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EnerComs The Oil and Gas Conference – Approach Resources, Inc.

Approach Resources, Inc. · Aug 19, 2014 · 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. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 1
    EnerComs The Oil and Gas Conference 19 AUGUST 2014
  2. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 2
    Company overview AREX OVERVIEW ASSET OVERVIEW Enterprise value 1 BN High-quality reserve base 115 MMBoe proved reserves 1.1 BN proved PV-10 99% Permian Basin Permian core operating area 160,000 gross (138,000 net) acres 1+…
  3. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 3
    Key investment highlights STRENGTHS HIGHLIGHTS High margin, oil-weighted asset base in Midland Basin 160,000 gross (138,000 net) primarily contiguous acres High Margin, Low Proved reserves are 69% liquids; 2Q14 production is 70%…
  4. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 4
    Strong track record of reserve growth RESERVE GROWTH OIL RESERVE GROWTH 120 50 46.1 45 100 40 37.3 80 35 30 60 25 20 18.1 40 15 20 10 MMBbls MMBoe 5 4.3 5.0 0 0 2004 2005 2006 2007 2008 2009 2010 2011…
  5. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 5
    Successful transition to an oil and liquids-rich Permian producer Approachs story DAILY PRODUCTION (BOE/D) Beginning Large Scale Development of 14,000 Wolfcamp Oil Shale Play 12,000 Commercializing Wolfcamp Oil Shale…
  6. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 6
    Horizontal Wolfcamp reserve growth driving oil production growth HZ WOLFCAMP RESERVE GROWTH FY13 HZ WOLFCAMP PRODUCTION MIX 120 HZ Wolfcamp proved 114.7 reserves up 5x since 2011 100 95.5 33.1 20% Began drilling HZ Wolfcamp…
  7. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 7
    AREX Wolfcamp shale oil resource play PERMIAN CORE OPERATING AREA REAGAN PXD APA IRION DVN Large, primarily contiguous acreage position UPTON EOG ENDURING Oil-rich, multiple pay zones EOG / ENDURING PXD DVN 160,000 gross…
  8. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 8
    Wolfcamp shale oil play WIDESPREAD, THICK & CONSISTENT 9
  9. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 9
    AREX Wolfcamp activity STRATIGRAPHIC UNIT Reagan Irion Clearfork/Spraberry PANGEA WEST Crockett Schleicher Dean 2Q14 Activity included: Stacked A/C completion A Wolfcamp B NORTH & CENTRAL C PANGEA 2Q14 Activity included:…
  10. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 10
    Infrastructure for large-scale development Reagan Irion Pangea Crockett Schleicher West 50-Mile Oil Pipeline 100,000 Bbls/d Capacity North & Central Pangea Reducing D&C cost South Reducing LOE Pangea Increasing project…
  11. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 11
    Efficiency-driven transition to two-bench pad development TRANSITION FROM SINGLE-BENCH TO TWO-BENCH DEVELOPMENT 2011 2013: SINGLE-BENCH CURRENT: TWO-BENCH DEVELOPMENT DEVELOPMENT Map view Reduces time between spud to…
  12. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 12
    Low cost operator OPERATIONAL EFFICIENCY COMPETITIVE LOE (FY13 LOE/Boe) Expect to drill 20 to 24 HZ wells per rig in 16.00 14.00 2014 vs. prior estimate of 10 to 12 HZ wells 14.00 12.20 per rig 12.00 10.43 11.00 10.00 Avg.…
  13. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 13
    AREX HZ Wolfcamp Well Performance AREX HZ WOLFCAMP (BOE/D) 800 Daily Production (BOE including NGLs) Production Data from 700 AREX C Bench Wells (10) Production Data from 600 AREX A Bench Wells (10) 500 Production Data…
  14. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 14
    AREX HZ Wolfcamp Economics Horizontal BTAX IRR SENSITIVITIES Play Type Wolfcamp 80 70 Avg. EUR (gross) 450 MBoe 60 Targeted Well Cost 5.5 MM 50 IRR (%) 40 Potential Locations 2,000 30 20 Gross Resource 1 Bn 10 Potential…
  15. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 15
    2014 Development plan 2014 Capital budget 400 MM, approx. 95% for HZ Wolfcamp 3 HZ rigs in the Wolfcamp shale Targeting Wolfcamp A, B and C Pad drilling and stacked lateral development Targeting 45% production growth, recently…
  16. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 16
    Strong, simple balance sheet As of FINANCIAL RESULTS (MM) June 30, 2014 Summary Balance Sheet Cash and Cash Equivalents 0.4 Credit Facility 46.0 Senior Notes 250.0 Total Long-Term Debt 296.0 Shareholders Equity 720.8 Total Book…
  17. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 17
    Current hedge position Commodity & Period Contract Type Volume Contract Price Crude Oil July 2014 December 2014 Collar 550 Bbls/d 90.00/Bbl - 105.50/Bbl July 2014 December 2014 Collar 950 Bbls/d 85.05/Bbl - 95.05/Bbl July 2014…
  18. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 18
    Appendix
  19. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 19
    2Q14 Key highlights 2Q14 HIGHLIGHTS 2Q14 SUMMARY RESULTS Drilled and completed 16 HZ wells Production (MBoe/d) 14.1 % Oil 41% Maintained best-in-class HZ well costs, % Total liquids 70% while further de-risking stacked wellbore…
  20. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 20
    2Q14 Operating highlights OPERATING HIGHLIGHTS Delivering Total production 14.1 MBoe/d (up 19% QoQ) Production Oil production 5.8 Mbbl/d (up 15% QoQ) Growth Oil differential of (4.79)/Bbl Maximizing HZ well costs continue to…
  21. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 21
    2Q14 Financial highlights FINANCIAL HIGHLIGHTS Revenues of 73.4 MM (up 74% YoY) Increasing Net income of 3.8 MM, or 0.10 per diluted share Revenues Adjusted net income (non-GAAP) of 8.7 MM, or 0.22 per diluted share Record…
  22. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 22
    Production and expense guidance 2014 Guidance Production Total (MBoe) 4,950 Oil (MBbls) 2,050 2,200 Percent total liquids 70% Operating costs and expenses (per Boe) Lease operating 5.00 - 6.00 Production and ad valorem taxes…
  23. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 23
    EBITDAX (unaudited) EBITDAX (UNAUDITED) The amounts included in the calculation of EBITDAX were computed in accordance with GAAP. EBITDAX is not a measure of net income or cash flow as determined by GAAP. EBITDAX is presented herein and…
  24. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 24
    PV-10 (unaudited) PV-10 (UNAUDITED) The present value of our proved reserves, discounted at 10% (PV-10), was estimated at 1.1 billion at December 31, 2013, and was calculated based on the first-of-the-month, twelve-month average prices…
  25. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 25
    F&D costs (unaudited) F&D COSTS (UNAUDITED) F&D COST RECONCILIATION Cost summary (in thousands) All-in finding and development (F&D) costs are calculated by dividing the sum of property acquisition costs, exploration costs and…
  26. EnerComs The Oil and Gas Conference – Approach Resources, Inc. – slide 26
    Contact information SERGEI KRYLOV Executive Vice President & Chief Financial Officer 817.989.9000 irapproachresources.com www.approachresources.com

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