Vanguard Natural Resources Reports Record Adjusted EBITDA, Production and Proved Reserves for 2012 and 2013 Guidance

  Vanguard Natural Resources Reports Record Adjusted EBITDA, Production and
  Proved Reserves for 2012 and 2013 Guidance

Business Wire

HOUSTON -- March 1, 2013

Vanguard Natural Resources, LLC (NYSE: VNR) ("Vanguard" or "the Company")
today reported financial and operational results for the full year and fourth
quarter ended December 31, 2012.

Mr. Scott W. Smith, President and CEO, commented, “We had a very busy year in
2012 as we closed almost $800 million in acquisitions and expanded our
operating presence into new areas upon which we can continue to build in the
future. In addition, with the announcement of the Range Permian acquisition,
we are well on our way to having a successful 2013 on the acquisition front.
Deal flow continues to be encouraging and with the liquidity we generated
through our recent bond and equity offerings we have ample financial resources
to be opportunistic. We are also proud that we delivered another year of
increased distributions per unit to our unitholders and look forward to
continuing this trend as we focus on growing the Company on their behalf."

Selected Financial Information

A summary of selected financial information follows. For consolidated
financial statements, please see accompanying tables.

                                                            
                   Three Months Ended               Year Ended December 31,
                   December 31,
                   2012             2011^(1)        2012             2011^(1)
                   ($ in thousands, except per unit data)
Production           22,803           13,686          18,298           13,405
(BOE/d)
Oil, natural
gas and            $ 82,327         $ 86,003        $ 310,356        $ 312,842
natural gas
liquids sales
Realized gain
on commodity       $ 1,712          $ 5,038         $ 956            $ 7,205
derivative
contracts
Unrealized
gain (loss) on
commodity          $ 26,647         $ (69,095 )     $ 35,890         $ (470    )
derivative
contracts
Operating          $ 27,817         $ 27,286        $ 103,735        $ 92,565
expenses
Selling,
general and        $ 7,168          $ 3,342         $ 22,466         $ 19,779
administrative
expenses
Depreciation,
depletion,         $ 30,645         $ 22,060        $ 104,542        $ 84,857
amortization,
and accretion
Impairment of
oil and            $ 229,693        $ -             $ 247,722        $ -
natural gas
properties
Net income
(loss)
attributable       $ (201,511 )     $ (15,208 )     $ (168,815 )     $ 62,063
to Vanguard
unitholders
Adjusted net
income
attributable       $ 15,978         $ 27,575        $ 64,131         $ 74,046
to Vanguard
unitholders ^
(2)
Adjusted net
income per
basic unit
attributable       $ 0.27           $ 0.76          $ 1.18           $ 2.33
to Vanguard
unitholders
^(2)
Adjusted
EBITDA
attributable       $ 66,547         $ 53,498        $ 230,512        $ 164,603
to Vanguard
unitholders ^
(2)
Interest
expense,
including
realized           $ 15,248         $ 8,562         $ 44,406         $ 31,868
losses on
interest rate
derivative
contracts
Drilling,
capital
workover and       $ 10,120         $ 10,367        $ 50,405         $ 34,096
recompletion
expenditures
Distributable      $ 41,179         $ 37,083        $ 141,223        $ 110,082
cash flow ^(2)
Distributable
cash flow per      $ 0.70           $ 0.76          $ 2.60           $ 2.26
basic unit
^(2)
Distribution       1.15       x     1.39      x     1.08       x     1.40      x
coverage ^(2)

    
      The operating results and production of the subsidiaries we acquired in
(1)   the ENP Purchase through the date of the completion of the ENP Merger on
      December 1, 2011 were subject to a 53.4% non-controlling interest.
      Non-GAAP financial measures. Please see Adjusted Net Income, Adjusted
(2)   EBITDA and Distributable Cash Flow tables at the end of this press
      release for a reconciliation of these measures to their nearest
      comparable GAAP measure.
      

2013 Guidance

Summary of Estimates

The following table sets forth certain estimates being used by Vanguard to
model its anticipated results of operations for the fiscal year ending
December 31, 2013 and includes the impact from the recently closed acquisition
of natural gas and liquids properties in the Piceance Basin in Colorado and
Powder River and Wind River Basins in Wyoming, but DOES NOT include the
pending acquisition of properties in the Permian Basin from Range Resources
Corp. ("Range Permian Acquisition") announced on February 28, 2013. These
estimates do not include any additional acquisitions of oil or natural gas
properties. In addition, the expectations below assume Vanguard's current
capital structure and does not contemplate any future equity or high yield
bond offerings. Actual results for the year ended December 31, 2012 have been
provided for comparative purposes.

