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UNDERWRITING AGREEMENT

Underwriting Agreement

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LEGACY RESERVES L P | Wachovia Capital Markets, LLC

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Title: UNDERWRITING AGREEMENT
Governing Law: New York     Date: 1/18/2007

UNDERWRITING AGREEMENT, Parties: legacy reserves l p , wachovia capital markets  llc
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Exhibit 1.1

Execution Copy

 

LEGACY RESERVES LP

6,000,000 Units

UNDERWRITING AGREEMENT

Dated: January 11, 2007

 

 


 

Table of Contents

 

 

 

 

 

 

 

Page

 

SECTION 1. Representations and Warranties

 

 

2

 

 

 

 

 

 

SECTION 2. Sale and Delivery to Underwriters; Closing

 

 

13

 

 

 

 

 

 

SECTION 3. Covenants of the Partnership

 

 

15

 

 

 

 

 

 

SECTION 4. Payment of Expenses

 

 

19

 

 

 

 

 

 

SECTION 5. Conditions of Underwriters’ Obligations

 

 

20

 

 

 

 

 

 

SECTION 6. Indemnification

 

 

23

 

 

 

 

 

 

SECTION 7. Contribution

 

 

25

 

 

 

 

 

 

SECTION 8. Representations, Warranties and Agreements to Survive Delivery

 

 

26

 

 

 

 

 

 

SECTION 9. Termination of Agreement

 

 

26

 

 

 

 

 

 

SECTION 10. Default by One or More of the Underwriters

 

 

27

 

 

 

 

 

 

SECTION 11. Notices

 

 

28

 

 

 

 

 

 

SECTION 12. Parties

 

 

28

 

 

 

 

 

 

SECTION 13. GOVERNING LAW AND TIME

 

 

28

 

 

 

 

 

 

SECTION 14. Effect of Headings

 

 

28

 

 

 

 

 

 

SECTION 15. Definitions

 

 

29

 

 

 

 

 

 

SECTION 16. Permitted Free Writing Prospectuses

 

 

32

 

 

 

 

 

 

SECTION 17. Absence of Fiduciary Relationship

 

 

32

 

EXHIBITS

Exhibit A – Underwriters
Exhibit B – Initial Securities to be Sold
Exhibit C – Subsidiaries of the Partnership
Exhibit D – List of Directors and Officers
Exhibit E – Form of Lock-Up Agreement
Exhibit F – Form of Opinion of Partnership Counsel
Exhibit G – Price-Related Information
Exhibit H – Issuer General Use Free Writing Prospectuses
Exhibit I – Existing Unitholders

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LEGACY RESERVES LP

6,000,000 Units

UNDERWRITING AGREEMENT

January 11, 2007

Wachovia Capital Markets, LLC
As Representative of the several Underwriters
c/o Wachovia Capital Markets, LLC
7 St. Paul Street
Baltimore, Maryland 21202

Ladies and Gentlemen:

     Legacy Reserves LP, a Delaware limited partnership (the “ Partnership ”), confirms its agreement with Wachovia Capital Markets, LLC (“ Wachovia ”) and each of the other Underwriters named in Exhibit A hereto (collectively, the “ Underwriters ,” which term shall also include any underwriter substituted as hereinafter provided in Section 10 hereof), for whom Wachovia is acting as representative (in such capacity, the “ Representative ”), with respect to the issue and sale by the Partnership of a total of 6,000,000 Units (the “ Initial Securities ”) representing limited partner interests in the Partnership (the “ Units ”), and the purchase by the Underwriters, acting severally and not jointly, of the respective numbers of Initial Securities set forth in said Exhibit A hereto, and with respect to the grant by the Partnership to the Underwriters, acting severally and not jointly, of the option described in Section 2(b) hereof to purchase all or any part of 900,000 additional Units to cover over-allotments, if any. The Initial Securities to be purchased by the Underwriters and all or any part of the 900,000 Units subject to the option described in Section 2(b) hereof (the “ Option Securities ”) are hereinafter called, collectively, the “ Securities .” Certain terms used in this Agreement are defined in Section 15 hereof.

     Legacy Reserves GP, LLC, a Delaware limited liability company (the “ General Partner ”), is the Partnership’s sole general partner. Legacy Reserves Operating GP, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Partnership (“ Operating GP ”), is the sole general partner of Legacy Reserves Operating LP, a Delaware limited partnership (the “ Operating Partnership ” and, together with the General Partner, the Partnership and the Operating GP, the “ Legacy Parties ” and, together with the direct and indirect subsidiaries of the Partnership (collectively, the “ Subsidiaries ”) listed on Exhibit C , the “ Partnership Entities ”).

     All or some of the Partnership Entities have entered into, prior to the date hereof, the following agreements (the “ Formation Documents ”): (i) the Amended and Restated Agreement of Limited Partnership governing the Partnership (the “ Partnership Agreement ”), (ii) the Amended and Restated Limited Liability Company Agreement governing the General Partner (the “ GP LLC Agreement ”), (iii) the Agreement of Limited Partnership governing the Operating Partnership (the “ Operating Partnership Agreement ”) and (iv) the Limited Liability Company Agreement governing the Operating GP (the “ Operating GP Agreement ”).

