----

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| T | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|-----------------------------------------------------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|

| Delaware                                                       | 90-0613069                           |
|----------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
|                                                           |                                 |
| 1401 McKinney Street, Suite 2400, Houston, Texas               | 77010                                |
| (Address of principal executive offices)                       | (Zip Code)                           |

| Large accelerated filer o | Accelerated filer o | Non-accelerated filer x                                                | Smaller reporting company o |
|------------------------------------------|-------------------------------|----------------------------------------------------------------------------------|--------------------------------------------|
|                                     |                          | (Do not check if a smaller reporting company) |

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----

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| PART I - FINANCIAL INFORMATION |                                                                                               |
|----------------------------------------------------|----------------------------------------------------------------------------------------------------|
|                                               |                                                                                               |   |
| Item 1.                                       | Financial Statements                                                                               | 4 |
|                                               | Unaudited Consolidated Statements of Operations for the Three Months Ended March 31, 2011 and 2010 | 4 |
|                                               | Unaudited Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010                   | 5 |
|                                               | Unaudited Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2011 and 2010  | 6 |
|                                               | Unaudited Consolidated Statement of Owners' Equity as of March 31, 2011                            | 7 |
|                                               | Notes to Consolidated Financials Statements                                                        | 8 |
|                                               |                                                                                               |   |
| Item 2.                                       | Management's Discussion and Analysis of Financial Condition and Results of Operations              | 21 |
| Item 3.                                       | Quantitative and Qualitative Disclosures about Market Risk                                         | 28 |
| Item 4.                                       | Controls and Procedures                                                                            | 28 |
|                                               |                                                                                               |   |
| PART II - OTHER INFORMATION    |                                                                                               |
|                                               |                                                                                               |   |
| Item 1.                                       | Legal Proceedings                                                                                  | 29 |
| Item 1A.                                      | Risk Factors                                                                                       | 30 |
| Item 2.                                       | Unregistered Sales of Equity Securities and Use of Proceeds                                        | 30 |
| Item 3.                                       | Defaults Upon Senior Securities                                                                    | 30 |
| Item 4.                                       | (Removed and Reserved)                                                                             | 30 |
| Item 5.                                       | Other Information                                                                                  | 30 |
| Item 6.                                       | Exhibits                                                                                           | 30 |
|                                               |                                                                                               |   |
| Signatures                                         | 31                                                                                                 |

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Table of Contents

|   | · | business strategies; |
|--------|--------|----------------------|

|   | · | ability to replace the reserves we produce through drilling and property acquisitions; |
|--------|--------|----------------------------------------------------------------------------------------|

|   | · | drilling locations; |
|--------|--------|---------------------|

|   | · | oil and natural gas reserves; |
|--------|--------|-------------------------------|

|   | · | technology; |
|--------|--------|-------------|

|   | · | realized oil and natural gas prices; |
|--------|--------|--------------------------------------|

|   | · | production volumes; |
|--------|--------|---------------------|

|   | · | lease operating expenses; |
|--------|--------|---------------------------|

|   | · | general and administrative expenses; |
|--------|--------|--------------------------------------|

|   | · | future operating results; and |
|--------|--------|-------------------------------|

|   | · | plans, objectives, expectations and intentions. |
|--------|--------|-------------------------------------------------|

|   | · | our ability to generate sufficient cash to pay the minimum quarterly distribution on our common units; |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | our substantial future capital requirements, which may be subject to limited availability of financing; |
|--------|--------|---------------------------------------------------------------------------------------------------------|

|   | · | uncertainty inherent in estimating our reserves; |
|--------|--------|--------------------------------------------------|

|   | · | our need to make accretive acquisitions or substantial capital expenditures to maintain our declining asset base; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------|

|   | · | cash flows and liquidity; |
|--------|--------|---------------------------|

|   | · | potential shortages of drilling and production equipment; |
|--------|--------|-----------------------------------------------------------|

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Table of Contents

|   | · | potential difficulties in the marketing of, and volatility in the prices for, oil and natural gas; |
|--------|--------|----------------------------------------------------------------------------------------------------|

|   | · | uncertainties surrounding the success of our secondary and tertiary recovery efforts; |
|--------|--------|---------------------------------------------------------------------------------------|

|   | · | competition in the oil and natural gas industry; |
|--------|--------|--------------------------------------------------|

|   | · | general economic conditions, globally and in the jurisdictions in which we operate; |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | legislation and governmental regulations, including climate change legislation and federal or state regulation of hydraulic fracturing; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the risk that our hedging strategy may be ineffective or may reduce our income; |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | the material weakness in our internal control over financial reporting; |
|--------|--------|-------------------------------------------------------------------------|

|   | · | actions of third party co-owners of interest in properties in which we also own an interest; |
|--------|--------|----------------------------------------------------------------------------------------------|

|   | · | risks related to potential acquisitions, including our ability to make acquisitions on favorable terms or to integrate acquired properties; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