                                                            
                          FY 2013E                     FY 2012
Net Production:
Oil (Bbls/d)              7,750        - 8,250         7,536
Natural gas (Mcf/d)       122,400      - 130,000       53,695
Natural gas liquids       3,200        - 3,400         1,813
(Bbls/d)
Total (BOE/d)             31,350       - 33,317        18,298
                                                       
Costs per BOE:
Lease operating           $8.25        - $9.25         $11.10
expenses
Production taxes (%       8.5%         - 9.5%          9.5%
of revenue)
G&A expenses              $1.25        - $1.75         $2.34
Depreciation,
depletion and             $12.25       - $13.25        $15.61
amortization
                                                       
Cash Flow
Calculation:
Adjusted EBITDA           $302,500                     $230,512
^(1)
Interest expense          (64,000)                     (44,406)
Maintenance capital
expenditures ^(2):
Operated                  (32,000)                     (16,544)
Non-operated              (23,000)                    (33,861)
Total maintenance
capital                   (55,000)                     (50,405)
expenditures
                                                       
Distributable cash        $183,500                     $141,223
flow ^(3)
                                                       
Mid-point
distributable cash        $2.69                        $2.60
flow per unit
Mid-point
distribution              1.11x                        1.08x
coverage ratio ^(4)
Mid-point adjusted
net income per unit       $1.20                        $1.18
^(1)
Units outstanding         68.3                         54.4
(millions)
                                                       
Assumed NYMEX                            Q2 - Q4
Pricing (February         Q1 2013        2013          FY 2012
28, 2013) ^ (5):
Oil (Bbl)                 $94.03         $93.47        $94.19
Natural gas (MMBtu)       $3.34          $3.63         $2.96
                                                       
Average NYMEX
Differentials:
Oil (Bbl)                 $(13.85)       $(8.70)       $(9.66)
Natural gas (MMBtu)       $(0.85)        $(0.90)       $(0.55)
NGL realization of        42%            43%           48%
crude oil price (%)
                                                       
Maintenance Capital       Q1 2013        Q2 2013      Q3 2013      Q4 2013
Expenditures:
Operated                  $(5,000)       $(12,500)     $ (8,500 )   $ (6,000 )
Non-operated              $(4,500)       $(6,500)      $ (3,000 )   $ (9,000 )

      Adjusted EBITDA and adjusted net income (non-GAAP financial measures
(1)  defined below) exclude the amortization of value on derivative contracts
      acquired (approximately $30.0 MM for the FY 2013).
      Additional detail regarding the maintenance capital breakout by quarter
(2)   is listed below. Actual results for the year ended December 31, 2012
      excludes the proceeds from the sale of leasehold interests.
(3)   Includes $5.5 million in proceeds from the sale of leasehold interests
      in 2012.
(4)   Assumes current monthly distribution rate of $0.2025 per unit for 2013
      and no additional unit offerings.
(5)   NYMEX pricing includes actual settlements for 2013.

Full Year 2012 Highlights:

  *The annualized monthly distribution of $2.43 per unit as of December 2012
    represents a 5.2% increase over the annualized quarterly distribution of
    $2.31 per unit as of December 2011.
  *Record Adjusted EBITDA attributable to Vanguard unitholders (a non-GAAP
    financial measure defined below) increased 40% to $230.5 million from the
    $164.6 million generated in 2011.
  *Record Distributable Cash Flow attributable to Vanguard unitholders (a
    non-GAAP financial measure defined below) increased 28% to $141.2 million
    from the $110.1 million generated in 2011.
  *We reported net loss attributable to Vanguard unitholders for the year
    ended December 31, 2012 of $168.8 million or $(3.11) per basic unit
    compared to a net income of $62.1 million or $1.95 per basic unit in the
    year ended December 31, 2011.The 2012 results include net non-cash
    expenses of $232.9 million, the largest item of which is a $247.7 million
    impairment charge on our oil and natural gas properties. The 2011 results
    include non-cash expenses of $3.6 million and material transaction costs
    incurred on acquisitions and mergers of $2.0 million.
  *Adjusted Net Income attributable to Vanguard unitholders (a non-GAAP
    financial measure defined below) was $64.1 million in 2012, or $1.18 per
    unit, compared to Adjusted Net Income of $74.0 million, or $2.33 per unit,
    in 2011.
  *Reported average production of 18,298 BOE per day in 2012 was up 37% over
    13,405 BOE per day produced in 2011. On a BOE basis, crude oil, natural
    gas and natural gas liquids (“NGLs”) accounted for 41%, 49% and 10% of our
    production, respectively.

During 2012 we produced 19,652 MMcf of natural gas, an increase of 89% from
the 10,413 MMcf of natural gas produced in 2011, 2,758 MBbls of oil, an
increase of 1% from the 2,726 MBbls of oil produced in 2011, and 664 MBbls of
NGLs, an increase of 54% from the 432 MBbls of NGLs produced in 2011.

Including the impact of our hedges this year, we realized a net price of $4.47
per Mcf on natural gas sales, $84.00 per Bbl on crude oil sales, and $45.11
per barrel on NGL sales, for an average sales price of $52.18 per BOE (all
excluding amortization of premiums paid and amortization of value on
derivative contracts acquired), which represents a 23% decline from the $67.70
average price per BOE realized in 2011.

