Investor Presentation Richard Robert, EVP & CFO March 4-5, 2015
Overview of Vanguard Natural Resources Upstream oil & gas LLC, headquartered in Houston, TX; Initial Public Offering VNR October 2007 had a Total Enterprise Value of Asset Profile(1) 240mm Twenty three strategic acquisitions…
Experienced Management Team Years of Name Title Prior Affiliations Experience Ensource Energy Scott W. Smith President and CEO The Wiser Oil Company 34 San Juan Partners Enbridge USA Richard A. Robert EVP and CFO Midcoast…
Geographically Diversified Reserve Base Core Areas Overview Green River Basin Big Horn Basin Williston Basin 2.03 Tcfe (339 MMBoe) proved reserves Proved Reserves: 765 Bcfe Proved Reserves: 104 Bcfe Proved Reserves: 25 Bcfe 73% gas…
High Quality Asset Base Oil Gas NGLs Total Net PV-10 Reserve Category (MMBbls) (Bcf) (MMBbls) (Bcfe) Liquids (%) ( MM) PV-10 % PDP 35.7 916.2 27.0 1,292.0 29% 2,268.3 76% PDNP 3.4 54.5 1.7 85.6 36% 170.1 6% PUD 10.9 505.2 13.8…
2015 Capital Program Maintaining Production 20% reduction in total 2015 capital budget from 2014 Pinedale and East Haynesville account for 75% of 2015E Budget After consideration of ethane rejection, VNR expects 2015 average daily…
Pinedale / East Haynesville Returns Even in todays commodity environment, the Pinedale and East Haynesville generate good rate of returns without assuming any savings on the drilling and completion costs Budget 3.8 MM per well…
Rig Count and Price Response Natural gas rigs have reached the lowest level since March 1993 Horizontal rigs have fallen by 426 since an all-time high of 1,372 reached in November last year, mainly as a response to falling crude…
A History of Oil Prices 150 High Oil Price 7/14/2006 - 77.03 130 Price Drop (28%) Decrease 110 WIT Price (/Bbl) 90 70 50 Low Oil Price 11/17/2006 - 55.81 30 Historical WTI Price 7/14/2006 Strip 11/17/2006…
A History of Oil Prices 150 High Oil Price 11/23/2007: 98.18 130 Price Drop 110 (18%) Decrease WTI Price (/Bbl) 90 70 50 Low Oil Price 1/18/2007: 50.48 30 Historical WTI Price 11/23/2007 Strip 1/18/2007…
A History of Oil Prices 150 High Oil Price 130 7/3/2008 - 145.29 Price Drop 110 WTI Price (/Bbl) (77%) Decrease 90 70 50 Low Oil Price 12/19/2008 - 33.87 30 Historical WTI Price 7/3/2008 Strip 12/19/2008…
A History of Oil Prices 150 High Oil Price 10/7/2009 - 81.37 130 Price Drop 110 (20%) Decrease WTI Price (/Bbl) 90 70 50 Low Oil Price 2/12/2009 - 33.98 30 Historical WTI Price 10/7/2009 Strip 2/12/2009…
A History of Oil Prices 150 High Oil Price 12/23/2010 - 91.51 130 Price Drop 110 (22%) Decrease WTI Price (/Bbl) 90 70 50 Low Oil Price 5/20/2010 - 68.01 30 Historical WTI Price 12/23/2010 Strip 5/20/2010…
A History of Oil Prices 150 High Oil Price 130 4/29/2011 - 113.93 110 WTI Price (/Bbl) 90 70 Price Drop (34%) Decrease 50 Low Oil Price 10/4/2011 - 75.67 30 Historical WTI Price 4/29/2011 Strip 10/4/2011…
A History of Oil Prices 150 High Oil Price 2/24/2012 109.77 130 110 WTI Price (/Bbl) 90 70 Price Drop (29%) Decrease 50 Low Oil Price 6/28/2012 - 77.69 30 Historical WTI Price 2/24/2012 Strip 6/28/2012…
A History of Oil Prices 150 High Oil Price 130 9/6/2013 - 110.53 110 WTI Price (/Bbl) 90 70 Price Drop (17%) Decrease 50 Low Oil Price 4/17/2013 86.68 30 Historical WTI Price 9/6/2013 Strip 4/17/2013…
A History of Oil Prices 150 130 High Oil Price 6/20/2014 - 106.91 110 WTI Price (/Bbl) 90 Price Drop (50%) Decrease 70 50 Low Oil Price 12/31/2014 - 53.27 30 Historical WTI Price 6/20/2014 Strip 12/31/2014…
A History of Oil Prices 150 130 High Oil Price 2/17/2015 - 53.53 110 WTI Price (/Bbl) 90 Price Drop (16%) Decrease 70 50 Low Oil Price 1/28/2015 - 44.45 30 Historical WTI Price 2/17/2015 Strip 1/28/2015…
Capital Appreciation Potential Since 1/1/14, VNRs unit price has been highly correlated with oil prices, with a R2 of 0.96 and since 1/1/13, a R2 of 0.84 The oil and gas industry is a cyclical business and if you believe we are at a…
VNR Investment Thesis Strong record of evaluating and integrating assets, completing over 4.2 billion since VNRs IPO in 2007 Designated business development and acquisition evaluation team We review between 125-150 and evaluate…
Natural Gas Production Profile Despite lower natural gas prices, production in the Northeast will continue to grow, driving total US production growth year over year resulting in significant negative pricing differentials to Henry…
Nat Gas Supply/Demand Fundamentals Natural gas is the fastest growing fossil fuel, with demand rising at the rate of 1.9%/year over the next two decades to reach 490 Bcf/d while oil falls to just 0.8%/year. (1) Supply in 2015 is…
Strategy Dependent on Acquisitions 1) Continue to Make Accretive Acquisitions- Take advantage of significant opportunities in 2015 Large inventory in the U.S. of mature oil and natural gas basins which provide significant opportunity…
Acquisitions Are Still Possible Although yields are higher and thus equity cost of capital has gone up, Upstream MLPs are still able to be opportunistic and make accretive acquisitions due to relative weakness across the energy space…
Financial Overview
VNR Has Actively Taken Steps to Improve Liquidity and the Balance Sheet Effective January 2015, VNR reduced the monthly distribution to 0.1175 Cut 2015 capital expenditures by 20%; all maintenance capital Restructured existing 2015…
Capitalization and Liquidity Vanguard currently has ample liquidity and access to multiple sources of capital As of February 27, 2015 ( in millions) Amount Current Yield Cash 10.0 Credit Facility 1,360.0 2.20% 7.875% Senior…
Summary Operating Performance 29 (1) Proved reserves as of 12/31/2014 based on SEC reserve report. (2) Amounts illustrated reflect ENP and VNR proved reserves and production on a consolidated basis. Pro forma for exchange of…
Hedges Mitigate Commodity Price Risk Through hedging, Vanguard is able to mitigate price risk and cash flow volatility Natural Gas Hedges Oil Hedges 4,000 120,000 76.12 83.02 4.32 4.37 4.18 100,000 23% 18% 3,000 1% 33%…
2015-2016 Sensitivities Mid-point distribution coverage ratio based on public guidance released on February 17, 2015 Assumes annualized common distribution rate of 1.41 per unit Mid-point of Mid-point of 1.24x (1) Guidance 1.20x…
Investment Questions Invest in MLPs Medium to Long-Term Investor Current Income is Important Like Potential for Income Growth Looking for Tax Advantaged Income OK with Getting a K-1 Invest in Upstream MLPs Believe Oil/Gas…
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