Delaware
|
|
16-1751069
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
303 W. Wall, Suite 1400
Midland, Texas
|
|
79701
|
(Address of principal executive offices)
|
|
(Zip code)
|
Large accelerated filer
x
|
|
Accelerated filer
o
|
|
Non-accelerated filer
o
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
o
|
|
ASSETS
|
||||||||
|
|
March 31,
2012 |
|
December 31,
2011 |
||||
|
|
(In thousands)
|
||||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
2,584
|
|
|
$
|
3,151
|
|
Accounts receivable, net:
|
|
|
|
|
|
|
||
Oil and natural gas
|
|
35,959
|
|
|
35,489
|
|
||
Joint interest owners
|
|
8,467
|
|
|
10,299
|
|
||
Other
|
|
359
|
|
|
204
|
|
||
Fair value of derivatives (Notes 5 and 6)
|
|
3,267
|
|
|
7,117
|
|
||
Prepaid expenses and other current assets
|
|
2,508
|
|
|
3,525
|
|
||
Total current assets
|
|
53,144
|
|
|
59,785
|
|
||
Oil and natural gas properties, at cost:
|
|
|
|
|
|
|
||
Proved oil and natural gas properties using the successful efforts method of accounting
|
|
1,401,849
|
|
|
1,389,326
|
|
||
Unproved properties
|
|
21,880
|
|
|
20,063
|
|
||
Accumulated depletion, depreciation, amortization and impairment
|
|
(471,135
|
)
|
|
(450,060
|
)
|
||
|
|
952,594
|
|
|
959,329
|
|
||
Other property and equipment, net of accumulated depreciation and amortization of $3,790 and $3,530, respectively
|
|
2,613
|
|
|
3,310
|
|
||
Deposits on pending acquisitions
|
|
611
|
|
|
—
|
|
||
Operating rights, net of amortization of $3,158 and $3,034, respectively
|
|
3,859
|
|
|
3,983
|
|
||
Fair value of derivatives (Notes 5 and 6)
|
|
6,512
|
|
|
10,188
|
|
||
Other assets, net of amortization of $6,704 and $6,337, respectively
|
|
6,524
|
|
|
6,611
|
|
||
Investment in equity method investee
|
|
308
|
|
|
282
|
|
||
Total assets
|
|
$
|
1,026,165
|
|
|
$
|
1,043,488
|
|
LIABILITIES AND UNITHOLDERS' EQUITY
|
||||||||
|
|
March 31,
2012 |
|
December 31,
2011 |
||||
|
|
(In thousands)
|
||||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
3,373
|
|
|
$
|
3,286
|
|
Accrued oil and natural gas liabilities (Note 1)
|
|
39,059
|
|
|
45,351
|
|
||
Fair value of derivatives (Notes 5 and 6)
|
|
24,584
|
|
|
18,905
|
|
||
Asset retirement obligation (Note 7)
|
|
20,242
|
|
|
20,262
|
|
||
Other (Note 9)
|
|
7,580
|
|
|
9,646
|
|
||
Total current liabilities
|
|
94,838
|
|
|
97,450
|
|
||
Long-term debt (Note 2)
|
|
333,000
|
|
|
337,000
|
|
||
Asset retirement obligation (Note 7)
|
|
100,542
|
|
|
100,012
|
|
||
Fair value of derivatives (Notes 5 and 6)
|
|
26,440
|
|
|
18,897
|
|
||
Other long-term liabilities
|
|
1,642
|
|
|
1,794
|
|
||
Total liabilities
|
|
556,462
|
|
|
555,153
|
|
||
Commitments and contingencies (Note 4)
|
|
|
|
|
|
|
||
Unitholders' equity:
|
|
|
|
|
|
|
||
Limited partners' equity - 47,803,708 and 47,801,682 units issued and outstanding at March 31, 2012 and December 31, 2011, respectively
|
|
469,629
|
|
|
488,264
|
|
||
General partner's equity (approximately 0.04%)
|
|
74
|
|
|
71
|
|
||
Total unitholders' equity
|
|
469,703
|
|
|
488,335
|
|
||
Total liabilities and unitholders' equity
|
|
$
|
1,026,165
|
|
|
$
|
1,043,488
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2012
|
|
2011
|
||||
|
|
(In thousands, except per unit data)
|
||||||
Revenues:
|
|
|
|
|
||||
Oil sales
|
|
$
|
76,137
|
|
|
$
|
59,265
|
|
Natural gas liquids (NGL) sales
|
|
3,726
|
|
|
4,250
|
|
||
Natural gas sales
|
|
12,784
|
|
|
9,253
|
|
||
Total revenues
|
|
92,647
|
|
|
72,768
|
|
||
|
|
|
|
|
||||
Expenses:
|
|
|
|
|
|
|
||
Oil and natural gas production
|
|
24,888
|
|
|
23,757
|
|
||
Production and other taxes
|
|
5,217
|
|
|
4,357
|
|
||
General and administrative
|
|
6,450
|
|
|
6,358
|
|
||
Depletion, depreciation, amortization and accretion
|
|
22,839
|
|
|
19,560
|
|
||
Impairment of long-lived assets
|
|
1,301
|
|
|
1,047
|
|
||
Gain on disposal of assets
|
|
(3,011
|
)
|
|
(409
|
)
|
||
Total expenses
|
|
57,684
|
|
|
54,670
|
|
||
|
|
|
|
|
||||
Operating income
|
|
34,963
|
|
|
18,098
|
|
||
|
|
|
|
|
||||
Other income (expense):
|
|
|
|
|
|
|
||
Interest income
|
|
4
|
|
|
2
|
|
||
Interest expense (Notes 2, 5 and 6)
|
|
(4,336
|
)
|
|
(3,377
|
)
|
||
Equity in income of partnership
|
|
26
|
|
|
29
|
|
||
Realized and unrealized net losses on commodity derivatives (Notes 5 and 6)
|
|
(23,089
|
)
|
|
(75,456
|
)
|
||
Other
|
|
32
|
|
|
4
|
|
||
Income (loss) before income taxes
|
|
7,600
|
|
|
(60,700
|
)
|
||
Income tax benefit (expense)
|
|
(211
|
)
|
|
330
|
|
||
Net income (loss)
|
|
$
|
7,389
|
|
|
$
|
(60,370
|
)
|
|
|
|
|
|
||||
Income (loss) per unit - basic and diluted (Note 8)
|
|
$
|
0.15
|
|
|
$
|
(1.39
|
)
|
Weighted average number of units used in computing net income (loss) per unit -
|
|
|
|
|
||||
Basic
|
|
47,802
|
|
|
43,529
|
|
||
Diluted
|
|
47,848
|
|
|
43,529
|
|
|
|
Number of Limited Partner Units
|
|
Limited Partner
|
|
General Partner
|
|
Total Unitholders' Equity
|
|||||||
|
|
(In thousands)
|
|||||||||||||
Balance, December 31, 2011
|
|
47,802
|
|
|
$
|
488,264
|
|
|
$
|
71
|
|
|
$
|
488,335
|
|
Compensation expense on restricted unit awards issued to employees
|
|
—
|
|
|
342
|
|
|
—
|
|
|
342
|
|
|||
Vesting of restricted units
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Offering costs associated with the issuance of units
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
|||
Net distributions to unitholders, $0.55 per unit
|
|
—
|
|
|
(26,354
|
)
|
|
—
|
|
|
(26,354
|
)
|
|||
Net income
|
|
—
|
|
|
7,386
|
|
|
3
|
|
|
7,389
|
|
|||
Balance, March 31, 2012
|
|
47,804
|
|
|
$
|
469,629
|
|
|
$
|
74
|
|
|
$
|