Fourth Quarter 2012 Highlights:

  *Record Adjusted EBITDA attributable to Vanguard unitholders (a non-GAAP
    financial measure defined below) increased 24% to $66.5 from $53.5 million
    in the fourth quarter of 2011 and remains relatively flat compared to the
    $66.3 million recorded in the third quarter of 2012.
  *Distributable Cash Flow attributable to Vanguard unitholders (a non-GAAP
    financial measure defined below) increased 11% to $41.2 million from the
    $37.1 million generated in the fourth quarter of 2011 and increased 12%
    from the $36.6 million generated in the third quarter of 2012.
  *We reported a net loss attributable to Vanguard unitholders for the
    quarter of $201.5 million or $(3.41) per basic unit compared to a reported
    net loss of $15.2 million or $(0.42) per basic unit in the fourth quarter
    of 2011. The recent quarter includes net non-cash expenses of $217.5
    million, the largest item of which is a $229.7 million impairment charge
    on our oil and gas properties. The fourth quarter of 2011 results includes
    net non-cash expenses of $69.7 million and material transaction costs
    incurred on acquisitions and mergers of $0.3 million.
  *Adjusted Net Income attributable to Vanguard unitholders (a non-GAAP
    financial measure defined below) was $16.0 million in the fourth quarter
    of 2012, or $0.27 per basic unit, as compared to $27.6 million, or $0.76
    per basic unit, in the fourth quarter of 2011.
  *Reported average production of 22,803 BOE per day in the fourth quarter of
    2012 was up 67% over 13,686 BOE per day produced in the fourth quarter of
    2011 and a 6% decrease over third quarter of 2012. On a BOE basis, crude
    oil, natural gas and NGLs accounted for 33%, 57%, and 10% of our
    production, respectively.

During the quarter we produced 7,147 MMcf of natural gas, an increase of 173%
from the 2,618 MMcf of natural gas produced in the fourth quarter of 2011, 697
MBbls of oil, an increase of 3% from the 675 MBbls of oil produced in the
fourth quarter of 2011, and 210 MBbls of NGLs, an increase of 42% from the 148
MBbls of NGLs produced in the fourth quarter of 2011.

Including the impact of our natural gas hedges in the fourth quarter of 2012,
we realized an average realized price of $4.19 per Mcf on natural gas sales,
which is $1.82 per Mcf more than the unhedged realized average price of $2.37
per Mcf. Including the impact of our oil hedges, we realized an average price
of $84.13 per barrel on crude oil sales, which is $3.15 per barrel more than
the unhedged realized average price of $80.98 per barrel. The realized average
price for our NGL production was $42.74 per barrel, which is a decline of 47%,
when compared to the realized price in the fourth quarter of 2011.

Capital Expenditures

Capital expenditures for the drilling, capital workover and recompletion of
oil and natural gas properties were approximately $10.1 million in the fourth
quarter of 2012 compared to $10.4 million for the comparable quarter of 2011
and $16.9 million for the third quarter of 2012. Total capital expenditures
for 2012 totaled $50.4 million, excluding the proceeds from the sale of
leasehold interests.

Excluding the recently announced Range Permian Acquisition discussed below and
any potential future acquisitions, we currently anticipate a capital budget
for 2013 of approximately $55.0 million. Our capital budget will largely
include drilling in the Arkoma Basin, Williston Basin and Big Horn Basin along
with other maintenance related projects. Approximately $32.0 million, or 58%
of the 2013 budget will be invested in operated projects, with the balance
relying on the timing of the receipt of Authorization For Expenditures from
our non-operated properties.

Recent Activities

On February5, 2013, we completed a public offering of 9,200,000 of our common
units at a price of $27.85 per unit. Offers were made pursuant to a prospectus
supplement to the registration statement we filed in 2012. We received net
proceeds of approximately $246.1 million, after deducting underwriting
discounts of $10.0 million and offering costs of $0.1 million.

On February26, 2013, we entered into a purchase and sale agreement to acquire
natural gas, oil and NGLs properties in the Permian Basin in southeast New
Mexico and West Texas for a purchase price of $275.0 million from Range
Resources Corporation. We refer to this transaction as the Range Permian
Acquisition. The effective date of the acquisition is January1, 2013 and we
anticipate closing this acquisition on or before April1, 2013. We intend to
fund this acquisition with borrowings under our existing reserve-based credit
facility.

Hedging Activities

We enter into derivative transactions in the form of hedging arrangements to
reduce the impact of oil and natural gas price volatility on our cash flow
from operations. We have mitigated some of the volatility by implementing a
hedging program for more than 90% of our anticipated production of crude oil
through 2016 and more than 85% of our natural gas production through June 30,
2017. At December31, 2012, the fair value of commodity derivative contracts
was an asset of approximately $93.1 million, of which $44.5 million settles
during the next twelve months. Currently, we use fixed-price swaps, basis
swaps, swaptions, put spread options, collars, three-way collars and range
bonus accumulators to hedge oil and natural gas prices.

New commodity derivative contracts put in place during the three months ended
December 31, 2012 are as follows:

                                                             
                          Year          Year          Year          Year

                          2013          2014          2015          2016
Gas Positions:
Fixed Price Swaps
Notional Volume           15,330,000    14,235,000    16,060,000    14,640,000
(MMBtu)
Fixed Price               $  3.72       $  4.01       $   4.17      $   4.37
($/MMBtu)
                                                                    
Oil Positions:
Fixed Price Swaps
Notional Volume           438,000       255,500       73,000        73,200
(Bbls)
Fixed Price ($/Bbl)       $  89.52      $  90.96      $   87.10     $   87.10
Range Bonus
Accumulators
Notional Volume           547,500       365,000       -             -
(Bbls)
Bonus ($/Bbl)             $  3.67       $  3.00       $   -         $   -
Digital Call Sold         $  105.87     $  110.00     $   -         $   -
($/Bbl)
Put Sold ($/Bbl)          $  72.67      $  70.00      $   -         $   -
                                                                        

Additionally, we sold $70.00 puts for 365,000 Bbls of oil that settle during
2013 in order to raise the fixed-price on an existing oil swap contract.

