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Office: 512-524-0462 | Fax: 866-874-3913 | 11940 Jollyville Rd. Ste 210-S | Austin, TX 78759

BAINES CREEK CAPITAL is an Austin-based investment firm that follows an opportunistic investment strategy using a fundamental, value-oriented approach.

1

Thesis Review for Legacy Reserves, Inc.

September 20, 2018

2(Revision 2 - released on 9/28/18)

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Legacy EBITDA and Market Cap

Historical EBITDA Forecasted EBITDA Historical Market Cap Forecasted Market Cap(EV/EBITDA = 6x)

• This document presents a thesis developed by Baines Creek Capital (BCC) regarding Legacy Reserves, Inc. (LGCY). We believe this thesis presents a 3X to 13X return over the next 12-48 months.

• There are both structural and cyclical inefficiencies at play. Legacy has been in a hated sector (oil and gas) and has operated a hated business model (Upstream MLP).

• They have pivoted their business model and have changed their legal structure (MLP to C-corp). This will lead to forced buying from passive index funds in the near term. Provides Legacy better access to capital markets.

• BCC expects Legacy to deliver explosive EBITDA growth, drilling on existing assets and within operating cash flow. EBITDA is currently at the highest level ever (Q2TTM ~284M); BCC forecasts EBITDA of ~$930M in 2020 and ~$1.4B by 2022. Assets include significant low decline (<11%) PDP reserves plus extensive horizontal drilling locations. They have “hidden” assets available for horizontal development that we believe both they and the market did not realize were present under their old business model as a yield generating MLP.

• Significant margin of safety: We estimate net assets are currently worth ~2.4x market cap (>$11 / share on liquidation value alone!). Legacy has taken several steps in the last year to substantially reduce risk. At current prices, this investment presents very low likelihood of permanent capital loss.

Executive Summary

Legacy Reserves, Inc. presents an asymmetric risk-reward profile with substantial upside.

Oil Price Crash

Business Model Pivot

3

Multiple valuation methods demonstrate that this thesis presents a 3X to 13X return in the next 12-48 months

Executive Summary

Method Value Comment

Operating Valuation~$14/share by YE 2018~$43/share by YE 2020~$59/share by YE 2022

Going-Concern Valuation: Based on detailed modeling and statistical analysis of current operations (Slides 14-28)

Comparative Asset Valuation >$12 / share Downside protection: Based on comparable acquisitions in the same space (EGN) (Slide 30)

Net Asset Valuation >$11 / share Downside protection: Current market liquidation value of existing assets (Slide 31 and appendix)

LGCY share price as of 9/20/18: $4.69/share ($498M market cap)

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(1) Several publications suggest that index funds own about 20% of the broad market (https://www.bis.org/publ/qtrpdf/r_qt1803j.htm), however internal BCC research suggests total passive ownership of some companies or even sectors could exceed 60% depending on the objectives of a respective fund and the sector. The chart above demonstrates this by looking at only three prominent index allocation firms.

Executive SummaryCatalyst: MLP C-corp = Forced Buying

• After recently completing its conversion from an MLP to a C-corp, LGCY will now qualify for inclusion in numerous market indices. Funds that track those indices will be required to purchase shares of Legacy in proportion to its size in the respective index. (e.g. Russell 2000, S&P 600 Index, S&P Total Market Index, Dow Jones Total Market Index, etc.)

• The chart below shows the portion of the float of peer companies that are owned only by Blackrock, Vanguard and State Street Corp, which focus almost exclusively on passive index allocations. For simplicity, only these three are shown here, but there are hundreds of other funds tracking the myriads of indices that are additive to the percentages shown below.

• Legacy currently has very limited ownership by passive funds.

Total index fund holdings in small cap companies range from 15% to 60%(1) of floated shares, suggesting 14M up to 56M shares of LGCY that must be purchased by index funds in the next year!

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Legacy Float ~93M shares

Investment Thesis for Legacy Reserves, Inc.

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Investment Target

• Legacy Reserves, Inc– Longstanding Midland, Texas-based operator

(NASDAQ: LGCY)

– Unique balance of diversified, stable PDP footprint with significant potential for horizontal drilling in the Permian Basin and East Texas

– 47.5 MBoe/d from 4 regions with <11% decline (this low decline is a very significant and differentiating aspect of Legacy versus other E&P companies in the Permian Basin)

– 939 gross / 673 net operated horizontal Permian and East Texas drilling locations

– Strong management team that weathered the downturn and positioned the company for substantial growth.

– Significant ownership among the board of directors and management.

(1) Source: Legacy’s presentation at the JPM Energy Conference, June 2018 7

(1)

• Legacy existed as a Master Limited Partnership (MLP) from 2007 to September 2018. It was built on a strategy of buying producing wells that had passed their initial production peak and were in a long-tail, low decline production phase.

• They would purchase new assets with significant leverage and distribute the majority of their free cash flow to unit holders. – Low interest rates and $90+/bbl

oil attracted significant equity investment with high distributions(yields often >10%+).

– In 2014 they were valued at over $1.8B in market cap.

Legacy Reserves, Inc Background

Legacy’s target purchases as an MLP

“Typical” well production profile

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LGCY Share Price History

Legacy Reserves 2014 - 2017

• When oil collapsed, they cut their distributions (dividends), had to take significant impairments, and faced the risk of breaching several debt covenants.

• As an MLP, they had not retained any substantial earnings and fell into a severe liquidity crisis.

• The stock fell by ~95% and was priced for bankruptcy.– Most of their peers went bankrupt.– Most analysts stopped following the stock.

BCC started buying Legacy’s unsecured debt in early 2016 and built a strong understanding of the business and its asset base.

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Legacy Leverage Ratio (Net Debt / EBITDA)

Hist. Leverage Ratio Forecasted Leverage Ratio

Legacy Reserves 2014 - 2017Carefully managed liquidityWhen the oil market crashed, Legacy, like most of its peers, faced a severe liquidity crisis as their net debt to EBITDA ratio climbed to nearly 8X. They made a number of key decisions to manage liquidity and provide time to pivot their business model.

– In 2015/16 they sold less performing assetsto increase liquidity and get covenant relief.

– In 2015 they signed a key agreement with TSSP to pay the cost to start a horizontal drilling program with existing assets; they turned their focus on growing EBITDA and improving their leverage ratio (as opposed to paying down or immediately restructuring debt).

– In 2016 they signed a second lien (2L) term loan with GSO.

• Provided 50% more liquidity• Helped to prove the value of their assets

– They had a reasonably strong hedging strategy to support revenue and liquidity needs.

All of these moves gave them relief from creditors and provided headroom to allow them to pivot their business.(1)

Liquidity Crisis

10(1) See current debt summary and leverage ratio forecast in the appendix, slide 62.

(1)

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Key Partnerships Enabled GrowthJoint Development Agreement• In 2015, Legacy signed a key agreement

(“the JDA”) with a private investment firm (TSSP) to fund the initial horizontal drilling of its existing locations per the terms shown here.

• This allowed them to… – prove they could execute a horizontal

drilling program and…– grow EBITDA with existing assets.

The JDA enabled a pivot in their business model from an operator of mature wells to an exploration and production (E&P) company, drilling new wells on existing locations that they owned. (We believe the market did not recognize the pivot and continued to price them for bankruptcy with their upstream MLP peers.)

Legacy PartnerCapital Contribution (%) 5% 95%Capital Contribution ($mm) $14.50 $275Initial Working Interest (WI) 20% 80%WI after partner recieves 15% IRR 85% 15%

JDA Tranche 1 Terms

11(1) Source: Legacy Presentation at the IPAA OGIS Conference in New York, April 2017

(1)

(1)

(1)

Key Partnerships Enabled Growth• The JDA program went very well. • In Q317, Legacy payed TSSP $141m

to pull forward the reversion date into 2017.

• They were “buying” EBITDA to drivedown the leverage ratio and committing to transform into an E&P company.

• They are currently receiving the benefit of significant EBITDA growth from the JDA operation and subsequent development.

– 33% Q/Q growth in Q317 – 41% Q/Q growth in Q417– BCC estimates 2018 EBITDA will be >40% higher

than 2017

Reversion pulled forward 3+ years to Q3 2017

Q2 2018 TTM EBITDA of ~$284M is the highest they’ve ever generated!

12(1) Source: Legacy Presentation at the IPAA OGIS Conference in New York, April 2017

Tranche 1 Reversion Profile (48 wells) (1)

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• From 2015 through 2017, the market priced Legacy for bankruptcy, and even now does not seem to recognize current value nor sizeable growth potential in the coming years.

• The company has a large inventory of quality assets, acquired over 10+ years and held by production with very low decline (<11%) and significant development opportunities.

• New Business Model: Legacy has converted to an E&P company and is currently drilling their way to recovery. We believe they can now move forward to…

– Recapitalize the business…• Began the process of deleveraging through the

Q318 exchange of $130M notes due in ‘20/’21 for convertible notes due in 2023 (1)

– Accelerate horizontal drilling withinoperating cash flow…

– Grow into their debt and generate sizable long term free cash flow.

• We believe value has been shielded from the market via…

– An MLP legal structure – hated in the upstream E&P space.

– A complex and over-levered capital structure (1)

– A misunderstanding of Legacy’s assets and strategy

Oil Price Crash

Business ModelPivot

Investment Thesis

The last time EBITDA was near current levels the company was worth ~3.7X the current market cap (as of 9/20/18).

13(1) See debt summary in appendix, slide 62.

(1) Its instructive to compare Legacy’s production to other companies with higher decline, newer wells. For example, consider a hypothetical Company A with 100k Boepd with a 35% decline (typical of Permian operators with predominantly new shale wells) vs Legacy with 47.5k Boepd with 11% decline. Given an estimated type curve for Permian production, if neither company drilled any new wells, Company A’s production would decline to match Legacy’s production in about 5 years, erasing Company A’s production advantage. To offset this, Company A has to spend heavily in CapEx just to maintain production, let alone grow.

