Vanguard Natural Resources Reports First Quarter 2013 Results

  Vanguard Natural Resources Reports First Quarter 2013 Results

Business Wire

HOUSTON -- April 30, 2013

Vanguard Natural Resources, LLC (NASDAQ: VNR) ("Vanguard" or "the Company")
today reported financial and operational results for the quarter ended
March31, 2013.

Mr. Scott W. Smith, President and CEO, commented, “Our operating results this
quarter were in line with our expectations and we were very pleased to see
several capital projects occur earlier than we had initially forecasted. This
will accelerate the benefits of these projects which should help drive
distributable cash flow growth for the year. With the recent improvement in
natural gas prices, it would seem that our decision in 2012 to make
substantial investments in natural gas oriented acquisitions was a wise one.
We are fortunate to have a large inventory of high quality drilling
opportunities to develop this year and into the future."

                                               Three Months Ended
                                           
                                               March 31,
                                               2013            2012
                                               ($ in thousands,
                                               except per unit data)
Production (BOE/d)                             33,122              13,569
Oil, natural gas and natural gas liquids       $ 96,682            $ 82,717
sales
Realized gain (loss) on commodity              $ 5,771             $ (3,239  )
derivative contracts
Unrealized loss on commodity derivative        $ (35,047 )         $ (22,734 )
contracts
Operating expenses                             $ 33,515            $ 25,419
Selling, general and administrative            $ 6,549             $ 4,972
expenses
Depreciation, depletion, amortization,         $ 38,693            $ 21,797
and accretion
Net loss                                       $ (27,023 )         $ (2,024  )
Adjusted net income ^ (1)                      $ 16,889            $ 21,612
Adjusted net income per basic unit ^(1)        $ 0.26              $ 0.41
Adjusted EBITDA^(1)                            $ 72,433            $ 53,239
Interest expense, including realized
losses on interest rate derivative             $ 16,385            $ 5,905
contracts
Drilling, capital workover and                 $ 14,648            $ 8,213
recompletion expenditures
Distributable cash flow ^(1)                   $ 41,400            $ 44,498
Distributable cash flow per basic unit         $ 0.61              $ 0.86
^(1)
Distribution coverage ^(1)                     1.00x               1.44x

      Non-GAAP financial measures. Please see Adjusted Net Income, Adjusted
(1)  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.

First Quarter 2013 Highlights:

  *Adjusted EBITDA (a non-GAAP financial measure defined below) increased 36%
    to $72.4 million in the first quarter of 2013 from $53.2 million in the
    first quarter of 2012 and increased 9% from $66.5 million recorded in the
    fourth quarter of 2012.
  *Distributable Cash Flow (a non-GAAP financial measure defined below)
    decreased 7% to $41.4 million from the $44.5 million generated in the
    first quarter of 2012 and remained relatively flat compared to the $41.2
    million generated in the fourth quarter of 2012.
  *We reported a net loss for the quarter of $27.0 million or $(0.42) per
    basic unit compared to a reported net loss of $2.0 million or $(0.04) per
    basic unit in the first quarter of 2012. The recent quarter includes net
    non-cash expenses of $43.3 million and one-time material transaction costs
    incurred on acquisitions of $0.6 million that are adjustments to arrive at
    Adjusted Net Income (a non-GAAP financial measure defined below). The
    first quarter of 2012 results include net non-cash expenses of $23.6
    million.
  *Adjusted Net Income (a non-GAAP financial measure defined below) was $16.9
    million in the first quarter of 2013, or $0.26 per basic unit, as compared
    to $21.6 million, or $0.41 per basic unit, in the first quarter of 2012.
  *Reported average production of 33,122 BOE per day in the first quarter of
    2013, up 144% over 13,569 BOE per day produced in the first quarter of
    2012 and a 45% increase from the fourth quarter of 2012. On a BOE basis,
    crude oil, natural gas and natural gas liquids (“NGLs”) accounted for 24%,
    67%, and 9% of our first quarter 2013 production, respectively.

During the quarter we produced 11,990 MMcf of natural gas, an increase of 68%
from the 7,147 MMcf of natural gas produced in the fourth quarter of 2012, 725
MBbls of oil, an increase of 4% from the 697 MBbls of oil produced in the
fourth quarter of 2012, and 257 MBbls of NGLs, an increase of 23% from the 210
MBbls of NGLs produced in the fourth quarter of 2012.