1. Financial 

QR ENERGY

|                                                                             |   | Partnership                                    |    |    | Predecessor                                    |   |
|----------------------------------------------------------------------------------|--------|------------------------------------------------|---------|---------|------------------------------------------------|--------|
|                                                                             |   | Three monthsended March 31,2011 |    |    | Three monthsended March 31,2010 |   |
| Revenues:                                                                        |   |                                           |    |    |                                           |   |
| Oil and natural gas sales                                                        |   | $                                              | 30,569  |    |                                           | $      | 33,840 |   |
| Processing and other                                                             |   |                                           | 198     |    |                                           |   | 1,793 |   |
| Total revenues                                                                   |   |                                           | 30,767  |    |                                           |   | 35,633 |   |
| Operating Expenses:                                                              |   |                                           |    |    |                                           |   |   |   |
| Production expenses                                                              |   |                                           | 8,774   |    |                                           |   | 14,315 |   |
| Depreciation, depletion and amortization                                         |   |                                           | 8,575   |    |                                           |   | 4,338 |   |
| Accretion of asset retirement obligations                                        |   |                                           | 267     |    |                                           |   | 673 |   |
| Management fees                                                                  |   |                                           | -       |    |                                           |   | 2,115 |   |
| General and administrative                                                       |   |                                           | 3,433   |    |                                           |   | 5,389 |   |
| Total operating expenses                                                         |   |                                           | 21,049  |    |                                           |   | 26,830 |   |
| Operating income                                                                 |   |                                           | 9,718   |    |                                           |   | 8,803 |   |
| Other (expense) income :                                                         |   |                                           |    |    |                                           |   |   |   |
| Equity in earnings of Ute Energy, LLC                                            |   |                                           | -       |    |                                           |   | 62 |   |
| (Loss) gain on commodity derivative contracts                                    |   |                                           | (37,534 | )       |                                           |   | 1,423 |   |
| Interest expense                                                                 |   |                                           | (1,676  | )       |                                           |   | (869 | ) |
| Other expense                                                                    |   |                                           | -       |    |                                           |   | (243 | ) |
| Total other (expense) income, net                                                |   |                                           | (39,210 | )       |                                           |   | 373 |   |
| (Loss) income before income taxes                                                |   |                                           | (29,492 | )       |                                           |   | 9,176 |   |
| Income tax benefit, net                                                          |   |                                           | 144     |    |                                           |   | - |   |
| Net (loss) income                                                                |   | $                                              | (29,348 | )       |                                           | $      | 9,176 |   |
| Net income attributable to noncontrolling interest                               |   |                                           | -       |    |                                           |   | 7,356 |   |
| Net (loss) income attributable to controlling interest                      |   | $                                              | (29,348 | )  |                                           | $      | 1,820 |   |
| General partner's interest in net loss                                           |   | $                                              | (29     | )       |                                           |   |   |   |
| Limited partner's interest in net loss                                           |   | $                                              | (29,319 | )       |                                           |   |   |   |
|                                                                             |   |                                           |    |    |                                           |   |   |   |
| Net loss per limited partner unit (basic and diluted)                            |   | $                                              | (0.82   | )       |                                           |   |   |   |
| Weighted average number of limited partner units outstanding (basic and diluted) |   |                                           | 35,626  |    |                                           |   |   |   |

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Table of Contents

QR 

|                                                                                                                          |   | Partnership    |    |
|-------------------------------------------------------------------------------------------------------------------------------|--------|----------------|---------|
|                                                                                                                          |   | March 31, |    |   | December 31, |   |
|                                                                                                                          |   | 2011           |    |   | 2010 |   |
| ASSETS                                                                                                                        |   |
| Current assets:                                                                                                               |   |           |    |   |   |   |
| Cash and cash equivalents                                                                                                     |   | $              | 1,830   |   |   | $ | 2,195 |   |
| Accounts receivable: oil and gas sales                                                                                        |   |           | 17,134  |   |   |   | 3,014 |   |
| Due from affiliate                                                                                                            |   |           | 9,260   |   |   |   | - |   |
| Due from general partner                                                                                                      |   |           | -       |   |   |   | 715 |   |
| Derivative instruments                                                                                                        |   |           | 7,678   |   |   |   | 9,027 |   |
| Prepaid and other current assets                                                                                              |   |           | 986     |   |   |   | 1,264 |   |
| Total current assets                                                                                                          |   |           | 36,888  |   |   |   | 16,215 |   |
| Noncurrent assets:                                                                                                            |   |           |    |   |   |   |   |   |
| Oil and gas properties, using the full cost method of accounting                                                              |   |           | 448,085 |   |   |   | 444,710 |   |
| Less accumulated depreciation, depletion and amortization                                                                     |   |           | (9,488  | ) |   |   | (913 | ) |
| Total property and equipment, net                                                                                             |   |           | 438,597 |   |   |   | 443,797 |   |
| Derivative instruments                                                                                                        |   |           | 13,629  |   |   |   | 9,020 |   |
| Deferred taxes                                                                                                                |   |           | 545     |   |   |   | 341 |   |
| Deferred financing costs                                                                                                      |   |           | 2,649   |   |   |   | 2,645 |   |
| Total noncurrent assets                                                                                                       |   |           | 455,420 |   |   |   | 455,803 |   |
| Total assets                                                                                                                  |   | $              | 492,308 |   |   | $ | 472,018 |   |
|                                                                                                                          |   |           |    |   |   |   |   |   |
| LIABILITIES AND PARTNERS' CAPITAL                                                                                             |   |
| Current liabilities:                                                                                                          |   |           |    |   |   |   |   |   |
| Due to affiliates                                                                                                             |   | $              | -       |   |   | $ | 442 |   |
| Current portion of asset retirement obligations                                                                               |   |           | 1,848   |   |   |   | 1,848 |   |
| Derivative instruments                                                                                                        |   |           | 21,405  |   |   |   | 7,045 |   |
| Accrued and other liabilities                                                                                                 |   |           | 10,920  |   |   |   | 3,806 |   |
| Total current liabilities                                                                                                     |   |           | 34,173  |   |   |   | 13,141 |   |
| Noncurrent liabilities:                                                                                                       |   |           |    |   |   |   |   |   |
| Long-term debt                                                                                                                |   |           | 225,000 |   |   |   | 225,000 |   |
| Derivative instruments                                                                                                        |   |           | 44,271  |   |   |   | 19,832 |   |
| Asset retirement obligations                                                                                                  |   |           | 16,707  |   |   |   | 16,440 |   |
| Total noncurrent liabilities                                                                                                  |   |           | 285,978 |   |   |   | 261,272 |   |
| Commitments and contingencies (See Note 9)                                                                                    |   |           |    |   |   |   |   |   |
| Partners' capital:                                                                                                            |   |           |    |   |   |   |   |   |
| General partner (35,729 units issued and outstanding as of March 31, 2011 and December 31,2010)                               |   |           | 677     |   |   |   | 708 |   |
| Public common unitholders (17,257,500 and 15,000,000 units issued and outstanding as of March 31, 2011 and December 31, 2010) |   |           | 304,080 |   |   |   | 276,723 |   |
| Affiliated common unitholders 11,297,737 units issued and outstanding as of March 31, 2011 and December 31, 2010)             |   |           | (81,226 | ) |   |   | (48,898 | ) |
| Affiliated subordinated unitholders (7,145,866 units issued and outstanding as of March 31, 2011 and December 31, 2010)       |   |           | (51,374 | ) |   |   | (30,928 | ) |
| Total partners' capital                                                                                                       |   |           | 172,157 |   |   |   | 197,605 |   |
| Total liabilities and partners' capital                                                                                       |   | $              | 492,308 |   |   | $ | 472,018 |   |