• Legacy’s operating value is built on two key factors: – Existing Production: Legacy has a strong foundation of low-decline (<11%) Proven Developed Producing

(PDP) reserves, already in place from its former business model as a yield generating MLP. These existing PDP reserves will deliver strong recurring cash flow(1) and will help to fund new horizontal drilling activity.

– Existing Drillable Acreage: Significant portions of their existing acreage are delineated by offset activity and can be drilled within operating cash flow to generate substantial EBITDA growth.

• The result of the above suggest the valuations below, which are defined in the following slides:

– ~$14/share by YE 2018– ~$43/share by YE 2020– ~$59/share by YE 2022

• Current share price (as of 9/20/18): $4.69/share 3X to 13X return in the next 12-48 months

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Operating Value- Summary -

We believe the key to Legacy’s dramatic EBITDA growth in the coming years (esp. 2019 and 2020) will be its ability to allocate significant CapEx to new horizontal drilling

programs, on existing acreage and within operating cash flow (no added debt).

Operating Value- Modeling Operations -

Very simply, oil and gas production is the summation of declining production from existing wells (Proven Developed Producing (PDP)) plus new production from drilling activity.

Total Production (Boe)

Existing Production

Newly drilled Production

= x Annual Decline Rate

+

Legacy has significant assets with low-decline (<11%) PDP production and is

allocating substantial capital towards new production.

New Production (0-12 months)

Existing Production (Long Term Decline)

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“Typical” Shale Well Production Profile

Operating Value- Existing Production -

• Q2’18 daily production of 47.5 Mboepd– PDP Reserves to Production (R/P) of 9.6 years– BCC has estimated type curves of Legacy’s long

term production decline, necessary to forecast cash flow from existing production going forward.

• Most E&P companies do not have the stable low-decline production that Legacy does. That is why growth in this thesis is so pronounced. Other E&P’s do not get the same impact when spending within operating cash flow.

• To get similar EBITDA growth, other E&P’s have to significantly outspend operating cash flow. In fact, in high decline (>30%) shale development, most companies have to spend significant CapEx just to maintain EBITDA, let alone grow.

• We believe Legacy is likely to spend heavily to drill its existing acreage, within operating cash flow. This will rapidly grow EBITDA and allow them to grow into their debt. (see following slides)

Legacy’s low decline PDP is a solid foundation to enable growth.

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75% of current production has <= 11% decline rate

(1) Source: Legacy Q2 2018 earnings release (August 2018)(2) Represents weighted average three-year PDP production decline rate, calculated from Q2’18 to Q2’21

production from the Reserve Report.

(1)

Operating Value- Modeling Newly Drilled Production -

New production is proportional to….1) How much the company spends in CapEx (new horizontal drilling and completion costs) and…

2) How efficiently it can allocate that capital (well cost / 1st year production).

New Production

(Boepd)

=CapEx ($)

Capital Efficiency ($/Boepd)

CapEx ($) = Avg Cost per well x # Wells

Drilled

Capital Efficiency ($/Boepd)

=Total Well Cost ($)

Average Daily Year 1 Production

(Boepd)

Drilling and Completion Model Assumptions

• 2018 CapEx Budget: $225M(1)

• 2019 CapEx Budget (BCC Est.): ~$400M• 2020 CapEx Budget (BCC Est.): ~$750M• 2021 CapEx Budget (BCC Est.): ~$900M• Permian Capital Eff: ~$17k-$28k / Boepd(2)

• E. Texas Capital Eff: ~$1.3k-$2.1k / Mcfepd(2)

(1) Legacy 2017 YE report – published on February 2018(2) Capital efficiency values depend on region, geology and potentially macro economic factors (availability of labor,

material costs, etc.). See appendix for additional detail on capital efficiency and EBITDA/production growth. 17

Operating Value- Legacy Operated Acreage/Drilling Locations -

• Legacy has 41k de-risked net acres that contain 695 gross/ 485 net additional locations in its Permian operating regions.

• East TX also represents 244 gross/ 187 net locations.

• This excludes any existing non-op positions, overriding royalty interests, and potential future locations stemming from reversion of term assignments.

• BCC estimates Legacy will drill between 12 and 20 wells per quarter in the Permian, and between 2 and 13 wells per quarter in East Texas in 2019 and 2020 respectively (within operating cash flow).

Legacy suggests it has up to 23 years of drillable inventory at current drilling rates before it

would have to acquire new locations.(1)

(1) Source: Q2’18 earnings presentation. BCC estimates they will accelerate from their current drilling rate. 18

Operating Value- Production and Cash Flow Analysis -

BCC expects Legacy will pour nearly all operating cash flow into CapEx to develop existing acreage through 2020, and from there, it will be able to pay down debt, grow free cash flow, and likely acquire new drillable assets.(2)

– 2017 CapEx: ~$177M 2017 EBITDA: ~$226M– 2018 CapEx: ~$225M 2018 EBITDA: ~$317M– 2019 CapEx: ~$400M 2019 EBITDA: ~$500M– 2020 CapEx: ~$750M 2020 EBITDA: ~$930M – 2021 CapEx: ~$900M 2021 EBITDA: ~$1,200M

(1) LGCY Corporate Transition Presentation – March 2018(2) BCC believes Legacy could alternatively maintain its current debt level indefinitely and invest free

cash flow in EBITDA growth.

Stated Corporate Objective: “Accelerate Development to Capture Upside -Depending on the availability of cash flows, accelerating development of high-return, identified horizontal drilling locations within existing Permian and East Texas acreage”(1)

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The key to Legacy’s operating value in the next 5 years will be explosive EBITDA growth, coming from heavy

CapEx investment, primarily into existing assets and within operating cash flow.

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• BCC is forecasting substantial EBITDA growth in 2019 and 2020. The chart below describes the key factors contributing to that growth.

• This bridge is based on nominal model inputs shown in the monte carlo input summary (slide 25). • EBITDA growth from new production in both the Permian Basin and East Texas are the largest contributors in both

2019 and 2020 ($160M and $409M) respectively.• Note the small decline rate of historical production – this allows new horizontal production to have a dramatic

impact on EBITDA. They are not replacing EBITDA; they’re adding to it!• See Appendix for more detail on how Legacy is able to grow EBITDA.

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Operating Value- EBITDA Bridge -

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• Legacy has been an “equity stub” for some time– $498M in market cap (as of 9/20/18)– $1.319B in net debt (Q2 reported)– Enterprise value = $1.817B

• Q218 TTM EBITDA was $284M(highest they’ve ever recorded!), yielding a trailing EV/EBITDA multiple of 6.4.

• Using reasonable assumptions for oil prices and conservative forecasts for other operating parameters of the business, BCC forecasts the company to generate TTM EBITDA results of $317M by YE 2018, $504M by YE 2019 and ~$926M by YE 2020

• If we assume the same TTM EV/EBITDA multiple of 6.4, the market cap at YE 2018 would be $707M, which would be a 42% return against September 2018 prices. Further in 2020, the market cap would be ~$4.6B, an 825% return from current prices.

• The above analysis is a very simplified representation. We do not get to choose and cannot know exactly how the market will price the company. See following slides for a simplified sensitivity study.

• Further, this analysis refers to trailing 12-month EBITDA and EV/EBITDA multiples for simplicity, to define a valuation derived from actual reported numbers. However, Legacy has transitioned from an MLP to a C-corp. When it discloses specific and substantial growth plans, it will not be priced on trailing 12-month multiples but rather on future plans and opportunities. The remainder of this report will evaluate Legacy against forward 12-month estimates for EBITDA and multiples(1). As Legacy’s growth plans mature, its trailing and forward multiples will come closer together(2).

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Operating Value- TTM EV/EBITDA Model -

(1) See appendix for comparison against both forward and trailing multiples for 20 peer companies. (2) See slide 33 to compare estimated forward and trailing multiples as Legacy grows over the next 5 years.

Q218 TTM ($M)

2018 YETTM

Forecast ($M)

2019 YETTM

Forecast ($M)

2020 YETTM

Forecast ($M)Market Cap 498$ 707$ 1,905$ 4,607$

Total Net Debt 1,319$ 1,319$ 1,319$ 1,319$ Enterprise Value (EV) 1,817$ 2,026$ 3,224$ 5,927$ EBITDA (TTM) 284$ 317$ 504$ 926$ EV/EBITDA 6.4 6.4 6.4 6.4

Return 42% 282% 825%

Oil (WTI) in Q418/'19/'20 = $70/$75/$80

4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0$55 4x 4.6x 5.3x 5.9x 6.6x 7.2x 7.9x 8.5x 9.2x$60 4.4x 5.1x 5.8x 6.5x 7.2x 7.9x 8.6x 9.3x 10x$65 4.8x 5.5x 6.3x 7.1x 7.8x 8.6x 9.3x 10.1x 10.8x$70 5.2x 6x 6.8x 7.6x 8.4x 9.2x 10x 10.9x 11.7x$75 5.6x 6.5x 7.3x 8.2x 9x 9.9x 10.8x 11.6x 12.5x$80 6x 6.9x 7.8x 8.7x 9.7x 10.6x 11.5x 12.4x 13.3x$85 6.4x 7.4x 8.3x 9.3x 10.3x 11.2x 12.2x 13.2x 14.1x$90 6.8x 7.8x 8.9x 9.9x 10.9x 11.9x 12.9x 13.9x 14.9x$95 7.2x 8.3x 9.4x 10.4x 11.5x 12.6x 13.6x 14.7x 15.8x

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2021 Forward EV/EBITDA MultipleYE 2021 Multiple Sensitivity (vs Q318 prices)

Assumptions:Baseline Market Cap: $498M; $4.69/shareAssumed 2021 Shares Oustanding: 146M sharesNatural Gas (HH) - strip prices (average $2.68 Q418 through 2021)Oil Prices (WTI) in Q4'18/'19/'20/'21 - $70/$75/$80/$85 per Bbl

The above matrix allows for a “what-if” consideration of value against a range of possible forward 12-month EV/EBITDA multiples and oil price scenarios. The top row is the EV/EBITDA multiple; the left column is a range of 2022 oil prices (which drives EBITDA). The table shows return multiples at YE 2021 against a $4.69/share price (as of 9/20/18). Peer EV/EBITDA multiples are provided for comparison and taken from 20 companies in the same space, as valued in September 2018. See appendix (slide 64) for details on peer company multiples.

