Legacy Reserves 8K Other Events | SEC 14 Feb 08

Exhibit 99.1


LEGACY RESERVES LP
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 2007


				Pro Forma
				Offering
	Legacy			Adjustments				Pro Forma
ASSETS

Current assets:
Cash and cash equivalents	$	4,358,522		$	74,668,533		(t)	$	4,358,522
					(1,598,230	)	(t)
					(73,070,303	)	(u)
Accounts receivable, net:
Oil and natural gas		12,596,594			-				12,596,594

Joint interest owners		3,650,636			-				3,650,636

Affiliated entities and other		9,907			-				9,907
Fair value of derivatives		301,534			-				301,534
Prepaid expenses and other current assets		649,654			-				649,654
Total current assets		21,566,847			-				21,566,847

Oil and natural gas properties, at cost:
Proved oil and natural gas properties, using the
successful efforts method of accounting:		406,356,304			-				406,356,304

Unproved properties		78,025			-				78,025

Accumulated depletion, depreciation and amortization		(61,373,332	)		-				(61,373,332	)
		345,060,997			-				345,060,997

Other property and equipment, net		679,495			-				679,495

Fair value of derivatives		25,293			-				25,293

Deposit on pending acquisition		4,637,644			-				4,637,644

Equity method investment		86,731			-				86,731

Operating rights		6,291,730			-				6,291,730

Other assets, net		738,235			-				738,235
	$	379,086,972		$	-			$	379,086,972

See accompanying notes to unaudited pro forma combined financial statements.

LEGACY RESERVES LP
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 2007

			Pro Forma
			Offering
	Legacy		Adjustments				Pro Forma

LIABILITIES AND OWNERS' EQUITY

Current liabilities:
Accounts payable	$	681,293	$	-			$	681,293

Accrued oil and natural gas liabilities		8,566,783		-				8,566,783

Fair value of derivatives		8,124,905		-				8,124,905
Asset retirement obligation		470,518		-				470,518
Other		2,882,551		-				2,882,551
Total current liabilities		20,726,050		-				20,726,050

Long-term debt		93,000,000		(73,070,303	)	(u)		19,929,697

Asset retirement obligation		7,045,527		-				7,045,527

Fair value of derivatives		13,768,328		-				13,768,328

Total unitholders' equity		244,547,067		73,070,303		(t)		317,617,370
	$	379,086,972	$	-			$	379,086,972

See accompanying notes to unaudited pro forma combined financial statements.

LEGACY RESERVES LP
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2006


					Formation			2006 Property
					Entities			Acquisitions			Binger		Ameristate		TSF		Raven OBO
		Legacy			Historical			Historical			Acquisition		Acquisition		Acquisition		Acquisition		Pro Forma
		Historical			Note 2			Note 3			Historical		Historical		Historical		Historical		Adjustments				Pro Forma

Revenues:
Oil sales		$	45,351,122		$	2,910,059		$	5,107,379		$	8,404,221	$	411,472	$	3,378,849	$	4,181,662	$	-			$	69,744,764
Natural gas sales			14,446,193			829,695			354,526			1,883,982		1,193,736		1,181,403		1,363,610		-				21,253,145
Natural gas liquids sales			-			-			-			3,914,506		-		-		507,721		-				4,422,227
Realized and unrealized loss on oil and natural gas swaps			9,288,470			(1,304,472	)		-			-		-		-				-				7,983,998
	Total revenues		69,085,785			2,435,282			5,461,905			14,202,709		1,605,208		4,560,252		6,052,993		-				103,404,134

Expenses:
Oil and natural gas production			15,938,276			820,906			1,549,329			3,982,341		282,689		245,400		1,627,765		-				24,446,706
Production and other taxes			3,745,793			291,447			419,175			1,163,078		151,469		438,595		433,377		-				6,642,934
General and administrative			3,691,018			292,098			(394,345	)		-		-		-		-		317,788		(e)		4,194,552
																				226,743		(e)
																				61,250		(f)

Depletion, depreciation, amortization and accretion			18,394,674			266,126			-			-		-		-		-		1,231,584		(b)		28,166,682
																				407,717		(c)
																				589,799		(g)
																				986,478		(i)
																				2,851,969		(l)
																				700,322		(n)
																				1,043,203		(p)
																				1,694,810		(r)

Impairment of long-lived assets			16,113,300			-			-			-		-		-		-		-				16,113,300

Loss on sale of assets			42,370			-			-			-				-		-						42,370
	Total expenses		57,925,431			1,670,577			1,574,159			5,145,419		434,158		683,995		2,061,142		10,111,663				79,606,544

	Operating income		11,160,354			764,705			3,887,746			9,057,290		1,171,050		3,876,257		3,991,851		(10,111,663	)			23,797,590

Other income (expense):
Interest income			129,712			301,380			-			-		-		-		-		(301,380	)	(d)		129,712
Interest expense			(6,644,721	)		(207,905	)		-			-		-		-		-		(434,070	)	(h)		(2,600,601	)
																				(578,760	)	(j)
																				9,580,455		(k)
																				(1,939,375	)	(m)
																				(346,875	)	(o)
																				(860,600	)	(q)
																				(1,168,750	)	(s)


Equity in income (loss) of partnerships			(317,788	)		(609,306	)		-			70,540		-		-				317,788		(e)		70,540
																				226,743		(e)
																				382,563		(e)

Other			29,328			6,600			-			-		-		-				-				35,928
Net income		$	4,356,885		$	255,474		$	3,887,746		$	9,127,830	$	1,171,050	$	3,876,257	$	3,991,851	$	(5,233,924	)		$	21,433,169



Net income per unit -
basic		$	0.26																				$	0.83
diluted		$	0.26																				$	0.83


Shares used in computing net income
per unit:
basic			16,567,287																	1,750,229		(a)		25,904,034
																				75,271		(g)
																				6,900,000		(k)
																				611,247		(l)
diluted			16,568,879																					25,905,626

See accompanying notes to unaudited pro forma combined financial statements.

