EnerCom The Oil and Gas Conference 22 August 14, 2017
Safe Harbor Statement Forward-Looking Statements and Non-GAAP Disclosure This communication includes certain statements that may constitute "forward-looking statements" for purposes of the federal securities laws. All statements, other than statements of historical fact included in this communication, regarding our opportunities in the Delaware Basin, our strategy, future operations, prospects, plans and objectives of management are forward-looking statements. When used in this communication, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “forecast” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this communication are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved or occur, and actual results could differ materially and adversely from those anticipated or implied by the forward-looking statements. Some factors that could cause actual results to differ include: (i) changes in applicable laws or regulations; (ii) the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors , including, but not limited to, future trends in energy markets and commodity prices; and (iii) other risks and uncertainties described herein, as well as those risks and uncertainties discussed under Risk Factors in our Registration Statement on Form S-3, as amended, filed with the SEC on June 14, 2017, and in other public filings with the Securities and Exchange Commission (the “SEC”) by the Company. Our SEC filings are available publicly on the SEC’s website at www.sec.gov. These forward- looking statements are based on management's current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this communication. PV–10 is a non-GAAP financial measures used by management, investors and analysts to estimate the present value, discounted at 10% per annum, of estimated future cash flows of the Company’s estimated proved reserves before income tax and asset retirement obligations. Management believes that PV-10 provides useful information to investors because it is widely used by professional analysts and sophisticated investors in evaluating oil and natural gas companies. Because there are many unique factors that can impact an individual company when estimating the amount of future income taxes to be paid, the Company believes the use of a pre-tax measure is valuable for evaluating the Company. PV-10 should not be considered as an alternative to the standardized measure of discounted future net cash flows as computed under GAAP. 2
ROSEHILL COMBINES TWO COMPANIES WITH COMPLIMENTARY VISIONS • Preeminent Delaware Basin small-cap E&P company • Experienced technical and operations team • Proficient and knowledgeable management team • Focused on shareholder returns Rosehill Resources Drilling & Completion Net Acres: 4,771 § Efficiencies Inventory: ~250 locations § § Current Production: ~5,700 boepd (1) Active Core Delaware M&A Acreage Pipeline Production, Reserves, & Value Growth An Organic Growth and Acquisition Strategy Combined with Operational Excellence Makes Rosehill an Attractive Delaware Basin Small-Cap Investment 3 Source: Company filings 1. Previously disclosed March 2017 E production
ROSEHILL STRATEGY Optimize •Continue improvements to drilling and completion techniques to improve EUR, minimize costs and improve F&D metrics Operations •Drive down cash operating costs and improve margins to grow cash flow Expand Delaware •Strong balance sheet allows for organic leasing and bolt-on deals Footprint •Explore strategic, accretive acquisitions Maintain •Capital expenditures focused on highest return benches and funded within Financial operational cash flow and credit facility availability •Opportunistically add hedges to minimize downside exposure Discipline Deliver Value to •Sustainable growth in net income and cash flow Shareholders •Operate safely and efficiently to maximize margins Deliver Strong, Profitable Growth Through Operational Excellence and Accretive Acquisitions 4
