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Fourth Quarter and Full Year 2016 Results – Approach Resources, Inc.

Approach Resources, Inc. · Mar 9, 2017 · 21 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. Fourth Quarter and Full Year 2016 Results – Approach Resources, Inc. – slide 1
    Fourth Quarter & Full-Year 2016 Results MARCH 9, 2017
  2. Fourth Quarter and Full Year 2016 Results – Approach Resources, Inc. – slide 2
    Company overview AREX OVERVIEW ASSET OVERVIEW Enterprise value 639 MM High-quality reserve base 156.4 MMBoe proved reserves 62% Liquids, 32% oil 730.2 MM PV-10 (non-GAAP) at NYMEX strip1 Available Oil Sales Outlets Cushing and…
  3. Fourth Quarter and Full Year 2016 Results – Approach Resources, Inc. – slide 3
    Fourth quarter and full-year 2016 operating highlights Q4 2016 FY 2016 Total production 1,106 MBoe exceeding Drilled 6 HZ wells and completed 5 HZ quarterly guidance wells Solid execution Drilled 2 HZ wells during the quarter 6 HZ…
  4. Fourth Quarter and Full Year 2016 Results – Approach Resources, Inc. – slide 4
    Established infrastructure in place is critical to low cost structure Benefits of water system Reduce D&C cost Reduce LOE Increase project profit margin Minimize fresh water use, truck traffic and surface disturbance Fourth…
  5. Fourth Quarter and Full Year 2016 Results – Approach Resources, Inc. – slide 5
    AREX continues to achieve one of the lowest cost structures in the Permian Basin AREX LOE Historical Track Record (/Boe) Q4 2016 Permian Peer LOE (/Boe) 8.00 9.0 7.36 8.36 7.00 8.0 7.85 6.65 6.18 5.87 7.0 6.42 6.00 5.55 5.44 5.45…
  6. Fourth Quarter and Full Year 2016 Results – Approach Resources, Inc. – slide 6
    Cost reductions and improvement in commodity prices are translating into expanding profit margins Profit margin per Boe 30.00 24.36 Hedged Realized 25.00 21.96 Price Hedged 20.76 Realized Hedged 23.96 Price Realized…
  7. Fourth Quarter and Full Year 2016 Results – Approach Resources, Inc. – slide 7
    Enhanced completion design drives outperformance from 2016 wells 100,000 Enhanced Design Reduced stage spacing (< 200) Increase percentage of 100 mesh sand 90,000 Increase proppant load per foot 80,000 Cumulative Production…
  8. Fourth Quarter and Full Year 2016 Results – Approach Resources, Inc. – slide 8
    The business is anchored by long-lived, low-cost proved reserve base 12/31/2016 reserve summary prepared by DeGolyer and MacNaughton (D&M) Reserve Replacement Ratio of 350%1 PV-10 of 730.2 million at NYMEX Strip3 Total Proved…
  9. Fourth Quarter and Full Year 2016 Results – Approach Resources, Inc. – slide 9
    Fourth quarter and full-year 2016 financial highlights Q4 2016 FY 2016 Revenues of 90.3 MM Revenues of 26.5 MM (up 12% QoQ) Reduced operating expenses to improve Record low quarterly LOE of 3.40/Boe, Maximizing cash flow: 38%…
  10. Fourth Quarter and Full Year 2016 Results – Approach Resources, Inc. – slide 10
    Highlights of exchange transaction Large-scale strategic recapitalization anchored by a proven industry investor (Wilks Family Office) First Step: Elimination of 130.6 million of debt, annual cash interest expense reduction of 9.1…
  11. Fourth Quarter and Full Year 2016 Results – Approach Resources, Inc. – slide 11
    Pro Forma Balance sheet detail At 12/31/2016 we had a 1 billion senior secured revolving AREX Liquidity and Capitalization credit facility in place, with aggregate lender commitments AREX Capitalization as of 12/31/2016 1( MM) and…
  12. Fourth Quarter and Full Year 2016 Results – Approach Resources, Inc. – slide 12
    Current hedge position Based on the midpoint of 2017 guidance, approximately 85% of forecasted natural gas and 50% of NGL production are hedged. Commodity & Period Contract Type Volume Contract Price Natural Gas January 2017…
  13. Fourth Quarter and Full Year 2016 Results – Approach Resources, Inc. – slide 13
    Production and expense guidance 2017 Guidance Production Oil (MBbls) 1,200 1,300 NGLs (MBbls) 1,380 1,460 Natural Gas (MMcf) 9,500 10,160 Total (MBoe) 4,163 4,453 Cash operating costs (per Boe) Lease operating 4.00 - 5.00…
  14. Fourth Quarter and Full Year 2016 Results – Approach Resources, Inc. – slide 14
    Appendix
  15. Fourth Quarter and Full Year 2016 Results – 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 AEP EOG / Meaningful cash flow…
  16. Fourth Quarter and Full Year 2016 Results – Approach Resources, Inc. – slide 16
    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…
  17. Fourth Quarter and Full Year 2016 Results – Approach Resources, Inc. – slide 17
    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) impairment of…
  18. Fourth Quarter and Full Year 2016 Results – Approach Resources, Inc. – slide 18
    Cash operating expenses (unaudited) Cash operating expenses We define cash operating expenses as operating expenses, excluding (1) exploration expense, (2) depletion, depreciation and amortization expense, (3) share-based compensation…
  19. Fourth Quarter and Full Year 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 307.9 million at December 31, 2016, and was calculated based on the first-of-the- month, twelve-month average prices for oil, NGLs…
  20. Fourth Quarter and Full Year 2016 Results – Approach Resources, Inc. – slide 20
    Pro Forma Balance sheet (unaudited) The following table sets forth our capitalization as of December 31, 2016, on a historical basis and As adjusted giving effect to the debt-for-equity exchange that closed on January 27, 2017, as if it…
  21. Fourth Quarter and Full Year 2016 Results – Approach Resources, Inc. – slide 21
    Contact information SUZANNE OGLE Vice President Investor Relations & Corporate Communication 817.989.9000 irapproachresources.com www.approachresources.com

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