LEGACY RESERVES LP
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2007



					Binger		Ameristate		TSF		Raven OBO
		Legacy			Acquisition		Acquisition		Acquisition		Acquisition		Pro Forma
		Historical			Historical		Historical		Historical		Historical		Adjustments				Pro Forma

Revenues:
Oil sales		$	51,396,169		$	2,038,092	$	301,823	$	930,101	$	2,160,152	$	-			$	56,826,337
Natural gas sales			13,776,326			573,873		196,596		397,477		725,726		-				15,669,998
Natural gas liquids sales			2,890,994			993,057		-		-		320,918		-				4,204,969
Realized and unrealized loss on oil and natural gas swaps			(20,151,656	)		-		-		-				-				(20,151,656	)
	Total revenues		47,911,833			3,605,022		498,419		1,327,578		3,206,796		-				56,549,648

Expenses:
Oil and natural gas production			18,408,152			1,217,586		89,361		110,403		1,150,157		-				20,975,659
Production and other taxes			4,360,881			316,242		43,794		105,710		224,959		-				5,051,586
General and administrative			6,039,371			-		-		-		-		-				6,039,371

Depletion, depreciation, amortization and accretion			19,065,064			-		-		-				674,516		(l)		21,033,793
														166,169		(n)
														219,324		(p)
														908,720		(r)

Impairment of long-lived assets			1,229,874			-		-		-				-				1,229,874

Loss on disposal of asets			387,373			-		-		-		-		-				387,373
	Total expenses		49,490,715			1,533,828		133,155		216,113		1,375,116		1,968,729				54,717,656

	Operating income (loss)		(1,578,882	)		2,071,194		365,264		1,111,465		1,831,680		(1,968,729	)			1,831,992

Other income (expense):
Interest income			205,443			-		-		-		-		-				205,443
Interest expense			(3,423,286	)		-		-		-		-		(565,863	)	(m)		(5,131,323	)
														(115,667	)	(o)
														(344,240	)	(q)
														(682,267	)	(s)

Equity in income (loss) of partnerships			40,600			12,210		-		-				-				52,810

Other			1,013			-		-		-				-				1,013
Net income (loss)		$	(4,755,112	)	$	2,083,404	$	365,264	$	1,111,465	$	1,831,680	$	(3,676,766	)		$	(3,040,065	)



Net loss per unit -
basic and diluted		$	(0.19	)													$	(0.12	)

Units used in computing net loss
per unit: basic and diluted			25,492,521											278,022		(k)		26,005,638
														235,095		(l)

See accompanying notes to unaudited pro forma combined financial statements.

LEGACY RESERVES LP (FORMERLY MORIAH GROUP)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

1. Basis of Presentation:

The financial statements included in this report present a pro forma combined balance sheet and pro forma combined results of operations reflecting the pro forma effect of certain transactions, discussed in detail below, entered into by Legacy Reserves LP (“Legacy” or the “Company”).

The unaudited pro forma combined balance sheet as of September 30, 2007 included in this report gives effect to Legacy’s issuance of unregistered units in a private equity transaction on November 8, 2007 (referred to as the “Private Placement”) and the use of proceeds therefrom.

The unaudited pro forma combined balance sheet as of September 30, 2007 is derived from the historical consolidated financial statements of Legacy.

The unaudited pro forma combined statement of operations gives effect to the Private Placement discussed below, the acquisition of the oil and natural gas properties of the Brothers Group, Foundations, H2K, South Justis Unit, Kinder Morgan, Binger Properties, Ameristate Properties, TSF Properties, Raven OBO Properties and the non-controlling interests in MBN Properties LP, and the distribution of certain assets to the owners of the Moriah Group and the Brothers Group, and our initial public offering discussed below and the use of the net proceeds therefrom, as if the transactions had occurred on January 1, 2006. Our private offering of 5,000,000 units at an offering price of $17.00 per unit, the concurrent redemption of an aggregate 4,400,000 units from our Founding Investors for $69.9 million, the acquisition of the oil and natural gas properties of the Brothers Group, Foundations, H2K and the non-controlling interests in MBN Properties LP, and the distribution of certain assets to the owners of the Moriah Group and the Brothers Group occurred on March 15, 2006. Accordingly, the operating results of the properties acquired in this transaction are included in Legacy’s historical results from that date. The acquisition of the South Justis Unit was completed as of June 29, 2006 and the operating results related to the acquired properties are included in Legacy Reserves LP’s historical results after June 30, 2006. The acquisition from Kinder Morgan was completed on July 31, 2006 and the operating results related to the acquired properties are included in Legacy’s historical results after July 31, 2006. Our initial public offering of 6,900,000 units at an offering price of $19.00 per unit closed on January 18, 2007 after trading began on January 12, 2007. The acquisition of the Binger Properties was completed on April 16, 2007 and the operating results related to the acquired properties are included in Legacy’s historical results after April 16, 2007. The acquisition from Ameristate Exploration, LLC was completed on May 1, 2007 and the operating results related to the acquired properties are included in Legacy’s historical results after May 1, 2007. The acquisition of the TSF Properties was completed on May 25, 2007 and the operating results related to the acquired properties are included in Legacy’s historical results after May 25, 2007. The acquisition of the Raven OBO Properties was completed on August 3, 2007 and the operating results related to the acquired properties are included in Legacy’s historical results after August 3, 2007.

