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ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc.

Approach Resources, Inc. · Aug 1, 2013 · 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 & GAS CONFERENCE – Approach Resources, Inc. – slide 1
    Approach Resources Inc. ENERCOMS THE OIL & GAS CONFERENCE 18 AUGUST 2013
  2. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 2
    Company Overview AREX OVERVIEW ASSET OVERVIEW Enterprise value 1.2 BN High quality reserve base 95.5 MMBoe proved reserves 99% Permian Basin Permian core operating area 170,000 gross (152,000 net) acres 1+ BnBoe gross, unrisked…
  3. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 3
    Key Investment Highlights Low-Risk, Oil-Rich Asset Base Oil and liquids-weighted asset base in Midland Basin 170,000 gross (152,000 net) primarily contiguous acres Proved reserves are 69% liquids; 2Q13 production is 70% liquids (42%…
  4. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 4
    Strong Track Record of Reserve Growth RESERVE GROWTH OIL RESERVE GROWTH Strong HZ Wolfcamp Results; 120 40 Prepare for Large-Scale Development 100 35 30 80 25 Began HZ 60 20 Wolfcamp Pilot Program 40 15 10 Announced 20…
  5. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 5
    and Production Growth PRODUCTION GROWTH OIL PRODUCTION GROWTH 9.0 1200 8.0 1000 7.0 6.0 800 5.0 600 4.0 3.0 400 2.0 200 1.0 0.0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2009 2010 2011 2012 Natural Gas (MBoe/d) Oil &…
  6. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 6
    AREX Wolfcamp Oil Shale Resource Play PERMIAN CORE OPERATING AREA Large, primarily contiguous acreage position Oil-rich, multiple pay zones 170,000 gross (152,000 net) acres Low acreage cost 500 per acre 940+ MMBoe gross, unrisked HZ…
  7. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 7
    Wolfcamp Oil Shale Play WOLFCAMP SHALE WIDESPREAD, THICK, CONSISTENT & REPEATABLE 8
  8. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 8
    Wolfcamp Stacked Pay Zones HZ TARGETS & RESOURCE POTENTIAL AREX Baker A 112 LLD OHMM DPHI BVW 0.2 20 200 2,000 0.3 -0.1 0.2 0 GR API MSFL OHMM NPHI Free Hydrocarbon 0 200 0.2 20 200 2,000 0.3 -0.1 0.2 0 HZ WOLFCAMP Wolfcamp…
  9. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 9
    AREX HZ Wolfcamp Activity Reagan Irion U 50 A 603HA PANGEA WEST 19,000 gross acres Crockett Schleicher PW 6533H PW 6507H PW 6601H 45 D 917H 45 D 905H 45 D 923H 45 D 913H 45 D 907H 45 D 919H 45 D 927H 3-D seismic acquisition &…
  10. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 10
    Accelerating Wolfcamp Program with 3 Rigs OPERATIONAL EFFICIENCY 2H13 COMPLETION ACTIVITY 40-42 35-40 40 (Prior Expect to drill 20 to 24 HZ wells per rig in 2014 Estimate) vs. prior estimate of 10 to 12 HZ wells per rig 32 HZ…
  11. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 11
    HZ Wolfcamp Well Performance CONTINUED STRONG WELL RESULTS & MORE PRODUCTION HISTORY TRACKING ABOVE THE TYPE CURVE 1,200 1,100 Legend B Bench Well Data (27 wells) 1,000 A Bench Well Data (3 wells) 450 MBoe Type Curve 900 Daily…
  12. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 12
    AREX HZ Wolfcamp Economics Horizontal BTAX IRR SENSITIVITIES Play Type Wolfcamp 80 70 Avg. EUR (gross) 450 MBoe 60 50 IRR (%) Targeted Well Cost 5.5 MM 40 30 Potential Locations 2,096 20 Gross Resource 10 940+ MMBoe 0…
  13. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 13
    AREX Drilling Locations, Targets & Resource Potential GROSS DRLLING EUR IDENTIFIED TARGET RESOURCE DEPTH (FT.) (MBoe) LOCATIONS POTENTIAL 7,000+ Wolfcamp A 450 703 316,350 (lateral length) 7,000+ Wolfcamp B 450 690 310,500…
  14. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 14
    Infrastructure for Large-Scale Development Reagan Irion Pangea Crockett Schleicher West North & Central Pangea Reducing D&C Cost to 5.5 MM or lower South Pangea Reducing LOE Minimizing truck traffic and surface disturbance…
  15. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 15
    Infrastructure & Equipment Projects PROJECTS BENEFITS Securing water supply Facilitate large-scale field development Testing non-potable water and Reduce fresh water use and water costs recycling flowback water Expected savings from…
  16. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 16
    Creating Value Through Growth Concentrated geographic footprint in the Midland Basin Strong growth track record at competitive costs Detailed technical evaluation led to discovery of growth potential in the Wolfcamp oil shale…
  17. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 17
    Financial Information NON-GAAP RECONCILIATIONS
  18. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 18
    2Q13 Operating & Financial Highlights HIGHLIGHTS Total production increased to 9 Mboe/d (up 16% YoY) Growing Oil Oil growing as a percentage of production (up 50% YoY) Production Targeting 28 to 30 HZ well completions during…
  19. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 19
    Oil & Liquids-Weighted Reserves, Production & Revenue YE12 RESERVE MIX BY COMMODITY 2Q13 PRODUCTION MIX BY COMMODITY 31% 30% 39% 42% 95.5 9.0 MMBoe MBoe/d 30% 28% Oil NGLs Gas Oil NGLs Gas 2Q13 REVENUE MIX BY…
  20. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 20
    2013 Capital Budget 2013 Capital budget 260 MM, approx. 90% for HZ Wolfcamp 3 HZ rigs in the Wolfcamp shale Targeting Wolfcamp A, B and C Testing stacked-wellbore development Optimizing well spacing and completion design…
  21. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 21
    Strong, Simple Balance Sheet Strong Balance Sheet and Liquidity to Develop HZ Wolfcamp Shale FINANCIAL RESULTS (MM) As of 6/30/2013 Summary Balance Sheet Cash 55.3 Credit Facility Senior Notes 250.0 Total Long-Term Debt 250.0…
  22. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 22
    2013 Operating and Financial Guidance 3Q13 Production guidance 8.7 MBoe/d 9 MBoe/d 3Q13 Exploration expense guidance 6.00/Boe 7.00/Boe Full-Year 2013 Guidance Production Total (MBoe) 3,600 3,900 Percent Oil & NGLs 70%…
  23. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 23
    Current Hedge Position Commodity and Time Period Type Volume Price Crude Oil 2013 Collar 650 Bbls/d 90.00/Bbl - 105.80/Bbl 2013 Collar 450 Bbls/d 90.00/Bbl - 101.45/Bbl 2013 (1) Collar 1,200 Bbls/d 90.35/Bbl - 100.35/Bbl 2014…
  24. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 24
    Adjusted Net Income (unaudited) The amounts included in the calculation of adjusted net income and adjusted net income per diluted share below were computed in accordance with GAAP. We believe adjusted net income and adjusted net income…
  25. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 25
    EBITDAX (unaudited) We define EBITDAX as net income, plus (1) exploration expense, (2) depletion, depreciation and amortization expense, (3) share-based compensation expense, (4) unrealized gain on commodity derivatives, (5) interest…
  26. ENERCOMS THE OIL & GAS CONFERENCE – Approach Resources, Inc. – slide 26
    Contact Information MEGAN P. HAYS Manager, Investor Relations & Corporate Communications 817.989.9000 x2108 mhaysapproachresources.com www.approachresources.com

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