News Column

LRR Energy, L.P. to Acquire Oil and Gas Producing Properties in Oklahoma

September 2, 2014

HOUSTON--(BUSINESS WIRE)-- LRR Energy, L.P. (NYSE:LRE) (“LRR Energy”) announced today that it has signed a definitive agreement to acquire oil and natural gas properties in Lincoln and Creek Counties, Oklahoma for a purchase price of $38.0 million, subject to customary purchase price adjustments. The primary asset, the Stroud Prue Sand Unit (“SPSU”), is a mature oil property and one of the largest Prue Sand waterfloods in Oklahoma. The field was discovered in 1943 and SPSU initial water injection began in 1960. The effective date of the transaction is September 1, 2014, and closing of the transaction is expected to occur on or about October 1, 2014, subject to customary closing conditions.

Eric Mullins, Chairman and Co-Chief Executive Officer, commented, "We are very excited to announce our first third-party acquisition. We expect this acquisition to be immediately accretive to distributable cash flow per unit and create long-term value for our unitholders.” Charlie Adcock, Co-Chief Executive Officer, noted, “These high quality, long-lived, low-decline assets are a great fit for our MLP structure and a strong complement to our existing Oklahoma operations.”

Acquisition Highlights

  • Estimated proved developed reserves of approximately 2.5 MMBoe
  • 83% proved developed producing
  • 89% oil, 6% NGLs and 5% natural gas
  • Average net production of approximately 275 Boe/d for the six months ended June 30, 2014 (95% liquids)
  • 110 active producing wells and 57 active injection wells
  • Properties have a long-lived production profile with a proved developed reserve to production ratio of 24 years
  • Assets have a shallow decline profile with a projected 3-year average annual PDP decline rate of 4%
  • Current estimated annualized monthly operating cash flow of $6.0 million
  • Properties are 100% operated with average working interests of approximately 100% and average net revenue interest of approximately 87%
  • Additional reserve potential will be evaluated at year-end and is expected to include 10-acre infill development and replacing inactive wells

    Financial Highlights

    LRR Energy expects to fund the acquisition through borrowings under its $500 million revolving credit facility, which currently has a borrowing base of $235 million prior to any increase for this acquisition. LRR Energy is working with its lending group to complete a redetermination of its borrowing base. Management believes cash flow from operations, the capacity under the revolving credit facility and the proceeds from its At-the-Market Offering Program will provide ample financial flexibility to execute its 2014 capital program and distribution strategy.

    LRR Energy expects to hedge 85% of estimated total proved developed producing oil production associated with this acquisition through 2018. The acquisition is expected to be immediately accretive to distributable cash flow per unit.

    About LRR Energy, L.P.

    LRR Energy is a Delaware limited partnership formed in April 2011 by affiliates of Lime Rock Resources to operate, acquire, exploit and develop producing oil and natural gas properties in North America. LRR Energy's properties are located in the Permian Basin region in West Texas and Southeast New Mexico, the Mid-Continent region in Oklahoma and East Texas and the Gulf Coast region in Texas.

    Forward-Looking Statements

    This press release includes "forward-looking statements" — that is, statements related to future events. Forward-looking statements are based on the current expectations of LRR Energy and include any statement that does not directly relate to a current or historical fact. In this context, forward-looking statements often address expected future business, operational and financial performance, and often contain words such as "may," "predict," "pursue," "expect," "estimate," "project," "plan," "believe," "intend," "achievable," "anticipate," "target," "continue," "potential," "should," "could" and other similar words. Forward-looking statements involve certain risks and uncertainties, and ultimately may not prove to be accurate. These risks and uncertainties include, among other things, a decline in oil, natural gas or NGL prices, the risk and uncertainties involved in producing oil and natural gas, competition in the oil and natural gas industry, governmental regulations and other factors. Actual results and future events could differ materially from those anticipated or implied in the forward-looking statements due to the factors described under the captions "Risk Factors" in LRR Energy's Annual Report on Form 10-K for the year ended December 31, 2013 and LRR Energy's subsequent filings with the SEC. All forward-looking statements speak only as of the date of this press release. LRR Energy does not intend to update or revise any forward-looking statements as a result of new information, future events or otherwise. All forward-looking statements are qualified in their entirety by this cautionary statement.

    The SEC permits oil and gas companies, in their filings with the SEC, to disclose only "reserves" as defined by SEC rules. Estimates of reserves in this press release are based on economic assumptions with regard to commodity prices that differ from the prices required by the SEC (historical 12 month average) to be used in calculating reserves estimates prepared in accordance with SEC definitions and guidelines. In addition, the estimates of reserves in this press release were prepared by our internal reserve engineers and are based on various assumptions, including assumptions related to oil and natural gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds. Our internal estimates of proved reserves may differ materially from the estimates of our proved reserves prepared by third-party reserve engineers as a result of the SEC pricing and other assumptions employed by an independent reserve engineering firm.





    Investor

    Angelique Brou, 713-345-2145

    Financial Reporting Manager

    abrou@lrrenergy.com

    or

    Jaime Casas, 713-345-2126

    Chief Financial Officer

    jcasas@lrrenergy.com

    Source: LRR Energy, L.P.


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