Presentation Transcript

1. INVESTOR PRESENTATION

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 or make payments on our notes 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 for the year ended December 31, 2012 in Item 1A under “Risk Factors” and subsequent filings with the Securities and Exchange Commission. The Partnership undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information or future events.

3. Legacy Reserves LP Overview

   Legacy has a 6+ year history as a publicly traded MLP (NASDAQ: LGCY) and a consistent track record of growing its oil-weighted asset base and delivering unitholder value Current Enterprise Value: $2.3billion $1.5 billion market cap(1) $788 million of net debt Tax-advantaged quarterly cash distribution of $0.575/unit ($2.30 annualized) provides 8.5% yield(1) Long-lived oil-weighted properties afford stable, low-decline asset base that is well suited for an MLP 83 MMBoe of proved reserves(2) 68% Oil and NGLs 88% PDP 11.6 R/P(3) Core competencies have driven 40% distribution growth since Jan ‘07 IPO and 10 consecutive distribution increases Evaluating acquisitions and development projects Financing capital requirements Executing the plan Based on closing price as of 5/16/13 of $26.95. Proved reserves as of December 31, 2012 as disclosed in Legacy’s 2012 Form 10-K. Based on proved reserves as of 12/31/12 and Q1 2013 production.

4. Permian Basin: Our Home and a Great Fit for an MLP

   Industry Production Activity Discovered in 1921, the Permian Basin is one of the most prolific basins in the U.S. Cumulative production of over 30 billion Bbls Currently producing ~1.25 million Bbl/d and ~4.8 Bcf/d (Jan ’13) Oil production increased 30% since Jan ’11 Multiple producing formations Established and expanding infrastructure with constructive regulatory environment Long-lived reserves Predictable, shallow decline rates Fragmented ownership Over 1,275 companies currently operating in the basin Top 5 owners represent less than one third of total ownership(1) Permian holds nearly all of our PUDs and future capex Source: Texas Railroad Commission (Districts 7C, 8 & 8A) and the New Mexico Oil Conservation Division. Map Source: Midland Map Company. (1) Ownership based on 2011 total production. Permian Basin includes Texas Railroad Commission Districts 7C, 8, 8A as well as Lea and Eddy Counties, New Mexico.

5. Acquisitions Drive Growth

   Disciplined evaluation approach to making acquisitions of mature, long-lived oil and natural gas propertieswith high concentration of PDP reserves. Over $1.5 billion of acquisitions since 2006 focused in the Permian Basin, Mid-Continent and Rockies Purchased at an average of 5.6x estimated FTM cash flow Averaged over $200 million of acquisitions annually during 2007, 2008, 2010 and 2011 2012 acquisitions of approximately $635 million 2012 opportunities: 135 screened, 95 evaluated, 19 closed (14%) Six bolt-on acquisitions(1) made in 2013 at attractive metrics, and current acquisition pipeline looks strong $ 635 $ 700 ($ Total Deal Value) (# of Transactions) (1) (1) Includes pending acquisitions.

6. Concho 2012 Acquisition

   Acquisition Overlap with Existing Properties On December 20, 2012 Legacy closed the purchase of Permian Basin oil and natural gas properties from Concho Resources Inc. for approximately $503 million Landmark acquisition adds significant size and scale to Legacy’s existing Permian footprint Approximately 5,250 Boe/d from over 1,500 producing wells (1) Almost 100% of properties within the Permian Basin Approximately 90% operated Overlapping properties leverage operational know-how and existing corporate and field-level infrastructure Evaluated acreage is approximately 99% HBP and supports substantial long-term opportunities, including over 230 currently identified development locations Q1 2013 production in line with initial forecasts Q1 2013 production.

7. Core Asset Areas

   Overview 83.2 MMBoe proved reserves(1) 68% Oil and NGLs 88% PDP 19,711 Boe / d current production(2) Proved R/P of 11.6(3) Over 80% of reserves are operated 7,675 gross producing wells Rocky Mountain 10,286 MBoe proved reserves(1) 96% Oil and NGLs 95% PDP 2,301 Boe / d current production(2) Permian Basin 62,884 Mboe proved reserves(1) 63% Oil and NGLs 85% PDP 15,331 Boe / d current production(2) Mid-Continent 9,863 Mboe proved reserves(1) 72% Oil and NGLs 98% PDP 2,004 Boe / d current production(2) SEC proved reserves at Dec. 31, 2012 as disclosed in Legacy’s Form 10-K. Q1 2013 production. Based on proved reserves as of 12/31/12 and Q1 2013 production.

8. Permian Basin Drilling Opportunities

   Note: Reflects proved and unproved locations as well as prospective acreage. Well costs are based on current estimates.

9. Key Investment Highlights

   High-quality, liquids-rich asset portfolio 68% Liquids 11.6 R/P(1) Strong track record 118 acquisitions(2) of producing properties worth more than $1.5 billion 10 consecutive quarters of distribution growth Extensive, Low-Risk development Drilling Inventory Over 700 low-risk development opportunities Experienced and Incentivized Management Team 18% of outstanding units held by management/insiders No Incentive Distribution Rights promotes unitholder alignment with 100% of incremental cash flows going to LPs Conservative Financial and Hedging Policy 3.1x Debt/LQA EBITDA with no near-term debt maturities Substantial hedge portfolio Based on proved reserves as of 12/31/12 and Q1 2013 production. Includes pending acquisitions.
10. Financial Overview

11. Conservative Capital Structure

    Reflects face value of the notes. Annualized Q1 2013 Adjusted EBITDA ($64.4 million). Q1 2013 production.