469,703
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2012
|
|
2011
|
||||
|
|
(In thousands)
|
||||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
7,389
|
|
|
$
|
(60,370
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
||
Depletion, depreciation, amortization and accretion
|
|
22,839
|
|
|
19,560
|
|
||
Amortization of debt issuance costs
|
|
367
|
|
|
468
|
|
||
Impairment of long-lived assets
|
|
1,301
|
|
|
1,047
|
|
||
Losses on derivatives
|
|
22,802
|
|
|
73,767
|
|
||
Equity in income of partnership
|
|
(26
|
)
|
|
(29
|
)
|
||
Unit-based compensation
|
|
(711
|
)
|
|
(375
|
)
|
||
Gain on disposal of assets
|
|
(3,011
|
)
|
|
(409
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
|
|
|||
Increase in accounts receivable, oil and natural gas
|
|
(470
|
)
|
|
(8,209
|
)
|
||
(Increase) decrease in accounts receivable, joint interest owners
|
|
1,832
|
|
|
(2,973
|
)
|
||
Increase in accounts receivable, other
|
|
(155
|
)
|
|
(226
|
)
|
||
(Increase) decrease in other assets
|
|
1,017
|
|
|
(949
|
)
|
||
Increase in accounts payable
|
|
87
|
|
|
4,115
|
|
||
Increase (decrease) in accrued oil and natural gas liabilities
|
|
(6,292
|
)
|
|
10,757
|
|
||
Decrease in other liabilities
|
|
(2,181
|
)
|
|
(1,756
|
)
|
||
Total adjustments
|
|
37,399
|
|
|
94,788
|
|
||
Net cash provided by operating activities
|
|
44,788
|
|
|
34,418
|
|
||
Cash flows from investing activities:
|
|
|
|
|
|
|
||
Investment in oil and natural gas properties
|
|
(20,079
|
)
|
|
(24,027
|
)
|
||
(Increase) decrease in deposits on pending acquisitions
|
|
(611
|
)
|
|
112
|
|
||
Proceeds from sale of assets
|
|
8,265
|
|
|
—
|
|
||
Investment in other equipment
|
|
(233
|
)
|
|
(302
|
)
|
||
Net cash settlements on commodity derivatives
|
|
(2,053
|
)
|
|
1,676
|
|
||
Net cash used in investing activities
|
|
(14,711
|
)
|
|
(22,541
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
|
|
||
Proceeds from long-term debt
|
|
76,000
|
|
|
55,000
|
|
||
Payments of long-term debt
|
|
(80,000
|
)
|
|
(41,000
|
)
|
||
Payments of debt issuance costs
|
|
(281
|
)
|
|
(4,685
|
)
|
||
Offering costs associated with the issuance of units
|
|
(9
|
)
|
|
(8
|
)
|
||
Distributions to unitholders
|
|
(26,354
|
)
|
|
(22,897
|
)
|
||
Net cash used in financing activities
|
|
(30,644
|
)
|
|
(13,590
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
|
(567
|
)
|
|
(1,713
|
)
|
||
Cash and cash equivalents, beginning of period
|
|
3,151
|
|
|
3,478
|
|
||
|
|
|
|
|
||||
Cash and cash equivalents, end of period
|
|
$
|
2,584
|
|
|
$
|
1,765
|
|
|
|
|
|
|
||||
Non-cash investing and financing activities:
|
|
|
|
|
|
|
||
|
|
|
|
|
||||
Asset retirement obligation costs and liabilities
|
|
$
|
—
|
|
|
$
|
(848
|
)
|
Asset retirement obligations associated with property acquisitions
|
|
$
|
106
|
|
|
$
|
1,438
|
|
(1)
|
Summary of Significant Accounting Policies
|
(a)
|
Organization, Basis of Presentation and Description of Business
|
(b)
|
Accrued Oil and Natural Gas Liabilities
|
|
March 31,
2012 |
|
December 31,
2011 |
||||
|
(In thousands)
|
||||||
Revenue payable to joint interest owners
|
$
|
17,980
|
|
|
$
|
19,972
|
|
Accrued lease operating expense
|
6,822
|
|
|
8,004
|
|
||
Accrued capital expenditures
|
4,147
|
|
|
6,920
|
|
||
Accrued ad valorem tax
|
6,516
|
|
|
5,171
|
|
||
Other
|
3,594
|
|
|
5,284
|
|
||
|
$
|
39,059
|
|
|
$
|
45,351
|
|
(2)
|
Credit Facility
|
•
|
total debt as of the last day of the most recent quarter to EBITDA (as defined in the Current Credit Agreement) in total over the last four quarters of not more than
4.0
to 1.0; and
|
•
|
consolidated current assets, as of the last day of the most recent quarter and including the unused amount of the total commitments, to consolidated current liabilities as of the last day of the most recent quarter of not less than
1.0
to 1.0, excluding non-cash assets and liabilities under ASC 815, which includes the current portion of oil, natural gas and interest rate derivatives.
|
(3)
|
Related Party Transactions
|
(4)
|
Commitments and Contingencies
|
(5)
|
Fair Value Measurements
|
Level 1:
|
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Legacy considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
|
Level 2:
|
Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that Legacy values using observable market data. Substantially all of these inputs are observable in the marketplace throughout the term of the derivative instrument, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category include non-exchange traded derivatives such as over-the-counter commodity price swaps and interest rate swaps as well as long-term incentive plan liabilities calculated using the Black-Scholes model to estimate the fair value as of the measurement date.
|
Level 3:
|
Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e. supported by little or no market activity). Legacy’s valuation models are primarily industry standard models that consider various inputs including: (a) quoted forward prices for commodities, (b) time value, and (c) current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Level 3 instruments primarily include derivative instruments, such as natural gas derivative swaps for those derivatives indexed to the West Texas Waha, ANR-Oklahoma and CIG indices, commodity collars and oil swaptions. Although Legacy utilizes third party broker quotes to assess the reasonableness of its prices and valuation techniques, Legacy does not have sufficient corroborating evidence to support classifying these assets and liabilities as Level 2.