Legacy in Q3’18

If the market pays just the average forward EV/EBITDA multiple of ~6X and oil prices in 2022 fall between $65 and $90, this is an 7.8X to 10.9X return in 2021 versus Q3 2018 prices

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Operating Value- Forward EV/EBITDA Model -

Min Max Mean Median St. Dev3.73 9.93 6.26 6.45 1.87

LGCY FWD EV/EBITDA (9/20/18): 4.5

Peer CompaniesForward EV/ EBITDA Multiples @Q2E'18

4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0$55 18.59$ 21.66$ 24.73$ 27.79$ 30.86$ 33.93$ 37.00$ 40.07$ 43.13$ $60 20.52$ 23.82$ 27.13$ 30.44$ 33.75$ 37.06$ 40.37$ 43.67$ 46.98$ $65 22.44$ 25.99$ 29.54$ 33.09$ 36.64$ 40.19$ 43.73$ 47.28$ 50.83$ $70 24.36$ 28.15$ 31.94$ 35.73$ 39.52$ 43.31$ 47.10$ 50.89$ 54.68$ $75 26.29$ 30.32$ 34.35$ 38.38$ 42.41$ 46.44$ 50.47$ 54.50$ 58.53$ $80 28.21$ 32.48$ 36.76$ 41.03$ 45.30$ 49.57$ 53.84$ 58.11$ 62.38$ $85 30.14$ 34.65$ 39.16$ 43.67$ 48.18$ 52.70$ 57.21$ 61.72$ 66.23$ $90 32.06$ 36.82$ 41.57$ 46.32$ 51.07$ 55.82$ 60.57$ 65.33$ 70.08$ $95 33.99$ 38.98$ 43.97$ 48.97$ 53.96$ 58.95$ 63.94$ 68.94$ 73.93$

Assumptions:Assumed 2021 Shares Oustanding: 146M sharesNatural Gas (HH) - strip prices (average $2.68 Q418 through 2021)Oil Prices (WTI) in Q4'18/'19/'20/'21 - $70/$75/$80/$85 per Bbl

2021 Forward EV/EBITDA Multiple

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YE 2021 LGCY Share Price Sensitivity

The above matrix allows for a “what-if” consideration of valuation against a range of possible forward 12-month Enterprise Value (EV) to EBITDA multiples and oil price scenarios. The top row is the EV/EBITDA multiple; the left column is a range of 2022 oil prices and resultant EBITDA. The table shows share prices at YE 2021. Peer EV/EBITDA multiples are provided for comparison and taken from 20 companies in the same space, as valued in September 2018. See appendix (slide 64) for details on peer company multiples.

If the market pays just the average forward EV/EBITDA multiple of ~6X and oil prices in 2022 fall between $65 and $90, the share price would be ~$37-$51/share! (share price as of 9/20/18 - $4.69/share)

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Operating Value- Forward EV/EBITDA Model -

Legacy in Q3’18

Min Max Mean Median St. Dev3.73 9.93 6.26 6.45 1.87

LGCY FWD EV/EBITDA (9/20/18): 4.5

Peer CompaniesForward EV/ EBITDA Multiples @Q2E'18

Operating Value - Monte Carlo Analysis -

• BCC has modeled all aspects of Legacy’s business. • A monte carlo (MC) analysis was used to randomly apply an array of inputs over

100k scenarios to gain an understanding of the range and likelihood of possible outcomes.

• The following pages describe the model inputs and results for 2018 through 2022, as well as a more robust sensitivity study for all inputs.

• “Beware of geeks with models.” – Warren E. Buffet– We recognize this thesis is a part of a dynamic complex adaptive system that cannot be

precisely modeled. – Identifying and developing a thesis like this is more of an art than a science. – Information from this MC analysis is only one piece of a big puzzle. We use it with

caution as we evaluate the entire thesis. – It does, however, allow us to consider some elements that may have a larger effect than

others and broaden our thinking in regards to both downside and upside potential.

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Operating Value- Monte Carlo Model Inputs -

(1) Note that the model includes many more inputs than shown (e.g. oil/gas /NGL production content, capital efficiencies, future interest rates, basis differentials for Midland-Cushing/Waha/Carthage/NWP (currently modeled with strip prices), well economics, hedging, and others. Only the inputs above were varied for the MC study. All others held constant.

(2) The nominal natural gas prices are the strip prices as of 9/18/18. Average annual prices are shown here, but this analysis varies all quarterly NG Prices within the bounds shown. (3) EV in consideration of convertible notes assumes $6/share, ~106.1M shares outstanding (see Legacy 8k – 9/20/18) and Q2’18 Net Debt of $1,319M. (4) This model assumes Legacy will start purchasing new Permian locations starting in 2021, after using all of its current Bone Spring, Spraberry, Wolfcamp identified locations. The model

currently does not incorporate any swap opportunities, as Legacy has recently described in its Q218 earnings report regarding ~15.5k net de-risked acres within the Delaware and Midland basins for swap and/or any of its unidentified non-de-risked acreage.

The MC model randomly assigns inputs within the distributions defined here and saves the outputs to present a broad range of potential outcomes. Further the model evaluates how sensitive the results are to each of these inputs(1). (see following slides)

25

EV at Q318 debt exchange for convertible notes

(i.e. an equity issuance): $1,956B ($6/share)(3)

Normal Distribution Mean

Standard Deviation

(sigma) 3 sigma min 3 sigma maxQ4 2018 Oil Price 70$ 2$ 64$ 76$ 2019 Oil Price 75$ 3$ 66$ 84$ 2020 Oil Price 80$ 4$ 68$ 92$ 2021 Oil Price 85$ 5$ 70$ 100$ 2022 Oil Price 90$ 5$ 75$ 105$ Q4 2018 Nat Gas Price (2) 2.92$ 0.10$ 2.62$ 3.22$ 2019 Nat Gas Price 2.74$ 0.10$ 2.68$ 3.28$ 2020 Nat Gas Price 2.63$ 0.15$ 2.40$ 3.30$ 2021 Nat Gas Price 2.60$ 0.20$ 2.00$ 3.20$ 2022 Nat Gas Price 2.61$ 0.25$ 1.86$ 3.36$

Min Nominal Max5.00$ 6.50$ 8.00$ -$ -$ -$ -$ -$ -$ -$ -$ -$

50,000$ 100,000$ 150,000$ 1,900,000$ 2,250,000$ 2,600,000$

9 12 1512 18 2448 72 1202 4 6

4.5 6 7.5

Permian San Andreas Shelby FreestoneYes Yes Yes No

Acquire new locations (4):

EV at Equity Issue (x1000):Permian Wells / qtr ('19):Permian Wells / qtr ('20):Permian Wells /Yr (2021 onward):Shelby Wells/qtr (2020 onward):FWD EV/EBITDA Multiple:

Equity Issued (x1000):

Triangle DistributionPermian Horizontal LOE/ BOE:Piceance Asset Sale:

Other Assets Sale: E. Binger Asset Sale:

5.0% 90.0% 5.0%

$40.03 $67.59

$20

$30

$40

$50

$60

$70

$80

$90

$100

0.000

0.005

0.010

0.015

0.020

0.025

0.030

0.035

0.040

0.045

0.050

2021 Share Price:

2021 Share Price:

Minimum $26.219Maximum $91.511Mean $53.044Std Dev $8.385Values 100000

Operating Value- Share Price Results as of 9/20/18 -

26

(1) In this context, share price is a reference to our estimate of fair value, not an explicit prediction of market price.

Mean 5%-ile 95%-ile2018 13.80$ 9.44$ $ 18.39 2019 30.95$ 23.24$ 39.24$ 2020 42.56$ 32.19$ 53.95$ 2021 53.04$ 40.03$ 67.59$ 2022 59.33$ 45.30$ 75.11$

Forecasted Share Price at Year End

$-

$10

$20

$30

$40

$50

$60

$70

$80

2018 2019 2020 2021 2022

Pric

e

($ /

Sha

re)

LGCY Forecasted Share Price(year end values)

Mean 5%-ile 95%-ile

5.0% 90.0% 5.0%

$23.24 $39.24

$15

$20

$25

$30

$35

$40

$45

$50

$55

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

0.09

2019 Share Price:

2019 Share Price:

Minimum $15.648Maximum $52.054Mean $30.946Std Dev $4.846Values 100000

5.0% 90.0% 5.0%

1.038 1.372

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

Values in Millions ($)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Valu

es x

10^

-6

2021 EBITDA

2021 EBITDA

Minimum $818,081.46Maximum $1,692,837.84Mean $1,198,668.98Std Dev $101,747.95Values 100000

Operating Value- EBITDA Results as of 9/20/18 -

27

Mean 5%-ile 95%-ile2018 316,645$ 314,161$ 319,111$ 2019 504,129$ 458,242$ 552,473$ 2020 925,912$ 818,561$ 1,035,563$ 2021 1,198,669$ 1,037,652$ 1,371,819$ 2022 1,441,130$ 1,217,166$ 1,687,644$

TTM EBITDA (x1000)

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

2018 2019 2020 2021 2022

(x 1

000)

TTM EBITDA(year end values)

