Permian driller Legacy plunges 56% on strategic review

By Joe Carroll on 3/15/2019

HOUSTON (Bloomberg) -- Permian shale oil explorer Legacy Reserves Inc. lost more than half its market value after announcing plans to explore “strategic alternatives” including selling all or part of the company.

The stock dropped as much as 56% on Thursday to 59 cents for the biggest intraday collapse in more than a decade. The announcement late Wednesday brought the Midland, Texas-based company’s 12-month decline to 85%. The shares traded close to $10 as recently as May.

Legacy launched a shale buying spree beginning in 2007 that didn’t stop until 2015 amidst the worst crude-market slump in a generation. Investor payouts were halted in early 2016.

Over time, Legacy’s production shifted from crude to less profitable natural gas. Output that was about 75% oil in 2010 dwindled to less than 40% as of the third quarter of last year.

“Legacy is encouraging proposals from existing stakeholders and interested third parties,” the company said in the statement.

Legacy hired Tudor Pickering & Holt LP and Perella Weinberg Partners LP as financial advisors, and Sidley Austin LLP for legal counsel.

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