Alta Mesa Resources Pure-Play STACK Enterprise August 2017 1
Table of Contents I. Introduction II. Company Overview III. Our Upstream Assets IV. Our Midstream Assets V. Financial Summary VI. Valuation and Timeline Appendix 3
Introduction
Silver Run II Delivering on Investment Criteria Upstream Midstream Assets economic well below current oil price Competitively-positioned assets that benefit from strong supply/demand fundamentals High margin core basin…
Pure Play STACK Company Premier liquids upstream growth with value-enhancing midstream World class asset with attractive geology Highly contiguous 120,000 acres with substantial infrastructure in core of STACK Oil-weighted resource…
Transaction Overview Jim Hackett and Riverstone raised 1 billion through Silver Run Acquisition Corporation II (Silver Run II) IPO to invest in a market leading company which could generate significant potential return Silver Run II…
Alta Mesa Overview Focused on development and acquisition in the STACK Upstream Metrics Contiguous Core Position in STACK Oil Window Net STACK Surface Acres 120,000 Current Production (BOE/D) 20,000 % Liquids 69% Proved…
High Caliber STACK Operating Team Cohesive, tenured, scalable team producing world class results Name Position Years at AMR Years Experience Hal Chappelle President and CEO 13 30+ Mike Ellis Founder and Chief Operating Officer 30…
Optimization, Delineation and Expansion Systematic horizontal development and growth of contiguous acreage 1992 - 2013 2014 - 2015 2016 & 2017 Plan Legend 40,000+ Net Acres 73,000+ Net Acres 120,000+ Net Acres 1987 2013 2016…
Alluring Macroeconomic Fundamentals High quality rock drives compelling returns, robust rig activity Major U.S. Oil Plays Breakeven Prices (/BBL)1 Alta Mesa Type Well IRR3 33.36 34.66 34.76 32.14 169.3% 27.71…
Asset Value of AMRs STACK Position 7B PV-10 Value from Identified Gross Locations before downspacing Alta Mesas 4,196 Identified Gross Drilling Locations are the Implied P/NAV: primary focus of the near-term development plan 38%…
Our Upstream Assets
Significant Activity in Alta Mesa Neighborhood Prominent operators active in Updip Oil Window adjoining Alta Mesa Permits 180 Days SD SD SD CHK CHK CHK MRO CHK DVN NFX CHK AMR DVN AMR MRO AMR DVN MRO DVN CLR…
Alta Mesa Vision Rigorous development and balance sheet to consolidate regional assets Alta Mesa Position in Expanding STACK/MERGE/SCOOP Area Existing Asset Value Early phase of systematic Meramec/Osage, and Oswego development…
Progressive Increase in Completion Intensity Alta Mesa leadership in operational advancements Completion Summary By Generation Current Type Curve Gen 2.0 Alta Mesa has proactively advanced completion designs with each 100 generation…
Average Well Results Results as of YE 2016 with early-stage Gen 2.5 forecasts Average EUR by Generation1 Optimizing Stimulated Reservoir Volume MBO MBOE Financial goal: maximize discounted cash flow Well design goal: optimize…
Cost-Advantaged Asset Base Infrastructure and basic well design mitigate cost inflation Advantage Why It Matters Gross D&C1 (MM) 1 Lat. Length: 4.8k 4.8k 4.8k 5.0k 4.8k 5.0k 9.6k 9.8k 9.6k 10.0k Allows for the elimination of additional…
Alta Mesa: Low Cost Operator Peer leader in operating cost and capital efficiency SEC Future Development Cost Per Proved Undeveloped BOE ( / BOE)1 24.21 13.78 9.37 10.02 8.53 8.77 8.89 7.96 5.62 2 2 AMR XEC CLR PE…
Solid Results Affirm De-Risked Acreage Position Representative wells across 11 townships Notable 2017 Alta Mesa Wells Lateral EUR EUR/'000 IP90 IP90 IP90/'000 Well Target IP30 (BOE/D) Well Name1 Length (MBOE)2 Lateral ft2 (BOE/D) % Oil…
Alta Mesa STACK Development Moving into development mode on de-risked Kingfisher acreage Base Case Development Plan For AMR 2017 Development Plan Oswego/ Big Lime 150 ft 1,500 1,500 1,500 450 ft Meramec 750 750…
STACK: A Significant Petroleum System Additional development potential in multiple stacked pay zones Alta Mesa Existing Development Potential 55 Wells per Section Existing spacing tests at 660 show full Type Log Down- Additional…
