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October 2016 Management Presentation – Vanguard Natural Resources, Llc

Vanguard Natural Resources, Llc · Oct 7, 2016 · 74 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. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 1
    Management Presentation October 7, 2016
  2. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 2
    Agenda Company Overview 4 Asset and Operations Overview 13 Northern Division Overview 25 Pinedale Overview & Upside 27 Piceance Overview & Upside 34 East Central Division Overview 41 Arkoma Woodford Overview & Upside 46 Southern…
  3. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 3
    Company Overview 4
  4. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 4
    Management Team Years of Name Title Prior Affiliations Experience Ensource Energy Scott W. Smith President and CEO The Wiser Oil Company 34 San Juan Partners Enbridge USA Richard A. Robert EVP and CFO Midcoast Energy Resources…
  5. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 5
    Company Highlights 4.4 Tcfe of proved(1) reserves: 78% Gas, 35% PD, 29 year R/P Diversified, Reserves and production diversified across 10 basins spanning Rockies, Mid-Continent, Low-Decline West Texas and Gulf Coast Reserve Base…
  6. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 6
    Company Overview Company Profile Asset Profile(1) Upstream oil & gas LLC, headquartered in Houston, TX 25 Strategic Acquisitions Totaling 5.0 BN Initial public offering VNR in October 2007 had a 4.4 Tcfe (737 MMBoe) Proved…
  7. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 7
    Organizational Structure VNR Finance Corp. Vanguard Natural Gas LLC 381.8 million Unsecured 7.875% Senior Notes Due 2020(1) 75.6 million Unsecured 7.000% Senior Notes Due 2023(1) 1.325 billion Senior Secured Reserve-Based…
  8. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 8
    Current Capital Structure Current Capital Structure 6/30/16 Cash Multiple of Percentage of Face Coupon Interest Maturity 2016E EBITDA 1P PV-10 at Strip Cash and Cash Equivalents (1) 41 First Lien Debt RBL Facility (1) (2) 1,372 L…
  9. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 9
    Hedges Mitigate Commodity Price Risk Natural Gas Hedges Oil Hedges 100.0% 100.0% 87.7% 10.0% 79.3% 75.0% 75.0% 11.7% 64.0% 22.1% % Hedged % Hedged 13.3% 50.0% 50.0% 7.6% 0.4% 10.5% 65.9% 25.0% 50.3% 25.0% 19.8%…
  10. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 10
    Significant Operating Cost Reductions Achieved Over Last 6 Quarters Reduction in Vanguard Operated LOE(1) 30.0 38% LOE Reduction 25.0 1.4 1.4 0.4 1.8 2015 Average 21.2 MM / quarter 20.0 0.8 1.5 1.6 0.5 1.1 1.1 0.7 LOE…
  11. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 11
    Key Highlights And Near-Term Strategy Focused on achieving adequate rates of return on our development capital program; Live Within remain flexible and reallocate capital as appropriate Cash Flows 2015-2016 budgets designed to…
  12. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 12
    Asset and Operations Overview 13
  13. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 13
    Geographically Diversified Reserve Base (1) Core Operating Areas Overview (1) Wind River Basin Big Horn Basin Williston Basin Proved Reserves: 4.4 Tcfe (737 MMBoe) Proved Reserves: 24 Bcfe Proved Reserves: 16 MMBoe Proved…
  14. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 14
    Low-Risk Proved Reserve Base with Significant PDP Component 6/30/16 Management Reserve Database Net Oil Gas NGL Total Volumes PV-9 PV-10 PV-12 PV-15 % Gas Cases (MMBbl) (Bcf) (MMBbl) (Bcfe) (MM) (MM) (MM) (MM) PDP 7,757 50 935 37…
  15. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 15