|
|
|
Fair Value Measurements at March 31, 2012 Using
|
||||||||||||||
|
|
Quoted Prices in Active Markets for Identical Assets
|
|
Significant Other Observable Inputs
|
|
Significant Unobservable Inputs
|
|
Total Carrying Value as of
|
||||||||
Description
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
March 31, 2012
|
||||||||
|
|
(In thousands)
|
||||||||||||||
LTIP liability (a)
|
|
—
|
|
|
(4,415
|
)
|
|
—
|
|
|
(4,415
|
)
|
||||
Oil and natural gas derivative swaps
|
|
—
|
|
|
(55,127
|
)
|
|
27,270
|
|
|
(27,857
|
)
|
||||
Oil and natural gas collars
|
|
—
|
|
|
—
|
|
|
555
|
|
|
555
|
|
||||
Oil swaptions
|
|
—
|
|
|
—
|
|
|
(2,177
|
)
|
|
(2,177
|
)
|
||||
Interest rate swaps
|
|
—
|
|
|
(11,766
|
)
|
|
—
|
|
|
(11,766
|
)
|
||||
Total
|
|
$
|
—
|
|
|
$
|
(71,308
|
)
|
|
$
|
25,648
|
|
|
$
|
(45,660
|
)
|
(a)
|
See Note 9 for further discussion on unit-based compensation expenses and the related LTIP liability for certain grants accounted for under the liability method.
|
|
|
Significant Unobservable Inputs
|
||||||
|
|
(Level 3)
|
||||||
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2012
|
|
2011
|
||||
|
|
(In thousands)
|
||||||
Beginning balance
|
|
$
|
30,054
|
|
|
$
|
24,641
|
|
Total gains
|
|
48
|
|
|
(17,463
|
)
|
||
Settlements, net
|
|
(4,454
|
)
|
|
(3,341
|
)
|
||
Ending balance
|
|
$
|
25,648
|
|
|
$
|
3,837
|
|
|
|
|
|
|
||||
Change in unrealized losses included in earnings relating to derivatives
|
|
|
|
|
||||
still held as of March 31, 2012 and 2011
|
|
$
|
(4,406
|
)
|
|
$
|
(20,804
|
)
|
|
|
Fair Value Measurements at March 31, 2012 Using
|
||||||||||
|
|
Quoted Prices in Active Markets for Identical Assets
|
|
Significant Other Observable Inputs
|
|
Significant Unobservable Inputs
|
||||||
Description
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||
|
|
(In thousands)
|
||||||||||
Assets:
|
|
|
|
|
|
|
||||||
Impairment (a)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,429
|
|
Acquisitions (b)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,879
|
|
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,308
|
|
(a)
|
Legacy utilizes ASC 360-10-35 to periodically review oil and natural gas properties for impairment when facts and circumstances indicate that their carrying value may not be recoverable. Legacy compares net capitalized costs of proved oil and natural gas properties to estimated undiscounted future net cash flows using management’s expectations of future oil and natural gas prices. These future price scenarios reflect Legacy’s estimation of future price volatility. During the
three
-month period ended
March 31, 2012
, Legacy incurred impairment charges of
$1.3 million
as oil and natural gas properties with a net cost basis of
$2.7 million
were written down to their fair value of
$1.4 million
. The inputs used by management for the fair value measurements utilized in this review include significant unobservable inputs, and therefore, the fair value measurements employed are classified as Level 3 for these types of assets.
|
(b)
|
Legacy utilizes ASC 805-10 to identify and record the fair value of assets and liabilities acquired in a business combination. During the
three
-month period ended
March 31, 2012
, Legacy acquired oil and natural gas properties, inclusive of an unproved acreage acquisition, with a fair value of
$7.9 million
in
2
individually immaterial transactions. The inputs used by management for the fair value measurements of these acquired oil and natural gas properties include significant unobservable inputs, and therefore, the fair value measurements employed are classified as Level 3 for these types of assets.
|
(6)
|
Derivative Financial Instruments
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2012
|
|
2011
|
||||
|
|
(In thousands)
|
||||||
Crude oil derivative contract settlements
|
|
$
|
(6,203
|
)
|
|
$
|
(1,140
|
)
|
Natural gas derivative contract settlements
|
|
4,150
|
|
|
2,816
|
|
||
Total commodity derivative contract settlements
|
|
(2,053
|
)
|
|
1,676
|
|
||
Unrealized change in fair value - oil contracts
|
|
(23,278
|
)
|
|
(74,108
|
)
|
||
Unrealized change in fair value - natural gas contracts
|
|
2,242
|
|
|
(3,024
|
)
|
||
Total unrealized change in fair value of commodity derivative contracts
|
|
(21,036
|
)
|
|
(77,132
|
)
|
||
Total realized and unrealized loss on commodity derivative contracts
|
|
$
|
(23,089
|
)
|
|
$
|
(75,456
|
)
|
|
|
|
|
Average
|
|
|
||
Calendar Year
|
|
Volumes (Bbls)
|
|
Price per Bbl
|
|
Price Range per Bbl
|
||
April-December 2012(a)
|
|
1,516,891
|
|
$87.37
|
|
$67.72
|
-
|
$109.20
|
2013(a)
|
|
1,215,493
|
|
$86.93
|
|
$80.10
|
-
|
$108.65
|
2014
|
|
609,014
|
|
$90.09
|
|
$87.50
|
-
|
$103.75
|
2015
|
|
218,051
|
|
$92.18
|
|
$90.50
|
-
|
$100.20
|
2016
|
|
45,600
|
|
$94.53
|
|
$91.00
|
-
|
$99.85
|
|
|
(a)
|
On October 6, 2010, as part of an oil swap transaction entered into with a counterparty, Legacy sold two call options to the counterparty that allow the counterparty to extend a swap transaction covering calendar year 2011 to either 2012, 2013 or both calendar years. The counterparty exercised the option covering calendar year 2012 on December 30, 2011 and must exercise or decline the option covering calendar year 2013 on December 31, 2012. As the option was exercised for calendar year 2012, Legacy will pay the counterparty floating prices and receive a fixed price of
$98.25
per Bbl on annual notional volumes of
183,000
Bbls (
137,500
Bbls remaining as of
March 31, 2012
). For calendar year 2013, if exercised, Legacy would pay the counterparty floating prices and receive a fixed price of
$98.25
per Bbl on annual notional volumes of
182,500
Bbls in 2013. The premium paid by the counterparty to Legacy for the two call options was in the form of an increase in the fixed price that we received pursuant to the 2011 swap of
$98.25
per Bbl on
182,500
Bbls, or
500
Bbls per day, rather than the prevailing market price of approximately
$87.00
per Bbl. These additional potential volumes related to the unexercised 2013 option are not reflected in the above table.
