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2015 DUG Permian Presentation – Approach Resources, Inc.

Approach Resources, Inc. · May 20, 2015 · 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. 2015 DUG Permian Presentation – Approach Resources, Inc. – slide 1
    Oil Price and the Southern Midland Basin J. Ross Craft / Chairman, President and CEO May 20, 2015
  2. 2015 DUG Permian Presentation – Approach Resources, Inc. – slide 2
    Company overview AREX OVERVIEW ASSET OVERVIEW Enterprise value 804MM High-quality reserve base 146 MMBoe proved reserves 66% Liquids, 38% oil 1.4 BN proved PV-10 Permian core operating area 147,000 gross (134,000 net) acres 1+…
  3. 2015 DUG Permian Presentation – Approach Resources, Inc. – slide 3
    Strong track record of reserve and production growth RESERVE GROWTH PRODUCTION GROWTH YE14 reserves up 27% YoY 2014 Production increased 47% YoY Replaced 819% of produced reserves at a drill- Targeting 10-14% production growth in…
  4. 2015 DUG Permian Presentation – Approach Resources, Inc. – slide 4
    Four significant downturn cycles during past 20 years 160 US Financial Crisis 79% 140 Oil is a commodity, has 7/3/2008 12/23/2008 always been volatile, and will continue to be volatile 60% 6/20/2014 3/17/2015 120 Success of US…
  5. 2015 DUG Permian Presentation – Approach Resources, Inc. – slide 5
    Wall Street is focusing on next quarter, but we need to focus on long term Average Brent Oil Price = 93 / bbl Average WTI Oil Price = 87 / bbl Over Last 7.5 Years Beginning When Oil Price Reached 80/BBL Including 2008 and Current Down…
  6. 2015 DUG Permian Presentation – Approach Resources, Inc. – slide 6
    Oil Price (/BBL) Oil Price (/BBL) 100 120 140 160 0 20 60 80 40 100 120 140 160 0 20 60 80 40 1 Jan 03, 2005 31 Jan 03, 2006 61 Jan 03, 2007 91 Jan 03, 2008 2008-2009 121…
  7. 2015 DUG Permian Presentation – Approach Resources, Inc. – slide 7
    Fraclog and Refrac There has, is and will always be drilled, but uncompleted wells in our normal course of business During the 2nd quarter of 2011, Halliburton reported 3,500 wells were uncompleted in the US The uncompleted wells…
  8. 2015 DUG Permian Presentation – Approach Resources, Inc. – slide 8
    How long can OPEC sustain the price war for market share Fiscal Break-Even Price (Brent, USD/bbl) Kuwait 54.00 Qatar 60.00 UAE 77.30 May 15th Brent Crude Price (66.98) Ecuador 80.00 Angola 98.00 Iraq 101.00 Oman 103.00 S. Arabia…
  9. 2015 DUG Permian Presentation – Approach Resources, Inc. – slide 9
    Successful oil shale plays in North America will not only be the key to our energy independence, but also to world economic growth 30,000 Historical Daily Production Africa & Europe 25,000 decline Asia & Oceania and (x1,000…
  10. 2015 DUG Permian Presentation – Approach Resources, Inc. – slide 10
    Midland Basin - Wolfcamp Horizontal Well Activity 18.3% Northern Midland Basin Northern Midland Basin 81.7% Southern Midland Basin Southern Midland Basin Source: DrillingInfo and IHS 11
  11. 2015 DUG Permian Presentation – Approach Resources, Inc. – slide 11
    Midland Basin - IP and Drilling & Completion Cost P-5% with P-18% IP 1,500 with BOE IP 1,000 BOE Entire Midland Basin P- 50% Average IP 689 BOE Southern Northern Midland Midland Basin Basin 12 Actual Cost 10 Target…
  12. 2015 DUG Permian Presentation – Approach Resources, Inc. – slide 12
    AREX HZ Wolfcamp Well Performance AREX HZ WOLFCAMP (BOE/D) Average GOR = 5,000 6,000 Gas EUR = 1,271 MMCF Well EUR = 510 MBOE Oil EUR = 230 MBBL Average GOR Average Gas N = 93 Wells Average BOE AREX Wolfcamp Horizontal…
  13. 2015 DUG Permian Presentation – Approach Resources, Inc. – slide 13
    Probability Distribution of AREX 93 Type Curve Wells at Year-end 2014 14
  14. 2015 DUG Permian Presentation – Approach Resources, Inc. – slide 14
    Proven track record of delivering lowest D&C cost in the Midland Basin Approachs annual average horizontal well D&C cost MM 9.0 8.6 8.0 7.0 7.0 6.0 5.8 5.5 5.0 4.6 4.0 3.0 2.0 1.0 0.0 2011 2012 2013…
  15. 2015 DUG Permian Presentation – Approach Resources, Inc. – slide 15
    Established infrastructure in place is critical to low cost structure Reagan Irion Pangea Crockett Schleicher West Recently completed water recycling facility 329,000 Bbl Capacity North & Central Pangea South Benefits of…
  16. 2015 DUG Permian Presentation – Approach Resources, Inc. – slide 16
    AREX Flowback and Produced Water Recycle Facility 32,000 32,000 329,000 Bbl Capacity Facility BBL 20 Treated Flowback & Produced Frac Water Supply Line BBL Treated Treated Reduce drilling and completion cost Water Water Tank…
  17. 2015 DUG Permian Presentation – Approach Resources, Inc. – slide 17
    Water recycling facility successfully started in March 2015 Recent Recycled Water Volumes The water recycling facility was ramped up during March 2015 and now successfully recycles up to 70+% of AREX daily flowback water volumes…
  18. 2015 DUG Permian Presentation – Approach Resources, Inc. – slide 18
    D&C Cost reductions will significantly improve profitability 70% 4.1MM D&C 60% 4.6MM D&C 5.1MM D&C IRR at NYMEX strip 50% pricing (5/18/2015) 40% IRR (%) 30% 20% 10% 0% 40 50 60 70 80 90 Realized Oil…
  19. 2015 DUG Permian Presentation – Approach Resources, Inc. – slide 19
    Summary Oil is a commodity, has always been volatile, and will continue to be volatile World population continues to increase and people continue to improve their living conditions therefore the demand for oil will continue to…
  20. 2015 DUG Permian Presentation – Approach Resources, Inc. – slide 20
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