----

Table of Contents

QR ENERGY

|                                       |   |    |   |   | Limited Partners |   |    |      |   |
|--------------------------------------------|--------|---------|--------|--------|-----------------------|--------|---------|-----------|--------|
|                                       |   | General |   |   | Public                |   |    | Affliated |   |   | Total |   |
|                                       |   | Partner |   |   | Common                |   |    | Common    |   |   | Subordinated |   |   | Partners' Capital |   |
| Balances - December 31, 2010               |   | $       | 708    |   |                  | $      | 276,723 |      |   | $ | (48,898 | ) |   | $ | (30,928 | ) |   | $ | 197,605 |   |
| Proceeds from over-allotment               |   |    | -      |   |                  |   | 41,963  |      |   |   | - |   |   |   | - |   |   |   | 41,963 |   |
| Other contributions (See Note 12)          |   |    | -      |   |                  |   | -       |      |   |   | 3,184 |   |   |   | 2,015 |   |   |   | 5,199 |   |
| Recognition of equity awards (See Note 11) |   |    | -      |   |                  |   | 345     |      |   |   | - |   |   |   | - |   |   |   | 345 |   |
| Distribution to the Fund                   |   |    | -      |   |                  |   | -       |      |   |   | (25,727 | ) |   |   | (16,273 | ) |   |   | (42,000 | ) |
| Distributions to unitholders               |   |    | (2     | )      |                  |   | (779    | )         |   |   | (506 | ) |   |   | (320 | ) |   |   | (1,607 | ) |
| Net loss                                   |   |    | (29    | )      |                  |   | (14,172 | )         |   |   | (9,279 | ) |   |   | (5,868 | ) |   |   | (29,348 | ) |
| Balances - March 31, 2011                  |   | $       | 677    |   |                  | $      | 304,080 |      |   | $ | (81,226 | ) |   | $ | (51,374 | ) |   | $ | 172,157 |   |