Mean 5%-ile 95%-ile

5.0% 90.0% 5.0%

$458,242 $552,473

$350

,000

$400

,000

$450

,000

$500

,000

$550

,000

$600

,000

$650

,000

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

Valu

es x

10^

-5

2019 EBITDA

2019 EBITDA

Minimum $393,291.91Maximum $614,822.23Mean $504,129.36Std Dev $28,669.85Values 100000

(x 1000)

Value in Billions ($)

1.05

1.10

1.15

1.20

1.25

1.30

1.35

2021 EBITDAValues in Millions ($)

E. Binger Sale: / Value

2019 Oil Price / Value

Equity Issued (x1000): / Value

Permian Wells / qtr ('19): / …

Permian HZ LOE/ BOE: / Value

Permian Wells / qtr ('20): / …

Shelby Wells/qtr (2020 onwa…

2021 Nat Gas Price / Value

Permian Wells /Yr (2021 on…


2021 EBITDAInputs Ranked By Effect on Output Mean

Input High

Input Low

Baseline = $1,198,668.98

$507,743.78

$503,723.88 $504,861.79

$503,501.15 $504,611.72

$503,731.36 $504,792.04

$503,773.89 $504,519.50

$460

,000

$470

,000

$480

,000

$490

,000

$500

,000

$510

,000

$520

,000

$530

,000

$540

,000

$550

,000

2019 EBITDA

Q42018 Oil Price / Value

Q418 Nat Gas Price / Value

Equity Issued (x1000): / …

E. Binger Sale: / Value

Permian HZ LOE/ BOE: / …



Permian Wells / qtr ('19): …

2019 EBITDAInputs Ranked By Effect on Output Mean

Input High

Input Low

Baseline = $504,129.36

$42.655 $63.472

$49.343 $56.676

$50.582 $55.055

$51.794 $54.435

$51.838 $53.986

$52.007 $53.985

$52.247 $53.830

$52.514 $53.760

$40

$45

$50

$55

$60

$65

2021 Share Price:


Permian HZ LOE/ BOE: / …Permian Wells / qtr ('20): …

EV at equity raise (x1000…


Shelby Wells/qtr (2020 o…


2022 Oil Price / ValuePermian Wells /Yr (2021 …

FWD EV/EBITDA Multiple…

2021 Share Price:Inputs Ranked By Effect on Output Mean

Input High

Input Low

Baseline = $53.044

$24.160 $37.756

$33.486

$29.869 $31.963

$29.903 $31.976

$30.147 $31.716

$30.259 $31.690

$30.192 $31.482

$30.529 $31.369

$30.778 $31.102

$24

$26

$28

$30

$32

$34

$36

$38

2019 Share Price:


Permian HZ LOE/ BOE: / …EV at equity raise (x1000…


Permian Wells / qtr ('19): …


Shelby Wells/qtr (2020 o…

Permian Wells / qtr ('20): …2020 Oil Price / Value

FWD EV/EBITDA Multiple…

2019 Share Price:Inputs Ranked By Effect on Output Mean

Input High

Input Low

Baseline = $30.946

Operating Value- Sensitivity Results as of 9/20/18 -

Sensitivity: as the model iterates through hundreds of thousands of scenarios, it evaluates how much the outputs (e.g. share price and EBITDA) vary with changes to each input. These are summarized in the plots below with the lowest sensitivities on the bottom of each plot to the highest sensitivity on the top.

28

EBITDA, which strongly effects how the market will value the company, is driven largely on drilling performance and commodity prices.

EBITDA, which strongly effects how the market will value the company, is driven largely on drilling performance and commodity prices.

Note that equity issuance, while important, is not the largest contributor to value(1)

Note that equity issuance, while important, is not the largest contributor to value(1)

(1) In this context, share price is a reference to our estimate of fair value, not an explicit prediction of market price.

Lower Upper

1.08$ 1.32$ 1.11$ 1.30$ 1.14$ 1.26$ 1.15$ 1.25$ 1.16$ 1.24$ 1.18$ 1.21$ 1.19$ 1.21$ 1.19$ 1.20$ 1.20$ 1.20$ 1.20$ 1.20$

(x Billions)

Value in Billions ($)

(x 1000)

• The previous slides present a valuation based on the operating potential of the business.

• It is instructive to also consider the value of the existing operation and assets, regardless of growth opportunities…

– …As a downside protection(If Legacy decided to sell assets, what would they be worth?)

– …As an indicator of current value.

• The following slides present two measures of asset valuation:

– Comparative Market Value – considers asset value of a recent market acquisition (Energen) and applies the same value to Legacy’s assets. ~$12 / share

– Net Asset Value – looks at liquidation value of Legacy’s assets(2) ~$11 / share

29

Asset Valuation

(1) Legacy’s Q2 Earnings Presentation, August 2018(2) See appendix for greater detail on the liquidation value of Legacy’s assets.

(1)

On August 14, 2018 Diamondback (FANG) announced it was acquiring Energen (EGN) for $9.2B. Energen’s asset base is comparable to Legacy’s, and this transaction can be used as a proxy for Legacy’s asset value.

Energen: 244k Net Permian Acres/160.5k Net Mid-Del Acres/97.4 MBoepd (est. >30% decline)

If Legacy’s assets, were priced the same as Energen’s, its market cap could exceed

~$1.25B and share price of >$12/share.

Legacy: ~250k Net Permian Acres (BCC est.)/36.7k Net Mid-Del Acres/47.5 MBoepd (<11% decline)

(1) Legacy’s 36.7k acres represents the portion of the 41k de-risked net acreage found in the Midland and Delaware basins. This also includes the 15k de-risked acres identified for swaps as discussed in Legacy’s Q218 earnings release.

(2) Implied price/acre is calculated by subtracting market value of existing production from the transaction value (including debt) and dividing by the relevant acreage. This value was calculated for Energen and applied to Legacy’s asset base.

(3) This is an extreme simplification of the value of flowing production. Legacy’s production is very low decline (<11%, vs EGN estimated at >30%) and thus should be worth more. BCC estimates Legacy’s production value at $1.42B (see slide 50), which would translate to a LGCY share price of >$13.3/share, but to simplify the analysis on this page, we applied the same metrics to both EGN and LGCY production.

(4) Legacy 8k – September 20, 2018 lists share count of 106.1M shares(5) “Other assets” are more subjective to value and are thus not included in this comparison. Legacy’s “Other Permian Net

Acreage” is based on BCC internal research as it is not published by the company. 30

Comparative Asset Value(EGN vs LGCY)

Source: Legacy 2017 Earnings Presentation

Source: Energen Q2 2018 investor Presentation

Delaware Net Acres 66,187 13,346 Midland Net Acres 94,303 23,346 Total Mid/Del Net Acreage (1): 160,490 36,692 Implied Price $/acre (2) 39,862$ 39,862$

6,397,452,380$ 1,462,616,504$

Production (Mboepd): 97400 47500Production Mix - % oi l : 58% 38%

35,000$ 35,000$ 18,000$ 18,000$

2,713,564,000$ 1,161,850,000$ Net Debt: 829,812,000$ 1,319,246,000$ Net Asset Value: 8,281,204,380$ 1,305,220,504$ Share Count (4): 97,481,597 106,100,000

Share Price ($/share): 84.95$ 12.30$ Other Assets (not included above) (5)

Other Permian Net Acreage: 83,642 ~213,300East Texas Acreage: 165,000

Infrastructure: est. $100M in

pipelines/ other

LegacyKey Permian Acreage

Production Value (3) :

Market Value of Net Acreage:

Market va lue of oi l production ($/Boepd):Market va lue of Gas /NGL Production

Energen

• Fair market value of all Permian acreage plus proven reserves based on comparable sales in respective regions is conservatively estimated to be up to $2,363M. East Texas Acreage and other assets are conservatively $132M(see appendix for more detail).

• Total asset value (not entirely reflected on the balance sheet) is estimated to be ~$2,495M.

• Long Term Debt: ~$1,319M

• $2,495M(assets) - $1,319M(debt) = $1,176M versus $498M market cap (as of 9/20/18)

the net assets alone are worth ~2.4X the market cap of the whole company!

Net Asset ValueLiquidation Value of Permian Acreage

(1) $1.176B (NAV) / 106.1M shares outstanding = $11.08 / share; for share count, see Legacy 8k dated 9/20/18.(2) Source: Legacy 2017 Earnings Presentation 31

(2)

Net Asset Value alone suggests a conservative share price of $11+/share(1)

BCC Net Asset Value AnalysisPDP Reserves: ~$1,416MDe-Risked 41k Net Permian Acres: ~$511MAdditional Identified Drilling Acres (15k) ~$339MAdditional Net Permian Acres ~$97MEast Texas Acreage ~$32MPipeline Assets and Other Infrastructure: ~$100MTotal Asset Value: ~$2,495MNet Debt: ~$1,319MNet Asset Value: ~$1,176MMarket cap (as of 9/20/18): $498MNAV/ Market Cap: 2.4x

(1) Source: Legacy Q2 2018 Earnings Presentations(2) See current debt summary and leverage ratio forecast in the appendix, slide 62.(3) The new 2023 Notes mandatorily convert when the common shares trade above $6 for 20 days out of any 30 day period.(4) East Binger is currently marketed for sale. https://www.oilandgasinvestor.com/marketed-legacy-reserves-caddo-county-nitrogen-flood-asset-1714601(5) Proforma Q318 leverage ratio gives effect to the conversion of the 2023 convertible notes.

Catalysts for Unlocking Value

• Transition from an MLP structure to a C-corp Closed on September 20, 2018– “Whiteout” transaction: the company formed a new entity that acquired the GP of the former MLP partnership, and had a subsidiary that

merged with the LP.– $237.5M par value in preferred shareholder equity was converted to common stock. Additionally, $47.5M in deferred distributions were

eliminated to clear the path for a potential equity raise and/or other measures to recapitalize the business.– Management has indicated the importance of this transaction to provide “enhance[d] access to, and lower cost of, capital”(1). It allows them

access to a larger field of both lenders and investors. – Transaction is likely to induce forced buying from index funds and open up Legacy to a much larger investor base.

