| Delaware                                                                                                                                                                                                                                |   | 26-0388421                                                                                                          |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------|
|                 (State or other jurisdiction of              incorporation or organization) |   |         (I.R.S. Employer       Identification No.) |
|                                                                                                                                                                                                                                    |   |                                                                                                                |
| 5205 N. O'Connor Blvd., Suite 200, Irving, Texas                                                                                                                                                                                        |   | 75039                                                                                                               |
| (Address of principal executive offices)                                                                                                                                                                                                |   |         (Zip Code)                                                               |

| (972) 444-9001                                                                     |
|------------------------------------------------------------------------------------|
| (Registrant's telephone number, including area code)                               |
|                                                                               |
| Not applicable                                                                     |
| (Former name, former address and former fiscal year, if changed since last report) |
|                                                                               |

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

|  Number of common units outstanding as of October 27, 2010 |  33,113,700 |
|-----------------------------------------------------------------|------------------|

----

|  TABLE OF CONTENTS                                    |
|------------------------------------------------------------|
|                                                       |   |   |
|                                                       |   | Page |
|                                                       |   |
| Cautionary Statement Concerning Forward-Looking Statements | 3 |
|                                                       |   |
| Definitions of Certain Terms and Conventions Used Herein   | 4 |
|                                                       |   |
| PART I. FINANCIAL INFORMATION                              |
|                                                       |   |   |
| Item 1.                                                    | Financial Statements |   |
|                                                       |   |   |
|                                                       | Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009 | 6 |
|                                                       |   |   |
|                                                       | Consolidated Statements of Operations for the three and nine months ended September 30, 2010 and 2009 | 7 |
|                                                       |   |   |
|                                                       | Consolidated Statement of Partners' Equity for the nine months ended September 30, 2010 | 8 |
|                                                       |   |   |
|                                                       | Consolidated Statements of Cash Flows for the nine months ended September 30, 2010 and  2009 | 9 |
|                                                       |   |   |
|                                                       | Consolidated Statements of Comprehensive Income (Loss) for the three and nine months endedSeptember 30, 2010 and 2009 |  10 |
|                                                       |   |   |
|                                                       | Notes to Consolidated Financial Statements | 11 |
|                                                       |   |   |
| Item 2.                                                    | Management's Discussion and Analysis of Financial Condition and Results of Operations | 26 |
|                                                       |   |   |
| Item 3.                                                    | Quantitative and Qualitative Disclosures About Market Risk | 33 |
|                                                       |   |   |
| Item 4.                                                    | Controls and Procedures | 36 |
|                                                       |   |   |
| PART II. OTHER INFORMATION                                 |
|                                                       |   |   |
| Item 1.                                                    | Legal Proceedings | 37 |
|                                                       |   |   |
| Item 1A.                                                   | Risk Factors | 37 |
|                                                       |   |   |
| Item 6.                                                    | Exhibits | 38 |
|                                                       |   |   |
| Signatures                                                 | 39 |
|                                                       |   |   |
| Exhibit Index                                              | 40 |
|                                                       |   |   |

----

----

| ·   | "Bbl" means a standard barrel containing 42 United States gallons. |
|--------------------|--------------------------------------------------------------------|

| · | "BOE" means a barrel of oil equivalent and is a standard convention used to express oil and gas volumes on a comparable oil equivalent basis. Gas equivalents are determined under the relative energy content method by using the ratio of six thousand cubic feet of gas to one Bbl of oil or natural gas liquid. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | "BOEPD" means BOE per day. |
|--------|---------------------------------|

| · | "Btu" means British thermal unit, which is a measure of the amount of energy required to raise the temperature of one pound of water one degree Fahrenheit. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | "Common unit" means outstanding Pioneer Southwest Energy Partners L.P. limited partner units. |
|--------|----------------------------------------------------------------------------------------------------|

| · | "COPAS fee" means a fee based on an overhead rate established by the Council of Petroleum Accountants Societies to reimburse the operator of a well for overhead costs, such as accounting and engineering costs. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | "Derivatives" means financial contracts or financial instruments, whose values are derived from the value of an underlying asset, reference rate or index. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | "GAAP" means accounting principles that are generally accepted in the United States of America. |
|--------|-------------------------------------------------------------------------------------------------|

| · | "LIBOR" means London Interbank Offered Rate, which is a market rate of interest. |
|--------|---------------------------------------------------------------------------------------|

| · | "MBbl" means one thousand Bbls. |
|--------|--------------------------------------|

| · | "MBOE" means one thousand BOEs. |
|--------|--------------------------------------|

| · | "Mcf" means one thousand cubic feet and is a measure of gas volume. |
|--------|---------------------------------------------------------------------|

| · | "MMBOE" means one million BOEs. |
|--------|--------------------------------------|

| · | "MMBtu" means one million Btus. |
|--------|---------------------------------|

| · | "MMcf" means one million cubic feet. |
|--------|-------------------------------------------|

| · | "Mont Belvieu-posted-price" means the daily average of natural gas liquids components as priced in Oil Price Information Service ("OPIS") in the table "U.S. and Canada LP – Gas Weekly Averages" at Mont Belvieu, Texas. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | "NGL" means natural gas liquid. |
|--------|--------------------------------------|

| ·   | "Novation" represents the act of replacing one party to a contractual obligation with another party. |
|--------------------|------------------------------------------------------------------------------------------------------|

| · | "NYMEX" means the New York Mercantile Exchange. |
|--------|-------------------------------------------------|

| · | "NYSE" means the New York Stock Exchange. |
|--------|-------------------------------------------|

| · | "Partnership Predecessor" means Pioneer Southwest Energy Partners L.P. Predecessor. |
|--------|-------------------------------------------------------------------------------------|

| · | "Partnership" or "Pioneer Southwest" means Pioneer Southwest Energy Partners L.P. and its subsidiaries. |
|--------|---------------------------------------------------------------------------------------------------------|

| · | "Pioneer" means Pioneer Natural Resources Company and its subsidiaries. |
|--------|-------------------------------------------------------------------------|

| · | "Proved reserves" means the quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible – from a given date forward, from known reservoirs and under existing economic conditions, operating methods, and government regulations – prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation.  The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| · | "SEC" means the United States Securities and Exchange Commission. |
|--------|------------------------------------------------------------------------|

| · | "Standardized Measure" means the after-tax present value of estimated future net cash flows of proved reserves, determined in accordance with the rules and regulations of the SEC, using prices and costs employed in the determination of proved reserves and a ten percent discount rate. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | "U.S." means United States. |
|--------|-----------------------------|

| · | "Workover" means operations on a producing well to restore or increase production. |
|--------|------------------------------------------------------------------------------------|