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Table of Contents

QR 

|                                                                                          |   | Partnership                                    |    |   | Predecessor                                    |   |
|-----------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|--------|------------------------------------------------|--------|
|                                                                                          |   | Three monthsended March 31,2011 |    |   | Three monthsended March 31,2010 |   |
| Cash flows from operating activities:                                                         |   |                                           |    |   |                                           |   |
| Net (loss) income                                                                             |   | $                                              | (29,348 | )      |                                           | $      | 9,176 |   |
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: |   |                                           |    |   |                                           |   |   |   |
| Depreciation, depletion and amortization                                                      |   |                                           | 8,575   |   |                                           |   | 4,338 |   |
| Accretion of asset retirement obligations                                                     |   |                                           | 267     |   |                                           |   | 673 |   |
| Amortization of deferred financing costs                                                      |   |                                           | 143     |   |                                           |   | 154 |   |
| Recognition of equity awards                                                                  |   |                                           | 345     |   |                                           |   | 889 |   |
| Loss on disposal of furniture, fixtures and equipment                                         |   |                                           | -       |   |                                           |   | 243 |   |
| General and administrative expense contributed by the Fund                                    |   |                                           | 2,324   |   |                                           |   | - |   |
| Unrealized losses (gains) on derivative contracts (See Note 4)                           |   |                                           | 38,414  |   |                                           |   | (581 | ) |
| Deferred income tax benefit                                                                   |   |                                           | (204    | )      |                                           |   | - |   |
| Equity in earnings of Ute Energy, LLC                                                         |   |                                           | -       |   |                                           |   | (62 | ) |
| Changes in operating assets and liabilities:                                                  |   |                                           |    |   |                                           |   |   |   |
| Accounts receivable and other assets                                                          |   |                                           | (23,544 | )      |                                           |   | (248 | ) |
| Accounts payable and other liabilities                                                        |   |                                           | 5,127   |   |                                           |   | (3,463 | ) |
| Net cash provided by operating activities                                                     |   |                                           | 2,099   |   |                                           |   | 11,119 |   |
| Cash flows from investing activities:                                                         |   |                                           |    |   |                                           |   |   |   |
| Additions to oil and gas properties                                                           |   |                                           | (1,388  | )      |                                           |   | (4,329 | ) |
| Deposit for acquisition of oil and gas properties                                             |   |                                           | -       |   |                                           |   | (45,000 | ) |
| Additions/disposals of furniture, equipment and other                                         |   |                                           | -       |   |                                           |   | 67 |   |
| Net cash used in investing activities                                                         |   |                                           | (1,388  | )      |                                           |   | (49,262 | ) |
| Cash flows from financing activities:                                                         |   |                                           |    |   |                                           |   |   |   |
| Proceeds from over-allotment (See Note 1)                                                     |   |                                           | 41,963  |   |                                           |   | - |   |
| Distribution to the Fund (See Note 1)                                                         |   |                                           | (42,000 | )      |                                           |   | (6,020 | ) |
| Contributions from general partner                                                            |   |                                           | 715     |   |                                           |   | - |   |
| Distributions to unitholders                                                                  |   |                                           | (1,607  | )      |                                           |   |   |   |
| Proceeds from bank borrowings                                                                 |   |                                           | -       |   |                                           |   | 27,084 |   |
| Deferred financing costs                                                                      |   |                                           | (147    | )      |                                           |   | - |   |
| Net cash (used in) provided by financing activities                                           |   |                                           | (1,076  | )      |                                           |   | 21,064 |   |
| Decrease in cash and cash equivalents                                                         |   |                                           | (365    | )      |                                           |   | (17,079 | ) |
| Cash and cash equivalents at beginning of period                                              |   |                                           | 2,195   |   |                                           |   | 17,156 |   |
| Cash and cash equivalents at end of period                                                    |   | $                                              | 1,830   |   |                                           | $      | 77 |   |

----

Table of Contents

QR 

|   | · | A Contribution, Conveyance and Assumption Agreement (the “Contribution Agreement”) was executed on the Closing Date by and among the Fund, the Partnership and QRE GP with net assets contributed by the Fund to the Partnership as follows: |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Oil and gas properties, net                                                                                                                                                                                                                                                                                                                                         |   | $      | 444,671  |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|
| Natural gas imbalance                                                                                                                                                                                                                                                                                                                                               |   |   | (1,247   | )      |
| Long-term debt                                                                                                                                                                                                                                                                                                                                                      |   |   | (200,000 | )      |
| Derivative instrument liability, net (1)                                                                                                                                                                                                                                                                                                                            |   |   | (1,425   | )      |
| Asset retirement obligation                                                                                                                                                                                                                                                                                                                                         |   |   | (18,263  | )      |
| Net assets                                                                                                                                                                                                                                                                                                                                                          |   | $      | 223,736  |   |
|                                                                                                                                                                                                                                                                                                                                                                |   |   |     |   |
| (1) Novation of derivative instruments from the Fund to the Partnership was concurrent with the IPO but not part of the Contribution Agreement and were transferred at fair value on the Closing Date. The fair value is reflected in the Predecessor’s book value by the means of non-recurring valuation measurements as of the date of transfer. |   |

|   | · | In exchange for the net assets above, the Fund received 11,297,737 common and 7,145,866 subordinated limited partner units. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|

|   | · | The Fund also received a $300 million cash distribution. |
|--------|--------|----------------------------------------------------------|

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Table of Contents

|   | · | QRE GP made a capital contribution or $0.7 million in exchange for 35,729 QRE GP units. The contribution was received in January 2011. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

|   | Level 1 – | Defined as inputs such as unadjusted quoted prices in active markets for identical assets or liabilities. |
|--------|-----------------|-----------------------------------------------------------------------------------------------------------|

|   | Level 2 – | Defined as inputs other than quoted prices in active markets that are either directly or indirectly observable for the asset or liability. |
|--------|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level 3 – | Defines as unobservable inputs for use when little or no market data exists, therefore requiring an entity to develop its own assumptions for the asset or liability. |
|--------|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

| As of March 31, 2011                                |   | Total  |    |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
|-----------------------------------------------------|--------|--------|---------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
| Assets from commodity derivative contracts          |   | $      | 14,594  |   |    | $      | -      |    |   | $      | 14,594  |   |   | $ | - |   |
| Assets from interest rate derivative contracts      |   |   | 6,713   |   |    |   | -      |    |   |   | 6,713   |   |   |   | - |   |
|                                                |   | $      | 21,307  |   |    | $      | -      |    |   | $      | 21,307  |   |   | $ | - |   |
|                                                |   |   |    |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Liabilities from commodity derivative contracts     |   | $      | (62,267 | )      |    | $      | -      |    |   | $      | (62,267 | )      |   | $ | - |   |
| Liabilities from interest rate derivative contracts |   | $      | (3,409  | )      |    |   | -      |    |   |   | (3,409  | )      |   |   | - |   |
|                                                |   | $      | (65,676 | )      |    | $      | -      |    |   | $      | (65,676 | )      |   | $ | - |   |

| As of December 31, 2010                         |   | Total |    |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
|-------------------------------------------------|--------|-------|---------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
| Assets from commodity derivative contracts      |   | $     | 18,047  |   |    | $      | -      |    |   | $      | 18,047  |   |   | $ | - |   |
| Liabilities from commodity derivative contracts |   | $     | (26,877 | )      |    | $      | -      |    |   | $      | (26,877 | )      |   | $ | - |   |

