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Investor Presentation – Warren Resources Inc.

Warren Resources Inc. · Dec 1, 2014 · 40 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. Investor Presentation – Warren Resources Inc. – slide 1
    Investing in the Future of Energy Investor Presentation December 2014
  2. Investor Presentation – Warren Resources Inc. – slide 2
    Areas of Operations Marcellus Properties 5,289 net acres in Northeast PA 75% working interest California Properties PA WY Core-of-the-core Marcellus Wilmington Field in the Los Angeles Basin 30 PDP wells with an average lateral…
  3. Investor Presentation – Warren Resources Inc. – slide 3
    Marcellus Acquisition: Deal Overview Warren acquired assets in the Marcellus Basin from Citrus Energy Corporation (Citrus Energy or Citrus) and two additional working interest owners for 352.5 million 312.5 million in cash and 40…
  4. Investor Presentation – Warren Resources Inc. – slide 4
    Marcellus Acquisition: Key Takeaways Free cash flow generation from acquired assets Self-funded development Expected to allow for natural deleveraging Significant embedded upside potential Upper Marcellus Narrowing of…
  5. Investor Presentation – Warren Resources Inc. – slide 5
    Pro Forma Warren Resources Combined Proved Reserves(1) (Bcfe) LTM PF EBITDA(2,3) (MM) Oil Gas 142 407.3 81 202.5 310.9 106.0 96.4 96.4 Prior Combined 3Q13 3Q14 Pro forma Production(2) (MMcfe/d) 2014 Capex Budget(4) (MM)…
  6. Investor Presentation – Warren Resources Inc. – slide 6
    Pro Forma Proved Reserves Asset Summary Natural Gas Reserves 500 Estimated Proved Reserves of 407 Bcfe(1) 375 76% gas, 59% proved developed (PDP/PDNP) Bcf 250 121.2 125 189.7 - Gas PDP/PDNP Gas PUD Estimated Proved…
  7. Investor Presentation – Warren Resources Inc. – slide 7
    Organic Growth: Turning Potential to Proved Strategies Resource Potential Upside(1) Marcellus 400 Drill Lower Marcellus locations offset to PDP wells to prove-up greater recovery factor of OGIP 350 Resource Potential Upside…
  8. Investor Presentation – Warren Resources Inc. – slide 8
    2015 Guidance 2015 Capex Budget(1) (MM) 2015 Production Guidance(1) Three Months WTU Full Year ending ending 7 MM December 31, 2015 March 31, 2015 NWU 9 MM Oil (MBbl) 260 280 900 1,000 Marcellus 44 MM Gas (MMcf) 7,000 8,000…
  9. Investor Presentation – Warren Resources Inc. – slide 9
    Marcellus Operations Investing in the Future of Energy NASDAQ (WRES) 10
  10. Investor Presentation – Warren Resources Inc. – slide 10
    Marcellus Assets Overview Asset Summary Map of Operations & Offset Operators Concentrated acreage position in Wyoming County, PA Offset operators include Cabot, Southwestern, and Chesapeake Citrus drilled 7 of the top 25 wells in…
  11. Investor Presentation – Warren Resources Inc. – slide 11
    Core-of-the-Core Asset Core-of-the-Core Asset with Top-Tier Economics EURs by Company (Bcf/1,000' of Lateral Length) (1) Leading Marcellus breakevens 3.6 Average IRR exceeding 100% 2.6 2.4 Consistently strong well results,…
  12. Investor Presentation – Warren Resources Inc. – slide 12
    Compelling Upside Potential Overview Upper Marcellus Opportunity to significantly increase reserves through targeting of the Upper Marcellus Cabot Oil & Gas, an offset operator to Citrus, has reported highly encouraging…
  13. Investor Presentation – Warren Resources Inc. – slide 13
    Established and Growing Infrastructure Key Points Pipeline and Gathering System Map Operational infrastructure system in place to support full field development All volumes gathered by Regency (formerly PVR) Two planned compressor…
