Three Legend Partnerships Merged Into Single Holding Company

May 2011, Vol. 238 No. 5

The Legend Natural Gas partnerships, composed of Legend Natural Gas II, LP, Legend Natural Gas III, LP and Legend Natural Gas IV, LP, along with their equity sponsor Riverstone Holdings LLC, executred several transactions aimed at increasing reserves and production, improving operational and administrative efficiencies and positioning Legend for future growth.

Chief among the transactions:
• The three existing Legend partnerships were contributed into a new holding company called Legend Production Holdings, LLC..
• Immediately following the contribution, Legend closed on its previously announced purchase of a subsidiary of Range Resources Corporation’s Barnett Shale assets in the Fort Worth Basin for $900 million.
• Legend Production, together with its affiliated partnerships, closed a $1.5 billion senior secured revolving facility which, along with additional contributed equity, funded the Range acquisition as well as future growth opportunities. The credit facility was funded by a syndication of banks led by Wells Fargo Securities and J.P. Morgan Chase.

The Barnett assets acquired from Range include 390 producing wells and approximately 52,000 net acres, 80% of which are located in the prolific core area of the Barnett trend. Daily net production from the properties was 113 MMcfe/d (86% gas) as of February 1, 2011, the effective date of the purchase. The acquisition marks Legend’s entry into the horizontal Barnett Shale resource play, making it the fifth largest producer in the play. Legend is the operator of the newly acquired properties.

The Range acquisition follows the recent acquisition of conventional South Texas Vicksburg production from a subsidiary of Smith Production Company, which closed on March 31, 2011 for $99.2 million. Effective January 1, 2011, Legend acquired a majority interest in the Samano and Santa Fe Fields located in Starr, Brooks and Hidalgo Counties, TX. The properties include 103 wells producing approximately 9 MMcfe/d (65% gas) on 7,200 net acres. Legend is the operator of the newly acquired properties.

Legend expects the combined entity to have average daily net production of approximately 200 Mmcfe/d in 2011.

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