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NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc

Vanguard Natural Resources, Llc · May 21, 2015 · 24 slides

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Slides

  1. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 1
    NAPTP Presentation Richard Robert, EVP & CFO May 21, 2015
  2. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 2
    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…
  3. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 3
    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…
  4. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 4
    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…
  5. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 5
    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…
  6. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 6
    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…
  7. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 7
    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 beginning in January 2015, VNR…
  8. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 8
    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 Vertical Wells (2…
  9. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 9
    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…
  10. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 10
    VNR + LRE Transaction Overview VNR to acquire LRR Energy, L.P. (LRE) by issuing 0.55 units of VNR for each LRE unit Consideration Implied purchase price of 8.93 per LRE common unit based on Vanguards closing price on April 20,…
  11. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 11
    LRR Energy, L.P. Overview Publicly traded Upstream MLP formed in November 2011 Capitalization Table(1) ( in millions) (NYSE: LRE) Equity Market Capitalization 219 Operates more than a dozen fields in 3 regions; Permian Basin,…
  12. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 12
    Operational Metrics of Pro Forma Company VNR + LRE Vanguard LRR Energy PF Vanguard PUD 12% PUD PUD 32% 30% PDNP 15% Reserves by Category PDP PDNP PDNP PDP 64% 5% 4% 65% PDP 73% 2,031 Bcfe 203 Bcfe(1) 2,234 Bcfe Permian…
  13. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 13
    VNR: Strategic Rationale VNR + LRE Transaction Transaction adds attractive portfolio of mature, long-lived assets well-suited to upstream MLP structure Mature asset base with proved reserve life of 14 years Adds additional scale in…
  14. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 14
    Attractive Operational Overlap VNR + LRE Combined VNR OPERATIONS PENDING LRE MERGER 15
  15. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 15
    Financial Overview
  16. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 16
    Pro Forma Capitalization and Liquidity VNR + LRE Little change to historical metrics, but expected to improve 2015 leverage metrics Capitalization Table (3/31/15) ( in millions) Vanguard LRR Energy Pro Form a Cash 15 3 17 Credit…
  17. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 17
    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 Filed new 625 million ATM…
  18. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 18
    Hedges Mitigate Commodity Price Risk (VNR + LRE) Transaction modestly improves Vanguards hedge book, increasing weighted average price and volumes hedged for both oil and gas in 2016 and 2017 PF Natural Gas Hedges PF Oil Hedges…
  19. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 19
    A History of Oil Prices 150 130 110 /Bbl 90 70 50 30 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16…
  20. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 20
    Latest EIA Drilling Productivity Data Arguments for US Oil Production Growth Slowing Arguments Against US Oil Production Growth Slowing Short-Term As of mid-March, the oil rig count had fallen by 727 since it peaked in ...But many…
  21. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 21
    Nat Gas Supply/Demand Fundamentals Globally: 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…
  22. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 22
    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 Prices…
  23. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 23
    Appendix
  24. NAPTP 2015 MLP Conference Presentation – Vanguard Natural Resources, Llc – slide 24
    Attractive Operational Overlap VNR + LRE Combined Arkoma Basin Permian Basin VNR OPERATIONS PENDING LRE MERGER South Texas Gulf Coast Basin 25

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