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First Quarter 2016 Results – Approach Resources, Inc.

Approach Resources, Inc. · May 4, 2016 · 19 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. First Quarter 2016 Results – Approach Resources, Inc. – slide 1
    First Quarter 2016 Results MAY 4, 2016
  2. First Quarter 2016 Results – Approach Resources, Inc. – slide 2
    Company overview AREX OVERVIEW ASSET OVERVIEW Enterprise value 619MM High-quality reserve base 167 MMBoe proved reserves 63% Liquids, 33% oil 504 MM proved PV-10 (non-GAAP) Permian core operating area 139,000 gross (126,000 net)…
  3. First Quarter 2016 Results – Approach Resources, Inc. – slide 3
    1Q16 Operating highlights OPERATING HIGHLIGHTS No completions during the quarter given sustained low prices, production continued on Production natural PDP decline decline Total 1Q16 production of 1,165 Mboe management Positioned…
  4. First Quarter 2016 Results – Approach Resources, Inc. – slide 4
    1Q16 Financial highlights FINANCIAL HIGHLIGHTS Revenues (pre-hedge) of 17.6 MM, adjusted net loss (non-GAAP)1 of 13.0 MM, or 0.32 Heightened per diluted share focus on cutting Every per-unit cash cost metric has been improved…
  5. First Quarter 2016 Results – Approach Resources, Inc. – slide 5
    Balance sheet detail Following the Spring 2016 redetermination, our lenders set the AREX Liquidity and Capitalization borrowing base and commitment amount at 325 MM, while agreeing to a number of amendments designed to provide…
  6. First Quarter 2016 Results – Approach Resources, Inc. – slide 6
    Lowest cost structure in the Permian Basin AREX LOE Historical Track Record (/Boe) 2015 Permian Peer LOE (/Boe) 8.00 14.0 13.23 7.36 7.00 6.65 12.0 6.18 5.87 6.00 5.55 5.44 5.45 10.0 9.51 4.97 5.04 8.84 5.00 7.83 7.71 8.0 7.46…
  7. First Quarter 2016 Results – Approach Resources, Inc. – slide 7
    Enhanced completion design drives outperformance from 2015 wells 140,000 2015 Wolfcamp B&C bench completions Average completed lateral length = 6886' 120,000 Cumulative Production (Boe) 100,000 80,000 60,000…
  8. First Quarter 2016 Results – Approach Resources, Inc. – slide 8
    Strong track record of reserve and production growth RESERVE GROWTH PRODUCTION GROWTH MMBoe MBoe/d 180 16.0 160 14.0 140 12.0 120 10.0 100 8.0 80 60 6.0 40 4.0 20 2.0 0 2004 2005 2006 2007 2008 2009 2010 2011…
  9. First Quarter 2016 Results – Approach Resources, Inc. – slide 9
    The business is anchored by long-lived, low-cost proved reserve base 12/31/2015 reserve summary prepared by DeGolyer and MacNaughton (D&M) Replaced 603% of produced reserves at a drill-bit F&D cost (non-GAAP) of 4.32 per Boe1 Total…
  10. First Quarter 2016 Results – Approach Resources, Inc. – slide 10
    Established infrastructure in place is critical to low cost structure Benefits of water recycling Reduce D&C cost Reduce LOE Increase project profit margin Minimize fresh water use, truck traffic and surface disturbance…
  11. First Quarter 2016 Results – Approach Resources, Inc. – slide 11
    Current hedge position Based on the midpoint of current 2016 guidance, approximately 48% of forecasted oil production and 75% of forecasted natural gas production are hedged at weighted average prices of 50.56/Bbl and 2.61/MMBtu,…
  12. First Quarter 2016 Results – Approach Resources, Inc. – slide 12
    Production and expense guidance 2016 Guidance Production Oil (MBbls) 1,300 1,400 NGLs (MBbls) 1,440 1,540 Natural Gas (MMcf) 9,600 10,100 Total (MBoe) 4,340 4,625 Cash operating costs (per Boe) Lease operating 5.00 - 6.00…
  13. First Quarter 2016 Results – Approach Resources, Inc. – slide 13
    AREX Wolfcamp acreage is offset by large operators APA REAGAN PXD ENDEAVOR PXD DVN APA BROADOAK IRION UPTON EAP EOG / EAP EOG HENRY ELEVATION SCHLEICHER DVN AREX AREX EP ENERGY Pangea West DVN AREX AREX EOG APA EP…
  14. First Quarter 2016 Results – Approach Resources, Inc. – slide 14
    Adjusted net loss (unaudited) The amounts included in the calculation of adjusted net loss and adjusted net loss per diluted share below were computed in accordance with GAAP. We believe adjusted net loss and adjusted net loss per diluted…
  15. First Quarter 2016 Results – Approach Resources, Inc. – slide 15
    EBITDAX (unaudited) We define EBITDAX as net loss, plus (1) exploration expense, (2) depletion, depreciation and amortization expense, (3) share-based compensation expense, (4) unrealized loss on commodity derivatives, (5) interest…
  16. First Quarter 2016 Results – Approach Resources, Inc. – slide 16
    Cash operating expenses (unaudited) We define cash operating expenses as operating expenses, excluding (1) exploration expense, (2) depletion, depreciation and amortization expense, and (3) share-based compensation expense. Cash operating…
  17. First Quarter 2016 Results – Approach Resources, Inc. – slide 17
    Liquidity (unaudited) Liquidity is calculated by adding the net funds available under our revolving credit facility and cash and cash equivalents. We use liquidity as an indicator of the Companys ability to fund development and…
  18. First Quarter 2016 Results – Approach Resources, Inc. – slide 18
    F&D costs (unaudited) All-in finding and development (F&D) costs are calculated by dividing the sum of F&D Cost reconciliation property acquisition costs, exploration costs and development costs for the year by the sum of reserve…
  19. First Quarter 2016 Results – Approach Resources, Inc. – slide 19
    PV-10 (unaudited) The present value of our proved reserves, discounted at 10% (PV-10), was estimated at 504 million at December 31, 2015, and was calculated based on the first-of-the-month, twelve-month average prices for oil, NGLs and…

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