November 11, 2010 Southwest IDEAS Conference Dallas, TX
Comparable Company Distribution Yields C CURRENT DISTRIBUTION S O YIELDS SOOF PEER G GROUP O 10% 8.4% 7.6% 7.9% 7.9% 7.3% 8% 6.5% 6.9% 6.4% 5 8% 5.8% 6% 4% 2% 2.33 2.00 2.64 1.56 3.03 2.08 2.20 0% *Pipe *G&P *USRT…
Price Performance Since 2009 The results Th lt have h been b good. d VNR has h outperformed t f d US Royalty R lt Trusts, C-Corps and other E&P MLPs. The strategy works. 500% V NR: 342% 400% 300% E&P M LPs :…
Unit Price History Since IPO Distribution Increases with Acquisition Growth 0.55 0 525 0.525 0.50 0.445 0.425 5
Yield Compression Continues A Average Yi Yield ld 2004 2005 2006 2007 2008 2009 YTD Current Liquids T&S 6.5% 6.2% 6.8% 6.1% 8.3% 8.2% 6.8% 6.3% Natural Gas T&S 6.8 6.4 6.7 6.1 7.8 8.1 6.5 5.8 50% Natural Gas G&P 6.8 5.9 6.2 5.5…
Overview of Vanguard Natural Resources Upstream Energy LLC, headquartered in Houston Initial Public Offering VNR - October 2007 Fi strategic Five t t i acquisitions i iti totaling t t li 350MM 350MM expanded d d geographic hi…
Company Profile Company Profile EQUITY MARKET CAP (1) 700 million TOTAL DEBT 54 million LESS CASH 3 million ENTERPRISE VALUE 751 million (1) Market pricing as of November 8, 2010; includes 420m Class B units Positive Cash…
Advantages of Vanguards LLC Structure LLC Partnership structure results in lower cost of capital No entity level income tax is competitive advantage in A&D market No Incentive Distribution Rights (IDRs) Investors share equally in…
Multiple Operating Areas Appalachia Proved Reserves: 50.4 Bcfe(1) 93% Gas Gas, 67% Proved Developed 10.0 MMcfe/d current net production Permian Basin Proved Reserves: 7.0 MMboe (1) 84% oil and 75% Proved Developed 1.3 1 3 Mb…
2009 - Growth in South Texas Acquisition from Lewis Energy, closed August 2009 for 52.3 million, cash funded with proceeds of equity offering Lewis to operate and conduct PUD drilling program through 2015 (7 wells per year)…
2009 - Growth in Permian Basin Acquisition of producing assets in Ward County closed December 2009 for 55 million cash funded with equity proceeds Increased net oil production from the Permian by more than 100% High margin…
2010 Mississippi Acquisition Acquisition of producing assets in Mississippi, Texas and New Mexico closed May 2010 for 113.1 million cash funded with q yp equity proceeds Inventory of infill PUD locations to develop oil reserves…
Asset and Location Diversification 12/31/07*: OIL, GAS AND NGL 9/30/10**: OIL, GAS AND NGL 1.5 , 2% 21.3, 12% GAS, BCF 85.2, GAS, BCFE OIL, BCFE 49% OIL, BCFE 68.8, NGL, BCFE 39% 65.3 65 3, 98% 12/31/07*: BCFE BY AREA…
FINANCIAL OVERVIEW 18
Hedges Mitigate Distribution Risk Approximately 82% of expected natural gas production (total proved) through 2011 is hedged via a combination of swaps and collars at a weighted average floor price of 7.81 per MMBtu: 4th Qtr 2010…
Conservative Balance Sheet ( in millions) June 30, 2009 Nov 5,2010 Facility Size 400 400 Borrowing Base 154 225 Amount Outstanding 133 54 Borrowing Availability 22 171 Maturity Date March 31, 2011 October 1, 2012 Interest Rate…
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…
Key Investor Considerations High quality, long lived reserves Asset base generates stable cash flow Multi-year hedge program mitigates commodity risk G Geographic hi and d commodity dit diversity di it LLC structure gives…
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