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BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc.

Approach Resources, Inc. · Jun 4, 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. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 1
    Bank of America Merrill Lynch 2014 Energy & Power Leveraged Finance Conference JUNE 2014
  2. BAML 2014 Energy & Power Leveraged Finance 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 162,000 gross (144,000 net) acres 1+…
  3. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 3
    Key investment highlights STRENGTHS HIGHLIGHTS High margin, oil-weighted asset base in Midland Basin 162,000 gross (144,000 net) primarily contiguous acres High Margin, Low Proved reserves are 69% liquids; 1Q14 production is 70%…
  4. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 4
    Long history of operating in Midland Basin WELLS DRILLED TO DATE Drilled more than 750 wells 140 14 in Midland Basin since 122 2004 120 12 One of the first-movers in 100 94 10 the HZ Wolfcamp play with 87 88 longest…
  5. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 5
    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…
  6. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 6
    Strong track record of production growth PRODUCTION GROWTH OIL PRODUCTION GROWTH 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 MBoe/d MBbls 0.0 0…
  7. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 7
    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…
  8. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 8
    Successful transition to an oil and liquids-rich Permian producer Approachs story DAILY PRODUCTION (BOE/D) 12,000 Beginning Large Scale Development of Wolfcamp Oil Shale Play 10,000 Commercializing Wolfcamp Oil Shale…
  9. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 9
    AREX Wolfcamp shale oil resource play PERMIAN CORE OPERATING AREA Large, primarily contiguous acreage position Oil-rich, multiple pay zones 162,000 gross (144,000 net) acres Low acreage cost 500 per acre 1BnBoe gross, unrisked HZ…
  10. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 10
    Wolfcamp oil shale play activity overview GAINES DAWSON SCURRY BORDEN N Midland Basin ANDREWS 20% HOWARD MARTIN MITCHELL S Midland Basin 80% STERLING MIDLAND ECTOR GLASSCOCK CRANE 450 416 416 415 400 REAGAN UPTON…
  11. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 11
    Wolfcamp shale oil play WIDESPREAD, THICK & CONSISTENT 12
  12. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 12
    AREX Wolfcamp activity STRATIGRAPHIC UNIT Reagan Irion Clearfork/Spraberry PANGEA WEST Crockett Schleicher Dean 1Q14 Activity included: Stacked A/C completion A Wolfcamp B NORTH & CENTRAL C PANGEA 1Q14 Activity included:…
  13. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 13
    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…
  14. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 14
    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…
  15. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 15
    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.…
  16. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 16
    AREX HZ Wolfcamp well performance AREX HZ WOLFCAMP (BOE/D) 800 Production Data from 700 AREX C Bench Wells (4) Production Data from 600 AREX A Bench Wells (8) 500 Production Data from Daily Production (Boe including…
  17. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 17
    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…
  18. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 18
    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 40%+ production growth 2014…
  19. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 19
    Strong, simple balance sheet As of March 31, 2014 (Pro forma for As of Borrowing Base FINANCIAL RESULTS (MM) March 31, 2014 Increase) Summary Balance Sheet Cash and Cash Equivalents 4.3 Restricted Cash 7.4 Credit Facility…
  20. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 20
    Current hedge position Commodity & Period Contract Type Volume Contract Price Crude Oil April 2014 December 2014 Collar 550 Bbls/d 90.00/Bbl - 105.50/Bbl April 2014 December 2014 Collar 950 Bbls/d 85.05/Bbl - 95.05/Bbl April…
  21. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 21
    Appendix
  22. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 22
    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…
  23. BAML 2014 Energy & Power Leveraged Finance 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. BAML 2014 Energy & Power Leveraged Finance 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. BAML 2014 Energy & Power Leveraged Finance 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. BAML 2014 Energy & Power Leveraged Finance Conference – Approach Resources, Inc. – slide 26
    Contact information MEGAN P. HAYS Director, Investor Relations & Corporate Communications 817.989.9000 mhaysapproachresources.com www.approachresources.com

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