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INVESTOR PRESENTATION – Approach Resources, Inc.

Approach Resources, Inc. · Mar 1, 2013 · 28 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 MARCH 2013
  2. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 2
    Company Overview AREX OVERVIEW ASSET OVERVIEW Enterprise value 1.1 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
    2012 Highlights Oil-driven reserves growth YE12 proved reserves total 95.5 MMBoe, up 24% over YE11 Oil proved reserves total 37.3 MMBbls, up 106% over YE11 Oil-driven production growth Production totaled 7.9 MBoe/d, up 24% over…
  4. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 4
    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 Launched Vertical…
  5. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 5
    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 & NGLs…
  6. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 6
    Low-Cost Operator 3-YR AVERAGE F&D COSTS (/Boe) LEASE OPERATING EXPENSE (/Boe) 20.00 18.00 2010-2012 Drill-Bit F&D Cost (/Boe) FY12 LOE (/Boe) 18.00 16.00 16.00 14.00 14.00 12.00 12.00 10.00 10.00 8.00 8.00 6.00…
  7. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 7
    AREX Wolfcamp Oil Shale Resource Play Large, primarily contiguous acreage position Oil-rich, multiple pay zones 167,000 gross (148,000 net) acres Low acreage cost 500 per acre HZ Wolfcamp resource potential up 300%+ 940+ MMBoe…
  8. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 8
    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…
  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
    Horizontal Wolfcamp 82% of IP is Oil Sutton Source: Publicly available regulatory filings, company presentations. 11
  11. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 11
    Misconception vs. Facts Misconception: Wells are gassier as the play moves southward Gassier wells are historical Canyon, Strawn and Ellenburger wells The Wolfcamp Shale is located in peak oil and early wet gas window.…
  12. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 12
    AREX HZ Wolfcamp Activity Reagan Irion U 50 A 603HA Pangea West U 50 A 601HC Crockett Schleicher PW 6533H PW 6507H 18,000 gross acres PW 6601H Pad drilling with A/B and A/C stacked laterals 3-D Seismic acquisition completed.…
  13. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 13
    HZ Wolfcamp Well Performance CONTINUED STRONG WELLS RESULTS TRACKING ABOVE THE TYPE CURVE 1,200 B Bench Wells A Bench Wells 1,100 45 A 701H 45 F 2303H PW 6601H 45 D 902H 45 F 2304H PW 6602H 45 C 803H 45 A 703H 45 D 905H 1,000 45 B…
  14. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 14
    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…
  15. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 15
    AREX HZ Wolfcamp Economics Horizontal BTAX IRR SENSITIVITIES Play Type Wolfcamp 80 Avg. EUR (gross) 450 MBoe 70 60 Targeted Well Cost 5.5 MM 50 IRR (%) 40 Potential Locations 2,096 30 20 Gross Resource 940+ MMBoe 10…
  16. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 16
    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…
  17. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 17
    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…
  18. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 18
    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…
  19. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 19
    Financial Information NON-GAAP RECONCILIATIONS
  20. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 20
    2012 Financial Highlights REVENUES, EARNINGS & CASH FLOW Revenues of 128.9 MM in 2012 vs. 108.4 MM in 2011 Net income of 6.4 MM or 0.18 per diluted share Adjusted net income (non-GAAP) of 3.8 MM or 0.11 per diluted share EBITDAX…
  21. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 21
    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 lateral development concept Targeting 30%+ production growth 2013…
  22. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 22
    2013 Operating and Financial Guidance 2013 GUIDANCE 2013 Guidance Production Total (MBoe) 3,600 3,900 Percent Oil & NGLs 70% Operating costs and expenses (/per Boe) Lease operating 7.00 8.00 Production and ad valorem taxes 3.00…
  23. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 23
    Hedge Position 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 February 2013 December 2013 Collar 1,200 Bbls/d…
  24. INVESTOR PRESENTATION – 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. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 25
    EBITDAX (unaudited) We define EBITDAX as net income, plus (1) exploration expense, (2) impairment expense, (3) depletion, depreciation and amortization expense, (4) share- based compensation expense, (5) unrealized (gain) loss on…
  26. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 26
    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…
  27. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 27
    F&D Costs Reconciliation (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…
  28. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 28
    Contact Information MEGAN P. HAYS Manager, Investor Relations & Corporate Communications 817.989.9000 x2108 mhaysapproachresources.com www.approachresources.com

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