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2Q 2018 Earnings Presentation – Approach Resources, Inc.

Approach Resources, Inc. · Aug 1, 2018 · 26 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. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 1
    Second Quarter 2018 Earnings Presentation AUGUST 1, 2018
  2. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 2
    Solid foundation to realize strategic objectives APPROACH RESOURCES OVERVIEW ASSET OVERVIEW Enterprise value 611 MM1 High-quality reserve base 181.5 MMBoe proved reserves2 WOLFCAMP SHALE RESOURCES PLAY 60% liquids, 28% oil 582.2 MM…
  3. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 3
    Strategic pillars for long-term value creation Contiguous, Low Decline, Balanced Portfolio 100% Owned Infrastructure Portfolio Management Low Risk Asset Balanced Comprehensive Contiguous HBP position production profile…
  4. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 4
    Business today and competitive landscape PERMIAN Dynamics AREX Risk Mitigation and Tailwinds Strategy WTI price improvement Production - capital expenditures Additional take-away aligned with cash flow capacity out of the basin…
  5. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 5
    Wolfcamp Shale success creates temporary takeaway bottleneck Average Midland WTI Differential 2.03/BBL (Only 16% of the time 5.00/BBL) (25.00) Beginning of Wolfcamp Horizontal Development (20.00) (15.00) (10.00)…
  6. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 6
    Wolfcamp Shale success creates temporary takeaway bottleneck Average Waha Differential 0.16/MMBTU (Only 14% of the time 0.30/MMBTU) (4.00) Beginning of Wolfcamp Horizontal (3.00) Development (2.00) (1.00) -…
  7. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 7
    Options for leverage reduction & future growth Organic - Reinvest Cash Flow Increased production results in increased cash flow in Drilling Pursue acquisitions, refinancing and other Deleveraging deleveraging opportunities…
  8. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 8
    Q2 2018 Financial and Operational Highlights Operations Financial Oil marketing contributes to 8% increase in realized oil prices, Production at high-end of Qtr./Qtr. quarterly guidance Oil sold at Cushing based pricing, 1,056…
  9. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 9
    LOE cost reductions driven by water handling infrastructure and field-level operating efficiencies AREX LOE Historical Track Record (/Boe) 8.00 6.98 7.00 6.00 5.16 5.00 4.77 0.78 0.72 Pumpers & Supervision 4.00 1.56…
  10. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 10
    Enhanced completion technique driving improved well performance Second Quarter 2018 Earnings Presentation, August 1, 2018 11
  11. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 11
    Delivering consistent quarterly results Production maintenance, while increasing EBITDAX and unhedged cash margin Unhedged Cash Margin1 Production (MBoe) Adjusted EBITDAX1 (mm) (per Boe) Oil equivalent production (Mboe/day) Unhedged…
  12. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 12
    Balance sheet detail at June 30, 2018 AREX Liquidity and Capitalization AREX Capitalization as of 6/30/2018 ( MM) Interest coverage ratio of 2.6x, above minimum 1.75x Cash 0 covenant requirement Credit Facility 297.5 7.0% Senior…
  13. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 13
    Investment highlights Concentrated geographic footprint in Permian Basin liquids-rich play 100% operated 150,000 net acres 181.5 MMBoe 60% liquids Significant organic growth potential Room To Run 1,350 horizontal drilling locations…
  14. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 14
    Appendix
  15. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 15
    Centralized infrastructure drives capital and operating efficiencies Receipt Point Reagan Irion PANGEA WEST PW Receipt Point Crockett Schleicher DCP Tap PW BLK 50 Receipt Point CS 1 Compressor 228HA Receipt 204HA Point…
  16. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 16
    Business anchored by long-lived, low-cost proved reserve base Year-end 2017 proved reserves totaled 181.5 MMBoe Reserve replacement ratio of 748% of produced reserves1 Total proved reserves up 16% YoY, proved PV-10 (non-GAAP) of 521…
  17. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 17
    Strong track record of efficiently managing through price cycles Production Growth Reserve Growth 16.0 200 180 14.0 160 12.0 140 10.0 120 MBOE MMBOE 8.0 100 80 6.0 60 4.0 40 2.0 20 0.0 0 NG Liquid NG…
  18. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 18
    Approach continues to achieve one of the lowest cost structures in the basin while improving EUR AREX D&C Historical Track Record ( MM) 49% reduction in well cost Well cost EUR 55% improvement in EUR since 2011 800 10.0 700 +700…
  19. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 19
    Low capital intensity required to maintain production No completions from Aug. 2015 May 2016 due to low commodity pricing Second Quarter 2018 Earnings Presentation, August 1, 2018 20
  20. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 20
    2018 production and expense guidance Annual Guidance Production Guidance: Oil Production (MBbls) 1,150 1,250 NGLs (MBbls) 1,450 1,550 Natural Gas (MMcf) 9,600 10,200 Total 4,200 4,500 Cash operating costs (per Boe): Lease…
  21. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 21
    PV-10 (unaudited) The present value of our proved reserves, discounted at 10% (PV-10), was estimated at 521 million at December 31, 2017, and was calculated based on the first-of-the-month, twelve-month average prices for oil, NGLs and…
  22. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 22
    Current hedge summary Commodity and Period Contract Type Volume Transacted Contract Price Crude Oil July 2018 December 2018 Swap 300 Bbls/day 50.00/Bbl July 2018 September 2018 Swap 1,500 Bbls/day 60.50/Bbl CMA Roll July 2018…
  23. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 23
    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…
  24. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 24
    EBITDAX (unaudited) We define EBITDAX as net loss, plus (1) exploration expense, (2) depletion, depreciation and amortization expense, (3) share-based compensation expense, (4) non-cash fair value loss (gain) on derivatives, (5) gain on…
  25. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 25
    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…
  26. 2Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 26
    Contact information SUZANNE OGLE Vice President Investor Relations & Corporate Communication 817.989.9000 irapproachresources.com www.approachresources.com

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