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Legacy Reserves LP Announces Cash Distributions, Provides Update to Select Operating & Financial Information

Legacy Reserves LP (“Legacy”) (LGCY) today announced:

  • Cash distributions of $0.166667 per unit for the 8% Series A (LGCYP) and 8% Series B (LGCYO) Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units payable on May 15, 2015 to the respective holders of record on May 1, 2015
  • Cash distribution attributable to the first quarter of 2015 of $0.35 per unit payable on May 15, 2015 to unitholders of record on May 1, 2015
  • Expected 2015 distribution coverage of greater than 1.3x
  • Reaffirmed 2015 capital budget of $30 million of which approximately 45% was spent in Q1
  • Updated hedge position providing greater cash flow protection from sustained lower oil prices in summer 2015 and Midland-to-Cushing differentials
  • Reaffirmed borrowing base of $700 million and current liquidity of approximately $570 million
  • Participation at the 2015 IPAA OGIS conference in New York
  • Q1 2015 earnings teleconference call details

Paul T. Horne, President and Chief Executive Officer of Legacy’s general partner, said, “In response to the sustained steep decline in commodity prices, we have reduced our quarterly distribution to $0.35 per unit to more accurately reflect the cash flow generation of our assets at these commodity prices. This marks the first time we have ever reduced our distribution and it’s a decision that was not taken lightly, but instead was made after thorough analyses of the best options available given the current price environment. We continue to execute our $30 million capital spending budget and are realizing better-than-expected reductions in operating and capital costs. Our employees are doing a terrific job at driving down costs. With our new distribution level and current hedge portfolio, we expect to generate over 1.3x distribution coverage in 2015 and, absent any acquisitions, plan to use excess cash to repay debt.

“We remain active in our business development efforts. Year to date we have evaluated more than $1 billion worth of asset acquisition opportunities that fit our MLP profile. We will continue to take a patient approach to acquisitions and expect to have an opportunity to utilize our liquidity in making a significant acquisition in 2015. We have also kick-started our efforts to monetize portions of our undeveloped Permian acreage as we attempt to balance maximizing the value of our assets with maintaining our low production decline profile. Currently, we believe a DrillCo structure may be our best option given our broad-based Permian footprint and the strength and expertise of our technical and operating teams. We believe that structure has the ability to effectively harness capital at attractive rates and further enhance the stability and longevity of our business. In spite of the low commodity price environment, we remain excited about our opportunities. We look forward to presenting at the IPAA OGIS conference and hosting our upcoming earnings call.”

Commodity Derivative Contracts

We enter into oil and natural gas derivative contracts to help mitigate the risk of changing commodity prices. As of April 17, 2015, we have entered into derivative agreements to receive average NYMEX WTI crude oil prices and NYMEX Henry Hub, Waha, NWPL, NGPA, SoCal, San Juan and CIG-Rockies natural gas prices as summarized below:

WTI Crude Oil Swaps:

Period Volumes (Bbls) Average Price per Bbl Price Range per Bbl
Q2-Q4 2015 914,735 $79.14 $52.00 – $100.20
2016 228,600 $87.94 $86.30 – $99.85
2017 182,500 $84.75 $84.75

WTI Crude Oil 3-Way Collars:

Period Volumes
Average Short

Price per Bbl
Average Long

Price per Bbl
Average Short

Price per Bbl
Q2-Q4 2015 997,400 $64.87 $89.60 $111.39
2016 621,300 $63.37 $88.37 $106.40
2017 72,400 $60.00 $85.00 $104.20

WTI Crude Oil Enhanced Swaps:

Period Volumes (Bbls) Average Short Put
Price per Bbl
Average Swap
Price per Bbl
Q2-Q4 2015 688,000 $77.01 $93.79
Period Volumes (Bbls) Average Long Put
Price per Bbl
Average Short Put
Price per Bbl
Average Swap
Price per Bbl
2016 183,000 $57.00 $82.00 $91.70
2017 182,500 $57.00 $82.00 $90.85
2018 127,750 $57.00 $82.00 $90.50

Midland-to-Cushing WTI Crude Oil Differential Swaps:

Period Volumes (Bbls) Average Price per Bbl Price Range per Bbl
Q2-Q4 2015 2,475,000 ($1.77) ($1.65) ($1.90)
2016 732,000 ($1.75) ($1.75)

Natural Gas Swaps (Henry Hub, Waha and CIG-Rockies):

Period Volumes (MMBtu) Average
Price per MMBtu
Price Range per MMBtu
Q2-Q4 2015 13,963,300 $4.39 $3.98 $5.82
2016 1,419,200 $4.30 $4.12 $5.30

Natural Gas 3-Way Collars (Henry Hub):

Period Volumes
Average Short Put
Price per MMBtu
Average Long Put
Price per MMBtu
Average Short Call
Price per MMBtu
Q2-Q4 2015 6,030,000 $3.66 $4.21 $5.01
2016 5,580,000 $3.75 $4.25 $5.08
2017 5,040,000 $3.75 $4.25 $5.53

Natural Gas Basis Swaps (NWPL, NGPA, SoCal, San Juan and Waha):

Q2-Q4 2015
Volumes (MMBtu) Average
Price per MMBtu
NWPL 9,000,000 $(0.13)
NGPL 360,000 $(0.15)
SoCal 180,000 $0.19
San Juan 360,000 $(0.12)
WAHA 4,500,000 $(0.10)

Location and quality differentials attributable to our properties are not reflected in the above prices. The agreements provide for monthly settlement based on the difference between the agreement fixed price and the actual reference oil and natural gas index prices.

Presenting at 2015 IPAA OGIS New York

Mr. Horne and James Daniel Westcott, Executive Vice President and Chief Financial Officer, will present at IPAA’s 2015 Oil and Gas Investment Symposium (OGIS) in New York on Monday, April 20, 2015, at 10:00 a.m. Eastern Time. The presentation slides and webcast will be available on Legacy’s website at

Q1 2015 Earnings

Legacy will provide details of its first quarter operating and financial performance with its earnings report which is scheduled to be released on Wednesday, May 6, 2015, following the close of NASDAQ trading.

A teleconference and webcast will be held on Thursday, May 7, 2015, beginning at 9:00 a.m. Central Time. Those wishing to participate in the conference call should dial 877-266-0479. A replay of the call will be available through Thursday, May 14, 2015, by dialing 855-859-2056 or 404-537-3406 and entering replay code 24970195. Those wishing to listen to the live or archived webcast via the Internet should go to the Investor Relations tab of our website

About Legacy Reserves LP

Legacy Reserves LP is a master limited partnership headquartered in Midland, Texas, focused on the acquisition and development of oil and natural gas properties primarily located in the Permian Basin, Rocky Mountain and Mid-Continent regions of the United States. Additional information is available at

Cautionary Statement Relevant to Forward-Looking Information

This press release contains forward-looking statements relating to our operations that are based on management’s current expectations, estimates and projections about its operations. Words such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “projects,” “believes,” “seeks,” “schedules,” “estimated,” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are realized oil and natural gas prices; production volumes, lease operating expenses, general and administrative costs and finding and development costs; future operating results and the factors set forth under the heading “Risk Factors” in our annual and quarterly reports filed with the Securities and Exchange Commission. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, Legacy undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. This press release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale of any securities in any jurisdiction in which such offering, solicitation or sale would be unlawful.

Withholding Information

This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of Legacy’s distributions to foreign investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, Legacy’s distributions to foreign investors are subject to federal income tax withholding at the highest applicable rate.