Holdings of an aggregate of 5,327,205 common units, representing an aggregate 97.1% limited partner interest in us; and
	•		the common units held by AIM Midstream Holdings converted into 801,139 common units and 4,526,066 subordinated units.

In connection with the closing of our IPO and immediately following the recapitalization transactions, the following transactions also occurred:

	•		AIM Midstream Holdings contributed 76,019 common units to our general partner as a capital contribution, and;
	•		our general partner contributed the common units contributed to it by AIM Midstream Holdings to us in exchange for 76,019 general partner units in order to maintain its 2.0% general partner interest in us;

New Credit Facility

     On August 1, 2011 and immediately following the repayment of the outstanding balance under our $85 million credit facility with net proceeds of the IPO, we terminated our $85 million credit facility, entered into our $100 million credit facility and borrowed approximately $30.0 million under the $100 million revolving credit facility. We used the proceeds from those borrowings to (i) make an aggregate distribution of approximately $27.9 million, on a pro rata basis, to participants in our LTIP holding common units, AIM Midstream Holdings and our general partner and (ii) pay fees and expenses of approximately $2.1 million relating to $100 million revolving credit facility. As of September 8, 2011 we had $30 million in borrowing outstanding under our new credit facility.

Bazor Ridge Emissions Matter

     In July 2011, in the course of preparing our annual filing for 2010 with the Mississippi Department of Environmental Quality (“MDEQ”) as required by our Title V Air Permit, we determined that we underreported to MDEQ the SO₂ emissions from the Bazor Ridge plant for 2009 and 2010. Moreover, we recently discovered that SO₂ emission levels during 2009 may have exceeded the threshold that triggers the need for a Prevention of Significant Deterioration, or a PSD, permit under the federal Clean Air Act. No PSD permit has been issued for the Bazor Ridge plant. In addition, we recently determined that certain SO₂ emissions during 2009 and 2010 exceeded the reportable quantity threshold under the federal Emergency Planning and Community Right-to-Know Act, or EPCRA, requiring notification of various governmental authorities. We did not make any such EPCRA notifications. In July 2011, we self-reported these issues to the MDEQ and the EPA.

     If the MDEQ or the EPA were to initiate enforcement proceedings with respect to these exceedances and violations, we could be subject to monetary sanctions and our Bazor Ridge plant could become subject to restrictions or limitations (including the possibility of installing additional emission controls) on its operations or be required to obtain a PSD permit or to amend its current Title V Air Permit. If the Bazor Ridge plant were subject to any curtailment or other operational restrictions as a result of any such enforcement proceeding, or were required to incur additional capital expenditures for additional emission controls through any permitting process, the costs to us could be material. Although enforcement proceedings are reasonably possible, we cannot estimate the financial impact on us from such enforcement proceedings until we have completed an investigation of these matters and met with the agencies to determine treatment, extent, and reportability any of exceedances and violations. As a result, we have not recorded a loss contingency as the criteria under ASC 450, Contingencies, has not been met.

In addition, if emission levels for our Bazor Ridge plant were not properly reported by the prior owner or if a PSD permit was required for periods before our acquisition, it is possible, though not probable at this time, that one or both of the MDEQ and the EPA may institute enforcement actions against us and/or the prior owner. If one or both of the MDEQ and the EPA pursue enforcement actions or other sanctions against the prior owner, we may have an obligation under our purchase agreement with the prior owner to indemnify them for any losses (as defined in the purchase agreement) that may result. Because the existence and extent of any violations is unknown at this time, the financial impact of any amounts due regulatory agencies and/or the prior owner cannot be reasonably estimated at this time.

     We are in communication with regulatory officials at both the MDEQ and the EPA regarding the Bazor Ridge plant reporting issue.