WHAT SEPARATES THE DELAWARE CORE FROM OTHER PLAYS? Central Delaware Basin Reservoir Thickness Gross Estimated Thickest and Richest Part of the Basin Reservoir Locations Thickness (ft) Brushy Canyon 210 27 Upper Avalon 325 13 Lower Avalon & 1st Bone Spring Sand 315 13 • Rosehill’s core acreage is in the thickest 2nd Bone Spring Shale 200 19 2nd Bone Spring Sand 350 34 part of the Delaware Basin 3rd Bone Spring Shale 410 19 3rd Bone Spring Sand • Multiple high-quality source rocks Wolfcamp A (X,Y) 825 83 Wolfcamp A Lower • 10 distinct productive benches Upper and Lower Wolfcamp B 800 44 Total 3,435 252 Wolfcamp A Porosity (PhiH) Superior Reservoir Quality 60 55 50 45 40 Lea Co. 35 Eddy Co. New Mexico • Several benches are overpressured with 30 Texas 25 good porosity and thickness 20 15 10 • Natural fractures are abundant and 5 Loving Co. 0 Reeves Co. Porosity-Feet increase drainage efficiency (PhiH) • Strong EURs across multiple benches 5 Source: Company filings
PROVEN FIRST CLASS ACREAGE Compelling Area Results • Significant number of EOG EOG Chevron Endurance State Magellan #15H Moose’s Tooth #1H Yates 16 State #1H State Magellan #13H Peak Rate: 1,746 Boepd Peak Rate: 1,619 Boepd Peak Rate: 592 Boepd 348 MBoe 12 Months offset operators, enhances 3 rd Bone Spring Sand 1 st Bone Spring Sand 2nd Bone Spring Shale Brushy Canyon knowledge Rosehill Concho Kyle 26 ST-1 Coronado 35 Fed #1H • Highly repeatable drilling Peak Rate: 2,000 Boepd Peak Rate: 1,327 Boepd 2 nd Bone Spring Sand Wolfcamp A X/Y due to close proximity to Anadarko EOG Lea Co. offset activity and similar Thresher #9HN Rattlesnake 21 Fed #701H Peak Rate: 928 Boepd Peak Rate: 3,352 Boepd Wolfcamp A X/Y Upper Avalon geologic features • Acreage has high oil WPX EOG Excelsior 7 #8H Lindsay 10 #6H Peak Rate: 928 Boepd Peak Rate: 2,874 Boepd content Lower Avalon Wolfcamp B • Rosehill’s well results have Rosehill EOG Z&T 42 #G2 State Galileo #9H Loving Co. Peak Rate: 866 Boepd Peak Rate: 2,792 Boepd improved dramatically 2 nd Bone Spring Sand Upper Avalon across its footprint Anadarko Rosehill Tabasco Cat #1H Kyle 24 #G1 • Peak Rate: 1,458 Boepd Peak Rate: 1,318 Boepd Improving recoveries due to Lower Wolfcamp A Lower Wolfcamp A refinement of drilling and Anadarko Rosehill completion methodology Kingston #2H Kyle 26 #E4 Peak Rate: 1,448 Boepd Peak Rate: 687 Boepd • Rosehill recently completed Lower Wolfcamp A Wolfcamp A (X,Y Sands) the Kyle 26 ST-1well Apache Rosehill RSP Permian Falcon State #S224H Weber 26 #G1 Rudd Draw 29-3 #3H targeting the 2 nd Bone Peak Rate: 1,508 Boepd Peak Rate: 1,859 Boepd Peak Rate: 1,318 Boepd 3 rd Bone Spring Shale Lower Wolfcamp A Wolfcamp A (X/Y) Spring Sand flowing at over 2,000 Boepd, with 84% oil (24 hour rate), while still cleaning up 6 Source: IHS, Drilling Info
OPTIMIZING DRILLING TECHNIQUES LEADING TO REDUCTION IN COSTS • Better understanding of the acreage Drilling AFE vs. Cost 2017 YTD (1) and refining drilling techniques has 4.0 3.48 3.46 decreased drilling days and costs 3.5 3.13 3.14 2.93 2.93 3.42 2.79 2.79 • Drilling 4600’ effective laterals 3.0 3.26 2.62 2.62 3.09 Drill Cost ($MM) 2.82 2.5 2.7 • Changes in well design and drilling 2.6 2.61 2.0 2.24 2.19 procedures have resulted in savings of 1.95 1.5 ~$0.5 million per well compared to original estimates 1.0 0.5 • Drilling and completing wells in 0.0 “clusters” to maximize efficiencies Well 1 Well 2 Well 3 Well 4 Well 5 Well 6 Well 7 Well 8 Well 9 Well 10 and minimize downtime AFE Cost Estimate • Development wells focused on the Spud to TD Wolfcamp A (X/Y), A lower, & B Shale 2017 YTD (1) and the 2 nd & 3rd Bone Spring Sand 25 • Currently drilling with two contracted 20 rigs and one dedicated frac crew for 3 rd quarter 2017 15 Days 10 5 0 7 1. Excludes two wells, a sidetrack and a well that conducted coring and testing Well 1 Well 2 Well 3 Well 4 Well 5 Well 6 Well 7 Well 8 Well 9 Well 10
PERFORMANCE EXCEEDING TYPE CURVE Gen-1 Completions Gen-2 Completions Gen-1Wolfcamp A 710 Gross MBoe Type Curve (1) Gen-2 Lower Wolfcamp A 830 Gross MBoe Type Curve Enhanced Completion Techniques Have Significantly Improved Well Performance 8 1. Represents a blended Wolfcamp A (X,Y) and Lower Wolfcamp A type curve
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