| · | With respect to information on the working interest in wells, drilling locations and acreage, "net" wells, drilling locations and acres are determined by multiplying "gross" wells, drilling locations and acres by the Partnership's working interest in such wells, drilling locations and acres. Unless otherwise specified, wells, drilling locations and acres statistics quoted herein represent gross wells, drilling locations and acres. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                       |                                                                             |                                |                | September 30,       |               |                | December 31,        |
|----------------------------------------------------------------------------|----------------------------------------------------------------------------------|-------------------------------------|---------------------|---------------------|--------------------|---------------------|---------------------|
|                                                                       |                                                                             |                                |                | 2010           |               |                | 2009           |
|                                                                       |                                                                             |                                | (Unaudited)         |                |               |                |
|                                                                       |                                                                             | ASSETS                              |
| Current assets:                                                            |                                                                             |                                |                |                |               |
|                                                                       | Cash and cash equivalents                                                        | $                                   |  611      |                | $                  |  625      |
|                                                                       | Accounts receivable                                                              |                                |  13,940   |                |               |  14,162   |
|                                                                       | Inventories                                                                      |                                |  1,108    |                |               |  851      |
|                                                                       | Prepaid expenses                                                                 |                                |  386      |                |               |  260      |
|                                                                       | Derivatives                                                                      |                                |  22,332   |                |               |  16,042   |
|                                                                       |                                                                             | Total current assets                |                |  38,377   |               |                |  31,940   |
|                                                                       |                                                                             |                                |                |                |               |                |                |
| Property, plant and equipment, at cost:                                    |                                                                             |                                |                |                |               |
| Oil and gas properties, using the successful efforts method of accounting: |                                                                             |                                |                |                |               |
|                                                                       | Proved properties                                                                |                                |  345,123  |                |               |  311,730  |
|                                                                       | Accumulated depletion, depreciation and amortization                             |                                |  (122,768)     |                |               |  (113,386)     |
|                                                                       |                                                                             | Total property, plant and equipment |                |  222,355  |               |                |  198,344  |
|                                                                       |                                                                             |                                |                |                |               |                |                |
| Deferred income taxes                                                      |                                                                             |  1,690                    |                |                |  1,964   |
| Derivatives                                                                |                                                                             |  10,085                   |                |                |  23,784  |
| Other, net                                                                 |                                                                             |  470                      |                |                |  606     |
|                                                                       |                                                                             |                                | $                   |  272,977  |               | $                   |  256,638  |
|                                                                       |                                                                             |                                |
|                                                                       |                                                                             | LIABILITIES AND PARTNERS' EQUITY    |
| Current liabilities:                                                       |                                                                             |                                |                |                |               |
|                                                                       | Accounts payable:                                                                |                                |                |                |               |                |
|                                                                       |                                                                             | Trade                               | $                   |  10,056   |               | $                   |  6,139    |
|                                                                       |                                                                             | Due to affiliates                   |                |  1,185    |               |                |  697      |
|                                                                       | Interest payable                                                                 |                                |  23       |                |               |  26       |
|                                                                       | Income taxes payable to affiliate                                                |                                |  364      |                |               |  460      |
|                                                                       | Deferred income taxes                                                            |                                |  159      |                |               |  127      |
|                                                                       | Derivatives                                                                      |                                |  2,196    |                |               |  3,606    |
|                                                                       | Asset retirement obligations                                                     |                                |  500      |                |               |  500      |
|                                                                       |                                                                             | Total current liabilities           |                |  14,483   |               |                |  11,555   |
|                                                                       |                                                                             |                                |                |                |               |                |                |
| Long-term debt                                                             |                                                                             |  74,000                   |                |                |  67,000  |
| Derivatives                                                                |                                                                             |  19,712                   |                |                |  30,205  |
| Asset retirement obligations                                               |                                                                             |  6,482                    |                |                |  6,605   |
| Partners' equity:                                                          |                                                                             |                                |                |                |               |
|                                                                       | General partner's interest - 33,147 general partner units issued and outstanding |                                |  263      |                |               |  211      |
|                                                                       | Limited partners' interest - 33,113,700 common units issued and outstanding      |                                |  110,191  |                |               |  58,624   |
|                                                                       | Accumulated other comprehensive income - deferred hedge gains, net of tax        |                                |  47,846   |                |               |  82,438   |
|                                                                       |                                                                             | Total partners' equity              |                |  158,300  |               |                |  141,273  |
| Commitments and contingencies                                              |                                                                             |                                |                |                |               |
|                                                                       |                                                                             |                                | $                   |  272,977  |               | $                   |  256,638  |
|                                                                       |                                                                             |                                |                |                |               |                |                |

----

|                                                          |                                                  |                                                      |               |               | Three Months Ended |               | Nine Months Ended  |               |
|---------------------------------------------------------------|-------------------------------------------------------|-----------------------------------------------------------|--------------------|--------------------|--------------------|--------------------|--------------------|--------------------|
|                                                          |                                                  |                                                      |               |               | September 30,      |               | September 30,      |               |
|                                                          |                                                  |                                                      |               |               |               | 2010          |               |               | 2009  |   |   | 2010  |   |   | 2009  |   |
| Revenues:                                                     |                                                  |                                                      |               |               |               |               |               |               |   |   |   |   |   |
|                                                          | Oil and gas                                           |                                                      | $                  |  44,907  |               | $                  |  43,574  |               | $ |  134,734  |   | $ |  120,177  |   |
|                                                          | Interest and other                                    |                                                      |               |  -       |               |               |  35      |               |   |  -  |   |   |  209  |   |
|                                                          | Derivative gain (loss), net                           |                                                      |               |  (19,971)     |               |               |  (2,461)      |               |   |  20,334  |   |   |  (34,921) |   |
|                                                          |                                                  |                                                      |               |               |               |  24,936  |               |               |  41,148  |   |   |  155,068  |   |   |  85,465  |   |
|                                                          |                                                  |                                                      |               |               |               |               |               |               |   |   |   |   |   |   |   |   |
| Costs and expenses:                                           |                                                  |                                                      |               |               |               |               |               |               |   |   |   |   |   |
|                                                          | Oil and gas production                                |                                                      |               |  9,964   |               |               |  8,754   |               |   |  28,221  |   |   |  25,262  |   |
|                                                          | Production and ad valorem taxes                       |                                                      |               |  2,962   |               |               |  2,596   |               |   |  8,961  |   |   |  7,327  |   |
|                                                          | Depletion, depreciation and amortization              |                                                      |               |  3,313   |               |               |  2,885   |               |   |  9,381  |   |   |  10,066  |   |
|                                                          | General and administrative                            |                                                      |               |  1,600   |               |               |  1,145   |               |   |  4,752  |   |   |  3,786  |   |
|                                                          | Accretion of discount on asset retirement obligations |                                                      |               |  136     |               |               |  121     |               |   |  409  |   |   |  363  |   |
|                                                          | Interest                                              |                                                      |               |  386     |               |               |  348     |               |   |  1,157  |   |   |  728  |   |
|                                                          | Other, net                                            |                                                      |               |  -       |               |               |  252     |               |   |  -  |   |   |  252  |   |
|                                                          |                                                  |                                                      |               |               |               |  18,361  |               |               |  16,101  |   |   |  52,881  |   |   |  47,784  |   |
|                                                          |                                                  |                                                      |               |               |               |               |               |               |   |   |   |   |   |   |   |   |
| Income before taxes                                           |                                                  |                                                      |  6,575   |               |               |  25,047  |               |               |  102,187  |   |   |  37,681  |   |
| Income tax provision                                          |                                                  |                                                      |  (60)         |               |               |  (111)        |               |               |  (993) |   |   |  (229) |   |
| Net income                                                    |                                                  | $                                                         |  6,515   |               | $                  |  24,936  |               | $                  |  101,194  |   | $ |  37,452  |   |
|                                                          |                                                  |                                                      |               |               |               |               |               |               |   |   |   |   |   |   |   |   |
|                                                          |                                                  |                                                      |               |               |               |               |               |               |   |   |   |   |   |   |   |   |
| Allocation of net income:                                     |                                                  |                                                      |               |               |               |               |               |               |   |   |   |   |   |
|                                                          |                                                  | Net loss applicable to the Partnership Predecessor        |               | $                  |  -       |               | $                  |  (3,860)      |   | $ |  -  |   | $ |  (1,598) |   |
|                                                          |                                                  | Net income applicable to the Partnership                  |               |               |  6,515   |               |               |  28,796  |   |   |  101,194  |   |   |  39,050  |   |
|                                                          |                                                  | Net income                                                |               | $                  |  6,515   |               | $                  |  24,936  |   | $ |  101,194  |   | $ |  37,452  |   |
|                                                          |                                                  |                                                      |               |               |               |               |               |               |   |   |   |   |   |   |   |   |
| Allocation of net income applicable to the Partnership        |                                                  |                                                      |               |               |               |               |               |               |   |   |   |   |   |
|                                                          |                                                  | General partner's interest in net income                  |               | $                  |  6       |               | $                  |  29      |   | $ |  101  |   | $ |  39  |   |
|                                                          |                                                  | Limited partners' interest in net income                  |               |               |  6,491   |               |               |  28,767  |   |   |  101,024  |   |   |  39,011  |   |
|                                                          |                                                  | Unvested participating securities' interest in net income |               |  18      |               |               |  -       |               |   |  69  |   |   |  -  |   |
|                                                          |                                                  | Net income applicable to the Partnership                  |               | $                  |  6,515   |               | $                  |  28,796  |   | $ |  101,194  |   | $ |  39,050  |   |
|                                                          |                                                  |                                                      |               |               |               |               |               |               |   |   |   |   |   |   |   |   |
| Net income per common unit - basic and diluted                |                                                  | $                                                         |  0.20    |               | $                  |  0.96    |               | $                  |  3.05  |   | $ |  1.30  |   |
|                                                          |                                                  |                                                      |               |               |               |               |               |               |   |   |   |   |   |   |   |   |
| Weighted average common units outstanding - basic and diluted |                                                  |                                                      |  33,114  |               |               |  30,009  |               |               |  33,114  |   |   |  30,009  |   |
|                                                          |                                                  |                                                      |               |               |               |               |               |               |   |   |   |   |   |   |   |   |
| Distributions declared per common unit                        |                                                  | $                                                         |  0.50    |               | $                  |  0.50    |               | $                  |  1.50  |   | $ |  1.50  |   |