|
|
|
|
|
Floor
|
|
Ceiling
|
Calendar Year
|
|
Volumes (Bbls)
|
|
Price
|
|
Price
|
April-December 2012
|
|
49,100
|
|
$120.00
|
|
$156.30
|
|
|
|
|
Average
|
|
Average
|
|
Average
|
Calendar Year
|
|
Volumes (Bbls)
|
|
Short Put Price
|
|
Long Put Price
|
|
Short Call Price
|
April-December 2012
|
|
302,700
|
|
$67.96
|
|
$94.55
|
|
$113.30
|
2013
|
|
795,670
|
|
$66.24
|
|
$91.92
|
|
$112.25
|
2014
|
|
1,007,130
|
|
$65.78
|
|
$91.05
|
|
$115.64
|
2015
|
|
869,300
|
|
$65.56
|
|
$90.56
|
|
$118.54
|
2016
|
|
219,100
|
|
$66.23
|
|
$91.23
|
|
$116.65
|
|
|
|
|
Average
|
|
|
|
|
Calendar Year
|
|
Volumes (MMBtu)
|
|
Price per MMBtu
|
|
Price Range per MMBtu
|
||
April-December 2012
|
|
3,581,055
|
|
$6.07
|
|
$4.19
|
-
|
$8.70
|
2013
|
|
3,630,654
|
|
$5.62
|
|
$4.68
|
-
|
$6.89
|
2014
|
|
2,091,254
|
|
$5.63
|
|
$4.95
|
-
|
$6.47
|
2015
|
|
1,339,300
|
|
$5.65
|
|
$5.14
|
-
|
$5.82
|
2016
|
|
219,200
|
|
$5.30
|
|
$5.30
|
|
|
|
|
Floor
|
|
Ceiling
|
Calendar Year
|
|
Volumes (MMBtu)
|
|
Price
|
|
Price
|
April-December 2012
|
|
270,000
|
|
$4.00
|
|
$5.45
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2012
|
|
2011
|
||||
|
|
(In thousands)
|
||||||
Interest rate swap settlements
|
|
$
|
1,692
|
|
|
$
|
1,827
|
|
Unrealized change in fair value - interest rate swaps
|
|
(287
|
)
|
|
(1,689
|
)
|
||
Total increase to interest expense, net
|
|
$
|
1,405
|
|
|
$
|
138
|
|
(7)
|
Asset Retirement Obligation
|
|
|
March 31,
2012 |
|
December 31,
2011 |
||||
|
|
(In thousands)
|
||||||
Asset retirement obligation - beginning of period
|
|
$
|
120,274
|
|
|
$
|
111,262
|
|
|
|
|
|
|
||||
Liabilities incurred with properties acquired
|
|
106
|
|
|
8,300
|
|
||
Liabilities incurred with properties drilled
|
|
—
|
|
|
1,101
|
|
||
Liabilities settled during the period
|
|
(546
|
)
|
|
(3,775
|
)
|
||
Liabilities associated with properties sold
|
|
(160
|
)
|
|
—
|
|
||
Current period accretion
|
|
1,110
|
|
|
4,234
|
|
||
Current period revisions to previous estimates
|
|
—
|
|
|
(848
|
)
|
||
Asset retirement obligation - end of period
|
|
$
|
120,784
|
|
|
$
|
120,274
|
|
(8)
|
Earnings Per Unit
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2012
|
|
2011
|
||||
|
|
(In thousands)
|
||||||
Income available to unitholders
|
|
$
|
7,389
|
|
|
$
|
(60,370
|
)
|
Weighted average number of units outstanding
|
|
47,802
|
|
|
43,529
|
|
||
Effect of dilutive securities:
|
|
|
|
|
||||
Restricted units
|
|
46
|
|
|
—
|
|
||
Weighted average units and potential units outstanding
|
|
47,848
|
|
|
43,529
|
|
||
Basic and diluted earnings per unit
|
|
$
|
0.15
|
|
|
$
|
(1.39
|
)
|
(9)
|
Unit-Based Compensation
|
|
|
Units
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Term
|
|
Aggregate Intrinsic Value
|
||||||
Outstanding at January 1, 2012
|
|
620,031
|
|
|
$
|
22.36
|
|
|
|
|
|
|||
Granted
|
|
17,000
|
|
|
28.79
|
|
|
|
|
|||||
Exercised
|
|
(51,833
|
)
|
|
21.09
|
|
|
|
|
|||||
Forfeited
|
|
(13,666
|
)
|
|
22.32
|
|
|
|
|
|||||
Outstanding at March 31, 2012
|
|
571,532
|
|
|
$
|
22.67
|
|
|
4.20
|
|
|
$
|
3,632,238
|
|
|
|
|
|
|
|
|
|
|
|
|||||
UARs and unit options exercisable at March 31, 2012
|
|
183,932
|
|
|
$
|
21.75
|
|
|
1.60
|
|
|
$
|
1,318,518
|
|
|
|
Non-Vested UARs
|
|||||
|
|
Number of Units
|
|
Weighted-Average Exercise Price
|
|||
Non-vested at January 1, 2012
|
|
387,766
|
|
|
$
|
22.80
|
|
Granted
|
|
17,000
|
|
|
28.79
|
|
|
Vested - Unexercised
|
|
(3,500
|
)
|
|
23.73
|
|
|
Vested - Exercised
|
|
(500
|
)
|
|
10.20
|
|
|
Forfeited
|
|
(13,166
|
)
|
|
22.03
|
|
|
Non-vested at March 31, 2012
|
|
387,600
|
|
|
$
|
23.10
|
|
|
Three Months Ended
|
|
|
March 31,
2012 |
|
Expected life (years)
|
4.20
|
|
Annual interest rate
|
0.9
|
%
|
Annual distribution rate per unit
|
$2.20
|
|
Volatility
|
49
|
%
|
•
|
the level of our lease operating expenses, general and administrative costs and finding and development costs, including payments to our general partner;
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2012
|
|
2011
|
||||
|
|
(In thousands, except per unit data)
|
||||||
Revenues:
|
|
|
|
|
||||
Oil sales
|
|
$
|
76,137
|
|
|
$
|
59,265
|
|
Natural gas liquid sales
|
|
3,726
|
|
|
4,250
|
|
||
Natural gas sales
|
|
12,784
|
|
|
9,253
|
|
||
Total revenue
|
|
$
|
92,647
|
|
|
$
|
72,768
|
|
|
|
|
|
|
||||
Expenses:
|
|
|
|
|
|
|
||
Oil and natural gas production
|
|
$
|
22,983
|
|
|
$
|
21,497
|
|
Ad valorem taxes
|
|
1,905
|
|
|
2,260
|
|
||
Total oil and natural gas production
|
|
$
|
24,888
|
|
|
$
|
23,757
|
|
Production and other taxes
|
|
$
|
5,217
|
|
|
$
|
4,357
|
|
General and administrative
|
|
$
|
6,450
|
|
|
$
|
6,358
|
|
Depletion, depreciation, amortization and accretion
|
|
$
|
22,839
|
|
|
$
|
19,560
|
|
|
|
|
|
|
||||
Realized commodity derivative settlements:
|
|
|
|
|
|
|
||
Realized loss on oil derivatives
|
|
$
|
(6,203
|
)
|
|
$
|
(1,140
|
)
|
Realized gain on natural gas derivatives
|
|
$
|
4,150
|
|
|
$
|
2,816
|
|
|
|
|
|
|
||||
