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Scotia Howard Weil Conference – Approach Resources, Inc.

Approach Resources, Inc. · Mar 29, 2017 · 20 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. Scotia Howard Weil Conference – Approach Resources, Inc. – slide 1
    Scotia Howard Weil 45th Annual Energy Conference MARCH 29, 2017
  2. Scotia Howard Weil Conference – Approach Resources, Inc. – slide 2
    Company overview AREX OVERVIEW ASSET OVERVIEW Enterprise value 563 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. Scotia Howard Weil Conference – Approach Resources, Inc. – slide 3
    Highlights of exchange transaction Large-scale strategic recapitalization anchored by a proven industry investor (Wilks Brothers family office) Elimination of 145 million of debt and 44 million in future interest expense Debt…
  4. Scotia Howard Weil Conference – Approach Resources, Inc. – slide 4
    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…
  5. Scotia Howard Weil Conference – Approach Resources, Inc. – slide 5
    Large resource potential with significant running room AREX Horizontal Wells / Locations AREX Undrilled Locations Probable, Possible & Resource: 1,369 locations 77% PDNP & PUD: 231 locations 13% A Bench: 576 locations 36% B…
  6. Scotia Howard Weil Conference – Approach Resources, Inc. – slide 6
    Balanced production mix allows AREX to benefit from commodity price appreciation across all product streams % Change in realized prices 2016 Commodity Mix 160.0% Oil NGLs Natural Gas 140.0% 28% 38% 120.0% 100.0% 34% 80.0% Oil…
  7. Scotia Howard Weil Conference – 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. Scotia Howard Weil Conference – Approach Resources, Inc. – slide 8
    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 Howard…
  9. Scotia Howard Weil Conference – Approach Resources, Inc. – slide 9
    Record low LOE cost driven by water handling infrastructure and field-level operating efficiencies AREX LOE Historical Track Record (/Boe) 8.00 7.00 0.90 6.00 1.23 0.92 0.88 0.59 5.00 2.88 0.96 1.17 1.28 0.81 0.96…
  10. Scotia Howard Weil Conference – Approach Resources, Inc. – slide 10
    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…
  11. Scotia Howard Weil Conference – Approach Resources, Inc. – slide 11
    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…
  12. Scotia Howard Weil Conference – Approach Resources, Inc. – slide 12
    Drilling and completion (D&C) cost reductions have significantly improved profitability despite lower commodity prices 100% 3.0MM D&C 90% 3.5MM D&C 4.0MM D&C 80% 70% 60% IRR (%) 50% 40% 30% 20% 10% 0% 30…
  13. Scotia Howard Weil Conference – 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. Scotia Howard Weil Conference – Approach Resources, Inc. – slide 14
    Company Highlights Concentrated geographic footprint in Permian Basin oil/liquids-rich play 123,000 net, primarily contiguous acres, 100% operated Stable leasehold that is predominately HBP Large infrastructure system enables…
  15. Scotia Howard Weil 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 Meaningful cash flow generated from…
  16. Scotia Howard Weil Conference – Approach Resources, Inc. – slide 16
    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…
  17. Scotia Howard Weil Conference – Approach Resources, Inc. – slide 17
    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…
  18. Scotia Howard Weil Conference – Approach Resources, Inc. – slide 18
    Unhedged Cash Margin and Cash Operating Expenses We define unhedged cash margin as revenue, less cash operating expenses. We define cash operating expenses as operating expenses, excluding (1) exploration expense, (2) depletion,…
  19. Scotia Howard Weil Conference – Approach Resources, Inc. – slide 19
    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 ( MM) and…
  20. Scotia Howard Weil Conference – Approach Resources, Inc. – slide 20
    Contact information SUZANNE OGLE Vice President Investor Relations & Corporate Communication 817.989.9000 irapproachresources.com www.approachresources.com

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