October 4, 2012 Better Investing Virtual Conference Lisa Godfrey Investor Relations NYSE: VNR
MLP OVERVIEW 3
MLP Subsector Descriptions Natural Gas Gatherers These MLPs gather and process natural gas in the field and process it by removing and separating natural gas liquids (NGLs) to make the gas acceptable to transport on gas transmission…
Key MLP Investor Benefits 4 Specific Investor Benefits High Current Income 6.2% average current yield for the AMZ MLP Index(1) Growth Potential 372.4% total return for the AMZ MLP Index over 10 year period (2) Tax Advantaged…
Where Are MLPs Today MLPs remain attractive for three key reasons 1) Attractive valuations Still within historical average yields and yield spreads Still within historical averages EV/EBITDA and Price/DCF multiples Attractive to…
Advantages of Vanguards LLC Structure Characteristics VNR Typical Typical MLP Corporation Non-Taxable Entity No Tax Shields on Distributions/ Taxable Dividends Distribution Distribution Dividend Tax Reporting Schedule Schedule…
Overview of Vanguard Natural Resources Upstream oil & gas LLC, headquartered in Houston, Texas Initial Public Offering VNR October 2007 (Total Enterprise Value of 240mm) Fifteen strategic acquisitions totaling 2.1bn expanded…
Recent Investor Friendly Events Initiated monthly distribution policy Commenced with July 2012 distribution and paid on September 14, 2012 Previously paid quarterly distributions Established a Direct Reinvestment Plan (DRIP)…
The Power of the DRIP The below example looks at two identical investments over a 20 year period.one with a DRIP and the other not Initial Unit Price 28.50 Initial Unit Price 28.50 Units Bought 1,000 Units Bought 1,000 Initial…
Geographically Diversified Reserve Base Core Areas Overview Big Horn Basin Williston Basin Proved Reserves: 24.0 MMBoe 136.2 MMBoe proved reserves Proved Reserves: 5.8 MMBoe 85% oil and 96% Proved Developed 93% oil and 95%…
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…
Our Successful Acquisition Track Record We acquire developed, proved properties in established oil and gas basins We review between 125-150 and evaluate approximately 50 acquisition candidates each year Adj. Effective Purchase…
Arkoma Basin Acquisition Woodford Shale Fayetteville Shale Operated Acreage Non-operated Acreage Assets located in the Woodford Shale and Fayetteville Shale plays Total proved reserves of 402 Bcfe (57% PDP) Current net…
Pro Forma Reserve Summary Total Reserves of 136 MMBoe (817 Bcfe) PDP reserves of 94 MMBoe (569 Bcfe) is 69% of total reserves Oil NGL Gas Total (MMBl) (MMBl) (Bcf) (MMBoe) PDP 37 9 291 95 PDNP 2 0 11 4 PUD 5 10 138 38 Total…
VNRs 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, Low 136 MMBoe total proved reserves, 72% proved developed and 15 year…
Disciplined Financial Strategy Maintain conservative capital structure and sufficient liquidity Availability under Revolver as of August 1, 2012 of 250 million Target Debt / EBITDA of less than 3.0x Active management of debt…
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 program…
Hedges Mitigate Commodity Price Risk More than 80% of expected crude oil proved production hedged thru 2014 at a weighted average FLOOR price of 91.18 per barrel Use a combination of swaps, collars and three-way collars 3,500…
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 5.11 per MMBtu Primarily use NYMEX and basis swaps 30,000…
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…
Price Performance Since 2009 The results have been great. VNR has outperformed US Royalty Trusts, C-Corps and other E&P MLPs. The strategy works. 500% 400% 383.9% 300% Price Performance (%) 200% 175.7% 124.6% 100%…
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…
Key Investor Considerations Management and unitholders are well aligned High quality, long lived reserves Asset base generates stable cash flow Multi-year hedge program mitigates commodity risk Geographic and commodity…
Loading...