• Recapitalize the Company(2) Q318 to Q119– Equity Raise: BCC believes this is likely to happen through further debt for equity swaps or an offering of newly issued shares (there are other

potential options, but we believe they are less likely given current circumstances). • As announced on 9/14/18, Legacy has entered into an agreement with holders of existing unsecured notes due in 2020 and 2021 to

exchange a portion of them for convertible notes due in 2023.(3)

– Asset Sales: Potentially sell non-strategic assets (East Binger(4), Piceance, other Rockies or non-core assets).– Refinance and/or receive an extension of the current bank revolver.

(OCC compliance rules require leverage ratio below 4X; BCC estimates Q318 proforma leverage ratio of 3.96!(5))– Refinance 2L loan and/or unsecured notes

(Most likely requires a leverage ratio of ~3x or lower to refinance, hence the likely equity raise above)• Accelerate development programs with existing Permian Basin and East Texas assets2019 onward

– Expected to fund entirely within operating cash flow, building on a strong foundation of low-decline PDP. – BCC forecasts debt levels to remain constant for a couple of years before possibly being paid down with forecasted EBITDA growth.

(However, Legacy could maintain debt levels indefinitely, and invest operating cash flow in EBITDA growth.)– This effort is likely to generate extreme EBITDA growth in 2019 (~$490M) and 2020 (~$930m).

Legacy is positioned to recapitalize in order to enable growth.

32

Step 1 Step 2 Step 39/20/2018 YE2018 YE2019 YE2020 YE2021 YE2022

1L Revolver 508,000$ 532,000$ 321,000$ 74,000$ -$ -$ 2L Term loan 338,626$ 338,626$ -$ -$ -$ -$ 8% Notes 211,989$ 211,989$ -$ -$ -$ -$ 6.625% Notes 136,579$ 136,579$ 136,579$ -$ -$ -$ Convertible 8% Notes 130,000$ -$ -$ -$ -$ -$ New Note A 300,000$ 400,000$ 400,000$ 400,000$ New Note B 350,000$ 550,000$ 550,000$ 550,000$ (Less Cash) 5,948$ 433$ 732$ 810$ 81,556$ 382,759$ Net Debt: 1,319,246$ 1,218,761$ 1,106,847$ 1,023,190$ 868,444$ 567,241$ TTM EBITDA 283,802$ 316,645$ 503,831$ 926,213$ 1,167,692$ 1,386,696$ FWD EBITDA(4) 400,674$ 503,831$ 926,213$ 1,167,692$ 1,386,696$ 1,507,638$ EV/ FWD EBITDA(5) 4.53 6.00 6.00 6.00 6.00 6.00 EV/ TTM EBITDA 6.40 9.55 11.03 7.56 7.13 6.52 Enterprise Value 1,816,855$ 3,022,986$ 5,557,280$ 7,006,155$ 8,320,175$ 9,045,826$ Market Cap 497,609$ 1,804,225$ 4,450,433$ 5,982,964$ 7,451,732$ 8,478,586$ Shares outstanding 106,100,000 130,875,648 143,566,751 144,738,582 145,910,413 148,254,075 LGCY Share Price 4.69 $13.79 $31.00 $41.34 $51.07 $57.19

Debt/TTM EBITDA 4.65 3.85 2.20 1.10 0.74 0.41

Step 4

(all values x1000, except share price and ratios)

C-corp Conversion - "Whiteout"

Transaction" and Note Exchange

Convert 2023 notes(2); Bank

Extension; Asset Sale(3)

Equity Raise(1); Refi. 2L/8%

Notes; Accelerate

Perm. Drillng; Start E.Tx Test

Wells

Increase Permian and E. Tx. Drilling

Continue Permian and E. Tx. Drilling; begin

acquiring and drilling new acreage

Catalysts for Unlocking Value- Potential steps forward -

(1) Assumed $100M in equity raised at a $2.25B enterprise value.(2) The new 2023 Notes mandatorily convert when the common shares trade above $6 for 20 days out of any 30 day period.(3) Could include sales of non-core assets (E. Binger, Piceance, other)(4) EBITDA is driven by oil price assumptions. Oil prices for Q418/’19/’20/’21/’22 assumed to be $70/ $75/ $80/ $85/$90 per Bbl respectively(5) A forward EV/EBITDA multiple of 6.0 has been assumed throughout this presentation (i.e. the nominal value in the monte carlo simulation), however a range of multiples could be

warranted. See appendix for comparable forward EV/EBITDA multiples. Note how the trailing and fwd EV/EBITDA multiples converge as the company gets through its initial growth stage.(6) Trailing EV/EBITDA <4X is required for OCC compliance; Note Q318 leverage ratio is estimated 3.96, giving effect to the conversion of the 2023 convertible notes.

Assume a constant fwd EV/EBITDA multiple of 6.0

Share price (fair value) is derived from forecasted EBITDA and assumed fwd multiple.Forecasted leverage ratios fall quickly(6)

Legacy has a number of options moving forward to both recapitalize and grow, including further debt for equity swaps, asset sales, equity raise, etc. This table suggests just one possible scenario. (the monte carlo analysis presented previously envisions a broader range of possibilities)

33

Note: Proforma leverage ratio at Q3E’18 is 3.96! (BCC est., giving effect to conversion of the 2023 notes)

Catalysts for Unlocking Value- Index Funds Ownership Potential -

• After transitioning its legal structure from an MLP to a C-corp, Legacy will now be exposed to a much larger universe of potential buyers, most notably index funds which will be forced to buy.

• These funds could be required to purchase upwards of 15%-60% of the company passively.• As an example, the table below suggests a very simple calculation of the target share count

holding of index funds tracking the Russell 2000.

Funds tracking the Russell 2000 index alone could be forced buyers of nearly 2.7 MILLION shares of LGCY (avg daily volume in Q3 is ~350k shares).

- Forced buying with no large sellers could yield rapid share price appreciation -

34

Russell 2000 Market Cap ($trillions): 2.60$ Index Fund Ownership of R2K ($billions): 67.00$

Legacy Market Cap ($millions): 498.00$ LGCY Share Price: 4.69$

LGCY % of R2K: 0.02%Index fund target holding of LGCY ($millions): 12.83$

Index fund share ownership of LGCY (x 1 million): 2.7 % of LGCY Shares Outstanding: 2.6%

Catalysts for Unlocking Value- Index Funds Ownership Potential -

• There are numerous indices (e.g. Russell 2000, S&P 600, S&P Total Market Index, Dow Jones Total Market Index, etc.) and even more funds that track those indices (e.g. iShares S&P 600 growth (IJT), iShares core S&P small cap ETF (IJR), Vanguard Small Cap Index (VB), Fidelity Small Cap Index (FSSPX), SPDR S&P 600 small cap growth (SLYG), etc.)

• The chart below shows what portion of the float of peer companies is owned by just 3 of the largest index fund operators: Blackrock, Vanguard and State Street Corp. There are hundreds of funds beyond these, tracking the myriads of indices. These are shown only for simplicity, but demonstrate the large percentage of passive ownership that exists in companies in this space.

• Legacy currently has almost no passive ownership.

Total index fund holdings of peer companies range from 15% to as high as 60%(1) of floated shares, suggesting 14M up to 56M shares of LGCY that must be purchased by index funds in the next year!

(1) Several publications suggest that index funds own about 20% of broad market (https://www.bis.org/publ/qtrpdf/r_qt1803j.htm), however internal BCC research suggests total passive ownership could exceed 60% of some companies, depending on the objectives of a respective fund and the sector. The chart above demonstrates this by looking at only three prominent index allocation firms. 35

Legacy Float ~93M shares

(1) See slide 30 for an analysis of Legacy’s assets based on Diamondback’s acquisition of Energen in Q318, suggesting a share price, on asset value alone of >$12 / share. (2) See the appendix for a detailed overview of the liquidation value of Legacy’s assets, suggesting a share price on liquidation value alone of ~$11/ share. (3) See current debt summary and leverage ratio forecast in the appendix, slide 62.(4) The new 2023 Notes mandatorily convert when the common shares trade above $6 for 20 days out of any 30 day period.(5) Proforma Q318 leverage ratio gives affect to the conversion of the 2023 convertible notes.

Risk ConsiderationsBCC regards risk simply as the likelihood of losing money. An exhaustive risk analysis has been conducted. The following highlights several risk factors and at least partial mitigation for each: • Margin of safety

– At September 2018 prices, we believe this thesis provides substantial margin of safety such that, even if extreme unexpected events occur or we have made mistakes, we are likely to still make money.

– See appendix for an evaluation of the market value of Legacy’s assets alone: • A comparative market valuation, based on a recent market transaction (EGN) suggests an asset value of > $12/share.(1)

• Liquidation value of production and assets are estimated to be ~$11 / share.(2)

– Founders/Management: One of the key intangible factors in this thesis is that some of the founders are still on the board and/or hold significant equity stakes. Further, collectively, the founders and management own ~12% of the common equity; so interests are well aligned to common share holders for the foreseeable future.

• Risks associated with debt refinancingIf debt markets tighten and/or the company has any operational difficulty that might slow the reduction of Legacy’s leverage ratio, it could impede efforts to extend or refinance the 1L revolver, 2L, and/or unsecured notes prior to their respective debtmaturities.(3)

– The company continues to deliver. • Bought back $187M of unsecured notes for $0.7 on the dollar in December 2017.• Completed transition from an MLP to a C-corp on September 20, 2018, which provides better access to capital markets.• Executed an agreement to exchange $130M of existing notes due in 2020 and 2021 for convertible notes due in 2023

(though they will likely be converted to equity well before maturity).(4)

• Reduced TTM Debt/EBITDA leverage ratio from 7.7 to 4.7 in Q2 2018. BCC estimates the proforma leverage ratio to be 3.96 as of Q318(5); we expect it to be <3 by Q219.