During 2013, we have continued to layer in additional crude oil hedges,
Midland-Cushing basis differential hedges, and for the first time have hedged
a portion of our NGLs exposure through 2014.

For a summary of all commodity and interest rate derivative contracts in place
at December 31, 2012, please refer to our Annual Report on Form 10-K which was
filed on March 1, 2013.

Liquidity Update

At December 31, 2012, Vanguard had indebtedness under its reserve-based credit
facility totaling $700.0 million with a borrowing base of $1.2 billion which
provided for $498.3 million in undrawn capacity, after consideration of a $1.7
million reduction in availability for letters of credit. In February 2013, we
used net proceeds totaling $246.1 million from the common unit offering of 9.2
million, previously mentioned above, to repay indebtedness outstanding under
our reserve-based credit facility. As of February 25, 2013, there were $449.0
of outstanding borrowings and $749.3 of borrowing capacity under the
reserve-based credit facility, including a $1.7 million reduction in
availability for letters of credit. We also have approximately $10.0 million
in available cash.

Cash Distributions

On February 14, 2013, the Company paid a cash distribution attributable to the
month of December 2012 of $0.2025 per unit ($2.43 on an annual basis) to its
unitholders of record as of February4, 2013.

Annual Report on Form 10-K and Unitholders’ Schedule K-1

Vanguard's financial statements and related footnotes are available on our
2012 Form 10-K, which was filed today and is available through the Investor
Relations/SEC Filings section of the Vanguard’s website
athttp://www.vnrllc.com.

Also available for download on our website by March 7, 2013 will be
unitholders' Schedule K-1s for the tax year 2012. For any questions regarding
their Schedule K-1, unitholders are invited to call the Tax Package Support
helpline at 1-866-536-1972 or via email at VanguardK1Help@deloitte.com.

Conference Call Information

Vanguard will host a conference call on Monday (March 4, 2013) to discuss its
2012 full year and fourth quarter results, its 2013 outlook and the recent
Range Permian Acquisition announcement at 11:00 a.m. Eastern Time (10:00 a.m.
Central). To access the call, please dial (877) 941-0844 or (480) 629-9835 for
international callers and ask for the “Vanguard Natural Resources Earnings
Call.” The conference call will also be broadcast live via the Internet and
can be accessed through the Investor Relations section of Vanguard's corporate
website, http://www.vnrllc.com.

A telephonic replay of the conference call will be available until April 2,
2013 and may be accessed by calling (303) 590-3030 and using the pass code
4599724#. A webcast archive will be available on the Investor Relations page
at www.vnrllc.com shortly after the call and will be accessible for
approximately 30 days. For more information, please contact Lisa Godfrey at
(832) 327-2234 or email at investorrelations@vnrllc.com.

About Vanguard Natural Resources, LLC

Vanguard Natural Resources, LLC is a publicly traded limited liability company
focused on the acquisition, production and development of oil and natural gas
properties. Vanguard's assets consist primarily of producing and non-producing
oil and natural gas reserves located in the Arkoma Basin in Arkansas and
Oklahoma, the Permian Basin in West Texas and New Mexico, the Big Horn Basin
in Wyoming and Montana, the Piceance Basin in Colorado, South Texas, the
Williston Basin in North Dakota and Montana, the Wind River Basin in Wyoming,
the Powder River Basin in Wyoming and Mississippi. More information on
Vanguard can be found at www.vnrllc.com.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of
the federal securities laws. All statements, other than statements of
historical facts, included in this press release that address activities,
events or developments that the Company expects, believes or anticipates will
or may occur in the future are forward-looking statements. These statements
include but are not limited to statements about the acquisition announced in
this press release. These statements are based on certain assumptions made by
the Company based on management's experience and perception of historical
trends, current conditions, anticipated future developments and other factors
believed to be appropriate. Such statements are subject to a number of
assumptions, risks and uncertainties, many of which are beyond the control of
the Company, which may cause actual results to differ materially from those
implied or expressed by the forward-looking statements. These include risks
relating to financial performance and results, availability of sufficient cash
flow to pay distributions and execute our business plan, prices and demand for
oil, natural gas and NGLs, our ability to replace reserves and efficiently
develop our current reserves and other important factors that could cause
actual results to differ materially from those projected as described in the
Company's reports filed with the Securities and Exchange Commission. Please
see "Risk Factors" in the Company's public filings.

Any forward-looking statement speaks only as of the date on which such
statement is made and the Company undertakes no obligation to publicly correct
or update any forward-looking statement, whether as a result of new
information, future events or otherwise.


