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Legacy Reserves LP Announces Fourth Quarter And Annual 2010 Results

Stocks in this article: LGCY

MIDLAND, Texas, March 2, 2011 (GLOBE NEWSWIRE) -- Legacy Reserves LP ("Legacy") (Nasdaq:LGCY) today announced annual and fourth quarter results for 2010. This unaudited financial information is preliminary and is subject to adjustments to our final audited financial statements to be released on or about March 4, 2011 in conjunction with the filing of Legacy's Form 10-K for the year-ended December 31, 2010.

A summary of selected financial information follows. For consolidated financial statements, please see accompanying tables.

  Three Months Ended Twelve Months Ended
  December 31, September 30, December 31,
  2010 2010 2010 2009
  (dollars in millions)
Production (Boe/d)  10,337  9,804  9,611  8,225
Revenue $62.3 $52.8 $216.4 $137.3
Commodity Derivative Cash Settlements $4.8 $6.3 $20.1 $52.5
Expenses $48.1 $45.0 $178.1 $140.8
Operating income (loss) $14.2 $7.8 $38.3 ($3.5)
Unrealized loss on commodity derivatives ($36.6) ($26.2) ($21.5) ($128.0)
Net income (loss) ($18.7) ($20.2) $10.8 ($92.8)
Adjusted EBITDA (*) $39.7 $35.7 $140.4 $120.0
Development Capital $13.6 $9.0 $32.9 $13.7
Distributable Cash Flow (*) $21.5 $22.2 $89.0 $88.0
* Non-GAAP financial measure. Please see Adjusted EBITDA and Distributable Cash Flow table at the end of this press release for a reconciliation of these measures to their nearest comparable GAAP measure.

Highlights of full year 2010 include the following:

  • Production increased 17% to 9,611 Boe per day in 2010 from 8,225 Boe per day in 2009 due primarily to our approximately $280 million of acquisitions and approximately $33 million of development capital expenditures.  
  • Proved reserves as of December 31, 2010 increased by 42% to 52.8 MMBoe (86% PDP, 74% liquids) compared to 37.1 MMBoe (84% PDP, 72% liquids) as of December 31, 2009 due primarily to our acquisitions and drilling activity as well as commodity price increases.  
  • Adjusted EBITDA increased 17% to $140.4 million in 2010 from $120.0 million in 2009.  
  • Our total unitholder return during 2010 was approximately 56.6%, including distributions.  
  • To partially fund our acquisitions, we completed two equity offerings during 2010 in which we issued approximately 8.3 million units and raised net proceeds of approximately $179 million.

Highlights of the fourth quarter of 2010 include the following:

  • Production increased 5% to 10,337 Boe per day in the fourth quarter from 9,804 Boe per day in the third quarter due to production from recent acquisitions, workovers and increased development drilling, primarily on our operated Wolfberry locations.  
  • Adjusted EBITDA increased 11% to $39.7 million during the fourth quarter from $35.7 million during the third quarter.  
  • We closed our acquisition of Permian Basin properties from Concho Resources on December 22, 2010, for $100.8 million (including estimated post-closing adjustments). This acquisition was the second-largest in our history after our acquisition of Wyoming properties from SM Energy in February 2010 for approximately $125.5 million.  
  • In anticipation of the closing of our Permian Basin acquisition, we closed a 3.45 million unit offering on November 23, 2010 that raised net proceeds of approximately $83.6 million.

Cary D. Brown, Chairman and Chief Executive Officer of Legacy Reserves GP, LLC, the general partner of Legacy, commented: "After the challenges of 2009, Legacy experienced its most productive year to date in 2010. We grew our annual production and adjusted EBITDA by 17% and our proved reserves by 42%. In addition, we closed approximately $280 million of acquisitions, including our two largest acquisitions in which we established a new core area in the Rockies and significantly expanded our Permian Basin asset base. We ended 2010 on a high note, as we grew our production by 5% and our EBITDA by 11% compared to the third quarter due to our acquisitions and development activities. We continue to be encouraged by the results of our development drilling and workover projects, which are meeting or exceeding our expectations. In addition, we closed our Permian Basin acquisition from Concho during the fourth quarter, which contributed only 10 days of production and cash flow to our results. Due to our growth in 2010 as well as our positive outlook for 2011, we increased our quarterly distribution to $0.525 per unit, which was paid on February 14, 2011. We are pleased to report that during the fourth quarter, even after we deducted $13.6 million of development capital expenditures and pre-funded our Permian Basin acquisition with the issuance of additional units in November, we still generated approximately $21.5 million or $0.52 per unit of distributable cash flow with coverage of 0.99 times our $0.525 distribution. For the year, after deducting $32.9 million of development capital expenditures, we generated approximately $89.0 million or $2.21 per unit of distributable cash flow, covering our $2.085 distribution by 1.06 times. 

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