(continued on next slide…)

At current equity prices, this thesis presents extreme risk/reward asymmetry and significant upside, with a low likelihood of loss.


36

Risk Considerations• Risks associated with execution/cost of drilling

If drilling costs are higher than expected or wells produce below expectation, EBITDA growth and debt reduction could be lower.

– BCC has modeled increased drilling cost and G&A/operating costs to account for this. – The company continues to deliver.

• Production growth and EBITDA are at record highs (47.5MBoe / day and $284M TTM respectively) .• 29 new wells have been brought on line this year and 76 new wells since the commencement of their horizontal

drilling effort.• They have been and are continuing to leverage existing acreage as currency to swap for larger contiguous acreage

and improve well economics.

• Risk associated with commodity pricesIf oil prices were to fall, EBITDA and overall liquidity would fall.

– Oil prices could fall below $45 for up to 2 years and the thesis would remain intact (though with a lower upside).

• Incumbent in this risk is the potential for a prolonged pipeline bottleneck in the Permian Basin. BCC forecasts take this into account.

– Current WTI Price: $70.80/Bbl (as of 9/20/18)– The commodity price is likely to be volatile in the short term, but we believe there is significantly more

upward pressure in the medium to long term. Our view is that an extended low price environment is extremely unlikely. If it were to fall for a relatively short period (<2 years), Legacy could slow drilling and take other mediation efforts that would implicitly protect this thesis.(1)

(1) BCC conducts extensive research on the macro case for energy, which is beyond the scope of this presentation and not the core basis for this thesis. Two suggested references for the macro view could include Baines Creek’s 2017 addendum on the oil and gas market (see https://www.bainescreek.com/docs/2017_addendum.pdf) and for a recent (May 2018) macro-view on the oil and gas market written by Burggraben Holdings : https://invertirenvalor.com/wp-content/uploads/2018/05/18.05.06-Crude-Oil-Master-Presentation-Final.pdf ; 37



Summary

• Smart Management and Strong Assets: Legacy weathered the down turn with very shrewd management, a determined board, and a strong asset base.

• New Business Model: The company has successfully pivoted their business model from an upstream MLP to an E&P C-corp and is well positioned to execute on that model in order to…

– Recapitalize the business and address near term debt maturities, – Expand their horizontal drilling programs on existing acreage both in the Permian and East

Texas, within operating cash flow, – Significantly grow EBITDA, and…– Create significant value for shareholders.

• Very Large Upside: The market priced the company in line with its MLP peers, many of whom went bankrupt, and overlooked it due to its legal structure and complex cap table.

– Projected returns range from 3X to 13x in the next 12-48 months relative to Q318 prices. – The conversion to a C-corp should induce forced buying by passive index funds, which could

facilitate rapid share price appreciation.

• Low Risk: This is an extremely asymmetric opportunity with a low likelihood of long term capital impairment.

38

Appendix

39

EBITDA Growth Detail

40

-180000

-130000

-80000

-30000

20000

70000

120000

170000

$(8,000)

$(6,000)

$(4,000)

$(2,000)

$-

$2,000

$4,000

$6,000

$8,000

$10,000

0 1 2 3 4 5 6 7 8 9 10 11 12

Cum

mul

ativ

e Pr

oduc

tion

(Boe

)

mil

lions

Months

Lea #38H - Year 1 Economics

Monthly EBITDA Cumm EBITDA Net Payout (4) Cumm Boe

(1) San Andreas well data/cost are based on offset operators. (2) Actual weighted average payout ratio will depend on exact details of where and how many wells Legacy drills and how much they spend. These are incorporated in more detail in BCC’s

models but are simplified for this description.(3) Source: Production data from the Texas Railroad Commission(4) This specific well is drilled into the 3rd Bone Spring formation. Most of the Bone Spring wells in the upper table on this page reflect 1st and 2nd BS. 3rD BS requires a deeper well. As such a

higher cost of $7M is assumed in this analysis.

• BCC has researched all of Legacy’s horizontal wells drilled in the Permian basin, for which data is available (50+) as well as results of offset operators that have de-risked Legacy’s non-developed acreage.

• The upper table on this page presents well economics for a series of geologic shelves (Bone Spring, Wolfcamp, Lower Spraberry, etc.) and illustrates the potential revenue and EBITDA contribution of each.

• The table and chart below demonstrate actual performance of a specific well drilled and operated by Legacy, along with the revenue and EBITDA potential based on the same assumptions in the upper table.

41

EBITDA Growth- Single Well Economics -

Legacy’s capital efficiency and asset base is such that new wells can pay for themselves entirely in 1-2 years and then generate more cash flow for new investment.

Legacy’s capital efficiency and asset base is such that new wells can pay for themselves entirely in 1-2 years and then generate more cash flow for new investment.

1st Year Payout Ratios (EBITDA/CapEx) range from 62% to 119%(2)

Gross Net Well CapitalGross Net Year 1 Year 1 Cost Efficiency Year 1 Year 1 Year 1EUR EUR % Oil Mboe Mboe (CapEx) ($/boepd) Revenue EBITDA Payout

BS 554 416 80% 111 83.06 $6,425 28,234 $4,886 $3,992 62%Lea WC 840 630 83% 168 126 $7,000 20,278 $7,581 $6,212 89%LS 575 431 76% 115 86.25 $5,700 24,122 $4,874 $3,960 69%WC 600 450 76% 120 90 $5,700 23,117 $5,086 $4,132 72%San Andreas(1) 340 255 95% 68 51 $2,400 17,176 $3,427 $2,847 119%

Geologic Formation

Permian Well Economics

*Assumptions: Royalty Rate - 25%: Realized Oil Price - $70; Realized NG Price - $2.30; Production Taxes – 7.25%; LOE/Boe - $6.50.

Month Boe BoepdCumm

BoeCumm % Oil

Monthly Revenue

Monthly EBITDA

Cumm EBITDA

Net Payout (4)

Cumm % Return

0 0 0 0 0 0 0 0 -$7,000 -100%1 10,170 363 10,170 83% 615$ 504$ 504$ -$6,496 -93%2 33,940 1,095 44,110 84% 2,070$ 1,699$ 2,203$ -$4,797 -69%3 9,322 311 53,432 84% 569$ 467$ 2,670$ -$4,330 -62%4 30,116 971 83,548 85% 1,861$ 1,530$ 4,200$ -$2,800 -40%5 236 8 83,784 85% 15$ 12$ 4,212$ -$2,788 -40%6 246 8 84,029 85% 15$ 12$ 4,225$ -$2,775 -40%7 12,804 413 96,833 85% 789$ 649$ 4,873$ -$2,127 -30%8 16,410 547 113,243 85% 1,007$ 827$ 5,701$ -$1,299 -19%9 10,866 351 124,110 84% 664$ 545$ 6,246$ -$754 -11%10 8,711 290 132,820 84% 531$ 436$ 6,682$ -$318 -5%11 9,483 306 142,303 84% 577$ 474$ 7,156$ $156 2%12 10,092 326 152,394 83% 613$ 503$ 7,658$ $658 9%

LEA UNIT #038H (3rd Bone Spring)API: 30-025-43077 (3)

317

504

926

3

140 20

72

3

323

86

113

( 48 )

( 101 )

( 2 )

$-

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000







- G&A Increase + NewConventionalProduction




2020 EBITDA

mill

ions

EBITDA Bridge from 2018 to 2020

2019 2020Permian CapEx ($ millions): $320 $492New EBITDA Contribution ($ millions): $140 $323Calendar Year Payout Ratio: 44% 66%

(1) This slide is showing the payout contribution in the calendar year that the CapEx is spent, which is lower than the range of payout ratios given on the previous slide for a single well. The reason for this has to do with the timing of CapEx investment within a calendar year and the when new wells come on line. The payout ratios on the previous slide are based on 1 full year of production of a new well (regardless of when it was drilled). This slide presents CapEx in a given year against new EBITDA contribution in that year. 42

EBITDA Growth- Complete Portfolio Economics -

• BCC’s has used its research on capital efficiency and well performance, along with public information about Legacy’s drilling locations to estimate production and EBITDA growth from future CapEx investment.

• BCC forecasts Legacy will invest $320M of CapEx into the Permian in 2019 (out of $400M total), and this will contribute $140M in new EBITDA in 2019, for a calendar year payout ratio of 44%.(1)

• Similarly, BCC forecasts $492M in CapEx Investment in the Permian in 2020 (out of $750M total) that will contribute $323M in new EBITDA in 2020, for a calendar year payout ratio of 66%.(1)

48,263 57,256

86,890

541 9,218 4,798

540

17,836

19,167

( 2,900 ) ( 2,664 )( 2,128 ) ( 5,186 )

( 596 )

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2018 Production - ConventionalDecline

- Permian HzDecline





- Permian HzDecline

- ETX Hz Decline + NewConventionalProduction



2020 Production

Boep

d

Production Bridge by Commodity Type from 2018 to 2020

NGL Oil Gas

48,263

57,256

86,890

541 9,218

4,798 540

17,836

19,167

( 2,900 ) ( 2,664 )

( 2,128 ) ( 5,186 )( 596 )

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000


- Permian HzDecline

+ NewConventional

Production




- Permian HzDecline

- ETX Hz Decline + NewConventionalProduction



2020 Production

Boep

d

Production Bridge by Location Category 2018 to 2020

Conventional Permian Hz ETX Hz

43

EBITDA Growth- Production Bridge -

Note new Permian production and East Texas production are dominant factors.

