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Legacy Reserves Updates Hedge Position; Reaffirms CapEx

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   |    Monday,April 20,2015

Legacy Reserves LP announced:

  • Cash distributions of $0.166667 per unit for the 8% Series A and 8% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units payable on May 15, 2015 to the respective holders of record on May 1, 2015
  • Cash distribution attributable to the first quarter of 2015 of $0.35 per unit payable on May 15, 2015 to unitholders of record on May 1, 2015
  • Expected 2015 distribution coverage of greater than 1.3x
  • Reaffirmed 2015 capital budget of $30 million of which approximately 45% was spent in Q1
  • Updated hedge position providing greater cash flow protection from sustained lower oil prices in summer 2015 and Midland-to-Cushing differentials
  • Reaffirmed borrowing base of $700 million and current liquidity of approximately $570 million
  • Participation at the 2015 IPAA OGIS conference in New York
  • Q1 2015 earnings teleconference call details

Paul T. Horne, President and Chief Executive Officer of Legacy's general partner, said, "In response to the sustained steep decline in commodity prices, we have reduced our quarterly distribution to $0.35 per unit to more accurately reflect the cash flow generation of our assets at these commodity prices. This marks the first time we have ever reduced our distribution and it's a decision that was not taken lightly, but instead was made after thorough analyses of the best options available given the current price environment. We continue to execute our $30 million capital spending budget and are realizing better-than-expected reductions in operating and capital costs. Our employees are doing a terrific job at driving down costs. With our new distribution level and current hedge portfolio, we expect to generate over 1.3x distribution coverage in 2015 and, absent any acquisitions, plan to use excess cash to repay debt.

"We remain active in our business development efforts. Year to date we have evaluated more than $1 billion worth of asset acquisition opportunities that fit our MLP profile. We will continue to take a patient approach to acquisitions and expect to have an opportunity to utilize our liquidity in making a significant acquisition in 2015. We have also kick-started our efforts to monetize portions of our undeveloped Permian acreage as we attempt to balance maximizing the value of our assets with maintaining our low production decline profile. Currently, we believe a DrillCo structure may be our best option given our broad-based Permian footprint and the strength and expertise of our technical and operating teams. We believe that structure has the ability to effectively harness capital at attractive rates and further enhance the stability and longevity of our business. In spite of the low commodity price environment, we remain excited about our opportunities. We look forward to presenting at the IPAA OGIS conference and hosting our upcoming earnings call."

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