LEGACY RESERVES LP (FORMERLY MORIAH GROUP)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

The unaudited pro forma combined statements of operations for the year ended December 31, 2006 and the nine-month period ended September 30, 2007, is derived from:

· the historical consolidated financial statements of Legacy (formerly the Moriah Group);

· the historical combined financial statements of the Brothers Group;

· the historical combined financial statements of the Selected Interests of the Charities Support Foundation Inc. (“Foundations”);

· the historical financial statements of the oil and natural gas operations of H2K Holdings Ltd. (“H2K”);

· the historical statements of revenues, operating fees and operating expenses of certain oil and natural gas properties acquired by Legacy from Henry Holding LP (“South Justis Unit”);

· the historical statements of revenues and direct operating expenses of certain oil and natural gas properties acquired by Legacy from Kinder Morgan (collectively “Kinder Morgan”);

· the historical statements of revenues, direct operating expenses and equity income of certain oil and natural gas properties and other interests acquired by Legacy from Nielson (Binger Properties);

· the historical statements of revenues and direct operating expenses of certain oil and natural gas properties acquired by Legacy from Ameristate (Ameristate Properties);

· the historical statements of revenues and direct operating expenses of certain oil and natural gas properties acquired by Legacy from Fields (TSF Properties);

· the historical statements of revenues and direct operating expenses of certain oil and natural gas properties acquired by Legacy from Raven (Raven OBO Properties);

· pro forma adjustments based on assumptions we have deemed appropriate.

The transactions and the related adjustments are described in the accompanying notes. In the opinion of Company management, all adjustments have been made that are necessary to present fairly, in accordance with Regulation S-X, the pro forma combined financial statements.

The unaudited pro forma combined balance sheet and statements of operations are presented for illustrative purposes only, and do not purport to be indicative of the financial position or results of operations that would actually have occurred if the transactions described had occurred as presented in such statements or that may be obtained in the future. In addition, future results

LEGACY RESERVES LP (FORMERLY MORIAH GROUP)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

may vary significantly from the results reflected in such statements due to factors described in “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2006 and elsewhere in the Company’s reports and filings with the Securities and Exchange Commission (“SEC”). The unaudited pro forma combined balance sheet and statements of operations should be read in conjunction with our historical consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2006 and on our Quarterly Reports on Form 10-Q for the quarters ended September 30, 2007, June 30, 2007 and March 31, 2007.

The pro forma statements should also be read in conjunction with the historical financial statements and the notes thereto of the acquired businesses reflected therein as filed by Legacy with the SEC.

2. Formation Entities Historical

For the sake of brevity, we have combined the following historical statements of operations for the period from January 1 through March 14, 2006 into a single column labeled “Formation Entities Historical” in the unaudited pro forma combined statement of operations for the year ended December 31, 2006:

· the historical combined statement of operations of the Brothers Group;

· the historical combined statement of operations of the Selected Interests of the Charities Support Foundation Inc. (“Foundations”);

· the historical statements of the oil and natural gas operations of H2K Holdings Ltd. (“H2K”);

The table below details the historical statements of operations for the entities combined into the Formation Entities Historical column:

LEGACY RESERVES LP (FORMERLY MORIAH GROUP)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

		For the period from January 1 through March 14, 2006
		Brothers			Charitable					Formation
		Group			Foundations		H2K Holdings			Entities
		Historical			Historical		Historical			Historical

Revenues:
Oil sales		$	2,614,139		$	255,280	$	40,640		$	2,910,059
Natural gas sales			748,765			80,930		-			829,695
Realized and unrealized loss on oil and natural gas swaps			(1,286,784	)		-		(17,688	)		(1,304,472	)
	Total revenues		2,076,120			336,210		22,952			2,435,282

Expenses:
Oil and natural gas production			696,077			111,484		13,345			820,906
Production and other taxes			261,143			27,002		3,302			291,447
General and administrative			277,241			11,830		3,027			292,098

Depletion, depreciation, amortization and accretion			200,722			62,631		2,773			266,126
	Total expenses		1,435,183			212,947		22,447			1,670,577

	Operating income		640,937			123,263		505			764,705

Other income (expense):
Interest income			301,380			-		-			301,380
Interest expense			(207,905	)		-		-			(207,905	)

Equity in loss of partnerships			(609,306	)		-		-			(609,306	)

Other			6,600			-		-			6,600
Net income		$	131,706		$	123,263	$	505		$	255,474

3. 2006 Property Acquisitions Historical

The following historical statements of operations for the year ended December 31, 2006 have been combined into a single column labeled “2006 Property Acquisitions Historical” in the unaudited pro forma combined statement of operations for the year ended December 31, 2006:

LEGACY RESERVES LP (FORMERLY MORIAH GROUP)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

· the historical statements of revenues, operating fees and operating expenses of certain oil and natural gas properties acquired by Legacy from Henry Holding LP (“South Justis Unit”);

· the historical statements of revenues and direct operating expenses of certain oil and natural gas properties acquired by Legacy from Kinder Morgan (collectively “Kinder Morgan”);

The table below details the historical statements of operations for the entities combined into the 2006 Property Acquisitions Historical column:

		For the period from January 1 through June 30, 2006			For the period from January 1 through July 31, 2006
							2006 Property
		South Justis			Kinder Morgan		Acquisitions
		Historical			Historical		Historical
Revenues:
Oil sales		$	1,067,065		$	4,040,314	$	5,107,379
Natural gas sales			246,866			107,660		354,526
	Total revenues		1,313,931			4,147,974		5,461,905

Operating expenses:
Oil and natural gas production			311,809			1,237,520		1,549,329

Production and other taxes			109,948			309,227		419,175

General and administrative			(394,345	)		-		(394,345	)
Total operating expenses			27,412			1,546,747		1,574,159

Excess of revenue over direct operating expenses		$	1,286,519		$	2,601,227	$	3,887,746

4. Pro Forma Adjustments

The unaudited pro forma combined financial statements reflect the following adjustments:

a. To reflect the units issued in the Legacy Formation.

