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Actionable news in VNR: Vanguard Natural Resources LLC,

Vanguard Natural Resources, Llc Reports

The following excerpt is from the company's SEC filing.

Quarter 2015 Results

--Vanguard Natural Resources, LLC (NASDAQ: VNR) (“Vanguard” or “the Company”) today reported financial and operational results for the quarter ended

September 30, 2015

Mr. Scott W. Smith, President and CEO, commented, “We are very pleased to have closed the LRR Energy LP (“LRE”) and Eagle Rock Energy Partners, LP (“EROC”) mergers in the first week of October. It goes without saying that consummating two mergers at the same time posed a challenge for the company. Our team has done a tremendous job throughout this process and the integrati on of both sets of assets has gone extremely well due to the efforts of our employees. With these two transactions, our daily production will increase approximately 33% to 513 mmcfe/d and our reserves will increase approximately 28% to 2.4 Tcfe as of September 30, 2015. Additionally, we issued approximately 43.7 million units in these transactions and welcome the former LRE and EROC unitholders to VNR.

We are pleased with our results this quarter as we saw an increase in our daily production while at the same time spending considerable less capex than originally forecast. Our assets continue to perform well and our operating teams and our drilling partners continue to deliver lower operating costs and gain efficiencies in this low commodity price environment. Our focus for the balance of the year will be continuing this trend and we are looking forward to reporting the impact to the Company from the contribution of the LRR and EROC assets in the fourth quarter and beyond.”

Selected Financial Information

A summary of selected financial information follows:

Three Months Ended

Nine Months Ended

($ in thousands, except per unit data)

(Unaudited)

Production (Mcfe/d)

386,679

321,847

383,067

301,816

Oil, natural gas and natural gas liquids sales

90,827

153,627

285,562

467,886

Net gains (losses) on commodity derivative contracts

64,328

83,311

102,561

(11,125

Operating expenses

43,251

46,141

132,509

142,419

Selling, general and administrative expenses

26,239

23,042

Depreciation, depletion, amortization, and accretion

52,428

55,680

182,443

150,798

Impairment of oil and natural gas properties

491,487

1,357,462

Net income (loss) attributable to Common and Class B unitholders

(468,967

109,150

(1,394,822

112,975

Adjusted Net Income Attributable to Common and Class B Unitholders

27,916

12,995

74,483

Adjusted Net Income Attributable to Common and Class B Unitholders, per unit

Adjusted EBITDA

88,204

108,245

264,122

295,796

Interest expense, including settlements paid on interest rate derivative contracts

22,118

17,742

64,661

52,555

Estimated maintenance capital expenditures

28,113

32,566

80,213

92,716

Distributions to Preferred unitholders

20,070

11,507

Distributable Cash Flow Available to Common and Class B Unitholders

31,283

52,988

99,178

140,968

Distributable Cash Flow per common and Class B unit

Common and Class B unit distribution coverage

Weighted average common and Class B units outstanding at record date attributable to distribution period

87,018

83,768

86,009

81,663

Non-GAAP financial measures. Please see Adjusted EBITDA and Distributable Cash Flow Available to Common and Class B Unitholders tables at the end of this press release for a reconciliation of these measures to their nearest comparable GAAP measure. Supplemental information on Vanguard's financial and operations results, including Adjusted Net Income Available to Common and Class B Unitholders, can be found under "Presentations" on the Investor Relations section of Vanguard’s corporate website, http://www.vnrllc.com.

Quarter 2015 Highlights:

Adjusted EBITDA (a non-GAAP financial measure defined below)

decreased

$88.2 million

quarter of

$108.2 million

$90.6 million

recorded in the

second

Distributable Cash Flow Available to Common and Class B Unitholders (a non-GAAP financial measure defined below)

$31.3 million

$53.0 million

generated in the

$35.5 million

Adjusted Net Income Available to Common and Class B Unitholders (a non-GAAP financial measure defined in the supplemental presentation posted at www.vnrllc.com) was

$1.6 million

per basic unit, as compared to Adjusted Net Income of

$27.9 million

per basic unit, in the

and Adjusted Net Loss of $6.6 million, or $0.07 per basic unit, in the

. The

includes net non-cash

$470.6 million

that are adjustments to arrive at Adjusted Net Income Attributable to Common and Class B Unitholders. The

quarter 2015 adjustments include a

$491.5 million

impairment charge on our oil and natural gas properties. The

results included net non-cash

$81.6 million

primarily attributable to the change in fair value of commodity derivative contracts.