• Below is a similar bridge showing production growth from 2018 to 2020.

44

EBITDA Growth- Complete Portfolio Economics -

• The well economics on the previous pages provide information on capital efficiencies that can be used to define the EBITDA contribution from each category of wells across Legacy’s portfolio(1).

• The existing, low-decline PDP contributes a strong EBITDA foundation for growth in the Permian and East Texas. • BCC estimates all CapEx investment from 2019 onward to fall within operating cash flow. • Further, as Legacy’s portfolio matures, they can flatten CapEx investment and see cash flow continue to grow.

Every dollar of CapEx is covered by operating cash flow and is deployed efficiently enough to grow production substantially.

(1) The EBITDA values shown here represent the contribution for each category and as such do not include corporate G&A. (2) Legacy’s production is described in 3 categories: a) “Conventional” – historical, producing wells (primarily conventional

vertical wells) that existed before Legacy started its horizontal drilling program; b) Permian – new horizontal wells in the Permian basin, initiated in 2015. c) East Texas (E. TX.) – new horizontal wells in East Texas.

-

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

(mil

lion

s)

EBITDA Contribution by Category (2)

"Conventional" EBITDA: Permian EBITDA: E. TX. EBITDA:

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

($m

illio

ns)

CapEx and Cash Flow from Operations

Total Capex: Cash Flow from Operations:

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

CapE

x (m

illi

ons)

Reve

nue

(mil

lion

s)

Capex and Revnue by Category

"Conventional" Total Revenue: Permian Total Revenue: E. TX. Total Revenue:"Conventional" CapEx: Permian CapEx: E. TX CapEx:

45

EBITDA Growth- Model Outputs -

• Future production shows a significant increase in both oil and especially natural gas by volume. However, revenue growth will be dominated by new Permian horizontal oil production.

• Because of this, we believe near term CapEx investment will be weighted toward Permian horizontal development for the foreseeable future. From 2020 onward, a larger investment will be directed to East Texas to take advantage of the company’s infrastructure assets there.

• The low-decline historical production becomes an increasingly smaller percentage of total production over time, but enables the company to ramp quickly within cash flow.

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

CapE

x (m

illio

ns)

Prod

ucti

on (B

oepd

)

Capex and Production by Category

"Conventional" Total (Boepd): Permian New Total (Boepd): E. TX. New Total (Boepd):"Conventional" CapEx: Permian CapEx: E. TX CapEx:

Legacy Reserves Asset Analysis

46

Analysis of Legacy’s Assets

The following is a discussion of liquidation values of Legacy’s assets:

1. What is the value of current production (PDP reserves)?

2. What is the amount and value of de-risked acreage available for future horizontal development (based on comp sales)?

3. What opportunity is there for acquiring and/or swapping drillable acreage?

4. What, if anything, is the value of all remaining acreage as well as other assets/ infrastructure/ etc.?

47(1) Legacy’s Q2 Earnings Presentation, August 2018

(1)

$1.15B(3) ($1.053B PDP)

(1) Legacy only publishes its total N. American acreage; they do not report a breakdown by region. BCC research estimated ~250k net Permian acres as of Q417. (2) Source: Legacy’s Q2 Earnings Presentation, August 2018 (3) ~1.15B is the proven reserves value published in the 2017 reserves report, which was based on ~$48 oil price. Considering average spot prices YTD in 2018 of ~$67/Bbl, BCC estimates the same reserves estimate would suggest a value of ~$1.6B.

• Legacy’s assets can be described in 4 regions– Permian– East Texas– Mid-Continent – Rocky Mountain

• Total acreage ~ 538k net acres in N. America• BCC estimated their Permian acreage at ~250k net acre as of Q417(1)

– 41k de-risked net acres identified for drilling– 15k de-risked net acres in small blocks identified as drillable and

potential for swaps with adjacent locations– 194k other acres all held by low-decline PDP.

• East Texas ~165k net acres with 30k net acres de-risked(2)and identified for drilling; plus pipeline and other infrastructure

• 939 gross/ 673 net identified drilling locations(represents 23 years of inventory at current drilling rates)

• Current production of 47.5 Mboepd from all regions with <11% decline

Reserves report includes only 16 gross (10 net) drilling

locations…. Proved PV-10 of ~$1.15B(3)

includes only a small fraction of the total current inventory!

Asset Summary

48

(2)

(2)

Asset Value Analysis

Liquidation Value Analysis Slide

Current Production (PDP Reserves): Slide 50

De-risked Acreage (41k Permian Net Acres): Slides 51-53,56

Swap Acreage (15k Permian Net Acres): Slides 54-56

Other Permian Acreage (250k - 41k - 15k = 194k): Slide 56

Shelby Area Acreage (13k Net Acres): Slide 57-59

Other Assets (Pipeline/ Infrastructure): Slide 57

Total Liquidation Value: Slide 60

49

Value of Current Production(Liquidation value)

The table below documents BCC estimates of production from each of Legacy’s operating regions and applies an estimated price per production unit (i.e. either $ per Boe per day or $ per Mcfe per day) to arrive at a liquidation value for flowing production. The estimated sale price per unit of flowing production is based on comparable transaction prices for similar production profiles in each respective region.

(1) PDP sale prices are based on comparable sales for PDP collected by BCC since early 2015 50

EstimatedLiquidation

Boepd Mcfepd % Gas % Oil % NGLs Decline $/Boepd $/Mcfepd Value ($M)Permian Hz 11,881 24% 76% 34% 35,000 415.8 Permian Conventional 10,455 39% 56% 5% 11% 50,000 522.8 Piceance Basin (Rockies) 11,332 67,991 87% 13% 7% 13,800 2,300 156.4 Other Rockies 1,850 14% 86% 7% 50,000 92.5 E.TX 11,406 68,434 100% 6% 17,400 2,900 198.5 Mid-Con 600 30% 70% 4% 50,000 30.0

Total 47,524 56% 38% 6% 11% 29,794 1,416

PDP Sale Price (1)

Current EstimatedEstimated Q2'18 Production

Liquidation Value of De-risked Acreage

• Legacy has publicly disclosed a total of 538k net acres in North America, but does not provide a concise breakdown of regional acreage(1)

• BCC estimates the acreage breakdown as follows: – Permian Acreage: ~250k net acres(2)

• 41k net acres identified as de-risked and targeted for horizontal development• 15k net acres are identified smaller tracts in the Midland and Delaware basin with

significant value that can be swapped to create larger contiguous blocks• 194k net acres represent either potential for swap or will be held for existing PDP

– Rocky Mountain + Mid Continent: ~122k net acres– East Texas: 165k net acres(3)

• 30k net acres identified for horizontal development

• BCC has conducted extensive research on Permian Basin assets, looking at comparable sales by county to estimate both the value of PDP production as well as the liquidation value of the acreage.

(1) Source: Legacy 2017 Annual Report(2) This is a BCC estimate from Q42017; Legacy does not own rights to all benches in all of their acreage. (3) Source: Legacy Q417 Earnings Presentation 51

Liquidation Value of De-risked Acreage- Legacy Operated Permian Horizontal Acreage -

Legacy has disclosed 41k net de-risked acres currently targeted for near term horizontal drilling programs.

(1) Source: Legacy Q2 2018 earnings report 52

(1)

Liquidation Value of De-risked Acreage- Total Legacy Permian Acreage -

The company has significant additional acreage in the Permian that it can use either for future development or as a currency to build bigger blocks of acreage.

(1) Source: Legacy 2017 Earnings Presentation 53

(1)

Liquidation Value of De-risked Acreage- Permian Acreage Development -

• Legacy has described efforts to use its vast acreage as a currency to shore up more contiguous and valuable positions through swaps and acquisitions.

• Example: Howard County

Howard County Acreage in early 2018: 3513 Net AcresHoward County Acreage in early 2015: 1593 Net Acres

Adding sections allows for longer lateral drilling and improved capital efficiency

54(1) Source: Legacy Q2 2018 Earnings Report

(1)

Liquidation Value of De-risked Acreage- Smaller Tract Acreage -

• Legacy’s historical focus on PDP acquisitions in the Permian Basin has yielded a large portfolio of small tracts (typically <1 mile) with prospects for horizontal development.(1)

• In the Q218 earnings release, Legacy published detail on 15k net de-risked acres that has significant value to monetize through trades for properties contiguous to their near-term drilling prospects.

(1) To be conservative, this smaller acreage (15.5k net) is not included in the Monte Carlo simulations presented in the body of this document.

(2) Source: Legacy Reserves, LP Q2’18 earnings presentation 55

(2)

Liquidation Value of Existing Permian Acreage• BCC has conducted an analysis to estimate the

liquidation value of the current acreage by looking at the average selling price of acreage by region.

• This analysis breaks down Legacy’s Permian acreages as follows:

– 41k de-risked net acres identified for near-term development

– 15k net acres of smaller tracts identified for drilling or swaps

– All remaining acreage

• BCC researched actual transactions in the Permian from 2015-2017 in the vicinity of all of Legacy’s current assets. This required some assumption of the geology available in each county, both in Legacy’s assets as well as in the comparable sales. These should be very conservative estimates of acreage value given the oil price environment and overall sentiment in 2015-2017. Current market pricing is likely higher.

