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Q1 2017 Results Presentation – Approach Resources, Inc.

Approach Resources, Inc. · May 4, 2017 · 23 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. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 1
    First Quarter 2017 Results MAY 4, 2017
  2. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 2
    Company overview AREX OVERVIEW ASSET OVERVIEW Enterprise value 577 MM1 High-quality reserve base 156.4 MMBoe proved reserves 62% Liquids, 32% oil 730.2 MM PV-10 (non-GAAP) at NYMEX strip2 Available Oil Sales Outlets Cushing and…
  3. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 3
    Approach Resources strategy Develop our Unlock Wolfcamp value through focus on increasing production and large, multi- reserves at a competitive cost using our operating, technical and regional expertise to enhance production rates…
  4. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 4
    Investment highlights STRENGTHS HIGHLIGHTS Drilled over 170 HZ Wolfcamp wells, acreage derisked and productivity validated by actual results Low-Risk, balanced Recent wells continue to outperform type curve asset base in Midland…
  5. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 5
    Next generation completion design Increase sand concentration 1,800 2,000 lbs./ft. of completed lateral 60% 100 mesh sand Decrease stage…
  6. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 6
    Enhanced completion design drives outperformance 160,000 2015 - 2016 Wells (24) 140,000 Stage Spacing 212 150 Sand Concentrations 1,150 to 1,880 (Lbs./Ft.) Percent Recycled Water 0 to 90% 120,000 Number of Clusters per stage 4 8…
  7. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 7
    Average 1st Qtr. 2017 wells 35,000 30,000 Cumulative Production (BOE) 25,000 20,000 15,000 10,000 5,000 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65…
  8. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 8
    First quarter 2017 operating highlights A track record of doing what we say we will do Total production 11.4 MBoe exceeding quarterly guidance Drilled 3 HZ wells, completed 2 HZ wells during the quarter, and started drilling of 1…
  9. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 9
    Strategic midstream asset Reduce D&C cost Reduce LOE Increase project profit margin Minimize fresh water use, truck traffic and surface disturbance Recycled water has a positive impact on well performance due to chemical…
  10. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 10
    Significant cost saving for using recycled water for fracing Flowback / Producing Well Waste Cost for recycled water Water 0.50 - 0.80 per barrel 0.05 - 0.10 per barrel Via existing water gathering lines Cost saving for using…
  11. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 11
    First quarter 2017 financial highlights Summary highlights Revenues of 26.4 MM up 50% YoY Maximizing Quarterly LOE of 4.06/Boe, 26% reduction over prior year quarter profitability in a Average realized unhedged price of 25.67 per…
  12. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 12
    Cost reductions and improvement in commodity prices are translating into expanding profit margins Profit margin per Boe 30.00 24.73 Hedged 24.36 Realized Hedged Price Realized 25.00 21.96 Price Hedged 20.76 Realized Hedged…
  13. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 13
    Balanced production mix allows AREX to benefit from commodity price appreciation across all product streams % Change in realized prices Q1 2017 Commodity Mix 100.0% Oil NGLs Natural Gas 27% 39% 80.0% 60.0% 34% Oil NGLs…
  14. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 14
    Continuing to manage commodity price risk Our balanced commodity profile allows the company to hedge any combination of products to mitigate risk. At the current time, we have chosen to hedge natural gas and NGLs. We will continue to…
  15. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 15
    Balance sheet detail AREX Liquidity and Capitalization At spring 2017 redetermination, our lenders reaffirmed the AREX Capitalization as of 3/31/2017 ( MM) borrowing base and commitment amount at 325 MM Cash 0.1 Liquidity of 49.8…
  16. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 16
    Appendix
  17. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 17
    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…
  18. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 18
    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 strip2 Total Proved…
  19. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 19
    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…
  20. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 20
    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…
  21. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 21
    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 (gain) loss on commodity derivatives, (5) gain on…
  22. Q1 2017 Results Presentation – 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. Q1 2017 Results Presentation – Approach Resources, Inc. – slide 23
    Contact information SUZANNE OGLE Vice President Investor Relations & Corporate Communication 817.989.9000 irapproachresources.com www.approachresources.com

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