Three Months Ended September 30,

Percentage

Increase /

(Decrease)

Three Months Ended June 30,

Total production volumes:

Oil (MBbls)

Natural Gas (MMcf)

26,242

20,962

23,543

NGLs (MBbls)

Combined (MMcfe)

35,574

29,610

33,514

Average daily production volumes:

Oil (Bbls/day)

Natural Gas (Mcf/day)

285,236

227,850

258,720

NGLs (Bbls/day)

Combined (Mcfe/day)

368,290

Average NYMEX prices:

Oil (Price/Bbl)

Natural Gas (Price/Mcf)

Average realized prices, excluding hedges:

NGLs (Price/Bbl)

Average realized prices, including hedges

During 2015 and 2014, we acquired certain oil and natural gas properties and related assets. The operating results of these properties are included from the closing date of the acquisition forward.

Excludes the premiums paid, whether at inception or deferred, for derivative contracts that settled during the period and the fair value of derivative contracts acquired as part of prior period business combinations that apply to contracts settled during the period.

2015 Nine Month Highlights:

$264.1 million

nine months

$295.8 million

Distributable Cash Flow Available to Common and Class B Unitholders (a non-GAAP financial measure defined below) for the first

$99.2 million

$141.0 million

generated in the first

Adjusted Net Income Attributable to Common and Class B Unitholders (a non-GAAP financial measure defined in the supplemental presentation posted at www.vnrllc.com) was

$13.0 million

$74.5 million

per basic unit, in the comparable period of

. The first

of 2015 includes net non-cash

$1.4 billion

that are adjustments to arrive at Adjusted Net Income Attributable to Common and Class B Unitholders. The net non-cash losses primarily resulted from a

impairment charge on our oil and natural gas properties. Results for the first

$38.8 million

primarily attributable to net gains on acquisitions of oil and natural gas properties recognized during the period.

Nine Months Ended September 30,

76,645

56,651

104,577

82,396

280,751

207,512

Capital Expenditures

Total capital expenditures for the drilling, capital workover and recompletion of oil and natural gas properties were approximately

$28.1 million

quarter of 2015 compared to $41.8 million for the comparable quarter of 2014 and $27.0 million for the

quarter of 2015. Capital spending in the

quarter of 2015 included only maintenance capital expenditures. For the

quarter of 2014, capital spending included maintenance capital expenditures of approximately $32.6 million and growth capital expenditures of $9.2 million primarily associated with the Pinedale acquisition in the Green River Basin. Total capital expenditures were approximately

$80.2 million

of 2015 compared to $109.5 million for the first nine months of 2014.

We currently anticipate a total capital expenditures budget for the remainder of 2015 to range between $31.0 million and $34.0 million, excluding any potential future acquisitions. We expect to spend approximately 51% ($16.0 million to $17.5 million) participating as a non-operated partner drilling and completing horizontal wells in the SCOOP and STACK plays in the Anadarko Basin acquired in the Eagle Rock Merger. Additionally, we expect to spend approximately 22% ($7.1 million to $7.5 million) of the remaining 2015 capital budget in the Green River Basin where we will participate as a non-operated partner in the drilling and completion of vertical and directional natural gas wells and approximately 7% ($2.0 million to $2.2 million) in the Gulf Coast Basin on completion and seismic activities in the East Haynesville field. The balance of the remaining 2015 budget ($5.9 million to $6.8 million) is related to maintenance activities in our other operating areas including approximately $1.3 million to $1.5 million of capital workovers associated with assets acquired in the LRE merger.

Recent Activities

Mergers

LRE Merger

On October 5, 2015, Vanguard completed the transactions contemplated by the Purchase Agreement and Plan of Merger, dated as of April 20, 2015 (the “LRE Merger Agreement”), pursuant to which a subsidiary of Vanguard merged into LRR Energy, L.P. (“LRE”) and, at the same time, Vanguard acquired LRE GP, LLC (the “LRE GP”), the general partner of LRR Energy, L.P.

(the “LRE Merger”).

Under the terms of the LRE Merger Agreement, (i) each outstanding LRE common unit was converted into the right to receive

newly issued Vanguard common units and (ii) Vanguard purchased all of the outstanding limited liability company interests in LRE GP in exchange for

12,320

newly issued Vanguard common units. Further, in connection with the LRE Merger Agreement, each award of restricted LRE common units issued under LRE’s long-term incentive plan that was subject to time-based vesting and that was outstanding and unvested immediately prior to the effective time of the LRE Merger became fully vested and was deemed to be a LRE common unit with the right to receive Vanguard common units.

As consideration for the LRE Merger, Vanguard issued approximately

15.4 million

common units valued at

$121.3 million

based on the closing price per Vanguard common unit of

at October 5, 2015 and assumed

$290.0 million

in debt.

The LRE Merger was...


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