MIDLAND, Texas, Oct. 6, 2008 (GLOBE NEWSWIRE) -- Legacy Reserves LP (Nasdaq:LGCY) closed on October 1st the previously announced acquisition of 100% of the membership interests of Pantwist, LLC from Cano Petroleum, Inc. (AMEX:CFW) for approximately $40.8 million. Pantwist owns operated interests in approximately 126 producing wells in the Texas Panhandle near Legacy's existing production.
Legacy also announced the acquisition of Permian Basin oil and natural gas producing properties from three private parties for approximately $9.44 million. These announced transactions are subject to customary post closing adjustments.
Borrowing Base Increase
Effective today, the borrowing base under Legacy's credit facility was increased to $383.76 million from the previous $320 million. As a result of this increase, and giving effect to the recent acquisitions, Legacy has in excess of $100 million of borrowing capacity available under its credit facility. Legacy has the option through November 30, 2008 of increasing its borrowing base to $410 million, and is in the process of identifying banks to provide the additional commitments. Should the current tight credit conditions persist, obtaining commitments for the full borrowing base will be difficult.
LIBOR Interest Rate Swaps
Today Legacy Reserves entered into LIBOR interest rate swaps on $100 million of its outstanding revolving debt beginning October 10, 2008 extending through October 10, 2011. The swap transaction has Legacy paying its counterparties fixed rates averaging 3.185% over the duration of the derivative instrument. Settlements will be paid on a quarterly basis, with the payment due on the 10th day of January, April, July and October beginning in 2009.
Hurricane Impact: Shut-in Production Volumes
Legacy had an estimated 3,367 barrels of oil and 43,053 Mcf of natural gas shut-in in the third quarter on its operated properties due to the impact of Hurricane Ike on Gulf Coast natural gas liquids ("NGL") fractionation facilities. The shut-in volumes represent less than 2% of estimated third quarter production volumes, but there were likely additional non-operated properties that were affected. Legacy's net production is over 75% operated. None of Legacy's production facilities were damaged by Hurricane Ike. There remains an estimated 26 barrels of oil per day and 836 Mcf per day of natural gas shut-in on operated properties, representing less than 2% of Legacy's net daily production. The timing of restoration of this remaining shut-in production is unknown, as it is dependent on the Texas Gulf Coast NGL fractionators. Legacy does not expect that shut-in production volumes will have a material impact on its financial results or its ability to pay quarterly distributions at the anticipated level.
About Legacy Reserves LP
Legacy Reserves LP is an independent oil and natural gas limited partnership headquartered in Midland, Texas, focused on the acquisition and development of oil and natural gas properties primarily located in the Permian Basin and Mid-continent regions of the United States. Additional information is available at www.LegacyLP.com.
The Legacy Reserves logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3201
Cautionary Statement Relevant to Forward-Looking Information
This press release contains forward-looking statements relating to Legacy's 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. 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.
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 Report on Form 10-K for the year ended December 31, 2007.