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…
Company Profile Company Profile EQUITY MARKET CAP (1) 562 million TOTAL DEBT 169 million LESS CASH 3 million ENTERPRISE VALUE 728 million (1) Market pricing as of October 7, 2010; includes 420m Class B units Positive Cash…
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…
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 equity proceeds Inventory of infill PUD locations to develop oil reserves with…
Asset and Location 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…
Acquisitions Drive 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
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…
FINANCIAL OVERVIEW 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 7.81 per MMBtu: 4th Qtr 2010…
Price Performance Since 2009 The results have been good. VNR has outperformed US Royalty Trusts, C-Corps and other E&P MLPs. The strategy works. 500% VNR: 317% 400% 300% E&P MLPs: 120% 200% Alerian Index: 82% S&P…
Comparable Company Distribution Yields CURRENT DISTRIBUTION YIELDS OF PEER GROUP 15% 10.4% 7.8% 8.1% 8.5% 8.7% 10% 7.0% 7.2% 5% 2.33 2.00 2.52 2.08 3.02 2.20 2.00 0% *USRT PSE LINE LGCY EVEP VNR ENP *USRT Average Yield of…
VNR-Acquisitions Fuel Distribution Growth -1% +2% +5% +14% +18% 2.08 Yield Growth Note: As of 10/6/2010. Source: IHS Herold. Peer group includes: ENP, EVEP, LGCY, LINE and PSE. (1) Annual distribution growth…
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…
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…
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 Geographic and commodity diversity LLC structure gives unitholders a voice…
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