----

Table of Contents

| Commodity          |   | Index  |   | April 1 –December 31,2011 |   |   | 2012   |   |   | 2013   |   |   | 2014   |   |   | 2015   |   |
|-------------------------|--------|--------|--------|------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Oil position:           |   |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Hedged volume (Bbls/d)  |   | WTI    |   |                                           | 2,238  |   |   |   | 2,039  |   |   |   | 2,076  |   |   |   | 2,090  |   |   |   | 2,000 |   |
| Average price ($/Bbl)   |   |   |   | $                                              | 85.00  |   |   | $      | 85.25  |   |   | $      | 85.35  |   |   | $      | 84.58  |   |   | $ | 87.40 |   |
|                    |   |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Natural gas position:   |   |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Hedged volume (MMBtu/d) |   | NYMEX  |   |                                           | 9,068  |   |   |   | 8,192  |   |   |   | 7,474  |   |   |   | 7,544  |   |   |   | 3,398 |   |
| Average price ($/MMbtu) |   |   |   | $                                              | 7.07   |   |   | $      | 6.45   |   |   | $      | 6.45   |   |   | $      | 6.30   |   |   | $ | 5.52 |   |

| Commodity               |   | Index  |   | 2011   |   |   | 2012   |   |   | 2013   |   |   | 2014   |   |   | 2015   |   |
|-------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Oil position:           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Hedged volume (Bbls/d)  |   | WTI    |   |   | 2,238  |   |   |   | 2,039  |   |   |   | 2,076  |   |   |   | 2,090  |   |   |   | 2,000 |   |
| Average price ($/Bbl)   |   |   |   | $      | 85.00  |   |   | $      | 85.25  |   |   | $      | 85.35  |   |   | $      | 84.58  |   |   | $ | 87.40 |   |
|                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Natural gas position:   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Hedged volume (MMBtu/d) |   | NYMEX  |   |   | 9,178  |   |   |   | 8,192  |   |   |   | 7,474  |   |   |   | 7,544  |   |   |   | 3,398 |   |
| Average price ($/MMbtu) |   |   |   | $      | 7.26   |   |   | $      | 6.45   |   |   | $      | 6.45   |   |   | $      | 6.30   |   |   | $ | 5.52 |   |

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|                    |   | March 31, 2011   |   |   | December 31, 2010    |   |
|-------------------------|--------|----------------------------|--------|--------|--------------------------------|--------|
|                    |   | Asset Derivative Contracts |   |   | Liability Derivative Contracts |   |   | Asset Derivative Contracts |   |   | Liability Derivative Contracts |   |
|                    |   |                       |   |   |                           |   |   |   |   |   |   |   |
| Commodity contracts     |   | $                          | 14,594 |   |                           | $      | 62,267 |   |   | $ | 18,047 |   |   | $ | 26,877 |   |
| Interest rate contracts |   |                       | 6,713  |   |                           |   | 3,409 |   |   |   | - |   |   |   | - |   |
|                    |   | $                          | 21,307 |   |                           | $      | 65,676 |   |   | $ | 18,047 |   |   | $ | 26,877 |   |
|                    |   |                       |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|                    |   |                       |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Commodity               |   |                       |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Current                 |   | $                          | 7,678  |   |                           | $      | 17,996 |   |   | $ | 9,027 |   |   | $ | 7,045 |   |
| Long-term               |   |                       | 6,916  |   |                           |   | 44,271 |   |   |   | 9,020 |   |   |   | 19,832 |   |
|                    |   | $                          | 14,594 |   |                           | $      | 62,267 |   |   | $ | 18,047 |   |   | $ | 26,877 |   |
| Interest                |   |                       |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Current                 |   | $                          | -      |   |                           | $      | 3,409 |   |   | $ | - |   |   | $ | - |   |
| Long-term               |   |                       | 6,713  |   |                           |   | - |   |   |   | - |   |   |   | - |   |
|                    |   | $                          | 6,713  |   |                           | $      | 3,409 |   |   | $ | - |   |   | $ | - |   |

