Quarterly / Earnings Reports | Second Quarter (2Q) Update | Production Rates | Capital Markets | Capital Expenditure | Drilling Program

Legacy Reserves LP Reduces Bone Spring, Wolfcamp Drilling

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Legacy Reserves LP has announced second quarter results for 2015.

Q2 highlights:

• Production of 33,571 Boe/d
• Lease operating expense (excluding ad valorem taxes) of $42.8 million, a $3.1 million (6.8%) improvement relative to Q1 2015 and a $10.4 million (19.5%) improvement relative to Q4 2014

Financial and Operating Results - Second Quarter 2015 Compared to Second Quarter 2014

• Production increased 44% to 33,571 Boe/d from 23,286 Boe/d primarily due to our 2014 acquisitions including our Piceance Basin acquisition from WPX Energy, Inc.
• Average realized price, excluding net cash settlements from commodity derivatives, decreased 56% to $28.74 per Boe in 2015 from $64.71 per Boe in 2014 driven by the significant decline in commodity prices as well as the increase of NGL and natural gas production as a percentage of total production. Average realized oil price decreased 45% to $50.48 in 2015 from $92.54 in 2014 driven by a decrease in the average West Texas Intermediate (WTI) crude oil price of $45.40 per Bbl partially offset by a decrease in realized regional differentials. Average realized natural gas price decreased 50% to $2.38 per Mcf in 2015 from $4.77 per Mcf in 2014. This decrease is a result of the decrease in the average Henry Hub natural gas index price of approximately $1.94 per Mcf as well as the inclusion of lower priced natural gas production from the WPX Acquisition. Finally, our average realized NGL price decreased 46% to $0.50 per gallon in 2015 from $0.92 per gallon in 2014. This decrease is due to the combination of lower commodity prices and the inclusion of lower priced NGL production from the WPX Acquisition.
• strong>Production expenses, excluding ad valorem taxes, increased 2% to $42.8 million in 2015 from $42.1 million in 2014. On an average cost per Boe basis, production expenses decreased 29% to $14.02 per Boe in 2015 from $19.85 per Boe in 2014, driven primarily by expense reduction efforts across the properties that we have owned prior to the WPX Acquisition as well as the inclusion of lower cost natural gas properties acquired in the WPX Acquisition.
• strong>Total development capital expenditures decreased to $8.4 million in 2015 from $36.1 million in 2014. 
• strong>The 2015 activity was comprised mainly of the drilling and completion of a non-operated horizontal Bone Springs well, completion costs on an operated horizontal Bone Springs well and capital costs related to CO2 properties.  Our non-operated capital expenditures were 51% of total capital for the quarter compared to 14% in 2014.

Financial and Operating Results - Second Quarter Year to Date 2015 Compared to Second Quarter Year to Date 2014

• Production increased 57% to 33,674 Boe/d from 21,392 Boe/d primarily due to acquisitions in 2014 including the WPX Acquisition.
• Average realized price, excluding net cash settlements from commodity derivatives, decreased 59% to $27.78 per Boe in 2015 from $67.93 per Boe in 2014 driven by the significant decline in commodity prices as well as the increase in NGL and natural gas production as a percentage of total production. Average realized oil price decreased 49% to $46.14 in 2015 from $91.25 in 2014 driven by a decrease in the average WTI crude oil price of $47.71 per Bbl partially offset by a decrease in realized regional differentials. Average realized natural gas price decreased 51% to $2.59 per Mcf in 2015 from $5.33 per Mcf in 2014. This decrease is a result of the decrease in the average Henry Hub natural gas index price of approximately $2.04 per Mcf as well as the inclusion of lower priced natural gas production from the WPX Acquisition. Finally, our average realized NGL price decreased 54% to $0.47 per gallon in 2015 from $1.02 per gallon in 2014. This decrease is due to the combination of lower commodity prices and the inclusion of lower priced NGL production from the WPX Acquisition.
• Production expenses, excluding ad valorem taxes, increased 9% to $88.8 million in 2015 from $81.7 million in 2014. On an average cost per Boe basis, production expenses decreased 31% to $14.56 per Boe in 2015 from $21.10 per Boe in 2014, driven primarily by expense reduction efforts across the properties that we have owned prior to the WPX Acquisition as well as the inclusion of lower cost natural gas properties acquired in the WPX Acquisition.
• Non-cash impairment expense totaled $209.4 million driven by the significant decline in natural gas futures prices during the first quarter of 2015.
• Total development capital expenditures decreased to $21.8 million in 2015 from $57.9 million in 2014. 
• strong>The 2015 activity was comprised mainly of the drilling and completion of two horizontal Wolfcamp wells, completion costs on an operated horizontal Bone Springs well, drilling and completion costs on a non-operated horizontal Bone Springs well and capital costs related to CO2 properties. 
• Our non-operated capital expenditures were 20% of total capital for the quarter compared to 23% in 2014.