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ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc.

Approach Resources, Inc. · Feb 22, 2011 · 30 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. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 1
    Approach Resources Inc. EnerComs The Oil & Services Conference IX February 22, 2011
  2. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 2
    Company overview Enterprise value (EV) (MM) 893 Areas of operation Proved reserves 6/30/10 (MMBoe) 46.4 EV per proved Boe (/Boe) 19.25 AREX highlights 4.5 MBoe/d Q3 2010 production 46.4 MMBoe proved reserves 95% Permian Basin…
  3. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 3
    Key investor highlights Concentrated geographic footprint focused on West Texas Permian Basin oil/liquids rich plays 113,000+ net, primarily contiguous acres, 100% operated More than 400 wells drilled by Approach since 2004, with a…
  4. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 4
    Strong track record of reserve and production growth Reserve growth Production growth 50% 50 Oil & 6.0 NGLs 2004-Mid Year 2010 2004-2011E CAGR: 32% CAGR: 41% 5.3 23% 5.0 40 18% Oil & Oil & NGLs NGLs 4.3 11% 23.1 4.0 4.0 Oil…
  5. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 5
    Lowcost operator across crude-oil weighted peers 3Q 2010 lifting costs (/Boe) 3-year average F&D costs (/Boe) 20.00 50.00 18.00 45.34 18.00 45.00 16.00 40.00 14.76 14.32 14.00 35.00 12.68 12.06 12.00 11.54 30.00 29.24…
  6. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 6
    2011 Capital budget - 100 MM 2011 Plan Targeting 20%+ Production Growth 2011 capital budget of 100 million 5.3 6 Substantially all of 2011 budget allocated to Project 5 4.3 Pangea: 4 Production (MBoe/d) One rig to drill 11…
  7. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 7
    2011 Plan What are our objectives 2011 Objectives Delineate Wolffork oil shale play across Project Pangea with a combination of vertical, horizontal and recompletion projects Improve initial production rates by refining our…
  8. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 8
    Overview of AREXs Permian Basin assets Proved reserves: Overview 43.9 MMBoe Project Pangea Net acres: 113,000 REAGAN IRION Recent acreage acquisitions increase Permian acreage position to 113,000 net acres with multiple pay zones…
  9. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 9
    AREX acreage is favorably located in Southern Midland Basin Wolfberry Well Winkler Midland Ector Sterling Coke Glasscock Midland Basin Wolfberry Play Upton Eastern Delaware Ward Shelf Basin Crane Wolfberry Play Tom Green…
  10. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 10
    Industry activity in Southern Midland Basin Recent activity in Southern Midland Basin University 43-10 1H Munson 2701H 64-728 BOEPD 1/2011-2/2011 Noelke A 1H REAGAN Faudree 1 IRION University 40 A 1H Linthicum 5H University…
  11. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 11
    Wolffork play recognition Why didnt others recognize the play Crockett County has been viewed as a gassy area when oil and gas price ratio ranges from 16 to 20, operators are pursuing oily plays Almost all published, regional maps…
  12. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 12
    AREX Wolfcamp producers and shows Existing producers and show wells suggest that the Wolfcamp is hydrocarbon-charged AREX - Cinco Terry AREX Ozona Northeast Wolfcamp Pilot Recompletions Wolfcamp Pilot Recompletions Addie Clayton…
  13. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 13
    AREX shale play evaluation process Creating value through detailed technical evaluation TOC Hydrocarbon generating potential R0 - Tmax - TAI Thermal maturity for hydrocarbon generation Shale Rock Properties Storage capacity…
  14. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 14
    Creating value through detailed technical evaluation of Wolfcamp shale World class source rock in oil window Significant oil & gas storage space TOC for Wolfcamp Shale from whole core of Baker A112: Oil & gas storage criteria for…
  15. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 15
    Creating value through detailed technical evaluation of Wolfcamp shale (contd) Hydrocarbon pathway to wellbore Wolfcamp shale components Depth (feet) W E likely high fracture density areas Porosity 4,000 7.0% Carbonate 26.2%…
  16. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 16
    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 -0.1 0…
  17. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 17
    Over 2,500 feet of gross pay in the Wolffork 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 0.2 20 200 2,000 0.3 -0.1 0.2 0 GR API…
  18. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 18
    Technical analysis is supported by early drilling and recompletion results Wolfcamp horizontal (EOG 40-13-1H) Wolfcamp vertical recompletion (AREX U42-15-2) Estimated EURs, related oil and gas in place, recovery factors and…
  19. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 19
    Wolffork economics summary (estimated) Approachs technical evaluation yields Original Oil & Gas in Place resource per section of 118 MMboe for Wolfcamp shale and 63 MMboe for Dean/Clearfork EUR estimates support conservative recovery…
  20. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 20
    Wolffork economics (estimated) Further opportunity for improvement on EURs and well costs Wolffork recompletion IRR sensitivity Canyon Wolffork new drill IRR sensitivity EUR improvement EUR improvement Improvement (25%) 0% +25% +50%…
  21. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 21
    Oil shale play comparison How does the Wolffork play stack up against other commercial shale oil plays Barnett Oil SHALE Wolffork Bakken Eagle Ford Niobrara Combo BASIN Midland Williston Fort Worth South Texas DJ Basin Late…
  22. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 22
    Technical evaluation derisks Wolffork play concept Creating value through detailed technical evaluation TOC Hydrocarbon generating potential R0 - Tmax - TAI Thermal maturity for hydrocarbon generation Shale Rock Properties…
  23. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 23
    Key takeaways The WOLFCAMP Is a world class source rock with significant hydrocarbon-generating potential thermally matured and currently located in peak oil generation and early gas generation window The WOLFCAMP Has storage…
  24. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 24
    Appendix
  25. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 25
    Structural cross-section across Big Lake Fault N S Union Oil Co of Cal Texas Gulf Inc Texas Gulf Inc Borden Sam H John R Scott Etal D 2 TXL 1 Wolters D 1 Wolters 1 13,973 5,022 7,275 Spraberry Dean Wolfcamp Cisco…
  26. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 26
    Hydrocarbons in place estimate & potential vertical well recovery Vertical well GIP (Gas in Place) / Potential Gas 640 Acre Recovery Factor Well Spacing Formation Recoverable / Well GAS Reservoir Bscf % Acre Mcf Wolfcamp 164 10%…
  27. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 27
    Hydrocarbons in place estimate & potential horizontal well recovery Horizontal well GIP / 640 Acre Potential Gas Recovery Factor Well Spacing Recoverable / Well Reservoir Formation GAS Bscf % Acre Bcf Wolfcamp 164 10% 40 1.03…
  28. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 28
    Liquidity Liquidity as of 12/31/2010 Borrowing base increased by 35 MM to 150 MM in October 2010 (in thousands) 12/31/2010 Cash and cash equivalents 23.5 Borrowings under credit facility 0.0 Total credit facility 150.0 %…
  29. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 29
    2011 Guidance 2011 Production and expenses guidance 2011 Guidance Production Total (MBoe) 1,870 2,015 Percent oil and NGLs 53% Operating costs and expenses (per Boe) Lease operating 5.10 5.70 Severance and production taxes…
  30. ENERCOMS THE OIL & SERVICES CONFERENCE IX – Approach Resources, Inc. – slide 30
    F&D costs reconciliation (unaudited) We believe that providing measures of finding and Natural Gas Oil & NGLs Total development, or F&D, cost is useful to assist an evaluation of AREX Historical Reserve Summary (Mmcf) (MBbl) (MMboe) how…

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