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EnerCom 2015 Conference – Approach Resources, Inc.

Approach Resources, Inc. · Aug 17, 2015 · 22 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. EnerCom 2015 Conference – Approach Resources, Inc. – slide 1
    EnerComs The Oil and Gas Conference 20 AUGUST 17, 2015
  2. EnerCom 2015 Conference – Approach Resources, Inc. – slide 2
    Company overview AREX OVERVIEW ASSET OVERVIEW Enterprise value 671MM High-quality reserve base 146 MMBoe proved reserves 66% Liquids, 38% oil 1.4 BN proved PV-10 Permian core operating area 143,000 gross (130,000 net) acres 1+…
  3. EnerCom 2015 Conference – Approach Resources, Inc. – slide 3
    Strong track record of reserve growth RESERVE GROWTH OIL RESERVE GROWTH MMBoe MMBbls 160 60 55.3 140 50 46.1 120 100 40 37.3 80 30 60 20 18.1 40 20 10 5.0 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013…
  4. EnerCom 2015 Conference – Approach Resources, Inc. – slide 4
    2Q15 Key highlights 2Q15 HIGHLIGHTS 2Q15 SUMMARY RESULTS Drilled 9 and completed 10 HZ wells Production (MBoe/d) 15.3 % Oil 36% Continued improvement on already best- % Total liquids 65% in-class HZ well costs Average realized price…
  5. EnerCom 2015 Conference – Approach Resources, Inc. – slide 5
    Lowest cost structure in the Permian Basin AREX LOE Historical Track Record (/Boe) Permian Peer LOE (/Boe) 8.00 14.0 13.26 7.36 7.00 6.65 12.0 11.23 6.18 5.87 6.00 5.55 10.0 9.63 9.03 4.97 8.78 5.00 8.14 7.83 7.58 8.0 4.00 6.0…
  6. EnerCom 2015 Conference – Approach Resources, Inc. – slide 6
    AREX Flowback and Produced Water Recycle Facility 32,000 32,000 BBL 20 Treated Flowback & Produced Frac Water Supply Line BBL Treated Treated Water Water 2 MM Bbls flowback and Tank Tank 8 Low Chloride Treated Frac Water…
  7. EnerCom 2015 Conference – Approach Resources, Inc. – slide 7
    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…
  8. EnerCom 2015 Conference – Approach Resources, Inc. – slide 8
    Strong, simple balance sheet At June 30, 2015, we had a 1 billion senior secured AREX Liquidity and Capitalization revolving credit facility in place, with aggregate lender AREX Capitalization as of 6/30/2015 ( MM) commitments of 450…
  9. EnerCom 2015 Conference – Approach Resources, Inc. – slide 9
    Valuation and leverage well supported by proved reserve base 12/31/2014 reserve summary prepared by DeGolyer and MacNaughton Replaced 819% of produced reserves at a drill-bit F&D cost of 8.94 per Boe1 Total proved reserves up 27%…
  10. EnerCom 2015 Conference – Approach Resources, Inc. – slide 10
    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…
  11. EnerCom 2015 Conference – Approach Resources, Inc. – slide 11
    Probability distribution of AREX 93 type curve wells at year-end 2014 12
  12. EnerCom 2015 Conference – Approach Resources, Inc. – slide 12
    D&C Cost reductions will significantly improve profitability 70% 4.0MM D&C 60% 4.5MM D&C 5.0MM D&C 50% 40% IRR (%) 30% 20% 10% 0% 40 50 60 70 80 90 Realized Oil Price (/Bbl) Note: HZ Wolfcamp…
  13. EnerCom 2015 Conference – Approach Resources, Inc. – slide 13
    Current hedge position Based on the midpoint of updated 2015 guidance, approximately 85% of forecasted 3Q15-4Q15 oil production and 32% of forecasted natural gas production are hedged at weighted average floor prices of 75.93/Bbl and…
  14. EnerCom 2015 Conference – Approach Resources, Inc. – slide 14
    Production and expense guidance Updated 2015 Guidance Production Oil (MBbls) 1,900 1,975 NGLs (MBbls) 1,575 1,625 Natural Gas (MMcf) 11,550 11,700 Total (MBoe) 5,400 5,550 Operating costs and expenses (per Boe) Lease operating…
  15. EnerCom 2015 Conference – Approach Resources, Inc. – slide 15
    Appendix
  16. EnerCom 2015 Conference – Approach Resources, Inc. – slide 16
    2Q15 Operating highlights OPERATING HIGHLIGHTS Delivering Total record quarterly production 15.3 MBoe/d (up 8% QoQ) Production Oil production 499 MBbl (up 1% QoQ) Growth Successfully implemented cost reduction initiatives, current…
  17. EnerCom 2015 Conference – Approach Resources, Inc. – slide 17
    2Q15 Financial highlights FINANCIAL HIGHLIGHTS Revenues (pre-hedge) of 38.6 MM, 47.9 MM with hedges Heightened Adjusted net loss (non-GAAP) of 2.8 MM, or 0.07 per diluted share Focus on Cutting Every per-unit cash cost metric has…
  18. EnerCom 2015 Conference – Approach Resources, Inc. – slide 18
    AREX Wolfcamp acreage is offset by large operators APA REAGAN APA PXD REAGAN ENDEAVOR PXD PXD BROADOAK IRION DVN APA ENDEAVOR PXD DVN APA BROADOAK IRION UPTON AEP UPTON EOG / AEP EOG AEP EOG / COP EOG SAMSONAEP SCHLEICHER…
  19. EnerCom 2015 Conference – Approach Resources, Inc. – slide 19
    Adjusted net (loss) income (unaudited) ADJUSTED NET (LOSS) INCOME (UNAUDITED) The amounts included in the calculation of adjusted net (loss) income and adjusted net (loss) income per diluted share below were computed in accordance with…
  20. EnerCom 2015 Conference – Approach Resources, Inc. – slide 20
    EBITDAX (unaudited) EBITDAX (UNAUDITED) The amounts included in the calculation of EBITDAX were computed in accordance with GAAP. EBITDAX is not a measure of net income or cash flow as determined by GAAP. EBITDAX is presented herein and…
  21. EnerCom 2015 Conference – Approach Resources, Inc. – slide 21
    Cash operating expenses Cash operating expenses We define cash operating expenses as operating expenses, excluding (1) exploration expense, (2) depletion, depreciation and amortization expense and (3) share-based compensation expense.…
  22. EnerCom 2015 Conference – Approach Resources, Inc. – slide 22
    PV-10 (unaudited) The present value of our proved reserves, discounted at 10% (PV-10), was estimated at 1.4 billion at December 31, 2014, and was calculated based on the first-of-the-month, twelve-month average prices for oil, NGLs and…

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