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WELLS FARGO SECURITIES DECEMBER 8 2009 8TH ANNUAL PIPELINE & MLP SYMPOSIUM – Vanguard Natural Resources, Llc

Vanguard Natural Resources, Llc · Dec 8, 2009 · 17 slides

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Slides

  1. WELLS FARGO SECURITIES DECEMBER 8 2009 8TH ANNUAL PIPELINE & MLP SYMPOSIUM – Vanguard Natural Resources, Llc – slide 1
    Wells Fargo Securities December 8, 2009 8th Annual Pipeline & MLP Symposium New York, NY
  2. WELLS FARGO SECURITIES DECEMBER 8 2009 8TH ANNUAL PIPELINE & MLP SYMPOSIUM – Vanguard Natural Resources, Llc – slide 2
    Overview of Vanguard Natural Resources Upstream Energy LLC, headquartered in Houston Initial Public Offering VNR - October 2007 Four strategic acquisitions totaling 235MM expanded geographic profile and commodity diversity…
  3. WELLS FARGO SECURITIES DECEMBER 8 2009 8TH ANNUAL PIPELINE & MLP SYMPOSIUM – Vanguard Natural Resources, Llc – slide 3
    Company Profile Company Profile EQUITY MARKET CAP (1) 345 million TOTAL DEBT 136 million LESS CASH 2 million ENTERPRISE VALUE 479 million (1)Market pricing as of December 3, 2009; pro-forma for recent equity offering, including…
  4. WELLS FARGO SECURITIES DECEMBER 8 2009 8TH ANNUAL PIPELINE & MLP SYMPOSIUM – Vanguard Natural Resources, Llc – slide 4
    Multiple Operating Areas Appalachia Proved Reserves: 53.2 Bcfe(1) 96% Gas, 69% PDP 10.3 MMcfe/d current net production Permian Basin (pro forma) Proved Reserves: 6.7 MMboe (1) 85% oil and 73% PDP 1.5 MBoed current net…
  5. WELLS FARGO SECURITIES DECEMBER 8 2009 8TH ANNUAL PIPELINE & MLP SYMPOSIUM – Vanguard Natural Resources, Llc – slide 5
    2009 - Growth in South Texas 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 year)…
  6. WELLS FARGO SECURITIES DECEMBER 8 2009 8TH ANNUAL PIPELINE & MLP SYMPOSIUM – Vanguard Natural Resources, Llc – slide 6
    2009- Growth in Permian Basin Acquisition of producing assets in Ward County closed December 2009 for 55 million cash. Increased net oil production from the Permian by more than 100% High margin assets with inventory of PUD…
  7. WELLS FARGO SECURITIES DECEMBER 8 2009 8TH ANNUAL PIPELINE & MLP SYMPOSIUM – Vanguard Natural Resources, Llc – slide 7
    Growth and Diversification 12/31/07*: OIL, GAS AND NGL 9/30/09**: OIL, GAS AND NGL 1.5 , 2% 19.9 , 14% GAS, BCF GAS, BCF 37.5 , 25% OIL, BCFE OIL, BCFE 90.7 , 61% NGL, BCFE 65.3 , 98% 12/31/07*: BCFE BY AREA 9/30/09**:…
  8. WELLS FARGO SECURITIES DECEMBER 8 2009 8TH ANNUAL PIPELINE & MLP SYMPOSIUM – Vanguard Natural Resources, Llc – slide 8
    Acquisitions Drive Reserve Growth 160 148 140 134 120 109 Reserves, Bcfe 100 80 67 60 40 20 0 12/31/07* 12/31/08* 6/30/09** 9/30/09*** * Netherland, Sewell & Associates reserve report ** Internal reserve report…
  9. WELLS FARGO SECURITIES DECEMBER 8 2009 8TH ANNUAL PIPELINE & MLP SYMPOSIUM – Vanguard Natural Resources, Llc – slide 9
    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…
  10. WELLS FARGO SECURITIES DECEMBER 8 2009 8TH ANNUAL PIPELINE & MLP SYMPOSIUM – Vanguard Natural Resources, Llc – slide 10
    FINANCIAL OVERVIEW 11
  11. WELLS FARGO SECURITIES DECEMBER 8 2009 8TH ANNUAL PIPELINE & MLP SYMPOSIUM – Vanguard Natural Resources, Llc – slide 11
    Hedges Mitigate Distribution Risk Significant percentage 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 8.07 per MMBtu: 2010 2011…
  12. WELLS FARGO SECURITIES DECEMBER 8 2009 8TH ANNUAL PIPELINE & MLP SYMPOSIUM – Vanguard Natural Resources, Llc – slide 12
    Hedged Cash Flow=Stable Distribution Coverage 2009 Natural Gas Prices (/MMbtu) 3.00 4.00 5.00 6.00 7.00 2009 Crude Oil Prices WTI 30.00 1.80x 1.74x 1.68x 1.62x 1.56x 40.00 1.81x 1.75x 1.70x 1.64x 1.58x (/Barrel) 50.00 1.83x…
  13. WELLS FARGO SECURITIES DECEMBER 8 2009 8TH ANNUAL PIPELINE & MLP SYMPOSIUM – Vanguard Natural Resources, Llc – slide 13
    14 (75.0%) (50.0%) (25.0%) 0.0% 25.0% 50.0% 75.0% 100.0% 125.0% 150.0% 175.0% 200.0% 225.0% 250.0% 275.0% 300.0% SGLP 257.1% MWE 216.7% VNR 210.5% CQP 191.1% DPM 167.4% NGLS 167.1% WPZ 139.5% 137.9% Note:…
  14. WELLS FARGO SECURITIES DECEMBER 8 2009 8TH ANNUAL PIPELINE & MLP SYMPOSIUM – Vanguard Natural Resources, Llc – slide 14
    Comparable Company Distribution Yields CURRENT DISTRIBUTION YIELDS OF PEER GROUP 14% 11.6% 11.8% 11.8% 10.9% 12% 9.8% 10.1% 10% 8.6% 8% 6% 4% 2% 2.00 2.52 2.00 2.08 3.02 2.15 0% CRT PSE LINE VNR LGCY EVEP ENP *CRT…
  15. WELLS FARGO SECURITIES DECEMBER 8 2009 8TH ANNUAL PIPELINE & MLP SYMPOSIUM – Vanguard Natural Resources, Llc – slide 15
    Yield Compression Continues 50% Average Yield 2004 2005 2006 2007 2008 YTD Current Liquids T&S 6.5% 6.2% 6.8% 6.1% 8.3% 8.3% 7.5% Natural Gas T&S 6.8 6.4 6.7 6.1 7.8 8.2 7.4 Natural Gas G&P 6.8 5.9 6.2 5.5 12.1 12.9 9.5 Propane 8.3…
  16. WELLS FARGO SECURITIES DECEMBER 8 2009 8TH ANNUAL PIPELINE & MLP SYMPOSIUM – Vanguard Natural Resources, Llc – slide 16
    Conservative Balance Sheet ( in millions) June 30, 2009 Current (1) Facility Size 400 400 Borrowing Base 154 195 Amount Outstanding 133 136 Borrowing Availability 22 59 Maturity Date March 31, 2011 October 1, 2012 Interest Rate…
  17. WELLS FARGO SECURITIES DECEMBER 8 2009 8TH ANNUAL PIPELINE & MLP SYMPOSIUM – Vanguard Natural Resources, Llc – slide 17
    Key Investor Considerations High quality, long lived reserves Asset base generates stable cash flow Multi-year hedge program mitigates commodity risk Geographic and commodity diversity LLC structure gives unitholders a voice…

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