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     The Partnership understands that the Underwriters propose to make a public offering of the Securities as soon as the Representative deems advisable after this Agreement has been executed and delivered.

     The Partnership and the Underwriters agree that up to 5% of the Initial Securities to be purchased by the Underwriters (the “ Reserved Securities ”) shall be reserved for sale by the Underwriters to the Partnership’s directors, officers, friends, business associates and other related persons (the “ Reserved Security Offerees ”) as part of the distribution of the Securities by the Underwriters, subject to the terms of this Agreement, the applicable rules, regulations and interpretations of the NASD and all other applicable laws, rules and regulations. To the extent that any such Reserved Securities are not orally confirmed for purchase by any such Reserved Security Offeree before 9:00 A.M. (Eastern Time) on the first day of trading of the Securities, such Reserved Securities may, at the sole and absolute discretion of Wachovia, be offered to the public as part of the public offering contemplated hereby or offered or sold to any other Reserved Security Offerees.

     Promptly after the execution of this Agreement, the Partnership will prepare and file with the Commission a prospectus in accordance with the provisions of Rule 430A and Rule 424(b) and the Partnership has previously advised you of all information (financial and other) that will be set forth therein. Such prospectus in the form first furnished to the Underwriters for use in connection with the offering of the Securities is herein called the “ Prospectus .” Any Prospectus delivered pursuant to Rule 173(d) shall be identical to the electronically transmitted copy thereof filed with the Commission pursuant to Rule 424(b), except to the extent permitted by Regulation S-T.

     SECTION 1. Representations and Warranties .

     (a)  Representations and Warranties by the Partnership. The Legacy Parties jointly and severally represent and warrant to each Underwriter as of the date hereof, as of the Applicable Time, as of the Closing Date referred to in Section 2(c) hereof, and as of each Option Closing Date (if any) referred to in Section 2(b) hereof, and agrees with each Underwriter, as follows:

     (1) Compliance with Registration Requirements . The Securities have been duly registered under the 1933 Act pursuant to the Registration Statement. Each of the Initial Registration Statement and any Rule 462(b) Registration Statement has become effective under the 1933 Act and no stop order suspending the effectiveness of the Initial Registration Statement or any Rule 462(b) Registration Statement has been issued under the 1933 Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Partnership, are contemplated by the Commission, and any request on the part of the Commission for additional information has been complied with.

     At the respective times the Initial Registration Statement, any Rule 462(b) Registration Statement and any post-effective amendments thereto became or become effective and at the Closing Date (and, if any Option Securities are purchased, at the applicable Option Closing Date), the Initial Registration Statement, any Rule 462(b) Registration Statement and any amendments and supplements thereto complied and will

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comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Neither the Prospectus nor any amendments or supplements thereto, as of its date, at the Closing Date (and, if any Option Securities are purchased, at the applicable Option Closing Date), and at any time when a prospectus is required by applicable law to be delivered in connection with sales of Securities, included or will include an untrue statement of a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Each of the statements made by the Partnership in such documents within the coverage of Rule 175(b) of the Rules and Regulations, including (but not limited to) any projections, results of operations or statements with respect to future available cash or future cash distributions of the Partnership or the anticipated ratio of taxable income to distributions, was made or will be made with a reasonable basis and in good faith. The representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement, the Statutory Prospectus, the Prospectus or any Issuer Free Writing Prospectus made in reliance upon and in conformity with information furnished to the Partnership in writing by any Underwriter through Wachovia expressly for use in the Registration Statement, the Statutory Prospectus, the Prospectus or such Issuer Free Writing Prospectus, as the case may be.

     Each preliminary prospectus and prospectus filed as part of the Registration Statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the 1933 Act in connection with the offering of the Securities (including, without limitation, the Prospectus and the Statutory Prospectus), complied when so filed in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and each preliminary prospectus and prospectus (including, without limitation, the Prospectus and the Statutory Prospectus) and any amendments or supplements thereto delivered to the Underwriters for use in connection with the offering of the Securities was identical to the electronically transmitted copy thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

     As of the Applicable Time, neither (a) any Issuer General Use Free Writing Prospectuses issued at or prior to the Applicable Time, the Statutory Prospectus as of the Applicable Time and the information included on Exhibit H hereto, all considered together (collectively, the “ General Disclosure Package ”), nor (b) any individual Issuer Limited Use Free Writing Prospectus, when considered together with the General Disclosure Package, included or will include any untrue statement of a material fact or omitted or will omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

     The Partnership has made available a “bona fide electronic road show” (as defined in Rule 433(h)(5)) in compliance with Rule 433(d)(8)(ii) such that no filing with the Commission of any “road show” (as defined in Rule 433(h)) is required in connection with the offering of the Securities.