Including the impact of our natural gas hedges in the first quarter of 2013,
we realized an average price of $3.52 per Mcf on natural gas sales, which is
$1.22 per Mcf more than the unhedged realized average price of $2.30 per Mcf.
Including the impact of our oil hedges, we realized an average price of $79.29
per barrel on crude oil sales, compared to the unhedged realized average price
of $80.67 per barrel. Including the impact of our NGL hedges, we realized an
average price of $41.44 per barrel, compared to the unhedged realized average
price of $41.38 per barrel.

Capital Expenditures

Capital expenditures for the drilling, capital workover and recompletion of
oil and natural gas properties were approximately $14.6 million in the first
quarter of 2013 compared to $8.2 million for the comparable quarter of 2012
and $10.1 million for the fourth quarter of 2012. The capital expenditures in
the first quarter exceeded our initial budget by approximately $5.0 million
due to the acceleration of projects planned for the second quarter and we
anticipate that our capital spending in the second quarter will be less than
the $19.0 million originally provided in our guidance. These accelerated
projects were primarily attributable to the completion of non-operated wells
in the Bakken and operated wells in the Woodford being drilled ahead of
schedule.

Excluding any potential future acquisitions, we currently anticipate a capital
budget for the remaining period of 2013 of approximately $40.4 million. Our
capital budget will largely include drilling in the Arkoma Basin, Williston
Basin and Big Horn Basin along with other maintenance related projects.

Recent Activities

On April 1, 2013, pursuant to a purchase and sale agreement dated February 26,
2013, we consummated the acquisition of natural gas, oil and NGLs properties
in the Permian Basin in southeast New Mexico and West Texas from Range
Resources Corporation for an adjusted purchase price of $268.8 million. The
purchase price was funded with borrowings under our reserve-based credit
facility and is subject to customary post-closing adjustments to be determined
based on an effective date of January 1, 2013. Based on internal reserve
estimates, the interests acquired have estimated total net proved reserves of
22.8 MMBOE, of which, 43% is natural gas and 78% is proved developed.

On April 11, 2013, we announced the transfer of our stock exchange listing
from the New York Stock Exchange to The NASDAQ Global Select Market
(“NASDAQ”), an exchange of The NASDAQ OMX Group Inc. (Nasdaq: NDAQ). Our
common units commenced trading on the NASDAQ on April 23, 2013 and remain
listed under the ticker symbol “VNR.”

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 2015, more than 85% of our natural gas production through June 30,
2017 and more than 10% of our NGLs production through 2014. At March31, 2013,
the fair value of commodity derivative contracts was an asset of approximately
$50.1 million, of which $8.8 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,
natural gas and NGL prices.

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

New commodity derivative contracts put in place during the three months ended
March 31, 2013 are as follows:

                                                           
                      Year            Year            Year           Year

                      2013            2014            2015           2016
Gas Positions:
Fixed Price
Swaps ^ (1)
Notional Volume       1,925,000       2,920,000       2,555,000      2,745,000
(MMBtu)
Fixed Price           $  3.52         $  3.89         $  4.08        $  4.23
($/MMBtu)
                                                                     
Oil Positions:
Three-Way
Collars ^(1)
Notional Volume       206,250         547,500         547,500        549,000
(Bbl)
Floor Price           $  90.00        $  90.00        $  90.00       $  90.00
($/Bbl)
Ceiling Price         $  95.00        $  95.00        $  95.00       $  95.00
($/Bbl)
Put Sold              $  70.00        $  70.00        $  70.00       $  70.00
($/Bbl)
Basis Swaps
Midland-Cushing
^(2)
Notional Volume       471,000         401,500         -              -
(Bbls)
Fixed Price           $  (1.24  )     $  (1.05  )     $  -           $  -
($/Bbl)
Midland-WTS ^
(1)
Notional Volume       247,500         328,500         -              -
(Bbls)
Fixed Price           $  (1.05  )     $  (1.05  )     $  -           $  -
($/Bbl)
LLS-Brent
Notional Volume       -               182,500         -              -
(Bbls)
Fixed Price           $  -            $  (3.95  )     $  -           $  -
($/Bbl)
Range Bonus
Accumulators
^(1)
Notional Volume       137,500         182,500         -              -
(Bbls)
Bonus ($/Bbl)         $  4.50         $  4.50         $  -           $  -
Digital Call          $  99.00        $  99.00        $  -           $  -
Sold ($/Bbl)
Put Sold              $  72.50        $  72.50        $  -           $  -
($/Bbl)

    
(1)   Year 2013 positions begin April 1, 2013.
      Year 2013 Midland-Cushing basis swaps have 1,000 Bbl/d at a weighted
(2)   average price of $(1.50) beginning March 1, 2013 and 600 Bbl/d at a
      weighted average price of $(0.75) beginning on April 1, 2013.

