**UNITED      STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C.      20549**

**Form 10-Q**

| **(Mark One)**                                                                                 |   |                                                                                                                                      |
|-----------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|
|  x                                                                                             |   | **QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934**  |
|                                                                                                |   |                                                                                                                                      |
| **For                the quarterly period ended June 30, 2008**                                     |
| **OR**                                                                                              |
| o                                                                                                   |   | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|                                                                                                |   |                                                                                                                                      |
| **For                the transition period from __________                to __________** |
|                                                                                                |
| **Commission                File Number 001-33756**                                                 |

**Vanguard      Natural Resources, LLC**

*(Exact      Name of Registrant as Specified in Its Charter)*

| **Delaware**                                                                                    |   | **61-1521161**                                                        |
|-------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|
| *(State                or Other Jurisdiction of**Incorporation                or Organization)* |   | *(I.R.S.                Employer**Identification                No.)* |

| **7700                San Felipe, Suite 485****Houston,                Texas** |   | **77063**                   |
|--------------------------------------------------------------------------------|--------|-----------------------------|
| *(Address                of Principal Executive Offices)*                      |   | *(Zip                Code)* |

**Telephone      Number: (832) 327-2255**

|   | Large                accelerated filer                o      |   | Accelerated                filer                o    |
|--------|--------------------------------------------------------------|--------|-----------------------------------------------------------|
|   | Non-accelerated                filer                x        |   | Smaller                reporting company                o |
|   | (Do                not check if a smaller reporting company) |   |                                                      |

12,145,873 

----

**VANGUARD      NATURAL RESOURCES, LLC**

**TABLE      OF CONTENTS**

|                                                   |   |                                                                                                                      |   | **Page** |
|--------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|--------|----------|
| **GLOSSARY                OF TERMS**                   |   |                                                                                                                      |
|                                                   |   |                                                                                                                      |   |     |
| **PART                I - FINANCIAL INFORMATION** |   |                                                                                                                      |
| Item                1.                                 |   | Financial                Statements                                                                                       |   |     |
|                                                   |   | Consolidated                Statements of Operations                                                                      |   | 3        |
|                                                   |   | Consolidated                Balance Sheets                                                                                |   | 4        |
|                                                   |   | Consolidated                Statements of Cash Flows                                                                      |   | 5        |
|                                                   |   | Consolidated                Statements of Comprehensive Income (Loss)                                                     |   | 6        |
|                                                   |   | Notes                to Consolidated Financial Statements (Unaudited)                                                     |   | 7        |
| Item                2.                                 |   | Management’s                Discussion and Analysis of Financial Condition and Results of                Operations |   | 15       |
| Item                3.                                 |   | Quantitative                and Qualitative Disclosures about Market Risk                                                 |   | 27       |
| Item                4.                                 |   | Controls                and Procedures                                                                                    |   | 28       |
|                                                   |   |                                                                                                                      |   |     |
| **PART                II - OTHER INFORMATION**    |   |                                                                                                                      |
| Item                1.                                 |   | Legal                Proceedings                                                                                          |   | 30       |
| Item                1A.                                |   | Risk                Factors                                                                                               |   | 30       |
| Item                2.                                 |   | Unregistered                Sales of Equity Securities and Use of Proceeds                                                |   | 30       |
| Item                3.                                 |   | Default                in Senior Securities                                                                               |   | 30       |
| Item                4.                                 |   | Submission                of Matters to a Vote of Securities Holders                                                      |   | 30       |
| Item                5.                                 |   | Other                Information                                                                                          |   | 31       |
| Item                6.                                 |   | Exhibits                                                                                                                  |   | 31       |
|                                                   |   |                                                                                                                      |   |     |
| **SIGNATURE**                                          |   |                                                                                                                      |

----

**GLOSSARY      OF TERMS**

| /day      |   | =                per day                                       |   | Mcf    |   | =                thousand cubic feet                            |
|-----------|--------|----------------------------------------------------------------|--------|--------|--------|-----------------------------------------------------------------|
|      |   |                                                           |   |   |   |                                                            |
| Bbls      |   | =                barrels                                       |   | Mcfe   |   | =                thousand cubic feet of natural gas equivalents |
|      |   |                                                           |   |   |   |                                                            |
| Bcfe      |   | =                billion cubic feet of natural gas equivalents |   | MMBtu  |   | =                million British thermal units                  |
|      |   |                                                           |   |   |   |                                                            |
|  Btu |   |  =                British thermal unit                    |   | MMcf   |   | =                million cubic feet                             |

----

**Item      1. Financial Statements**

|                                                          |   | **Three Months                  Ended****June 30,** |       | **Six Months                  Ended****June 30,** |   |
|---------------------------------------------------------------|--------|---------------------------------------------------------------|------------|-------------------------------------------------------------|--------|
|                                                          |   | **2008**                                                      |       | **2007**                                                    |   | **2008** |   | **2007** |   |
| **Revenues:**                                                 |   |                                                     |       |                                              |   |    |   |     |   |
| Natural                  gas and oil sales                    |   | $                                                             | 20,849,911 |                                                        | $      | 10,106,737 |   | $ | 34,850,008 |   | $ | 19,068,353 |   |
| Realized                  losses on derivative contracts      |   |                                                          | (5,749,947 | )                                                           |   | (918,044 | ) |   | (6,900,419 | ) |   | (1,665,852 | ) |
| **Total                  revenues**                           |   |                                                          | 15,099,964 |                                                        |   | 9,188,693 |   |   | 27,949,589 |   |   | 17,402,501 |   |
|                                                          |   |                                                          |       |                                                        |   |   |   |   |   |   |   |   |   |
| **Costs                  and expenses:**                      |   |                                                          |       |                                                        |   |   |   |   |   |   |   |   |   |
| Lease                  operating expenses                     |   |                                                          | 2,300,076  |                                                        |   | 1,314,041 |   |   | 4,315,753 |   |   | 2,460,420 |   |
| Depreciation,                  depletion and amortization     |   |                                                          | 3,330,024  |                                                        |   | 2,291,426 |   |   | 6,154,002 |   |   | 4,320,289 |   |
| Selling,                  general and administrative expenses |   |                                                          | 1,636,675  |                                                        |   | 781,198 |   |   | 3,282,466 |   |   | 1,215,489 |   |
| Bad                  debt expense                             |   |                                                          | —    |                                                        |   | — |   |   | — |   |   | 1,007,458 |   |
| Taxes                  other than income taxes                |   |                                                          | 1,428,965  |                                                        |   | 380,110 |   |   | 2,395,078 |   |   | 890,992 |   |
| **Total                  costs and expenses**                 |   |                                                          | 8,695,740  |                                                        |   | 4,766,775 |   |   | 16,147,299 |   |   | 9,894,648 |   |
|                                                          |   |                                                          |       |                                                        |   |   |   |   |   |   |   |   |   |
| **Income                  from operations**                   |   |                                                          | 6,404,224  |                                                        |   | 4,421,918 |   |   | 11,802,290 |   |   | 7,507,853 |   |
|                                                          |   |                                                          |       |                                                        |   |   |   |   |   |   |   |   |   |
| **Other                  income and (expense):**              |   |                                                          |       |                                                        |   |   |   |   |   |   |   |   |   |
| Interest                  income                              |   |                                                          | 4,394      |                                                        |   | 14,679 |   |   | 12,008 |   |   | 27,646 |   |
| Interest                  expense                             |   |                                                          | (1,244,450 | )                                                           |   | (2,196,691 | ) |   | (2,374,110 | ) |   | (4,419,814 | ) |
| Loss                  on extinguishment of debt               |   |                                                          | —    |                                                        |   | — |   |   | — |   |   | (2,501,528 | ) |
| **Total                  other expense, net**                 |   |                                                          | (1,240,056 | )                                                           |   | (2,182,012 | ) |   | (2,362,102 | ) |   | (6,893,696 | ) |
|                                                          |   |                                                          |       |                                                        |   |   |   |   |   |   |   |   |   |
| **Net                  income**                               |   | $                                                             | 5,164,168  |                                                        | $      | 2,239,906 |   | $ | 9,440,188 |   | $ | 614,157 |   |
|                                                          |   |                                                          |            |                                                        |   |  |   |   |  |   |   |  |   |
| **Net                  income per unit:**                     |   |                                                          |            |                                                        |   |  |   |   |  |   |   |  |   |
| Common                  & Class B units - basic           |   | $                                                             | 0.46       |                                                        | $      | 0.38 |   | $ | 0.84 |   | $ | 0.11 |   |
|                                                          |   |                                                          |            |                                                        |   |  |   |   |   |   |   |  |   |
| Common                  & Class B units - diluted         |   | $                                                             | 0.46       |                                                        | $      | 0.38 |   | $ | 0.84 |   | $ | 0.11 |   |
|                                                          |   |                                                          |       |                                                        |   |   |   |   |   |   |   |   |   |
| **Weighted                  average units outstanding:**      |   |                                                          |       |                                                        |   |   |   |   |   |   |   |   |   |
| Common                  units - basic & diluted           |   |                                                          | 10,795,000 |                                                        |   | 5,540,000 |   |   | 10,795,000 |   |   | 5,540,000 |   |
| Class                  B units - basic & diluted          |   |                                                          | 420,000    |                                                        |   | 296,813 |   |   | 420,000 |   |   | 149,227 |   |