  14. Investor Presentation – Warren Resources Inc. – slide 14
    NE PA Well Backlog (wells drilled but not producing) 1200 Rose Lake (230) 1000 Transco NE connector (100) Constitution (650) 800 TCO East Side (310) TGP Niagara (158) Transco Leidy SE (525) Wells 600 AGT AIM (343) DTI…
  15. Investor Presentation – Warren Resources Inc. – slide 15
    N.E. PA Differentials: Risk Mitigation Initiatives Initiatives expected to limit and reduce impact of N.E. PA differentials: Elevated differentials incorporated into analysis and valuation of the acquisition. Base Case NE PA realized…
  16. Investor Presentation – Warren Resources Inc. – slide 16
    California Operations Investing in the Future of Energy NASDAQ (WRES) 17
  17. Investor Presentation – Warren Resources Inc. – slide 17
    California: Wilmington Oil Field Overview Los Angeles Basin Third largest U.S. oilfield Produced over 2.5 billion barrels of oil since discovery in the 1930s Warren represents 10% of current production of the Wilmington Field…
  18. Investor Presentation – Warren Resources Inc. – slide 18
    California: Operations Overview Apply risk management concepts to significantly reduce the probability of major business losses Model of urban development Existing WTU Cellar Wilmington Townlot Unit Investing in the Future of…
  19. Investor Presentation – Warren Resources Inc. – slide 19
    California: Wilmington Development Strategy Continue horizontal / sinusoidal development Producing Zones Drill highly targeted wells in 5 stacked pay zones from 2,600 to 6,000 containing 14 reservoirs Projecting per well IRRs of…
  20. Investor Presentation – Warren Resources Inc. – slide 20
    Wyoming Operations Investing in the Future of Energy NASDAQ (WRES) 21
  21. Investor Presentation – Warren Resources Inc. – slide 21
    Wyoming: Atlantic Rim Operations Overview Atlantic Rim Project Commercial CBM production established by Warren in 2002, Anadarko operator through end of 2012 Warren approved as operator of the Spyglass Hill Unit in the Atlantic Rim…
  22. Investor Presentation – Warren Resources Inc. – slide 22
    Wyoming Deep Potential: Producing Zones Atlantic Rim Zones Owns certain deep rights in a portion of the Atlantic Rim area CBM current 60,00 net acres potentially Warren CBM production current Warren production prospective for…
  23. Investor Presentation – Warren Resources Inc. – slide 23
    5. Financial Overview Investing in the Future of Energy NASDAQ (WRES) 24
  24. Investor Presentation – Warren Resources Inc. – slide 24
    Financial Strategy Capital spending dictated by rates of return across all operating areas IRR hurdle rate of 30% for drilling projects Complement organic development with accretive acquisitions Maintain financial flexibility…
  25. Investor Presentation – Warren Resources Inc. – slide 25
    Capitalization Commentary Total Capitalization Sept. 30, 2014(1) Underlevered balance sheet prior to As of Sept 30, 2014 Actual the acquisition Cash & Cash Equivalents (US mm) 1.8 Revolving Credit Facility (US mm) (1) 130.0…
  26. Investor Presentation – Warren Resources Inc. – slide 26
    Summary Historical Financial Results Production (MMcfe/d) Revenue (MM) (1) Oil Production (MMcfe/d) Gas Production (MMcfe/d) 240.0 225 140 134.3 200.0 120 100 160.0 45% 48% 122 129 40% 44% 48% 80 120.0 103 116.8 88 60 33.3…
  27. Investor Presentation – Warren Resources Inc. – slide 27
    Strong Record of Reducing Expenses Warren management has a strong track record of improving efficiency, growing production while lowering costs G&A per Boe(1) LOE per Boe(2) 10 20 19.12 8.48 8.43 9 19 17.78 7.45 8 18 7.29 7.30…