----

|                                    |                               |           |          |               |          |          |            |          |   |                |          |          |               | Accumulated    |   |                |           |
|-----------------------------------------|------------------------------------|----------------|---------------|--------------------|---------------|---------------|-----------------|---------------|--------|---------------------|---------------|---------------|--------------------|----------------|--------|---------------------|----------------|
|                                    |                               |           |          | General            |          | Limited       |            | General       |   | Limited             |          | Other         |               | Total          |
|                                    |                               |           |          | Partner Units      |          | Partner Units |            | Partner's     |   | Partners'           |          | Comprehensive |               | Partners'      |
|                                    |                               |           |          | Outstanding        |          | Outstanding   |            | Equity        |   | Equity              |          | Income        |               | Equity         |
|                                    |                               |           |          |               |          |          |            |          |   |                |          |          |               |           |   |                |           |   |
| Balance as of December 31, 2009         |                               |  33  |          |  33,114  |          | $             |  211  |          | $      |  58,624   |          | $             |  82,438  |           | $      |  141,273  |
|                                    |                               |           |          |               |          |          |            |          |   |                |          |          |               |           |   |                |           |   |
| Cash distributions to partners          |                               |  -   |          |  -       |          |          |  (49)      |          |   |  (49,672)      |          |          |  -       |           |   |  (49,721)      |
| Net income                              |                               |  -   |          |  -       |          |          |  101  |          |   |  101,093  |          |          |  -       |           |   |  101,194  |
| Contributions of unit-based services    |                               |  -   |          |  -       |          |          |  -    |          |   |  146      |          |          |  -       |           |   |  146      |
| Other comprehensive income, net of tax: |                               |           |          |               |          |          |            |          |   |                |          |          |               |           |   |                |
|                                    | Hedge gains included in net income |           |  -  |               |  -  |          |            |  -  |   |                |  -  |          |               |  (34,592) |   |                |  (34,592) |
|                                    |                               |           |          |               |          |          |            |          |   |                |          |          |               |           |   |                |           |   |
| Balance as of September 30, 2010        |                               |  33  |          |  33,114  |          | $             |  263  |          | $      |  110,191  |          | $             |  47,846  |           | $      |  158,300  |
|                                    |                               |           |          |               |          |          |            |          |   |                |          |          |               |           |   |                |           |   |

----

|                                           |                                                 |                                                              |                  |                                                  |                                      |                |               |       |               |               |
|------------------------------------------------|------------------------------------------------------|-------------------------------------------------------------------|-----------------------|-------------------------------------------------------|-------------------------------------------|---------------------|--------------------|------------|--------------------|--------------------|
|                                           |                                                 |                                                              |                  |                                                  |                                      | Nine Months Ended   |
|                                           |                                                 |                                                              |                  |                                                  |                                      | September 30,       |
|                                           |                                                 |                                                              |                  |                                                  |                                      | 2010           |               | 2009  |
|                                           |                                                 |                                                              |                  |                                                  |                                      |                |               |       |               |               |
| Cash flows from operating activities:          |                                                 |                                                              |                  |                                                  |                                      |
|                                           | Net income                                           | $                                                                 |  101,194    |                                                  | $                                         |  37,452   |
|                                           |                                                 |  Adjustments to reconcile net income to net cash provided by |                  |                                                  |                                      |                |               |
|                                           |                                                 |                                                              | operating activities: |                                                  |                                      |                |               |       |
|                                           |                                                 |                                                              |                  | Depletion, depreciation and amortization              |                                      |  9,381    |               |       |  10,066  |
|                                           |                                                 |                                                              |                  | Deferred income taxes                                 |                                      |  628      |               |       |  (198)        |
|                                           |                                                 |                                                              |                  | Accretion of discount on asset retirement obligations |                                      |  409      |               |       |  363     |
|                                           |                                                 |                                                              |                  | Amortization of debt related costs                    |                                      |  136      |               |       |  153     |
|                                           |                                                 |                                                              |                  | Amortization of unit-based compensation               |                                      |  146      |               |       |  -       |
|                                           |                                                 |                                                              |                  | Commodity derivative related activity                 |                                      |  (39,409)      |               |       |  19,002  |
|                                           |                                                 | Change in operating assets and liabilities, net of effects from   |                  |                                                  |                                      |                |               |
|                                           |                                                 |                                                              | acquisitions:         |                                                  |                                      |                |               |       |
|                                           |                                                 |                                                              |                  | Accounts receivable                                   |                                      |  222      |               |       |  264     |
|                                           |                                                 |                                                              |                  | Inventories                                           |                                      |  (257)         |               |       |  923     |
|                                           |                                                 |                                                              |                  | Prepaid expenses                                      |                                      |  (126)         |               |       |  (276)        |
|                                           |                                                 |                                                              |                  | Accounts payable                                      |                                      |  3,752    |               |       |  (2,426)      |
|                                           |                                                 |                                                              |                  | Interest payable                                      |                                      |  (3)           |               |       |  110     |
|                                           |                                                 |                                                              |                  | Income taxes payable to affiliate                     |                                      |  (96)          |               |       |  (121)        |
|                                           |                                                 |                                                              |                  | Asset retirement obligations                          |                                      |  (557)         |               |       |  (738)        |
|                                           |                                                 |                                                              |                  |                                                  | Net cash provided by operating activities |                |  75,420  |       |               |  64,574  |
| Cash flows from investing activities:          |                                                 |                                                              |                  |                                                  |                                      |
|                                           | Payments for acquisition of carrying value           |                                                              |  -          |                                                  |                                      |  (54,674)      |
|                                           | Additions to oil and gas properties                  |                                                              |  (32,713)        |                                                  |                                      |  (939)         |
|                                           |                                                 |                                                              |                  |                                                  | Net cash used in investing activities     |                |  (32,713)     |       |               |  (55,613)     |
| Cash flows from financing activities:          |                                                 |                                                              |                  |                                                  |                                      |
|                                           | Borrowings under credit facility                     |                                                              |  47,000     |                                                  |                                      |  138,000  |
|                                           | Principal payments on credit facility                |                                                              |  (40,000)        |                                                  |                                      |  (3,000)       |
|                                           | Payments for acquisition in excess of carrying value |                                                              |  -          |                                                  |                                      |  (114,950)     |
|                                           | Distributions to unitholders                         |                                                              |  (49,721)        |                                                  |                                      |  (45,059)      |
|                                           | Net distributions to owner                           |                                                              |  -          |                                                  |                                      |  (7,856)       |
|                                           |                                                 |                                                              |                  |                                                  | Net cash used in financing activities     |                |  (42,721)     |       |               |  (32,865)     |
| Net decrease in cash and cash equivalents      |                                                 |  (14)                                                        |                  |                                                  |  (23,904)                            |
| Cash and cash equivalents, beginning of period |                                                 |  625                                                    |                  |                                                  |  29,936                         |
| Cash and cash equivalents, end of period       | $                                                    |  611                                                    |                  | $                                                     |  6,032                          |