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     Each Issuer Free Writing Prospectus, as of its date and at all subsequent times through the completion of the public offering and sale of the Securities, did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement or the Statutory Prospectus or the Prospectus and any preliminary or other prospectus deemed to be a part thereof that has not been superseded or modified.

     At the time of filing the Initial Registration Statement, any 462(b) Registration Statement and any post-effective amendments thereto and at the date hereof, the Partnership was not and is not an “ ineligible issuer ” as defined in Rule 405, in each case without taking into account any determination made by the Commission pursuant to paragraph 2 of the definition of such term in Rule 405.

     (2) Independent Accountants . The accountants who certified the financial statements and supporting schedules included in the Registration Statement and the Prospectus are independent public accountants as required by the 1933 Act and the 1933 Act Regulations.

     (3) Reserve Engineer . LaRoche Petroleum Consultants Ltd. (the “ Reservoir Engineer ”), whose report is included in the Registration Statement (the “ Reserve Report ”) are the Partnership’s independent reserve engineers. No information has come to the attention of the Partnership or, to the Partnership’s knowledge, to the Reservoir Engineer, that could reasonably be expected to cause the Reservoir Engineer to withdraw its Reserve Report.

     (4) Information Underlying Reserve Report . The information underlying the estimates of the Partnership’s proved reserves that was supplied to the Reservoir Engineer for the purposes of preparing the Reserve Report and estimates of the proved reserves of the Partnership disclosed in the Registration Statement, General Disclosure Package and the Prospectus, including, production, costs of operation, and, to the Partnership Entities’ knowledge, future operations and sales of production, was true and correct in all material respects on the dates such information was provided, and such information was supplied and was prepared in accordance with customary industry practices; and the estimates of such reserves and standardized measure thereof as described in the Registration Statement, General Disclosure Package and the Prospectus and future net cash flow reflected in the Reserve Report referenced therein have been prepared in a manner that complies with the applicable requirements of the 1933 Act Regulations. Other than normal production of the reserves, product price fluctuations, and fluctuations of demand for such products, and except as disclosed in the Registration Statement, General Disclosure Package and the Prospectus, no Legacy Party is aware of any facts or circumstances that would result in a materially adverse change in the reserves in the aggregate, or the aggregate present value of the future net cash flows therefrom as described in the Registration Statement, General Disclosure Package and the Prospectus and as reflected in the Reserve Report.

     (5) Financial Statements . The financial statements of the Partnership included in the Registration Statement, the General Disclosure Package and the Prospectus,

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together with the related schedules (if any) and notes, present fairly in all material respects the financial position of the Partnership and its consolidated subsidiaries at the dates indicated and the results of operations, changes in unitholders’ equity and cash flows of the Partnership and its consolidated subsidiaries for the periods specified; the financial statements of any other entities or businesses included in the Registration Statement, the General Disclosure Package or the Prospectus, together with the related schedules (if any) and notes, present fairly in all material respects the financial position of each such entity or business, as the case may be, and its consolidated subsidiaries (if any) at the dates indicated and the results of operations, changes in stockholders’ (or other owners’) equity and cash flows of such entity or business, as the case may be, and its consolidated subsidiaries, if any, for the periods specified; and all such financial statements have been prepared in conformity with GAAP applied on a consistent basis throughout the periods involved and comply with all applicable accounting requirements under the 1933 Act and the 1933 Act Regulations. The supporting schedules, if any, included in the Registration Statement present fairly, in all material respects in accordance with GAAP, the information required to be stated therein. The information (other than the pro forma information) in the Statutory Prospectus constituting a part of the General Disclosure Package and in the Prospectus under the captions “Summary Historical and Pro Forma Consolidated Financial and Operating Data” and “Selected Historical and Pro Forma Consolidated Financial Data” presents fairly in all material respects the information shown therein and has been compiled on a basis consistent with that of the audited financial statements of the Partnership included in the Registration Statement and the Prospectus. The pro forma financial statements and the related notes thereto included in the Registration Statement, the General Disclosure Package and the Prospectus present fairly in all material respects the information shown therein, have been prepared in accordance with the Commission’s rules and guidelines with respect to pro forma financial statements and have been properly compiled on the bases described therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein; and the pro forma information appearing in the Statutory Prospectus constituting a part of the General Disclosure Package and in the Prospectus under the caption “Summary Historical and Pro Forma Consolidated Financial and Operating Data” presents fairly in all material respects the information shown therein and has been compiled on a basis consistent with that of the pro forma financial statements included in the Registration Statement, the General Disclosure Package and the Prospectus. All information contained in the Registration Statement, the General Disclosure Package and the Prospectus regarding “non-GAAP financial measures” (as defined in Regulation G of the Commission) complies with Regulation G and Item 10 of Regulation S-K of the Commission, to the extent applicable. There are no financial statements (historical or pro forma) that are required to be included in the Registration Statement, the General Disclosure Package or the Prospectus that are not included as required.

