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Q3 2017 Presentation – Approach Resources, Inc.

Approach Resources, Inc. · Nov 2, 2017 · 27 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. Q3 2017 Presentation – Approach Resources, Inc. – slide 1
    Third Quarter 2017 Results NOVEMBER 2, 2017
  2. Q3 2017 Presentation – Approach Resources, Inc. – slide 2
    Solid foundation for long-term value APPROACH RESOURCES OVERVIEW ASSET OVERVIEW Enterprise value 600 MM1 High-quality reserve base2 165.5 MMBoe proved reserves 62% liquids, 31% oil Permian Basin core operating area 124,000…
  3. Q3 2017 Presentation – Approach Resources, Inc. – slide 3
    Bolt-0n acquisition highlights Transaction Overview Current production of approximately 550 Boe/d (48% oil) Total acreage post acquisition with existing field infrastructure and facilities 166,625 gross (150,140 net)(1) Estimated PDP…
  4. Q3 2017 Presentation – Approach Resources, Inc. – slide 4
    Execution focused on value creation Wells outperforming type curve Full cycle return development plan focused on value enhancing production Negotiated contracts mitigating OFS escalation Shallow PDP decline and low operating cost…
  5. Q3 2017 Presentation – Approach Resources, Inc. – slide 5
    Long history of operating in Midland Basin WELLS DRILLED TO DATE 140 Drilled more than 750 wells in Midland Basin since 2004 120 116 564 Vertical gas wells & 187 Horizontal oil wells 100 91 One of the first-movers in the 81…
  6. Q3 2017 Presentation – Approach Resources, Inc. – slide 6
    History of discipline and proactive management Through the industry turmoil, Approach has consistently delivered on our operational targets, financial projections and deleveraging plan Substantial progress made toward improved…
  7. Q3 2017 Presentation – Approach Resources, Inc. – slide 7
    Enhanced completion design drives outperformance Third Quarter 2017 Results November 2, 2017 8
  8. Q3 2017 Presentation – Approach Resources, Inc. – slide 8
    Enhanced completion design drives outperformance 700 MBOE Curve Average 2nd Qtr. 2017 Wells Average 1st Qtr. 2017 Wells Average 3rd Qtr. 2017 Wells Third Quarter 2017 Results November 2, 2017 9
  9. Q3 2017 Presentation – Approach Resources, Inc. – slide 9
    Results outperform type curve Third Quarter 2017 Results November 2, 2017 10
  10. Q3 2017 Presentation – Approach Resources, Inc. – slide 10
    Next generation completion design Utilized during the 2nd and 3rd quarter science wells Increase sand concentration 1,800 2,000 lbs./ft. of completed lateral 60% 100 mesh sand Decrease stage…
  11. Q3 2017 Presentation – Approach Resources, Inc. – slide 11
    Approach asset base is unique due to low capital intensity Third Quarter 2017 Results November 2, 2017 12
  12. Q3 2017 Presentation – Approach Resources, Inc. – slide 12
    Third quarter 2017 highlights OPERATION HIGHLIGHTS FINANCIAL HIGHLIGHTS Produced 11.5 Mboe, despite impact of approximately 500 Boe/d from Hurricane Harvey Drilled 1 HZ well and completed 2 HZ Revenue of 25.6 million, an…
  13. Q3 2017 Presentation – Approach Resources, Inc. – slide 13
    Strategic midstream asset Receipt Point Reagan Irion PW Receipt Point Crockett Schleicher DCP Tap PW BLK 50 Receipt Point CS 1 Compressor 228HA Receipt 204HA Point PW LACT PW Receipt Point NORTH & CENTRAL…
  14. Q3 2017 Presentation – Approach Resources, Inc. – slide 14
    LOE cost reductions driven by water handling infrastructure and field-level operating efficiencies AREX LOE Historical Track Record (/Boe) 7.00 6.48 6.00 0.99 5.24 5.00 0.95 1.69 4.24 4.05 4.00 0.79 0.62 Pumpers & 0.71…
  15. Q3 2017 Presentation – Approach Resources, Inc. – slide 15
    Approach continues to achieve one of the lowest cost structures in the Permian Basin AREX D&C Historical Track Record ( MM) 9.0 8.6 8.0 54% reduction since 2011 7.0 7.0 6.56 6.0 5.8 5.5 5.0 4.5 4.02 4.0 3.5 3.0…
  16. Q3 2017 Presentation – Approach Resources, Inc. – slide 16
    Cost reductions and improvement in commodity prices are translating into expanding profit margins Profit margin per Boe 30.00 25.67 Realized 24.36 24.14 Price Hedged Realized Realized 23.11 25.00 Hedged Price Price 21.96…
  17. Q3 2017 Presentation – Approach Resources, Inc. – slide 17
    Current hedge summary Approximately 80% of Q4 production has been hedged (based on midpoint of guidance) Adding 2018 hedges Commodity and Period Contract Type Volume Transacted Contract Price Crude Oil October 2017 December 2017…
  18. Q3 2017 Presentation – Approach Resources, Inc. – slide 18
    Balance sheet detail AREX Liquidity and Capitalization AREX Capitalization as of 9/30/2017 ( MM) Interest coverage ratio of 2.6x, above minimum 1.25x Cash 0.0 covenant requirement Credit Facility 291.1 7.0% Senior Notes due 2021…
  19. Q3 2017 Presentation – Approach Resources, Inc. – slide 19
    Appendix
  20. Q3 2017 Presentation – Approach Resources, Inc. – slide 20
    Multi-Year Drilling Inventory Drives Upside Potential AREX Horizontal Wells / Locations Total identified undrilled locations 1,500 PDP A Bench 176 537 - 36% C Bench 11% PUD 497 - 34% 224 Probable, 3% DUC/ Possible PDNP…
  21. Q3 2017 Presentation – Approach Resources, Inc. – slide 21
    The business is anchored by long-lived, low-cost proved reserve base Internal reserves estimate using SEC pricing at June 30, 2017 1 Balanced reserves can take advantage of price recovery in any of the 3 commodities Reserves by…
  22. Q3 2017 Presentation – Approach Resources, Inc. – slide 22
    AREX Wolfcamp assets offer significant upside Approach assets deliver: Balanced production profile Shallow natural decline rate Meaningful cash flow generated from operations Stacked-pay zone - Wolfcamp A, B and C offering 1,500…
  23. Q3 2017 Presentation – Approach Resources, Inc. – slide 23
    Production and expense guidance 2017 Guidance Annual Production Guidance: Oil Production (MBbls) 1,090 1,155 NGLs (MBbls) 1,440 1,480 Natural Gas (MMcf) 9,720 9,990 Total 4,150 4,300 Cash operating costs (per Boe): Lease…
  24. Q3 2017 Presentation – Approach Resources, Inc. – slide 24
    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…
  25. Q3 2017 Presentation – Approach Resources, Inc. – slide 25
    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 (gain) on commodity derivatives, (6)…
  26. Q3 2017 Presentation – Approach Resources, Inc. – slide 26
    Unhedged cash margin (unaudited) 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, depreciation and…
  27. Q3 2017 Presentation – Approach Resources, Inc. – slide 27
    Contact information SUZANNE OGLE Vice President Investor Relations & Corporate Communication 817.989.9000 irapproachresources.com www.approachresources.com

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