----

|                               |                        |                               |   |               |               |              |           |                |   |           |               |   |               |   |
|------------------------------------|-----------------------------|------------------------------------|--------|--------------------|--------------------|-------------------|----------------|---------------------|--------|----------------|--------------------|--------|--------------------|--------|
|                               |                        |                               |   | Three Months Ended |               | Nine Months Ended |
|                               |                        |                               |   | September 30,      |               | September 30,     |
|                               |                        |                               |   | 2010          |               | 2009         |           | 2010           |   | 2009      |
|                               |                        |                               |   |               |               |              |           |                |   |           |               |   |               |   |
| Net income                         | $                           |  6,515                   |   | $                  |  24,936  |              | $              |  101,194  |   | $              |  37,452  |
| Other comprehensive income (loss): |                        |                               |   |               |               |              |           |                |   |           |               |
|                               | Hedge activity, net of tax: |                               |   |               |               |              |           |                |   |           |               |   |
|                               |                        | Hedge fair value changes, net      |   |  -       |               |              |  -   |                |   |  -   |               |   |  11,509  |
|                               |                        | Hedge gains included in net income |   |  (11,672)     |               |              |  (17,679) |                |   |  (34,592) |               |   |  (53,055)     |
|                               |                        | Other comprehensive loss           |   |  (11,672)     |               |              |  (17,679) |                |   |  (34,592) |               |   |  (41,546)     |
| Comprehensive income (loss)        | $                           |  (5,157)                      |   | $                  |  7,257   |              | $              |  66,602   |   | $              |  (4,094)      |

----

----

----

|                              |                  | RestrictedUnits   |               | Phantom Units      |
|-----------------------------------|-----------------------|-------------------|--------------------|--------------------|
|                              |                  |              |               |               |
| Outstanding at beginning of year  |  17,121     |              |  -       |
|                              | Units granted         |  8,744  |               |  35,118  |
|                              | Lapse of restrictions |  (13,653)    |               |  -       |
| Outstanding at September 30, 2010 |  12,212     |              |  35,118  |

----

----

|   | · | Level 1 – quoted prices for identical assets or liabilities in active markets. |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | Level 2 – quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates) and inputs derived principally from or corroborated by observable market data by correlation or other means. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                  |   | Fair Value Measurements at Reporting Date Using |   |   |               |
|-----------------------|--------|-------------------------------------------------|--------|--------|--------------------|
|                  |   | Quoted Prices in                                |   |   | Significant        |   |   |   |   |   |   |
|                  |   | Active Markets                                  |   |   | Other              |   |   | Significant |   |   |   |
|                  |   | for Identical                                   |   |   | Observable         |   |   | Unobservable |   |   | Fair Value at |
|                  |   | Assets                                          |   |   | Inputs             |   |   | Inputs |   |   | September 30, |
|                  |   | (Level 1)                                       |   |   | (Level 2)          |   |   | (Level 3) |   |   | 2010  |
|                  |   | (in thousands)                                  |
| Assets:               |   |                                            |   |   |               |   |   |   |   |   |   |
| Commodity derivatives | $      |  -                                    |   | $      |  31,915  |   | $ |  502  |   | $ |  32,417  |
| Liabilities:          |   |                                            |   |   |               |   |   |   |   |   |   |
| Commodity derivatives | $      |  -                                    |   | $      |  18,268  |   | $ |  3,640  |   | $ |  21,908  |
| Credit facility       | $      |  -                                    |   | $      |  71,019  |   | $ |  -  |   | $ |  71,019  |

| Fair Value Measurements Using SignificantUnobservable Inputs (Level 3) |                              | Three Months EndedSeptember 30, 2010 |            | Nine Months EndedSeptember 30, 2010 |
|------------------------------------------------------------------------|-----------------------------------|--------------------------------------|-----------------|-------------------------------------|
|                                                                   |                              |                                 | (in thousands)  |
|                                                                   |                              |                                 |            |                                |   |   |   |
| Beginning asset (liability) balance                                    |                              | $                                    |  143  |                                | $ |  (4,906) |
| Net settlement receipts                                                |                              |                                 |  (801)     |                                |   |  (1,688) |
| Fair value changes (a):                                                |                              |                                 |            |                                |   |   |
|                                                                   | Included in earnings - realized   |                                 |            |  (647)                         |   |   |  (2,609) |
|                                                                   | Included in earnings - unrealized |                                 |            |  (1,833)                       |   |   |  6,065  |
| Ending liability balance                                               |                              | $                                    |  (3,138)   |                                | $ |  (3,138) |

----

|                  |   |   |               | September 30, 2010 |           | December 31, 2009  |
|-----------------------|--------|--------|--------------------|--------------------|----------------|--------------------|
|                  |   |   |               | Carrying           |           |               |   |   | Carrying |   |   |   |
|                  |   |   |               | Value              |           | Fair Value         |   | Value |   | Fair Value |
|                  |   |   |               |               | (in thousands) |
| Assets:               |   |   |               |               |           |               |   |   |   |   |   |   |
| Commodity derivatives |   | $      |  32,417  |               | $              |  32,417  |   | $ |  39,826  |   | $ |  39,826  |
|                  |   |   |               |               |           |               |   |   |   |   |   |   |   |   |
| Liabilities:          |   |   |               |               |           |               |   |   |   |   |   |   |
| Commodity derivatives |   | $      |  21,908  |               | $              |  21,908  |   | $ |  33,811  |   | $ |  33,811  |
| Credit facility       |   | $      |  74,000  |               | $              |  71,019  |   | $ |  67,000  |   | $ |  61,718  |