Production:
|
|
|
|
|
|
|
||
Oil (MBbls)
|
|
788
|
|
|
676
|
|
||
Natural gas liquids (MGal)
|
|
3,490
|
|
|
3,317
|
|
||
Natural gas (MMcf)
|
|
2,658
|
|
|
1,601
|
|
||
Total (MBoe)
|
|
1,314
|
|
|
1,022
|
|
||
Average daily production (Boe/d)
|
|
14,440
|
|
|
11,356
|
|
||
|
|
|
|
|
||||
Average sales price per unit (excluding derivatives):
|
|
|
|
|
|
|
||
Oil price (per Bbl)
|
|
$
|
96.62
|
|
|
$
|
87.67
|
|
Natural gas liquid price (per Gal)
|
|
$
|
1.07
|
|
|
$
|
1.28
|
|
Natural gas price (per Mcf)
|
|
$
|
4.81
|
|
|
$
|
5.78
|
|
Combined (per Boe)
|
|
$
|
70.51
|
|
|
$
|
71.20
|
|
|
|
|
|
|
||||
Average sales price per unit (including realized derivative gains/losses):
|
|
|
|
|
|
|||
Oil price (per Bbl)
|
|
$
|
88.75
|
|
|
$
|
85.98
|
|
Natural gas liquid price (per Gal)
|
|
$
|
1.07
|
|
|
$
|
1.28
|
|
Natural gas price (per Mcf)
|
|
$
|
6.37
|
|
|
$
|
7.54
|
|
Combined (per Boe)
|
|
$
|
68.95
|
|
|
$
|
72.84
|
|
|
|
|
|
|
||||
NYMEX oil index prices per Bbl:
|
|
|
|
|
|
|
||
Beginning of period
|
|
$
|
98.83
|
|
|
$
|
91.38
|
|
End of period
|
|
$
|
103.02
|
|
|
$
|
106.72
|
|
|
|
|
|
|
||||
NYMEX gas index prices per Mcf:
|
|
|
|
|
|
|
||
Beginning of period
|
|
$
|
2.99
|
|
|
$
|
4.41
|
|
End of period
|
|
$
|
2.13
|
|
|
$
|
4.39
|
|
|
|
|
|
|
||||
Average unit costs per Boe:
|
|
|
|
|
|
|
||
Oil and natural gas production
|
|
$
|
17.49
|
|
|
$
|
21.03
|
|
Ad valorem taxes
|
|
$
|
1.45
|
|
|
$
|
2.21
|
|
Production and other taxes
|
|
$
|
3.97
|
|
|
$
|
4.26
|
|
General and administrative
|
|
$
|
4.91
|
|
|
$
|
6.22
|
|
Depletion, depreciation, amortization and accretion
|
|
$
|
17.38
|
|
|
$
|
19.14
|
|
•
|
Interest expense;
|
•
|
Income taxes;
|
•
|
Depletion, depreciation, amortization and accretion;
|
•
|
Impairment of long-lived assets;
|
•
|
(Gain) loss on sale of partnership investment;
|
•
|
(Gain) loss on disposal of assets (excluding settlements of asset retirement obligations);
|
•
|
Equity in (income) loss of partnership.
|
•
|
Unit-based compensation expense related to LTIP unit awards accounted for under the equity or liability methods; and
|
•
|
Unrealized (gain) loss on oil and natural gas derivatives.
|
•
|
Cash interest expense;
|
•
|
Cash income taxes;
|
•
|
Cash settlements of LTIP unit awards; and
|
•
|
Development capital expenditures.
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2012
|
|
2011
|
||||
|
|
(dollars in thousands)
|
||||||
Net income (loss)
|
|
$
|
7,389
|
|
|
$
|
(60,370
|
)
|
Plus:
|
|
|
|
|
|
|
||
Interest expense
|
|
4,336
|
|
|
3,377
|
|
||
Income tax expense (benefit)
|
|
211
|
|
|
(330
|
)
|
||
Depletion, depreciation, amortization and accretion
|
|
22,839
|
|
|
19,560
|
|
||
Impairment of long-lived assets
|
|
1,301
|
|
|
1,047
|
|
||
Gain on disposal of assets
|
|
(3,488
|
)
|
|
—
|
|
||
Equity in income of partnership
|
|
(26
|
)
|
|
(29
|
)
|
||
Unit-based compensation expense
|
|
1,557
|
|
|
1,910
|
|
||
Unrealized loss on oil and natural gas derivatives
|
|
21,036
|
|
|
77,132
|
|
||
Adjusted EBITDA
|
|
$
|
55,155
|
|
|
$
|
42,297
|
|
|
|
|
|
|
||||
Less:
|
|
|
|
|
|
|
||
Cash interest expense
|
|
4,254
|
|
|
4,545
|
|
||
Cash settlements of LTIP unit awards
|
|
2,268
|
|
|
2,285
|
|
||
Development capital expenditures
|
|
12,200
|
|
|
11,909
|
|
||
Distributable Cash Flow
|
|
$
|
36,433
|
|
|
$
|
23,558
|
|
Calendar Year
|
|
Volumes (Bbls)
|
|
Average Price per Bbl
|
|
Price Range per Bbl
|
||
April-December 2012(a)
|
|
1,677,391
|
|
$89.18
|
|
$67.72
|
-
|
$109.20
|
2013(a)
|
|
1,498,443
|
|
$90.10
|
|
$80.10
|
-
|
$108.65
|
2014
|
|
901,014
|
|
$92.89
|
|
$87.50
|
-
|
$103.75
|
2015
|
|
362,851
|
|
$93.73
|
|
$90.50
|
-
|
$100.20
|
2016
|
|
45,600
|
|
$94.53
|
|
$91.00
|
-
|
$99.85
|
(a)
|
On October 6, 2010, as part of an oil swap transaction entered into with a counterparty, we sold two call options to the counterparty that allow the counterparty to extend a swap transaction covering calendar year 2011 to either 2012, 2013 or both calendar years. The counterparty exercised the option covering calendar year 2012 on December 30, 2011 and must exercise or decline the option covering calendar year 2013 on December 31, 2012. As the option was exercised for calendar year 2012, we will pay the counterparty floating prices and receive a fixed price of $98.25 per Bbl on annual notional volumes of 183,000 Bbls (137,500 Bbls remaining as of
April 1, 2012
). For calendar year 2013, if exercised, we would pay the counterparty floating prices and receive a fixed price of $98.25 per Bbl on annual notional volumes of 182,500 Bbls in 2013. The premium paid by the counterparty to us for the two call options was in the form of an increase in the fixed price that we received pursuant to the 2011 swap of $98.25 per Bbl on 182,500 Bbls, or 500 Bbls per day, rather than the prevailing market price of approximately $87.00 per Bbl. These additional potential volumes related to the unexercised 2013 option are not reflected in the above table.