    Meaningful Inventory of Low-Risk Drilling Opportunities Shifted to PUDs YE 2015 SEC Reserve Database 6/30/16 Management Reserve Database Pre-Tax PV-10 Pre-Tax PV-10 Reserve Oil Gas NGL Total SEC Pricing Strip Pricing Reserve Oil Gas…
  16. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 16
    Low-Decline Base Production Average Annual…
  17. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 17
    Ability to Grow Collateral Value While Spending Within Cash Flow Proved PV-10 Roll Forward at Strip Price Deck (MM) 3,000 2,500 2,326 2,203 2,031 2,063 380 2,000 507 542 565 1,500 1,000 1,946 1,696 1,489 1,498…
  18. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 18
    Significant Inventory of High-Quality, Organic Growth Opportunities Elk Basin (Water Flood) 3 Net MBoed(1) Vanguard Natural Resources, LLC 281 PDP Wells (Operated) 415 Net MMcfed(1) 20 MMBoe Net Upside Potential 2016 Water Flood…
  19. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 19
    Macro Gas Outlook Rockies Natural Gas Production US Dry Natural Gas Production 14.5 78.0 8.0% 14.0 76.0 13.5 74.0 6.0% 13.0 72.0 Bcfd Bcfd (yoy) 12.5 70.0 4.0% 68.0 Bcfd 12.0 66.0 2.0% 11.5 64.0 11.0 62.0 0.0%…
  20. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 20
    Rockies Differentials Attractive Relative to Appalachia Producing Region Major Natural Gas Hubs Opal AECO Cheyenne Dominion South TETCO M2 Marcellus Spot: 2.73 Spot: 2.00 Spot: 2.64 Spot: 1.34 Spot: 1.34 Spot: 1.30 Differential:…
  21. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 21
    Significant Low-Risk Upside Potential Achieves 15% IRR at Current Prices Upside Cases as of Q2 2016 Upside Present Value as of Q2 2016 (MM) 3,000 5,000 217 4,500 273 Additional 167 MM 31 Additional Cases Additional 2,500…
  22. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 22
    Significant Low-Risk Upside Potential Achieves 15% IRR at Current Prices Upside Cases as of Q2 2016 Upside Present Value as of Q2 2016 (MM) 3,500 5,000 348 Additional 537 MM 4,500 594 Cases 3,000 Additional 4,173 PV 2,852…
  23. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 23
    Majority of PUD PV-10 Comprised of Low-Risk Opportunities in Proven Gas Resource Plays Proved PV-10 Breakdown at Strip Key Field PV-10 (MM) 1,400 1,200 23% 1,000 48 69 800 50% 600 17% 915 400 224 111 10% 200 259 138…
  24. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 24
    Northern Division Overview 25
  25. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 25
    Northern Division Overview Big Horn Basin Powder River Basin Williston Basin Daily Net Production: 16 MBoed(1) Daily Net Production: 18 Mcfed(1) Daily Net Production: 7 MBoed(1) (without gas reinjection) 467 PDP Wells (Operated) 60…
  26. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 26
    Pinedale Overview & Upside 27
  27. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 27
    Pinedale Field Overview Pinedale Field Map Asset Overview 59 Tcfe OGIP 3rd largest U.S. onshore field (U.S. EIA, 2010) 38 Tcfe EUR 5 Acres Stewart 9 Tcfe PDP EUR Giant anticlinal fold with 1,000 Closure Point Half Moon 29 Tcfe…
  28. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 28
    Pinedale Offset Operator Update Select Recent Well Results Stewart Point 8A3-29 Warbonnet 4A2-13D Riverside 16A2-13D Riverside 16A1-13D Riverside 15B2-13D Riverside 9C2-13D Questar Ultra Ultra Ultra Ultra Ultra 1 6 5 5 5 5 IP-30:…
  29. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 29
    Pinedale Field Overview (contd) 6 Month Cumulative Production Operator Acreage Map 130,000 Legend 120,000 Rig Location (8/1/16) 110,000 100,000 Pinedale Bcfe Contour 90,000 Vanguard Non-Op 80,000 70,000 QEP Resources 60,000…
  30. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 30