*See      accompanying notes to consolidated financial statements*

----

|                                                                                                                                                             |   | **June                  30,****2008** |        | **December 31,****2007** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|-------------|-------------------------------|--------|
|                                                                                                                                                             |   | **(unaudited)**                       |        |                          |   |
| **Assets**                                                                                                                                                       |   |                                  |        |                          |   |
| **Current                  assets**                                                                                                                              |   |                                  |        |                          |   |
| Cash                  and cash equivalents                                                                                                                       |   | $                                     | 3,900,503   |                          | $      | 3,109,563 |   |
| Trade                  accounts receivable, net                                                                                                                  |   |                                  | 10,825,985  |                          |   | 4,372,731 |   |
| Derivative                  assets                                                                                                                               |   |                                  | —     |                          |   | 4,017,085 |   |
| Other                  current assets                                                                                                                            |   |                                  | 719,273     |                          |   | 453,198 |   |
| **Total                  current assets**                                                                                                                        |   |                                  | 15,445,761  |                          |   | 11,952,577 |   |
|                                                                                                                                                             |   |                                  |             |                          |   |  |   |
| **Property                  and equipment**                                                                                                                      |   |                                  |             |                          |   |  |   |
| Furniture                  and fixtures                                                                                                                          |   |                                  | 109,594     |                          |   | 72,893 |   |
| Machinery                  and equipment                                                                                                                         |   |                                  | 163,677     |                          |   | 138,719 |   |
| Less:                  accumulated depreciation                                                                                                                  |   |                                  | (70,234     | )                             |   | (45,157 | ) |
| **Total                  property and equipment**                                                                                                                |   |                                  | 203,037     |                          |   | 166,455 |   |
|                                                                                                                                                             |   |                                  |             |                          |   |  |   |
| **Natural                  gas and oil properties, net - full cost                  method**                                                                |   |                                  | 184,705,095 |                          |   | 106,983,349 |   |
|                                                                                                                                                             |   |                                  |        |                          |   |  |   |
| **Other                  assets**                                                                                                                                |   |                                  |        |                          |   |  |   |
| Derivative                  assets                                                                                                                               |   |                                  | 702,079     |                          |   | 1,329,511 |   |
| Deferred                  financing costs                                                                                                                        |   |                                  | 973,191     |                          |   | 941,833 |   |
| Non-current                  deposits                                                                                                                            |   |                                  | 45,963      |                          |   | 8,285,883 |   |
| Other                  assets                                                                                                                                    |   |                                  | 1,061,309   |                          |   | 1,519,577 |   |
| **Total                  assets**                                                                                                                                |   | $                                     | 203,136,435 |                          | $      | 131,179,185 |   |
|                                                                                                                                                             |   |                                  |             |                          |   |  |   |
| **Liabilities                  and members’ equity**                                                                                                       |   |                                  |             |                          |   |  |   |
|                                                                                                                                                             |   |                                  |             |                          |   |  |   |
| **Current                  liabilities**                                                                                                                         |   |                                  |             |                          |   |  |   |
| Accounts                  payable - trade                                                                                                                   |   | $                                     | 947,507     |                          | $      | 1,056,627 |   |
| Accounts                  payable - natural gas and oil                                                                                                          |   |                                  | 1,034,750   |                          |   | 257,073 |   |
| Payables                  to affiliates                                                                                                                          |   |                                  | 4,161,308   |                          |   | 3,838,328 |   |
| Derivative                  liabilities                                                                                                                          |   |                                  | 27,109,030  |                          |   | — |   |
| Accrued                  expenses                                                                                                                                |   |                                  | 3,435,907   |                          |   | 203,159 |   |
| **Total                  current liabilities**                                                                                                                   |   |                                  | 36,688,502  |                          |   | 5,355,187 |   |
|                                                                                                                                                             |   |                                  |        |                          |   |  |   |
| Long-term                  debt                                                                                                                                  |   |                                  | 102,500,000 |                          |   | 37,400,000 |   |
| Derivative                  liabilities                                                                                                                          |   |                                  | 47,582,633  |                          |   | 5,903,384 |   |
| Asset                  retirement obligations                                                                                                                    |   |                                  | 1,532,881   |                          |   | 189,711 |   |
| **Total                  liabilities**                                                                                                                           |   |                                  | 188,304,016 |                          |   | 48,848,282 |   |
|                                                                                                                                                             |   |                                  |             |                          |   |  |   |
| **Commitments                  and contingencies**                                                                                                               |   |                                  |             |                          |   |  |   |
|                                                                                                                                                             |   |                                  |             |                          |   |  |   |
| **Members’                  equity**                                                                                                                       |   |                                  |             |                          |   |  |   |
| Members’                  capital, 10,795,000 common units issued and outstanding at June                  30, 2008                  and December 31, 2007 |   |                                  | 91,303,423  |                          |   | 90,257,856 |   |
| Class                  B units, 420,000 issued and outstanding at June 30, 2008 and December                  31,                  2007                          |   |                                  | 3,804,273   |                          |   | 2,131,995 |   |
| Other                  comprehensive loss                                                                                                                        |   |                                  | (80,275,277 | )                             |   | (10,058,948 | ) |
| **Total                  members’ equity**                                                                                                                 |   |                                  | 14,832,419  |                          |   | 82,330,903 |   |
| **Total                  liabilities and members’ equity**                                                                                                 |   | $                                     | 203,136,435 |                          | $      | 131,179,185 |   |

*See      accompanying notes to consolidated financial statements*

----

|                                                                                                                          |   | **Six Months Ended****June                  30,** |        |
|-------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------|-------------|
|                                                                                                                          |   | **2008**                                                    |        | **2007** |   |
| **Operating                  activities**                                                                                     |   |                                                        |        |   |   |
| Net                  income                                                                                                   |   | $                                                           | 9,440,188   |   | $ | 614,157 |   |
| Adjustments                  to reconcile net income to net cash provided by (used in) operating                  activities: |   |                                                        |        |   |   |   |   |
| Depreciation,                  depletion and amortization                                                                     |   |                                                        | 6,154,002   |   |   | 4,320,289 |   |
| Amortization                  of deferred financing costs                                                                     |   |                                                        | 173,045     |   |   | 142,234 |   |
| Bad                  debt expense                                                                                             |   |                                                        | —     |   |   | 1,007,458 |   |
| Unit-based                  compensation                                                                                      |   |                                                        | 1,896,347   |   |   | 563,143 |   |
| Amortization                  of premiums paid and non-cash settlements on derivative                  contracts              |   |                                                        | 2,531,193   |   |   | 733,504 |   |
| Changes                  in operating assets and liabilities:                                                                 |   |                                                        |        |   |   |   |   |
| Trade                  accounts receivable                                                                                    |   |                                                        | (6,453,254  | ) |   | (322,027 | ) |
| Payables                  to affiliates                                                                                       |   |                                                        | 614,969     |   |   | (2,083,796 | ) |
| Other                  current assets                                                                                         |   |                                                        | (219,422    | ) |   | (12,372 | ) |
| Price                  risk management activities, net                                                                        |   |                                                        | (442,840    | ) |   | (8,475,676 | ) |
| Accounts                  payable                                                                                             |   |                                                        | 668,556     |   |   | 2,393,459 |   |
| Accrued                  expenses                                                                                             |   |                                                        | 3,158,729   |   |   | (1,713,858 | ) |
| **Net                  cash provided by (used in) operating activities**                                                      |   |                                                        | 17,521,513  |   |   | (2,833,485 | ) |
|                                                                                                                          |   |                                                        |             |   |   |  |   |
| **Investing                  activities**                                                                                     |   |                                                        |             |   |   |  |   |
| Additions                  to property and equipment                                                                          |   |                                                        | (61,659     | ) |   | (31,211 | ) |
| Additions                  to natural gas and oil properties                                                                  |   |                                                        | (6,677,962  | ) |   | (6,132,607 | ) |
| Acquisitions                  of natural gas and oil properties                                                               |   |                                                        | (66,389,952 | ) |   | — |   |
| Deposits                  and prepayments of natural gas and oil properties                                                   |   |                                                        | 48,074      |   |   | (455,883 | ) |
| **Net                  cash used in investing activities**                                                                    |   |                                                        | (73,081,499 | ) |   | (6,619,701 | ) |
|                                                                                                                          |   |                                                        |        |   |   |  |   |
| **Financing                  activities**                                                                                     |   |                                                        |        |   |   |  |   |
| Proceeds                  from borrowings                                                                                     |   |                                                        | 74,400,000  |   |   | 114,600,000 |   |
| Repayment                  of debt                                                                                            |   |                                                        | (9,300,000  | ) |   | (99,667,500 | ) |
| Contributions                  from members                                                                                   |   |                                                        | —     |   |   | 41,221,000 |   |
| Distributions                  to members                                                                                     |   |                                                        | (8,254,240  | ) |   | (41,220,000 | ) |
| Financing                  costs                                                                                              |   |                                                        | (204,403    | ) |   | (1,194,270 | ) |
| Offering                  costs                                                                                               |   |                                                        | (54,192     | ) |   | (1,571,993 | ) |
| Purchase                  of units for unit-based compensation                                                                |   |                                                        | (236,239    | ) |   | — |   |
| **Net                  cash provided by financing activities**                                                                |   |                                                        | 56,350,926  |   |   | 12,167,237 |   |
|                                                                                                                          |   |                                                        |        |   |   |   |   |
| **Net                  increase in cash and cash equivalents**                                                                |   |                                                        | 790,940     |   |   | 2,714,051 |   |
|                                                                                                                          |   |                                                        |        |   |   |   |   |
| **Cash                  and cash equivalents,**                  beginning of period                                          |   |                                                        | 3,109,563   |   |   | 1,730,956 |   |
|                                                                                                                          |   |                                                        |        |   |   |   |   |
| **Cash                  and cash equivalents,**                  end of period                                                |   | $                                                           | 3,900,503   |   | $ | 4,445,007 |   |
|                                                                                                                          |   |                                                        |             |   |   |  |   |
| **Supplemental                  cash flow information:**                                                                      |   |                                                        |             |   |   |  |   |
| Cash                  paid for interest                                                                                       |   | $                                                           | 1,802,039   |   | $ | 4,826,132 |   |
| **Non-cash                  financing and investing activities:**                                                             |   |                                                        |        |   |   |   |   |
| Asset                  retirement obligations                                                                                 |   | $                                                           | 1,309,854   |   | $ | 155,800 |   |
| Assumption                  of fixed-price oil swaps                                                                          |   | $                                                           | 1,128,114   |   | $ | — |   |
| Deferred                  swap liability                                                                                      |   | $                                                           | —     |   | $ | 7,322,685 |   |
| Initial                  contribution of assets                                                                               |   | $                                                           | —     |   | $ | 3,289,055 |   |

