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DUC Permian Conference – Approach Resources, Inc.

Approach Resources, Inc. · May 25, 2016 · 31 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. DUC Permian Conference – Approach Resources, Inc. – slide 1
    Oil Prices Supply/Demand/ and Cost Effective Ways of Large Scale Wolfcamp Development J Ross Craft, P.E., Chairman, President & CEO
  2. DUC Permian Conference – Approach Resources, Inc. – slide 2
    Overview of Approach Resources 4
  3. DUC Permian Conference – Approach Resources, Inc. – slide 3
    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 138,000 gross (126,000 net)…
  4. DUC Permian 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 2012…
  5. DUC Permian 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 5.87 6.00 5.55 5.44 5.45 10.0 9.51 4.97 5.04 8.84 5.00 7.83 8.0 7.71 7.46…
  6. DUC Permian Conference – Approach Resources, Inc. – slide 6
    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…
  7. DUC Permian Conference – Approach Resources, Inc. – slide 7
    What Determines the Price of OIL Supply Demand Energy prices Energy prices OPEC & Non OPEC Capacity Economic Growth Spare Capacity Industrial Production Geo Politics Transportation E&P Cost & Investments Physical Balance Markets &…
  8. DUC Permian Conference – Approach Resources, Inc. – slide 8
    Five significant downturn cycles during the past 30 years 160.00 US Financial Crisis US Shale Success Oil is a commodity, has always been Created a volatile mixture of Market Driven Economics volatile & will continue to be volatile.…
  9. DUC Permian Conference – Approach Resources, Inc. – slide 9
    IEA World Crude Supply & Demand Missing Barrels Manipulation or Actual World Production Over/Under MMBbls./day MMBbls./day 98.0 2.50 The tally of unaccounted-for oil which comes from the difference between the 1.9 million b/d…
  10. DUC Permian Conference – Approach Resources, Inc. – slide 10
    IEA Demand Revisions 2000 - 2015 MMBbls./day 1.6 1.4 1.4 Average Revision .737 MMBbls./day 1.2 1.1 1 1 1 0.9 0.8 0.8 0.8 0.7 0.7 0.7 0.6 0.6 0.6 0.6 0.5 0.4 0.4 0.2 0 0 2000 2001 2002 2003 2004 2005…
  11. DUC Permian Conference – Approach Resources, Inc. – slide 11
    Global Rig Count Compared to Brent Crude Prices Active Rig Count Brent Crude 4500 Price135.00 Middle East Rig Count U.S. Rig Count Total World Rig Count Brent Spot Price ( per Bbl.) 130.00 125.00 4000 120.00 115.00 110.00 3500…
  12. DUC Permian Conference – Approach Resources, Inc. – slide 12
    US Crude Production & Rig Count MMBbls/day Rig Count 10 2500 9.7 MMBbls/day April 2015 9 2000 8.79 MMBbls/day May 13th 2016 8 1500 7 1000 6 500 5 0 Baker Hughes, EIA 14
  13. DUC Permian Conference – Approach Resources, Inc. – slide 13
    0 5 10 15 20 25 30 35 40 1/31/11 2/28/11 3/31/11 MMBbls./day 4/30/11 5/31/11 6/30/11 Daily Oil Production 7/31/11 8/31/11 9/30/11 10/31/11 11/30/11 12/31/11 Baker Hughes, Trading Economics 1/31/12 2/29/12…
  14. DUC Permian Conference – Approach Resources, Inc. – slide 14
    Saudi Arabia Production & Rig Count Oil Rigs Gas Rigs Total Rigs Oil Production Rig Count Daily Oil Production MMBbls/day 140 11 129 126 126 10 124 120 124 120 112 9 108 104 10.2 MMBbls./day 98 98 8 88 89 84 86 84 77 7…
  15. DUC Permian Conference – Approach Resources, Inc. – slide 15
    Oil & Oil/Gas Products Percentage of Total Country Exports 99 100 96 95 95 95 95 91 90 90 90 87 82 80 73 70 68 68 60 58 50 40 40 32 30 20 10 0 Venezuela Iran Kuwait Iraq UAE Nigeria Algerian…
  16. DUC Permian Conference – Approach Resources, Inc. – slide 16