|
Calendar Year
|
|
Volumes (MMBtu)
|
|
Average Price per MMBtu
|
|
Price Range per MMBtu
|
||
April-December 2012
|
|
4,631,055
|
|
$5.26
|
|
$2.46
|
-
|
$8.70
|
2013
|
|
5,430,654
|
|
$4.85
|
|
$3.23
|
-
|
$6.89
|
2014
|
|
3,891,254
|
|
$4.73
|
|
$3.61
|
-
|
$6.47
|
2015
|
|
1,339,300
|
|
$5.65
|
|
$5.14
|
-
|
$5.82
|
2016
|
|
219,200
|
|
$5.30
|
|
$5.30
|
Calendar Year
|
|
Volumes (Bbls)
|
|
Floor Price
|
|
Ceiling Price
|
April-December 2012
|
|
49,100
|
|
$120.00
|
|
$156.30
|
Calendar Year
|
|
Volumes (Bbls)
|
|
Floor Price
|
|
Ceiling Price
|
April-December 2012
|
|
270,000
|
|
$4.00
|
|
$5.45
|
|
|
|
|
Average
|
|
Average
|
|
Average
|
Calendar Year
|
|
Volumes (Bbls)
|
|
Short Put Price
|
|
Long Put Price
|
|
Short Call Price
|
April-December 2012
|
|
302,700
|
|
$67.96
|
|
$94.55
|
|
$113.30
|
2013
|
|
795,670
|
|
$66.24
|
|
$91.92
|
|
$112.25
|
2014
|
|
1,007,130
|
|
$65.78
|
|
$91.05
|
|
$115.64
|
2015
|
|
1,016,500
|
|
$65.48
|
|
$90.48
|
|
$116.51
|
2016
|
|
438,300
|
|
$64.78
|
|
$89.78
|
|
$110.54
|
2017
|
|
72,400
|
|
$60.00
|
|
$85.00
|
|
$104.20
|
•
|
with respect to ABR loans, the alternate base rate equals the highest of the prime rate, the Federal funds effective rate plus 0.50%, or the one-month London interbank rate (“LIBOR”) plus 1.00%, plus an applicable margin ranging from and including 0.75% and 1.75% per annum, determined by the percentage of the borrowing base then in effect that is drawn, or
|
•
|
with respect to any Eurodollar loans, one-, two-, three- or six-month LIBOR plus an applicable margin ranging from and including 1.75% and 2.75% per annum, determined by the percentage of the borrowing base then in effect that is drawn.
|
•
|
incur indebtedness;
|
•
|
enter into certain leases;
|
•
|
grant certain liens;
|
•
|
enter into certain derivatives;
|
•
|
make certain loans, acquisitions, capital expenditures and investments;
|
•
|
make distributions other than from available cash;
|
•
|
merge, consolidate or allow any material change in the character of our business; or
|
•
|
engage in certain asset dispositions, including a sale of all or substantially all of our assets.
|
•
|
total debt as of the last day of the most recent quarter to EBITDA (as defined in the Current Credit Agreement) in total over the last four quarters of not more than 4.0 to 1.0; and
|
•
|
consolidated current assets, as of the last day of the most recent quarter and including the unused amount of the total commitments, to consolidated current liabilities as of the last day of the most recent quarter of not less than 1.0 to 1.0, excluding non-cash assets and liabilities under ASC 815, which includes the current portion of oil, natural gas derivatives and interest rate swaps.
|
•
|
failure to pay any principal when due or any reimbursement amount, interest, fees or other amount within certain grace periods;
|
•
|
a representation or warranty is proven to be incorrect when made;
|
•
|
failure to perform or otherwise comply with the covenants or conditions contained in the credit agreement or other loan documents, subject, in certain instances, to certain grace periods;
|
•
|
default by us on the payment of any other indebtedness in excess of $2.0 million, or any event occurs that permits or causes the acceleration of the indebtedness;
|
•
|
bankruptcy or insolvency events involving us or any of our subsidiaries;
|
•
|
the loan documents cease to be in full force and effect;
|
•
|
our failing to create a valid lien, except in limited circumstances;
|
•
|
a change of control, which will occur upon (i) the acquisition by any person or group of persons of beneficial ownership of more than 35% of the aggregate ordinary voting power of our equity securities, (ii) the first day on which a majority of the members of the board of directors of our general partner are not continuing directors (which is generally defined to mean members of our board of directors as of March 10, 2011 and persons who are nominated for election or elected to our general partner’s board of directors with the approval of a majority of the continuing directors who were members of such board of directors at the time of such nomination or election), (iii) the direct or indirect sale, transfer or other disposition in one or a series of related transactions of all or substantially all of the properties or assets (including equity interests of subsidiaries) of us and our subsidiaries to any person, (iv) the adoption of a plan related to our liquidation or dissolution or (v) Legacy Reserves GP, LLC ceasing to be our sole general partner;
|
•
|
the entry of, and failure to pay, one or more adverse judgments in excess of $2.0 million or one or more non-monetary judgments that could reasonably be expected to have a material adverse effect and for which enforcement proceedings are brought or that are not stayed pending appeal; and
|
•
|
specified ERISA events relating to our employee benefit plans that could reasonably be expected to result in liabilities in excess of $2.0 million in any year.
|
•
|
it requires assumptions to be made that were uncertain at the time the estimate was made, and
|
•
|
changes in the estimate or different estimates that could have been selected could have a material impact on our consolidated results of operations or financial condition.
|
|
LEGACY RESERVES LP
By: Legacy Reserves GP, LLC, its General Partner
|
|
|
|
|
|
|
May 4, 2012
|
By:
|
/s/ James R. Lawrence
|
|
|
|
James R. Lawrence
|
|
|
|
Interim Chief Financial Officer, Vice President - Finance and Treasurer
|
|
|
|
(On behalf of the Registrant and as Principal Financial Officer)
|
|
1.
|
Exhibit A
. After giving effect to the Contribution, in accordance with Section 3.1 of the GP LLC Agreement, each Member's respective percentage Interest in the Company will be as set forth on Exhibit A. In connection therewith, “Exhibit A” to the GP LLC Agreement is hereby amended as set forth on “Exhibit A” attached hereto.
|
2.
|
Actions taken by SHP Capital.
SHP Capital hereby ratifies and agrees to be bound by the form, terms and provisions of the GP LLC Agreement. The notice address of SHP Capital shall be as follows:
|
3.
|
Effect on GP LLC Agreement.
Except as amended hereby, the GP LLC Agreement shall be and remain in full force and effect and this Amendment shall become a part of the GP LLC Agreement, with SHP Capital having all of the same rights, powers, and duties of all of the other Members of the Company under the GP LLC Agreement.
|
4.
|
Counterparts.
This Amendment may be executed in counterparts, all of which together shall constitute one agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart.
|
|
|
SHP CAPITAL LP
|
|
|
|
|
|
|
|
|
|
By:
|
SHP Capital Management, LLC,
|
|
|
|
|
its general partner
|
|
|
|
|
|
|
|
|
By:
|
/s/ Steven H. Pruett
|
|
|
|
|
Steven H. Pruett, President
|
|
|
|
|
|
|
|
|
MEMBERS
|
||
|
|
|
|
|
|
|
BROTHERS PRODUCTION PROPERTIES, LTD.
|
|
|
|
|
|
|
|
|
|
By:
|
Brothers Production Company, Inc., its general partner
|
|
|
|
|
|
|
|
|
By:
|
/s/ Kyle A. McGraw
|
|
|
|
|
Kyle A. McGraw, President
|
|
|
|
|
|
|
|
|
BROTHERS PRODUCTION COMPANY, INC.