                                            
                                     Year              Year

                                     2013              2014
    NGLs Positions:
    Fixed Price Swaps ^(1)
    Mont Belvieu Ethane
    Notional Volume (Bbls)           59,333            70,774
    Fixed Price ($/Bbl)              $ 11.03           $ 11.03
    Mont Belvieu Propane
    Notional Volume (Bbls)           $ 44,355          $ 52,907
    Fixed Price ($/Bbl)              $ 37.91           $ 37.91
    Mont Belvieu N. Butane
    Notional Volume (Bbls)           $ 12,638          $ 15,075
    Fixed Price ($/Bbl)              $ 65.62           $ 65.62
    Mont Belvieu Isobutane
    Notional Volume (Bbls)           $ 13,479          $ 16,078
    Fixed Price ($/Bbl)              $ 70.24           $ 70.24
    Mont Belvieu N. Gasoline
    Notional Volume (Bbls)           $ 23,195          $ 27,667
    Fixed Price ($/Bbl)              $ 88.57           $ 88.57
                                                         
(1) Year 2013 NGL swaps begin March 1, 2013.


For a summary of all commodity and interest rate derivative contracts in place
at March31, 2013, please refer to our Quarterly Report on Form 10-Q which is
expected to be filed on May 2, 2013.

Liquidity Update

At March31, 2013, Vanguard had indebtedness under its reserve-based credit
facility totaling $461.0 million with a borrowing base of $1.2 billion, which
provided for $737.3 million in undrawn capacity, after consideration of a $1.7
million reduction in availability for letters of credit. On April 17, 2013, we
entered into the Fourth Amendment to the Third Amended and Restated Credit
Agreement, which provided for, among others, (a) the extension of the maturity
date to April 16, 2018, (b) the increase of our borrowing base from $1.2
billion to $1.3 billion and (c) increased hedging flexibility. However, under
the amended agreement, we are only committed to and paying for a borrowing
utilization of $1.2 billion, but we have the flexibility to request the
additional $100.0 million of availability if needed in the future.

As of April 30, 2013, there were $713.5 million of outstanding borrowings and
$584.8 million of borrowing capacity under the reserve-based credit facility,
after consideration of a $1.7 million reduction in availability for letters of
credit. We also have approximately $15.0 million in available cash.

Cash Distributions

On April19, 2013, our board of directors declared a cash distribution
attributable to the month of March 2013 of $0.2025 per common unit ($2.43 on
an annual basis) expected to be paid on May15, 2013 to Vanguard unitholders
of record as of the close of business on May1, 2013.

On April 30, 2013, our board of directors approved an increase to our monthly
cash distribution from $0.2025 to $0.2050 per common unit ($2.43 to $2.46 on
an annualized basis) effective with our April distribution to be paid on June
14, 2013.

Conference Call Information

Vanguard will host a conference call on Wednesday (May 1, 2013) to discuss its
first quarter 2013 financial results, at 11:00 a.m. Eastern Time (10:00 a.m.
Central). To access the call, please dial (877) 941-6010 or (480) 629-9770 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 June 1,
2013 and may be accessed by calling (303) 590-3030 and using the pass code
4614057#. 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

                                                    March 31,
                                                    2013        2012^(a)(b)
Average realized prices, excluding hedging:
Oil (Price/Bbl)                                     $ 80.67        $   93.04
Natural Gas (Price/Mcf)                             $ 2.30         $   4.19
NGLs (Price/Bbl)                                    $ 41.38        $   59.08
                                                                   
Average realized prices, including hedging
^(c):
Oil (Price/Bbl)                                     $ 79.29        $   86.66
Natural Gas (Price/Mcf)                             $ 3.52         $   6.01
NGLs (Price/Bbl)                                    $ 41.44        $   59.08
                                                                   
Total production volumes:
Oil (MBbls)                                         725            692
Natural Gas (MMcf)                                  11,990         2,428
NGLs (MBbls)                                        257            138
Combined (MBOE)                                     2,981          1,235
                                                                   
Average daily production volumes:
Oil (Bbls/day)                                      8,060          7,606
Natural Gas (Mcf/day)                               133,227        26,684
NGLs (Bbls/day)                                     2,858          1,515
Combined (BOE/day)                                  33,122         13,569

    
      During 2012, we acquired certain oil and natural gas properties and
(a)   related assets. 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.
      