     (6) No Material Adverse Change in Business . Since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package and the Prospectus (in each case exclusive of any amendments or supplements thereto subsequent to the date of this Agreement), except as otherwise stated therein, (A) there

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has been no material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Partnership and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business (a “Material Adverse Effect”), (B) there have been no transactions entered into by the Partnership or any of its subsidiaries which are material with respect to the Partnership and its subsidiaries considered as one enterprise, and (C) except for regular quarterly distributions on the Units in amounts per Unit that are consistent with past practice, there has been no dividend or distribution of any kind declared, paid or made by the Partnership on the Units.

     (7) Good Standing of the Partnership Entities . Each Partnership Entity has been duly organized or formed and is validly existing as a limited partnership, limited liability company, corporation or other business entity, in good standing under the laws of the state of its incorporation or formation and has power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement, the General Disclosure Package and the Prospectus and to enter into and perform its obligations under this Agreement; and the Partnership is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except to the extent that the failure to be so qualified or be in good standing would not, individually or in the aggregate result in a Material Adverse Effect.

     (8) Entity Ownership

          (a) Moriah Properties, Ltd., DAB Resources, Ltd., Brothers Production Properties, Ltd., Brothers Production Company, Inc., Brothers Operating Company, Inc., J&W McGraw Properties, Ltd., MBN Properties LP, and H2K Holdings, Ltd. own 100% of the issued and outstanding membership interests in the General Partner; such membership interests have been duly authorized and validly issued in accordance with the GP LLC Agreement, and are fully paid and non-assessable (except as such non-assessability may be limited by Sections 18-607 and 18-804 of the Delaware LLC Act); and such persons and entities own such membership interests free and clear of all Liens.

          (b) The General Partner is the sole general partner of the Partnership with an approximate 0.1% general partner interest in the Partnership; such general partner interest has been duly authorized and validly issued in accordance with the Partnership Agreement, and is fully paid; and the General Partner owns such general partner interest free and clear of all Liens; the General Partner owns no assets, and has no business, other than with respect to its general partner interest in the Partnership.

          (c) At the Closing Date, after giving effect to the offering contemplated hereby (assuming the option to purchase Option Securities is not exercised), the persons listed on Exhibit I (the “ Existing Unitholders ”) will own 13,240,068 Units, representing collectively an approximate 54.1% limited partner interest in the Partnership (the “ Existing Unitholder Units ”). All of the issued and outstanding

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Existing Unitholder Units, and the limited partner interests represented thereby, have been duly authorized and validly issued in accordance with the Partnership Agreement, and are fully paid (to the extent required under the Partnership Agreement) and non-assessable (except as such non-assessability may be affected by Sections 17-607 and 18-804 of the Delaware LP Act).

          (d) The Units to be issued and sold by the Partnership hereunder, and the limited partner interests represented thereby, will be duly authorized in accordance with the Partnership Agreement and, when issued and delivered to the purchaser thereof against payment therefor in accordance with the terms of this Agreement, will be validly issued, fully paid (to the extent required under the Partnership Agreement) and non-assessable (except as such non-assessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware LP Act).

     (9) Operating GP Ownership . The Partnership owns 100% of the membership interests in the Operating GP; such membership interests have been duly authorized and validly issued in accordance with the Operating GP Agreement, and are fully paid and non-assessable (except as such non-assessability may be affected by Sections 18-607 and 18-804 of the Delaware LLC Act); and the Partnership owns such membership interests free and clear of all Liens, except for the pledge of such membership interests under the Existing Credit Agreement.

     (10) Operating Partnership Ownership . (A) The Operating GP is the sole general partner of the Operating Partnership with a 0.1% general partner interest in the Operating Partnership; such general partner interest has been duly authorized and validly issued in accordance with the Operating Partnership Agreement, and is fully paid; and the Operating GP owns such general partner interest free and clear of all Liens, except for the pledge of such general partner interest under the Existing Credit Agreement; and (B) the Partnership is the sole limited partner of the Operating Partnership with a 99.9% limited partner interest in the Operating Partnership; such limited partner interest has been duly authorized and validly issued in accordance with the Operating Partnership Agreement and is fully paid (to the extent required under the Operating Partnership Agreement) and non-assessable (except as such non-assessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware LP Act and as otherwise described in the Prospectus); and the Partnership owns such limited partner interest free and clear of all Liens, except for the pledge of such limited partner interest under the Existing Credit Agreement.

     (11) No Other Subsidiaries . Other than ownership interests in the Subsidiaries, the Partnership does not own, and at the Closing Date and the Option Closing Date, will not own, directly or indirectly, an equity or long-term debt securities of any corporation, partnership, limited liability company, joint venture, association or other entity. Other than its ownership interest in the Partnership and its indirect ownership interests in the Subsidiaries, the General Partner does not own, and at the Closing Date and the Option Closing Date will not own, directly or indirectly, any equity or long-term debt securities of any corporation, partnership, limited liability company, joint venture, association or other entity.

