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April 2017 DUG Permian Basin Conference – Approach Resources, Inc.

Approach Resources, Inc. · Apr 10, 2017 · 25 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. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 1
    DUG Permian Basin Conference J. Ross Craft, P.E. Chairman & CEO
  2. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 2
    Midland Basin Wolfcamp shale largest discovery ever made in the U.S. 50 45.0 45 Wolfcamp is the largest oil discovery made in the Resource Potential (BBOE) 40 U.S. 35 Northern Approach is a pioneer in the Wolfcamp oil shale…
  3. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 3
    Permian The Most Active and Profitable Basin Mississippian Permian Basin Arkoma Woodford Barnett Ardmore Woodford 5 2 1 Fayetteville 13 9 7 Granite Wash Utica 22 DJ-Niobrara Haynesville 25 37 Williston 43 315 44…
  4. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 4
    Permian Rig Count 100 200 300 400 500 600 0 2/4/2011 4/4/2011 6/4/2011 8/4/2011 Baker Hughes & EIA 10/4/2011 12/4/2011 2/4/2012 4/4/2012 6/4/2012 8/4/2012 10/4/2012 12/4/2012 2/4/2013…
  5. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 5
    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…
  6. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 6
    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…
  7. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 7
    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…
  8. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 8
    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…
  9. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 9
    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…
  10. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 10
    Enhanced completion design drives outperformance 160,000 140,000 2015 - 2016 Wells (24) Stage Spacing 212 150 Sand Concentrations 1,150 to 1,880 Lbs./Ft. 120,000 Percent Recycled Water 0 to 90% Number of Clusters per stage 4…
  11. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 11
    Established infrastructure in place is critical to low cost structure Benefits of centralized gas lift Reduces LOE Increase profit margins Miscible gas injection enhanced oil recovery Benefits of water system Reduce D&C cost…
  12. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 12
    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…
  13. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 13
    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…
  14. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 14
    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…
  15. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 15
    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…
  16. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 16
    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…
  17. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 17
    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…
  18. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 18
    Appendix
  19. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 19
    Enhanced completion design drives outperformance from 2016 wells 100,000 Enhanced Design Reduced stage spacing (195 -152) 90,000 Increase percentage of 100 mesh sand Increase proppant load per foot 80,000 70,000 Cumulative…
  20. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 20
    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…
  21. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 21
    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…
  22. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 22
    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…
  23. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 23
    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,…
  24. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 24
    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…
  25. April 2017 DUG Permian Basin Conference – Approach Resources, Inc. – slide 25
    Contact information SUZANNE OGLE Vice President Investor Relations & Corporate Communication 817.989.9000 irapproachresources.com www.approachresources.com

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