    Pinedale Production History Pinedale Historical Production 1,800 3,600 Jan 2012 NYMEX 2.00 Caused reduction in drilling activity 1,500 3,000 Pre 1997: Seasonal Jan 2014 NYMEX 5.00 First well drilled in 1939/no market for gas…
  31. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 31
    Pinedale Capital Program 2014 Capital Program 2015 Capital Program Forecasted 2016 Capital Program Capital Spend: 79.7 MM Capital Spend: 62.6 MM Capital Budget: 36-37 MM Average WI: 13% Average WI: 12% Average WI: 14% Average Lease…
  32. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 32
    Pinedale Engineering Overview Key Highlights Pinedale Rate of Return Sensitivity 50% EUR: 4.7 Bcfe (88% Gas) AVG WI / NRI: 11.5% / 8.8% 40% IP30: 4.95 MMcfd Average type curve decline rates/yr are initially 68%, decreasing…
  33. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 33
    Piceance Overview & Upside 34
  34. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 34
    Piceance Basin Overview Piceance Basin Map Asset Overview Silt, CO office, VNR acquired 2012 & 2014 (BBC) 40 employees, average oilfield experience 10 years Personnel: 1 superintendent, 1 field engineer, 7 foremen, 19 operators, 5…
  35. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 35
    Piceance Offset Operator Update Select Recent Well Results PA 701-32-HN1 DGU Hotchkiss Federal 1289 Falcon Seaboard 11-90-12 3 Iron Point Unit Hotchkiss 1291 Homer Deep Unit 9-41CH Homer Deep Unit 9-41BH Terra Energy Partners 18-H1 SG…
  36. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 36
    Piceance Basin Overview (contd) 6 Month Cumulative Production Operator Acreage Map 130,000 Legend 120,000 Rio Blanco 110,000 Rig Location (8/1/16) County 100,000 Rio Blanco Vanguard Acreage 90,000 County Black Hills 80,000…
  37. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 37
    Mamm Creek (Piceance) Overview Mamm Creek Highlights Producing Wells: 954 (924 operated) Total Undeveloped Locations: 525 (Assumes 10-Acre Spacing) 358 locations have greater than 1.3+ Bcfe EUR 180 remaining additional drilling…
  38. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 38
    Piceance Completion Improvements Time-Normalized Williams Fork Type Curves by Vintage 10,000 32% Average Increase in Recoveries due to Completion Improvements Average Daily Gas 1,000 100 0 12 24 36 48 60 Months…
  39. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 39
    Mamm Creek Engineering Overview Key Highlights Mamm Creek Rate of Return Sensitivity 50% EUR: 1.8 Bcfe (66% Gas) AVG WI / NRI: 88% / 71.5% IP30: 2.8 MMcfd 40% Average type curve decline rates/year are initially 83%,…
  40. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 40
    East Central Division Overview 41
  41. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 41
    East Central Region Overview Arkoma & Anadarko Basins Daily Net Production: 62 MMcfed Number of Operated Wells: 357 619,749 Gross Acres (241,222 Net) Gulf Coast Basin Daily Net Production: 14 MMcfed Number of Operated…
  42. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 42
    Arkoma Basin Overview Arkoma Overview Current Gross Operated Production: 48 MMcfed 4 Operated Districts with +/- 281 Gross Wells Operated District Asset Overviews: District Well Count Production Woodford 141 31 MMcfed Potato…
  43. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 43
    Anadarko Basin Overview Anadarko Operated Overview Current Gross Operated Production: 5 MMcfe/d 2 Operated Districts with +/- 75 Operated Wells District Asset Overviews: District Well Count Production Anadarko Other 59 4…
  44. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 44
