Legacy Reserves LP (Nasdaq:LGCY) has entered into separate agreements to purchase oil-weighted properties in Chaves County, New Mexico and Sheridan County, Montana for a combined $112 million. The properties produce roughly 890 boe per day, contain estimated proved reserves of approximately 9.0 MMboe, are approximately 95% oil, and are over 95% operated.
The Midland, TX-based master limited partnership anticipates funding the transactions with borrowings under its revolver.
Cary Brown, Legacy's chairman and CEO, commented on the purchases. "We are pleased with our signing of these two acquisitions. Just a few weeks ago in our earnings release we stated our objective of providing unitholders with a stable and growing distribution by pursuing projects focused on long-term success. These two acquisitions align with that ambition and move us closer to our 2014 and long-term objectives. The Caprock field in New Mexico is an active CO2 flood project which has shown a strong response and has significant potential for increased response from ongoing CO2 investment under a long-term source agreement with Kinder Morgan. The inclining production profile should fit nicely in our portfolio and we look forward to leveraging the strength of our people including our EOR-focused team in The Woodlands, Texas.
"The high volume, low-decline oil wells in Montana also match us well. Given their close proximity to our existing properties and the attractive low-risk development opportunities afforded, our Rockies group based in Cody, WY is eager to take on this project," he continued.
The closings of these transactions are expected to occur in the second quarter, and the purchase prices remain subject to customary adjustments.