VANGUARD NATURAL RESOURCES, LLC

Operating Statistics

(Unaudited)

                                 Three Months Ended    Year Ended
                                  December 31, ^(a)      December 31, ^(a)
                                  2012      2011 ^(c)   2012 ^(b)  2011 ^(c)
Average realized prices,
excluding hedging:
Oil (Price/Bbl)                   $ 80.98    $  93.70    $  84.53    $  86.52
Natural Gas (Price/Mcf)           $ 2.37     $  4.12     $  2.41     $  4.59
NGLs (Price/Bbl)                  $ 42.74    $  80.19    $  45.11    $  66.88
                                                                     
Average realized prices,
including hedging ^(d):
Oil (Price/Bbl)                   $ 84.13    $  90.66    $  84.00    $  82.45
Natural Gas (Price/Mcf)           $ 4.19     $  7.54     $  4.47     $  7.45
NGLs (Price/Bbl)                  $ 42.74    $  80.19    $  45.11    $  66.88
                                                                     
Total production volumes:
Oil (MBbls)                       697        675         2,758       2,726
Natural Gas (MMcf)                7,147      2,618       19,652      10,413
NGLs (MBbls)                      210        148         664         432
Combined (MBOE)                   2,098      1,259       6,697       4,893
                                                                     
Average daily production
volumes:
Oil (Bbls/day)                    7,575      7,336       7,536       7,468
Natural Gas (Mcf/day)             77,688     28,461      53,695      28,529
NGLs (Bbls/day)                   2,279      1,606       1,813       1,183
Combined (BOE/day)                22,803     13,686      18,298      13,405

      During 2011 and 2012, we acquired certain oil and natural gas properties
(a)  and related assets as well as additional interests in these properties.
      The operating results of these properties are included with ours from
      the closing date of acquisition forward.
      
      On March 30, 2012, we divested oil and natural gas properties in the
(b)   Appalachian Basin. As such, there are no operating results from these
      properties included in our operating results from the closing date of
      the divestiture forward.
      
      On December 31, 2010, Vanguard acquired a 46.7% aggregate interest in
      Encore Energy Partners, LP or "ENP" ("ENP Purchase") and on December 1,
      2011, Vanguard acquired the remaining 53.4% interest in the ENP units
(c)   through a merger ("ENP Merger") with one of Vanguard's subsidiaries.
      Production results for oil and natural gas properties acquired in the
      ENP Purchase through the date of the completion of the ENP Merger were
      subject to a 53.4% non-controlling interest.
      
(d)   Excludes amortization of premiums paid and amortization on derivative
      contracts acquires.
      

Proved Reserves

Total proved oil and natural gas reserves at December 31, 2012 were 152.2
million barrels of oil equivalent, consisting of 61.2 million barrels of crude
oil, condensate, and natural gas liquids and 546.5 billion cubic feet of
natural gas. Proved reserves were calculated utilizing the 12-month unweighted
average first-day-of-the-month prices ("12-month average prices") during 2012,
or $94.67 per Bbl of oil and $2.76 per Mcf of natural gas as compared to
$96.24 per Bbl of oil and $4.12 per Mcf of natural gas for 2011.

Using the 12-month average prices, the estimated discounted net present value
of Vanguard's proved oil and natural gas reserves, before projected income
taxes, using a 10 percent per annum discount rate (“PV-10 Value”) was
approximately $1.6 billion, as compared to a PV-10 Value of approximately $1.5
billion at December 31, 2011.

At December 31, 2012, natural gas reserves accounted for 60% of total proved
reserves, and 74% of total proved reserves are developed. The following table
summarizes the changes in proved reserves:

                                    MBOE
Reserves at December 31, 2011           79,326
Purchases of reserves-in-place          89,229
Extensions and discoveries              517
Sales of reserves-in-place              (6,059  )
Revisions of previous estimates         (4,072  )
Production                              (6,697  )
Reserves at December 31, 2012           152,244 

Vanguard's proved reserve estimates for all of its properties were prepared by
independent petroleum engineers from DeGolyer and McNaughton and Netherland,
Sewell and Associates, Inc.

                                                
VANGUARD NATURAL RESOURCES, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per unit data)

(Unaudited)
                                                    
                       Three Months Ended           Year Ended

                       December 31,                 December 31,
                       2012          2011          2012          2011
Revenues:
Oil, natural gas       $ 82,327       $ 86,003      $ 310,356      $ 312,842
and NGLs sales
Loss on commodity      -              (764      )   -              (3,071    )
cash flow hedges
Realized gain on
commodity              1,712          5,802         956            10,276
derivative
contracts
Unrealized gain
(loss) on
commodity              26,647        (69,095   )   35,890        (470      )
derivative
contracts
Total revenues         110,686       21,946       347,202       319,577   
                                                                   
Costs and
expenses:
Production:
Lease operating        19,612         19,984        74,366         63,944
expenses
Production and         8,205          7,302         29,369         28,621
other taxes
Depreciation,
depletion,             30,645         22,060        104,542        84,857
amortization and
accretion
Impairment of oil
and natural gas        229,693        -             247,722        -
properties
Selling, general
and administrative     7,168         3,342        22,466        19,779    
expenses
Total costs and        295,323       52,688       478,465       197,201   
expenses
                                                                   
Income (loss) from     (184,637   )   (30,742   )   (131,263   )   122,376   
operations
                                                                   
Other income
(expense):
Other income           29             1             220            77
Interest expense       (14,343    )   (7,857    )   (41,891    )   (28,994   )
Realized loss on
interest rate          (905       )   (705      )   (2,515     )   (2,874    )
derivative
contracts
Unrealized gain
(loss) on interest     1,030          (448      )   (4,477     )   (2,088    )
rate derivative
contracts
Net gain (loss) on
acquisition of oil     (2,685     )   16           11,111        (367      )
and natural gas
properties
Total other            (16,874    )   (8,993    )   (37,552    )   (34,246   )
expense
                                                                   
