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EnerCom The Oil & Gas Conference – Approach Resources, Inc.

Approach Resources, Inc. · Aug 16, 2016 · 30 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 The Oil & Gas Conference – Approach Resources, Inc. – slide 1
    EnerComs The Oil and Gas Conference 21 AUGUST 16, 2016
  2. EnerCom The Oil & Gas Conference – 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. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 3
    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…
  4. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 4
    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…
  5. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 5
    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…
  6. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 6
    2Q16 Highlights doing more with less 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…
  7. EnerCom The Oil & Gas Conference – 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. EnerCom The Oil & Gas Conference – 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. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 9
    Large resource potential with significant running room AREX Horizontal Wells / Locations AREX Undrilled Locations Probable, Possible & Resource: 1,389 locations 77% PDNP & PUD: 251 locations A Bench: 14% 589 locations 36%…
  10. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 10
    Established infrastructure in place is critical to low cost structure Over 500 miles of pipelines in place More than 100 MMcfg/d gathering and gas lifting capacity Expandable up to 500 MMcfg/d One Centralized Super Water Recycle…
  11. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 11
    Significant cost savings from using recycled water for fracing Flowback / Producing Well Cost for recycled water 2 per barrel Free 0.25 per Cost saving for using recycled water barrel 2 - 3 per barrel Via existing water…
  12. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 12
    AREX water recycling facility successfully implemented Started up in March 2015, ramped up during April 2015 Recycled up to 100% of AREX daily flowback/produced water volumes More than 2.2 million barrels of produced water treated in…
  13. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 13
    Well Pads Serviced by Centralized Compressor and Shared Gas Lift System Efficient and Significant Cost Saving Wells 500 ft CPF 1 CPF 2 CPF 3 CPF 4 CPF 5 CPF 6 CPF 7 CPF 8 CPF 9 CPF 10 Low Pressure Low Pressure Gathering…
  14. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 14
    D&C Cost reductions have significantly improved profitability despite lower commodity prices 70% 3.5MM D&C 60% 4.0MM D&C 4.5MM D&C 50% 40% IRR (%) 30% 20% 10% 0% 30 40 50 60 70 80 Realized Oil Price…
  15. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 15
    AREX Wolfcamp assets offer significant upside Approach assets deliver: APA REAGAN PXD Balanced production profile ENDEAVOR PXD BROADOAK APA IRION Shallow natural decline rate UPTON SEQUITUR EOG / AEP Meaningful cash flow…
  16. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 16
    Key investment highlights Prudent and proactive management team First public E&P company to fully suspend capital spending in August 2015 Generated positive cash flow in 4Q15, used to reduce current liabilities by 17MM and total debt…
  17. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 17
    Appendix
  18. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 18
    AREX Wolfcamp A Bench wells and locations PDP PDNP PUD Pangea West Production Corridor PROB/POSS/RES PDP Project Pangea PUD Production Corridor PROB/POSS/RES Potential 10,000 laterals Potential 10,000 laterals Production…
  19. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 19
    AREX Wolfcamp B Bench wells and locations PDP Pangea West PUD Production Corridor PUD PDP Project Pangea Production Corridor PROB/POSS/RES PROB/POSS/RES Potential 10,000 laterals Potential 10,000 laterals Production…
  20. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 20
    AREX Wolfcamp C Bench wells and locations PDP PUD Pangea West Production Corridor PDP PROB/POSS/RES PUD Project Pangea Production Corridor PROB/POSS/RES Potential 10,000 laterals Potential 10,000 laterals Production…
  21. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 21
    AREX flowback and produced water recycle facility Flowback / Produced Water 32,000 32,000 BBL 20 Treated Flowback & Produced Frac Water Supply Line BBL Treated Treated Water Water Tank Tank 8 Low Chloride Treated Frac…
  22. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 22
    AREX flowback and produced water recycle facility Designed one of the highest industry KPI for water treatment Bacteria Sulfates Heavy metals Fines Best practice for water conservation and improving water use efficiency…
  23. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 23
    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…
  24. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 24
    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,…
  25. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 25
    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…
  26. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 26
    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…
  27. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 27
    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…
  28. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 28
    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…
  29. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 29
    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…
  30. EnerCom The Oil & Gas Conference – Approach Resources, Inc. – slide 30
    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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