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INVESTOR PRESENTATION – Approach Resources, Inc.

Approach Resources, Inc. · May 11, 2014 · 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
    Investor Presentation MAY 2014
  2. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 2
    Company overview AREX OVERVIEW ASSET OVERVIEW Enterprise value 1.1 BN High-quality reserve base 115 MMBoe proved reserves 1.1 BN proved PV-10 99% Permian Basin Permian core operating area 162,000 gross (144,000 net) acres 1+…
  3. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 3
    Key investment highlights STRENGTHS HIGHLIGHTS High margin, oil-weighted asset base in Midland Basin 162,000 gross (144,000 net) primarily contiguous acres High Margin, Low Proved reserves are 69% liquids; 1Q14 production is 70%…
  4. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 4
    Long history of operating in Midland Basin WELLS DRILLED TO DATE Drilled more than 530 wells 90 14 in Midland Basin since 81 80 2004 12 69 70 70 One of the first-movers in 63 10 the HZ Wolfcamp play with 60 58 56 longest…
  5. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 5
    Strong track record of reserve growth RESERVE GROWTH OIL RESERVE GROWTH 120 50 46.1 45 100 40 37.3 80 35 30 60 25 20 18.1 40 15 20 10 MMBbls MMBoe 5 4.3 5.0 0 0 2004 2005 2006 2007 2008 2009 2010 2011…
  6. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 6
    Strong track record of production growth PRODUCTION GROWTH OIL PRODUCTION GROWTH 10.0 1,600 1,444 9.0 1,400 8.0 1,200 7.0 969 6.0 1,000 5.0 800 4.0 600 3.0 482 400 2.0 246 206 1.0 200 MBoe/d MBbls 0.0 0…
  7. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 7
    Horizontal Wolfcamp reserve growth driving oil production growth HZ WOLFCAMP RESERVE GROWTH FY13 HZ WOLFCAMP PRODUCTION MIX 120 HZ Wolfcamp proved 114.7 reserves up 5x since 2011 100 95.5 33.1 20% Began drilling HZ Wolfcamp…
  8. INVESTOR PRESENTATION – 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 162,000 gross (144,000 net) acres Low acreage cost 500 per acre 1BnBoe gross, unrisked HZ…
  9. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 9
    AREX Wolfcamp activity STRATIGRAPHIC UNIT Reagan Irion Clearfork/Spraberry PANGEA WEST Crockett Schleicher Dean 1Q14 Activity included: Stacked A/C completion A Wolfcamp B NORTH & CENTRAL C PANGEA 1Q14 Activity included:…
  10. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 10
    Wolfcamp shale oil play WIDESPREAD, THICK, CONSISTENT & REPEATABLE 11
  11. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 11
    Efficiency-driven transition to two-bench pad development TRANSITION FROM SINGLE-BENCH TO TWO-BENCH DEVELOPMENT 2011 2013: SINGLE-BENCH CURRENT: TWO-BENCH DEVELOPMENT DEVELOPMENT Map view Reduces time between spud to…
  12. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 12
    Low cost operator OPERATIONAL EFFICIENCY COMPETITIVE LOE (FY13 LOE/Boe) Expect to drill 20 to 24 HZ wells per rig in 16.00 14.00 2014 vs. prior estimate of 10 to 12 HZ wells 14.00 12.20 per rig 12.00 10.43 11.00 10.00 Avg.…
  13. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 13
    AREX HZ Wolfcamp well performance AREX HZ WOLFCAMP (BOE/D) 800 Production Data from 700 AREX C Bench Wells (4) Production Data from 600 AREX A Bench Wells (8) 500 Production Data from Daily Production (Boe including…
  14. INVESTOR PRESENTATION – 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 South Reducing LOE Pangea Increasing project…
  15. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 15
    Key field infrastructure & equipment systems INFRASTRUCTURE BENEFITS Non-potable water source wells Facilitate large-scale field development Water recycling systems Reduce fresh water use and water costs Safely and securely…
  16. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 16
    AREX HZ Wolfcamp economics Horizontal BTAX IRR SENSITIVITIES Play Type Wolfcamp 80 70 Avg. EUR (gross) 450 MBoe 60 Targeted Well Cost 5.5 MM 50 IRR (%) 40 Potential Locations 2,000 30 20 Gross Resource 1 Bn 10 Potential…
  17. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 17
    2014 Development plan 2014 Capital budget 400 MM, approx. 95% for HZ Wolfcamp 3 HZ rigs in the Wolfcamp shale Targeting Wolfcamp A, B and C Pad drilling and stacked lateral development Targeting 40%+ production growth 2014…
  18. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 18
    Appendix
  19. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 19
    1Q14 Key highlights 1Q14 HIGHLIGHTS 1Q14 SUMMARY RESULTS Drilled 16 HZ wells and completed 19 HZ Production (MBoe/d) 11.9 wells % Oil 42% % Total liquids 70% De-risked stacked wellbore development Average realized price (/Boe)…
  20. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 20
    1Q14 Operating highlights OPERATING HIGHLIGHTS Drilled 16 HZ wells and completed 19 HZ wells Accelerating Wolfcamp A 1 well, Wolfcamp B 13 wells and Wolfcamp C 5 wells Development Total production 11.9 MBoe/d (up 42% YoY) 1Q14…
  21. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 21
    1Q14 Financial highlights FINANCIAL HIGHLIGHTS Revenues of 61.9 MM (up 71% YoY) Increasing Net income of 2.9 MM, or 0.08 per diluted share Revenues Adjusted net income (non-GAAP) of 6.7 MM, or 0.17 per diluted share Record…
  22. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 22
    Production and expense guidance 2014 Guidance Production Total (MBoe) 4,790 Percent oil 43% - 46% Percent total liquids 71% - 74% Operating costs and expenses (per Boe) Lease operating 5.00 - 6.00 Production and ad valorem…
  23. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 23
    Strong, simple balance sheet As of March 31, 2014 (Pro forma for As of Borrowing Base FINANCIAL RESULTS (MM) March 31, 2014 Increase) Summary Balance Sheet Cash and Cash Equivalents 4.3 Restricted Cash 7.4 Credit Facility…
  24. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 24
    Current hedge position Commodity & Period Contract Type Volume Contract Price Crude Oil April 2014 December 2014 Collar 550 Bbls/d 90.00/Bbl - 105.50/Bbl April 2014 December 2014 Collar 950 Bbls/d 85.05/Bbl - 95.05/Bbl April…
  25. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 25
    Adjusted net income (unaudited) 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…
  26. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 26
    EBITDAX (unaudited) EBITDAX (UNAUDITED) The amounts included in the calculation of EBITDAX were computed in accordance with GAAP. EBITDAX is not a measure of net income or cash flow as determined by GAAP. EBITDAX is presented herein and…
  27. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 27
    PV-10 (unaudited) PV-10 (UNAUDITED) The present value of our proved reserves, discounted at 10% (PV-10), was estimated at 1.1 billion at December 31, 2013, and was calculated based on the first-of-the-month, twelve-month average prices…
  28. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 28
    F&D costs (unaudited) F&D COSTS (UNAUDITED) F&D COST RECONCILIATION Cost summary (in thousands) All-in finding and development (F&D) costs are calculated by dividing the sum of property acquisition costs, exploration costs and…
  29. INVESTOR PRESENTATION – Approach Resources, Inc. – slide 29
    Contact information MEGAN P. HAYS Director, Investor Relations & Corporate Communications 817.989.9000 mhaysapproachresources.com www.approachresources.com

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