12. Production and EBITDA Growth with Modest Leverage

    Average Daily Production (Boe / d) Adjusted EBITDA ($ MM) (1) Debt / Production ($ / Boe / d) Debt / Adjusted EBITDA (1) Based on annualized Q1 2013 Adjusted EBITDA ($64.4 million).

13. Quarterly Cash Distribution Profile

    Cumulative distributions since inception = $12.92/unit $0.520 $0.575 $0.570 $0.565 $0.560 $0.555 $0.550 $0.545 $0.540 $0.530 $0.525 $0.490 $0.450 ($ / Bbl) (Quarterly Distribution / Unit) $0.430 $0.420 $0.410 1Q 1Q 1Q 1Q 1Q 1Q 2Q 2Q 2Q 2Q 2Q 2Q 3Q 3Q 3Q 3Q 3Q 3Q 4Q 4Q 4Q 4Q 4Q 4Q 1Q 2011 2007 2008 2013 2009 2010 2012 Legacy has increased its quarterly distribution by 3.6% year-over-year and 40.2% since its IPO

14. Hedging Strategy

    Clear objective to reduce cash flow volatility to protect our borrowing base and future distribution levels Target up to 85% of estimated PDP production over the next 18-24 months on a rolling quarterly basis with declining percentage hedging thereafter Approximately 84% of expected PDP crude oil production and approximately 70% of expected PDP natural gas production hedged through 2014 at favorable prices Hedge production from acquisitions for 3-5 years upon signing of a purchase and sale agreement to help lock-in acquisition economics Hedge within our bank group to capitalize on right-way risk and reduce capital constraints Primarily use swaps and costless 3-way collars Hedge interest rates to further mitigate volatility

15. Successful Historical Use of Hedging to Protect Cash Flows

    Annual Revenues Without Hedging Annual Hedging Settlements Annual Revenues Plus Hedging Annual Adjusted EBITDA

16. Oil and Natural Gas Hedging Summary

    Oil 3-Way Collars Summary Approximately 84% of expected PDP crude oil production hedged through 2014 at a weighted-averaged floor price of $91.16 / Bbl Uses a combination of swaps and three-way collars Approximately 70% of expected PDP natural gas production hedged through 2014 at a weighted-averaged floor price of $4.30 / MMBtu (MBbls Hedged) Natural Gas Hedging Summary(1)(2) Oil Hedging Summary(1) (MMCf Hedged) (MBbls Hedged) Hedging prices reflect a weighted average of swap prices and long put prices on 3-way collars. Natural gas hedge prices reflect Waha (West Texas), ANR-OK, and CIG (Rockies) indexes.
17. Appendix

18. Ownership Structure and Governance

    Significant insider ownership No IDRs yields lower cost of capital and ensures unitholder alignment Unitholder voting rights similar to typical LLC structure Independent board members enhance corporate governance Founding Investors, Directorsand Management Public 100% 18% Limited Partner Interest Legacy ReservesGP, LLC 82% LimitedPartner Interest Independent Reserve Engineers: LaRoche Petroleum Consultants, Ltd. Independent Auditors: BDO USA, LLP <0.1% General Partner Interest $1.0 Bn Revolving Credit Facility with $800MM Borrowing Base $300MM 8.00% Senior Notes Legacy Reserves LP (NASDAQ:LGCY) 100% Ownership Interest Legacy Reserves Operating LP

19. 2013 Guidance

    (1) Represents the projected percentage of WTI crude oil prices divided by 42, as we report NGLs in gallons. (2) Consistent with our definition of Adjusted EBITDA, these figures exclude LTIP expenses. Cash settlements of LTIP (not included herein) impact Distributable Cash Flow.

20. Adjusted EBITDA Reconciliation

    The following presents a reconciliation of “Adjusted EBITDA”, which is a non-GAAP measure, to its nearest comparable GAAP measure. “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. Adjusted EBITDA is defined 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 disposal of assets; equity in (income) loss of equity method investees; unit-based compensation expense related to LTIP unit awards accounted for under the equity or liability methods; minimum payments earned in excess of overriding royalty interests; and unrealized (gain) loss on oil and natural gas derivatives. The management of Legacy Reserves LP uses Adjusted EBITDA as a tool to provide additional information and metrics relative to the performance of Legacy’s business. Legacy’s management believes that Adjusted EBITDA is useful to investors because this measure is used by many companies in the industry as a measure of operating and financial performance and is commonly employed by financial analysts and others to evaluate the operating and financial performance of the Partnership from period to period and to compare it with the performance of other publicly traded partnerships within the industry. Adjusted EBITDA 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 in the same manner.

21. Reg G Reconciliation

    Minimum payments earned in excess of overriding royalties earned under a contractual agreement expiring December 31, 2019.