Exhibit 99.1
Legacy Reserves LP
Executive Oil Conference
April 14, 2009
Page 2
Forward-Looking Statements
Statements made by representatives of Legacy Reserves LP (the “Partnership”) during the course
of this presentation that are not historical facts are forward-looking statements. These statements
are based on certain assumptions made by the Partnership based on management’s experience
and perception of historical trends, current conditions, anticipated future developments and other
factors believed to be appropriate. Such statements are subject to a number of assumptions, risks
and uncertainties, many of which are beyond the control of the Partnership, which may cause actual
results to differ materially from those implied or expressed by the forward-looking statements.
These include risks relating to financial performance and results, availability of sufficient cash flow
to pay distributions and execute our business plan, prices and demand for oil and natural gas, our
ability to replace reserves and efficiently exploit our current reserves, our ability to make
acquisitions on economically acceptable terms, and other important factors that could cause actual
results to differ materially from those anticipated or implied in the forward-looking statements.
Please see the factors described in the Partnership’s Annual Report on Form 10-K in Item 1A under
“Risk Factors”. The Partnership undertakes no obligation to publicly update any forward-looking
statements, whether as a result of new information or future events.
of this presentation that are not historical facts are forward-looking statements. These statements
are based on certain assumptions made by the Partnership based on management’s experience
and perception of historical trends, current conditions, anticipated future developments and other
factors believed to be appropriate. Such statements are subject to a number of assumptions, risks
and uncertainties, many of which are beyond the control of the Partnership, which may cause actual
results to differ materially from those implied or expressed by the forward-looking statements.
These include risks relating to financial performance and results, availability of sufficient cash flow
to pay distributions and execute our business plan, prices and demand for oil and natural gas, our
ability to replace reserves and efficiently exploit our current reserves, our ability to make
acquisitions on economically acceptable terms, and other important factors that could cause actual
results to differ materially from those anticipated or implied in the forward-looking statements.
Please see the factors described in the Partnership’s Annual Report on Form 10-K in Item 1A under
“Risk Factors”. The Partnership undertakes no obligation to publicly update any forward-looking
statements, whether as a result of new information or future events.
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Name | Title | Years Experience in the Permian Basin | Years Experience in the Oil & Gas Industry |
Cary D. Brown, CPA | Chairman & CEO | 17 | 19 |
Steven H. Pruett | President & CFO | 20 | 25 |
Kyle A. McGraw | EVP, Business Development & Land | 26 | 26 |
Paul T. Horne | EVP, Operations | 23 | 25 |
William M. Morris, CPA | VP, Controller & CAO | 27 | 28 |
Senior Management averages over 20 years of experience
William D. Sullivan
Former EVP
Anadarko Petroleum
G. Larry Lawrence
Former Controller
Pure Resources
Kyle D. Vann
Former CEO
Entergy - - Koch, LP
Independent Board Members
William R. Granberry
Former Pres & COO
Tom Brown, Inc.
Legacy Management Team
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q 30.8 MMBoe of Proved
Reserves (1)
Reserves (1)
q Reserves-to-Production Ratio
of over 10 years
of over 10 years
q Diversified across 3,850
Producing Wells
Producing Wells
q 65% Operated Production
q 8,553 Net Boepd in Q4 2008
q 71% Oil & NGL Production
(1) 12-31-08 Reserves reported in the Legacy
Reserves 10-K based on flat prices of
$44.60/Bbl WTI and $5.62/MMBtu NYMEX
Henry Hub gas
Reserves 10-K based on flat prices of
$44.60/Bbl WTI and $5.62/MMBtu NYMEX
Henry Hub gas
Legacy Asset Overview
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Note: CAGR = Compound Annual Growth Rate
Quarterly Production and Cash Flow Profile
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Equity Offering History
q March, 2006: $85 million raised through 144A Private Placement
q January, 2007: $131 million raised at Initial Public Offering - 85% retail placement
q November, 2007: $75 million raised from institutional investors (PIPE)
q $292 million of equity capital has been raised since 2006
Ш Used to fund approximately $523 million of acquisitions since forming Legacy
Ш Hedged 5 years of oil and gas prices when Legacy was formed
Ш Hedged acquisitions upon signing purchase agreement or at closing
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Oil
Natural Gas (1)
Hedges have been placed with Bank Group to avoid margin
calls and manage counterparty risk
calls and manage counterparty risk
(1)Natural gas is hedged near our gas sales points at Waha and
ANR-Oklahoma
ANR-Oklahoma
Oil and Gas Price Hedging Summary
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Borrowing Base Update
q Borrowing base decreased to $340 million in March from $410 million in the fall
q Increased Upfront Fees (112 bp) as well as wider LIBOR spreads resulting in higher
cost of borrowing
cost of borrowing
q New maturity date of April 1, 2012
q $300 million of debt drawn
q Goal in 2009 is debt reduction
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Ticker: LGCY
Exchange: NASDAQ
Unit Price (4/9/09): $13.00 per unit
Quarterly Distribution: $0.52 per unit
Yield: 16%
Market Capitalization: $404 million
Enterprise Value $704 million
Note: Estimated Ownership as of 12/01/08
Legacy Ownership
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MLP Yields by Sector
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Hedge fund buying*
Hedge fund selling*
*Source: DTC
LGCY Unit Price vs. Oil Price
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“Take Private” Proposal
q Apollo Management VII, LP, a $14.7B private equity fund, has offered $14 per unit,
less future cash distributions, to buy all units outstanding.
