2011-04-13-2011-04-06-2011-04-06

Acquired 15% stake in Production Licenses PL505 and PL505BS and 10% share in Production License PL570 in exchange for funding Marathon North Sea well drilling.

Legacy Reserves LP, Midland, Texas, (Nasdaq: LGCY) plans to purchase Permian Basin gas properties from an undisclosed seller for $67 million in cash.

The properties include 126 wells (100 operated) in Eddy and Chaves counties, New Mexico. The acquisition also encompasses a gas-gathering system and related compression facilities gathering gas from the acquired wells and some third-party wells.

Net daily sales are 7.6 million cubic feet of gas, 397 barrels of gas liquids and four barrels of oil per day. Proved reserves are 40.7 billion cubic feet equivalent.

Legacy chairman and chief executive Cary Brown says, "With many companies paying strong prices for blocky Permian Basin oil reserves and leasehold, we are excited to enhance our position in high-quality natural gas assets in the Permian Basin while natural gas prices remain depressed. In addition, we took advantage of the recent uptick in natural gas prices and hedged a significant portion of the forecasted volumes from this acquisition."

The deal is expected to close on May 5.

The deal values production at $6,696 per flowing thousand cubic feet equivalent per day and proved reserves at $1.65 per proved thousand cubic feet equivalent, according to Raymond James Equity Research analyst Pavel Molchanov.

He says, "The implied transaction valuation is still very favorable compared to other developed transactions - proving once again the highly accretive nature of Legacy's business of consolidating small properties."