Deep Drilling Inventory 4,196 Identified Gross Locations represent 14+ years of inventory Alta Mesas 4,196 Identified Gross Drilling Locations are the primary focus of the near-term 753 development plan 1,996 174 484 488…
Progressive Execution Track record of growth in production, reserves, acreage position Net STACK Acreage Alta Mesa Footprint 102,466 73,512 Recent addition 40,587 44,506 YE 2013 YE 2014 YE 2015 YE 2016 Total Net…
Near Term Consolidation Opportunity Play is expanding and significant acreage could change hands Source: Investor Presentations, 1Derrick. 27
Our Midstream Assets
KFM is Value Accretive to Alta Mesa Vertical integration yields substantial strategic and financial benefits Rapidly Expanding G&P Complex KFM is positioned to capture volume growth from the STACK in the Heart of the STACK Acreage…
Market Multiples for Midstream Higher than Upstream Alta Mesa owners to capture GP / IDR cash flow / multiple arbitrage Valuation Arbitrage Likely valuation uplift (multiple arbitrage vs. traditional peer group) 30.0x 26.8x 23.8x…
Kingfisher Midstream Summary Existing Infrastructure Cushing 60 mi. Natural Gas Current processing capacity of 60 MMCF/D Processing Second 200 MMCF/D plant under construction 80 MMCF/D offtake processing expected 3Q 2017 1,200…
KFM Midstream Takeaway Overview Pipeline Description Current Takeaway Capacity Expansion Projects Commentary Natural Gas Connected to PEPL owned and 100,000/day FT on PEPL KFM in discussion Gas takeaway is functionally full creating a…
KFM Phase III Expansion Overview Recent Major county acquisition adds scale through 20,000 acre dedication Offset operator activity in the Western STACK reflects compelling economics driving producer interest and investment…
Financial Summary
Financial Strategy and Pro Forma Financial Impacts Demonstrated trajectory to positive free cash Capitalization at Announcement flow with near-term development funded with transaction proceeds Current ( in millions, unless…
2017 Capital Budget and Hedge Position Commentary 2017E Capital Budget by Quarter (MM) Excl. Acquisitions1 Alta Mesa Upstream Alta Mesas 2017 net capital budget is estimated to be 349MM, 11% higher than 14% capital expenditures of…
Valuation and Timeline
Summary Financial Projections ( in millions unless otherwise noted) 1 Average Net Daily Production (BOE/D) EBITDA(X) Capital Expenditures (excl. DrillCo Funds) 68,900 1,019 837 63 761 2,003 89 62 255 601 137 147 38,510 74…
Valuation Benchmarking ( in millions unless otherwise noted) Firm Value / 2018E EBITDA Firm Value / 2019E EBITDA 7.9x 7.9x 7.7x 7.7x 7.6x 7.3x 6.5x 6.6x 6.4x 6.1x 6.1x 6.1x 5.9x 6.0x 5.3x 4.7x 4.3x 3.1x MTDR DVN LPI XEC…
Benchmarking KFM Against High Growth G&P Peers ( in millions unless otherwise noted) Firm Value / 2018E EBITDA Firm Value / 2019E EBITDA 13.8x 13.8x 13.6x 12.3x 11.4x 11.2x 10.1x 8.7x 7.3x 4.2x 1 1 EQM AM HESM NBLX KFM…
Anticipated Transaction Timeline Date Event Weeks of September 4th September 29th Transaction marketing File preliminary proxy statement / marketing Mid-September 2017 materials with the SEC Mid/Late-November 2017 Anticipated…
Pure Play STACK Company Premier liquids upstream growth with value-enhancing midstream World class asset with attractive geology Top-tier operator with substantial in-basin expertise Industry-leading growth potential; 2-year…
Appendix
Alta Mesa Management Jim Hackett Hal Chappelle Michael McCabe Executive Chairman and COO of Midstream President and Chief Executive Officer Vice President and Chief Financial Officer Jim Hackett is a Partner at Riverstone Hal Chappelle…
Alta Mesa Management Michael Ellis Gene Cole David Murrell Founder and COO of Upstream Operations VP and Chief Technical Officer VP, Land and Business Development Michael Ellis founded Alta Mesa in 1987 after Gene Cole has served in the…
Jim Hacketts Track Record Under Mr. Hacketts leadership as Chairman, President, and/or CEO of Anadarko from 2003 to 2013, Anadarko was transformed into one of the largest U.S. oil and gas producers, growing its market cap from…