    Gulf Coast EC Overview Gulf Coast Overview Current Gross Operating Production: 41 MMcfed (FWS) 2 Operated Districts with +/- 36 Gross Well Count District Asset Overviews: District Well Count Production Alabama 27 38 MMcfe/d…
  45. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 45
    Arkoma Woodford Overview & Upside 46
  46. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 46
    Arkoma Woodford Overview Key Highlights Arkoma Overview Map PDP Reserves PDP as of 2Q16 with 8/12/2016 Strip pricing Producing Wells: 705 (140 Operated / 565 Non-Operated) Gas: 114 Bcf NGL: 1.7 MMBbl 125 Bcfe Average WI : 16%…
  47. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 47
    Arkoma Offset Operator Update Tonya 3-20H Phillips 2-28H Phillips 4-28H Phillips 3-28H Smalley 4-12H Ina 3-11H Petroquest BP America BP America BP America BP America BP America 1 13 12 12 11 10 IP-30: 6,511 Mcfed IP-30: 7,758 Mcfed…
  48. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 48
    Arkoma Woodford Overview (contd) 6 Month Cumulative Production Operator Acreage Map Okmulgee Okfuskee Muskogee Okmulgee County McIntosh County County County McIntosh Muskogee County Okfuskee County County County Seminole…
  49. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 49
    Arkoma Woodford Returns Arkoma Woodford Operated ROR Sensitivity 80.0% 70.0% 60.0% 50.0% 40.0% ROR (%) 30.0% 20.0% 10.0% --% 2.00 2.50 3.00 3.50 4.00 Gas Price (/Mcf) Pittsburg County Hughes County Atoka…
  50. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 50
    Southern Division Overview 51
  51. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 51
    South Region Overview Production By Area 34% Production By Area 66% Permian Gulf Coast Permian Basin Gulf Coast Basin Daily Net Production: 9 MBoed Daily Net Production: 29 MMcfed Primarily Natural Gas Operated…
  52. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 52
    Permian Basin Operations Highlights Permian Overview Gross Operated Production: 11 MBoed Wells: 2,430 Total 1,839 Prod/176 SWI/415 SI Office in Odessa Personnel OPERATIONS MAP 46 Vanguard Employees / 26 Contract 1…
  53. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 53
    New Mexico Operations Highlights Key Highlights Acreage Map New Mexico Operated Totals Wells: 909 Total 858 Prod/22 SWI/29 SI Production from 70 Fields / 114 Pools New Mexico North Wells: 625 Prod/10 SWI/25 SI Field office…
  54. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 54
    Permian Texas Operations Highlights Permian Texas Operated Totals Daily Production: 4 MBoed North Wells: 1521 Total Wells: 159 Prd/36 SWI /75 SI Managed out of Odessa 981 Prod/154 SWI/386 SI Production from 65 Fields/110 Pools…
  55. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 55
    Glasscock County Acreage Opportunity Significant Multi-Zone Horizontal Activity and Results in the Area Flanagan 14 Lloyd A 21H Calverley 5-44 6NC Powell Ranch 151HC Houston Ranch 12 Fowler A 1H Lazy E 1402H Lacy Creek 22-27 Alloc B…
  56. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 56
    Gulf Coast Basin Operations Highlights Gulf Coast Overview Gross Operated Production: 23 MMcfed Wells: 373 287 Prod/10 SWI/76 SI 15 Fields in 11 Pools Office in Poynor, Texas Personnel 25 Vanguard Employees/10 Contract 1…
  57. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 57
    East TX / North LA Operations Highlights East Haynesville Wells: 48 Prod/20 SI Managed out of Poynor Field office in Haynesville Fairway Wells: 179 Prod/10 SWI/23 SI Managed out of Poynor Fairway gas plant…
  58. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 58
    South Texas Operations Highlights New Years Ridge Wells: 15 Prod/6 SI Managed out of Poynor George West Wells: 10 Prod/2 SI Managed out of Poynor Stratton Wells: 6 Prod/6 SI Managed out of Poynor 59