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Kyle A. McGraw
|
|
|
|
|
Kyle A. McGraw, President
|
|
|
|
|
|
|
|
|
BROTHERS OPERATING COMPANY, INC.
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Kyle A. McGraw
|
|
|
|
|
Kyle A. McGraw, President
|
|
|
|
|
|
|
|
|
J&W MCGRAW PROPERTIES, LTD.
|
|
|
|
|
|
|
|
|
|
By:
|
Wanda J. McGraw Management, LLC, its general partner
|
|
|
|
|
|
|
|
|
By:
|
/s/ Kyle A. McGraw
|
|
|
|
|
Kyle A. McGraw, Vice President
|
|
|
|
MORIAH PROPERTIES, LTD.
|
|
|
|
|
|
|
|
|
|
By:
|
Moriah Resources, Inc., its general partner
|
|
|
|
|
|
|
|
|
By:
|
/s/ Cary D. Brown
|
|
|
|
|
Cary D. Brown, Vice President
|
|
|
|
|
|
|
|
|
DAB RESOURCES, LTD.
|
|
|
|
|
|
|
|
|
|
By:
|
DAB 1999 Corp., its general partner
|
|
|
|
|
|
|
|
|
By:
|
/s/ Dale A. Brown
|
|
|
|
|
Dale A. Brown, President
|
|
|
|
|
|
|
|
|
H2K HOLDINGS, LTD.
|
|
|
|
|
|
|
|
|
|
By:
|
H2K Management, LLC, its general partner
|
|
|
|
|
|
|
|
|
By:
|
/s/ Paul T. Horne
|
|
|
|
|
Paul T. Horne, President
|
|
MEMBER
|
PERCENTAGE INTEREST
AFTER REDEMPTION
|
CURRENT PERCENTAGE INTEREST
|
|
|
|
Moriah Properties, Ltd.
|
57.87%
|
56.614%
|
DAB Resources, Ltd.
|
5.2%
|
5.087%
|
Brothers Production Properties, Ltd.
|
29.26%
|
28.625%
|
Brothers Production Company, Inc.
|
1.56%
|
1.526%
|
Brothers Operating Company, Inc.
|
0.26%
|
0.254%
|
J&W McGraw Properties, Ltd.
|
5.33%
|
5.215%
|
H2K Holdings, Ltd.
|
0.52%
|
0.509%
|
SHP Capital LP
|
¯
|
2.17%
|
1.
|
Exhibit A
. After giving effect to the Redemption, each Member's respective percentage Interest in the Company will be as set forth on Exhibit A. In connection therewith, “Exhibit A” to the GP LLC Agreement is hereby amended as set forth on “Exhibit A” attached hereto.
|
2.
|
Effect on GP LLC Agreement.
Except as amended hereby, the GP LLC Agreement shall be and remain in full force and effect and this Amendment shall become a part of the GP LLC Agreement.
|
3.
|
Counterparts.
This Amendment may be executed in counterparts, all of which together shall constitute one agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart.
|
|
|
MEMBERS
|
||
|
|
|
|
|
|
|
BROTHERS PRODUCTION PROPERTIES, LTD.
|
|
|
|
|
|
|
|
|
|
By:
|
Brothers Production Company, Inc., its general partner
|
|
|
|
|
|
|
|
|
By:
|
/s/ Kyle A. McGraw
|
|
|
|
|
Kyle A. McGraw, President
|
|
|
|
|
|
|
|
|
BROTHERS PRODUCTION COMPANY, INC.
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Kyle A. McGraw
|
|
|
|
|
Kyle A. McGraw, President
|
|
|
|
|
|
|
|
|
BROTHERS OPERATING COMPANY, INC.
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Kyle A. McGraw
|
|
|
|
|
Kyle A. McGraw, President
|
|
|
|
|
|
|
|
|
J&W MCGRAW PROPERTIES, LTD.
|
|
|
|
|
|
|
|
|
|
By:
|
Wanda J. McGraw Management, LLC, its general partner
|
|
|
|
|
|
|
|
|
By:
|
/s/ Kyle A. McGraw
|
|
|
|
|
Kyle A. McGraw, Vice President
|
|
|
|
|
|
|
|
|
MORIAH PROPERTIES, LTD.
|
|
|
|
|
|
|
|
|
|
By:
|
Moriah Resources, Inc., its general partner
|
|
|
|
|
|
|
|
|
By:
|
/s/ Cary D. Brown
|
|
|
|
|
Cary D. Brown, Vice President
|
|
|
|
|
|
|
|
|
DAB RESOURCES, LTD.
|
|
|
|
|
|
|
|
|
|
By:
|
DAB 1999 Corp., its general partner
|
|
|
|
|
|
|
|
|
By:
|
/s/ Dale A. Brown
|
|
|
|
|
Dale A. Brown, President
|
|
|
|
|
|
|
|
|
H2K HOLDINGS, LTD.
|
|
|
|
|
|
|
|
|
|
By:
|
H2K Management, LLC, its general partner
|
|
|
|
|
|
|
|
|
By:
|
/s/ Paul T. Horne
|
|
|
|
|
Paul T. Horne, President
|
|
MEMBER
|
PERCENTAGE INTEREST
AFTER REDEMPTION
|
|
|
Moriah Properties, Ltd.
|
57.87%
|
DAB Resources, Ltd.
|
5.20%
|
Brothers Production Properties, Ltd.
|
29.26%
|
Brothers Production Company, Inc.
|
1.56%
|
Brothers Operating Company, Inc.
|
0.26%
|
J&W McGraw Properties, Ltd.
|
5.33%
|
H2K Holdings, Ltd.
|
0.52%
|
BORROWER:
|
LEGACY RESERVES LP
|
|
||
|
|
|
|
|
|
|
By:
|
Legacy Reserves GP, LLC
|
|
|
|
|
its general partner
|
|
|
|
|
|
|
|
|
By:
|
/s/ James R. Lawrence
|
|
|
|
|
James R. Lawrence
|
|
|
|
|
Interim Chief Financial Officer, Vice President - Finance and Treasurer
|
|
|
|
|
|
|
GUARANTORS:
|
LEGACY RESERVES OPERATING LP
|
|
||
|
|
|
|
|
|
|
By:
|
Legacy Reserves Operating GP LLC
,
its general partner
|
|
|
|
By:
|
Legacy Reserves LP
,
its sole member
|
|
|
|
By:
|
Legacy Reserves GP, LLC
,
its general partner
|
|
|
|
|
|
|
|
|
By:
|
/s/ James R. Lawrence
|
|
|
|
|
James R. Lawrence
|
|
|
|
|
Interim Chief Financial Officer, Vice President - Finance and Treasurer
|
|
|
|
|
|
|
|
LEGACY RESERVES OPERATING GP LLC
|
|
||
|
|
|
|
|
|
|
By:
|
Legacy Reserves LP
,
its sole member
|
|
|
|
By:
|
Legacy Reserves GP, LLC
,
its general partner
|
|
|
|
|
|
|
|
|
By:
|
/s/ James R. Lawrence
|
|
|
|
|
James R. Lawrence
|
|
|
|
|
Interim Chief Financial Officer, Vice President - Finance and Treasurer
|
|
|
LEGACY RESERVES SERVICES, INC.
