Investor Presentation Hilliard Lyons Richard Robert, EVP & CFO
Overview of Vanguard Natural Resources Upstream oil & gas LLC, headquartered in Houston, Texas Asset Profile(2) Initial Public Offering VNR October 2007 (Total Enterprise Value of 240mm) 175 MMBoe total proved reserves Eighteen…
Our Successful Execution of the E&P MLP Strategy Geographically diverse portfolio of long life assets, well positioned in most of the mature US Basins High Quality, 175 MMBoe total proved reserves, 70% proved developed Low Risk…
Experienced Management Team Years of Name Title Prior Affiliations Experience Ensource Energy Scott W. Smith President and CEO The Wiser Oil Company 32 San Juan Partners Enbridge USA Richard A. Robert EVP and CFO Midcoast…
Where We Started Appalachia Basin Proved Reserves: 67 Bcfe Undeveloped gross acres: 106,000 Gross locations: 543 (326 proved) (1) Based on NSAI 12/31/07 Reserve Report 6
Geographically Diversified Reserve Base Core Areas Overview 175 MMBoe proved reserves Big Horn Basin Williston Basin 60% gas and 40% liquids Proved Reserves: 22.7 MMBoe Proved Reserves: 6.2 MMBoe 83% oil and 96% Proved Developed…
Our Business Strategies Acquire and produce mature, long lived oil and gas properties which are nearly fully developed and have established, predictable production profiles We have a diversified asset base, geographically, by…
How We Spend Capital Disciplined approach to capital spending focus on maintaining cash flow from mature, long lived fields By contrast, resource players invest in growth to support equity valuation The nature of our capital program…
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 comprised of an estimated 1.5…
U.S. Natural Gas Reserves / Resource Life Shale development has significantly increased the natural gas reserves / resource in the United States Natural gas can now be viewed as a long-term energy solution 2,000 Tcf 100 Yr…
U.S. Oil & Liquids Reserves / Resources Increase in U.S. liquids production is reducing imports 300 270 250 Billions of Barrels 200 150 100 100 50 20 - U.S Existing U.S. Unconventional Saudi Arabia…
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…
Capital Sources for North American E&P Companies Since 2007 (B) More than 500 billion raised since 2007 297 112 74 53 M&A (Asset Only) Debt Equity Joint Ventures 15 Source: Jefferies January 2013 IPAA luncheon…
Range Permian Acquisition Three operated field areas in the Permian Basin Eunice Area Lea County, New Mexico Loving East Eddy County, New Mexico Powell Ranch Glasscock County, Texas Total proved reserves of 137 Bcfe (78%…
Barrett Acquisition Piceance Basin, CO, Powder River & Wind River, WY Assets located in the Piceance Basin in Colorado and the Powder River and Wind River Basins in Wyoming Total proved reserves of 151 Bcfe (84% PDP) Current net…
Arkoma Basin Acquisition Woodford Shale Fayetteville Shale Assets located in the Woodford Shale and Fayetteville Shale plays Total proved reserves of 362 Bcfe (54% PDP) Current net production of 61 MMcfe/d (includes 800 Bbl/d…
Financial Overview 20
Disciplined Financial Strategy Maintain conservative capital structure and sufficient liquidity Availability under Revolver as of 4/12/2013 of 565 million Target Debt / EBITDA of less than 3.0x Active management of debt levels by…
Risk Mitigation Vanguard seeks to mitigate risk across all facets of its business Drilling and Operational Risk Leverage other operators expertise in certain areas Rate of return disciplined approach to project selection Drill…
Hedging Philosophy Hedge commodity prices on estimated production from acquisitions for three to five years upon signing the Purchase and Sale Agreement to protect rate of return from price fluctuations Opportunistic hedging…
Hedges Mitigate Commodity Price Risk Approximately 85% of expected natural gas proved production hedged thru the first half of 2017 at a weighted average FLOOR price of 4.62 per MMBtu Primarily use NYMEX and basis swaps 60,000…
Hedges Mitigate Commodity Price Risk Approximately 90% of expected crude oil proved production hedged thru 2014 at a weighted average FLOOR price of 92.47 per barrel Use a combination of swaps, collars and three-way collars 3,500…
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…
Distribution Coverage Sensitivity Existing oil and gas hedges support the distributions in a period of volatile commodity prices ABOVE 1.00x coverage in almost any price environment 2013 Natural Gas Prices (/MMBtu) 2.00 3.00 4.00…
Vanguards Value Proposition Vanguard has the highest distribution growth rate since its IPO in October 2007 However, Vanguard is still trading at a higher yield than many of its peers Typically, MLPs with a track record of 50%…
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…
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