**Legacy Announces Year End and Fourth Quarter 2006 Results**MIDLAND, Texas, Mar 20, 2007 (PrimeNewswire via COMTEX News Network) — Legacy Reserves LP (“Legacy”) (NASDAQ:LGCY), today announced preliminary, unaudited annual andfourth quarter results for 2006.Cary Brown, Chairman and Chief Executive Officer of Legacy Reserves GP, LLC, the general partner ofLegacy, said, “We are excited to have had a successful IPO in early January 2007 that enabled us torepay all of our outstanding debt which makes the full borrowing capacity of $130 million availablefor working capital and potential acquisitions. We have been active since the IPO executing ourdevelopment program, completing five wells since the beginning of the year with two rigs nowrunning. In addition, we continue to evaluate potential acquisitions.”Summary of Year End and Fourth Quarter 2006 ResultsThis unaudited financial information is preliminary and is subject to adjustments in connectionwith the final audited financial statements to be released on or about March 28, 2007 withinLegacy’s Annual Report on Form 10-K. Legacy was formed in October 2005 to own and operate the oiland gas properties it acquired from its Founding Investors in connection with the closing of aprivate equity offering on March 15, 2006. Inasmuch as certain assets owned by the FoundingInvestors were acquired by Legacy on March 15, 2006, the results of operations from these acquiredassets are excluded from the first 73 days of the 2006 annual reporting period. On January 18,2007, Legacy closed its initial public offering of 6,900,000 units.Net income for the year ended December 31, 2006 totaled $4.8 million, or $0.29 basic and dilutedearnings per unit, while a loss of $1.9 million, or ($0.10) basic and diluted earnings per unit,was recorded for the quarter ended December 31, 2006. Results were negatively impacted byimpairment charges of $16.1 million and $7.5 million, respectively, related to the decrease in oiland natural gas prices. Impairment expense is a non-cash charge to earnings which does not affectour ability to make our expected cash distributions. Net income for both the year and quarterended December 31, 2006 was favorably impacted by $10.0 million and $2.3 million, respectively, ofunrealized gains on our oil and natural gas swaps, as the fair value of our future derivativeinstruments was marked to market.Adjusted EBITDA is defined in our revolving credit facility as net income (loss) plus interestexpense; depletion, depreciation, amortization and accretion; impairment of long-lived assets;(gain) loss on sale of partnership investment; (gain) loss on sale of assets; equity in (income)loss of partnerships; and unrealized (gain) loss on oil and natural gas swaps. Adjusted EBITDAtotaled $36.0 million and $11.3 million for the year and quarter ended December 31, 2006,respectively. (See “Non-GAAP Financial Measures” and the associated tables for a discussion ofmanagement’s use of Adjusted EBITDA in this release.)
 

 
Financial and Operating Results:Production     Net oil and natural gas production averaged 3,058 Boe per day for the year ended December 31, 2006,which increased to an average of 3,625 Boe per day in the quarter ended December 31, 2006.Legacy’s increased production has resulted primarily from its acquisition of oil and natural gasproperties in the third quarter of 2006 and from new wells drilled and completed in the third andfourth quarters of 2006 as part of its 2006 capital program.Revenues and Realized PricesFor the year ended December 31, 2006 oil and natural gas sales were $59.8 million. Revenues,including realized and unrealized gains on our oil and natural gas swaps of $9.7 million, totaled$69.5 million. Realized losses on oil and natural gas swaps totaled $0.3 million, which included a$4.0 million payment to terminate oil swaps, a form of hedges, for the calendar periods of 2007 and2008. Legacy simultaneously re-entered into oil swaps at the higher prevailing market swap pricesfor the same volumes and periods.Realized oil prices, excluding hedge settlements, were $60.55 and $55.33 per barrel for the yearand quarter ended December 31, 2006, respectively. Realized natural gas prices were $6.57 and$6.03 per Mcf excluding hedging settlements, respectively. Including the effects of realized gainson our oil swaps (including the $4.0 million swap termination payment), realized oil prices were$51.65 and $56.32 per barrel for the year and quarter ended December 31, 2006, respectively.Including the effects of realized gains on our natural gas swaps, realized natural gas prices were$9.48 and $8.84 per Mcf for the year and quarter ended December 31, 2006, respectively. Hedges,all of which are in the form of swaps, covered approximately 89% of Legacy’s production at aweighted average NYMEX price of $63.64 per Boe. Legacy’s realized prices are less than NYMEX due toquality and location differentials. The stated results are inclusive of natural gas basis swapsthat we use to improve the effectiveness of our natural gas swaps.Production CostsProduction costs totaled $15.9 million ($14.28 per Boe) and $5.8 million ($17.33 per Boe) for theyear and quarter ended December 31, 2006, respectively. The increase in production costs per Boeis consistent with industry-wide costs increases, particularly those related to oil operations thatrequire lifting produced oil and water or involve enhanced recovery processes.
 