On March 15, 2006, Legacy completed a private equity offering in which it issued 5,000,000 limited partnership units at a gross price of $17.00 per unit, netting $78.7 million after initial purchaser’s discount, placement agent’s fees and expenses. Simultaneous with the completion of this offering, Legacy purchased the oil and natural

LEGACY RESERVES LP (FORMERLY MORIAH GROUP)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

gas properties of the Brothers Group, H2K Holdings Ltd. and the Charitable Support Foundations, Inc. and its affiliates. Legacy also purchased the oil and natural gas properties owned by MBN Properties, LP. In the case of the Brothers Group and H2K Holdings Ltd. those entities exchanged their oil and natural gas properties for limited partnership units. The owners of the Moriah Group, the Brothers Group and H2K Holdings Ltd. (the ‘‘Founding Investors’’) exchanged 4.4 million of their units for $69.9 million in cash. The Moriah Group has been treated as the acquiring entity in the Legacy Formation. With the exception of its assumption of liabilities associated with the oil and natural gas swaps it acquired, the other depreciable assets of the Brothers Group (office furniture and equipment and vehicles) and certain unamortized deferred financing costs of the Moriah Group, Legacy did not acquire any other assets or liabilities of the Moriah Group, the Brothers Group, H2K Holdings Ltd. or the Charitable Support Foundations, Inc. and its affiliates. The removal of these assets and liabilities of the Moriah Group was reflected as a deemed dividend.

The following table sets forth the units issued in the Legacy Formation transaction:

			Number of units
	Moriah Properties LP		7,334,070
	DAB Resources, Ltd.		859,703
	Moriah Group		8,193,773

	Brothers Group		6,200,358
	H2K Holdings Ltd.		83,499
	MBN Properties LP		3,162,438
	Legacy units		600,000

	Total units issued at Legacy Formation		18,240,068

In addition to the 18,240,068 units issued at Legacy Formation, 52,616 restricted management units were issued to employees of Legacy concurrent with, but not as a part of, the Legacy Formation.

b. On March 15, 2006, Legacy Reserves LP, as part of its formation transactions, purchased oil and natural gas properties from the Brothers Group, H2K Holdings Ltd. and three charitable foundations, which included the assumption of liabilities associated with oil and natural gas swaps. The following table sets forth the purchase price allocation of this transaction:

LEGACY RESERVES LP (FORMERLY MORIAH GROUP)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

	Number of Units		Purchase Price
	at $17.00 per unit		of Assets Acquired
Brothers Group		6,200,358	$	105,406,069
H2K Holdings Ltd.		83,499		1,419,483
Cash paid to three charitable foundations		-		7,682,854
Total purchase price before liabilities assumed				114,508,406

Plus:
Oil and natural gas swap liabilities assumed				3,147,152
Asset retirement obligations incurred				1,467,241

Less:
Office furniture, equipment and vehicles acquired				(107,275	)

Total purchase price allocated to oil and
natural gas properties acquired			$	119,015,524

As a result of the purchase above, to record incremental depreciation, depletion, amortization and accretion, using the units of production method.

c. On March 15, 2006, in addition to the 3,162,438 common units issued to MBN Properties LP as part of the Legacy Formation transaction, Legacy paid $65.3 million in cash to MBN Properties LP to acquire that portion of the oil and natural gas properties of MBN Properties LP it did not already own by virtue of the Moriah Group’s ownership of a 46.22% limited partnership interest in MBN Properties LP. In addition, Legacy paid $1,980,468 to MBN Management LLC to reimburse expenses incurred by that entity in anticipation of the Legacy Formation. The following table sets forth the calculation of the step-up of oil and natural gas property basis with respect to this interest acquired:

LEGACY RESERVES LP (FORMERLY MORIAH GROUP)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS


	Number of Units			Purchase Price of
	at $17.00 per unit			Assets Acquired
Units issued to MBN Properties LP		3,162,438		$	53,761,446
Cash paid to MBN Properties LP		-			65,300,000
Total purchase price before liabilities assumed					119,061,446

Plus:
Oil and natural gas swap liabilities assumed					2,539,625
ARO liabilities assumed					453,913
Less:
Net book value of other property and equipment on
MBN Properties LP at March 14, 2006					(39,056	)
					122,015,928
Less:
Net book value of oil and gas assets on
MBN Properties LP at March 14, 2006					(62,990,390	)

Purchase price in excess of net book value of assets					59,025,538

Less:
Share already owned by Moriah via consolidation
of MBN Properties LP		46.22	%		(27,281,604	)
Non-controlling interest share to record					31,743,934

Plus:
Elimination of deferred financing costs related to
non-controlling interests' share of MBN Properties LP					164,202

Reimbursement of Brothers Group's share of MBN
Management LLC losses from inception through
March 14, 2006					780,239

MBN Properties LP purchase price to allocate
to oil and natural gas properties				$	32,688,375


Units related to purchase of non-controlling interest		1,867,290
Units related to interest previously owned by Moriah Group		1,295,148
Total units issued to MBN Properties LP		3,162,438

As a result of the purchase above, to record incremental depreciation, depletion, amortization and accretion, using the units of production method.

d. To eliminate interest income on notes receivable not acquired from the Brothers Group.

e. The Moriah Group and the Brothers Group also owned an interest in MBN Management LLC, whose purpose was to manage the oil and natural gas properties of MBN Properties LP and fund certain expenses and they accounted for their interests

LEGACY RESERVES LP (FORMERLY MORIAH GROUP)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

under the equity method of accounting. These interests were not acquired. The effect on the unaudited pro forma combined statements of operations is to reclassify the equity in loss of MBN Management LLC to general and administrative expense. In addition, the Brothers Group accounted for its investment in MBN Properties LP under the equity method, and an adjustment has been made to eliminate the equity method loss since the operations of MBN Properties LP are now wholly-owned. The adjustments are as follows:

	Year Ended
	December 31, 2006

Moriah Group - MBN Management LLC	$	317,788

Brothers Group:
MBN Properties LP	$	382,563
MBN Management LLC		226,743
Total Brothers Group	$	609,306

f. Record additional compensation expense resulting from employment agreements executed at the closing of the private equity offering.

g. On June 29, 2006, Legacy purchased oil and natural gas properties from Henry Holding LP in eastern New Mexico in the South Justis Unit (‘‘SJU’’) and the right to operate these properties. The stated purchase price was $14 million cash plus the issuance of 138,000 units on June 29, 2006 and 8,415 units on November 10, 2006 at $17.00 per unit ($2,346,000 and $143,055, respectively) less final adjustments of approximately $624,000. The effective date of our ownership is May 1, 2006. Legacy has been elected operator of the SJU following the closing of the transaction, which entitles Legacy to a contractual overhead reimbursement of approximately $127,500 per month from its partners in the SJU. The $15.8 million net purchase price was allocated (not including the $143,055 relating to the 8,415 units issued on November 10, 2006) with $2.9 million recorded as lease and well equipment, $5.9 million of leasehold costs and $7.0 million capitalized as an intangible asset relating to the operating rights associated with the SJU. The lease and well equipment and leasehold costs will be depleted using the units of production method. The capitalized operating rights associated with the SJU will be amortized over the estimated total well months the wells in the SJU are expected to be operated. $137,453 of asset retirement obligations were recorded in connection with this transaction.

As a result of the purchase above, to record incremental depreciation, depletion, amortization and accretion.

LEGACY RESERVES LP (FORMERLY MORIAH GROUP)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

h. To record incremental interest expense associated with the $12.6 million of borrowings under Legacy’s revolving credit agreement incurred to fund the acquisition of SJU oil and natural gas properties from Henry Holding LP, using an interest rate of 6.89% to reflect the interest rate at closing of the acquisition on June 29, 2006.

i. On July 31, 2006 Legacy purchased oil and natural gas properties from Kinder Morgan located in the Permian Basin. The stated purchase price was $18 million cash before post-closing adjustments. The effective date of our ownership is July 1, 2006. The $17.2 million net purchase price was allocated with $4.1 million recorded as lease and well equipment and $13.1 million of leasehold costs. Asset retirement obligations of $1,383,180 were recorded in connection with this transaction.

As a result of the purchase above, to record incremental depreciation, depletion, amortization and accretion, using the units of production method.

j. To record incremental interest expense associated with $14.4 million of borrowings under Legacy’s revolving credit agreement incurred to fund the acquisition of oil and natural gas properties from Kinder Morgan, using an interest rate of 6.89% to reflect the interest rate at closing of the acquisition on July 31, 2006.

k. On January 18, 2007, Legacy closed its initial public offering in which 6,900,000 units were issued at $19.00 per unit. Net proceeds totaled approximately $121,554,464 or $17.62 per unit. Payment of then existing revolver debt and general business purposes was the use of proceeds.

To adjust interest expense downward as a result of the use of net proceeds of the initial public offering to repay debt. Since the $121,554,464 net proceeds are less than the $139,800,000 pro forma debt amounts of $65,800,000 related to the Formation Transaction, $12,600,000 related to the South Justis acquisition, $14,400,000 related to the Kinder Morgan acquisition, $29,000,000 related to the Binger acquisition, $5,000,000 related to the Ameristate acquisition and $13,000,000 related to the TSF acquisition, we have assumed the issuance of all 6,900,000 units at $17.62 per unit on January 1, 2006 to retire a portion of the $139,800,000 of pro forma debt.

l. On April 16, 2007 Legacy purchased oil and natural gas properties from Nielson located in Caddo County, Oklahoma. The final net purchase price as determined by a post-closing settlement was $45.3 million, with $29.52 million paid in cash and the remaining $15.75 million via the issuance of 611,247 Legacy units at $25.77 per unit. The effective date of our ownership is February 1, 2007. The assets acquired consist of: (1) a 54.5% working interest in the East Binger (Marchand) Unit in Caddo County, Oklahoma with respect to 51 producing wells and 32 water injection wells and (2) a 50% ownership interest in Binger Operations, LLC (“BOL”), the principal purpose of which is to operate the East Binger Unit. Via Legacy’s 50% ownership of BOL, we own an additional 0.74% working

LEGACY RESERVES LP (FORMERLY MORIAH GROUP)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

interest in the East Binger Unit. Legacy accounts for its 50% ownership of BOL under the equity method. The estimated $45.3 million net purchase price was allocated as follows: $14.7 million recorded as lease and well equipment, $30.0 million as leasehold costs and $0.6 million as investment in BOL. Asset retirement obligations of approximately $185,000 were recorded in connection with this transaction.

As a result of the purchase above, to record incremental depreciation, depletion, amortization and accretion, using the units of production method.

m. To record incremental interest expense associated with $29.0 million of borrowings under Legacy’s revolving credit agreement incurred to fund the acquisition of oil and natural gas properties from Nielson, using an interest rate of 6.69% to reflect the interest rate at closing of the acquisition on April 16, 2007.

n. On May 1, 2007 Legacy purchased oil and natural gas properties from Ameristate located in the Permian Basin of southeast New Mexico. The stated purchase price was $5.5 million cash before post-closing adjustments. The effective date of our ownership is January 1, 2007. The Ameristate Properties consist primarily of working interests in 39 producing wells located in Lea and Eddy counties in southeast New Mexico, 15 of which are operated and 24 of which are non-operated. The $5.2 million net purchase price was allocated with $0.5 million recorded as lease and well equipment and $4.7 million of leasehold costs. Asset retirement obligations of approximately $51,000 were recorded in connection with this transaction.