Net income (loss)      (201,511   )   (39,735   )   (168,815   )   88,130
Less: Net income
(loss)
attributable to        -             24,527       -             (26,067   )
non-controlling
interest
Net income (loss)
attributable to        $ (201,511 )   $ (15,208 )   $ (168,815 )   $ 62,063  
Vanguard
unitholders
                                                                   
Net income (loss)
per Common and         $ (3.41    )   $ (0.42   )   $ (3.11    )   $ 1.95    
Class B units -
basic & diluted
                                                                   
Weighted average
units outstanding:
Common units –         58,668        36,053       53,777        31,370    
basic
Common units –         58,668        36,104       53,777        31,430    
diluted
Class B units –        420           420          420           420       
basic & diluted

                                                             
VANGUARD NATURAL RESOURCES, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands)
                                                                 
                                                 December 31,
                                                 2012            2011
Assets                                           (Unaudited)
Current assets
Cash and cash equivalents                        $ 11,563        $ 2,851
Trade accounts receivable, net                   51,880          48,046
Derivative assets                                46,690          2,333
Other currents assets                            3,858          3,462       
Total current assets                             113,991        56,692      
                                                                 
Oil and natural gas properties, at cost          2,126,268       1,549,821
Accumulated depletion, amortization and          (550,032    )   (331,836    )
impairment
Oil and natural gas properties evaluated,        1,576,236      1,217,985   
net – full cost method
Other assets
Goodwill                                         420,955         420,955
Derivative assets                                53,240          1,105
Other assets                                     35,712         19,626      
Total assets                                     $ 2,200,134    $ 1,716,363 
                                                                 
Liabilities and members’ equity
Current liabilities
Accounts payable:
Trade                                            $ 8,417         $ 7,867
Affiliates                                       32              718
Accrued liabilities:
Lease operating                                  7,884           5,828
Developmental capital                            4,754           563
Interest                                         11,573          103
Production and other taxes                       12,852          12,768
Derivative liabilities                           5,366           12,774
Oil and natural gas revenue payable              8,226           505
Distributions payable                            11,919          -
Other                                            8,479          4,712       
Total current liabilities                        79,502          45,838
Long-term debt                                   1,247,631       771,000
Derivative liabilities                           11,996          20,553
Asset retirement obligations                     60,096          34,776
Other long-term liabilities                      3,445          275         
Total liabilities                                1,402,670      872,442     
Commitments and contingencies
Members’ equity
Members’ capital, 58,706,282 and 48,320,104
common units issued and outstanding at           794,426         839,714
December 31, 2012 and 2011, respectively
Class B units, 420,000 issued and                3,038          4,207       
outstanding at December 31, 2012 and 2011
Total members’ equity                            797,464        843,921     
Total liabilities and members’ equity            $ 2,200,134    $ 1,716,363 
                                                                             

Use of Non-GAAP Measures

Adjusted EBITDA

We present Adjusted EBITDA in addition to our reported net income (loss)
attributable to Vanguard unitholders in accordance with GAAP. Adjusted EBITDA
is a non-GAAP financial measure that is defined as net income (loss)
attributable to Vanguard unitholders plus, for 2011, net income (loss)
attributable to the non-controlling interest. The result is net income (loss)
which includes the non-controlling interest for 2011. From this we add or
subtract the following:

  *Net interest expense, including write-off of deferred financing fees and
    realized gains and losses on interest rate derivative contracts;
  *Depreciation, depletion and amortization (including accretion of asset
    retirement obligations);
  *Impairment of oil and natural gas properties;
  *Amortization of premiums paid on derivative contracts;
  *Amortization of value on derivative contracts acquired;
  *Unrealized gains and losses on other commodity and interest rate
    derivative contracts;
  *Net gains and losses on acquisition of oil and natural gas properties;
  *Taxes;
  *Compensation related items, which include unit-based compensation expense,
    unrealized fair value of phantom units granted to officers and cash
    settlement of phantom units granted to officers;
  *Material transaction costs incurred on acquisitions and mergers;
  *For 2011, non-controlling interest amounts attributable to each of the
    items above from the beginning of year through the completion of the ENP
    Merger on December 1, 2011, which revert the calculation back to an amount
    attributable to the Vanguard unitholders; and
  *For 2011, administrative services fees charged to ENP, excluding the
    non-controlling interest, which are eliminated in consolidation.

Adjusted EBITDA is used by management as a tool to measure (prior to the
establishment of any cash reserves by our board of directors, debt service and
capital expenditures) the cash distributions we could pay our unitholders.
Specifically, this financial measure indicates to investors whether or not we
are generating cash flow at a level that can sustain or support an increase in
our quarterly distribution rates. Adjusted EBITDA is also used as a
quantitative standard by our management and by external users of our financial
statements such as investors, research analysts and others to assess the
financial performance of our assets without regard to financing methods,
capital structure or historical cost basis; the ability of our assets to
generate cash sufficient to pay interest costs and support our indebtedness;
and our operating performance and return on capital as compared to those of
other companies in our industry. Adjusted EBITDA is not intended to represent
cash flows for the period, nor is it presented as a substitute for net income,
operating income, cash flows from operating activities or any other measure of
financial performance or liquidity presented in accordance with GAAP.

