LGCY Legacy Reserves Inc. (MM)

MIDLAND, Texas, May 9, 2019 /PRNewswire/ -- Legacy Reserves Inc. ("Legacy") (NASDAQ:LGCY) today announced 2019 first quarter results including the following highlights:

• Generated quarterly oil production of 17,922 Bbls/d, a 4% increase relative to Q1'18;
• Reduced lease operating expense by 9% quarter-over-quarter; and
• Generated net loss of $78.4 million and adjusted EBITDA of $63.9 million.

As previously announced, Legacy is evaluating and exploring potential strategic alternatives. These alternatives include, among others, a sale or other business combination transaction, sales of assets, financing transactions, or some combination of these.

Financial and Operating Results - Three-Month Period Ended March 31, 2019 Compared to Three-Month Period Ended March 31, 2018

• Production increased 1% to 46,389 Boe/d from 46,078 Boe/d primarily due to additional oil production from our Permian Basin horizontal drilling program. This was partially offset by natural production declines.
• Average realized price, excluding net cash settlements from commodity derivatives, decreased 14% to $28.38 per Boe in 2019 from $33.15 per Boe in 2018 driven by a decrease in average realized price due to a decrease in the average West Texas Intermediate ("WTI") crude price of  $8.09 per Bbl coupled with the widening Mid-Cush and other regional differentials, and a decrease in the realized NGL price of 44% to $0.45 per gallon in 2019 from $0.80 per gallon in 2018. These decreases were partially offset by an average realized natural gas price increase of 1% to $2.60 per Mcf in 2019 from $2.57 per Mcf in 2018.
• Production expenses, excluding ad valorem taxes, were relatively flat at $45.0 million in 2019, a decrease from $45.6 million in 2018.
• General and administrative expenses, excluding unit-based Long-Term Incentive Plan ("LTIP") compensation expense, increased to $12.4 million in 2019 from $11.3 million in 2018 due to a $0.9 million increase in costs related to our strategic alternative process.
• Cash settlements received on our commodity derivatives during 2019 were $9.6 million compared to $2.8 million paid in 2018. The increase in cash settlements is a result of lower commodity prices.
• Total development capital expenditures decreased to $39.4 million in 2019 from $59.7 million in 2018. The 2019 activity was in line with our previously announced capital budget and was primarily related to our Permian horizontal drilling program.

Quarterly Report on Form 10-Q

Financial results contained herein are preliminary and subject to the final, unaudited financial statements and related footnotes included in Legacy's Form 10-Q which will be filed on or about May 10, 2019.

About Legacy Reserves Inc.

Legacy is an independent energy company engaged in the development, production and acquisition of oil and natural gas properties in the United States. Its current operations are focused on the horizontal development of unconventional plays in the Permian Basin and the cost-efficient management of shallow-decline oil and natural gas wells in the Permian Basin, East Texas, Rocky Mountain and Mid-Continent regions. Additional information is available at www.LegacyReserves.com.

Non-GAAP Financial Measures

"Adjusted EBITDA" is a non-generally accepted accounting principles ("non-GAAP") measure which may be used periodically by management when discussing our financial results with investors and analysts. The following presents a reconciliation of this non-GAAP financial measure to its nearest comparable generally accepted accounting principles ("GAAP") measure.

Adjusted EBITDA is presented as management believes it provides additional information concerning the performance of our business and is used by investors and financial analysts to analyze and compare our current operating and financial performance relative to past performance and such performances relative to that of other exploration and production companies. Adjusted EBITDA may not be comparable to similarly titled measures of other exploration and production companies because all companies may not calculate such measures in the same manner.

Certain factors impacting Adjusted EBITDA may be viewed as temporary, one-time in nature, or being offset by reserves from past performance or near-term future performance. Financial results are also driven by various factors that do not typically occur evenly throughout the year that are difficult to predict, including rig availability, weather, well performance, the timing of drilling and completions and near-term commodity price changes.

"Adjusted EBITDA" should not be considered as an alternative to GAAP measures, such as net income, operating income, cash flow from operating activities, or any other GAAP measure of financial performance.

The following table presents a reconciliation of our consolidated net loss to Adjusted EBITDA:

Commodity Derivative Contracts

We enter into oil and natural gas derivative contracts to help mitigate the risk of changing commodity prices. As of May 8, 2019, we had entered into derivative agreements to receive average prices as summarized below.

Location and quality differentials attributable to our properties are not reflected in the above prices. The agreements provide for monthly settlement based on the difference between the agreement fixed price and the actual reference oil and natural gas index prices.

Cautionary Statement Relevant to Forward-Looking Information

This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, the evaluation of financial transactions and other strategic alternatives, statements regarding the expected future growth and dividends of the company, and plans and objectives of management for future operations. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that Legacy expects, believes or anticipates will or may occur in the future, are forward-looking statements. 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 forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties, factors and risks, many of which are outside the control of Legacy, which could cause results to differ materially from those expected by management of Legacy. Such risks and uncertainties include, but are not limited to, the structure and timing of any financial, transactional, or other strategic alternative and whether any such financial, transactional, or other strategic alternative will be completed; whether Legacy will be able to receive extension of it revolving credit facility; 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 Legacy's filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. 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.

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SOURCE Legacy Reserves Inc.