As a result of the purchase above, to record incremental depreciation, depletion, amortization and accretion, using the units of production method.

o. To record incremental interest expense associated with $5.0 million of borrowings under Legacy’s revolving credit agreement incurred to fund the acquisition of oil and natural gas properties from Ameristate, using an interest rate of 6.94% to reflect the interest rate at closing of the acquisition on May 1, 2007.

p. On May 25, 2007 Legacy purchased oil and natural gas properties from Fields located in the Permian Basin of west Texas. The stated purchase price was $15.3 million cash before post-closing adjustments. The effective date of our ownership is March 1, 2007. The TSF Properties consist primarily of working interests in 19 operated producing wells located in Midland, Reagan and Upton counties in west Texas. The $14.9 million net purchase price was allocated with $1.9 million recorded as lease and well equipment and $13.0 million of leasehold costs. Asset retirement obligations of approximately $99,000 were recorded in connection with this transaction.

LEGACY RESERVES LP (FORMERLY MORIAH GROUP)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

As a result of the purchase above, to record incremental depreciation, depletion, amortization and accretion, using the units of production method.

q. To record incremental interest expense associated with $13.0 million of borrowings under Legacy’s revolving credit agreement incurred to fund the acquisition of oil and natural gas properties from TSF, using an interest rate of 6.62% to reflect the interest rate at closing of the acquisition on May 25, 2007.

r. On August 3, 2007 Legacy purchased oil and natural gas properties from Raven located primarily in the Permian Basin of west Texas. The stated purchase price was $20.3 million cash before post-closing adjustments which have not been finally determined. The effective date of our ownership is July 1, 2007. The Raven OBO Properties consist of working interests in 450 non-operated wells in 98 separate properties. The estimated $19.9 million net purchase price was allocated with $1.6 million recorded as lease and well equipment and $18.3 million of leasehold costs. Asset retirement obligations of approximately $224,000 were recorded in connection with this transaction.

To record the Raven OBO acquisition and related incremental depreciation, depletion, amortization and accretion, using the units of production method.

s. To record incremental interest expense associated with $17.0 million of borrowings under Legacy’s revolving credit agreement incurred to fund the acquisition of oil and natural gas properties from Raven, using an interest rate of 6.88% to reflect the interest rate at closing of the acquisition on August 3, 2007.

t. Legacy entered into a Unit Purchase Agreement (the “Purchase Agreement”), dated effective as of November 7, 2007, with Legacy Reserves GP, LLC and certain institutional investors (the “Purchasers”) to sell an aggregate of 3,642,369 units representing limited partner interests in the Partnership (the “Units”) in a private placement (the “Private Placement”). The negotiated purchase price for the Units in the Purchase Agreement was $20.50 per unit, or approximately $74.7 million in the aggregate. Offering costs of approximately $1.6 million were paid.

The Private Placement closed, and 3,642,369 Units were issued, on November 8, 2007. The Partnership used the net proceeds from the Private Placement to reduce debt currently outstanding under the Credit Agreement dated as of March 15, 2006, as amended, with BNP Paribas, as administrative agent, and other financial institutions party thereto.

In connection with the Purchase Agreement, the Partnership also entered into a Registration Rights Agreement dated November 8, 2007 (the “Registration Rights Agreement”) with the Purchasers. The Registration Rights Agreement requires the

LEGACY RESERVES LP (FORMERLY MORIAH GROUP)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

Partnership to use its commercially reasonable efforts to cause the shelf registration statement to become effective no later than 180 days after the closing date of the Private Placement (the “Target Effective Date”). If the registration statement covering the Units is not declared effective by the Securities Exchange Commission within 180 days after the closing date of the Private Placement (the “Target Effective Date”), then the Partnership will be liable to each Purchaser for liquidated damages, and not as a penalty, of 0.25% of the product of $20.50 (the purchase price) times the number of Units purchased by the Purchaser (the “Liquidated Damages Amount”) per the 30-day period for the first 30 days following the Target Effective Date, increasing by an additional 0.25% of the Liquidated Damages Amount per each non-overlapping 30-day period for each subsequent 30-day period subsequent to the 30 days following the Target Effective Date, up to a maximum of 1.00% of the Liquidated Damages Amount per each non-overlapping 30-day period (i.e., 0.25% for 1-30 days; 0.5% for 31-60 days; 0.75% for 61-90 days; and 1.0% thereafter); provided , that the aggregate amount of liquidated damages payable by the Partnership under the Registration Rights Agreement to each Purchaser shall not exceed 10.0% of the Liquidated Damages Amount with respect to such Purchaser. The Registration Rights Agreement also provides for the payment of liquidated damages in the event the Partnership suspends the use of the shelf registration statement in excess of permitted periods.

To record the Private Placement gross proceeds and the payment of related offering costs.

u. To record repayment of revolver debt with the approximately $73.1 million of net proceeds from the Private Placement.

LEGACY RESERVES LP (FORMERLY MORIAH GROUP)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

5. Oil, Natural Gas and NGL Reserve Disclosures

The following table sets forth certain unaudited pro forma information concerning our proved oil, natural gas and NGL reserves for the year ended December 31, 2006, giving effect to the acquisition of oil and natural gas properties from the Formation Entities (the Brothers Group, Charitable Foundations and H2K Holdings), the 2006 Acquisitions (South Justis Unit acquired from Henry and the Kinder Morgan Properties), Nielson, Ameristate, TSF and Raven as if the transactions had occurred on January 1, 2006. For the sake of brevity as in Notes 2 and 3 above, we have provided supporting tables detailing the Formation Entities and the 2006 Acquisitions. There are numerous uncertainties inherent in estimating the quantities of proved reserves and projecting future rates of production and timing of development expenditures. The following reserve data represent estimates only and should not be construed as being exact:


	Oil (MBbls)
	Legacy/			Formation			2006			Historical			Binger			Ameristate			TSF			Raven OBO			Pro Forma
	Moriah			Entities			Acquisitions			Legacy			Acquisition			Acquisition			Acquisition			Acquisition			Total

Total Proved Reserves:
Balance, December 31, 2005		8,118			4,191			1,769			14,078			1,926			55			630			1,043			17,732
Purchases (sales) of minerals
in place		6,352			(4,141	)		(1,698	)		513			-			-			-			-			513
Extensions and discoveries		75			-			-			75			-			-			-			-			75
Revisions of previous
estimates due to infill
drilling, recompletions and
stimulations		233			-			-			233			-			-			-			-			233
Revisions of previous
estimates due to prices and
performance		(657	)		-			-			(657	)		(4	)		7			13			(81	)		(722	)
Production		(749	)		(50	)		(71	)		(870	)		(131	)		(7	)		(53	)		(69	)		(1,130	)
Balance, December 31, 2006		13,372			-			-			13,372			1,791			55			590			893			16,701

Proved Developed Reserves:
December 31, 2005		6,380			3,631			1,695			11,706			1,526			51			630			1,043			14,956
December 31, 2006		11,132			-			-			11,132			1,391			51			590			893			14,057


	Gas (MMcf)
	Legacy/			Formation			2006			Historical			Binger			Ameristate			TSF			Raven OBO			Pro Forma
	Moriah			Entities			Acquisitions			Legacy			Acquisition			Acquisition			Acquisition			Acquisition			Total

Total Proved Reserves:
Balance, December 31, 2005		24,457			9,322			1,624			35,403			6,641			1,462			1,691			2,380			47,577
Purchases (sales) of minerals
in place		11,871			(9,204	)		(1,569	)		1,098			-			-			-			-			1,098
Extensions and discoveries		207			-			-			207			-			-			-			-			207
Revisions of previous
estimates due to infill
drilling, recompletions and
stimulations		494			-			-			494			-			-			-			-			494
Revisions of previous
estimates due to prices and
performance		(2,296	)		-			-			(2,296	)		(27	)		(12	)		100			(106	)		(2,341	)
Production		(2,200	)		(118	)		(55	)		(2,373	)		(331	)		(192	)		(150	)		(201	)		(3,247	)
Balance, December 31, 2006		32,533			-			-			32,533			6,283			1,258			1,641			2,073			43,788

Proved Developed Reserves:
December 31, 2005		20,618			8,535			1,498			30,651			5,957			1,330			1,691			2,380			42,009
December 31, 2006		28,126			-			-			28,126			5,599			1,126			1,641			2,073			38,565

LEGACY RESERVES LP (FORMERLY MORIAH GROUP)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS


	NGL (MBbls)
	Legacy/		Formation		2006		Historical		Binger			Ameristate		TSF		Raven OBO			Pro Forma
	Moriah		Entities		Acquisitions		Legacy		Acquisition			Acquisition		Acquisition		Acquisition			Total

Total Proved Reserves:
Balance, December 31, 2005		-		-		-		-		1,479			-		-		194			1,673
Purchases of minerals-in-place		-		-		-		-		-			-		-		-			-
Extensions and discoveries		-		-		-		-		-			-		-		-			-
Revisions of previous
estimates due to infill
drilling, recompletions and
stimulations		-		-		-		-		-			-		-		-			-
Revisions of previous
estimates due to prices and
performance		-		-		-		-		(4	)		-		-		1			(3	)
Production		-		-		-		-		(87	)		-		-		(11	)		(98	)
Balance, December 31, 2006		-		-		-		-		1,388			-		-		184			1,572

Proved Developed Reserves:
December 31, 2005		-		-		-		-		1,246			-		-		194			1,440
December 31, 2006		-		-		-		-		1,155			-		-		184			1,339

LEGACY RESERVES LP (FORMERLY MORIAH GROUP)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

The following tables set forth the oil and natural gas reserve quantities for the Formation Entities:


	Oil (MBbls)
	Brothers			Charitable				H2K		Pro Forma
	Group			Foundations			Holdings			Total

Total Proved Reserves:
Balance, December 31, 2005		3,685			457			49			4,191
Purchases (sales) of minerals
in place		(3,640	)		(453	)		(48	)		(4,141	)
Production		(45	)		(4	)		(1	)		(50	)
Balance, December 31, 2006		-			-			-			-

Proved Developed Reserves:
December 31, 2005		3,213			377			41			3,631
December 31, 2006		-			-			-			-


	Gas (MMcf)
	Brothers			Charitable				H2K		Pro Forma
	Group			Foundations			Holdings			Total

Total Proved Reserves:
Balance, December 31, 2005		8,013			1,185			124			9,322
Purchases (sales) of minerals
in place		(7,907	)		(1,174	)		(123	)		(9,204	)
Production		(106	)		(11	)		(1	)		(118	)
Balance, December 31, 2006		-			-			-			-

Proved Developed Reserves:
December 31, 2005		7,346			1,076			113			8,535
December 31, 2006		-			-			-			-

LEGACY RESERVES LP (FORMERLY MORIAH GROUP)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

The following tables set forth the oil and natural gas reserve quantities for the 2006 Acquisitions:


	Oil (MBbls)
	South			Kinder			Pro Forma
	Justis			Morgan			Total

Total Proved Reserves:
Balance, December 31, 2005		538			1,231			1,769
Purchases (sales) of minerals
in place		(522	)		(1,176	)		(1,698	)
Production		(16	)		(55	)		(71	)
Balance, December 31, 2006		-			-			-

Proved Developed Reserves:
December 31, 2005		464			1,231			1,695
December 31, 2006		-			-			-


	Gas (MMcf)
	South			Kinder			Pro Forma
	Justis			Morgan			Total

Total Proved Reserves:
Balance, December 31, 2005		1,079			545			1,624
Purchases (sales) of minerals
in place		(1,044	)		(525	)		(1,569	)
Production		(35	)		(20	)		(55	)
Balance, December 31, 2006		-			-			-

