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NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc

Vanguard Natural Resources, Llc · Sep 24, 2009 · 24 slides

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Slides

  1. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 1
    NAPTP MLP Conference September 17, 2009 Greenwich, CT
  2. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 2
    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 Recently completed…
  3. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 3
    Company Profile Company Profile EQUITY MARKET CAP (1) 234 million TOTAL DEBT 129 million LESS CASH 4 million ENTERPRISE VALUE 359 million (1)Market data as of September 10, 2009; reflects 3.9mm equity offering (including shoe)…
  4. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 4
    Vanguard Investment Highlights High quality, long lived reserves with minimal production decline Steady volumes of hydrocarbons produced from natural gas and oil reserves generate stable cash flows Acquisitions in the Permian Basin…
  5. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 5
    Solid Near-term Outlook for VNR Strong hedging book helps to ensure distribution stability, protects against debt covenant violations and maximizes borrowing base availability 78% of expected natural gas production (total proved)…
  6. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 6
    Appalachian Asset Profile High degree of step out development success Targeting low-risk, multiple Brushy Branch Lewis Heirs Smepa producing horizons Premium pricing due to proximity to northeastern markets: Gausdale 0.23/MMbtu…
  7. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 7
    Permian Basin Asset Profile Acquisition of producing assets from Apache, closed January 2008 Established Permian Basin as an operating area, approx. 50 operated wells in 7 fields Assumed hedges covering 90% of PDP production…
  8. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 8
    South Texas Dos Hermanos Acquisition Acquisition from Lewis Energy, closed July 2008, 53.4 million (60/40 cash and stock transaction) Lewis to operate and conduct PUD drilling program through 2013 (6-8 wells per year) Assumed…
  9. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 9
    South Texas Sun TSH Acquisition Acquisition from Lewis Energy, closed August, 2009 for 52.3 million, all cash funded with proceeds of equity offering Lewis to operate and conduct PUD drilling program through 2015 (7 wells per…
  10. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 10
    Vanguard Reserve Profile BY RESERVE CATEGORY: BY OIL, GAS AND NGL: BY AREA: Reserves using 6/30/09 prices, 69.82/bo WTI and 3.96/MMbtu HH 11
  11. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 11
    VNR Reserve Growth 160 140 134 120 109 Reserves, Bcfe 100 % 80 67 23 60 % 40 63 20 0 12/31/07* 12/31/08* 6/30/09** * Netherland, Sewell & Associates reserve report ** Internal reserve report including Sun TSH…
  12. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 12
    VNR Production Growth Average Daily Production, MMcfed 25 18.8 19.8 20 16.2 % 1 6 15 11.6 10 % 40 5 0 2007 2008 2009E 13
  13. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 13
    Advantages of Vanguards LLC Structure LLC Partnership structure results in lower cost of capital No entity level income tax Tax Shield minimum 60% of distributions through 2011 will be tax deferred (2007 & 2008 -100%) Unit holders…
  14. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 14
    Prudent Financial Strategy Maintain flexible balance sheet 175 million borrowing base resulting from recently amended credit facility 46 million borrowing availability Maintain strong distribution coverage Maximize productivity…
  15. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 15
    FINANCIAL OVERVIEW 16
  16. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 16
    Risk Management Significant percentage of expected natural gas production (total proved) through 2011 is hedged via a combination of swaps, collars and puts at a weighted average floor price of 8.18 per MMBtu: 2009 2010 2011 %…
  17. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 17
    Cash Distribution Coverage for 2009 Natural Gas Prices (/MMbtu) 3.00 4.00 5.00 6.00 7.00 30.00 1.80x 1.74x 1.68x 1.62x 1.56x Crude Oil Prices WTI 40.00 1.81x 1.75x 1.70x 1.64x 1.58x (/Barrel) 50.00 1.83x 1.77x 1.71x 1.65x…
  18. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 18
    2009 Calendar Year Guidance Pre Acquisition (1) Post Acquisition (1) TOTAL PRODUCTION (MMCFE) 6,442 - 6,785 6,785 7,100 AVERAGE DAILY PRODUCTION MCFE/D 17,650 - 18,590 18,815 19,845 LEASE OPERATING EXPENSES (000S) 10,500 - 11,000…
  19. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 19
    Comparable Company Distribution Yields CURRENT DISTRIBUTION YIELDS OF PEER GROUP 16% 14.0% 13.3% 14% 13.0% 12.3% 11.3% 12% 9.8% 9.9% 10% 9.3% 8% 6% 4% 2.44 2.00 2.52 2.08 2.05 3.01 2.00 2% 0% ATN PSE CRT LINE LGCY ENP…
  20. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 20
    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% 8.0% Natural Gas T&S 6.8 6.4 6.7 6.1 7.8 7.9 Natural Gas G&P 6.8 5.9 6.2 5.5 12.1 11.6 40% Propane 8.3 8.1 8.2 7.5 9.8…
  21. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 21
    22 (75.0%) (50.0%) (25.0%) 0.0% 25.0% 50.0% 75.0% 100.0% 125.0% 150.0% 175.0% 200.0% SGLP 167.9% MWE 157.9% DPM 144.4% VNR 141.4% CQP 138.3% NGLS 125.2% RGNC 114.3% GLP 112.3% TLP 107.7% ATN 106.1% GEL 86.3%…
  22. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 22
    Existing Debt Summary ( in millions) June 30, 2009 Amended Facility Size 400 400 Borrowing Base 154 175 Amount Outstanding 132.5 129 Borrowing Availability 21.5 46 Maturity Date March 31, 2011 October 1, 2012 Interest Rate…
  23. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 23
    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…
  24. NAPTP MLP CONFERENCE – Vanguard Natural Resources, Llc – slide 24
    Vanguard Investment Highlights High quality, long lived reserves with minimal production decline Steady volumes of hydrocarbons produced from natural gas and oil reserves generate stable cash flows Acquisitions in the Permian…

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