  28. Investor Presentation – Warren Resources Inc. – slide 28
    Hedges Oil Hedges(1) Natural Gas Hedges(1) 1,500 30,000 25,000 1,000 20,000 15,000 500 10,000 5,000 0 2014 0 2014 1Q15 2Q15 3Q15 4Q15 Derivatives Quantity(2) Period Derivatives Quantity(2) Period (2) Oil Brent…
  29. Investor Presentation – Warren Resources Inc. – slide 29
    Summary of Key Investment Highlights Balanced Portfolio with Commodity Optionality Attractive Reinvestment Profile Experienced Management With Large Upside Potential and Operations Team Strong Financial Position and…
  30. Investor Presentation – Warren Resources Inc. – slide 30
    Appendix Investing in the Future of Energy NASDAQ (WRES) 31
  31. Investor Presentation – Warren Resources Inc. – slide 31
    California: Wilmington Field Type Curves WTU Ford WTU Tar WTU Upper Terminal 60 Year Bbl/d Oil Decline 120 Year Bbl/d Oil Decline 120 Year Bbl/d Oil Decline 0 55 0 110 0 103 50 1 33 40% 100 1 54 51% 100 1 62 40% 2 24 27% 2 43 31% 2…
  32. Investor Presentation – Warren Resources Inc. – slide 32
    Northeast Marcellus Type Curve Commentary Northeast Marcellus Type Curve(1) Production from the 30 16,000 PDP wells currently Year Mcf/d Gas Decline 0 14,324.5 14,000 exceeding Lower 1 5,218.7 64% EUR (Gross): 11.7 Bcf…
  33. Investor Presentation – Warren Resources Inc. – slide 33
    Wyoming CBM: Type Curve Wyoming CBM Type Curve (1.0 Bcf) 500 450 EUR (Gross): 0.8 - 1.16 Bcf Natural Gas 400 Year Mcf/d 0 9 350 Mcf/d Natural Gas 1 324 300 2 476 3 397 250 4 324 200 150 100 50 0 0 1 2 3…
  34. Investor Presentation – Warren Resources Inc. – slide 34
    California: Wilmington Field Overview Wilmington Townlot Unit (WTU) Beverly Hills Salt Lake Los Angeles Operated by Warren with 99% WI / 81% NRI Chevice Hills Montebello 1,440 gross (1,424 net) acres Englewood Bandin Produced…
  35. Investor Presentation – Warren Resources Inc. – slide 35
    Wyoming: Atlantic Rim - Sub-unit Detail Doty Mountain Area Summary as of Sept. 30, 2014 Catalina Unit 3Q 2014 (ESCR operated) Avg. Net Proved Current Producing Production Reserves(1) Sun Dog Area Operator WI (%) Wells (MMcf/d)…
  36. Investor Presentation – Warren Resources Inc. – slide 36
    Large Inventory of Potential Drilling Locations Gross PUD Locations Marcellus, Pennsylvania: 20 gross PUD locations(1) Lower Marcellus 6 gross identified additional potential undeveloped Lower 20 WTU Marcellus locations(1)(2)(3)…
  37. Investor Presentation – Warren Resources Inc. – slide 37
    Non-GAAP Reconciliation: EBITDA EBITDA Reconciliation Warren Legacy PF Marcellus (millions) 2011 2012 2013 LTM 9/30/14(1) Net Income 21.6 15.5 30.4 62.4 Interest Expense 3.2 3.3 3.0 14.9 Income Taxes (0.1) - 0.1 - DD&A 30.5 47.2…
  38. Investor Presentation – Warren Resources Inc. – slide 38
    Non-GAAP Reconciliation: Year-end 2013 SEC PV-10 PV-10 Reconciliation1 Warren Legacy For the Year Ended December 31, 2013 (in 000s) Proved developed 379,310 Proved undeveloped 124,396 PV-10 Value 503,706 Less: future income…
  39. Investor Presentation – Warren Resources Inc. – slide 39
    Marcellus: Mid-year 2014 SEC PV-10 PV-10 Marcellus (Acquired Aug. 2014) For the Year Ended June 30, 2014 (in 000s) Proved developed 182,200 Proved undeveloped 68,200 Midstream Expense (60,500) PV-10 Value 189,900 Prices Used…
  40. Investor Presentation – Warren Resources Inc. – slide 40
    Warren Resources, Inc. Please visit our new website: www.warrenresources.com Investing in the Future of Energy NASDAQ (WRES) 42

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