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Investor Presentation – Approach Resources, Inc.

Approach Resources, Inc. · Jun 17, 2013 · 27 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 – Approach Resources, Inc. – slide 1
    Approach Resources Inc. INVESTOR PRESENTATION JUNE 2013
  2. Investor Presentation – 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 167,000 gross (148,000 net) acres 1+ BnBoe gross, unrisked…
  3. Investor Presentation – Approach Resources, Inc. – slide 3
    Key Investment Highlights Low-Risk, Oil-Rich Asset Base Oil and liquids-weighted asset base in Midland Basin 167,000 gross (148,000 net) primarily contiguous acres Proved reserves are 69% liquids; 1Q13 production is 69% liquids (41%…
  4. Investor Presentation – Approach Resources, Inc. – slide 4
    Extensive Inventory of Future Wolfcamp/Wolffork Drilling Locations IDENTIFIED DRILLING LOCATIONS 887 2,983 703 2,096 690 703 HZ Wolfcamp A HZ Wolfcamp B HZ Wolfcamp C Subtotal HZ Vertical Wolffork Total Wolfcamp…
  5. Investor Presentation – Approach Resources, Inc. – slide 5
    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…
  6. Investor Presentation – Approach Resources, Inc. – slide 6
    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 &…
  7. Investor Presentation – Approach Resources, Inc. – slide 7
    at Low-Cost 3-YR AVERAGE F&D COSTS (/Boe) LEASE OPERATING EXPENSE (/Boe) 20.00 19.76 16.00 2010-2012 Drill-Bit F&D Cost (/Boe) 18.18 1Q13 LOE (/Boe) 14.52 18.00 14.00 16.00 12.61 14.80 12.00 14.00 13.72 13.44 12.89 9.86…
  8. Investor Presentation – Approach Resources, Inc. – slide 8
    AREX Wolfcamp Oil Shale Resource Play PERMIAN CORE OPERATING AREA Large, primarily contiguous acreage position Oil-rich, multiple pay zones 167,000 gross (148,000 net) acres Low acreage cost 500 per acre 940+ MMBoe gross, unrisked HZ…
  9. Investor Presentation – Approach Resources, Inc. – slide 9
    Wolfcamp Oil Shale Play WOLFCAMP SHALE WIDESPREAD, THICK, CONSISTENT & REPEATABLE 10
  10. Investor Presentation – Approach Resources, Inc. – slide 10
    HZ Wolfcamp 79% of IP is Oil Source: Publicly available regulatory filings, company presentations. 11
  11. Investor Presentation – Approach Resources, Inc. – slide 11
    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…
  12. Investor Presentation – Approach Resources, Inc. – slide 12
    Multiple Lateral Stacking Effective Frac Volumes CHEVRON STACKING DEVELOPMENT PATTERN X-Section View (heel to toe) 660 A Bench 481 B Bench 481 C Bench Allows maximum volumes of shale reservoir to be fraced 13
  13. Investor Presentation – Approach Resources, Inc. – slide 13
    AREX HZ Wolfcamp Activity Reagan Irion PW 6507H U 50 A 603HA Pangea West Crockett Schleicher 18,000 gross acres PW 6533H PW 6601H Pad drilling with A/B and A/C stacked wellbores PW 6535H PW 6502H 3-D seismic acquisition…
  14. Investor Presentation – Approach Resources, Inc. – slide 14
    HZ Wolfcamp Well Performance CONTINUED STRONG WELLS RESULTS TRACKING ABOVE THE TYPE CURVE 1,200 1,100 Legend B Bench well data (24 wells) Recent B bench well data (7 wells) 1,000 A Bench well data (3 wells) Daily Production Data…
  15. Investor Presentation – Approach Resources, Inc. – slide 15
    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…
  16. Investor Presentation – Approach Resources, Inc. – slide 16
    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…
  17. Investor Presentation – Approach Resources, Inc. – slide 17
    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…
  18. Investor Presentation – Approach Resources, Inc. – slide 18
    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…
  19. Investor Presentation – Approach Resources, Inc. – slide 19
    Financial Information NON-GAAP RECONCILIATIONS
  20. Investor Presentation – 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. Investor Presentation – Approach Resources, Inc. – slide 21
    Strong, Simple Balance Sheet FINANCIAL RESULTS (MM) 3/31/13 3/31/13 As Adj.1 Summary Balance Sheet Cash 0.6 91.5 Revolver 152.3 Senior Notes 250.0 Total Debt 152.3 250.0 Shareholders Equity 635.2 635.2 Total Book Capitalization…
  22. Investor Presentation – Approach Resources, Inc. – slide 22
    2013 Operating and Financial Guidance 2013 GUIDANCE 2Q13 Production guidance 8.7 MBoe/d 9.1 MBoe/d 2013 Guidance Production Total (MBoe) 3,600 3,900 Percent Oil & NGLs 70% Operating costs and expenses (/per Boe) Lease operating…
  23. Investor Presentation – Approach Resources, Inc. – slide 23
    Hedge Position Prudent hedging program protects cash flow and returns as well as capital budget activities 53% of FY13 oil hedged at 90.17/Bbl x 102.19/Bbl 81% of FY13 gas hedged at weighted average floor of 3.72/MMBtu Commodity and…
  24. Investor Presentation – Approach Resources, Inc. – slide 24
    Liquidity Liquidity (unaudited) is calculated by adding the net funds available under our revolving credit facility and cash and cash equivalents. We use liquidity as an indicator of the Companys ability to fund development and…
  25. Investor Presentation – 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) loss on commodity derivatives, (5)…
  26. Investor Presentation – Approach Resources, Inc. – slide 26
    F&D Costs (unaudited) We believe that providing measures of finding and development, 2012 Reserve summary (MBoe) 3-Year Reserve summary (MBoe) or F&D, cost is useful to assist an evaluation of how much it costs Balance 12/31/2011 76,975…
  27. Investor Presentation – Approach Resources, Inc. – slide 27
    Contact Information MEGAN P. HAYS Manager, Investor Relations & Corporate Communications 817.989.9000 x2108 mhaysapproachresources.com www.approachresources.com

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