*See      accompanying notes to consolidated financial statements*

----

|                                                                                                           |   |   | **Three Months                  Ended****June 30,**  |   |   | **Six Months                  Ended****June 30,** |   |
|----------------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------|--------|--------|-------------------------------------------------------------|--------|
|                                                                                                           |   |   | **2008**                                                            |   |   | **2007**                                                    |   |   | **2008** |   |   | **2007** |   |
| **Net                  income**                                                                                |   | $      | 5,164,168                                                           |   | $      | 2,239,906                                                   |   | $ | 9,440,188 |   | $ | 614,157 |   |
|                                                                                                           |   |   |                                                                |   |   |                                                        |   |   |   |   |   |   |   |
| Net                  gains (losses) from cash flow hedging activities:                                         |   |   |                                                                |   |   |                                                        |   |   |   |   |   |   |   |
| Unrealized                  mark-to-market gains (losses) arising during the period                            |   |   | (55,847,350                                                         | )      |   | 698,959                                                     |   |   | (75,949,453 | ) |   | (10,966,008 | ) |
| Reclassification                  adjustments for changes in initial value to settlement                  date |   |   | 4,765,055                                                           |   |   | 911,890                                                     |   |   | 5,733,124 |   |   | 507,743 |   |
| Other                  comprehensive income (loss)                                                             |   |   | (51,082,295                                                         | )      |   | 1,610,849                                                   |   |   | (70,216,329 | ) |   | (10,458,265 | ) |
|                                                                                                           |   |   |                                                                |   |   |                                                        |   |   |   |   |   |   |   |
| **Comprehensive                  income (loss)**                                                          |   | $      | (45,918,127                                                         | )      | $      | 3,850,755                                                   |   | $ | (60,776,141 | ) | $ | (9,844,108 | ) |

*See      accompanying notes to consolidated financial statements*

----

**VANGUARD        NATURAL RESOURCES, LLC AND SUBSIDIARIES**

**NOTES TO        CONSOLIDATED FINANCIAL STATEMENTS **

**(Unaudited)**

**1.         Basis of Presentation and Significant Accounting Policies**

**Basis      of Presentation**

----

**VANGUARD        NATURAL RESOURCES, LLC AND SUBSIDIARIES**

**NOTES TO        CONSOLIDATED FINANCIAL STATEMENTS **

**(Unaudited)**

**Summary      of Significant Accounting Policies**

**Recently      Adopted Accounting Pronouncements**

*      Value Measurements*
*      Effective Date of FASB Statement No. 157*
*      Note      6. Fair Value Disclosures.*

*The      Fair Value Option for Financial Assets and Financial Liabilities, including      an      amendment of FASB Statement No. 115”*

**New      Pronouncements Issued But Not Yet Adopted**

*“Business      Combinations”*

*“Non-controlling      Interests in Consolidated Financial statements—an amendment of ARB No.      51”*

*Disclosures      about Derivative Instruments and Hedging Activities” (“*

----

**VANGUARD          NATURAL RESOURCES, LLC AND SUBSIDIARIES**

**NOTES TO          CONSOLIDATED FINANCIAL STATEMENTS **

**(Unaudited)**

*The      Hierarchy of Generally Accepted Accounting Principles*

**Use      of Estimates**

**2.          Acquisitions**

*      Note      10. Subsequent Event *

**3.          Accounts Receivable and Allowance for Doubtful Accounts**

**4.         Credit Facilities and Long-Term Debt**

|                                                       |   |   |                                         |   |   |                                   |   |   | **Amount Outstanding**           |   |
|------------------------------------------------------------|--------|--------|----------------------------------------------|--------|--------|----------------------------------------|--------|--------|---------------------------------------|--------|
| **Description**                                            |   |   |  **Interest***** *****Rate**  |   |   | **Maturity***** *****Date**  |   |   | **June                  30,****2008** |   |   | **December***** *****31,****2007**  |   |
| $400                  million Senior Secured Revolver |   |   | Variable                                     |   |   | March                  31, 2011        |   |   | 102,500,000                           |   |   | 37,400,000 |   |
| Total                                                      |   |   |                                              |   |   |                                        |   | $      | 102,500,000                           |   | $ | 37,400,000 |   |

----

**VANGUARD        NATURAL RESOURCES, LLC AND SUBSIDIARIES**

**NOTES TO        CONSOLIDATED FINANCIAL STATEMENTS **

**(Unaudited)**

***$400      Million Senior Secured Revolver***

| **Borrowing                Base Utilization Grid**   |   |
|------------------------------------------------------|--------|
| Borrowing                Base Utilization Percentage |   |   | *<25* | *%* |   | *>25%<50* | *%* |   | *>50%<75* | *%* |   | *>75* | *%* |
| Eurodollar                Loans                      |   |   | 1.000 | % |   | 1.250 | % |   | 1.500 | % |   | 1.750 | % |
| ABR                Loans                             |   |   | 0.000 | % |   | 0.250 | % |   | 0.500 | % |   | 0.750 | % |
| Commitment                Fee Rate                   |   |   | 0.250 | % |   | 0.300 | % |   | 0.375 | % |   | 0.375 | % |
| Letter                of Credit Fee                  |   |   | 1.000 | % |   | 1.250 | % |   | 1.500 | % |   | 1.750 | % |

*      Note      5. Price Risk Management Activities*

**5.          Price Risk Management Activities**

----

**VANGUARD          NATURAL RESOURCES, LLC AND SUBSIDIARIES**

**NOTES TO          CONSOLIDATED FINANCIAL STATEMENTS **

**(Unaudited)**

*      Accounting for Derivative Instruments and Hedging Activities*

*      Note      4. Credit Facility and Long-Term Debt*

**Swap      Agreements**

|                                        |   | **Gas**   |      | **Oil**                                                      |   |
|---------------------------------------------|--------|-----------|-----------|--------------------------------------------------------------|--------|
| **Contract                  Period  ** |   | **MMBtu** |      | **Weighted****Average****TECO                  Fixed**  |   | **Bbls** |   | **WTI****Price** |   |
| 2008                                   |   |      | 1,452,439 |                                                         | $      | 9.00 |   |   | 97,500 |   | $ | 90.30 |   |
| 2009                                   |   |      | 2,657,046 |                                                         | $      | 8.85 |   |   | 181,500 |   | $ | 87.23 |   |
| 2010                                   |   |      | 2,387,640 |                                                         | $      | 8.76 |   |   | 164,250 |   | $ | 85.65 |   |
| 2011                                   |   |      | 2,196,012 |                                                         | $      | 7.15 |   |   | 151,250 |   | $ | 85.50 |   |
| 2012                                        |   |      | —   |                                                         | $      | — |   |   | 144,000 |   | $ | 80.00 |   |

**Put      Option Contracts**

| **Contract                  Period  ** |   |   | **                   Volume in MMBtu** |   |   | **Purchased NYMEX****Price Floor** |   |
|---------------------------------------------|--------|--------|-------------------------------------------------------|--------|--------|----------------------------------------------|--------|
| 2008                                        |   |   | 561,311                                               |   | $      | 7.50                                         |   |
| 2009                                        |   |   | 840,139                                               |   | $      | 7.50                                         |   |

----

**VANGUARD          NATURAL RESOURCES, LLC AND SUBSIDIARIES**

**NOTES TO          CONSOLIDATED FINANCIAL STATEMENTS **

**(Unaudited)**

**Collars**

|                                                  |   | **Gas**   |      |
|-------------------------------------------------------|--------|-----------|-----------|
|                                                  |   | **MMBtu** |      | **Floor** |   | **Ceiling** |   |
| Production                    Period:                 |   |      |      |   |   |   |   |
| July                    – September 2008        |   |      | 300,000   |   | $ | 9.00 |   | $ | 9.00 |   |
| October                    – December 2008      |   |      | 300,000   |   | $ | 9.00 |   | $ | 9.25 |   |
| January                    2009 – December 2009 |   |      | 1,000,000 |   | $ | 7.50 |   | $ | 9.00 |   |
| January                    2010 – December 2010 |   |      | 730,000   |   | $ | 8.00 |   | $ | 9.30 |   |

**Interest          Rate Swaps**

|                                               |   | ** **  **Principal ** |       | **Fixed****Libor** |   |
|----------------------------------------------------|--------|-------------------------------------------|------------|--------------------|--------|
|                                               |   | ** Balance**                         |       | **Rates**          |   |
| Period:                                            |   |                                      |       |               |   |
| July                  1, 2008 to December 10, 2010 |   | $                                         | 20,000,000 |               |   | 3.88 | % |
| July                  1, 2008 to January 31, 2011  |   | $                                         | 30,000,000 |               |   | 3.00 | % |
| July                  1, 2008 to March 31, 2011    |   | $                                         | 10,000,000 |               |   | 2.66 | % |

**6.            Fair Value Disclosures**

*        Note*
*1.        Basis of Presentation and Significant Accounting Policies*

|                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Level                  1       |   | Quoted                  prices for identical instruments in active markets. Level 1assets                  include                  short-term investments (such as Money Market Funds and Treasury                  Bills).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Level                   2 |   | Quoted                  market prices for similar instruments in active markets; quoted                  priced for                  identical or similar instruments in markets that are not active;                  and                  model-derived valuations in which all significant inputs and significant                  value drivers are observable in active markets.                                                                                                                                                                                                                                                                                                                                                          |
|                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Level 3                   |   | Valuations                  derived from valuation techniques in which one or more significant                  inputs                  or significant value drivers are unobservable. Level 3 assets and                  liabilities generally include financial instruments whose value                  is                  determined using pricing models, discounted cash flow methodologies,                  or                  similar techniques, as well as instruments for which the determination                  of                  fair value requires significant management judgment or estimation                  or for                  which there is a lack of transparency as to the inputs                  used. |

|                                      |   | ** June                    30, 2008**           |    |
|-------------------------------------------|--------|------------------------------------------------------|---------|
|                                      |   | **Fair                    Value Measurements Using** |    | **Assets/Liabilities** |   |
|                                      |   | **Level                    1 **                 |    | **Level                    2 ** |   | **Level                    3 ** | ** ** | **at                    Fair value** |   |
| **Assets: **                         |   |                                            |    |    |   |    |   |   |   |
| Derivative                    instruments |   | $                                                    | — |   | $ | 702,079 |   | $ | — |   | $ | 702,079 |   |
|                                      |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |
| **Liabilities: **                    |   |                                                 |    |   |   |   |   |   |   |   |   |   |   |
| Derivative                    instruments |   | $                                                    | — |   | $ | (74,691,663 | ) | $ | — |   | $ | (74,691,663 | ) |

