Quarterly / Earnings Reports | First Quarter (1Q) Update | Drilling Activity | Drilling Program-Rig Count

Legacy Drills 20 Wells in Q1; Production Up 9% YOY to 46.1 MBOEPD

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   |    Wednesday,May 02,2018

Legacy Reserves reported its Q1 2018 results.

Highlights:

Announced transaction to transition from MLP to C-Corp

• Divested non-core Mid-Con assets with $15.4 million of plugging liability for $25.3 million in cash proceeds, further rationalizing our asset base and focusing our capital deployment;

- Brought 20 wells online late in the quarter with average peak rates exceeding expectations. These additional wells bring the total to 67 wells drilled and completed since commencement of the horizontal drilling program;

- Generated net income of $64.4 million;

• Generated Adjusted EBITDA of $70.7 million; and
• Reduced commodity price risk by adding 6,000 Bbls/d of 2019 WTI crude oil swaps at average swap price of $58.88 per barrel.

Ops Update

Paul T. Horne, Chairman of the Board and Chief Executive Officer of Legacy's general partner, commented, "We started 2018 focused on our two-rig horizontal Permian drilling program having brought an additional 20 wells online late in the quarter with peak rates, on average, exceeding our expectations. Due to our lease-wide development approach, we experienced significant non-productive time during the quarter including dewatering and temporary shut-ins of offset wells. While this operational approach enables us to focus on maximizing long-term lease-wide economics, it certainly can hamper short-term field-level production results. We remain excited about our previously-announced transaction that will transition Legacy to a C-Corp and currently anticipate a mid-2018 closing of the transaction. We continue to believe this transition will be a crucial step in our move to a growth-oriented development company and play an important part in future company success."

Dan Westcott, President and Chief Financial Officer of Legacy's general partner, commented, "Q1 proved to be an inflection point in Legacy's history as we announced our intention to transition to a C-Corp. We remain convinced of the key benefits of the transaction and, as we continue to work through the requisite steps to complete this transition, we will continue to focus on the efficient operation of our PDP base and development of our substantial horizontal Permian resource.

"We are thankful for the recent rise in oil prices. However, such increase has heightened the level of industry activity in the oil-rich Permian Basin and we, like other operators in the Basin, are now seeing some associated negative effects including wider commodity price differentials, third-party service constraints and increased production interference from increased development in and offsetting our densely developed leasehold. As longstanding, experienced players in the Permian, we will continue to utilize our strong local relationships and work through these industry-wide challenges. Despite some newly-projected delays and recently widened price differentials, we are very pleased with our well performance and expect continued success in our revised 2018 outlook. Importantly, we remain confident that our asset quality is high and our opportunity set deep."