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Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc.

Approach Resources, Inc. · Mar 24, 2014 · 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. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 1
    Howard Weil 42nd Annual Energy Conference MARCH 2014
  2. Howard Weil 42nd Annual Energy 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 163,000 gross (146,000 net) acres 1+ BnBoe…
  3. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 3
    Key investment highlights Low-Risk, Oil-Rich Asset Base Oil and liquids-weighted asset base in Midland Basin 163,000 gross (146,000 net) primarily contiguous acres Proved reserves are 69% liquids; 4Q13 production is 72% liquids (46%…
  4. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 4
    Strong track record of reserve growth RESERVE GROWTH OIL RESERVE GROWTH MMBoe MMBbls 120 50 46.1 45 100 40 37.3 80 35 30 60 25 20 18.1 40 15 20 10 5 4.3 5.0 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013…
  5. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 5
    Strong track record of production growth PRODUCTION GROWTH OIL PRODUCTION GROWTH MBoe/d MBbls 10.0 1,600 1,444 9.0 1,400 8.0 1,200 7.0 969 6.0 1,000 5.0 800 4.0 600 3.0 482 400 2.0 246 206 1.0 200 0.0 0 2004 2005…
  6. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 6
    Horizontal Wolfcamp reserve growth driving oil production growth HZ WOLFCAMP RESERVE GROWTH FY13 HZ WOLFCAMP PRODUCTION MIX MMBoe 120 HZ Wolfcamp proved 114.7 reserves up 5x since 2011 100 95.5 20% 33.1 Began drilling HZ…
  7. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 7
    AREX Wolfcamp shale oil resource play PERMIAN CORE OPERATING AREA Large, primarily contiguous acreage position Oil-rich, multiple pay zones 163,000 gross (146,000 net) acres Low acreage cost 500 per acre 1BnBoe gross, unrisked HZ…
  8. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 8
    AREX Wolfcamp activity Reagan Irion PANGEA WEST 19,000 gross acres Crockett Schleicher Pad drilling with AB and AC stacked wellbores NORTH & CENTRAL PANGEA 89,000 gross acres Pad drilling with AB, AC, and BC stacked…
  9. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 9
    AREX HZ Wolfcamp Well Performance AREX HZ WOLFCAMP (BOE/D) 900 800 Production Data from AREX C Daily Production (BOE including NGLs) Bench Wells (2) 700 600 Production Data from AREX A Bench Wells (8) 500 450 MBoe…
  10. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 10
    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…
  11. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 11
    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…
  12. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 12
    Key field infrastructure & equipment systems INFRASTRUCTURE BENEFITS Non-potable water source wells Facilitate large-scale field development Water recycling systems Reduce fresh water use and water costs Safely and securely…
  13. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 13
    Financial Information 4Q13 HIGHLIGHTS SUMMARY BALANCE SHEET, HEDGE POSITION & GUIDANCE NON-GAAP RECONCILIATIONS
  14. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 14
    4Q13 Operating highlights OPERATING HIGHLIGHTS Completed 14 HZ wells Accelerating Total production 11.3 MBoe/d (exceeded guidance) Development 4Q13 production 46% oil (up 59% YoY and 51% QoQ) 2014 production growth target 40%, made…
  15. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 15
    4Q13 Financial highlights FINANCIAL HIGHLIGHTS Revenues of 58.6 MM (up 66% YoY) Increasing Net income of 64.3 MM, or 1.65 per diluted share Revenues Adjusted net income (non-GAAP) of 8 MM, or 0.20 per diluted share Record…
  16. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 16
    Cash margin improvement 4Q13 UNHEDGED CASH MARGIN (/BOE) Oil production growth, lower costs generating margin improvement 4Q13 Total cash costs 17.18/Boe (9% lower than 4Q12) Unhedged cash margin 39.09/Boe (50% higher than 4Q12)…
  17. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 17
    Oil & liquids-weighted reserves, production & revenue YE13 RESERVE MIX FY13 PRODUCTION MIX 31% 30% 40% 42% 114.7 9.4 MMBoe MBoe/d 29% 28% Natural gas NGLs Oil Natural gas NGLs Oil FY13 REVENUE MIX FY14-E PRODUCTION…
  18. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 18
    Strong, simple balance sheet As of FINANCIAL RESULTS (MM) 12/31/2013 Summary Balance Sheet Cash 58.7 Restricted Cash 7.4 Credit Facility Senior Notes 250.0 Total Long-Term Debt 250.0 Shareholders Equity 710.5 Total Book…
  19. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 19
    Current hedge position Commodity & Period Contract Type Volume Contract Price Crude Oil January 2014 December 2014 Collar 550 Bbls/d 90.00/Bbl - 105.50/Bbl January 2014 December 2014 Collar 950 Bbls/d 85.05/Bbl - 95.05/Bbl…
  20. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 20
    Production and expense guidance 2014 Guidance Production Total (MBoe) 4,790 Percent oil 43% - 46% Percent total liquids 71% - 74% Operating costs and expenses (per Boe) Lease operating 5.00 - 6.00 Production and ad valorem…
  21. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 21
    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…
  22. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 22
    EBITDAX (unaudited) We define EBITDAX as net income (loss), plus (1) exploration expense, (2) gain on the sale of our equity method investment, (3) depletion, depreciation and amortization expense, (4) share-based compensation expense,…
  23. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 23
    F&D costs (unaudited) All-in finding and development (F&D) costs are calculated by dividing the sum of F&D Cost reconciliation property acquisition costs, exploration costs and development costs for the year by the sum of reserve…
  24. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 24
    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 for oil, NGLs and…
  25. Howard Weil 42nd Annual Energy Conference – Approach Resources, Inc. – slide 25
    Contact information MEGAN P. HAYS Director, Investor Relations & Corporate Communications 817.989.9000 mhaysapproachresources.com www.approachresources.com

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