(c)   Excludes amortization of premiums paid and amortization on derivative
      contracts acquired.
      

Proved Reserves

Total proved oil and natural gas reserves at March31, 2013 were 151.1 million
barrels of oil equivalent, consisting of 60.7 million barrels of crude oil,
condensate, and natural gas liquids and 542.5 billion cubic feet of natural
gas. Natural gas reserves accounted for 60% of total proved reserves, and 73%
of total proved reserves are developed.

                                              
VANGUARD NATURAL RESOURCES, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per unit data)

(Unaudited)
                                                  
                                                  Three Months Ended
                                                  March 31,
                                                  2013           2012
Revenues:
Oil, natural gas and NGLs sales                   $ 96,682          $ 82,717
Realized gain (loss) on commodity                 5,771             (3,239   )
derivative contracts
Unrealized loss on commodity derivative           (35,047   )       (22,734  )
contracts
Total revenues                                    67,406           56,744   
                                                                    
Costs and expenses:
Production:
Lease operating expenses                          24,172            18,559
Production and other taxes                        9,343             6,860
Depreciation, depletion, amortization, and        38,693            21,797
accretion
Selling, general and administrative               6,549            4,972    
expenses
Total costs and expenses                          78,757           52,188   
                                                                    
Income (loss) from operations                     (11,351   )       4,556    
                                                                    
Other income (expense):
Interest expense                                  (15,438   )       (5,329   )
Realized loss on interest rate derivative         (947      )       (576     )
contracts
Unrealized gain (loss) on interest rate           661               (421     )
derivative contracts
Loss on acquisition of oil and natural gas        -                 (330     )
properties
Other                                             52               76       
Total other expense                               (15,672   )       (6,580   )
                                                                    
Net loss                                          $ (27,023 )       $ (2,024 )
                                                                    
Net loss per Common and Class B units –           $ (0.42   )       $ (0.04  )
basic & diluted
                                                                    
Weighted average units outstanding:
Common units – basic & diluted                    64,369           52,067   
Class B units – basic & diluted                   420              420      

                                                         
VANGUARD NATURAL RESOURCES, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)

                                             March 31,            December 31,
                                             2013                 2012
                                             (Unaudited)
Assets
Current assets
Cash and cash equivalents                    $5,272               $11,563
Trade accounts receivable, net               73,646               51,880
Derivative assets                            20,914               46,690
Other current assets                         3,554               3,858      
Total current assets                         103,386             113,991    
                                                                             
Oil and natural gas properties, at           2,145,130            2,126,268
cost
Accumulated depletion, amortization          (587,760   )         (550,032   )
and impairment
Oil and natural gas properties               1,557,370           1,576,236  
evaluated, net – full cost method
                                                                             
Other assets
Goodwill                                     420,955              420,955
Derivative assets                            44,397               53,240
Other assets                                 61,607              35,712     
Total assets                                 $2,187,715          $2,200,134 
                                                                             
Liabilities and members’ equity
Current liabilities
Accounts payable:
Trade                                        $5,486               $8,417
Affiliates                                   204                  32
Accrued liabilities:
Lease operating                              12,280               7,884
Developmental capital                        13,664               4,754
Interest                                     22,546               11,573
Production and other taxes                   15,892               12,852
Derivative liabilities                       15,307               5,366
Oil and natural gas revenue payable          8,603                8,226
Distribution payable                         13,872               11,919
Other                                        10,506              8,479      
Total current liabilities                    118,360             79,502     
                                                                             
Long-term debt                               1,008,691            1,247,631
Derivative liabilities                       9,799                11,996
Asset retirement obligations, net of         60,314               60,096
current portion
Other long-term liabilities                  3,445               3,445      
Total liabilities                            1,200,609           1,402,670  
                                                                             