----

|                            |       |           | Three Months Ended |   |   | Nine Months Ended |
|---------------------------------|------------|----------------|--------------------|--------|--------|-------------------|
|                            |       |           | September 30,      |   |   | September 30,     |
|                            |       |           | 2010          |   |   | 2009         |   |   | 2010  |   |   | 2009  |
|                            |       | (in thousands) |
| Current provisions:             |       |           |               |   |   |              |   |   |   |   |   |
|                            | U.S. state | $              |  15      |   | $      |  172    |   | $ |  365  |   | $ |  427  |
| Deferred provisions (benefits): |       |           |               |   |   |              |   |   |   |   |   |
|                            | U.S. state |           |  45      |   |   |  (61)        |   |   |  628  |   |   |  (198) |
|                            |       | $              |  60      |   | $      |  111    |   | $ |  993  |   | $ |  229  |

----

|                                   |                                                   |   |              | Three Months Ended |   |              | Nine Months Ended |
|----------------------------------------|--------------------------------------------------------|--------|-------------------|--------------------|--------|-------------------|-------------------|
|                                   |                                                   |   |              | September 30,      |   |              | September 30,     |
|                                   |                                                   |   |              | 2010          |   |              | 2009         |   |   | 2010  |   |   | 2009  |
|                                   |                                                   |   | (in thousands)    |
|                                   |                                                   |   |              |               |   |              |              |   |   |   |   |   |   |
| Beginning asset retirement obligations |                                                   | $      |  7,229  |               | $      |  6,280  |              | $ |  7,105  |   | $ |  6,427  |
|                                   | Liabilities settled                                    |   |              |  (393)        |   |              |  (349)       |   |   |  (557) |   |   |  (738) |
|                                   | New wells placed on production and changes in estimate |   |              |  10      |   |              |  -      |   |   |  25  |   |   |  -  |
|                                   | Accretion of discount                                  |   |              |  136     |   |              |  121    |   |   |  409  |   |   |  363  |
| Ending asset retirement obligations    |                                                   | $      |  6,982  |               | $      |  6,052  |              | $ |  6,982  |   | $ |  6,052  |

----

|   |   | 2010         |
|--------|--------|-------------------|
|   |   | Fourth            |
|   |   | Quarter           |
|   |   |
|   |   |              |   |
| Oil    | $      |  2,150  |
| NGL    |   |  239    |
| Gas    |   |  172    |
| Total  | $      |  2,561  |

----

|             |                              |                  |      |   | 2010         |              |   |                     |               |   |              |               |   |              |
|------------------|-----------------------------------|-----------------------|-----------|--------|-------------------|-------------------|--------|--------------------------|--------------------|--------|-------------------|--------------------|--------|-------------------|
|             |                              |                  |      |   |              | Fourth            |   | Year Ending December 31, |
|             |                              |                  |      |   |              | Quarter           |   |                     | 2011          |   |              | 2012          |   |              | 2013  |
| Oil Derivatives: |                              |                  |      |   |              |              |   |                     |               |   |              |               |
|             | Swap contracts:                   |                  |      |   |              |              |   |                     |               |   |              |               |   |
|             |                              | Volume (Bbls per day) |      |   |  2,500  |              |   |  750           |               |   |  3,000  |               |   |  3,000  |
|             |                              | Price per Bbl         |      | $      |  93.34  |              | $      |  77.25         |               | $      |  79.32  |               | $      |  81.02  |
|             | Collar contracts:                 |                  |      |   |              |              |   |                     |               |   |              |               |   |
|             |                              | Volume (Bbls per day) |      |   |  -      |              |   |  2,000         |               |   |  -      |               |   |  -      |
|             |                              | Price per Bbl:        |      |   |              |              |   |                     |               |   |              |               |   |              |
|             |                              |                  | Ceiling   |   | $                 |  -      |   | $                        |  170.00  |   | $                 |  -       |   | $                 |  -  |
|             |                              |                  | Floor     |   | $                 |  -      |   | $                        |  115.00  |   | $                 |  -       |   | $                 |  -  |
|             | Collar contracts with short puts: |                  |      |   |              |              |   |                     |               |   |              |               |   |
|             |                              | Volume (Bbls per day) |      |   |  1,250  |              |   |  1,000         |               |   |  1,000  |               |   |  1,000  |
|             |                              | Price per Bbl:        |      |   |              |              |   |                     |               |   |              |               |   |              |
|             |                              |                  | Ceiling   |   | $                 |  89.06  |   | $                        |  99.60   |   | $                 |  103.50  |   | $                 |  111.50  |
|             |                              |                  | Floor     |   | $                 |  70.00  |   | $                        |  70.00   |   | $                 |  80.00   |   | $                 |  83.00  |
|             |                              |                  | Short Put |   | $                 |  55.00  |   | $                        |  55.00   |   | $                 |  65.00   |   | $                 |  68.00  |

|             |            |                  |   |   | 2010         |    |   |        |                     |   |        |
|------------------|-----------------|-----------------------|--------|--------|-------------------|---------|--------|-------------|--------------------------|--------|-------------|
|             |            |                  |   |   |              | Fourth  |   |        | Year Ending December 31, |
|             |            |                  |   |   |              | Quarter |   |        | 2011                |   |        | 2012  |
| NGL Derivatives: |            |                  |   |   |              |    |   |        |                     |
|             | Swap contracts: |                  |   |   |              |    |   |        |                     |   |
|             |            | Volume (Bbls per day) |   |   |  750    |    |   | 750    |                     |   | 750    |
|             |            | Price per Bbl         |   | $      |  52.52  |    | $      | 34.65  |                     | $      | 35.03  |

----

|             |                  |                                        |   |   | 2010         |   |                     |              |       |   |              |   |   |              |
|------------------|-----------------------|---------------------------------------------|--------|--------|-------------------|--------|--------------------------|-------------------|------------|--------|-------------------|--------|--------|-------------------|
|             |                  |                                        |   |   | Fourth            |   | Year Ending December 31, |
|             |                  |                                        |   |   | Quarter           |   | 2011                |              | 2012  |   | 2013         |
| Gas Derivatives: |                  |                                        |   |   |              |   |                     |              |       |   |              |   |
|             | Swap contracts:       |                                        |   |   |              |   |                     |              |       |   |              |   |   |
|             |                  | Volume (MMBtus per day)                     |   |   |  5,000  |   |                     |  2,500  |       |   |  5,000  |   |   |  2,500  |
|             |                  | Price per MMBtu                             |   | $      |  7.44   |   | $                        |  6.65   |       | $      |  6.43   |   | $      |  6.89   |
|             | Basis Swap contracts: |                                        |   |   |              |   |                     |              |       |   |              |   |   |
|             |                  | Permian Basin index swaps - (MMBtu per day) |   |   |  2,500  |   |                     |  -      |       |   |  2,500  |   |   |  2,500  |
|             |                  | Price differential ($/MMBtu)                |   | $      |  (0.87)      |   | $                        |  -      |       | $      |  (0.30)      |   | $      |  (0.31)      |

| Fair Value of Derivative Instruments as of September 30, 2010 |
|---------------------------------------------------------------|
|                                                          |   |   | Asset Derivatives (a) |   | Liability Derivatives (a) |
| Type                                                          |   | Balance SheetLocation |   | FairValue |   | Balance SheetLocation |   | FairValue |
|                                                          |   |   |   |   | (in thousands) |   |   |   | (in thousands) |
| Derivatives not designated as hedging instruments             |   |   |   |   |   |   |   |   |
|                                                          | Commodity price derivatives |   | Derivatives - current |   | $ |  24,177  |   | Derivatives - current |   | $ |  4,041  |
|                                                          | Commodity price derivatives |   | Derivatives - noncurrent |   |   |  10,090  |   | Derivatives - noncurrent |   |   |  19,717  |
| Total Derivatives                                             |   |   | $ |  34,267  |   |   |   | $ |  23,758  |