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     (12) Authorization of Agreement . This Agreement has been duly authorized, executed and delivered by the Legacy Parties.

     (13) Description of Securities . The Units and the Partnership’s Organizational Documents conform in all material respects to all of the respective statements relating thereto contained in the Registration Statement, the General Disclosure Package and the Prospectus and such statements conform in all material respects to the rights set forth in the respective instruments and agreements defining the same.

     (14) Absence of Defaults and Conflicts . Neither the Partnership nor any of its subsidiaries is in violation of its Organizational Documents or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any Partnership Document, except (solely in the case of Partnership Documents other than Subject Instruments) for such defaults that would not result in a Material Adverse Effect. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein and in the Registration Statement, the General Disclosure Package and the Prospectus (including the issuance and sale of the Securities and the use of the proceeds from the sale of the Securities as described in the Prospectus under the caption “Use of Proceeds”) and compliance by the Legacy Parties with their obligations under this Agreement do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event under, or result in the creation or imposition of any Lien upon any property or assets of the Partnership or any of its subsidiaries pursuant to any Partnership Documents, except (solely in the case of Partnership Documents other than Subject Instruments) for such conflicts, breaches, defaults or Liens that would not result in a Material Adverse Effect, nor will such action result in any violation of the provisions of the Organizational Documents of the Partnership or any of its subsidiaries or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Partnership or any of its subsidiaries or any of their respective assets, properties or operations, except for such violations of any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Partnership or any of its subsidiaries or any of their respective assets, properties or operations that would not, individually or in the aggregate, result in a Material Adverse Effect.

     (15) Absence of Labor Dispute . No labor dispute with the employees of any Partnership Entity exists or, to the knowledge of the Partnership, is threatened or imminent, and the Partnership is not aware of any existing or imminent labor disturbance by the employees of any of the principal suppliers, manufacturers, customers or contractors of any Partnership Entity which, in any such case, would reasonably be expected to result in a Material Adverse Effect.

     (16) Absence of Proceedings . There is no action, suit, proceeding, inquiry or investigation before or brought by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Partnership, threatened, against or affecting any Partnership Entity which is required to be disclosed in the Registration

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Statement (other than as disclosed therein), or which would reasonably be expected to result in a Material Adverse Effect, or which would reasonably be expected to materially and adversely affect the properties or assets thereof or the consummation of the transactions contemplated in this Agreement or the performance by the Partnership of its obligations under this Agreement; the aggregate of all pending legal or governmental proceedings to which any Partnership Entity is a party or of which any of their respective property or assets is the subject which are not described in the Registration Statement, including ordinary routine litigation incidental to the business, could not reasonably be expected to result in a Material Adverse Effect.

     (17) Accuracy of Descriptions and Exhibits . The information in the Statutory Prospectus constituting a part of the General Disclosure Package and in the Prospectus under the captions “Business—Environmental Matters and Regulation,” “Business—Other Regulation of the Oil and Natural Gas Industry,” “Business—Legal Proceedings,” “Description of Units,” and “Material Tax Consequences,” in each case to the extent that it constitutes matters of law, summaries of legal matters, summaries of provisions of the Partnership’s Organizational Documents or any other instruments or agreements, summaries of legal proceedings, or legal conclusions, is correct in all material respects; all descriptions in the Registration Statement, the General Disclosure Package and the Prospectus of any Partnership Documents are accurate in all material respects; and there are no franchises, contracts, indentures, mortgages, deeds of trust, loan or credit agreements, bonds, notes, debentures, evidences of indebtedness, leases or other instruments or agreements required to be described or referred to in the Registration Statement, the Statutory Prospectus constituting a part of the General Disclosure Package or the Prospectus or to be filed as exhibits to the Registration Statement which have not been so described and filed as required.

     (18) Possession of Intellectual Property . The Partnership and its subsidiaries own or possess or have the right to use on reasonable terms all patents, patent rights, patent applications, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names, service names and other intellectual property (collectively, “ Intellectual Property ”) necessary to carry on their respective businesses as described in the Prospectus except where the failure to own, possess or have the right to use would not, individually or in the aggregate, result in a Material Adverse Effect; and neither the Partnership nor any of its subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Partnership or any of its subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, individually or in the aggregate, would result in a Material Adverse Effect.

     (19) Absence of Further Requirements . (A) No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency, domestic or foreign, (B) no authorization, approval, vote or other consent of any member, unitholder or creditor of any Partnership Entity,

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(C) no waiver or consent under any Subject Instrument, and (D) no authorization, approval, vote or other consent of any other person or entity, is necessary or required for the performance by the Partnership of its obligations under this Agreement, for the offering, issuance, sale or delivery of the Securities hereunder, or for the consummation of any of the other transactions contemplated by this Agreement, in each case on the terms contemplated by the Registration Statement, the General Disclosure Package and the Prospectus, except such as have been already obtained under the 1933 Act or the 1933 Act Regulations or such as may be required under state securities laws.

