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INVESTOR MEETINGS – Vanguard Natural Resources, Llc

Vanguard Natural Resources, Llc · Aug 19, 2010 · 20 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. INVESTOR MEETINGS – Vanguard Natural Resources, Llc – slide 1
    August 2010 Investor Meetings San Francisco, CA
  2. INVESTOR MEETINGS – Vanguard Natural Resources, Llc – slide 2
    Overview of Vanguard Natural Resources Upstream Energy LLC, headquartered in Houston Initial Public Offering VNR - October 2007 Five strategic acquisitions totaling 350MM expanded geographic profile and commodity diversity…
  3. INVESTOR MEETINGS – Vanguard Natural Resources, Llc – slide 3
    Company Profile Company Profile EQUITY MARKET CAP (1) 540 million TOTAL DEBT 172 million LESS CASH 2 million ENTERPRISE VALUE 710 million (1) Market pricing as of August 16, 2010; includes 420m Class B units Positive Cash…
  4. INVESTOR MEETINGS – Vanguard Natural Resources, Llc – slide 4
    Multiple Operating Areas Appalachia Proved Reserves: 50.4 Bcfe(1) 93% Gas, 67% PDP 9.9 MMcfe/d current net production Permian Basin Proved Reserves: 7.1 MMboe (1) 84% oil and 67% PDP 1.3 Mboe/d current net production South…
  5. INVESTOR MEETINGS – Vanguard Natural Resources, Llc – slide 5
    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)…
  6. INVESTOR MEETINGS – 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 funded with equity proceeds Increased net oil production from the Permian by more than 100% High margin…
  7. INVESTOR MEETINGS – Vanguard Natural Resources, Llc – slide 7
    2010 Mississippi Acquisition Acquisition of producing assets in Mississippi, Texas and New Mexico closed May 2010 for 113.1 million cash funded with equity proceeds Inventory of infill PUD locations to develop oil reserves with…
  8. INVESTOR MEETINGS – Vanguard Natural Resources, Llc – slide 8
    Growth and Diversification 12/31/07*: OIL, GAS AND NGL 6/30/10**: OIL, GAS AND NGL 1.5 , 2% 21.4, 12% GAS, BCF GAS, BCFE OIL, BCFE 84.8, 49% OIL, BCFE 66.6, 39% NGL, BCFE 65.3 , 98% 12/31/07*: BCFE BY AREA 6/30/10**:…
  9. INVESTOR MEETINGS – Vanguard Natural Resources, Llc – slide 9
    Acquisitions Drive Reserve Growth Reserves (Bcfe) * 12/31/2007 12/31/2008 12/31/2009 12/31/2007 12/31/2008 12/31/2009 6/30/2010* * Based on Internal Engineer Reserve Report as of 6/30/10 10
  10. INVESTOR MEETINGS – Vanguard Natural Resources, Llc – slide 10
    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…
  11. INVESTOR MEETINGS – Vanguard Natural Resources, Llc – slide 11
    FINANCIAL OVERVIEW 12
  12. INVESTOR MEETINGS – Vanguard Natural Resources, Llc – slide 12
    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 8.07 per MMBtu: 2010 2011 %…
  13. INVESTOR MEETINGS – Vanguard Natural Resources, Llc – slide 13
    Hedged Cash Flow=Stable Distribution Coverage 2010 Natural Gas Prices (/MMBtu) 2.00 3.00 4.00 5.00 6.00 2010 Crude Oil Prices WTI 50.00 1.30x 1.29x 1.28x 1.26x 1.25x 60.00 1.37x 1.36x 1.34x 1.33x 1.32x (/Barrel) 70.00 1.44x…
  14. INVESTOR MEETINGS – Vanguard Natural Resources, Llc – slide 14
    Yield Compression Continues Average Yield 2004 2005 2006 2007 2008 2009 YTD Current Liquids T&S 6.5% 6.2% 6.8% 6.1% 8.3% 8.2% 6.9% 6.7% Natural Gas T&S 6.8 6.4 6.7 6.1 7.8 8.1 6.7 6.1 50% Natural Gas G&P 6.8 5.9 6.2 5.5 12.1 12.4…
  15. INVESTOR MEETINGS – Vanguard Natural Resources, Llc – slide 15
    17 (100.0%) (50.0%) 0.0% 50.0% 100.0% 150.0% 200.0% 250.0% 300.0% XTEX 270.6% APL 150.2% CQP 128.1% WPZ 114.9% WMZ 90.7% EROC 90.2% BBEP 86.0% Note: Market data as of 7/30/2010. LGCY 78.3% EVEP 76.2% VNR 75.2%…
  16. INVESTOR MEETINGS – Vanguard Natural Resources, Llc – slide 16
    Comparable Company Distribution Yields CURRENT DISTRIBUTION YIELDS OF PEER GROUP 12% 10.3% 10% 8.3% 8.4% 8.8% 7.9% 8.1% 8% 7.3% 6% 4% 2% 2.00 2.08 3.02 2.52 2.20 2.00 0% PSE *CRT LGCY EVEP LINE VNR ENP *CRT Average…
  17. INVESTOR MEETINGS – Vanguard Natural Resources, Llc – slide 17
    Profitable Growth Through Accretive Acquisitions 2.18** 2.00 1.82 1.70* 12/31/2007 12/31/2008 12/31/2009 12/31/2010(E) *Annualized quarterly distributions **Based on current distribution rate of .55 and Q1 2010…
  18. INVESTOR MEETINGS – Vanguard Natural Resources, Llc – slide 18
    Conservative Balance Sheet ( in millions) June 30, 2009 June 30,2010 Facility Size 400 400 Borrowing Base 154 240 Amount Outstanding 133 172 Borrowing Availability 22 68 Maturity Date March 31, 2011 October 1, 2012 Interest…
  19. INVESTOR MEETINGS – Vanguard Natural Resources, Llc – slide 19
    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…
  20. INVESTOR MEETINGS – Vanguard Natural Resources, Llc – slide 20
    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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