----

**VANGUARD            NATURAL RESOURCES, LLC AND SUBSIDIARIES **

**NOTES            TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Unaudited)**

**7.                Related Party Transactions**

**8.           Common Units and Net Income per Unit**

*“Earnings        Per Share”*
*        Note        10.Unit-Based Compensation*

**9.   Unit-Based        Compensation**

*        Share-Based Payment.*

----

**VANGUARD          NATURAL RESOURCES, LLC AND SUBSIDIARIES **

**NOTES          TO CONSOLIDATED FINANCIAL STATEMENTS **

**(Unaudited)**

|                                                   |   | **                   Number of ****Non-vested Units** |    | **Weighted Average****Grant Date ****Fair Value**  |   |
|--------------------------------------------------------|--------|---------------------------------------------------------------------------|---------|-----------------------------------------------------------------------------|--------|
|                                                   |   |                                                            |    |                                                         |   |
| Non-vested                  units at December 31, 2007 |   |                                                                      | 425,000 |                                                                        | $      | 18.14 |   |
| Granted                                                |   |                                                                      | 15,000  |                                                                        |   | 16.79 |   |
| Non-vested                  units at June 30, 2008     |   |                                                                      | 440,000 |                                                                        | $      | 18.10 |   |

**10.  Subsequent        Event **

----

**Item 2.  Management’s        Discussion and Analysis of Financial Condition and Results of        Operations**

**Forward-Looking        Statements**

**Overview**

***Initial        Public Offering***

***Permian        Basin Acquisition***

----

***South        Texas Acquisition***

***Our        Relationship with Vinland***

***Restructuring        Plan***

----

***Private        Offering***

** **

***Reserve-Based        Credit Facility***

| **Borrowing                  Base Utilization Grid**   |   |
|--------------------------------------------------------|--------|
| Borrowing                  Base Utilization Percentage |   |   | *<25* | *%* |   | *>25%<50* | *%* |   | *>50%<75* | *%* |   | *>75* | *%* |
| Eurodollar                  Loans                      |   |   | 1.000 | % |   | 1.250 | % |   | 1.500 | % |   | 1.750 | % |
| ABR                  Loans                             |   |   | 0.000 | % |   | 0.250 | % |   | 0.500 | % |   | 0.750 | % |
| Commitment                  Fee Rate                   |   |   | 0.250 | % |   | 0.300 | % |   | 0.375 | % |   | 0.375 | % |
| Letter                  of Credit Fee                  |   |   | 1.000 | % |   | 1.250 | % |   | 1.500 | % |   | 1.750 | % |

**Outlook**

----

**Results        of Operations**

|                                                          |   | **Three Months Ended****June 30,** |           | **Six Months Ended****June 30,** |   |
|---------------------------------------------------------------|--------|---------------------------------------------------|----------------|-------------------------------------------------|--------|
|                                                          |   | **2008**                                          |           | **2007**                                        |   | **2008(a)** |   | **2007** |   |
| **Revenues:**                                                 |   |                                              |           |                                            |   |   |   |   |   |
| Natural                  gas and oil sales                    |   | $                                                 | 20,849,911     |                                            | $      | 10,106,737 |   | $ | 34,850,008 |   | $ | 19,068,353 |   |
| Realized                  losses on derivative contracts      |   |                                              | (5,749,947     | )                                               |   | (918,044 | ) |   | (6,900,419 | ) |   | (1,665,852 | ) |
| **Total                  revenues**                           |   |                                              | **15,099,964** |                                            | **$**  | **9,188,693** |   |   | **27,949,589** |   | **$** | **17,402,501** |   |
| **Costs                  and expenses:**                      |   |                                              |                |                                            |   |  |   |   |  |   |   |  |   |
| Lease                  operating expenses                     |   | $                                                 | 2,300,076      |                                            | $      | 1,314,041 |   | $ | 4,315,753 |   | $ | 2,460,420 |   |
| Depreciation,                  depletion and amortization     |   |                                              | 3,330,024      |                                            |   | 2,291,426 |   |   | 6,154,002 |   |   | 4,320,289 |   |
| Selling,                  general and administrative expenses |   |                                              | 1,636,675      |                                            |   | 781,198 |   |   | 3,282,466 |   |   | 1,215,489 |   |
| Bad                  debt expense                             |   |                                              | —        |                                            |   | — |   |   | — |   |   | 1,007,458 |   |
| Taxes                  other than income taxes                |   |                                              | 1,428,965      |                                            |   | 380,110 |   |   | 2,395,078 |   |   | 890,992 |   |
| **Total                  costs and expenses**                 |   | **$**                                             | **8,695,740**  |                                            | **$**  | **4,766,775** |   | **$** | **16,147,299** |   | **$** | **9,894,648** |   |
| **Other                  Income and (Expense):**              |   |                                              |                |                                            |   |  |   |   |  |   |   |  |   |
| Interest                  expense, net                        |   | $                                                 | (1,240,056     | )                                               | $      | (2,182,012 | ) | $ | (2,362,102 | ) | $ | (4,392,168 | ) |
| Loss                  on extinguishment of debt               |   | $                                                 | —        |                                            | $      | — |   | $ | — |   | $ | (2,501,528 | ) |

|  | (a) | The                      Permian acquisition closed on January 31, 2008 and as such                      only five                      months of operations are included in the six month period ended                      June 30,                      2008. |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Three        Months Ended June 30, 2008 Compared to Three Months Ended June 30,        2007**

*Revenues*

|                                                                 |   | **Three                  Months Ended ****June                  30,** | ** ** | **Percentage ****Increase** |   |
|----------------------------------------------------------------------|--------|----------------------------------------------------------------------------|------------|----------------------------------|--------|
|                                                                 |   | **2008**                                                                   |       | **2007**                         |   | **(Decrease)** |   |
| Net                  Natural Gas Production:                         |   |                                                                       |       |                             |   |   |   |
| Appalachian                  gas (MMcf)                         |   |                                                                       | 903        |                             |   | 1,032 |   |   | (13 | )% |
| Permian                  gas (MMcf)                             |   |                                                                       | 109        |                             |   | — |   |   | N/A |   |
| **Total                  natural gas production (MMcf)**             |   |                                                                       | 1,012      |                             |   | 1,032 |   |   | (2 | )% |
| Average                  Appalachian daily gas production (Mcf/day)  |   |                                                                       | 9,922      |                             |   | 11,340 |   |   | (13 | )% |
| Average                  Permian daily gas production (Mcf/day)      |   |                                                                       | 1,202      |                             |   | — |   |   | N/A |   |
|                                                                 |   |                                                                       |       |                             |   |  |   |   |  |   |
| Average                  Natural Gas Sales Price per Mcf:            |   |                                                                       |       |                             |   |  |   |   |  |   |
| Net                  realized gas price, including hedges            |   | $                                                                          | 10.35      | (a)                              | $      | 9.12 | (a) |   | 13 | % |
| Net                  realized gas price, excluding hedges            |   | $                                                                          | 13.14      |                             | $      | 9.30 |   |   | 41 | % |
|                                                                 |   |                                                                       |       |                             |   |  |   |   |  |   |
| Net                  Oil Production:                                 |   |                                                                       |       |                             |   |  |   |   |  |   |
| Appalachian                  oil (Bbls)                         |   |                                                                       | 10,430     |                             |   | 8,513 |   |   | 22 | % |
| Permian                  oil (Bbls)                             |   |                                                                       | 61,817     |                             |   | — |   |   | N/A |   |
| **Total                  oil (Bbls)**                                |   |                                                                       | 72,247     |                             |   | 8,513 |   |   | 749 | % |
| Average                  Appalachian daily oil production (Bbls/day) |   |                                                                       | 115        |                             |   | 94 |   |   | 22 | % |
| Average                  Permian daily oil production (Bbls/day)     |   |                                                                       | 679        |                             |   | — |   |   | N/A |   |
|                                                                 |   |                                                                       |       |                             |   |  |   |   |  |   |
| Average                  Oil Sales Price per Bbls:                   |   |                                                                       |       |                             |   |  |   |   |  |   |
| Net                  realized oil price, including hedges            |   | $                                                                          | 81.01      |                             | $      | 60.46 |   |   | 34 | % |
| Net                  realized oil price, excluding hedges            |   | $                                                                          | 104.44     |                             | $      | 60.46 |   |   | 73 | % |

|   | (a) | Excludes                  amortization of premiums paid and non-cash settlement on derivative                  contracts. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------|

----

*Hedging        Activities*

*Costs        and Expenses*

----

**Six        Months Ended June 30, 2008 Compared to Six Months Ended June 30,        2007**

*Revenues*

|                                                                 |   | **Six                  Months Ended ****June                  30,** |    | **Percentage ****Increase** |   |
|----------------------------------------------------------------------|--------|--------------------------------------------------------------------------|---------|----------------------------------|--------|
|                                                                 |   | **2008**                                                                 |    | **2007**                         |   | **(Decrease)** |   |
| Net                  Natural Gas Production:                         |   |                                                                     |    |                             |   |   |   |
| Appalachian                  gas (MMcf)                         |   |                                                                     | 1,770   |                             |   | 2,100 |   |   | (16 | )% |
| Permian                  gas (MMcf)                             |   |                                                                     | 151     | (a)                              |   | — |   |   | N/A |   |
| **Total                  natural gas production (MMcf)**             |   |                                                                     | 1,921   |                             |   | 2,100 |   |   | (9 | )% |
| Average                  Appalachian daily gas production (Mcf/day)  |   |                                                                     | 9,724   |                             |   | 11,602 |   |   | (16 | )% |
| Average                  Permian daily gas production (Mcf/day)      |   |                                                                     | 1,000   | (a)                              |   | — |   |   | N/A |   |
|                                                                 |   |                                                                     |    |                             |   |  |   |   |  |   |
| Average                  Natural Gas Sales Price per Mcf:            |   |                                                                     |    |                             |   |  |   |   |  |   |
| Net                  realized gas price, including hedges            |   | $                                                                        | 10.41   | (b)                              | $      | 8.39 | (b) |   | 24 | % |
| Net                  realized gas price, excluding hedges            |   | $                                                                        | 11.62   |                             | $      | 8.84 |   |   | 31 | % |
|                                                                 |   |                                                                     |    |                             |   |  |   |   |  |   |
| Net                  Oil Production:                                 |   |                                                                     |    |                             |   |  |   |   |  |   |
| Appalachian                  oil (Bbls)                         |   |                                                                     | 21,421  |                             |   | 8,513 |   |   | 151 | % |
| Permian                  oil (Bbls)                             |   |                                                                     | 102,539 | (a)                              |   | — |   |   | N/A |   |
| **Total                  oil (Bbls)**                                |   |                                                                     | 123,960 |                             |   | 8,513 |   |   | 1,356 | % |
| Average                  Appalachian daily oil production (Bbls/day) |   |                                                                     | 118     |                             |   | 47 |   |   | 151 | % |
| Average                  Permian daily oil production (Bbls/day)     |   |                                                                     | 679     | (a)                              |   | — |   |   | N/A |   |
|                                                                 |   |                                                                     |    |                             |   |  |   |   |  |   |
| Average                  Oil Sales Price per Bbls:                   |   |                                                                     |    |                             |   |  |   |   |  |   |
| Net                  realized oil price, including hedges            |   | $                                                                        | 84.61   |                             | $      | 60.46 |   |   | 40 | % |
| Net                  realized oil price, excluding hedges            |   | $                                                                        | 101.06  |                             | $      | 60.46 |   |   | 67 | % |

|  | (a) | The                    Permian acquisition closed on January 31, 2008 and as such only                    five                    months of operations are included in the six month period ended                    June 30,                    2008. |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (b) | Excludes                    amortization of premiums paid and non-cash settlement on derivative                    contracts. |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------|