56

Gross Acres Net AcresAvg Sale

Price $/AcreAcreage Value

($millions)Central Basin Platform 11600 7800 500 4$ Delaware Basin 14300 10600 23500 249$ Midland Basin 12000 10600 21500 228$ Northwest Shelf 13600 12000 2500 30$ Total: 51500 41000 12,461$ 511$

Identified De-risked Locations (41k net acres shown as green on previous maps)



($millions)Central Basin Platform 0 0 -$ -$ Delaware Basin 23771 2746 23500 65$ Midland Basin 31785 12746 21500 274$ Northwest Shelf 0 0 -$ -$ Total: 55556 15492 21,855$ 339$

15k net acres of smaller tracts identified for drilling or swap to add value



($millions)

Total: 346000 194000 500$ 97$

Total estimated value of all acreage: 946$

All Remaining Acreage

Liquidation Value of East Texas Assets

• 108k net acres in the Freestone Area (98% HBP)– 17,400 net acres identified for horizontal development

• 12,800 net acres in the Shelby Area identified for horizontal development (99% HBP)

• Substantial infrastructure that is under-utilized – 567 miles of high pressure pipeline and low-pressure gathering– 500 Mmcf/d processing plant (running at <25% utilization)– With additional drilling, incremental transport/processing costs are very

low.

• Legacy also has 44k net acres in other East Texas areas.• Liquidation value

– Value of existing PDP: $199M (slide 50)– Estimate of pipeline and infrastructure assets: $100M(2)

– Liquidation Value of acreage: $32M(3)

(1) Sources: Legacy Reserves, LP April 2016 Investor Presentation; Legacy Reserves, Inc. September 2018 Investor Presentation

(2) Based on internal BCC research(3) Assume only Shelby acreage at $2500/acre x 12,800 net acres. It is difficult to price Freestone area acreage 1) because

there are not many comps in that area and 2) because there has not been significant horizontal drilling in that area. Legacy’s Freestone acreage likely to sell primarily for PDP reserves. For conservancy, we do not include any value of potential drillable acreage in the Freestone area in our estimates. 57

Shelby Area (1)

Freestone Area (1)

Potential for Larger Capital Allocation• Legacy’s Shelby area and Freestone area holdings allow

for large capital allocation, targeting longer lateral wells (~$10m allocation / well).

• Currently have over 70 identified drilling locations in the Freestone Area and 174 locations in the Shelby area.

• Most recent Shelby area wells generate EUR’s of 2.2Bcf/1,000’ lateral length (e.g. a single 5k ft lateral well will generate 11 Bcf in its life, worth approximately $27.5M at $2.5/mcf)

– Legacy has recently participated in wells in this area with Exxon Mobil (XTO).

• Existing production data in the Freestone area suggests EUR’s of 2 – 4 BCF/ 1000-ft lateral well

– Based on data from 8+ years ago– More recent well and frac designs may allow for improved

and more efficient performance.

• BCC believes Legacy’s strategy will be to drill horizontal wells in an area where horizontal development has been proven, but has not been active in quite some time. This will allow them to use newer drilling and fracking technology to leverage their existing pipeline and processing infrastructure with very low incremental Opex.

58

Potential for Large Capital Allocation

Vintage Freestone area well results representative of Legacy Holdings

59

By Field# of Wells

Avg Lateral

Avg 12m Production Avg EUR

Avg EUR/k

1st Production

Avg Well Age (yrs)

Newest Well

Dry Wells

Current Permits

Newest Permit

Primary Operator

BALD PRAIRIE 6 6413 1,896,384 9,481,921 2,351 Nov-2006 6.6 Nov-2017 0 6 Nov-2017 O'BrienBEAR GRASS 52 4087 1,555,815 7,779,073 2,157 Feb-2006 7.4 Jun-2015 1 15 May-2018 XTODEW 4 2031 762,879 3,814,395 2,070 Feb-2000 18.2 Dec-2000 0 0 LegacyDOWDY RANCH 5 2286 1,100,559 5,502,793 3,301 May-2000 13.2 Feb-2011 1 1 Oct-2009 LegacyFARRAR 21 3945 431,220 2,131,571 644 Feb-2007 7.8 Sep-2017 0 8 Jan-2013 XTOFREESTONE E. 11 3643 751,832 3,759,159 1,221 Dec-2006 8.6 Oct-2013 1 3 Jan-2017 LinnFREESTONE W. 7 4861 501,777 2,508,887 574 Jul-2010 5.7 Nov-2017 0 0 Jan-1900 LinnNAN-SU-GAIL 39 3043 1,731,455 8,657,277 2,947 Oct-2005 10.0 Sep-2011 1 2 Feb-2011 LinnPERSONVILLE, N 5 3815 608,752 3,043,759 697 Feb-2007 9.0 Nov-2011 0 5 Feb-2010 LinnTEAGUE 32 3141 950,280 4,751,399 1,427 Apr-1998 8.4 Jan-2015 0 13 May-2018 XTOTotal 182 3723 1,227,669 6,157,960 1,921 Apr-1998 8.6 Nov-2017 4 53 May-2018

By County# of Wells

Avg Lateral

Avg 12m Production Avg EUR

Avg EUR/k

1st Production

Avg Well Age (yrs)

Newest Well

Dry Wells

Current Permits

Newest Permit

Primary Operator

FREESTONE 87 3080 1,297,909 6,489,545 2,251 Apr-1998 9.7 Jun-2015 2 22 May-2018 XTOLEON 46 4090 1,651,067 8,255,334 2,281 Feb-2006 7.5 May-2015 1 11 May-2018 XTOLIMESTONE 42 4061 512,478 2,560,226 689 Dec-2006 8.0 Nov-2017 1 14 Jan-2017 XTOROBERTSON 7 6058 1,731,074 8,655,369 2,378 Nov-2006 6.1 Nov-2017 0 6 Nov-2017 O'BrienTotal 182 3723 1,227,669 6,157,960 1,921 Apr-1998 8.6 Nov-2017 4 53 May-2018

Legacy Asset Value

Liquidation Value AnalysisLiquidation Value

($millions)Current Production (PDP Reserves): $1,416

De-risked Acreage (41k Permian Net Acres): $511

Swap Acreage (15k Permian Net Acres): $339

Other Permian Acreage (250k - 41k - 15k = 194k): $97

Shelby Area Acreage (13k Net Acres): $32

Other Assets (Pipeline/ Infrastructure): $100

Total Estimated Liquidation Value of all Assets: $2,495

Net Debt (as of June 30, 2018) $1,319

Asset Value Less Net Debt $1,176

Net Asset Value per Share (~106.1M shares(1)) ~$11.08 / shareEquity Share Price (as of 9/20/18) $4.69 / shareNet Asset Value / Market Cap 2.4

The net value of assets are conservatively worth 2.4x the current equity value of the entire company! Suggests a conservative share price of $11+/share based on the net asset value alone.

60(1) Legacy 8k – September 20, 2018 lists a share count of 106.1M shares

Debt Summary

61

(1) Source: Legacy 2017 Earnings Report(2) The new 2023 Notes mandatorily convert when the common shares trade above $6 for 20 days out of any 30 day period. Legacy's common equity has closed above $6 on 40 of the

120 trading days since the end of Q1'18.(3) OCC compliance requires Net Debt to EBITDA ratio below 4X. This is likely what will be required to refinance or extend the senior 1L revolver; Refinancing the 2L term loan and

unsecured notes will likely require Debt/EBITDA ~3X; Note: BCC estimates proforma leverage ratio at Q3E’18 is 3.96, giving effect to conversion of the 2023 notes.

Debt Summary

62

Below is a summary of Legacy’s current debt profile (as of 9/20/18). Management has publicly stated a primary corporate objectives as follows:

“Evaluate and opportunistically pursue alternatives to … materially reduce our outstanding debt and extend our near term maturity debt” (1)

Critical to that effort is to drive down the leverage ratio to enable refinancing of existing debt. They have been achieving this 1) by pivoting their business model and 2) investing all operating cash flow into growing EBITDA sufficient to support the debt.

OCC Compliance Target: 4X(3)

(2)

As Legacy has pivoted their business. The next step is address debt maturities and grow substantially.

Comparable Valuations

63

Comparable Valuations

• These plots show forward 12 month and trailing 12 month EV / EBITDA multiples for peer companies operating in the Permian Basin(1)

• We believe most of the companies in the E&P space have been unloved for the past few years, and LGCY’s valuation in particular has been hampered by structural and cyclical inefficiencies in the market, as well as a general misunderstanding of its business model, assets and growth plans.

64(1) Source: Bloomberg as of 9/14/18

2 3 4 5 6 7 8 9

10

Forward EV / EBITDA Multiple for Legacy Peers(F12 @ Q2E 2018)

F12@Q2E'18 EV/EBITDA Average F12 EV/EBITDA - 6.26

Min 5.50 Max 13.58 Mean 9.53 Median 10.40 St. Dev 2.74 LGCY 6.40

@Q2E'18Trailing EV/ EBITDA

Min 3.73 Max 9.93 Mean 6.26 Median 6.45 St. Dev 1.87 LGCY 4.53

Forward EV/ EBITDA@Q2E'18

Disclaimers

This material contains data and information that were obtained from published sources believed to be reliable and which is presented for illustrative purposes only. None of the data or information presented herein from third party sources is warranted as to its accuracy or completeness. Further, due to the ever-changing nature of markets, the deductions, interrelationships, and conclusions drawn from historical data may not hold true in the future.

The discussion of return potential from an investment in Legacy Reserves, Inc or any other mentioned security is based on Baines Creek Capital’s internal projections for appreciation potential and is presented to show upside appreciation potential based on Baines Creek Capital’s estimates only. An investment in any public or private entity is subject to significant risks and could realize losses. The discussion of return potential and the other forward-looking statements contained herein generally will not be updated in future.

PAST PERFORMANCE AND PERFORMANCE PROJECTIONS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

65

Confidential/Proprietary Information

This presentation and the information contained in it are the exclusive property of Baines Creek Capital, LLC. and are protected by one or more of patent, trade secret, trademark, copyright and other laws. Any reproduction, distribution, or modification of any of the content on this presentation or any of the information contained in it, in any manner without the express written permission of Baines Creek Capital, LLC. is strictly prohibited.

Baines Creek Capital, LLC and their associated logos are trademarks or registered trademarks of Baines Creek Capital, LLC., and all rights are expressly reserved.

66

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