Investor Presentation Richard Robert, EVP & CFO September 2014
Overview of Vanguard Natural Resources Upstream oil & gas LLC, headquartered in Houston, TX; Initial Public Offering VNR October 2007 had a Total Enterprise Value of Asset Profile(2) 240mm Twenty three strategic acquisitions…
Building Blocks of a Successful E&P MLP Experienced Management Team Extensive experience in acquisition integration, development and operation of oil and gas assets Strong Credit Profile and Liquidity Not outspending cash flow…
Experienced Management Team Years of Name Title Prior Affiliations Experience Ensource Energy Scott W. Smith President and CEO The Wiser Oil Company 33 San Juan Partners Enbridge USA Richard A. Robert EVP and CFO Midcoast…
Geographically Diversified Reserve Base Core Areas Overview Big Horn Basin Powder River Basin 2.3 Tcfe (390 MMBoe) proved reserves Proved Reserves: 127 MMBoe Proved Reserves: 21 Bcfe 68% gas and 32% liquids 85% oil and 96% Proved…
Our Acquisition Strategy The U.S. has a large inventory of mature oil and natural gas basins which provide significant opportunity for future growth and consolidation Current E&P opportunity set is substantially more than the U.S.…
Our Successful Acquisition Track Record Strong record of evaluating and integrating assets, completing over 4.2 billion since VNRs IPO in 2007 Designated business development and acquisition evaluation team We review between 125-150…
Pinedale/Jonah Acquisition a Strategy Shift Marks the first Vanguard acquisition to include a growth capital component Management determined this was the best direction for Companys growth and cash flow stability because the deal…
Pinedale-Jonah Acquisition Pinedale and Jonah Fields in Green River Basin Wyoming Pinedale Jonah Natural gas and oil assets located in the Pinedale and Jonah Fields of Southwestern Wyoming in the Green River Basin Estimated…
Pinedale Well Economic Sensitivities Pinedale well economics are strong and based on recent Ultra results and natural gas prices can achieve rates of return in excess of 45% EUR (Bcfe) 4.0 5.0 6.0 7.0 Well Cost (/MM) 4.0…
Pinedale-Jonah Gas Flow Pinedale Jonah 12
Hunt Gulf Coast Acquisition Cotton Valley and East Haynesville Fields in North Louisiana and East Texas Current Net Natural Gas Oil NGL Total % Proved Production COUNTY FIELD (Bcf) (MMBI) (MMBI) (Bcfe) Developed (MMcfe/d) Cotton…
Recently Announced Piceance Acquisition (Pending) Oil (MMBbl) Gas (Bcf) NGL (MMBbl) Total (Bcfe) Pinedale PDP 1.7 221.2 9.3 287.2 Jonah PDNP 0.2 15.2 0.6 20.0 PUD 0.6 62.0 2.6 81.4 TOTAL 2.5 298.4 12.5 388.5 Natural gas,…
An Evolving Reserve Base Acquisitions were driver of increased natural gas exposure since 2011 66% Natural gas assets are being sold for a better value than oil opportunities 34% 66% of estimated 2013 proved reserves are…
Significant Growth in High Quality Asset Base Vanguards proved reserves have increased 128% and PV-10 has increased 86% since year-end 2013 Proved Reserves (Bcfe) Net Gas (%) PV-10 ( MM) PV-10 % Reserve Category 12/31/2013 PF…
Reserve Information Reserves by Category Reserves by Category PDP 4% PDP 7% PDNP 71% PDNP 63% 33% 22% PUD PUD Reserves by Commodity Reserves by Commodity Oil Oil 57% 17% 18% Gas Gas 68% NGL NGL 14% 26% PV-10 by…
Future Shale Development Requires Massive Capital Average of 70 billion per year in capital requirements for the next 30 years Creates opportunities for E&P MLPs to acquire higher PDP assets as Shale players try to close the funding…
Financial Profile August 31, 2014 August 31, 2014 August 31, 2014 ( in millions) (w/ Hunt Gulf Coast) (w/ Preferred Offering) (w/ Piceance Acquisition) Cash 10.0 10.0 10.0 Credit Facility 950.0 853.4 1,353.4 7.875% Senior Notes…
