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3Q 2018 Earnings Presentation – Approach Resources, Inc.

Approach Resources, Inc. · Nov 8, 2018 · 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. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 1
    Third Quarter 2018 Results Presentation NOVEMBER 8, 2018
  2. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 2
    Solid foundation to realize strategic objectives APPROACH RESOURCES OVERVIEW ASSET OVERVIEW UPTON Enterprise value 591 MM1 CRANE High-quality reserve base TOM GREEN 181.5 MMBoe proved reserves2 WOLFCAMP SHALE RESOURCES PLAY 60%…
  3. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 3
    2018 YTD milestones and strategic focus Solid Execution Disciplined Management Operational Excellence Precise, Prudent, Persistent Completed 2018 drilling plan Capital expenditures aligned with ahead of schedule and 21% cash flow…
  4. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 4
    Delivering consistent quarterly results Increasing revenue, EBITDAX and unhedged cash margin Unhedged Cash Margin1 Adjusted EBITDAX1 (mm) (per Boe) Unhedged cash margin EBITDAX 19% improvement 40% improvement year-over-year…
  5. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 5
    Wolfcamp Shale success creates temporary takeaway bottleneck Waha Differential 2.00 Actual 2018 Forward Curve 1.50 1.00 0.50 - (0.50) Average Waha differential 0.21/MMBTU (Only 20% of the time 0.30/MMBTU) (1.00) 2018…
  6. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 6
    Q3 2018 Financial and Operational Highlights Operations Financial Production of 1,043 Mboe or 11.3 27% increase in revenue over prior Mboe/day year quarter, revenue of 32.6 million Drilled 6 and completed 2 horizontal Net loss of 4.3…
  7. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 7
    LOE cost reductions driven by water handling infrastructure and field-level operating efficiencies 8.00 AREX LOE Historical Track Record (/Boe) 7.12 7.00 6.00 5.57 5.16 5.17 0.79 5.00 4.77 Pumpers & 0.78 0.76 Supervision…
  8. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 8
    Production growth correlated to commodity price environment 16.0 60.00 54.74 52.95 51.78 51.20 14.0 50.00 Average Daily Production (Mboe/day) 46.37 44.24 44.63 12.0 Realized Commodity Price (/Boe) 41.52 37.61 40.00…
  9. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 9
    Enhanced completion technique driving improved well performance Third Quarter 2018 Earnings Presentation, November 8, 2018 10
  10. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 10
    Balanced commodity portfolio delivers increased cash flow Blended Realized Price / Boe Basin Dynamics 31.50 Approach is not impacted by Mid-Cush 31.00 differential 30.50 30.00 Oil sold at Cushing base pricing 29.50 marketing…
  11. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 11
    Balance sheet detail at September 30, 2018 AREX Liquidity and Capitalization AREX Capitalization as of 9/30/2018 ( MM) Interest coverage ratio of 2.6x, above minimum 1.75x Cash 0 covenant requirement Credit Facility 294.3 7.0%…
  12. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 12
    Investment Highlights Concentrated geographic footprint in Permian Basin liquids-rich play 100% operated 150,000 net acres 181.5 MMBoe 60% liquids Room to Run - Significant organic growth potential, with 1,350 horizontal drilling…
  13. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 13
    Appendix
  14. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 14
    Revised 2018 production and expense guidance Revised Guidance Production Guidance: Oil Production (MBbls) 1,040 1,100 NGLs (MBbls) 1,410 1,450 Natural Gas (MMcf) 9,500 9,550 Total 4,050 4,150 Cash operating costs (per Boe):…
  15. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 15
    Current hedge summary Commodity and Period Contract Type Volume Transacted Contract Price Crude Oil October 2018 December 2018 Swap 300 Bbls/day 50.00/Bbl October 2018 December 2019 Collar 500 Bbls/day 65.00/Bbl - 71.00/Bbl CMA Roll…
  16. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 16
    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…
  17. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 17
    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…
  18. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 18
    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…
  19. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 19
    Approach continues to achieve one of the lowest cost structures in the basin while improving EUR AREX D&C Historical Track Record ( MM) 47% reduction in well cost Well cost EUR 55% improvement in EUR since 2011 800 10.0 700 +700…
  20. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 20
    Low capital intensity required to maintain production Third Quarter 2018 Earnings Presentation, November 8, 2018 21
  21. 3Q 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. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 22
    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…
  23. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 23
    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…
  24. 3Q 2018 Earnings Presentation – Approach Resources, Inc. – slide 24
    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…
  25. 3Q 2018 Earnings Presentation – 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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