EnerCom Presentation August 17th, 2016 CONFIDENTIAL: DO NOT DISTRIBUTE 1
Table of Contents 1. Resource Energy Summary 2. Background: Investors and Team 3. Macro Conditions for Strategy Architecture 4. Profitability Challenges: Oil-Gas Case Studies 5. DUC, Refracturing, & PUD Break-evens 6.…
Resource Energy Summary Private Equity Investment with Long Term Strategy Recently formed private equity-backed Apollo Global Management (173 Billion Assets Under Management) Purchased American Eagle Energy in November, 2015 Bakken…
Resource Energy Partners Investor Funding Apollo Partnership with Room to Grow Long Term Notable Apollo Energy Investments: Apollo Global Management, LLC and its subsidiaries (Apollo) is a leading global o Athlon: Sold to Encana…
Resource Energy US Experience Resource Team has Worked 95% of the US Basins: 25 Companies The Source team has operating experience in every major US basin Large company experience with numerous domestic & international successes…
Source Midcon Assets liquidated in 2015 Source Midcon (20112015): 35,000 Per Day Fluids, 350K Acres Over 35,000 BFPD and 350,000 net acres in core areas in and Kansas around top Mississippian operators Reloaded Whitewater 3D…
Source Colombia (LaLuna Res.) South America Operations, and Significant Land Position in World Class Oil Resource Play Source Energy amassed 302,000 acres in a world class developing oil resource play La Luna Shale in the Middle…
N. America Supply Effects & Historical Futures Supply Growth and Oil Hedge Futures Free Fall Key Oil Conclusions: Saudi Arabia Extraordinary supply growth in US & Canada Progression towards self supply Russia Futures contango not…
Real Estate Bankruptcy Case Study 5-7 Year Cycle with Significant Term to Resolve Asset Transfers Price Drop 2007-2009 Max Fore- Sales Drop Closures: 2005-2007 January 2009 Foreclosure sales: 5+ year cycle 2010 on…
Greenhouse Methane & US Regulations The US Oil Industry has a Small Footprint but Heavily Regulated Anthropogenic is Methane Gas that is created by humans Clearly visible are major methane source Continental resources regions…
Worldwide Oil and Gas: Production Image Filter Bakken and Permian Stand Out as High Density Production Williston Basin Powder River Basin DJ Basin Paradox Basin Arkoma Basin San Juan Basin Ft Worth Basin…
Bakken Quality Map & ND Production vs Price Not All Rock Created Equal; Play Development Will Consolidate to Tier I Tier 3 Tier 2 Tier 1 March 2012 March 2016 Active Rigs: 204 Active Rigs: 35 Frac Crews: 62 Frac Crews:…
Bakken Oil Margins W/ Other Cost Elements Essential to Focus on Field Level Margins and all Investment Costs CONFIDENTIAL: DO NOT DISTRIBUTE 14
Gas Margins with Other Cost Categories Capital and Drilling Costs Reduce Margins Further Category Gas 0.65 Transport 20% Royalty 11% Tax 0.50 LOE 0.50 G&A 0.50 Captial Cost 0.80 Well Cost Profit Profit Margin Cum Value 2.25 1.60…
Break-evens by Region and Futures Price No PUDs in the Money at Current Oil Strip Pricing Q3 2016 Q2 2015 DUCs Orig. JP Morgan Drilled, Un-Completed - Rockies Region CONFIDENTIAL: DO NOT DISTRIBUTE 16
Macro Conclusions & Historical Perspective This Too Shale Pass: Prices Will Revert to Mean Replacement Costs Macro Conclusions Reduced pricing yields efficiencies Upstream operations LOE improvements are abundant Midstream…
Resource Energy: Strategy & Long Term Plan 20/20 Vision: Scale to 20,000 BOE/D by 2020 The Resource Energy team has developed a differentiated strategy of acquisition and exploitation through refrac, targeting producing assets in…
Resource Energy Acquisition Focus Areas Company seeking acquisitions in Rockies and Texas Initial Focus Area Bakken Woodford Permian Barnett Eagle Ford CONFIDENTIAL: DO NOT DISTRIBUTE 19
Resource Energy Basins of Interest Substantial Inventory of Rejuvenation Candidates Over 55,000 horizontal completions Horizontal Completions By Basin (2000 2014) performed across premier US Primary Horizontal Completions…
Refracturing Primary & Secondary Improvements Why Refracturing Works in Resource Plays Primary Improvements Early completions may not have been optimized Bigger is Better (Proppant and Volumes) Production log study indicates 40%…
Historical Team Performance in the Barnett Barnett Annual Gas Production (Refracturing Increases IPs and EURs) Cum. To-Date 1.6 Tcf Produced ANNUAL GAS PRODUCTION (BCF) 1995 wells 10.6 Bcf 2002 Production Produced (2002) 34…
Refrac Proprietary Selection Correlation 17 Bakken Refracs Exhibit a 0.883 Predicted vs Actual (NS verified) Resource Energy has developed a proprietary model for the Bakken play called the Refrac Potential Map (RPM). Back testing…
Refracturing Investment Strategy Overview of Acquisition and Refrac Strategy 1. Identify Refracturing Opportunities Identify basins with economic refrac potential Target operated assets based on well vintage, original completion…
Acquired Bankruptcy Asset Transition Focus on Field Level Profit Margin Growth & Refracs Assumed operations at closing (11/23/2015) Refrac Economics: Reduced LOE by 30% from 14 to 10 per B gross Reduced Transportation costs by 30%…
Presentation Summary & Takeaways Focus on Total Financial Returns with Limited Downside Risk Plan for sustained low prices Focus on SSL: Sustainable Savings Leverage Production growth with refracturing & PUDs Contact Resource…
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