  59. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 59
    East Haynesville Field Overview & Upside 60
  60. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 60
    East Haynesville Field Overview Key Highlights Discovered in 1945 in Gloyd and Kilpatrick zones (4,100 SSTVD) First Smackover zone (9,500 SSTVD) wells in 1946 Taylor sand (8,300 SSTVD) developed in 1960 Haynesville Sand…
  61. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 61
    Haynesville Sand Type Curve EUR: 1.7 Bcf, 82 MBbl IP: 2.0 MMcfd, 150 Bopd B factor: 1.2 De: 78% Dmin: 6% 62
  62. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 62
    Haynesville Sand Economics Key Highlights Haynesville Sand Rate of Return Sensitivity Undeveloped Locations: 11 160% Average WI: 100% 140% Average Lease NRI: 82% 120% 19.2 Bcfe Net 100% Undeveloped Economics: ROR 80%…
  63. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 63
    Smackover Type Curve Smackover Type Curve EUR: 1.1 Bcf, 70 MBbls B factor: 1.25 IP: 590 Mcfd, 50 Bopd De: 43% Dmin: 6% 64
  64. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 64
    Smackover Economics Key Highlights Smackover Rate of Return Sensitivity Undeveloped Locations: 16 160% Average WI: 100% 140% Average Lease NRI: 82% 120% 19.5 Bcfe Net 100% Undeveloped Economics: ROR 80% EUR: 1.1…
  65. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 65
    Red Lake Overview & Upside 66
  66. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 66
    Red Lake Field Permian Basin Key Highlights Infill Drilling San Andres, Red Lake/Artesia Yeso and Tubb Dolomitized Reservoirs Primarily deepening into Yeso and Tubb Vertical multi-stage fracs & commingled pay zones 67
  67. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 67
    Red Lake Type Curve Type Curve Developed from PDP Wells EUR: 40 MBbls B factor: 1.25 IP: 90 Bopd De: 82% Dmin: 6% 68
  68. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 68
    Red Lake Economics Undeveloped Locations: 45 35% Average WI: 90% 30% Average Lease NRI: 77% NGL Yield: 124 Bbl/MMcf 25% 2.1 MMBoe Net 20% ROR Undeveloped Economics: 15% EUR: 40 MBbl and 125 MMcf 10% Well Cost: 0.8…
  69. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 69
    Business Plan Overview 70
  70. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 70
    Business Plan Assumptions Management utilized the Pinedale Non-Operated, Piceance Operated and Arkoma type curves in the development of the Business Plan drilling schedule, as summarized below: Type Curve Assumptions Pinedale…
  71. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 71
    Summary of Business Plan 52.50 / 3.25 Price Case Quarterly Daily Production 800.0 600.0 (MMcfed) 400.0 200.0 -- Base Production Drilling Production - Pinedale Drilling Production - Piceance Drilling Production -…
  72. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 72
    Summary of Business Plan (contd) 52.50 / 3.25 Price Case Quarterly EBITDA 150.0 120.0 ( in Millions) 90.0 60.0 30.0 -- Unhedged EBITDA Hedging Gains Quarterly Unlevered Free Cash Flow 100.0 1,000.0 80.0…
  73. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 73
    Business Plan Sensitivities Annual EBITDA Annual Unlevered Free Cash Flow 500 350 300 450 250 in Millions in Millions 400 200 350 150 100 300 50 250 0 2016 2017 2018 2016 2017 2018 (1) (2) (2) (2) (2) (2) (2)…
  74. October 2016 Management Presentation – Vanguard Natural Resources, Llc – slide 74
    Business Plan Financial Summary 52.50 / 3.25 Price Case Business Plan Financial Summary For the Years Ending December 31, 2016E 2017E 2018E 2019E 2020E Commodity Prices Crude Oil (/Bbl) 41.92 52.50 52.50 52.50 52.50 Natural Gas…

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