     (20) Possession of Licenses and Permits . The Partnership Entities possess such permits, licenses, approvals, consents and other authorizations (collectively, “ Governmental Licenses ”) issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business now operated by them, except where the failure to possess such permits, licenses, approvals, consents and other authorizations would not, individually or in the aggregate, have a Material Adverse Effect; the Partnership Entities are in compliance with the terms and conditions of all such Governmental Licenses, except where the failure so to comply would not, individually or in the aggregate, have a Material Adverse Effect; all of the Governmental Licenses are valid and in full force and effect, except when the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not, individually or in the aggregate, have a Material Adverse Effect; and none of the Partnership Entities has received any notice of proceedings relating to the revocation or modification of any such Governmental Licenses which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect.

     (21) Title to Assets . Each of the Partnership Entities has (A) legal, valid and defensible title to the interests in Oil and Gas Properties supporting the estimates of its net proved reserves contained in the Registration Statement, the General Disclosure Package and the Prospectus, (B) good and marketable title in fee simple to all real property other than Oil and Gas Properties covered by clause (A), and (C) good and marketable title to all personal property owned by them, in each case free and clear of all Liens except such as are described in the Registration Statement, the General Disclosure Package and the Prospectus or such as do not materially affect the value of the property of the Partnership Entities, taken as a whole, and do not materially interfere with the use made of such property by any of the Partnership Entities; all real property and buildings held under lease by any of the Partnership Entities are held by them under valid, subsisting and enforceable leases, with such exceptions as do not materially affect the value of such property and do not materially interfere with the use made of such property by any of the Partnership Entities. The Working Interests derived from the Oil and Gas Properties evidence in all material respects the right of the Partnership Entities to explore, develop and produce hydrocarbons from such Hydrocarbon Interests, and the acquisition and procurement of such oil and gas leases, options to lease, drilling rights and concessions or other property interests was generally consistent with standard industry practices in the areas in which the Partnership Entities operate for acquiring or procuring oil and gas leases and interests therein to explore, develop or produce hydrocarbons.

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     (22) Investment Company Act . No Partnership Entity is, and upon the issuance by the Partnership and sale of the Securities as herein contemplated and the application of the net proceeds therefrom as described in the Prospectus, no Partnership Entity will be, an “investment company” or an entity “controlled” by an “investment company” as such terms are defined in the 1940 Act.

     (23) Environmental Laws . Except as described in the Registration Statement, the General Disclosure Package and the Prospectus and except as would not, individually or in the aggregate, result in a Material Adverse Effect, (A) no Partnership Entity is in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products (collectively, “ Hazardous Materials ”) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, “ Environmental Laws ”), (B) the Partnership Entities have all permits, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements, (C) there are no pending or threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against any Partnership Entity and (D) there are no events or circumstances that might reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting any Partnership Entity relating to Hazardous Materials or any Environmental Laws.

     (24) Absence of Registration Rights . Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, there are no persons with registration rights or other similar rights to have any securities (debt or equity) (A) registered pursuant to the Registration Statement or included in the offering contemplated by this Agreement or (B) otherwise registered by the Partnership under the 1933 Act. There are no persons with tag along rights or other similar rights (other than any such rights which have been complied with or waived) to have any securities (debt or equity) included in the offering contemplated by this Agreement or sold in connection with the sale of Securities by the Partnership pursuant to this Agreement.

     (25) Parties to Lock-Up Agreements . Each of the parties listed on Exhibit D hereto has executed and delivered to the Representative a lock-up agreement in the form of Exhibit E hereto. Exhibit D hereto contains a true, complete and correct list of all directors and officers of the Legacy Parties.

     (26) Nasdaq Global Market . The Securities being sold hereunder by the Partnership have been approved for listing, subject only to official notice of issuance, on the Nasdaq Global Market.

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     (27) NASD Matters . All of the information provided to the Underwriters or to counsel for the Underwriters by the Partnership and its officers and directors in connection with letters, filings or other supplemental information provided to NASD Regulation Inc. pursuant to NASD Conduct Rule 2710 or 2720 is true, complete and correct.

     (28) Tax Returns . The Partnership Entities have filed all foreign, federal, state and local tax returns that are required to be filed or have requested extensions thereof, except where the failure so to file would not, individually or in the aggregate, have a Material Adverse Effect, and have paid all taxes required to be paid by them and any other assessment, fine or penalty levied against any of them, to the extent that any of the foregoing is due and payable, except for any such tax, assessment, fine or penalty that is currently being contested in good faith by appropriate actions and except for such taxes, assessments, fines or penalties the nonpayment of which would not, individually or in the aggregate, have a Material Adverse Effect.

     (29) Insurance . The Partnership Entities are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as, in management’s judgment, are prudent and customary in the businesses in which they are engaged; all policies of insurance and any fidelity or surety bonds insuring any Partnership Entity or their respective businesses, assets, employees, officers and directors are in full force and effect; the Partnership Entities are in compliance with the terms of such policies and instruments in all material respects; there are no claims by any Partnership Entity under any such policy or instrument as to which any insurance company is denying liability or defending under a reservation of rights clause; no Partnership Entity has been refused any insurance coverage sought or applied for; and no Partnership Entity has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not result in a Material Adverse Effect.