----

*Hedging        Activities*

*Costs        and Expenses*

**Critical        Accounting Policies and Estimates**

**Recently        Adopted Accounting Pronouncements**

*        Value Measurements*
*        Effective Date of FASB Statement No. 157*
* *

----

*The        Fair Value Option for Financial Assets and Financial Liabilities, including        an        amendment of FASB Statement No. 115”*

**New        Pronouncements Issued But Not Yet Adopted**

*“Business        Combinations”*

*“Non-controlling        Interests in Consolidated Financial statements—an amendment of ARB No.        51”*

*Disclosures        about Derivative Instruments and Hedging Activities” (“*

*The        Hierarchy of Generally Accepted Accounting Principles*

**Liquidity        and Capital Resources**

----

***Cash        Flow from Operations***

***Cash        Flow from Investing Activities***

***Cash        Flow from Financing Activities***

**Reserve-Based        Credit Facility**

----

|   | · | the                  London interbank offered rate, or LIBOR, plus an applicable margin                  between                  1.00% and 1.75% per annum; or |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  domestic bank rate plus an applicable margin between 0.00% and                  0.75% per                  annum. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | · | incur                  indebtedness; |
|--------|--------|--------------------------------------|

|   | · | grant                  certain liens; |
|--------|--------|---------------------------------------|

|   | · | make                  certain loans, acquisitions, capital expenditures and                  investments; |
|--------|--------|-----------------------------------------------------------------------------------------------------------|

|   | · | make                  distributions; |
|--------|--------|--------------------------------------|

|   | · | merge                  or consolidate; or |
|--------|--------|-------------------------------------------|

|   | · | engage                  in certain asset dispositions, including a sale of all or substantially                  all of our assets. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------|

|   | · | consolidated                  net income plus interest expense, income taxes, depreciation, depletion,                  amortization, changes in fair value of derivative instruments and                  other                  similar charges, minus all non-cash income added to consolidated                  net                  income, and giving pro forma effect to any acquisitions or capital                  expenditures, to interest expense of not less than 2.5 to                  1.0; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | consolidated                  current assets, including the unused amount of the total commitments,                  to                  consolidated current liabilities of not less than 1.0 to 1.0, excluding                  non-cash assets and liabilities under SFAS No. 133, which includes                  the                  current portion of derivative                  contracts; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | consolidated                  debt to consolidated net income plus interest expense, income taxes,                  depreciation, depletion, amortization, changes in fair value of                  derivative                  instruments and other similar charges, minus all non-cash income                  added to                  consolidated net income, and giving pro forma effect to any acquisitions                  or capital expenditures of not more than 4.0 to                  1.0. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | failure                  to pay any principal when due or any interest, fees or other amount                  within                  certain grace periods; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | a                  representation or warranty is proven to be incorrect when                  made; |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | failure                  to perform or otherwise comply with the covenants in the credit                  agreement                  or other loan documents, subject, in certain instances, to certain                  grace                  periods; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | default                  by us on the payment of any other indebtedness in excess of $2.0                  million,                  or any event occurs that permits or causes the acceleration of                  the                  indebtedness; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | bankruptcy                  or insolvency events involving us or our                  subsidiaries; |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | the                  entry of, and failure to pay, one or more adverse judgments in                  excess of                  $1.0 million or one or more non-monetary judgments that could reasonably                  be expected to have a material adverse effect and for which enforcement                  proceedings are brought or that are not stayed pending                  appeal; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | specified                  events relating to our employee benefit plans that could reasonably                  be                  expected to result in liabilities in excess of $1.0 million in                  any year;                  and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  change of control, which includes (1) an acquisition of ownership,                  directly or indirectly, beneficially or of record, by any person                  or group                  (within the meaning of the Securities Exchange Act of 1934 and                  the rules                  of the Securities Exchange Commission) of equity interests representing                  more than 25% of the aggregate ordinary voting power represented                  by our                  issued and outstanding equity interests other than by Majeed S.                  Nami or                  his affiliates, or (2) the replacement of a majority of our directors                  by                  persons not approved by our board of                  directors. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Off-Balance        Sheet Arrangements**

**Contingencies**

**Commitments        and Contractual Obligations**

|                                       |   | **Payments                    Due by Year (in thousands)** |    |
|--------------------------------------------|--------|------------------------------------------------------------|---------|
|                                       |   | **2008**                                                   |    | **2009** |   | **2010** |   | **2011** |   | **2012** |   | **After                    2012** |   | **Total** |   |
| Management                    compensation |   | $                                                          | 300     |   | $ | 600 |   | $ | 100 |   | $ | — |   | $ | — |   | $ | — |   | $ | 1,000 |   |
| Long-term                    debt          |   |                                                       | — |   |   | — |   |   | — |   |   | 102,500 |   |   | — |   |   | — |   |   | 102,500 |   |
| Operating                    leases        |   |                                                       | 20      |   |   | 41 |   |   | 10 |   |   | — |   |   | — |   |   | — |   |   | 71 |   |
| Total                                      |   | $                                                          | 320     |   | $ | 641 |   | $ | 110 |   | $ | 102,500 |   | $ | — |   | $ | — |   | $ | 103,571 |   |

----

**Non-GAAP        Financial Measure**

***Adjusted        EBITDA***

|   | • | Net                  interest expense (including write-off of deferred financing                  fees); |
|--------|---------|----------------------------------------------------------------------------------------------------------|

|   | • | Loss                  on extinguishment of debt; |
|--------|---------|--------------------------------------------------|

|   | • | Depreciation,                  depletion and amortization (including accretion of asset retirement                  obligations); |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | • | Bad                  debt expenses; |
|--------|---------|-------------------------------------|

|   | • | Amortization                  of premiums paid and non-cash settlement on derivative                  contracts; |
|--------|---------|------------------------------------------------------------------------------------------------------------------|

|   | • | Change                  in fair value of derivative                  contracts; |
|--------|---------|---------------------------------------------------------------------------------|

|   | • | Unit-based                  compensation expense; and |
|--------|---------|-------------------------------------------------------|

|   | • | Realized                  (gain) loss on cancelled                  derivatives. |
|--------|---------|----------------------------------------------------------------------------------|

|                                                                                               |   | **Three                      Months Ended****June                      30,** |       | **Six                      Months Ended****June                      30,** |   |
|----------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------|--------|
|                                                                                               |   | **2008**                                                                     |       | **2007**                                                                   |   | **2008** |   | **2007** |   |
| **Net                      income**                                                                |   | $                                                                            | 5,164,168  |                                                                       | $      | 2,239,906 |   | $ | 9,440,188 |   | $ | 614,157 |   |
| Plus:                                                                                              |   |                                                                         |       |                                                                       |   |   |   |   |   |   |   |   |   |
| Interest                      expense                                                              |   |                                                                         | 1,244,450  |                                                                       |   | 2,196,691 |   |   | 2,374,110 |   |   | 4,419,814 |   |
| Loss                      on extinguishment of debt                                                |   |                                                                         | —    |                                                                       |   | — |   |   | — |   |   | 2,501,528 |   |
| Depreciation,                      depletion and amortization                                      |   |                                                                         | 3,330,024  |                                                                       |   | 2,291,426 |   |   | 6,154,002 |   |   | 4,320,289 |   |
| Bad                      debt expense                                                              |   |                                                                         | —    |                                                                       |   | — |   |   | — |   |   | 1,007,458 |   |
| Amortization                      of premiums paid and non-cash settlement on derivative contracts |   |                                                                         | 1,230,584  |                                                                       |   | 733,504 |   |   | 2,531,193 |   |   | 733,504 |   |
| Non-cash                      compensation expense                                                 |   |                                                                         | 981,002    |                                                                       |   | 563,143 |   |   | 1,896,347 |   |   | 563,143 |   |
| Realized                      loss on cancelled derivatives                                        |   |                                                                         | —    |                                                                       |   | — |   |   | — |   |   | 776,633 |   |
| Less:                                                                                              |   |                                                                         |       |                                                                       |   |   |   |   |   |   |   |   |   |
| Interest                      income                                                               |   |                                                                         | 4,394      |                                                                       |   | 14,679 |   |   | 12,008 |   |   | 27,646 |   |
| **Adjusted                      EBITDA **                                                     |   | $                                                                            | 11,945,834 |                                                                       | $      | 8,009,991 |   | $ | 22,383,832 |   | $ | 14,908,880 |   |

