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Legacy Reserves LP Announces Second Quarter 2013 Results

Stocks in this article: LGCY

"While quarter-over-quarter WTI prices stayed relatively flat, our company-wide oil differential improved by approximately $9.00 per barrel during the second quarter as both the Permian and the Rockies regions improved to levels inside of their historical norms and above our expectations. We expect these differentials to be at or around normal levels for the remainder of 2013, with company-wide oil differentials of $5.25-$6.25 per barrel. Natural gas realizations during the first half of the year were negatively impacted by infrastructure issues and declining NGL prices. We currently expect second-half 2013 positive natural gas differentials of $0.90-$1.00 per Mcf.

"On the development front, we continue to be pleased with our program that is focused on oil-weighted projects in the Permian Basin. Our results from our operated Wolfberry drilling program remain solid, and we continue to participate in several attractive non-operated drilling projects, including a horizontal Bone Spring well in which we own a 50% working interest. We are excited about the second half of 2013, as our development pace will accelerate to include the drilling of two operated horizontal Bone Spring wells along with our drilling in the Wolfberry.

"We are pleased with our year-to-date acquisitions which total approximately $90 million of oil-weighted producing properties at attractive metrics. We have evaluated and are continuing to evaluate a strong pipeline of acquisitions of various sizes in all of our core areas, and hope to expand our acquisitions in the second half of the year. 

"Based on these strong financial and operational results as well as our positive outlook, we increased our distribution for the 11 th consecutive quarter to $0.58 per unit, resulting in year-over-year distribution growth of 3.6%. For the quarter, we generated Distributable Cash Flow of $38.8 million or $0.68 per unit, covering our second quarter distribution by 1.17 times."

Dan Westcott, Executive Vice President and Chief Financial Officer, commented, "We are very pleased with our strong financial and operational results during the second quarter. On May 28, we closed a $250 million private offering of 6.625% senior notes due in 2021. With this opportunistic financing, we were able to access unsecured long-term capital at very attractive rates that will provide us with greater liquidity to pursue our acquisition and development plans. In accordance with the provisions of our credit agreement, our borrowing base was automatically reduced from $800 million to $737.5 million upon the closing of our senior notes offering. As of August 5, we had $311 million of debt outstanding under our revolving credit facility, giving us a record of approximately $426 million of current availability.  Given this availability, our recent performance, and our expectations from our recent $90 million of acquisitions, we are looking forward to the second half of the year and executing on our objectives."

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