MIDLAND, Texas, Nov. 8, 2010 (GLOBE NEWSWIRE) -- Legacy Reserves LP ("Legacy") (Nasdaq:LGCY) today announced it has entered into an agreement to purchase Permian Basin oil and natural gas properties for $105 million in cash from Concho Resources Inc. The properties currently produce 1,419 barrels of oil equivalent ("Boe") per day, of which 47% is oil. Proved reserves are estimated to be 5.8 MMBoe, 88% of which are considered proved developed producing ("PDP"). In the aggregate, the natural gas being acquired sells at a premium to Henry Hub natural gas prices due to its natural gas liquids content, giving Legacy exposure to NGL prices. The closing is anticipated to occur on or about December 22, 2010, and is subject to customary purchase price adjustments. Approximately 60% of the properties are operated, and over 95% of the properties are near Legacy's existing operations in multiple counties throughout the Permian Basin. Legacy plans to finance the acquisition with its existing credit facility.
Cary Brown, Chairman and CEO, commented, "These Permian Basin properties fit our MLP model of acquiring high percentage PDP properties with low production decline rates in areas with established production histories. As we have done in the past, we are acquiring assets that are non-core to a resource and drilling-focused E&P company. We have identified attractive development and recompletion projects on these assets, and believe we will find additional opportunities to improve production. In addition, we expect to realize operating synergies with this acquisition, as these properties are located near our existing properties in the Permian Basin. We expect this acquisition to be accretive to our distributable cash flow per unit."
New Commodity Derivatives Contracts
In anticipation of the completion of this acquisition and our recent development activity, Legacy has entered into the following crude oil swap agreements:
About Legacy Reserves LP
Legacy Reserves LP is an independent oil and natural gas limited partnership headquartered in Midland, Texas, focused on the acquisition and development of oil and natural gas properties primarily located in the Permian Basin, Mid-Continent and Rocky Mountain regions of the United States. Additional information is available at .
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CONTACT: Legacy Reserves LP Steven H. Pruett, President and Chief Financial Officer 432-689-5200