    Fiscal Break-Even Price (Brent Crude, US /Bbl) 42.73 51.79 45.86 per Bbl. April 2016 Close 57.77 Turkmenistan 60.63 67.51 Kuwait 70.42 Qatar 75.90 2016 82.68 Azerbaijan 92.99 95.84 UAE 97.55 Iran 104.97 207.56 Iraq…
  17. DUC Permian Conference – Approach Resources, Inc. – slide 17
    Budget Balance as Percentage of GDP 2014 2015 Rodger Andrew; Low Oil Price and Budget deficits & OPEC IMF 2015 World Economic Outlook 19
  18. DUC Permian Conference – Approach Resources, Inc. – slide 18
    Market Sentiment, Wrong or Right The global price of crude is as ridiculously priced today as it was at 120 per barrel. A 2 percent oversupply in a world where we cannot even measure within 5 percent with any certainty, drops the price…
  19. DUC Permian Conference – Approach Resources, Inc. – slide 19
    Midland Basin Wolfcamp Shale - Largest Discovery Ever Made in the U.S. 50 46.0 Wolfcamp is the largest oil discovery made in the U.S. Resource Potential (BBOE) 40 Approach is a pioneer in the Wolfcamp oil 30 shale horizontal…
  20. DUC Permian Conference – Approach Resources, Inc. – slide 20
    Over View of Approach Operations 22
  21. DUC Permian Conference – Approach Resources, Inc. – slide 21
    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…
  22. DUC Permian Conference – Approach Resources, Inc. – slide 22
    Enhanced Completion Design Drives Outperformance 140,000 2015 Wolfcamp B&C bench completions Average completed lateral length = 6886' 120,000 Reduced stage spacing (< 200) Increase percentage of 100 mesh sand Use of Recycled…
  23. DUC Permian Conference – Approach Resources, Inc. – slide 23
    Centralized Compression Facilities and Gas Lifting Lines Necessity In Reducing Initial Capital Investments And Future Rental Costs 25
  24. DUC Permian Conference – Approach Resources, Inc. – slide 24
    Well Pads Serviced by Centralized Compressor and Shared Gas Lift System Efficient and Significant Cost Saving Prod Wells Prod ell ell uctio Gas lift to W uctio Gas lift to W n to C n to C 500…
  25. DUC Permian Conference – Approach Resources, Inc. – slide 25
    Water Recycling And Transportation Lines Must Have In Sustainable Large Scale Development 27
  26. DUC Permian Conference – Approach Resources, Inc. – slide 26
    One of the Most Important Challenges in Developing the Wolfcamp Shale Play Availability of Frac Water A typical 7500 WFMP lateral in the Midland Basin uses more than 200,000 Bbls of water 13.5 billion barrels of water is required to…
  27. DUC Permian Conference – Approach Resources, Inc. – slide 27
    Significant Cost Saving for Using Recycled Water for Fracing Cost for recycled water Flowback / Producing Well 2 per barrel Free Cost saving for using recycled water 0.25 per 2 - 3 per barrel barrel Via existing water…
  28. DUC Permian Conference – Approach Resources, Inc. – slide 28
    AREX Flowback and Produced Water Recycle Facility Flowback / Produced Water 32,000 32,000 BBL BBL 20 Treated Flowback & Produced Frac Water Supply Line Treated Treated Water Water Tank Tank 8 Low Chloride Treated…
  29. DUC Permian Conference – Approach Resources, Inc. – slide 29
    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…
  30. DUC Permian Conference – Approach Resources, Inc. – slide 30
    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…
  31. DUC Permian Conference – Approach Resources, Inc. – slide 31
    Summary Saudi Arabia is not solely responsible for the collapse of oil prices but rather a combina(on of US shale success, slowing economies, market condi;ons/herd mentality & misguided governmental policies. Oil is a commodity, has…

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