Commitments and contingencies
Members’ equity
Members’ capital, 68,261,030 common
units issued and outstanding at
March 31, 2013 and 58,706,282 at             984,323              794,426
December 31, 2012
Class B units, 420,000 issued and
outstanding at March 31, 2013 and            2,783               3,038      
December 31, 2012
Total members’ equity                        987,106             797,464    
Total liabilities and members’               $2,187,715          $2,200,134 
equity
                                                                             

Adjusted EBITDA

We present Adjusted EBITDA in addition to our reported net income (loss) in
accordance with GAAP. Adjusted EBITDA is a non-GAAP financial measure that is
defined as net income (loss) plus the following adjustments:

  *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);
  *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
    and unrealized fair value of phantom units granted to officers; and
  *Material transaction costs incurred on acquisitions.

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
(loss), operating income (loss), 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) in accordance with GAAP. Distributable Cash Flow is a non-GAAP
financial measure that is defined as net income (loss) plus the following
adjustments:

  *Depreciation, depletion, amortization and accretion;
  *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
    and unrealized fair value of phantom units granted to officers; and
  *Material transaction costs incurred on acquisitions;

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 (loss), operating income
(loss), 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
                                              March 31,
                                              2013             2012
Net loss                                      $ (27,023 )           $ (2,024 )
Plus:
Interest expense, including
realized losses on interest rate              16,385                5,905
derivative contracts
Depreciation, depletion,                      38,693                21,797
amortization and accretion
Amortization of premiums paid on              54                    3,234
derivative contracts
Amortization of value on                      7,924                 -
derivative contracts acquired
Unrealized losses on commodity
and interest rate derivative                  34,386                23,155
contracts
Loss on acquisition of oil and                -                     330
natural gas properties
Taxes                                         (317      )           (70      )
Compensation related items                    1,728                 912
Material transaction costs                    603                  -        
incurred on acquisitions
Adjusted EBITDA                               72,433                53,239
Less:
Interest expense, net                         (16,385   )           (5,905   )
Drilling, capital workover and                (14,648   )           (8,213   )
recompletion expenditures
Proceeds from sale of leasehold               -                    5,377    
interests
Distributable cash flow                       $ 41,400             $ 44,498 
                                                                    
Distributable cash flow per unit              $ 0.61                $ 0.86
Distribution coverage                         1.00x                 1.44x
                                                                    

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

Adjusted Net Income

We present Adjusted Net Income in addition to our reported net income (loss)
in accordance with GAAP. Adjusted Net Income is a non-GAAP financial measure
that is defined as net income (loss) plus the following adjustments:

  *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;
  *Net gains and losses on acquisition of oil and natural gas properties; and
  *Material transaction costs incurred on acquisitions.

This information is provided because management believes exclusion of the
impact of these items will help investors compare results between periods and
identify operating trends that could otherwise be masked by these items and to
highlight the significant fluctuations that commodity price volatility has on
our results, particularly as it relates to unrealized changes in the fair
value of our derivative contracts. Adjusted Net Income is not intended to
represent cash flows for the period, nor is it presented as a substitute for
net income (loss), operating income (loss), 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 Loss to Adjusted Net Income
(in thousands, except per unit data)
(Unaudited)

                                            Three Months Ended
                                                March 31,
                                                2013            2012
Net loss                                        $ (27,023 )         $ (2,024 )
Plus (less):
Unrealized loss on other commodity              35,047              22,734
derivative contracts
Unrealized (gain) loss on interest rate         (661      )         421
derivative contracts
Unrealized fair value of phantom units          999                 151
granted to officers
Amortization of value of derivative             7,924               -
contracts acquired
Loss on acquisition of oil and natural          -                   330
gas properties
Material transaction costs incurred on          603                -        
acquisitions
Adjusted net income                             $ 16,889           $ 21,612 
Net loss per unit                               $ (0.42   )         $ (0.04  )
Plus (less):
Unrealized loss on other commodity              0.54                0.43
derivative contracts
Unrealized (gain) loss on interest rate         (0.01     )         0.01
derivative contracts
Unrealized fair value of phantom units          0.02                -
granted to officers
Amortization of value of derivative             0.12                -
contracts acquired
Loss on acquisition of oil and natural          -                   0.01
gas properties
Material transaction costs incurred on          0.01               -        
acquisitions
Adjusted net income per basic unit              $ 0.26             $ 0.41   

Contact:

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