|
|
||
|
|
|
|
|
|
|
By:
|
/s/ James R. Lawrence
|
|
|
|
|
James R. Lawrence
|
|
|
|
|
Interim Chief Financial Officer, Vice President - Finance and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADMINISTRATIVE AGENT:
|
BNP PARIBAS,
|
|
||
|
as Administrative Agent and a Lender
|
|
||
|
|
|
|
|
|
|
By:
|
/s/ Brian Malone
|
|
|
|
|
Brian Malone
|
|
|
|
|
Managing Director
|
|
|
|
|
|
|
|
|
By:
|
/s/ Michaela Braun
|
|
|
|
|
Michaela Braun
|
|
|
|
|
Director
|
|
LENDERS:
|
WELLS FARGO BANK, N.A.
|
|
||
|
|
|
|
|
|
|
By:
|
/s/ David C. Brooks
|
|
|
|
|
David C. Brooks
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
COMPASS BANK
|
|
||
|
|
|
|
|
|
|
By:
|
/s/ Dorothy Marchand
|
|
|
|
|
Dorothy Marchand
|
|
|
|
|
Senior Vice President
|
|
|
|
|
|
|
|
BANK OF AMERICA, N.A.
|
|
||
|
|
|
|
|
|
|
By:
|
/s/ Jeff Rathkamp
|
|
|
|
|
Jeff Rathkamp
|
|
|
|
|
Managing Director
|
|
|
|
|
|
|
|
THE BANK OF NOVA SCOTIA
|
|
||
|
|
|
|
|
|
|
By:
|
/s/ Mark Sparrow
|
|
|
|
|
Mark Sparrow
|
|
|
|
|
Managing Director
|
|
|
|
|
|
|
|
ROYAL BANK OF CANADA
|
|
||
|
|
|
|
|
|
|
By:
|
/s/ Don J. McKinnerney
|
|
|
|
|
Don J. McKinnerney
|
|
|
|
|
Authorized Signatory
|
|
|
U.S. BANK NATIONAL ASSOCIATION
|
|
||
|
|
|
|
|
|
|
By:
|
/s/ Justin M. Alexander
|
|
|
|
|
Justin M. Alexander
|
|
|
|
|
Vice President
|
|
|
|
|
|
|
|
KEYBANK, N.A.
|
|
||
|
|
|
|
|
|
|
By:
|
/s/ Craig Hanselman
|
|
|
|
|
Craig Hanselman
|
|
|
|
|
Vice President
|
|
|
|
|
|
|
|
WEST TEXAS NATIONAL BANK
|
|
||
|
|
|
|
|
|
|
By:
|
/s/ Chris L. Whigham
|
|
|
|
|
Chris L. Whigham
|
|
|
|
|
Senior Vice President
|
|
|
|
|
|
|
|
SOCIETE GENERALE
|
|
||
|
|
|
|
|
|
|
By:
|
/s/ Christopher S. Parada
|
|
|
|
|
Christopher S. Parada
|
|
|
|
|
Managing Director
|
|
|
|
|
|
|
|
UNION BANK, N.A.
|
|
||
|
|
|
|
|
|
|
By:
|
/s/ Lara Sorokolit
|
|
|
|
|
Lara Sorokolit
|
|
|
|
|
Assistant Vice President
|
|
|
CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK
|
|
||
|
|
|
|
|
|
|
By:
|
/s/ Sharada Manne
|
|
|
|
|
Sharada Manne
|
|
|
|
|
Managing Director
|
|
|
|
|
|
|
|
|
By:
|
/s/ Darrell Stanley
|
|
|
|
|
Darrell Stanley
|
|
|
|
|
Managing Director
|
|
|
|
|
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UBS AG, STAMFORD BRANCH
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By:
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/s/ Irja R. Otsa
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Irja R. Otsa
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Associate Director
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By:
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/s/ Mary E. Evans
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Mary E. Evans
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Associate Director
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BMO HARRIS FINANCING, INC.
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By:
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/s/ Joseph A. Bliss
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Joseph A. Bliss
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Managing Director
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CITIBANK, N.A.
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By:
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/s/ John Miller
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John Miller
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Vice President
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Name of Lender
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Applicable Percentage
|
Maximum Credit Amount
|
BNP Paribas
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7.9646018%
|
$79,646,018
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Wells Fargo Bank, N.A.
|
7.0796460%
|
$70,796,460
|
Compass Bank
|
9.7345133%
|
$97,345,133
|
UBS AG, Stamford Branch
|
9.7345133%
|
$97,345,133
|
U.S. Bank National Association
|
9.7345133%
|
$97,345,133
|
Bank of America, N.A.
|
7.9646018%
|
$79,646,018
|
Royal Bank of Canada
|
7.0796460%
|
$70,796,460
|
The Bank of Nova Scotia
|
6.7256637%
|
$67,256,637
|
Credit Agricole Corporate and Investment Bank
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5.6637168%
|
$56,637,168
|
Union Bank, N.A.
|
6.7256637%
|
$67,256,637
|
KeyBank N.A.
|
6.7256637%
|
$67,256,637
|
Societe Generale
|
2.8318584%
|
$28,318,584
|
West Texas National Bank
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1.4159292%
|
$14,159,292
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BMO Harris Financing, Inc.
|
5.3097345%
|
$53,097,345
|
Citibank, N.A.
|
5.3097345%
|
$53,097,345
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TOTAL
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100.0000000%
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$1,000,000,000
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(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
May 4, 2012
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By:
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/s/ Cary D. Brown
|
|
|
|
Cary D. Brown
|
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Chairman of the Board, President and Chief Executive Officer of Legacy Reserves GP, LLC, general partner of Legacy Reserves LP
(Principle Executive Officer)
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
May 4, 2012
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By:
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/s/ James R. Lawrence
|
|
|
|
James R. Lawrence
|
|
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|
Interim Chief Financial Officer, Vice President - Finance and Treasurer of Legacy Reserves GP, LLC, general partner of Legacy Reserves LP
(Principal Financial Officer)
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.
|
/s/ Cary D. Brown
|
|
/s/ James R. Lawrence
|
|
Cary D. Brown
|
|
James R. Lawrence
|
|
Chairman of the Board, President and Chief Executive Officer
|
|
Interim Chief Financial Officer, Vice President - Finance and Treasurer
|
|
|
|
|
|
May 4, 2012
|
|
May 4, 2012
|
|