Well Spacing Optimization on De-Risked Acreage DVN, CLR, MRO, NFX and AMR aggressively defining optimum spacing Alta Mesa is the Leader in the Oil Window with Successful Long Life Spacing Tests Alta Mesa4-well Spacing Test EHU 237,…
Completion Design Focus on increasing stimulated reservoir volume STACK Well Completion Strategy Total D&C Cost (MM) D&C Cost / Lateral Foot Progressed through testing multiple generations Actual D&C Target Pattern Test D&C 1,359…
Multiple Long Term Density Pattern Tests Density Patterns Test Horizontal and Vertical Spacing 1,320ft spacing / 2 benches 1,500ft spacing / 2 benches 1,500ft spacing / 2 benches Section 29 18N 5W Section 8 17N 5W Section 28 17N 5W…
NAV Model Assumptions Operated Other Area Osage Meramec Oswego DrillCo Pricing & Discount Assumptions Gas Differential (% of HH) 95% 95% 95% 95% Oil Differential (% of WTI) 94% 94% 94% 94% NGL Realization (% of WTI) 45% 45% 45%…
Osage Type Curve Summary Average Type Curve 118 Generation 2.0+ wells with production history Key Statistics Average Generation 2.5 lateral length of 4,612; Generation 2.0+ 4,767 1,200 Gen 2.5 Type Curve Gen 2.5 Gen 2.0 Type Curve…
Meramec Type Curve Summary Average Type Curve Over 100 wells drilled in the Meramec by Newfield, Devon, Marathon, Gastar, and Chaparral 1,200 Meramec Type Curve Key Statistics Offset Well Results1 Initial Rate (BO/D / MCF/D) 170 /…
Oswego Type Curve Summary Average Type Curve Chesapeake, Chaparral, Cimarex, Gastar, and Longfellow are actively 1,500 Type Curve Key Statistics Initial Rate (BO/D / MCF/D) 320 / 320 targeting the Oswego Incline Period (oil / gas)…
Substantial Inventory of Drilling Locations Identified Drilling Locations Prospective Drilling Locations Com bined Average Working Interest Average Other (Including Working Form ations Dow nspacing Total Dow nspacing Total…
Substantial Resources Volumes and PV-10 Value for 4,196 Primary Gross Identified Locations Only PV-10 at Research Consensus PV-10 at NYMEX1 PV-10 at 70/3.50 Osage Osage Osage 3,541 2,795 4,945 6,059MM 4,805MM 8,493MM…
Stacked Pay: Oswego, Osage/Meramec Prominent Oswego, Osage, and Meramec consistent east to west West A East A Big Lime Penn - Cherokee Oswego Manning A A Chester Unc. Chester Shale Meramec Unconformity Upr Meramec Lwr…
Significant Oswego, Osage/Meramec Section Consistent thickness east to west West B East B Big Lime Oswego Penn - Cherokee Chester Unc. Chester Shale Meramec Unconformity Upr Meramec Lwr Meramec B B Upr Osage Lwr…
Significant Oswego, Osage/Meramec C Osage prominent throughout, thickening to the north North C South C C Manning Meramec Unc. Chester Shale Upr Meramec Lwr Meramec Upr Osage Lwr Osage Pre-WDFD Unc. Hunton…
Top Cumulative Producing STACK Wells Alta Mesa wells among top producers Cumulative Osage/Meramec STACK Producing Wells Drilled by Operator (2012-2016)1 122 108 70 61 48 48 38 28 20 Newfield Alta Mesa Longfellow Devon/…
Alta Mesa Track Record of Growth Consistent increases in production, reserves and acreage Alta Mesa Operated Wells Drilled by Year Alta Mesa Net STACK Acreage 205 STACK wells drilled as of 8/10/17 71 102,466 73,512 44,506…
DrillCo JV Pivotal relationship with Bayou City Energy Parameters 2017 Alta Mesa Estimated Capital Expenditures Entered into joint development agreement with Houston-based Alta Mesa Only private equity firm, Bayou City Energy, in…
One Mile Laterals Optimum for Up-Dip STACK Alta Mesa and other efficient operators adopt fit-for-purpose solutions 5,000 laterals used for multi-faceted benefits: drilling, completions, production operations, land and legal…
Alta Mesa Summary STACK Pro Forma Financials Three Months Ended Years Ended December 31, ( in millions, unless specified) March 31, 2017 December 31, 2016 2016 2015 2014 Production Oil (MBBLS) 942.0 989.1 3,057.2 2,006.1 1,071.6…
Reconciliation of Adjusted EBITDAX to Net Income Three Months Ended Years Ended December 31, ( in millions, unless specified) March 31, 2017 December 31, 2016 2016 2015 2014 Net Income (Loss) (0.8) 4.1 (49.6) (91.6) (72.7)…
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