     (30) Accounting Controls . The Partnership Entities (A) make and keep books, records and accounts, which, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets and; (B) maintain and have maintained effective internal control over financial reporting as defined in Rule 13a-15 under the Exchange Act and a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for their assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

     (31) Compliance with the Sarbanes-Oxley Act. There is and has been no failure on the part of the Partnership or any of the Partnership’s directors or officers, in their capacities as such, to comply in all material respects with any provision of the

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Sarbanes-Oxley Act with which any of them is required to comply, including Section 402 related to loans.

     (32) Absence of Manipulation . No Partnership Entity has taken nor will any Partnership Entity take, directly or indirectly, any action designed to or that would constitute or that might reasonably be expected to cause or result in the stabilization or manipulation of the price of any security to facilitate the sale or resale of the Securities.

     (33) No Right of First Refusal . No Partnership Entity nor any other person has any preemptive right, right of first refusal or other similar right to purchase or otherwise acquire any of the Securities to be sold by the Partnership to the Underwriters pursuant to this Agreement.

     (34) Statistical, Demographic or Market-Related Data . Any statistical, demographic, market-related, customer-related or production-related data included in the Registration Statement, the General Disclosure Package or the Prospectus is based on or derived from sources that the Partnership believes to be reliable and accurate and all such data included in the Registration Statement, the General Disclosure Package or the Prospectus accurately reflects the materials upon which it is based or from which it was derived.

     (35) Lending Relationship . Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, no Partnership Entity has any lending relationship or other commercial banking relationship with any bank or similar institution affiliated with any of the Underwriters, and no Partnership Entity intends to use any of the proceeds from the sale of the Securities to repay any debt owed to any Underwriter or any affiliate of any Underwriter.

     (36) No Prohibition on Dividends by Subsidiaries . No subsidiary of the Partnership is prohibited, directly or indirectly, from paying any dividends or making any other distributions on such subsidiary’s capital stock, from repaying any debt owed to the Partnership or any of its other subsidiaries, or from transferring any of its property or assets to the Partnership or any of its other subsidiaries, except as described in or contemplated by (A) the Registration Statement, General Disclosure Package and the Prospectus or (B) the organizational documents of the Subsidiaries.

     (b)  Certificates. Any certificate signed by any officer of the Partnership Entities or any of its subsidiaries and delivered to the Representative or to counsel for the Underwriters shall be deemed a representation and warranty by such Partnership Entity to each Underwriter as to the matters covered thereby.

     SECTION 2. Sale and Delivery to Underwriters; Closing .

     (a)  Initial Securities. On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Partnership agrees to sell to each Underwriter, severally and not jointly, and each Underwriter, severally and not jointly, agrees to purchase from the Partnership, at the price of $17.67 per Unit (the “ Purchase Price ”), that proportion of the number of Initial Securities set forth in Exhibit B opposite the name of the

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Partnership, which the number of Initial Securities set forth in Exhibit A opposite the name of such Underwriter, plus any additional number of Initial Securities which such Underwriter may become obligated to purchase pursuant to the provisions of Section 10 hereof, bears to the total number of Initial Securities, subject in each case to such adjustments among the Underwriters as the Representative in its sole discretion shall make to eliminate any sales or purchases of fractional Securities. The price at which the Securities shall initially be offered to the public is $19.00 per Unit.

     (b)  Option Securities. In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Partnership hereby grants an option to the Underwriters, severally and not jointly, to purchase up to 900,000 Units at a price per Unit equal to the Purchase Price referred to in Section 2(a) above; provided that the price per Unit for any Option Securities shall be reduced by an amount per Unit equal to any dividends or distributions declared by the Partnership and payable or paid on the Initial Securities but not payable on such Option Securities. The option hereby granted will expire at the close of business on the 30th day after the date hereof and may be exercised in whole or in part from time to time only for the purpose of covering over-allotments which may be made in connection with the offering and distribution of the Initial Securities upon notice by the Representative to the Partnership setting forth the number of Option Securities as to which the several Underwriters are then exercising the option and the time and date of payment and delivery for such Option Securities. Any such time and date of delivery (an “ Option Closing Date ”) shall be determined by the Representative, but shall not be later than seven full business days after the exercise of said option, nor in any event prior to the Closing Date, as hereinafter defined. If the option is exercised as to all or any portion of the Option Securities, the Partnership will sell to the Underwriters that number of Option Securities as to which the Underwriters are exercising the Option, and each of the Underwriters, acting severally and not jointly, will purchase that proportion of the total number of Option Securities then being purchased which the number of Initial Securities set forth in Exhibit A opposite the name of such Underwriter, plus any additional number of Initial Securities which such Underwriter may become obligated to purchase pursuant to the provisions of Section 10 hereof, bears to the total number of Initial Securities, subject in each case to such adjustments as the Representative in their discretion shall make to eliminate any sales or purchases of fractional Units.