Proved Developed Reserves:
December 31, 2005		953			545			1,498
December 31, 2006		-			-			-

LEGACY RESERVES LP (FORMERLY MORIAH GROUP)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

Summarized in the following tables is information for our standardized measure of discounted cash flows relating to proved reserves as of December 31, 2006, giving effect to the acquisition of oil and natural gas properties from Nielson, Ameristate, TSF and Raven as if the transactions had occurred on January 1, 2006. Future cash flows are computed by applying year-end pricing relating to our proved reserves to the year-end quantities of those reserves. Future production, development, site restoration and abandonment costs are derived based on current costs assuming continuation of existing economic conditions. The information should be viewed only as a form of standardized disclosure concerning possible future cash flows that would result under the assumptions used, but should not be viewed as indicative of fair market value. Reference is made to our Annual Report on Form 10-K for the year ended December 31, 2006 as well as to the historical statements of direct revenues and direct operating expenses of certain natural gas and oil properties acquired from Nielson, Ameristate, TSF and Raven for a discussion of the assumptions used in preparing the information presented.


	December 31, 2006
	Legacy/			Binger			Ameristate			TSF			Raven OBO			Pro Forma
	Moriah			Acquisition			Acquisition			Acquisition			Acquisition			Total
	(in thousands)

Future production revenues	$	947,914		$	195,500		$	10,186		$	44,923		$	71,096		$	1,269,619
Future costs:
Production		(387,238	)		(118,403	)		(3,306	)		(15,323	)		(35,318	)		(559,588	)
Development		(43,419	)		(7,904	)		(959	)		-			(272	)		(52,554	)
Future net cash flows
before income taxes		517,257			69,193			5,921			29,600			35,506			657,477
10% annual discount for
estimated timing of
cash flows		(276,694	)		(30,474	)		(2,348	)		(15,671	)		(17,565	)		(342,752	)
Standardized measure of
discounted net cash
flows	$	240,563		$	38,719		$	3,573		$	13,929		$	17,941		$	314,725

LEGACY RESERVES LP (FORMERLY MORIAH GROUP)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

The following table sets forth the principal sources of change in discounted future net cash flows (dollars in thousands):


	December 31, 2006
	Legacy/			Formation				2006			Historical			Binger			Ameristate			TSF			Raven OBO			Pro Forma
	Moriah			Entities				Acquisitions			Legacy			Acquisition			Acquisition			Acquisition			Acquisition			Total
	(in thousands)

Increase (decrease):
Sales, net of production
costs	$	(40,113	)	$	(2,628	)		$	(3,493	)	$	(46,234	)	$	(9,057	)	$	(1,171	)	$	(3,876	)	$	(3,992	)	$	(64,330	)
Net change in sales prices,
net of production costs		(60,531	)		-				-			(60,531	)		(15,785	)		(2,539	)		(3,275	)		(4,480	)		(86,610	)
Changes in estimated future
development costs		4,582			-				-			4,582			18			(89	)		-			(258	)		4,253
Extensions and discoveries,
net of future production
and development costs		2,723			-				-			2,723			-			-			-			-			2,723
Previously estimated
development costs
incurred		9,517			-				-			9,517			1,759			100			141			44			11,561
Revisions of previous
estimates due to infill
drilling, recompletions
and stimulations		7,919			-				-			7,919			-			-			-			-			7,919
Revisions of previous
estimates due to prices
and performance		(12,232	)		-				-			(12,232	)		(122	)		78			468			(1,246	)		(13,054	)
Purchases (sales) of minerals
in place		127,009			(82,563	)			(27,125	)		17,321			-			-			-			-			17,321
Other		(2,971	)		-				-			(2,971	)		4,852			(615	)		877			1,608			3,751
Accretion of discount		12,663			-				-			12,663			5,005			701			1,575			2,354			22,298
Net Increase (decrease)		48,566			(85,191	)			(30,618	)		(67,243	)		(13,330	)		(3,535	)		(4,090	)		(5,970	)		(94,168	)
Standardized measure of							��
discounted net cash
flows:
Beginning of year		191,997			85,191				30,618			307,806			52,049			7,108			18,019			23,911			408,893
End of year	$	240,563		$	-			$	-		$	240,563		$	38,719		$	3,573		$	13,929		$	17,941		$	314,725

LEGACY RESERVES LP (FORMERLY MORIAH GROUP)

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

The following table sets forth the changes in the standardized measure for the Formation entities:


	December 31, 2006
	Brothers			Charitable				H2K		Pro Forma
	Group			Foundations			Holdings			Total
	(in thousands)
Increase (decrease):
Sales, net of production
costs	$	(2,406	)	$	(198	)	$	(24	)	$	(2,628	)
Purchase (sales) of minerals
in place		(72,441	)		(9,140	)		(982	)		(82,563	)
Net increase (decrease)		(74,847	)		(9,338	)		(1,006	)		(85,191	)
Standardized measure of
discounted net cash
flows:
Beginning of year		74,847			9,338			1,006			85,191
End of year	$	-		$	-		$	-		$	-

The following table sets forth the changes in the standardized measure for the 2006 Acquisitions:


	December 31, 2006
	South			Kinder			Pro Forma
	Justis			Morgan			Total
	(in thousands)
Increase (decrease):
Sales, net of production
costs	$	(892	)	$	(2,601	)	$	(3,493	)
Purchase of minerals-in-
place		(10,096	)		(17,029	)		(27,125	)
Net Increase (decrease)		(10,988	)		(19,630	)		(30,618	)
Standardized measure of
discounted net cash
flows:
Beginning of year		10,988			19,630			30,618
End of year	$	-		$	-		$	-

Legacy Reserves Inactive 8-KOther Events