----

**Item        3.** **Quantitative        and Qualitative Disclosures About Market Risk**

***Commodity        Price Risk***

|                                       |   | **July                    1, - September 30, 2008** | ** ** | **October                    1, -****December                    31,****2008** | ** ** | **Year                    2009** | ** ** | **Year                    2010** | ** ** | **Year                    2011** | ** ** | **Year                    2012** |   |
|--------------------------------------------|--------|-----------------------------------------------------|------------|--------------------------------------------------------------------------------|------------|----------------------------------|------------|----------------------------------|------------|----------------------------------|------------|----------------------------------|--------|
| **Gas                    Positions:**      |   |                                                |       |                                                                           |       |                             |       |                             |       |                             |       |                             |   |
| Fixed                    Price Swaps:      |   |                                                |       |                                                                           |       |                             |       |                             |       |                             |       |                             |   |
| Hedged                    Volume (MMBtu)   |   |                                                | 738,608    |                                                                           |       | 713,831                          |       |                             | 2,657,046  |                             |       | 2,387,640                        |   |   | 2,196,012 |   |   | — |   |
| Fixed                    Price ($/MMBtu)   |   | $                                                   | 9.00       |                                                                           | $          | 9.00                             |       | $                                | 8.85       |                             | $          | 8.76                             |   | $ | 7.15 |   | $ | -— |   |
| Puts:                                      |   |                                                |       |                                                                           |       |                             |       |                             |       |                             |       |                             |   |   |   |   |   |   |   |
| Hedged                    Volume (MMBtu)   |   |                                                | 314,391    |                                                                           |       | 246,920                          |       |                             | 840,139    |                             |       | —                          |   |   | — |   |   | — |   |
| Floor                    Price ($/MMBtu)   |   | $                                                   | 7.50       |                                                                           | $          | 7.50                             |       | $                                | 7.50       |                             | $          | —                          |   | $ | — |   | $ | — |   |
| Collars:                                   |   |                                                |       |                                                                           |       |                             |       |                             |       |                             |       |                             |   |   |   |   |   |   |   |
| Hedged                    Volume (MMBtu)   |   |                                                | 300,000    |                                                                           |       | 300,000                          |       |                             | 1,000,000  |                             |       | 730,000                          |   |   | — |   |   | — |   |
| Floor                    Price ($/MMBtu)   |   | $                                                   | 9.00       |                                                                           | $          | 9.00                             |       | $                                | 7.50       |                             | $          | 8.00                             |   | $ | — |   | $ | — |   |
| Ceiling                    Price ($/MMBtu) |   | $                                                   | 9.00       |                                                                           | $          | 9.25                             |       | $                                | 9.00       |                             | $          | 9.30                             |   | $ | — |   | $ | — |   |
| Total:                                     |   |                                                |       |                                                                           |       |                             |       |                             |       |                             |       |                             |   |   |   |   |   |   |   |
| Hedged                    Volume (MMBtu)   |   |                                                | 1,352,999  |                                                                           |       | 1,260,751                        |       |                             | 4,497,185  |                             |       | 3,117,640                        |   |   | 2,196,012 |   |   | — |   |
|                                       |   |                                                |       |                                                                           |       |                             |       |                             |       |                             |       |                             |   |   |   |   |   |   |   |
| **Oil                    Positions:**      |   |                                                |       |                                                                           |       |                             |       |                             |       |                             |       |                             |   |   |   |   |   |   |   |
| Fixed                    Price Swaps:      |   |                                                |       |                                                                           |       |                             |       |                             |       |                             |       |                             |   |   |   |   |   |   |   |
| Hedged                    Volume (Bbls)    |   |                                                | 49,500     |                                                                           |       | 48,000                           |       |                             | 181,500    |                             |       | 164,250                          |   |   | 151,250 |   |   | 144,000 |   |
| Fixed                    Price ($/Bbl)     |   | $                                                   | 90.30      |                                                                           | $          | 90.30                            |       | $                                | 87.23      |                             | $          | 85.65                            |   | $ | 85.50 |   | $ | 80.00 |   |

----

***Interest        Rate Risks***

|                                               |   | ** **  **Principal** ** ** **Balance** |       | **Fixed****Libor****Rates** |   |
|----------------------------------------------------|--------|----------------------------------------------------------------------|------------|-----------------------------|--------|
| Period:                                            |   |                                                                 |       |                        |   |
| July                  1, 2008 to December 10, 2010 |   | $                                                                    | 20,000,000 |                        |   | 3.88 | % |
| July                  1, 2008 to January 31, 2011  |   | $                                                                    | 30,000,000 |                        |   | 3.00 | % |
| July                  1, 2008 to March 31, 2011    |   | $                                                                    | 10,000,000 |                        |   | 2.66 | % |

**Item 4.  Controls        and Procedures**

**Evaluation        of Disclosure Controls and Procedures**

----

**Changes        in Internal Control over Financial Reporting**

----

**PART II —        OTHER INFORMATION**

**Item 1.  Legal        Proceedings**

**Item 1A.         Risk Factors**

**Item 2.  Unregistered        Sales of Equity Securities and Use of Proceeds**

During        the six months ended June 30, 2008, one of our wholly-owned subsidiaries        purchased 20,300 of our common units on the open market at the then        prevailing market price. 15,000 of these units were subsequently granted        to three of our independent directors, with Loren Singletary, John R.        McGoldrick and Bruce W. McCullough each receiving 5,000 units. The grants        were made by our Board of Directors upon the appointment of these independent        directors on February 28, 2008. The following table summarizes the unit        purchases that occurred during the six months ended June 30,        2008:

|  **Period**                                       |   |   | **Number                  of common units repurchased** |   |   | **Average                  price paid per common unit** |   |
|--------------------------------------------------------|--------|--------|---------------------------------------------------------|--------|--------|---------------------------------------------------------|--------|
| January                  1, 2008 to January 31, 2008   |   |   | 5,000                                                   |   | $      | 14.50                                                   |   |
| February                  1, 2008 to February 29, 2008 |   |   | 10,000                                                  |   | $      | 16.28                                                   |   |
| March                  1, 2008 to March 31, 2008       |   |   | 300                                                     |   | $      | 14.70                                                   |   |
| April                  1, 2008 to April 30, 2008       |   |   | —                                                 |   |   | N/A                                                     |   |
| May                  1, 2008 to May 31, 2008           |   |   | —                                                 |   |   | N/A                                                     |   |
| June                  1, 2008 to June 30, 2008         |   |   | 5,000                                                   |   | $      | 16.97                                                   |   |
| Total                  common units purchased          |   |   | 20,300                                                  |   | $      | 15.99                                                   |   |

**Item 3.  Defaults        Upon Senior Securities**

**Item 4.  Submission        of Matters to a Vote of Security Holders**

The        annual meeting of unitholders of Vanguard Natural Resources, LLC was held        on        June 10, 2008 in Houston, Texas. At the annual meeting, holders of 11,215,000        units were entitled to vote on the specified unitholder matters, of which        10,145,022 units were present and voting, or 90% of the outstanding units,        which        constituted a quorum. 

|                                             |   | **Number                  of Voting Units** |       |
|--------------------------------------------------|--------|---------------------------------------------|------------|
|  **Director’s                  Name** |   |  **For**                               |       |  **Withheld** |   |
| Scott                  W. Smith                  |   |                                        | 10,143,118 |   |   | 1,904 |   |
| W.                  Richard Anderson             |   |                                        | 10,143,118 |   |   | 1,904 |   |
| Loren                  Singletary                |   |                                        | 10,143,118 |   |   | 1,904 |   |
| Bruce                  W. McCullough             |   |                                        | 10,143,118 |   |   | 1,904 |   |
| John                  R. McGoldrick              |   |                                        | 10,143,118 |   |   | 1,904 |   |
| Lasse                  Wagene                    |   |                                        | 10,143,118 |   |   | 1,904 |   |
| Thomas                  Blake                    |   |                                        | 10,143,118 |   |   | 1,904 |   |

----

| **For**    |   | **Against** |   | **Abstained** |   |
|------------|--------|-------------|--------|---------------|--------|
| 10,142,822 |   |        | 1,700  |          |   | 500 |   |

**Item 5.  Other        Information**

**Indemnification        Agreements**

**Item 6.         Exhibits**

**EXHIBIT        INDEX**

| **Exhibit                  No.** |   | **Exhibit                  Title**                                                                                                                                                                                                                                                  |   | **Incorporated                  by Reference to the Following**                          |
|----------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------|
| 3.1                              |   | Certificate                  of Formation of Vanguard Natural Resources, LLC                                                                                                                                                                                                        |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                  |
|                             |   |                                                                                                                                                                                                                                                                                |   |                                                                                     |
| 3.2                              |   | Second                  Amended and Restated Limited Liability Company Agreement of Vanguard                  Natural Resources, LLC (including specimen unit certificate for                  the                  units)                                                          |   | Form                  8-K, filed November 2, 2007 (File No. 001-33756)                   |
|                             |   |                                                                                                                                                                                                                                                                                |   |                                                                                     |
| 10.1                             |   | Amended                  and Restated Credit Agreement, dated February 14, 2008, by and                  between                  Nami Holding Company, LLC, Citibank, N.A., as administrative agent                  and L/C                  issuer and the lenders party thereto |   | Previously                  filed with our Form 10-K on March 31, 2008                   |
|                             |   |                                                                                                                                                                                                                                                                                |   |                                                                                     |
| 10.2                             |   | Vanguard                  Natural Resources, LLC Long-Term Incentive Plan                                                                                                                                                                                                           |   | Form                  8-K, filed October 24, 2007 (File No. 001-33756)                   |
|                             |   |                                                                                                                                                                                                                                                                                |   |                                                                                     |
| 10.3                             |   | Form of                  Vanguard Natural Resources, LLC Long-Term Incentive Plan Phantom                  Options                  Grant Agreement                                                                                                                            |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                  |
|                             |   |                                                                                                                                                                                                                                                                                |   |                                                                                     |
| 10.4                             |   | Vanguard                  Natural Resources, LLC Class B Unit Plan                                                                                                                                                                                                             |   | Form                  8-K, filed October 24, 2007 (File No. 001-33756)                   |
|                             |   |                                                                                                                                                                                                                                                                                |   |                                                                                     |
| 10.5                             |   | Form of                  Vanguard Natural Resources, LLC Class B Unit Plan Restricted                  Class B Unit Grant                                                                                                                                            |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                  |
|                             |   |                                                                                                                                                                                                                                                                                |   |                                                                                     |
| 10.6                             |   | Management                  Services Agreement, effective January 5, 2007, by and between Vinland                  Energy Operations, LLC, Vanguard Natural Gas, LLC, Trust Energy                  Company,                  LLC and Ariana Energy, LLC                            |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                  |
|                             |   |                                                                                                                                                                                                                                                                                |   |                                                                                     |
| 10.7                             |   | Participation                  Agreement, effective January 5, 2007, by and between Vinland Energy                  Eastern, LLC, Vanguard Natural Gas, LLC, Trust Energy Company,                  LLC and                  Ariana Energy, LLC                                     |   | Form                  S-1/A, filed April 25, 2007 (File No.                  333-142363) |

