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Q3 2013 RESULTS – Approach Resources, Inc.

Approach Resources, Inc. · Nov 7, 2013 · 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. Q3 2013 RESULTS – Approach Resources, Inc. – slide 1
    Approach Resources Inc. THIRD QUARTER 2013 RESULTS NOVEMBER 7, 2013
  2. Q3 2013 RESULTS – Approach Resources, Inc. – slide 2
    Company Overview AREX OVERVIEW ASSET OVERVIEW Enterprise value 1.4 BN High quality reserve base 95.5 MMBoe proved reserves 99% Permian Basin Permian core operating area 166,000 gross (149,000 net) acres 1+ BnBoe gross, unrisked…
  3. Q3 2013 RESULTS – Approach Resources, Inc. – slide 3
    Strong Track Record of Reserve Growth RESERVE GROWTH OIL RESERVE GROWTH Strong HZ Wolfcamp Results; 120 Prepare for Large-Scale 40 Development 35 100 30 80 25 Began HZ 60 Wolfcamp Pilot 20 Program 15 40 10 Announced…
  4. Q3 2013 RESULTS – Approach Resources, Inc. – slide 4
    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…
  5. Q3 2013 RESULTS – Approach Resources, Inc. – slide 5
    3Q13 Key Highlights KEY HIGHLIGHTS Accelerated completion pace / drilling efficiencies Strong Wolfcamp B and C results across acreage position 3Q13 Exit rate 11.1 MBoe/d Well costs of 5.4 MM below D&C cost target of 5.5 MM…
  6. Q3 2013 RESULTS – Approach Resources, Inc. – slide 6
    3Q13 Operational Update
  7. Q3 2013 RESULTS – Approach Resources, Inc. – slide 7
    3Q13 Operating Highlights OPERATING HIGHLIGHTS Completed 14 HZ wells (at the high-end of activity guidance) Accelerating Total production 8.8 MBoe/d Development Exit rate 11.1 MBoe/d 2014 preliminary production growth target 40%…
  8. Q3 2013 RESULTS – Approach Resources, Inc. – slide 8
    AREX Wolfcamp Shale Oil Resource Play PERMIAN CORE OPERATING AREA Large, primarily contiguous acreage position Oil-rich, multiple pay zones 166,000 gross (149,000 net) acres Low acreage cost 500 per acre 940+ MMBoe gross, unrisked HZ…
  9. Q3 2013 RESULTS – Approach Resources, Inc. – slide 9
    Wolfcamp Shale Oil Play WOLFCAMP SHALE WIDESPREAD, THICK, CONSISTENT & REPEATABLE 10
  10. Q3 2013 RESULTS – Approach Resources, Inc. – slide 10
    HZ Well Costs Down & Efficiencies Up HZ WELL COSTS (MM) 7.5 6.7 Below Average Quarterly Well 6.2 6.1 5.5 MM 5.75 6.0 5.4 Target HZ Cost (MM) D&C Cost 4.5 3.0 1.5 - 3Q12 4Q12 1Q13 2Q13 3Q13 DRILLING DAYS TO TD 20…
  11. Q3 2013 RESULTS – Approach Resources, Inc. – slide 11
    AREX HZ Wolfcamp Activity Reagan Irion U 50 A 603HA PANGEA WEST PW 6533H PW 6507H 19,000 gross acres Crockett Schleicher PW 6601H Pad drilling with A/B and A/C stacked wellbores 45 D 905H 45 D 923H 45 D 919H 45 D 927H 45 D 907H…
  12. Q3 2013 RESULTS – Approach Resources, Inc. – slide 12
    HZ Wolfcamp Well Performance CONTINUED STRONG WELL RESULTS & MORE PRODUCTION HISTORY 1,200 Legend 1,100 B Bench Well Data (33 wells) 41 producing wells with at least A Bench Well Data (8 wells) 3 months of production history Daily…
  13. Q3 2013 RESULTS – Approach Resources, Inc. – slide 13
    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…
  14. Q3 2013 RESULTS – Approach Resources, Inc. – slide 14
    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 to 5.5 MM and lower Reducing LOE Minimizing…
  15. Q3 2013 RESULTS – Approach Resources, Inc. – slide 15
    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…
  16. Q3 2013 RESULTS – 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. Q3 2013 RESULTS – Approach Resources, Inc. – slide 17
    3Q13 Financial Update
  18. Q3 2013 RESULTS – Approach Resources, Inc. – slide 18
    3Q13 Financial Highlights FINANCIAL HIGHLIGHTS Revenues of 44.2 MM (up 34% YoY) Increasing Net income of 495,000 or 0.01 per diluted share Revenues Adjusted net income (non-GAAP) of 2.8 MM or 0.07 per diluted share Record…
  19. Q3 2013 RESULTS – Approach Resources, Inc. – slide 19
    Oil & Liquids-Weighted Reserves, Production & Revenue YE12 RESERVE MIX BY COMMODITY 3Q13 PRODUCTION MIX BY COMMODITY 31% 31% 39% 39% 95.5 8.8 MMBoe MBoe/d 30% 30% Oil NGLs Gas Oil NGLs Gas 3Q13 REVENUE MIX BY COMMODITY…
  20. Q3 2013 RESULTS – Approach Resources, Inc. – slide 20
    Oil Pipeline Monetization TRANSACTION OVERVIEW WILDCAT OIL PIPELINE SYSTEM First-mover oil pipeline system in the southern Reagan Irion Midland Basin Formed Wildcat JV to develop pipeline system in September 2012 50-miles of…
  21. Q3 2013 RESULTS – Approach Resources, Inc. – slide 21
    Production and Expense Guidance 2013 GUIDANCE Full-Year 2013 Guidance Production Total (MBoe) 3,400 Percent Oil & NGLs 70% Operating costs and expenses (/per Boe) Lease operating 5.00 7.00 Production and ad valorem taxes 3.00…
  22. Q3 2013 RESULTS – Approach Resources, Inc. – slide 22
    Strong, Simple Balance Sheet As of 9/30/2013 As of (Including Borrowing Base FINANCIAL RESULTS (MM) 9/30/2013 Increase & JV Pipeline Sale) Summary Balance Sheet Cash 25.5 127.2 Credit Facility Senior Notes 250.0 250.0 Total…
  23. Q3 2013 RESULTS – Approach Resources, Inc. – slide 23
    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 2013 (1) Collar 1,200 Bbls/d 90.35/Bbl - 100.35/Bbl 2014…
  24. Q3 2013 RESULTS – 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. Q3 2013 RESULTS – Approach Resources, Inc. – slide 25
    EBITDAX (unaudited) We define EBITDAX as net income (loss), plus (1) exploration expense, (2) depletion, depreciation and amortization expense, (3) share-based compensation expense, (4) unrealized loss on commodity derivatives, (5)…
  26. Q3 2013 RESULTS – Approach Resources, Inc. – slide 26
    Contact Information MEGAN P. HAYS Manager, Investor Relations & Corporate Communications 817.989.9000 x2108 mhaysapproachresources.com www.approachresources.com

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