| Fair Value of Derivative Instruments as of December 31, 2009 |
|--------------------------------------------------------------|
|                                                         |   |   | Asset Derivatives (a) |   | Liability Derivatives (a) |
| Type                                                         |   | Balance SheetLocation |   | FairValue |   | Balance SheetLocation |   | FairValue |
|                                                         |   |   |   |   | (in thousands) |   |   |   | (in thousands) |
| Derivatives not designated as hedging instruments            |   |   |   |   |   |   |   |   |
|                                                         | Commodity price derivatives |   | Derivatives - current |   | $ |  16,042  |   | Derivatives - current |   | $ |  3,606  |
|                                                         | Commodity price derivatives |   | Derivatives - noncurrent |   |   |  23,784  |   | Derivatives - noncurrent |   |   |  30,205  |
| Total derivatives                                            |   |   | $ |  39,826  |   |   |   | $ |  33,811  |

| (a) | Derivative assets and liabilities shown in the tables above are presented as gross assets and liabilities, without regard to master netting arrangements which are considered in the presentations of derivative assets and liabilities in the accompanying consolidated balance sheets. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |                                                       |                                                | Amount of Gain Recognized in AOCI on Effective Portion |
|--------|------------------------------------------------------------|-----------------------------------------------------|--------------------------------------------------------|
|   |                                                       |                                                | Three Months Ended                                     |   | Nine Months Ended |
|   | Derivatives in Cash FlowHedging Relationships              |                                                | September 30,                                          |   | September 30, |
|   |                                                       | 2010                                           |                                                   | 2009  |   | 2010  |   | 2009  |
|   |                                                       |                                                | (in thousands)                                         |
|   |                                                       |                                                |                                                   |   |   |   |   |   |   |   |   |   |   |
|   | Commodity contracts                                        |                                                | $                                                      |  -  |   | $ |  -  |   | $ |  -  |   | $ |  11,235  |
|   |                                                       |                                                |                                                   |   |   |   |   |   |   |   |   |   |   |
|   | Location of Gain (Loss)Reclassified fromAOCI into Earnings |                                                |                                                   |   |   |   |   |   |   |   |   |   |   |
|   |                                                       | Amount of Gain Reclassified from AOCI into Earnings |
|   |                                                       | Three Months Ended                                  |                                                   | Nine Months Ended |
|   |                                                       | September 30,                                       |                                                   | September 30, |
|   |                                                       | 2010                                           |                                                   | 2009  |   | 2010  |   | 2009  |
|   |                                                       |                                                | (in thousands)                                         |
|   |                                                       |                                                |                                                   |   |   |   |   |   |   |   |   |   |   |
|   | Oil and gas revenues                                       |                                                | $                                                      |  11,766  |   | $ | 17,728  |   | $ | 34,914  |   | $ | 53,306  |

|   |                                              |   |                                                         |          |               | Amount of Gain (Loss) Recognized in Earnings on Derivatives |
|--------|---------------------------------------------------|--------|--------------------------------------------------------------|---------------|--------------------|-------------------------------------------------------------|
|   | Derivatives Not Designated as Hedging Instruments |   | Location of Gain (Loss)Recognized in Earnings on Derivatives |          | Three Months Ended |                                                        | Nine Months Ended |
|   |                                              |   |                                                         | September 30, |               |                                                        | September 30, |
|   |                                              |   |                                                         | 2010     |               |                                                        | 2009  |   |   | 2010  |   |   | 2009  |
|   |                                              |   |                                                         |          |               | (in thousands)                                              |
|   |                                              |   |                                                         |          |               |                                                        |   |   |   |   |   |   |   |   |   |
|   | Commodity contracts                               |   | Derivative gain (loss), net                                  |          | $                  |  (19,971)                                              |   | $ |  (2,461) |   | $ |  20,334  |   | $ |  (34,921) |

----

|   |                      |                                            |   | Three Months Ended |           | Nine Months Ended |
|--------|---------------------------|-------------------------------------------------|--------|--------------------|----------------|-------------------|
|   |                      |                                            |   | September 30,      |           | September 30,     |
|   |                      |                                            |   | 2010          |           | 2009         |   | 2010  |   | 2009  |
|   |                      |                                            |   | (in thousands)     |
|   |                      |                                            |   |               |           |              |   |   |   |   |   |   |   |   |
|   | Hedge gains               |                                            | $      |  2,559   |           | $                 |  3,969  |   | $ |  7,595  |   | $ |  11,778  |
|   | Fair value gains (losses) |                                            |   |  (16,792)     |           |              |  1,462  |   |   |  31,814  |   |   |  (30,780) |
|   |                      | Total noncash derivative-related gains (losses) |   | $                  |  (14,233) |              | $ |  5,431  |   | $ |  39,409  |   | $ |  (19,002) |

|   |                                               |   |   | Three Months Ended |              | Nine Months Ended |
|--------|----------------------------------------------------|--------|--------|--------------------|-------------------|-------------------|
|   |                                               |   |   | September 30,      |              | September 30,     |
|   |                                               |   |   | 2010          |              | 2009         |   | 2010  |   | 2009  |
|   |                                               |   |   | (in thousands)     |
|   |                                               |   |   |               |              |              |   |   |   |   |   |   |   |   |
|   | Producing well overhead (COPAS) fees               |   | $      |  2,572   |              | $                 |  2,262  |   | $ |  7,656  |   | $ |  6,436  |
|   | Payment of lease operating and supervision charges |   |   |  2,149   |              |              |  1,776  |   |   |  6,079  |   |   |  4,766  |
|   | Drilling and completion related charges            |   |   |  639     |              |              |  -  |   |   |  3,005  |   |   |  13  |
|   | General and administrative expenses                |   |   |  1,080   |              |              |  480  |   |   |  3,141  |   |   |  1,358  |
|   |                                               | Total  |   | $                  |  6,440  |              | $ |  4,518  |   | $ |  19,881  |   | $ |  12,573  |

----

----

| · | Net income decreased to $6.5 million ($.20 per common unit) for the third quarter of 2010, as compared to $24.9 million ($0.96 per common unit) for the third quarter of 2009.  The decrease in net income is primarily attributable to a $17.5 million increase in net commodity derivative losses. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Daily sales volumes increased by 13 percent to 6,631 BOEPD, as compared to 5,853 BOEPD in the third quarter of 2009, primarily due to production volumes from new wells drilled as part of the two-rig drilling program that commenced in November 2009. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | The average reported oil, NGL and gas sales prices decreased to $100.02 and $41.25 per Bbl and $4.53 per Mcf, respectively, during the third quarter of 2010, as compared to $109.61 and $45.42 per Bbl and $5.05 per Mcf, respectively, during the third quarter of 2009. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Average oil and gas production costs per BOE (excluding production and ad valorem taxes) increased to $16.33 for the third quarter of 2010, as compared to $16.26 for the third quarter of 2009, due primarily to increased workover activity during 2010. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Net cash provided by operating activities decreased to $24.6 million in the third quarter of 2010, as compared to $25.5 million in the third quarter of 2009. The decrease in 2010, as compared to 2009, is primarily due to working capital changes. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                     |   | Three Months Ended |   | Nine Months Ended |
|--------------------------|--------|--------------------|--------|-------------------|
|                     |   | September 30,      |   | September 30,     |
|                     |   | 2010          |   |              | 2009  |   | 2010  |   |   | 2009  |
|                     |   |               |   |              |   |   |   |   |   |   |
| Oil (Bbls)               |   | 3,894         |   |              | 3,482  |   | 3,874  |   |   | 3,699  |
| NGLs (Bbls)              |   | 1,722         |   |              | 1,333  |   | 1,628  |   |   | 1,431  |
| Gas (Mcf)                |   | 6,092         |   |              | 6,229  |   | 5,987  |   |   | 6,315  |
| Daily sales volume (BOE) |   | 6,631         |   |              | 5,853  |   | 6,500  |   |   | 6,183  |

