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INVESTOR PRESENTATION – Approach Resources, Inc.

Approach Resources, Inc. · Jan 12, 2012 · 29 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 JANUARY 12, 2012
  2. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 2
    Company Overview AREX OVERVIEW ASSET OVERVIEW Enterprise value 958 MM High quality reserve base 66.8 MMBoe proved reserves 97% Permian Basin 55% Oil & NGLs Permian core operating area 160,600 gross (142,000 net) acres 500+ MMBoe…
  3. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 3
    Historical Results and Cost Structure RESERVE GROWTH 3-YEAR AVERAGE F&D COSTS (/BOE) 80 60% 25 70 20.96 proved reserves (mmboe) 50% 60 20 40% 16.95 17.22 50 15.60 40 30% 15 13.29 12.21 30 20% 20 10 8.78 10 10% 0 0% 5…
  4. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 4
    2011 A Transformational Year for AREX THENNOVEMBER 2010 NOW2011 ACCOMPLISHMENTS 46.4 MMBoe proved reserves 66.8 MMBoe proved reserves (+44% YoY) Growth 4.5 MBoe/d daily production 6.7 MBoe/d daily production (+46% YoY) 98,000 net…
  5. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 5
    Wolffork Oil Shale Resource Play PLAY IDENTIFICATION APPROACH RESOURCES
  6. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 6
    AREX Acreage Position Favorably Located in the Midland Basin Winkler Coke Midland Ector Sterling Glasscock Midland Basin Upton Eastern Delaware Ward Shelf Basin Crane Tom Green Irion Reagan Central Basin Platform…
  7. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 7
    Wolfcamp Shale Name Convention Southern Midland Basin Wolfcamp shale name conventions are based on investor presentations of AREX (10/18/2010), EP (5/24/2011) and PXD (9/7/2011). APPROACH RESOURCES 8
  8. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 8
    Wolfcamp Rock Characteristics WORLD CLASS SOURCE ROCK IN OIL WINDOW SIGNIFICANT OIL & GAS STORAGE SPACE TOC for Wolfcamp Shale from whole core of Baker A 112: Oil & gas storage criteria for shales: Wolfcamp Shale: 2.24% 7.24% Matrix…
  9. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 9
    Wolfcamp Rock Characteristics HYDROCARBON PATHWAY TO WELLBORE WOLFCAMP SHALE COMPONENTS Depth (feet) W E likely high fracture density areas Porosity 4,000 7.0% Carbonate 26.2% Clay 5,000 25.8% 6,000 Wolfcamp TOC 7,000…
  10. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 10
    Wolffork Hydrocarbon Column Over 2,500 Thick 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 LLD OHMM DPHI BVW 0.2 20 200 2,000 0.3…
  11. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 11
    Wolfcamp Regional Correlation University 40-13 1H 12.5 miles Baker A 112 Bailey 310 12.8 miles SW Irion Co Cinco Terry Ozona NE DPHI DPHI DPHI 0.3 -0.1 0.3 -0.1 0.3 -0.1 GR API NPHI GR API NPHI GR API NPHI 0 200 0.3 -0.1 0 200 0.3…
  12. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 12
    Oil Shale Play Comparison How does the Wolffork play stack up against other commercial oil shale plays Barnett Oil SHALE Wolffork Bakken Eagle Ford Niobrara Combo BASIN Midland Williston Fort Worth South Texas DJ Basin Late…
  13. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 13
    Wolffork Oil Shale Resource Play PILOT PROGRAM, EVALUATION & FUTURE POTENTIAL APPROACH RESOURCES
  14. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 14
    AREX Wolffork Oil Shale Resource Play Large, primarily contiguous acreage position UPTON REAGAN IRION EP 160,600 gross (142,000 net) acres 5,580 / AC SAMSON (76% NRI) 120th UT Lease Sale EOG COP HK 4,200 / AC Low acreage cost…
  15. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 15