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|                                                                                                                                                                          |   | Three months ended March 31, |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                                                                                                                                          |   | 2011                                             |    |   | 2010 |   |
|                                                                                                                                                                          |   |                                             |    |   |   |   |
|                                                                                                                                                                          |   | Partnership                                      |    |   | Predecessor |   |
| Realized gains (losses):                                                                                                                                                      |   |                                             |    |   |   |   |
| Commodity contracts                                                                                                                                                           |   | $                                                | 1,309   |   |   | $ | 842 |   |
| Interest rate swaps                                                                                                                                                           |   |                                             | (314    | ) |   |   | - |   |
| Total                                                                                                                                                                         |   | $                                                | 995     |   |   | $ | 842 |   |
|                                                                                                                                                                          |   |                                             |    |   |   |   |   |   |
| Unrealized gains (losses):                                                                                                                                                    |   |                                             |    |   |   |   |   |   |
| Commodity contracts                                                                                                                                                           |   | $                                                | (38,843 | ) |   | $ | 581 |   |
| Interest rate swaps                                                                                                                                                           |   |                                             | 429     |   |   |   | - |   |
| Total                                                                                                                                                                         |   | $                                                | (38,414 | ) |   | $ | 581 |   |
|                                                                                                                                                                          |   |                                             |    |   |   |   |   |   |
| Total gains (losses):                                                                                                                                                         |   |                                             |    |   |   |   |   |   |
| Commodity contracts (1)                                                                                                                                                       |   | $                                                | (37,534 | ) |   | $ | 1,423 |   |
| Interest rate swaps (2)                                                                                                                                                       |   |                                             | 115     |   |   |   | - |   |
| Total                                                                                                                                                                         |   | $                                                | (37,419 | ) |   | $ | 1,423 |   |
|                                                                                                                                                                          |   |                                             |    |   |   |   |   |   |
| (1) (Loss) gain on commodity derivative contracts is located in other (expense) income in the consolidated statement of operations.                                           |   |
|                                                                                                                                                                          |   |                                             |    |   |   |   |   |   |
| (2) Gain on interest rate derivatives contracts is recorded as part of interest expense and is located in other (expense) income in the consolidated statement of operations. |   |

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| Liability for asset retirement obligation as of December 21, 2010 |   | $      | -      |   |
|-------------------------------------------------------------------|--------|--------|--------|--------|
| Contribution by Predecessor                                       |   |   | 18,263 |   |
| Accretion expense                                                 |   |   | 25     |   |
| Liability for asset retirement obligation as of December 31, 2010 |   |   | 18,288 |   |
| Accretion expense                                                 |   |   | 267    |   |
| Liability for asset retirement obligation as of March, 31, 2011   |   | $      | 18,555 |   |
|                                                              |   |   |   |   |
| Current portion of asset retirment obligations                    |   | $      | 1,848  |   |
| Non-current portion of asset retirement obligations               |   |   | 16,707 |   |
| Liability for asset retirement obligation as of March, 31, 2011   |   | $      | 18,555 |   |

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| Net loss                                              |   | $      | (29,348 | )      |
|-------------------------------------------------------|--------|--------|---------|--------|
| Less:                                                 |   |   |    |   |
| General partner's 0.1% interest in net loss           |   |   | (29     | )      |
| Limited partners' interest in net loss                |   | $      | (29,319 | )      |
|                                                  |   |   |    |   |
| Weighted average limited partner units outstanding:   |   |   |    |   |
| Common units                                          |   |   | 28,480  |   |
| Subordinated units                                    |   |   | 7,146   |   |
| Total                                                 |   |   | 35,626  |   |
|                                                  |   |   |    |   |
| Net loss per limited partner unit (basic and diluted) |   | $      | (0.82   | )      |

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|                                                                                         |   | Number of Unvested Restricted Units |    |   | Weighted Average Grant-Date Fair Value per unit |   |
|----------------------------------------------------------------------------------------------|--------|-------------------------------------|---------|--------|-------------------------------------------------|--------|
| Outstanding at beginning of period                                                           |   |                                | 148,150 |   |                                            | $      | 20.03 |   |
| Granted (1)                                                                                  |   |                                | 25,470  |   |                                            | $      | 21.65 |   |
| Forfeited                                                                                    |   |                                | (2,700  | )      |                                            | $      | 20.03 |   |
| Vested (1)                                                                                   |   |                                | (7,500  | )      |                                            | $      | 20.20 |   |
| Outstanding at end of period                                                                 |   |                                | 163,420 |   |                                            | $      | 20.28 |   |
|                                                                                         |   |                                |    |   |                                            |   |   |   |
| (1) Includes 7,500 units granted to our independent directors for services performed for us. |   |

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|   | · | The Fund agrees to provide us, for a period of five years from the Closing Date, with the first opportunity to purchase certain oil and gas assets it may offer for sale that consist of at least 70% proved developed producing reserves. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Fund agrees to provide us, for a period of five years from the Closing Date, the first option to participate in certain of its acquisition opportunities so long as 70% of the allocated value of the acquisition is attributable to proved developed producing reserves. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Should QA Global or any of its affiliates close any new investment fund within two years from the Closing Date, the Omnibus Agreement shall be amended to include such new investment fund as a party to the terms in the first two points above. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the future net revenue of our estimated proved oil and natural gas reserves, discounted to present value at 10% per annum and calculated based on SEC methodology, |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the fair market value of our assets, other than our estimated oil and natural gas reserves and our commodity derivative contracts, that principally produce qualifying income for federal income tax purposes, at such value as may be determined by the board of directors of QRE GP and approved by the conflicts committee of QRE GP’s board of directors. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                       |   | Partnership                       |   |   | Predecessor                       |   |
|------------------------------------------------------------|--------|-----------------------------------|--------|--------|-----------------------------------|--------|
|                                                       |   | Three Months Ended March 31, |   |   | Three Months Ended March 31, |   |
|                                                       |   | 2011                              |   |   | 2010                              |   |
| Cash                                                       |   |                              |   |   |                              |   |
| Cash paid during the period for interest                   |   | $                                 | 1,437  |   |                              | $      | 692 |   |
| Noncash                                                    |   |                              |   |   |                              |   |   |   |
| Interest rate swaps novated from the Fund                  |   | $                                 | 2,875  |   |                              | $      | - |   |
| Change in accrued capital expenditures                     |   | $                                 | 1,987  |   |                              | $      | 970 |   |
| General and administrative expense allocated from the Fund |   | $                                 | 2,324  |   |                              | $      | - |   |

| Commodity                       |   | Index  |   |   | 2014   |   |   | 2015   |   |
|---------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Natural gas collars:            |   |   |   |   |   |   |   |   |   |
| Hedged Volume (MMBtu/d)         |   | NYMEX  |   |   |   | 500    |   |   |   | 3,000 |   |
| Average floor price ($/MMBtu)   |   |   |   |   |   | $      | 5.00   |   |   | $ | 5.00 |   |
| Average ceiling price ($/MMBtu) |   |   |   |   |   | $      | 6.19   |   |   | $ | 7.50 |   |