Hedges Mitigate Commodity Price Risk Approximately 75% of expected natural gas proved production hedged thru 2017 at a weighted average price of 4.42 per MMBtu Primarily use NYMEX and basis swaps and three-way collars 100,000…
Hedges Mitigate Commodity Price Risk Approximately 85% of expected crude oil proved production hedged thru 2015 at a weighted average FLOOR price of 92.67 per barrel Use a combination of swaps, collars and three-way collars…
VNR Operating Costs versus Peers VNR operating costs (% of total revenue) is significantly lower than other E&P MLP peers which equates to higher CASH margins 30.0% 8.0% 7.4% 26.5% 7.2% 25.6% 24.7% 6.8% 6.7% 24.1% 25.0%…
Risk Mitigation Acquisition Risk Measured and conservative approach to evaluating acquisitions Acquire quality assets, immediately accretive Focus on largely PDP assets with proved upside potential Commodity Risk Management seeks…
2014 Peer Benchmarking Leverage Metrics Asset Coverage (PV-10 / Debt)(1) 3.0 x 2.4 x 2.5 x 2.3 x 2.3 x 2.1 x 2.0 x 2.0 x 1.8 x 1.8 x 1.4 x 1.5 x 1.3 x 1.0 x 1.0 x 0.9 x 0.8 x 1.0 x 0.5 x 0.0 x OAS SFY CRZO QRE LPI BBE…
Robust Asset Coverage (6/30/14) PV-10 Value and Commodity Hedges NYMEX Strip Case (1)(2) Total Debt VNR PV-10 Asset Value (mm) 2,428 2,427 Total PV-10 Value (mm) 2,500 PDP Value 1,885 2,250 354 354 1,885 2,074 PDNP Value 189…
2014 to be an Exciting Year Pinedale acquisition closed in January Adds a growth capital component to VNRs strategy Significant amount of additional drilling locations not booked due to 5-year SEC rule Partnered with two of the…
Permian Development Opportunities Diamondback (Horizontal WC) 7000 GR/2400 Net acres 32-40 Gross Wells, 30-35% WI Athlon (Horizontal WC) 1040 GR/926 Net acres 8-10 Gross Wells, 30-35% WI Athlon (Vertical WB) 1000 GR/840 Net…
Key Investor Considerations Diversified and Balanced Portfolio of High Quality, Liquids Focused Assets Long Lived, Predictable Properties with Low Decline Rates Disciplined Acquisition Strategy Active Hedging Program, which…
Appendix
Locking in Margins Provides Stability Through the use of hedging, Vanguard is able to lock in significant acquisition margins for the foreseeable future, helping to insure distribution stability 98.49 100.00 92.82 92.27 93.42…
Arkoma (Woodford) OPERATIONS MAP 57.6 MMBOE Total Proved Reserves 55% proved developed 0% oil / 80% natural gas / 20% NGLs Current net production of 8.5 MBoe/d (2013Q4) 18.5 proved R/P 771 gross / 165 net producing wells…
Permian Basin 42.3 MMBOE Total Proved Reserves 84% proved developed 37% oil / 45% natural gas / 18% NGLs Current net production of 7.2 MBoe/d (2013Q4) 16.1 proved R/P OPERATIONS 1369 gross / 958 net producing wells MAP Developed…
Big Horn Basin OPERATIONS MAP 20.8 MMBOE Total Proved Reserves 96% proved developed 85% oil / 4% natural gas / 11% NGLs Current net production of 3.5 MBoe/d (2013Q4) 16.3 proved R/P 299 gross / 230 net producing wells…
Piceance Basin OPERATIONS MAP 19.0 MMBOE Total Proved Reserves 94% proved developed 4% oil / 69% natural gas / 26% NGLs Current net production of 6.1 MBoe/d (2013Q4) 8.5 proved R/P 950 gross / 200 net producing wells Developed…
Gulf Coast Basin OPERATIONS MAP 9.5 MMBOE Total Proved Reserves 92% proved developed 50% oil / 35% natural gas / 15% NGLs Current net production of 1.6 MBoe/d (2013Q4) 16.3 proved R/P 324 gross / 245 net producing wells…
Wind River Basin OPERATIONS MAP 9.1 MMBOE Total Proved Reserves 96% proved developed 16% oil / 68% natural gas / 16% NGLs Current net production of 2.4 MBoe/d (2013Q4) 10.4 proved R/P 265 gross / 216 net producing wells…
Williston Basin OPERATIONS MAP 5.8 MMBOE Total Proved Reserves 94% proved developed 90% oil / 10% natural gas / 0% NGLs Current net production of 1.4 MBoe/d (2013Q4) 11.3 proved R/P 202 gross / 84 net producing wells Developed…
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