Legacy Reserves LP Unit (NASDAQ: LGCY) stock fell 4.96% after the company signed the memorandum of understanding to settle the previously disclosed putative class action lawsuits in the Delaware Chancery Court. As per the settlement envisioned by the memorandum of understanding, the company will also effectively resolve all claims in other previously disclosed lawsuits filed by purported holders of Legacy’s preferred units (together with the Consolidated Class Action, the “Actions”). LGCY has entered into the memorandum of understanding in order to avoid the costs, disruption, delay and distraction of further litigation, and without admitting the validity of any allegations made in the complaints in the Actions.  As per the memorandum of understanding, Legacy, Legacy Reserves GP, LLC and Legacy Reserves Inc. (“New Legacy”) have agreed to amend the terms of the Transaction to provide that each outstanding 8% Series A Preferred Unit shall be converted into the right to receive 2.92033118 shares of common stock of New Legacy and each outstanding 8% Series B Preferred Unit shall be converted into the right to receive 2.90650421 shares of common stock of New Legacy (approximately 27.6 million total shares).  The memorandum of understanding also provides, among other things, that the parties will negotiate in good faith to enter into a stipulation of settlement with respect to the Actions and that, upon the execution of a stipulation of settlement, the holders of preferred units will not seek additional relief or damages based on and release all claims related to the Transaction. The stipulation of settlement, once executed by the parties thereto, will be subject to customary conditions, including final court approval of definitive settlement documentation.

Meanwhile, LGCY in the first quarter of 2018, has announced transaction to transition from MLP to C-Corp. The company has divested non-core Mid-Con assets with $15.4 million of plugging liability for $25.3 million in cash proceeds, further rationalizing the asset base and focusing the capital deployment. In the first quarter, LGCY brought 20 wells online late with average peak rates exceeding expectations. These additional wells bring the total to 67 wells drilled and completed since commencement of the horizontal drilling program. The company in 1Q 2018 has denerated net income of $64.4 million and adjusted EBITDA of $70.7 million. LGCY has reduced commodity price risk by adding 6,000 Bbls/d of 2019 WTI crude oil swaps at average swap price of $58.88 per barrel.