Legacy Reserves LP Announces Distribution Suspension, 2016 Capital Budget and Year-End 2015 Conference Call
January 21 2016 - 4:01PM
Legacy Reserves LP ("Legacy") (Nasdaq:LGCY) today announced that
the Board of Directors of its general partner has approved the
suspension of distributions to unitholders and distributions to
both the 8% Series A and Series B Fixed-to-Floating Rate Cumulative
Redeemable Perpetual Preferred Units. The Board also approved
a 2016 capital budget of $37 million.
Paul T. Horne, President and Chief Executive Officer of Legacy's
general partner, commented: "The continued collapse in oil and gas
prices over the past few months has had a severe impact on our
industry and Legacy is no different. While our estimated fourth
quarter cash generation was well in excess of our prior $0.15 per
unit quarterly distribution, further declining commodity price
forecasts have eroded our projected future cash flow generation and
we believe our best course of action today is to conserve cash and
improve our balance sheet position. We anticipate, based on
strip pricing, to be free cash flow positive in 2016 and we
continue to work through select credit-accretive asset sale
opportunities that will enhance that cash flow as well as our
leverage metrics and liquidity. Importantly, we strongly
believe that today’s commodity price environment is unsustainable
for our industry and taking a more protective posture will help us
ride out this storm. We will continue to monitor the industry
environment and our situation, and look forward to reinstating
distributions to our unitholders when things improve.
"I remain thankful for our hard-working employees. They
have done a tremendous job executing our day-to-day business
objectives and I look forward to providing investors more
operational specifics and our 2016 outlook at our upcoming year-end
earnings conference call."
Upcoming Earnings Release
Legacy will provide the details of its fourth quarter and 2015
operating and financial performance with its earnings report which
is scheduled to be released on Wednesday, February 24, 2016,
following the close of NASDAQ trading. A teleconference and webcast
will be held on Thursday, February 25, 2016, beginning at 9:00 a.m.
Central Time. Those wishing to participate in the conference call
should dial 877-266-0479. A replay of the call will be available
through Thursday, March 3, 2016, by dialing 855-859-2056 or
404-537-3406 and entering replay code 22745604. Those wishing to
listen to the live or archived webcast via the Internet should go
to the Investor Relations tab of our website
at www.LegacyLP.com.
Other Information
Although Legacy has suspended distributions to both the 8%
Series A and Series B Fixed-to-Floating Rate Cumulative Redeemable
Perpetual Preferred Units (the “Preferred Units”), such
distributions continue to accrue. Pursuant to the terms of
Legacy’s partnership agreement, Legacy is required to pay or set
aside for payment all accrued but unpaid distributions with respect
to the Preferred Units prior to or contemporaneously with making
any distribution with respect to Legacy’s units. Accruals of
distributions on the Preferred Units are treated for tax purposes
as guaranteed payments for the use of capital that will generally
be taxable to the holders of such Preferred Units as ordinary
income even in the absence of contemporaneous distributions.
In addition, Legacy unitholders, just like unitholders of other
master limited partnerships, are allocated taxable income
irrespective of cash distributions paid.
This release is intended to be a qualified notice under Treasury
Regulation Section 1.1446-4(b). Brokers and nominees should treat
one hundred percent (100.0%) of Legacy's distributions to foreign
investors as being attributable to income that is effectively
connected with a United States trade or business. Accordingly,
Legacy's distributions to foreign investors are subject to federal
income tax withholding at the highest applicable rate.
About Legacy Reserves LP
Legacy Reserves LP is a master limited partnership headquartered
in Midland, Texas, focused on the acquisition and development of
oil and natural gas properties primarily located in the Permian
Basin, East Texas, Mid-Continent and Rocky Mountain regions of the
United States. Additional information is available
at www.LegacyLP.com.
Cautionary Statement Relevant to Forward-Looking
Information
This press release contains forward-looking statements relating
to our operations that are based on management's current
expectations, estimates and projections about its operations. Words
such as "anticipates," "expects," "intends," "plans," "targets,"
"projects," "believes," "seeks," "schedules," "estimated," and
similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and
other factors, some of which are beyond our control and are
difficult to predict. Among the important factors that could cause
actual results to differ materially from those in the
forward-looking statements are realized oil and natural gas prices;
production volumes, lease operating expenses, general and
administrative costs and finding and development costs; future
operating results and the factors set forth under the heading "Risk
Factors" in our annual and quarterly reports filed with the
Securities and Exchange Commission. Therefore, actual outcomes and
results may differ materially from what is expressed or forecasted
in such forward-looking statements. The reader should not place
undue reliance on these forward-looking statements, which speak
only as of the date of this press release. Unless legally required,
Legacy undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise.
CONTACT: Legacy Reserves LP
Dan Westcott
Executive Vice President and Chief Financial Officer
432-689-5200
Legacy Reserves Inc. (MM) (NASDAQ:LGCY)
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