 
Depletion, Depreciation and Amortization (DD&A)DD&A expense for the year ended December 31, 2006 totaled $18.4 million, or $16.48 per Boe, whileDD&A expense was $5.7 million, or $17.07 per Boe for the quarter ended December 31, 2006. Under thesuccessful efforts method of accounting, Legacy calculates DD&A on an individual producing fieldbasis. Changes in reserve estimates and in the timing and amount of abandonment cost estimates aswell as changes in the timing and amount of development projects of one or two fields can causevariations in the aggregate DD&A rate.ImpairmentWe incurred impairment expense related to our oil and natural gas properties of $16.1 million forthe year ended December 31, 2006, of which $7.5 million occurred in the quarter ended December 31,2006. Impairment expense is a non-cash charge to earnings which does not affect our ability tomake our expected cash distributions. The impairment expense reflects the downward movement in oilprices from $73.92 per barrel at June 30, 2006 to $61.05 per barrel at December 31, 2006 andnatural gas prices from $6.06 per MMBtu at June 30, 2006 to $5.62 per MMBtu at September 30, 2006.General and Administrative Expenses (G&A)G&A expenses for the year ended December 31, 2006 totaled $3.7 million ($3.31 per Boe), and thequarter ended December 31, 2006 totaled $0.4 million ($1.28 per Boe). When compared to the quarterended December 31, 2006, we expect accounting, legal and professional fees to be higher in thequarter ending March 31, 2007 due to the 2006 tax return preparation and financial audit processes.ReservesTotal proved reserves attributable to the properties contributed to Legacy and acquired by Legacywere 18.8 million Boe as of December 31, 2006. The standardized measure of discounted cash flowswas $240.6 million as of December 31, 2006 based on year-end 2006 NYMEX prices of $61.05 per barrelof oil (WTI) and $6.30 per MMBtu of natural gas (Henry Hub).Oil and Natural Gas Derivative InstrumentsWe have entered into the following fixed price swaps for oil and natural gas to help hedge the riskof changing commodity prices. As of March 19, 2007, we had entered into swap agreements to receiveaverage NYMEX West Texas Intermediate oil and Henry Hub natural gas prices as summarized below:
 

 
               **Annual**  **Average**  **Price** **Calendar Year** **Volumes (Bbls)**  **Price per Bbl**  **Range per Bbl** 2007  671,637  $67.62  $64.15 - $75.70 2008  618,689  $67.11  $62.25 - $73.45 2009  571,453  $64.46  $61.05 - $71.40 2010  526,685  $62.49  $60.15 - $66.70                **Annual**  **Average**  **Price** **Calendar Year** **Volumes (Mcf)**  **Price per Mcf**  **Range per Mcf** 2007  1,558,504  $9.56  $9.02 - $11.83 2008  1,422,732  $8.61  $7.98 - $10.58 2009  1,316,354  $8.38  $7.77 - $10.18 2010  1,218,899  $7.99  $7.37 - $9.73 Location and quality differentials attributable to Legacy properties are not reflected in the aboveprices. The agreements provide for monthly settlement based on the difference between the agreementprice and the actual NYMEX oil and natural gas prices.We have entered into basis swaps to receive floating NYMEX prices less a fixed basis differentialand pay prices based on the floating Waha index, a natural gas hub in West Texas. The prices thatwe receive for our natural gas sales follow Waha more closely than NYMEX. The basis swaps therebyprovide a better match between our natural gas sales and the settlement payments on our natural gasswaps. The following table summarizes, for the periods indicated, our NYMEX basis swaps currentlyin place through December 31, 2010:           **Annual**  **Basis** **Calendar Year** **Volumes (Mcf)**  **Range per Mcf** 2007  1,560,000  $(0.88)2008  1,422,000  $(0.84)2009  1,320,000  $(0.68)2010  1,200,000  $(0.57)Annual Report on Form 10-KThe consolidated financial statements and related footnotes will be available on our 2006 Form10-K, which will be filed on or before March 28, 2007.Conference CallAs announced on March 16, 2007, Legacy Reserves LP will host an investor conference call to discussLegacy’s results today at 4:00 p.m. (Central Time). Investors may access the conference call bydialing 800-263-8506. For those who cannot listen to the live broadcast, a replay of the call willbe available through Tuesday, March 27, by dialing 719-457-0820 or 888-203-1112 and entering code2453191, or by going to the Investor Relations tab of Legacy’s
 

 
website (www.LegacyLP.com). We will take live questions from securities analysts and institutionalportfolio managers and analysts; the complete call is open to all other interested parties on alisten-only basis.About Legacy Reserves LPWe are an independent oil and natural gas limited partnership headquartered in Midland, Texas, andare focused on the acquisition and exploitation of oil and natural gas properties primarily locatedin the Permian Basin of West Texas and southeast New Mexico. Additional information is available atwww.LegacyLP.com.Cautionary Statement Relevant to Forward-Looking InformationThis press release contains forward-looking statements relating to Legacy’s operations that arebased on management’s current expectations, estimates and projections about its operations. Wordssuch as “anticipates,” “expects,” “intends,” “plans,” “targets,” “projects,” “believes,” “seeks,”“schedules,” “estimated,” and similar expressions are intended to identify such forward-lookingstatements. These statements are not guarantees of future performance and are subject to certainrisks, uncertainties and other factors, some of which are beyond our control and are difficult topredict. Among the factors contained in these forward-looking statements are uncertainties as tothe actual amount and timing of Legacy’s transition costs from a private entity to a publicly heldMLP. Therefore, actual outcomes and results may differ materially from what is expressed orforecasted in such forward-looking statements. The reader should not place undue reliance on theseforward-looking statements, which speak only as of the date of this press release. Unless legallyrequired, Legacy undertakes no obligation to update publicly any forward-looking statements,whether as a result of new information, future events or otherwise.Among the important factors that could cause actual results to differ materially from those in theforward-looking statements are realized oil and natural gas prices; production volumes, leaseoperating expenses, general and administrative costs and finding and development costs; futureoperating results and the factors set forth under the heading “Risk Factors” in our Prospectusfiled pursuant to Rule 424(b)(4) on January 11, 2007 (File No. 333-138637).
 

 
**LEGACY RESERVES LP**