|                     |        | Three Months Ended |               | Nine Months Ended |
|--------------------------|-------------|--------------------|--------------------|-------------------|
|                     |        | September 30,      |               | September 30,     |
|                     |        | 2010          |               | 2009         |   | 2010  |   | 2009  |
|                     |        |               |               |              |   |   |   |   |   |   |   |   |
| Average reported prices: |        |               |               |              |   |   |   |   |   |   |   |
|                     | Oil (Bbls)  | $                  |  100.02  |              | $ |  109.61  |   | $ |  101.79  |   | $ |  94.96  |
|                     | NGLs (Bbls) | $                  |  41.25   |              | $ |  45.42  |   | $ |  43.23  |   | $ |  39.41  |
|                     | Gas (Mcf)   | $                  |  4.53    |              | $ |  5.05  |   | $ |  4.80  |   | $ |  5.16  |
|                     | Total (BOE) | $                  |  73.61   |              | $ |  80.93  |   | $ |  75.93  |   | $ |  71.20  |
|                     |        |               |               |              |   |   |   |   |   |   |   |   |
| Average realized prices: |        |               |               |              |   |   |   |   |   |   |   |
|                     | Oil (Bbls)  | $                  |  73.92   |              | $ |  65.45  |   | $ |  75.56  |   | $ |  52.65  |
|                     | NGLs (Bbls) | $                  |  30.61   |              | $ |  28.35  |   | $ |  31.98  |   | $ |  23.47  |
|                     | Gas (Mcf)   | $                  |  3.23    |              | $ |  2.45  |   | $ |  3.48  |   | $ |  2.63  |
|                     | Total (BOE) | $                  |  54.32   |              | $ |  48.00  |   | $ |  56.25  |   | $ |  39.62  |

----

|                     |   | Three Months Ended |        | Nine Months Ended |
|--------------------------|--------|--------------------|-------------|-------------------|
|                     |   | September 30,      |        | September 30,     |
|                     |   | 2010          |        | 2009         |   | 2010  |   | 2009  |
|                     |   |               |        |              |   |   |   |   |   |   |   |   |
| Lease operating expenses |   | $                  | 14.12  |              | $ | 14.50  |   | $ | 13.98  |   | $ | 13.95  |
| Workover costs           |   |               | 2.21   |              |   | 1.76  |   |   | 1.92  |   |   | 1.02  |
| Production costs         |   | $                  | 16.33  |              | $ | 16.26  |   | $ | 15.90  |   | $ | 14.97  |

|                                  |   | Three Months Ended |       | Nine Months Ended |
|---------------------------------------|--------|--------------------|------------|-------------------|
|                                  |   | September 30,      |       | September 30,     |
|                                  |   | 2010          |       | 2009         |   | 2010  |   | 2009  |
|                                  |   |               |       |              |   |   |   |   |   |   |   |   |
| Ad valorem taxes                      |   | $                  | 2.09  |              | $ | 2.37  |   | $ | 2.16  |   | $ | 2.31  |
| Production taxes                      |   |               | 2.77  |              |   | 2.45  |   |   | 2.89  |   |   | 2.03  |
| Total production and ad valorem taxes |   | $                  | 4.86  |              | $ | 4.82  |   | $ | 5.05  |   | $ | 4.34  |

----

----

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----

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|                                                         |   | Derivative     |
|--------------------------------------------------------------|--------|----------------|
|                                                         |   | Contract Net   |
|                                                         |   | Assets         |
|                                                         |   | (in thousands) |
|                                                         |   |           |
| Fair value of contracts outstanding as of December 31, 2009  |   | $              |  6,015  |
| Changes in contract fair value                               |   |           |  20,334  |
| Contract maturities                                          |   |           |  (15,840) |
| Fair value of contracts outstanding as of September 30, 2010 |   | $              |  10,509  |

----

|             |                                          |                                         |                |              |              |                     |              |              |             |              |               |             |              |               |          | Asset              |
|------------------|-----------------------------------------------|----------------------------------------------|---------------------|-------------------|-------------------|--------------------------|-------------------|-------------------|------------------|-------------------|--------------------|------------------|-------------------|--------------------|---------------|--------------------|
|             |                                          |                                         |                | Three Months      |              |                     |              |              |             |              |               |             |              |               | (Liability)   |
|             |                                          |                                         |                | Ending            |              |                     |              |              |             |              |               |             |              |               | Fair Value at |
|             |                                          |                                         |                | December 31,      |              | Year Ending December 31, |              | September 30,     |
|             |                                          |                                         |                |              | 2010         |                     |              | 2011         |             |              | 2012          |             |              | 2013          |          | 2010 (a)           |
|             |                                          |                                         |                |              |              |                     |              |              |             |              |               |             |              |               |          | (in thousands)     |
| Oil Derivatives: |                                          |                                         |                |              |              |                     |              |              |             |              |               |             |              |               |
|             | Swap contracts:                               |                                         |                |              |              |                     |              |              |             |              |               |             |              |               |          |
|             |                                          | Volume (Bbls per day)                        |                | 2,500        |              |                     |  750    |              |             |  3,000  |               |             |  3,000  |               | $             |  (14,627)     |
|             |                                          |                                         |  Price per Bbl | $                 | 93.34        |                     | $                 | 77.25        |             | $                 | 79.32         |             | $                 | 81.02         |          |               |   |
|             | Collar contracts:                             |                                         |                |              |              |                     |              |              |             |              |               |             |              |               |          |
|             |                                          | Volume (Bbls per day)                        |                |  -      |              |                     | 2,000        |              |             |  -      |               |             |  -      |               | $             |  23,152  |
|             |                                          | Price per Bbl:                               |                |              |              |                     |              |              |             |              |               |             |              |               |          |               |
|             |                                          |                                         | Ceiling             | $                 |  -      |                     | $                 | 170.00       |             | $                 |  -       |             | $                 |  -       |          |               |   |
|             |                                          |                                         | Floor               | $                 |  -      |                     | $                 | 115.00       |             | $                 |  -       |             | $                 |  -       |          |               |   |
|             | Collar contracts with short puts:             |                                         |                |              |              |                     |              |              |             |              |               |             |              |               |          |
|             |                                          | Volume (Bbls per day)                        |                |  1,250  |              |                     |  1,000  |              |             |  1,000  |               |             |  1,000  |               | $             |  (2,196)      |
|             |                                          | Price per Bbl:                               |                |              |              |                     |              |              |             |              |               |             |              |               |          |               |
|             |                                          |                                         | Ceiling             | $                 |  89.06  |                     | $                 |  99.60  |             | $                 |  103.50  |             | $                 |  111.50  |          |               |   |
|             |                                          |                                         | Floor               | $                 |  70.00  |                     | $                 |  70.00  |             | $                 |  80.00   |             | $                 |  83.00   |          |               |   |
|             |                                          |                                         | Short Put           | $                 |  55.00  |                     | $                 |  55.00  |             | $                 |  65.00   |             | $                 |  68.00   |          |               |   |
|             | Average forward NYMEX oil prices (b)          | $                                            | 82.53          |              | $                 | 85.34               |              | $                 | 87.42       |              | $                  | 88.09       |              |               |          |
|             |                                          |                                         |                |              |              |                     |              |              |             |              |               |             |              |               |          |               |   |
| NGL Derivatives: |                                          |                                         |                |              |              |                     |              |              |             |              |               |             |              |               |
|             | Swap contracts:                               |                                         |                |              |              |                     |              |              |             |              |               |             |              |               |          |
|             |                                          | Volume (Bbls per day)                        |                | 750          |              |                     | 750          |              |             | 750          |               |             |  -      |               | $             |  (3,138)      |
|             |                                          |                                         | Price per Bbl       | $                 | 52.52        |                     | $                 | 34.65        |             | $                 | 35.03         |             | $                 |  -       |          |               |   |
|             | Average forward Mont Belvieu NGL prices (c)   | $                                            | 47.18          |              | $                 | 42.80               |              | $                 | 40.84       |              | $                  |  -     |              |               |          |
|             |                                          |                                         |                |              |              |                     |              |              |             |              |               |             |              |               |          |               |   |
| Gas Derivatives: |                                          |                                         |                |              |              |                     |              |              |             |              |               |             |              |               |
|             | Swap contracts:                               |                                         |                |              |              |                     |              |              |             |              |               |             |              |               |          |
|             |                                          | Volume (MMBtus per day)                      |                | 5,000        |              |                     |  2,500  |              |             |  5,000  |               |             |  2,500  |               | $             |  7,392   |
|             |                                          |                                         | Price per MMBtu (d) | $                 |  7.44   |                     | $                 |  6.65   |             | $                 |  6.43    |             | $                 |  6.89    |          |               |   |
|             | Average forward index gas prices (e)          | $                                            |  3.53     |              | $                 |  4.23          |              | $                 |  5.00  |              | $                  |  5.37  |              |               |          |
|             | Basis swap contracts:                         |                                         |                |              |              |                     |              |              |             |              |               |             |              |               |          |
|             |                                          | Permian Basin index swaps - (MMBtus per day) |                | 2,500        |              |                     |  -      |              |             |  2,500  |               |             |  2,500  |               | $             |  (74)         |
|             |                                          | Price differential ($/MMBtu) (d)             | $                   |  (0.87)      |              | $                        |  -      |              | $                |  (0.30)      |               | $                |  (0.31)      |               |          |               |
|             | Average forward basis differential prices (e) | $                                            |  (0.24)        |              | $                 |  -             |              | $                 |  (0.34)     |              | $                  |  (0.38)     |              |               |          |

