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Legacy Reserves LP Announces $440 Million Acquisition of Upstream and Gathering and Processing Assets in East Texas

Legacy Reserves LP, July 7, 2015

Legacy Reserves LP ("Legacy") has 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."

For more information, visit http://www.legacylp.com/home/.

 


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