Distributable Cash Flow

We present Distributable Cash Flow in addition to our reported net income
(loss) attributable to Vanguard unitholders in accordance with GAAP.
Distributable Cash Flow is a non-GAAP financial measure that is defined as net
income (loss) attributable to Vanguard unitholders plus, for 2011, net income
(loss) attributable to the non-controlling interest. The result is net income
(loss) which includes the non-controlling interest for 2011. From this we add
or subtract the following:

  *Depreciation, depletion, amortization and accretion;
  *Impairment of oil and natural gas properties;
  *Amortization of premiums paid on derivative contracts;
  *Amortization of value on derivative contracts acquired;
  *Unrealized gains and losses on commodity and interest rate derivative
    contracts;
  *Net gains and losses on acquisition of oil and natural gas properties;
  *Taxes;
  *Compensation related items, which include unit-based compensation expense,
    unrealized fair value of phantom units granted to officers and cash
    settlement of phantom units granted to officers;
  *Material transaction costs incurred on acquisitions and mergers;
  *For 2011, non-controlling interest amount attributable to each of the
    items above from the beginning of year through the completion of the ENP
    Merger on December 1, 2011, which revert the calculation back to an amount
    attributable to the Vanguard unitholders; and
  *For 2011, administrative services fees charged to ENP, excluding the
    non-controlling interest, which are eliminated in consolidation.

Less:

  *Drilling, capital workover and recompletion expenditures.

Plus:

  *Proceeds from the sale of leasehold interests.

Distributable Cash Flow is used by management as a tool to measure (prior to
the establishment of any cash reserves by our board of directors) the cash
distributions we could pay our unitholders. Specifically, this financial
measure indicates to investors whether or not we are generating cash flow at a
level that can sustain or support an increase in our monthly distribution
rates. While Distributable Cash Flow is measured on a quarterly basis for
reporting purposes, management must consider the timing and size of its
planned capital expenditures in determining the sustainability of its monthly
distribution. Capital expenditures are typically not spent evenly throughout
the year due to a variety of factors including weather, rig availability, and
the commodity price environment. As a result, there will be some volatility in
Distributable Cash Flow measured on a quarterly basis. Distributable Cash Flow
is not intended to be a substitute for net income, operating income, cash
flows from operating activities or any other measure of financial performance
or liquidity presented in accordance with GAAP.

                                                
VANGUARD NATURAL RESOURCES, LLC

Reconciliation of Net Income (Loss) to Adjusted EBITDA (a) and Distributable Cash
Flow

(Unaudited)

(in thousands, except per unit amounts)
                                                     
                    Three Months Ended               Year Ended

                    December 31,                     December 31,
                    2012           2011 ^(b)       2012           2011 ^(b)
Net income
(loss)
attributable to     $ (201,511 )     $ (15,208 )     $ (168,815 )     $ 62,063
Vanguard
unitholders
Net income
(loss)
attributable to     -               (24,527   )     -               26,067    
non-controlling
interest
Net income          (201,511   )     (39,735   )     (168,815   )     88,130
(loss)
Plus:
Interest
expense,
including
realized losses     15,248           8,562           44,406           31,868
on interest
rate derivative
contracts
Depreciation,
depletion,          30,645           22,060          104,542          84,857
amortization
and accretion
Impairment of
oil and natural     229,693          -               247,722          -
gas properties
Amortization of
premiums paid       1,125            1,845           11,641           11,346
on derivative
contracts
Amortization of
value on
derivative          12,409           15              26,505           169
contracts
acquired
Unrealized
(gains) losses
on commodity        (27,677    )     69,543          (31,413    )     2,558
and interest
rate derivative
contracts
Net (gain) loss
on acquisitions
of oil and          2,685            (16       )     (11,111    )     367
natural gas
properties
Taxes               392              (154      )     239              261
Compensation        3,538            895             6,796            3,026
related items
Material
transaction
costs incurred      -               274            -               2,019     
on acquisitions
and mergers
Adjusted EBITDA
before              66,547           63,289          230,512          224,601
non-controlling
interest
Non-controlling
interest
attributable to     -                (10,382   )     -                (62,838   )
adjustments
above
Administrative
services fees       -               591            -               2,840     
eliminated in
consolidation
Adjusted EBITDA
attributable to     $ 66,547         $ 53,498        $ 230,512        $ 164,603
Vanguard
unitholders
Less:
Interest            (15,248    )     (8,562    )     (44,406    )     (31,868   )
expense, net
Drilling,
capital
workover and        (10,120    )     (10,367   )     (50,405    )     (34,096   )
recompletion
expenditures
Proceeds from
sale of             -                                5,522            -
leasehold
interests
Non-controlling     -               2,514          -               11,443    
interest
Distributable       $ 41,179        $ 37,083       $ 141,223       $ 110,082 
cash flow
                                                                                
Distributable
cash flow per       $ 0.70           $ 0.76          $ 2.60           $ 2.26
unit
Distribution        1.15       x     1.39      x     1.08       x     1.40      x
coverage

      Our Adjusted EBITDA should not be considered as an alternative to net
      income, operating income, cash flows from operating activities or any
      other measure of financial performance or liquidity presented in
(a)  accordance with GAAP. Our Adjusted EBITDA excludes some, but not all,
      items that affect net income and operating income and these measures may
      vary among other companies. Therefore, our Adjusted EBITDA may not be
      comparable to similarly titled measures of other companies.