| 10.8   |   | Gathering                  and Compression Agreement, effective January 5, 2007, by and between                  Vinland Energy Gathering, LLC, Vinland Energy Eastern, LLC, Vanguard                  Natural Gas, LLC and Ariana Energy, LLC   |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                  |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                             |   |                                                                                     |
| 10.9   |   | Gathering                  and Compression Agreement, effective January 5, 2007, by and between                  Vinland Energy Gathering, LLC, Vinland Energy Eastern, LLC, Vanguard                  Natural Gas, LLC and Trust Energy Company |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                  |
|   |   |                                                                                                                                                                                                                                             |   |                                                                                     |
| 10.10  |   | Gathering                  and Compression Agreement, effective January 5, 2007, by and between                  Vinland Energy Gathering, LLC and Nami Resources Company,                  L.L.C.                                               |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                  |
|   |   |                                                                                                                                                                                                                                             |   |                                                                                     |
| 10.11  |   | Well                  Services Agreement, effective January 5, 2007, by and between Vinland                  Energy Operations, LLC, Vanguard Natural Gas, LLC and Ariana Energy,                  LLC                                           |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                  |
|   |   |                                                                                                                                                                                                                                             |   |                                                                                     |
| 10.12  |   | Well                  Services Agreement, effective January 5, 2007, by and between Vinland                  Energy Operations, LLC, Vanguard Natural Gas, LLC and Trust Energy                  Company, LLC                                    |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                  |
|   |   |                                                                                                                                                                                                                                             |   |                                                                                     |
| 10.13  |   | Well                  Services Agreement, effective January 5, 2007, by and between Vinland                  Energy Operations, LLC and Nami Resources Company, L.L.C.                                                                           |   | Form                  S-1/A, filed April 25, 2007 (File No.                  333-142363) |

----

| 10.14  |   | Amended                  and Restated Operating Agreement by and between Vinland Energy                  Operations,                  LLC, Vinland Energy Eastern, LLC and Ariana Energy, LLC, dated                  October 2,                  2007 and effective as of January 5, 2007                                                                     |   | Form                  S-1/A, filed October 22, 2007 (File No. 333-142363)                 |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                      |
| 10.15  |   | Operating                  Agreement, effective January 5, 2007, by and between Vinland Energy                  Operations, LLC, Vinland Energy Eastern, LLC and Trust Energy Company,                  LLC                                                                                                                                                    |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                      |
| 10.16  |   | Amended                  and Restated Indemnity Agreement by and between Nami Resources                  Company,                  L.L.C., Vinland Energy Eastern, LLC, Trust Energy Company, LLC,                  Vanguard                  Natural Gas, LLC and Vanguard Natural Resources, LLC, dated September                  11,                  2007 |   | Form                  S-1/A, filed September 18, 2007 (File No. 333-142363)               |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                      |
| 10.17  |   | Revenue                  Payment Agreement by and between Nami Resources Company, L.L.C.                  and Trust                  Energy Company, dated April 18, 2007 and effective as of January                  5,                  2007                                                                                                                |   | Form                  S-1/A, filed August 21, 2007 (File No. 333-142363)                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                      |
| 10.18  |   | Gas                  Supply Agreement, dated April 18, 2007, by and between Nami Resources                  Company, L.L.C. and Trust Energy Company                                                                                                                                                                                                           |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                      |
| 10.19  |   | Amended                  Employment Agreement, dated April 18, 2007, by and between Scott W.                  Smith, VNR Holdings, LLC and Vanguard Natural Resources,                  LLC                                                                                                                                                               |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                      |
| 10.20  |   | Amended                  Employment Agreement, dated April 18, 2007, by and between Richard A.                  Robert, VNR Holdings, LLC and Vanguard Natural Resources,                  LLC                                                                                                                                                            |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                      |
| 10.21  |   | Registration                  Rights Agreement, dated April 18,                  2007, between                  Vanguard Natural Resources, LLC and the private investors named                  therein                                                                                                                                             |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                      |
| 10.22  |   | Purchase                  Agreement, dated April 18,                  2007, between                  Vanguard Natural Resources, LLC, Majeed S. Nami and the private                  investors                  named therein                                                                                                                       |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                      |
| 10.23  |   | Omnibus                  Agreement, dated October 29, 2007, among Majeed S. Nami, Vanguard                  Natural                  Resources, LLC, Vanguard Natural Gas, LLC, Ariana Energy, LLC and                  Trust                  Energy Company, LLC.                                                                                            |   | Form                  8-K, filed November 2, 2007 (File No. 001-33756)                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                      |
| 10.24  |   | Employment                  Agreement, dated May 15, 2007, by and between Britt Pence, VNR                  Holdings,                  LLC and Vanguard Natural Resources, LLC                                                                                                                                                                                 |   | Form                  S-1/A, filed July 5, 2007 (File No. 333-142363)                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                      |
| 10.25  |   | Natural                  Gas Contract, dated May 26, 2003, between Nami Resources Company,                  Inc. and Osram Sylvania Products, Inc.                                                                                                                                                                                                        |   | Form                  S-1/A, filed August 21, 2007 (File No. 333-142363)                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                      |
| 10.26  |   | Natural                  Gas Purchase Contract, dated December 16, 2004, between Nami                  Resources Company, LLC and Dominion Field Services, Inc.                                                                                                                                                                                           |   | Form                  S-1/A, filed August 21, 2007 (File No. 333-142363)                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                      |
| 10.27  |   | Natural                  Gas Purchase Contract, dated December 28, 2004, between Nami                  Resources Company, LLC and Dominion Field Services, Inc.                                                                                                                                                                                           |   | Form                  S-1/A, filed August 21, 2007 (File No. 333-142363)                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                      |
| 10.28  |   | Director                  Compensation Agreement                                                                                                                                                                                                                                                                                                               |   | Form                  S-1/A, filed September 18, 2007 (File No. 333-142363)               |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                      |
| 10.29  |   | Purchase                  and Sale Agreement, dated December 21, 2007, among Vanguard Permian,                  LLC                  and Apache Corporation                                                                                                                                                                                                    |   | Form                  8-K/A, filed February 13, 2008 (File No. 001-33756)                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                      |
| 10.30  |   | Amended                  Purchase and Sale Agreement, dated January 31, 2008, among Vanguard                  Permian, LLC and Apache Corporation                                                                                                                                                                                                              |   | Form                  8-K/A, filed February 4, 2008 (File No.                  001-33756) |

| 10.31  |   | Purchase                  and Sale Agreement, dated July 18, 2008, among Vanguard Permian,                  LLC and                  Segundo Navarro Drilling, Ltd. |   | Form                  8-K, filed July 21, 2008 (File No. 001-33756) |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|
|   |   |                                                                                                                                                                |   |                                                                |
| 10.32  |   | Form                  of Indemnity Agreement dated August 7, 2008                                                                                                   |   | Filed                  herewith                                     |
|   |   |                                                                                                                                                                |   |                                                                |

| 31.1   |   | Certification                  of Chief Executive Officer Pursuant to Rule 13a — 14 of the                  Securities and Exchange Act of 1934, as Adopted Pursuant to                  Section 302 of the Sarbanes-Oxley Act of 2002 |   | Filed                  herewith |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|
|   |   |                                                                                                                                                                                                                                                        |   |                            |
| 31.2   |   | Certification                  of Chief Financial Officer Pursuant to Rule 13a — 14 of the                  Securities and Exchange Act of 1934, as Adopted Pursuant to                  Section 302 of the Sarbanes-Oxley Act of 2002 |   | Filed                  herewith |
|   |   |                                                                                                                                                                                                                                                        |   |                            |
| 32.1   |   | Certification                  of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,                  as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of                  2002                                         |   | Filed                  herewith |
|   |   |                                                                                                                                                                                                                                                        |   |                            |
| 32.2   |   | Certification                  of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,                  as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of                  2002                                         |   | Filed                  herewith |

----

**SIGNATURE**

|                                   |   | VANGUARD                  NATURAL RESOURCES, LLC                                                 |
|----------------------------------------|--------|--------------------------------------------------------------------------------------------------|
|                                   |   | (Registrant)                                                                                     |
|                                   |   |                                                                                             |
| Date:                  August 13, 2008 |   |                                                                                             |
|                                   |   | /s/ Richard                  A. Robert                                                      |
|                                   |   | Richard                  A. Robert                                                               |
|                                   |   | Executive                  Vice President and                                                    |
|                                   |   | Chief                  Financial Officer                                                         |
|                                   |   | (Principal                  Financial Officer and Principal Accounting                  Officer) |

