Overview of Vanguard Natural Resources Upstream Energy LLC, headquartered in Houston Initial Public Offering VNR NYSE Arca October 2007 Moved to NYSE Big Board in May 2009 Increased distributions 18% since IPO Generating stable…
Company Profile Company Profile (1) Equity Market Cap 174 million Total Debt 134 million Less Cash 2 million Enterprise Value 306 million (1) Market data as of June 1, 2009. Positive cash distribution coverage Annualized…
Vanguard Investment Highlights High quality, long lived reserves with minimal production decline Steady volumes of hydrocarbons produced from oil and gas reserves generate stable cash flows Acquisitions in the Permian Basin…
Solid Near-term Outlook for VNR Strong hedging book helps to ensure distribution stability, protects against debt covenant violations and maximizes borrowing base availability. 82% of expected natural gas production is hedged…
Appalachian Asset Profile High degree of step out development success Targeting low-risk, multiple producing horizons Premium pricing due to proximity to northeastern markets: 0.23/Mmbtu over Lewis Heirs NYMEX Brushy Branch…
Permian Basin Asset Profile Acquisition of producing assets from Lovington Field West Field Apache, closed 1/31/08 Established Permian Basin as an Robertson N Field operating area, approx. 50 operated Hobbs Field wells in 7…
South Texas Assets Acquisition from Lewis Energy, closed July 2008 (60/40 cash and stock transaction) Lewis to operate and conduct PUD drilling program through 2013 (6-8 wells per year) Drop-down opportunities possible as Lewis…
Advantages of Vanguards LLC Structure LLC Partnership structure results in lower cost of capital No entity level income tax Tax Shield minimum 70% of distributions through 2010 will be tax deferred (2007 & 2008 -100%) Unit…
Prudent Financial Strategy Maintain flexible balance sheet 154 million borrowing base resulting from semi-annual redetermination under current credit facility 20 million borrowing availability Maintain strong distribution…
Overview of Publicly-Traded Partnerships 12
Taxation Example (Assuming Units Held For 4-Year Period) Schedule of Annual Taxes on Distributions Year 1 Year 2 Year 3 Year 4 Purchase Price 10.00 Sale Price 15.00 Income/Unit 1.00 1.00 1.00 1.00 Depreciation/Unit (0.70) (0.70)…
Attractive Post-Tax Return Upon Sale In this example, 70% of the Total Tax Liability After Four Years allocated share of income is tax-deferred. Ordinary Income per Unit 4.00 Cumulative Taxes Paid 0.36 The deferred portion of taxes…
Major Taxation Points All investors receive a partnership K-1 at the end of the year K-1 allocates the partnerships income and expenses to individual investors based on their percentage ownership of the partnership Quarterly…
Financial Overview 16
Risk Management Significant percentage of expected natural gas production thru 2011 is hedged via a combination of swaps, collars and puts at a weighted average floor price of 8.50 per MMBtu: 2009 2010 2011 % Hedged 100% 87% 64%…
Comparable Company Distribution Yields Current Distribution Yields of Peer Group 18% 16.7% 16% 14.5% 13.4% 13.8% 14% 12.6% 12.8% 12% 11.2% 9.4% 10.3% 10% 8% 6% 4% 2% 2.00 2.44 2.52 2.00 0.52 3.01 2.00 2.08 0% CRT* PSE ATN LINE ENP…
MLP Yields by Subsector 50% Average Yield 2004 2005 2006 2007 2008 Current Liquids T&S 6.5% 6.2% 6.8% 6.1% 8.3% 8.6% Natural Gas T&S 6.8 6.4 6.7 6.1 7.8 8.3 Natural Gas G&P 6.8 5.9 6.2 5.5 12.1 12.7 40% Propane 8.3 8.1 8.2 7.5…
MLP YTD Performance Note: Market data as of 6/1/2009.
Debt Summary ( in millions) Facility Size 400 Borrowing Base 154 Amount Outstanding 134 Borrowing Availability 20 Maturity Date March 2011 Interest Rate Pricing Grid (a): Borrowing Base Utilization of: less than 33% L + 150 bps…
2009 Calendar Year Guidance (1) Total Production (Mmcfe) 6,442 - 6,785 Average Daily Production Mcfe/d 17,650 - 18,590 Lease Operating Expenses (000s) 10,500 - 11,000 G&A (000s) 3,100 - 3,600 Non-cash G&A (2) 2,580 - 2,580 Cash Interest…
Vanguard Investment Highlights High quality, long lived reserves with minimal production decline Steady volumes of hydrocarbons produced from oil and gas reserves generate stable cash flows Acquisitions in the Permian Basin…
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