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 2. 
Management’s 

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|                                      |   | Partnership                                |    |   | Predecessor                                |   |
|-------------------------------------------|--------|--------------------------------------------|---------|--------|--------------------------------------------|--------|
|                                      |   | Three MonthsEnded March 31, |    |   | December 22, toDecember 31, |   |   | Three MonthsEnded March 31, |   |
|                                      |   | 2011                                       |    |   | 2010                                       |   |   | 2010 |   |
| Revenues                                  |   |                                       |    |   |                                       |   |   |   |   |
| Oil sales                                 |   | $                                          | 23,517  |   |                                       | $      | 2,217 |   |   | $ | 25,065 |   |
| Natural gas sales                         |   |                                       | 5,262   |   |                                       |   | 551 |   |   |   | 6,315 |   |
| NGLs sales                                |   |                                       | 1,790   |   |                                       |   | 246 |   |   |   | 2,460 |   |
| Processing and other                      |   |                                       | 198     |   |                                       |   | - |   |   |   | 1,793 |   |
| Total Revenue                             |   |                                       | 30,767  |   |                                       |   | 3,014 |   |   |   | 35,633 |   |
| Operating Expenses                        |   |                                       |    |   |                                       |   |   |   |   |   |   |   |
| Lease operating expenses                  |   |                                       | 6,274   |   |                                       |   | 734 |   |   |   | 3,615 |   |
| Production and other taxes                |   |                                       | 1,978   |   |                                       |   | 192 |   |   |   | 1,979 |   |
| Processing and transportation             |   |                                       | 522     |   |                                       |   | 13 |   |   |   | 8,721 |   |
| Total production expenses                 |   |                                       | 8,744   |   |                                       |   | 939 |   |   |   | 14,315 |   |
| Depreciation, depletion and amortization  |   |                                       | 8,575   |   |                                       |   | 913 |   |   |   | 4,338 |   |
| Accretion of asset retirement obligations |   |                                       | 267     |   |                                       |   | 25 |   |   |   | 673 |   |
| Management fees                           |   |                                       | -       |   |                                       |   | - |   |   |   | 2,115 |   |
| General and administrative and other      |   |                                       | 3,433   |   |                                       |   | 280 |   |   |   | 5,389 |   |
| Total operating expenses                  |   |                                       | 21,049  |   |                                       |   | 2,157 |   |   |   | 26,830 |   |
| Operating income                          |   |                                       | 9,718   |   |                                       |   | 857 |   |   |   | 8,803 |   |
| Other income (expense):                   |   |                                       |    |   |                                       |   |   |   |   |   |   |   |
| Equity in earnings of Ute Energy, LLC     |   |                                       | -       |   |                                       |   | - |   |   |   | 62 |   |
| Gain (loss) on derivative contracts       |   |                                       | (37,534 | )      |                                       |   | (7,694 | ) |   |   | 1,423 |   |
| Interest expense                          |   |                                       | (1,676  | )      |                                       |   | (304 | ) |   |   | (869 | ) |
| Other expense                             |   |                                       | -       |   |                                       |   | - |   |   |   | (243 | ) |
| Total other income (expense), net         |   |                                       | (39,210 | )      |                                       |   | (7,998 | ) |   |   | 373 |   |
| Income (loss) before income taxes         |   |                                       | (29,492 | )      |                                       |   | (7,141 | ) |   |   | 9,176 |   |
| Income tax benefit, net                   |   |                                       | 144     |   |                                       |   | 42 |   |   |   | - |   |
| Net income (loss)                         |   | $                                          | (29,348 | )      |                                       | $      | (7,099 | ) |   | $ | 9,176 |   |
| Production data:                          |   |                                       |    |   |                                       |   |   |   |   |   |   |   |
| Oil (MBbls)                               |   |                                       | 246     |   |                                       |   | 26 |   |   |   | 342 |   |
| Natural gas (MMcf)                        |   |                                       | 1,253   |   |                                       |   | 141 |   |   |   | 1,104 |   |
| Natural gas liquids (MBbls)               |   |                                       | 38      |   |                                       |   | 4 |   |   |   | 49 |   |
| Total (Mboe)                              |   |                                       | 493     |   |                                       |   | 54 |   |   |   | 575 |   |
| Average Net Production (Boe/d)            |   |                                       | 5,473   |   |                                       |   | 5,352 |   |   |   | 6,384 |   |
| Average sales price per unit:             |   |                                       |    |   |                                       |   |   |   |   |   |   |   |
| Oil (per Bbl)                             |   | $                                          | 95.60   |   |                                       | $      | 85.27 |   |   | $ | 73.29 |   |
| Natural gas (per Mcf)                     |   | $                                          | 4.20    |   |                                       | $      | 3.91 |   |   | $ | 5.72 |   |
| NGLs (per Bbl)                            |   | $                                          | 47.11   |   |                                       | $      | 61.50 |   |   | $ | 50.20 |   |
| Average unit cost per Boe:                |   |                                       |    |   |                                       |   |   |   |   |   |   |   |
| Lease operating expense                   |   | $                                          | 12.74   |   |                                       | $      | 13.59 |   |   | $ | 6.29 |   |
| Production and other taxes                |   | $                                          | 4.02    |   |                                       | $      | 3.56 |   |   | $ | 3.44 |   |
| Management fees                           |   | $                                          | -       |   |                                       | $      | - |   |   | $ | 3.68 |   |
| Depreciation, depletion and amortization  |   | $                                          | 17.41   |   |                                       | $      | 16.91 |   |   | $ | 7.54 |   |
| General and administrative expenses       |   | $                                          | 6.96    |   |                                       | $      | 5.19 |   |   | $ | 9.37 |   |