less future cash distributions, to buy all units outstanding.
q The proposed price represents a 42% premium over the April 2, 2009 closing price
prior to the announcement and a 51% premium to the prior 30 day average closing
price.
prior to the announcement and a 51% premium to the prior 30 day average closing
price.
q Legacy’s Conflicts Committee (composed entirely of independent directors) has
engaged Tudor Pickering Holt to evaluate the fairness of the proposal and consider
other alternatives.
engaged Tudor Pickering Holt to evaluate the fairness of the proposal and consider
other alternatives.
q It is expected that management and employees would remain in place should the
proposed transaction be approved.
proposed transaction be approved.
q If approved by the Board of Directors, Legacy management has indicated that it will
support the transaction, rolling a significant portion of its holdings into the private
partnership with Apollo.
support the transaction, rolling a significant portion of its holdings into the private
partnership with Apollo.
Note: There can be no assurance that any definitive offer will be made, any agreement will be executed or that any
transaction will be approved or consummated.
transaction will be approved or consummated.
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Upstream MLP Issues
q Sustainability of Distributions
– Distribution security impacted by liquidity
– Variable vs. Managed
q Judicious Approach to Acquisitions
– Opportunities for acquisition should become compelling if capital
remains scarce; companies selling off production to fund drilling
remains scarce; companies selling off production to fund drilling
– Reductions in Borrowing Base
q Lack of Access to Equity Markets
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Hunker Down or Act?
q The longer prices remain depressed, the more dramatic the recovery due to
deferral and cancellation of LT capital projects and demand stimulus.
deferral and cancellation of LT capital projects and demand stimulus.
q Costs are resetting with stacking of iron and layoffs, input costs declining with
global recession (iron, cement, power).
global recession (iron, cement, power).
q Opportunistic selling during 2007-08 replaced with distressed selling by the fall.
q Availability of good projects and acreage has never been better as companies
are overcommitted with expiring leases.
are overcommitted with expiring leases.
q Capital markets will start to function ahead of the global recovery.
q Patience is warranted, as we are relatively early in what is expected to be a
deep cycle, but be positioned to act.
deep cycle, but be positioned to act.
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Adjusted EBITDA & Distributable Cash Flow Reconciliation
This presentation, the financial tables and other supplemental information, including the reconciliations
of certain non-generally accepted accounting principles ("non-GAAP") measures to their nearest
comparable generally accepted accounting principles ("GAAP") measures, may be used periodically by
management when discussing Legacy's financial results with investors and analysts and they are also
available on Legacy's website under the Investor Relations tab. Adjusted EBITDA is defined in our
revolving credit facility as net income (loss) plus interest expense; income taxes; depletion,
depreciation, amortization and accretion; impairment of long-lived assets; (gain) loss on sale of
partnership investment; (gain) loss on sale of assets; equity in (income) loss of partnerships; non-cash
compensation expense and unrealized (gain) loss on oil and natural gas swaps. Adjusted EBITDA and
Distributable Cash Flow is presented as management believes it provides additional information and
metrics relative to the performance of Legacy's business, such as the cash distributions we expect to
pay to our unitholders, as well as our ability to meet our debt covenant compliance tests. Management
believes that these financial measures indicate to investors whether or not cash flow is being generated
at a level that can sustain or support an increase in our quarterly distribution rates. Adjusted EBITDA
and Distributable Cash Flow may not be comparable to a similarly titled measure of other publicly
traded limited partnerships or limited liability companies because all companies may not calculate
Adjusted EBITDA and Distributable Cash Flow in the same manner.
of certain non-generally accepted accounting principles ("non-GAAP") measures to their nearest
comparable generally accepted accounting principles ("GAAP") measures, may be used periodically by
management when discussing Legacy's financial results with investors and analysts and they are also
available on Legacy's website under the Investor Relations tab. Adjusted EBITDA is defined in our
revolving credit facility as net income (loss) plus interest expense; income taxes; depletion,
depreciation, amortization and accretion; impairment of long-lived assets; (gain) loss on sale of
partnership investment; (gain) loss on sale of assets; equity in (income) loss of partnerships; non-cash
compensation expense and unrealized (gain) loss on oil and natural gas swaps. Adjusted EBITDA and
Distributable Cash Flow is presented as management believes it provides additional information and
metrics relative to the performance of Legacy's business, such as the cash distributions we expect to
pay to our unitholders, as well as our ability to meet our debt covenant compliance tests. Management
believes that these financial measures indicate to investors whether or not cash flow is being generated
at a level that can sustain or support an increase in our quarterly distribution rates. Adjusted EBITDA
and Distributable Cash Flow may not be comparable to a similarly titled measure of other publicly
traded limited partnerships or limited liability companies because all companies may not calculate
Adjusted EBITDA and Distributable Cash Flow in the same manner.
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(1) Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures.
Reconciliation of Net Income to Adjusted EBITDA & Distributable Cash Flow
Adjusted EBITDA and DCF Reconciliation
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MLP Yields by Sectors Listed Below (see page 10)
Appendix A