----

**Vanguard        Natural Resources, LLC**

**EXHIBIT        INDEX**

| **Exhibit                  No.** |   | **Exhibit                  Title**                                                                                                                                                                                                                                                         |   | **Incorporated                  by Reference to the Following**                            |
|----------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------|
| 3.1                              |   | Certificate                  of Formation of Vanguard Natural Resources, LLC                                                                                                                                                                                                               |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                    |
|                             |   |                                                                                                                                                                                                                                                                                       |   |                                                                                       |
| 3.2                              |   | Second                  Amended and Restated Limited Liability Company Agreement of Vanguard                  Natural Resources, LLC (including specimen unit certificate for                  the                  units)                                                                 |   | Form                  8-K, filed November 2, 2007 (File No. 001-33756)                     |
|                             |   |                                                                                                                                                                                                                                                                                       |   |                                                                                       |
| 10.1                             |   | Amended                  and Restated Credit Agreement, dated February 14, 2008, by and                  between                  Nami Holding Company, LLC, Citibank, N.A., as administrative agent                  and L/C                  issuer and the lenders party thereto        |   | Previously                  filed with our Form 10-K on March 31, 2008                     |
|                             |   |                                                                                                                                                                                                                                                                                       |   |                                                                                       |
| 10.2                             |   | Vanguard                  Natural Resources, LLC Long-Term Incentive Plan                                                                                                                                                                                                                  |   | Form                  8-K, filed October 24, 2007 (File No. 001-33756)                     |
|                             |   |                                                                                                                                                                                                                                                                                       |   |                                                                                       |
| 10.3                             |   | Form of                  Vanguard Natural Resources, LLC Long-Term Incentive Plan Phantom                  Options                  Grant Agreement                                                                                                                                   |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                    |
|                             |   |                                                                                                                                                                                                                                                                                       |   |                                                                                       |
| 10.4                             |   | Vanguard                  Natural Resources, LLC Class B Unit Plan                                                                                                                                                                                                                    |   | Form                  8-K, filed October 24, 2007 (File No. 001-33756)                     |
|                             |   |                                                                                                                                                                                                                                                                                       |   |                                                                                       |
| 10.5                             |   | Form of                  Vanguard Natural Resources, LLC Class B Unit Plan Restricted                  Class B Unit Grant                                                                                                                                                   |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                    |
|                             |   |                                                                                                                                                                                                                                                                                       |   |                                                                                       |
| 10.6                             |   | Management                  Services Agreement, effective January 5, 2007, by and between Vinland                  Energy Operations, LLC, Vanguard Natural Gas, LLC, Trust Energy                  Company,                  LLC and Ariana Energy, LLC                                   |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                    |
|                             |   |                                                                                                                                                                                                                                                                                       |   |                                                                                       |
| 10.7                             |   | Participation                  Agreement, effective January 5, 2007, by and between Vinland Energy                  Eastern, LLC, Vanguard Natural Gas, LLC, Trust Energy Company,                  LLC and                  Ariana Energy, LLC                                            |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                    |
|                             |   |                                                                                                                                                                                                                                                                                       |   |                                                                                       |
| 10.8                             |   | Gathering                  and Compression Agreement, effective January 5, 2007, by and between                  Vinland Energy Gathering, LLC, Vinland Energy Eastern, LLC, Vanguard                  Natural Gas, LLC and Ariana Energy, LLC                                             |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                    |
|                             |   |                                                                                                                                                                                                                                                                                       |   |                                                                                       |
| 10.9                             |   | Gathering                  and Compression Agreement, effective January 5, 2007, by and between                  Vinland Energy Gathering, LLC, Vinland Energy Eastern, LLC, Vanguard                  Natural Gas, LLC and Trust Energy Company                                           |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                    |
|                             |   |                                                                                                                                                                                                                                                                                       |   |                                                                                       |
| 10.10                            |   | Gathering                  and Compression Agreement, effective January 5, 2007, by and between                  Vinland Energy Gathering, LLC and Nami Resources Company,                  L.L.C.                                                                                         |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                    |
|                             |   |                                                                                                                                                                                                                                                                                       |   |                                                                                       |
| 10.11                            |   | Well                  Services Agreement, effective January 5, 2007, by and between Vinland                  Energy Operations, LLC, Vanguard Natural Gas, LLC and Ariana Energy,                  LLC                                                                                     |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                    |
|                             |   |                                                                                                                                                                                                                                                                                       |   |                                                                                       |
| 10.12                            |   | Well                  Services Agreement, effective January 5, 2007, by and between Vinland                  Energy Operations, LLC, Vanguard Natural Gas, LLC and Trust Energy                  Company, LLC                                                                              |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                    |
|                             |   |                                                                                                                                                                                                                                                                                       |   |                                                                                       |
| 10.13                            |   | Well                  Services Agreement, effective January 5, 2007, by and between Vinland                  Energy Operations, LLC and Nami Resources Company, L.L.C.                                                                                                                     |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                    |
|                             |   |                                                                                                                                                                                                                                                                                       |   |                                                                                       |
| 10.14                            |   | Amended                  and Restated Operating Agreement by and between Vinland Energy                  Operations,                  LLC, Vinland Energy Eastern, LLC and Ariana Energy, LLC, dated                  October 2,                  2007 and effective as of January 5, 2007 |   | Form                  S-1/A, filed October 22, 2007 (File No.                  333-142363) |

| 10.15  |   | Operating                  Agreement, effective January 5, 2007, by and between Vinland Energy                  Operations, LLC, Vinland Energy Eastern, LLC and Trust Energy Company,                  LLC                                                                                                                                                    |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                  |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                     |
| 10.16  |   | Amended                  and Restated Indemnity Agreement by and between Nami Resources                  Company,                  L.L.C., Vinland Energy Eastern, LLC, Trust Energy Company, LLC,                  Vanguard                  Natural Gas, LLC and Vanguard Natural Resources, LLC, dated September                  11,                  2007 |   | Form                  S-1/A, filed September 18, 2007 (File No. 333-142363)              |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                     |
| 10.17  |   | Revenue                  Payment Agreement by and between Nami Resources Company, L.L.C.                  and Trust                  Energy Company, dated April 18, 2007 and effective as of January                  5,                  2007                                                                                                                |   | Form                  S-1/A, filed August 21, 2007 (File No. 333-142363)                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                     |
| 10.18  |   | Gas                  Supply Agreement, dated April 18, 2007, by and between Nami Resources                  Company, L.L.C. and Trust Energy Company                                                                                                                                                                                                           |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                     |
| 10.19  |   | Amended                  Employment Agreement, dated April 18, 2007, by and between Scott W.                  Smith, VNR Holdings, LLC and Vanguard Natural Resources,                  LLC                                                                                                                                                               |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                     |
| 10.20  |   | Amended                  Employment Agreement, dated April 18, 2007, by and between Richard A.                  Robert, VNR Holdings, LLC and Vanguard Natural Resources,                  LLC                                                                                                                                                            |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                     |
| 10.21  |   | Registration                  Rights Agreement, dated April 18,                  2007, between                  Vanguard Natural Resources, LLC and the private investors named                  therein                                                                                                                                             |   | Form                  S-1/A, filed April 25, 2007 (File No.                  333-142363) |

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| 10.22  |   | Purchase                  Agreement, dated April 18,                  2007, between                  Vanguard Natural Resources, LLC, Majeed S. Nami and the private                  investors                  named therein                            |   | Form                  S-1/A, filed April 25, 2007 (File No. 333-142363)     |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                |   |                                                                        |
| 10.23  |   | Omnibus                  Agreement, dated October 29, 2007, among Majeed S. Nami, Vanguard                  Natural                  Resources, LLC, Vanguard Natural Gas, LLC, Ariana Energy, LLC and                  Trust                  Energy Company, LLC. |   | Form                  8-K, filed November 2, 2007 (File No. 001-33756)      |
|   |   |                                                                                                                                                                                                                                                                |   |                                                                        |
| 10.24  |   | Employment                  Agreement, dated May 15, 2007, by and between Britt Pence, VNR                  Holdings,                  LLC and Vanguard Natural Resources, LLC                                                                                      |   | Form                  S-1/A, filed July 5, 2007 (File No. 333-142363)       |
|   |   |                                                                                                                                                                                                                                                                |   |                                                                        |
| 10.25  |   | Natural                  Gas Contract, dated May 26, 2003, between Nami Resources Company,                  Inc. and Osram Sylvania Products, Inc.                                                                                                             |   | Form                  S-1/A, filed August 21, 2007 (File No. 333-142363)    |
|   |   |                                                                                                                                                                                                                                                                |   |                                                                        |
| 10.26  |   | Natural                  Gas Purchase Contract, dated December 16, 2004, between Nami                  Resources Company, LLC and Dominion Field Services, Inc.                                                                                                |   | Form                  S-1/A, filed August 21, 2007 (File No. 333-142363)    |
|   |   |                                                                                                                                                                                                                                                                |   |                                                                        |
| 10.27  |   | Natural                  Gas Purchase Contract, dated December 28, 2004, between Nami                  Resources Company, LLC and Dominion Field Services, Inc.                                                                                                |   | Form                  S-1/A, filed August 21, 2007 (File No. 333-142363)    |
|   |   |                                                                                                                                                                                                                                                                |   |                                                                        |
| 10.28  |   | Director                  Compensation Agreement                                                                                                                                                                                                                    |   | Form                  S-1/A, filed September 18, 2007 (File No. 333-142363) |
|   |   |                                                                                                                                                                                                                                                                |   |                                                                        |
| 10.29  |   | Purchase                  and Sale Agreement, dated December 21, 2007, among Vanguard Permian,                  LLC                  and Apache Corporation                                                                                                         |   | Form                  8-K/A, filed February 13, 2008 (File No. 001-33756)   |
|   |   |                                                                                                                                                                                                                                                                |   |                                                                        |
| 10.30  |   | Amended                  Purchase and Sale Agreement, dated January 31, 2008, among Vanguard                  Permian, LLC and Apache Corporation                                                                                                                   |   | Form                  8-K/A, filed February 4, 2008 (File No. 001-33756)    |
|   |   |                                                                                                                                                                                                                                                                |   |                                                                        |
| 10.31  |   | Purchase                  and Sale Agreement, dated July 18, 2008, among Vanguard Permian,                  LLC and                  Segundo Navarro Drilling, Ltd.                                                                                                 |   | Form                  8-K, filed July 21, 2008 (File No. 001-33756)         |
|   |   |                                                                                                                                                                                                                                                                |   |                                                                        |
| 10.32  |   | Form                  of Indemnity Agreement dated August 7, 2008                                                                                                                                                                                                   |   | Filed                  herewith                                             |
|   |   |                                                                                                                                                                                                                                                                |   |                                                                        |
| 31.1   |   | Certification                  of Chief Executive Officer Pursuant to Rule 13a — 14 of the                  Securities and Exchange Act of 1934, as Adopted Pursuant to                  Section 302 of the Sarbanes-Oxley Act of 2002         |   | Filed                  herewith                                             |
|   |   |                                                                                                                                                                                                                                                                |   |                                                                        |
| 31.2   |   | Certification                  of Chief Financial Officer Pursuant to Rule 13a — 14 of the                  Securities and Exchange Act of 1934, as Adopted Pursuant to                  Section 302 of the Sarbanes-Oxley Act of 2002         |   | Filed                  herewith                                             |
|   |   |                                                                                                                                                                                                                                                                |   |                                                                        |
| 32.1   |   | Certification                  of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,                  as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of                  2002                                                 |   | Filed                  herewith                                             |
|   |   |                                                                                                                                                                                                                                                                |   |                                                                        |
| 32.2   |   | Certification                  of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,                  as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of                  2002                                                 |   | Filed                  herewith                                             |

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