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|   | · | Our March 31, 2011 results include additional operating results from certain properties that were contributed to us at the IPO from the Predecessor’s Denbury acquisition which occurred in May 2010 and therefore not part of our Predecessor’s operating results for the three months ended March 31, 2010. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our March 31, 2011 results do not include the operating results of certain properties owned by the Predecessor during the three months ended March 31, 2010 but were not contributed to us. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                            |   | Partnership                    |   |   | Predecessor                    |   |
|---------------------------------|--------|--------------------------------|--------|--------|--------------------------------|--------|
|                            |   | ThreeMonthsEndedMarch 31, |   |   | ThreeMonthsEndedMarch 31, |   |
|                            |   | 2011                           |   |   | 2010                           |   |
| Net Cash provided by (used in): |   |                           |   |   |                           |   |
| Operating activities            |   | $                              | 2,099  |   |                           | $      | 11,119 |   |
| Investing activities            |   |                           | (1,388 | )      |                           |   | (49,262 | ) |
| Financing activities            |   |                           | (1,076 | )      |                           |   | 21,064 |   |

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3. 

 4. 

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 1. 
Legal 

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1A. 

 2. 

 3. 

 4. [

 5. 

 6. 

| Exhibit |   |   |    | Description                                                                                                                                                                                                                                 |
|---------|--------|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Number  |   |   |    |                                                                                                                                                                                                                                        |
| 3.1     |   |   | — | Certificate of Limited Partnership of QR Energy, LP (Incorporated by reference to Exhibit 3.1 of the Partnership’s Registration Statement on Form S-1 (File No. 333-169664) filed on September 30, 2010).                             |
| 3.2     |   |   | — | Agreement of Limited Partnership of QR Energy, LP (Incorporated by reference to Exhibit 3.2 of the Partnership’s Registration Statement on Form S-1 (File No. 333-169664) filed on September 30, 2010).                               |
| 3.3     |   |   | — | First Amended and Restated Agreement of Limited Partnership of QR Energy, LP (Incorporated by reference to Exhibit 3.1 of the Partnership’s Current Report on Form 8-K (File No. 001-35010) filed on December 22, 2010).              |
| 3.4     |   |   | — | Certificate of Formation of QRE GP, LLC (Incorporated by reference to Exhibit 3.4 of the Partnership’s Registration Statement on Form S-1 (File No. 333-169664) filed on September 30, 2010).                                         |
| 3.5     |   |   | — | Limited Liability  Company Agreement of QRE GP, LLC (Incorporated by reference to Exhibit 3.5 of the Partnership’s Registration Statement on Form S-1 (File No. 333-169664) filed on September 30, 2010).                   |
| 3.6     |   |   | — | First Amendment to Limited Liability Company Agreement of QRE GP, LLC (Incorporated by reference to Exhibit 3.6 of the Partnership’s Registration Statement on Form S-1/A (File No. 333-169664) filed on November 26, 2010).          |
| 3.7     |   |   | — | Amended and Restated Limited Liability Company Agreement of QRE GP, LLC (Incorporated by reference to Exhibit 3.1 of the Partnership’s Current Report on Form 8-K (File No. 001-35010) filed on December 22, 2010).                   |
| 4.1     |   | +      | — | Form of Restricted Unit Agreement under the QRE GP, LLC Long-Term Incentive Plan (Incorporated by reference to Exhibit 4.4 of the Partnership’s Registration Statement on Form S-8 (File No. 333-171333) filed on December 22, 2010). |
| 31.1    |   | *      | — | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.                                                                                                                       |
| 31.2    |   | *      | — | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.                                                                                                                       |
| 32.1    |   | **     | — | Certification of the Chief Executive Officer pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                     |
| 32.2    |   | **     | — | Certification of the Chief Financial Officer pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                     |

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SIG

|                | QR ENERGY, LP |
|---------------------|---------------|
|                |          |   |
|                | By:           | QRE GP, LLC, |
|                |          | its General Partner |
|                |          |   |
| Dated: May 23, 2011 | By:           | /s/ Alan L. Smith |
|                |          | Alan L. Smith |
|                |          | Chief Executive Officer and Director |
|                |          |   |
| Dated: May 23, 2011 | By:           | /s/ Cedric W. Burgher |
|                |          | Cedric W. Burgher |
|                |          | Chief Financial Officer |

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