| (a) | In accordance with ASC 210-20 and ASC 815-10, the Partnership classifies the fair value amounts of derivative assets and liabilities executed under master netting arrangements as net derivative assets or net derivative liabilities, as the case may be.  The net asset and liability amounts shown above have been provided on a commodity contract-type basis, which may differ from their master netting arrangements classifications. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | Forward Mont Belvieu–posted-prices are not available as formal market quotes. These forward prices represent estimates as of October 27, 2010 provided by third parties who actively trade in the derivatives. Accordingly, these prices are subject to estimates and assumptions. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | To minimize basis risk, the Partnership enters into basis swaps to convert the index prices of those swap contracts from a NYMEX index to an El Paso Natural Gas (Permian Basin) posting index. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e) | The average forward index gas prices are based on October 27, 2010 NYMEX market quotes and October 27, 2010 estimated El Paso Natural Gas (Permian Basin) differentials to NYMEX prices. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|        |                    |       |             |          |                     |   |          |          |       |          |   |       |               |   |          |               |
|-------------|-------------------------|------------|------------------|---------------|--------------------------|--------|---------------|---------------|------------|---------------|--------|------------|--------------------|--------|---------------|--------------------|
|        |                    |       | Three Months     |          |                     |   |          |          |       |          |   |       |               |   | Liability     |
|        |                    |       | Ending           |          |                     |   |          |          |       |          |   |       |               |   | Fair Value at |
|        |                    |       | December 31,     |          | Year Ending December 31, |   |          | September 30, |
|        |                    |       | 2010        |          | 2011                |   | 2012     |          | 2013  |          |   | 2010  |
|        |                    |       | ($ in thousands) |
| Total Debt: |                    |       |             |          |                     |   |          |          |       |          |   |       |               |   |
|        | Variable rate principal |       |             |          |                     |   |          |          |       |          |   |       |               |   |          |
|        |                    | maturities | $                |  -  |                     | $      |  -  |          | $          |  -  |   | $          |  74,000  |   | $             |  71,019  |
|        |                    |       |             |          |                     |   |          |          |       |          |   |       |               |   |          |               |
|        | Average interest rate   |       | 1.24%            |          |                     | 1.42%  |          |          | 1.94%      |          |   | 2.64%      |               |   |          |

----

----

----

| ExhibitNumber |   |   |    |  Description                                                                      |
|---------------|--------|--------|---------|----------------------------------------------------------------------------------------|
| 31.1 (a)      |   |   | — | Chief Executive Officer certification under Section 302 of Sarbanes-Oxley Act of 2002. |
| 31.2 (a)      |   |   | — | Chief Financial Officer certification under Section 302 of Sarbanes-Oxley Act of 2002. |
| 32.1 (b)      |   |   | — | Chief Executive Officer certification under Section 906 of Sarbanes-Oxley Act of 2002. |
| 32.2 (b)      |   |   | — | Chief Financial Officer certification under Section 906 of Sarbanes-Oxley Act of 2002. |

----

|                                                                              | PIONEER SOUTHWEST ENERGY PARTNERS, L.P. |
|-----------------------------------------------------------------------------------|-----------------------------------------|
|                                                                              | By:                                |  Pioneer Natural Resources GP LLC, its general partner |
|                                                                              |                                    |   |
|                                                                              |                                    |   |
| Date:          October 28, 2010 | By:                                | /s/ Richard P. Dealy                                                                 |
|                                                                              |                                    | Richard P. Dealy |
|                                                                              |                                    | Executive Vice President and Chief |
|                                                                              |                                    | Financial Officer |
|                                                                              |                                    |   |
|                                                                              |                                    |   |
|                                                                              |                                    |   |
|                                                                              |                                    |   |
| Date:          October 28, 2010 | By:                                | /s/ Frank W. Hall                                                                      |
|                                                                              |                                    | Frank W. Hall |
|                                                                              |                                    | Vice President and Chief |
|                                                                              |                                    | Accounting Officer |

----

| ExhibitNumber |   |   |    |  Description                                                                      |
|---------------|--------|--------|---------|----------------------------------------------------------------------------------------|
| 31.1 (a)      |   |   | — | Chief Executive Officer certification under Section 302 of Sarbanes-Oxley Act of 2002. |
| 31.2 (a)      |   |   | — | Chief Financial Officer certification under Section 302 of Sarbanes-Oxley Act of 2002. |
| 32.1 (b)      |   |   | — | Chief Executive Officer certification under Section 906 of Sarbanes-Oxley Act of 2002. |
| 32.2 (b)      |   |   | — | Chief Financial Officer certification under Section 906 of Sarbanes-Oxley Act of 2002. |