Investor Presentation Richard Robert, EVP & CFO November 12, 2014
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…
Building Blocks of a Successful E&P MLP Experienced Management Team Extensive experience in acquisition integration, development and operation of oil and gas assets Strong Credit Profile and Liquidity Not outspending cash flow…
Experienced Management Team Years of Name Title Prior Affiliations Experience Ensource Energy Scott W. Smith President and CEO The Wiser Oil Company 33 San Juan Partners Enbridge USA Richard A. Robert EVP and CFO Midcoast…
Geographically Diversified Reserve Base Core Areas Overview Big Horn Basin Powder River Basin 2.3 Tcfe (390 MMBoe) proved reserves Proved Reserves: 127 Bcfe Proved Reserves: 21 Bcfe 68% gas and 32% liquids 85% oil and 96% Proved…
Our Acquisition Strategy The U.S. has a large inventory of mature oil and natural gas basins which provide significant opportunity for future growth and consolidation Current E&P opportunity set is substantially more than the U.S.…
Our Successful Acquisition Track Record 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…
Pinedale/Jonah Acquisition a Strategy Shift Marks the first Vanguard acquisition to include a growth capital component Management determined this was the best direction for Companys growth and cash flow stability because the deal…
Pinedale-Jonah Acquisition Pinedale and Jonah Fields in Green River Basin Wyoming Pinedale Jonah Natural gas and oil assets located in the Pinedale and Jonah Fields of Southwestern Wyoming in the Green River Basin Estimated…
Pinedale Well Economic Sensitivities Pinedale well economics are strong and based on recent Ultra results and natural gas prices can achieve rates of return in excess of 45% EUR (Bcfe) 4.0 5.0 6.0 7.0 Well Cost (/MM) 4.0…
Pinedale-Jonah Gas Flow Pinedale Jonah 12
Hunt Gulf Coast Acquisition Cotton Valley and East Haynesville Fields in North Louisiana and East Texas Current Net Natural Gas Oil NGL Total % Proved Production COUNTY FIELD (Bcf) (MMBI) (MMBI) (Bcfe) Developed (MMcfe/d) Cotton…
Piceance Acquisition Oil (MMBbl) Gas (Bcf) NGL (MMBbl) Total (Bcfe) Pinedale PDP 1.7 221.2 9.3 287.2 Jonah PDNP 0.2 15.2 0.6 20.0 PUD 0.6 62.0 2.6 81.4 TOTAL 2.5 298.4 12.5 388.5 Natural gas, oil, and natural gas liquids…
An Evolving Reserve Base Acquisitions were driver of increased natural 68% gas exposure since 2011 Natural gas assets are being sold for a better value than oil opportunities 34% 68% of estimated Q3 2014 proved reserves are…
Future Shale Development Requires Massive Capital Average of 70 billion per year in capital requirements for the next 30 years Creates opportunities for E&P MLPs to acquire higher PDP assets as Shale players try to close the funding…
Financial Profile ( in millions) October 31, 2014 Cash 5.0 Credit Facility 1,360.0 7.875% Senior Notes due 2020 550.0 Total Debt 1,910.0 Total Members' Equity (1) 1,655.0 Total Book Capitalization 3,565.0 Borrowing Base…
Financial Overview
Summary Operating Performance (1) Proved reserves as of 12/31/2013 based on SEC reserve report. (2) Amounts illustrated reflect ENP and VNR proved reserves and production on a consolidated basis. Pro forma for exchange of…
Locking in Margins Provides Stability Through the use of hedging, Vanguard is able to lock in significant acquisition margins for the foreseeable future, helping to insure distribution stability 98.49 100.00 92.82 92.27 93.42…
Hedges Mitigate Commodity Price Risk Note: Hedge prices reflect a weighted average of swap prices, floor prices on collars and long out prices on three way collars. Weighted average floor prices includes impact from the range bonus…
Distribution Coverage Sensitivity The following major assumptions were made in calculating the above chart illustration: 1. A preliminary 2015 capital expenditure program of 215 million comprised of 156 million of maintenance…
Vanguards Conservative Business Model Yields Distribution Growth Current trend of asset rationalization in E&P space is accelerating E&P companies looking to divest mature assets to fund their growth projects VNR is well positioned…
Higher Yield / Less Growth vs Lower Yield / More Growth Wanted to look at the comparison of two types of MLPs and how long does it take for the distributions both on a quarterly and cumulative basis become equal with a 1,000…
VNR Operating Costs vs Peers VNR operating costs (% of total revenue) is significantly lower than other E&P MLP peers which equates to higher CASH margins 30.0% 28.6% 10.0% 25.6% 26.5% 8.6% 24.4% 24.7% 7.9% 7.8% 25.0% 22.3% 8.0%…
Risk Mitigation Acquisition Risk Measured and conservative approach to evaluating acquisitions Acquire quality assets, immediately accretive Focus on largely PDP assets with proved upside potential Commodity Risk Management seeks…
Key Investor Considerations Diversified and Balanced Portfolio of High Quality, Liquids Focused Assets Long Lived, Predictable Properties with Low Decline Rates Disciplined Acquisition Strategy Active Hedging Program, which…
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