Larry E. Lee, who helped create the company that became Halcón Resources Corp. (NYSE: HK), is on the move again, buying Permian Basin assets and, more recently, interest in the general partner of an MLP.

Through the deal, Lee would be able to acquire control of the E&P activities of New Source Energy Partners LP (NYSE: NSLP) if certain conditions are met, including the purchase of some of Lee’s oil and gas assets. The transaction is another sign that E&P MLPs may be struggling more than their publically traded cousins in the downturn.

New Source said April 27 that Lee’s 2100 Energy LLC acquired an 18.4% interest in New Source Energy GP LLC. The interest was purchased from Kristian B. Kos, New Source’s chairman and CEO. New Source is an Oklahoma City company with conventional resource reservoirs in east-central Oklahoma and oilfield services that specialize in increasing efficiencies and safety in drilling and completion processes.

The deal gives Lee the option to buy Kos’ remaining 51% of the general partner, which is owned by Kos’ company Deylau LLC. Lee would be able to purchase the interest if New Source acquires at least $150 million of oil and gas properties from Lee’s company, 2100 Energy. Doing so would give Lee and his team full responsibility for the E&P activities of the company.

A separate Lee company, RAM Energy LLC, recently acquired more than $100 million of conventional, low-decline assets primarily in the Permian and Ark-La-Tex regions. RAM operates more than 194 wells and produces about 2,000 barrels of oil equivalent per day. It also owns interests in 258 nonoperated producing wells. RAM employs 43 people, including 19 field personnel.

Analysts have questioned the long-term viability of the upstream business model. In an April 20 deal, MLP Vanguard Natural Resources LLC (NYSE: VNR) said it would buy its fellow MLP LRR Energy LP (NYSE: LRE) in a deal worth $539 million.

Kos acknowledged in a press release that the downturn has been difficult for the industry and for the company.

“While I am pleased with the performance of our oilfield services business in this market environment, our upstream business has faced numerous challenges,” he said. “The current commodity price environment provides a unique opportunity to prudently acquire select oil and gas properties. Larry's decision to acquire an interest in the partnership's general partner provides NSLP with the ability to take advantage of this environment.”

Since its IPO in 2013, New Source has so far concentrated its efforts in east-central Oklahoma in the conventional Hunton Reservoir. As of April 27, the partnership had a $96 million market cap.

The agreement sets up a number of caveats, including that any oil and gas acquisition consummated by New Source that 2100 Energy sources or any sale of assets from 2100 Energy or Lee to New Source will occur in a new, wholly-owned subsidiary of the company that will have its own set of incentive rights—and will be owned by 2100 Energy or Lee.

Lee said he intends to contribute to New Source's E&P activities with a focus on growing distributions and enhancing unitholder value.

“I am excited to work with senior management to grow NSLP by completing and integrating attractive and accretive E&P acquisitions," he said.

Lee has been active in the public and private oil and natural gas business for more than 39 years. Lee built RAM Energy Resources into a publicly traded E&P company that subsequently became Halcón.

New Source said in January that the partnership and its general partner have been sued in Oklahoma state court by former chairman and senior geologist David J. Chernicky. Chernicky accuses the companies of withholding fair value for various working interests acquired by the partnership.

The company has said that Chernicky’s claims against the partnership and its general partner are without merit. Chernicky owns a 30% interest in the general partner and, through entities he controls, a significant number of the New Source’s common units and subordinated units.