      Results of operations from oil and gas properties acquired in the ENP
(b)   Purchase through the date of the completion of the ENP Merger were
      subject to a 53.4% non-controlling interest.
      

Adjusted Net Income

We present Adjusted Net Income in addition to our reported net income (loss)
attributable to Vanguard unitholders in accordance with GAAP. Adjusted Net
Income is a non-GAAP financial measure that is defined as net income (loss)
attributable to Vanguard unitholders plus, for 2011, net income (loss)
attributable to the non-controlling interest. The result is net income (loss)
which includes the non-controlling interest for 2011. From this we add or
subtract the following:

  *Unrealized gains and losses on commodity derivative contracts;
  *Unrealized gains and losses on interest rate derivative contracts;
  *Amortization of value on derivative contracts acquired;
  *Unrealized fair value of phantom units granted to officers;
  *Impairment of oil and natural gas properties;
  *Net gains and losses on acquisition of oil and natural gas properties;
  *Material transaction costs incurred on acquisitions and mergers;
  *For 2011, non-controlling interest amount attributable to each of the
    items above from the beginning of year through the completion of the ENP
    Merger on December 1, 2011 which revert the calculation back to an amount
    attributable to the Vanguard unitholders; and
  *For 2011, administrative services fees charged to ENP, excluding the
    non-controlling interest, which are eliminated in consolidation.

This information is provided because management believes exclusion of the
impact of our unrealized derivatives not accounted for as cash flow hedges and
non-cash oil and natural gas property impairment charge will help investors
compare results between periods and identify operating trends that could
otherwise be masked by these items and to highlight the impact that commodity
price volatility has on our results. Adjusted Net Income is not intended to
represent cash flows for the period, nor is it presented as a substitute for
net income, operating income, cash flows from operating activities or any
other measure of financial performance or liquidity presented in accordance
with GAAP.

                                                
VANGUARD NATURAL RESOURCES, LLC

Reconciliation of Net Income (Loss) to Adjusted Net Income

(in thousands, except per unit data)

(Unaudited)
                                                     
                    Three Months Ended               Year Ended
                    December 31,                     December 31,
                    2012           2011            2012           2011
                                                                      
Net income
(loss)
attributable to     $ (201,511 )     $ (15,208 )     $ (168,815 )     $ 62,063
Vanguard
unitholders
Net income
(loss)
attributable to     -               (24,527   )     -               26,067   
non-controlling
interest
Net income          $ (201,511 )     $ (39,735 )     $ (168,815 )     $ 88,130
(loss)
Plus (less):
Unrealized
(gain) loss on
other commodity     (26,647    )     69,095          (35,890    )     470
derivative
contracts
Unrealized
(gain) loss on
interest rate       (1,030     )     448             4,477            2,088
derivative
contracts
Unrealized fair
value of
phantom units       379              159             1,243            469
granted to
officers
Amortization of
value of
derivative          12,409           15              26,505           169
contracts
acquired
Net (gain) loss
on acquisition
of oil and          2,685            (16       )     (11,111    )     367
natural gas
properties
Impairment of
oil and natural     229,693          -               247,722          -
gas properties
Material
transaction
costs incurred      -               274            -               2,019    
on acquisitions
and mergers
Total               217,489         69,975         232,946         5,582    
adjustments
Adjusted net
income before       15,978           30,240          64,131           93,712
non-controlling
interest
Non-controlling
interest            -                (3,256    )     -                (22,506  )
attributable to
items above
Administrative
services fees       -               591            -               2,840    
eliminated in
consolidation
Adjusted Net
Income
attributable to     $ 15,978        $ 27,575       $ 64,131        $ 74,046 
Vanguard
unitholders
                                                                               
                                                                               
Net income
(loss) per
basic unit          $ (3.41    )     $ (0.42   )     $ (3.11    )     $ 1.95
attributable to
Vanguard
unitholders
Net income
(loss)
attributable to     -               (0.67     )     -               0.82     
non-controlling
interest
Net income
(loss) per          $ (3.41    )     $ (1.09   )     $ (3.11    )     $ 2.77
basic unit:
Plus (less):
Unrealized
(gain) loss on
other commodity     (0.45      )     1.89            (0.66      )     0.02
derivative
contracts
Unrealized
(gain) loss on
interest rate       (0.02      )     0.01            0.08             0.07
derivative
contracts
Unrealized fair
value of
phantom units       -                0.01            0.02             0.01
granted to
officers
Amortization of
value of
derivative          0.21             -               0.49             0.01
contracts
acquired
Net (gain) loss
on acquisition
of oil and          0.05             -               (0.21      )     0.01
natural gas
properties
Impairment of
oil and natural     3.89             -               4.57             -
gas properties
Material
transaction
costs incurred      -                0.01            -                0.06
on acquisitions
and mergers
Non-controlling
interest            -                (0.09     )     -                (0.71    )
attributable to
items above
Administrative
services fees       -               0.02           -               0.09     
eliminated in
consolidation
Adjusted net
income per
basic unit          $ 0.27          $ 0.76         $ 1.18          $ 2.33   
attributable to
Vanguard
unitholders

Contact:

Vanguard Natural Resources, LLC
Investor Relations
Lisa Godfrey, 832-327-2234
investorrelations@vnrllc.com
 
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