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Legacy Reserves LP's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Legacy Reserves LP is an independent oil and natural gas limited partnership headquartered in Midland, Texas focused on the acquisition and development of long-lived oil and natural gas properties, primarily located in the Permian Basin, Mid-Continent and Rocky Mountain regions of the United States.

I will now turn the call over to Cary Brown, Legacy's Chairman, Chief Executive Officer, and Co-Founder.

Cary Brown – Chairman and Chief Executive Officer

Thanks, Steve and thank you to our friends and unit holders joining us today. After an outstanding 2010, Legacy continued its strong growth in 2011 as we set new records for production, adjusted EBITDA, and proved reserves. We increased our annual production by 36% to an average of over 13,000 barrel oil equivalents per day. We increased our adjusted EBITDA by 44% to over $200 million and we grew our proved reserves by 20% to 63.4 million barrels through our robust acquisition program and a record $71.6 million of development capital expenditure.

After closing our $100 million Permian Basin acquisition at the end of 2010, we closed 28 transactions during 2011, including $136 million of producing properties, another $5.5 million of undeveloped acreage in the Permian. While approximately 96% of our 2011 acquisitions were in the Permian, we continue to evaluate and expect to close accretive acquisitions in all of our core areas.

Due to our strong results, we increased our distribution every quarter during 2011 resulting in distribution growth of 4.8% since the fourth quarter of 2010. We are pleased to report that during the fourth quarter even after deducting $19.5 million of development capital expenditures and additional $1.9 million of G&A related to the termination of the potential acquisition in Wyoming, we still generated approximately $29.4 million or $0.64 per unit of distributable cash flow with coverage of 1.16 times or $0.55 distribution.

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