By July 6, 2015 Read More →

Legacy Reserves buys East TX natural gas properties, assets for $440M

Gathering/processing a new operation for Legacy Reserves

Legacy Reserves

Legacy Reserves is headquartered in Midland, Texas.

Midland-based Legacy Reserves is finally venturing into East Texas after purchasing natural gas properties, gathering/ processing assets for $440 million.

Legacy Reserves (Nasdaq:LGCY) made the announcement Monday, saying it has entered into separate agreements with affiliates of Anadarko Petroleum and Western Gas Partners, LP as part of the deal.

Legacy Reserve

Paul Horne, Legacy Reserve’s president and CEO.

“This acquisition represents a material entry into East Texas, a region we have wanted to enter for several years due to its long-lived, low-decline, low-cost nature and high potential for bolt-on acquisitions,” said Paul Horne, Legacy’s president and CEO.

“These high-quality assets combined with the upside optionality of recompletions and a contango gas-curve make this a very attractive acquisition for us.”

The closings of these transactions are expected to occur in the third quarter, and the purchase prices remain subject to customary adjustments, Legacy Reserves announced in a release. The company anticipates funding the transactions with borrowings under its revolver.

Horne says the gathering and processing side of the business will be a new operational venture for Legacy Reserves, but one management is confident it can execute with the anticipated addition of personnel experienced in the operation of the acquired assets.

“We believe these assets will provide a stable cash flow stream and some synergies with our upstream assets that would not exist with an outside operator,” said Horne.

“Given the meaningful immediate and long-term accretion to distributable cash flow per unit from this acquisition and our concurrent announcement with TSSP, the future looks bright for Legacy Reserves.”

Highlights of the Legacy Reserves acquisition are as follows:

  • Estimated proved reserves of approximately 420 Bcfe of which 100% are natural gas, 95% are classified as proved developed producing, and 95% are operated
  • Estimated Q3 2015 production of approximately 70 Mmcfe/d, yielding a proved reserves-to-production ratio of 16.4 years
  • Multi-year development plan centered on recompletions and workovers to further flatten production declines and extend the productive life of the fields
  • Significant additional drilling inventory in a higher gas price environment
  • 567 miles of high-pressure pipeline and low-pressure gathering lines and a 502 Mmcfe/d processing plant with access to 5 major gas markets
  • Expected NTM cash flow of approximately $60 million

Posted in: Energy Financial

Comments are closed.