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Q2 2016 Results – Approach Resources, Inc.

Approach Resources, Inc. · Aug 3, 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. Q2 2016 Results – Approach Resources, Inc. – slide 1
    Second Quarter 2016 Results AUGUST 3, 2016
  2. Q2 2016 Results – Approach Resources, Inc. – slide 2
    Company overview AREX OVERVIEW ASSET OVERVIEW Enterprise value 588MM High-quality reserve base 167 MMBoe proved reserves 63% Liquids, 33% oil 460 MM Standardized measure, 504 MM proved PV-10 (non-GAAP) Permian core operating…
  3. Q2 2016 Results – Approach Resources, Inc. – slide 3
    2Q16 Operating highlights OPERATING HIGHLIGHTS Resumed completion activity following a sustained price correction during the quarter Continued 2Q16 production averaged 12.6 MBoe/d, exceeding previous guidance of 12.3 MBoe/d…
  4. Q2 2016 Results – Approach Resources, Inc. – slide 4
    2Q16 Financial highlights FINANCIAL HIGHLIGHTS Every per-unit cash cost metric has been improved since 2Q15 Heightened 2Q16 Operating expenses of 34.5 MM, cash operating expenses (non-GAAP)1 totaled focus on cutting 10.06/Boe, a 9%…
  5. Q2 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. Q2 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 6.00 5.87 5.55 5.44 5.45 10.0 9.51 4.97 5.04 8.84 5.00 4.56 7.83 7.71 8.0…
  7. Q2 2016 Results – Approach Resources, Inc. – slide 7
    Enhanced completion design drives outperformance from 2015 and 2016 wells 120,000 2nd Qtr. 2016 Wolfcamp B&C bench completions Average completed lateral length = 6,541' Reduced stage spacing (< 200) Increase percentage of 100 mesh…
  8. Q2 2016 Results – Approach Resources, Inc. – slide 8
    AREX is benefiting from commodity price appreciation across all product streams % Change in realized prices 1H16 Commodity Mix 140.0% Oil NGLs Natural Gas 29% 120.0% 38% 100.0% 33% 80.0% Oil NGLs Natural Gas 60.0%…
  9. Q2 2016 Results – Approach Resources, Inc. – slide 9
    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…
  10. Q2 2016 Results – Approach Resources, Inc. – slide 10
    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 of 4.32 per Boe1 Total proved…
  11. Q2 2016 Results – Approach Resources, Inc. – slide 11
    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…
  12. Q2 2016 Results – Approach Resources, Inc. – slide 12
    Current hedge position Based on the midpoint of current 2016 guidance, approximately 31% of forecasted oil production and 88% of forecasted natural gas production are hedged at weighted average prices of 56.01/Bbl and 2.68/MMBtu,…
  13. Q2 2016 Results – Approach Resources, Inc. – slide 13
    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…
  14. Q2 2016 Results – Approach Resources, Inc. – slide 14
    AREX Wolfcamp acreage is offset by large operators APA REAGAN PXD ENDEAVOR PXD APA BROADOAK IRION UPTON EAP EOG / EAP EOG ELEVATION HENRY SCHLEICHER DVN AREX EP ENERGY AREX DVN AREX AREX APA AMISTAD EP ENERGY AREX…
  15. Q2 2016 Results – Approach Resources, Inc. – slide 15
    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…
  16. Q2 2016 Results – Approach Resources, Inc. – slide 16
    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) write-off of…
  17. Q2 2016 Results – Approach Resources, Inc. – slide 17
    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…
  18. Q2 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. Q2 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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