    AREX Wolffork Oil Shale Resource Play Activity Map Reagan Irion Pangea West Crockett Schleicher 18,000 gross acres 3-D seismic acquisition completed Begin horizontal drilling 1Q 2012 54-2 1 45 C 803H ST 45 A 702H 54-9 1 45 D…
  16. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 16
    AREXs Wolffork Drilling Targets & Resource Potential PLAY TYPE Vertical Wolffork Vertical Wolffork Vertical Canyon Horizontal Recompletion Wolffork Wolfcamp EUR (MBoe) 110 93 193 450 24-hr. IP (Boe/d) 80 72 170 325 Well cost ( MM)…
  17. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 17
    Vertical Wolffork Well Profile 80 IP Profile 58 BO, 11 Bbls NGLs, 64 Mcf gas 70 Avg. EUR 110 MBoe 60 Gross Daily Production 50 40 30 20 10 0 0 1 2 3 4 5 6 7 8 9 10 Annual 62% 29% 20% 15% 12% 10% 9% 8% 7%…
  18. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 18
    Vertical Canyon Wolffork Well Profile 300 IP Profile 66 BO, 52 Bbls NGLs, 315 Mcf gas 250 Avg. EUR 193 MBoe 200 Gross Daily Production 150 100 50 0 0 1 2 3 4 5 6 7 8 9 10 Annual 68% 32% 21% 16% 12% 10% 9%…
  19. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 19
    Horizontal Wolfcamp Well Profile 350 IP Profile 230 BO, 47 Bbls NGLs, 285 Mcf gas 300 Avg. EUR 450 MBoe 250 Gross Daily Production 200 150 100 50 0 Annual 0 62% 1 31% 2 21% 3 16% 4 13% 5 11% 6 9% 7 8% 8 7%…
  20. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 20
    Horizontal Wolfcamp Well Performance RECENT HORIZONTAL WOLFCAMP RESULTS CONSISTENTLY IMPROVING WELL RESULTS University 45 C 803H 7,358 lateral, 23 frac stages 9/2011 Initial 24-hour flow rate 1,044 BOEPD, 95% liquids 1,200 (931 BO, 57…
  21. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 21
    Key Investor Highlights Concentrated geographic footprint focused on West Texas Midland Basin oil/liquids-rich play 142,000+ net, primarily contiguous acres, 100% operated More than 575 wells drilled since 2004, with a 93%+ success…
  22. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 22
    Financial Framework & Non-GAAP Reconciliations APPROACH RESOURCES
  23. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 23
    Pre-Tax IRR Sensitivities of AREXs Wolffork Drilling Targets VERTICAL WOLFFORK VERTICAL WOLFFORK RECOMPLETIONS 80 80 60 60 IRR (%) IRR (%) 40 40 20 20 0 0 100 105 110 115 120 76 85 93 102 110 Well EUR (MBoe) Well EUR…
  24. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 24
    2012 Capital Budget 2012 PROGRAM 2012 Capital budget 160 MM 2 Vertical rigs, 1 horizontal rig and 2 to 4 recompletions per month targeting the Wolffork oil shale Substantially same rig program as 2011 Targeting 20%+ production…
  25. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 25
    Hedge Position CURRENT HEDGE POSITION Oil (NYMEX West Texas Intermediate) 2012 Collars contracted for 1,200 Bbls/d at weighted average floor 87.08 ceiling 101.08 2013 Collars contracted for 650 Bbls/d Floor 90.00 Ceiling 105.80…
  26. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 26
    Liquidity (unaudited) Liquidity 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…
  27. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 27
    F&D Costs Reconciliation (unaudited) 1H 2011 Reserve summary (MBoe) 3-Year reserve summary (MBoe) We believe that providing measures of finding and development, or Balance 12/31/2010 50,715 Balance 12/31/2007 30,067 F&D, cost is useful…
  28. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 28
    EBITDAX Reconciliation (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…
  29. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 29
    Contact Information MEGAN P. HAYS MANAGER, IR & CORPORATE COMMUNICATIONS 817.989.9000 X 2108 MHAYSAPPROACHRESOURCES.COM APPROACH RESOURCES

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