MIDLAND, Texas, July 6, 2015 (GLOBE NEWSWIRE) -- Legacy Reserves LP ("Legacy") (Nasdaq:LGCY) today announced it has entered into separate agreements with affiliates of Anadarko Petroleum and Western Gas Partners, LP to purchase natural gas properties and gathering and processing assets in East Texas for a combined $440 million. These properties represent Legacy's entry into a new basin in East Texas and into meaningful gathering and processing operations supporting the natural gas properties. The closings of these transactions are expected to occur in the third quarter, and the purchase prices remain subject to customary adjustments. Legacy anticipates funding these transactions with borrowings under its revolver. Highlights of this acquisition are as follows:
- Estimated proved reserves of approximately 420 Bcfe of which 100% are natural gas, 95% are classified as proved developed producing, and 95% are operated
- Estimated Q3 2015 production of approximately 70 Mmcfe/d, yielding a proved reserves-to-production ratio of 16.4 years
- Multi-year development plan centered on recompletions and workovers to further flatten production declines and extend the productive life of the fields
- Significant additional drilling inventory in a higher gas price environment
- 567 miles of high-pressure pipeline and low-pressure gathering lines and a 502 Mmcfe/d processing plant with access to 5 major gas markets
- Expected NTM cash flow of approximately $60 million
Paul Horne, Legacy's President and Chief Executive Officer, commented on the purchases. "Today we are pleased to announce the signing of two meaningful acquisitions and the ability to use our ample liquidity to position ourselves for success in 2016 and beyond. This acquisition represents a material entry into East Texas, a region we have wanted to enter for several years due to its long-lived, low-decline, low-cost nature and high potential for bolt-on acquisitions. These high-quality assets combined with the upside optionality of recompletions and a contango gas-curve make this a very attractive acquisition for us.
"The gathering and processing side will be a new operational venture for us, and one that we are confident in our abilities to execute with the anticipated addition of personnel experienced in the operation of the acquired assets. We believe these assets will provide a stable cash flow stream and some synergies with our upstream assets that would not exist with an outside operator. Given the meaningful immediate and long-term accretion to distributable cash flow per unit from this acquisition and our concurrent announcement with TSSP, the future looks bright for Legacy."
Hedging Update
In conjunction with the transaction, Legacy entered into the following costless natural gas swaps. 2016-2019 hedges represent an average of 83% of current production from the acquisition, providing significant insulation from natural gas price volatility.
| Time Period |
Volumes (MMBtu) |
Average Price per MMBtu |
| July-December 2015 | 2,400,000 | $3.11 |
| 2016 | 21,600,000 | $3.37 |
| 2017 | 21,600,000 | $3.37 |
| 2018 | 21,600,000 | $3.37 |
| 2019 | 19,800,000 | $3.38 |
Conference Call
To provide additional context for this acquisition and the referenced announcement with TPG Special Situations Partners, Legacy has posted presentation slides at www.LegacyLP.com and will host a teleconference and webcast on Tuesday, July 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 Tuesday, July 14, 2015, by dialing (855) 859-2056 and entering replay code 78032712. Those wishing to listen to the live or archived webcast via the Internet should go to the Investor Relations tab of our website at www.LegacyLP.com.
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 www.LegacyLP.com.
Cautionary Statement Relevant to Forward-Looking Information
This press release contains forward-looking statements relating to the pending acquisition 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 SEC. 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.