     (c)  Payment. Payment of the purchase price for, and delivery of certificates for, the Initial Securities shall be made at the offices of Andrews Kurth LLP, 600 Travis, Suite 4200, Houston, Texas 77002, or at such other place as shall be agreed upon by the Representative and the Partnership, at 9:00 A.M. (Eastern time) on January 18, 2007 (unless postponed in accordance with the provisions of Section 10), or such other time not later than ten business days after such date as shall be agreed upon by the Representative and the Partnership (such time and date of payment and delivery being herein called “ Closing Date ”).

     In addition, in the event that any or all of the Option Securities are purchased by the Underwriters, payment of the purchase price for, and delivery of certificates for, such Option Securities shall be made at the above-mentioned offices, or at such other place as shall be agreed upon by the Representative and the Partnership, on each Option Closing Date as specified in the notice from the Representative to the Partnership.

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     Payment shall be made to the Partnership by wire transfer of immediately available funds to a single bank account designated by the Partnership against delivery to the Representative for the respective accounts of the Underwriters of certificates for the Securities to be purchased by them. It is understood that each Underwriter has authorized the Representative, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the Initial Securities and the Option Securities, if any, which it has agreed to purchase. Wachovia, individually and not as representative of the Underwriters, may (but shall not be obligated to) make payment of the purchase price for the Initial Securities or the Option Securities, if any, to be purchased by any Underwriter whose funds have not been received by the Closing Date or the relevant Option Closing Date, as the case may be, but such payment shall not relieve such Underwriter from its obligations hereunder.

     (d)  Denominations; Registration. Certificates for the Initial Securities and the Option Securities, if any, shall be in such denominations and registered in such names as the Representative may request in writing at least one full business day before the Closing Date or the relevant Option Closing Date, as the case may be. The certificates for the Initial Securities and the Option Securities, if any, will be made available for examination and packaging by the Representative in Houston, Texas not later than noon (Central time) on the business day prior to the Closing Date or the relevant Option Closing Date, as the case may be.

     SECTION 3. Covenants of the Partnership . The Partnership covenants with each Underwriter as follows:

     (a) Compliance with Securities Regulations and Commission Requests. The Partnership, subject to Section 3(b), will comply with the requirements of Rule 430A and will notify the Representative immediately, and confirm the notice in writing, (i) when the Initial Registration Statement, any Rule 462(b) Registration Statement or any post-effective amendment to the Registration Statement shall become effective, or any supplement to the Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt of any comments from the Commission, (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or any Issuer Free Writing Prospectus or for additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes, or of any examination pursuant to Section 8(e) of the 1933 Act concerning the Registration Statement and (v) if the Partnership becomes the subject of a proceeding under Section 8A of the 1933 Act in connection with the offering of the Securities. The Partnership will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible moment.

     (b) Filing of Amendments. The Partnership will give the Representative notice of its intention to file or prepare any amendment to the Registration Statement (including any filing under Rule 462(b)) or any amendment, supplement or revision to either the prospectus included in the Registration Statement at the time it became

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effective or to the Prospectus, whether pursuant to the 1933 Act or otherwise, or (without limitation to the provisions of Section 16 of this Agreement), any Issuer Free Writing Prospectus or any amendment or supplement thereto, and will furnish the Representative with copies of any such documents within a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file or use any such document to which the Representative or counsel for the Underwriters shall object.

     (c) Delivery of Registration Statements. The Partnership has furnished or will deliver to the Representative and counsel for the Underwriters, without charge, signed copies of the Registration Statement as originally filed and of each amendment thereto (including exhibits filed therewith) and signed copies of all consents and certificates of experts. The copies of the Registration Statement and each amendment thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

     (d) Delivery of Prospectuses. The Partnership has delivered to each Underwriter, without charge, as many copies of each preliminary prospectus and any Issuer Free Writing Prospectuses prepared prior to the date of this Agreement as such Underwriter reasonably requested, and the Partnership hereby consents to the use of such copies for purposes permitted by the 1933 Act. The Partnership will furnish to each Underwriter, without charge, such number of copies of the documents constituting the General Disclosure Package, any Issuer Free Writing Prospectuses prepared on or after the date of this Agreement and the Prospectus (and any amendments or supplements thereto) as such Underwriter may reasonably request. The Statutory Prospectus, each Issuer Free Writing Prospectus and the Prospectus and any amendments or supplements thereto furnished to the Underwriters is or will be, as the case may be, identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

     (e) Continued Compliance with Securities Laws. The Partnership will comply with the 1933 Act, the 1933 Act Regulations so as to permit the completion of the distribution of the Securities as contemplated in this Agreement and in the Prospectus. If at any time when a prospectus is required by the 1933 Act to be delivered in connection with sales of the Securities (including, without lim


 
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