09.25.20 10:57 PM EDT

News Release

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FORT WORTH, Texas, Oct 18, 2010 (BUSINESS WIRE) --

Approach Resources Inc. (NASDAQ: AREX) today announced highlights from its investor and analyst meeting held on October 18, 2010, in New York City. Key highlights from the meeting include:

  • A detailed, technical discussion of the Wolfcamp Shale, Dean and Clearfork (the "Wolffork") resource play in the Permian Basin
  • An estimated 119 to 182 MMBoe of oil and gas in place per 640 acres based on whole core and petrophysical analyses
  • Increased Permian Basin acreage position to over 93,000 net acres
  • Plans to drill and recomplete additional Wolffork pilot wells during the fourth quarter of 2010, including a horizontal well targeting the Wolfcamp Shale
  • Borrowing base increase to $150 million, providing $99 million in liquidity at September 30, 2010

J. Ross Craft, Approach's President and Chief Executive Officer said, "During the investor and analyst meeting today, we provided a summary of our detailed geological and petrophysical study of the Wolfcamp and Clearfork formations across our West Texas acreage position. We expect that the Wolffork play will significantly enhance our opportunities in Permian. We believe we are uniquely positioned with a large, primarily contiguous block of acreage, extensive data, excellent team of geoscientists and engineers and strong financial position to capitalize on these opportunities. As with any new shale play, there is room for improvement in cost and completion technique. We have drilled over 400 wellbores with the Wolffork behind pipe and have an extensive inventory of multiple-pay locations across our 93,000 net acres. Given these opportunities, I believe we have exceptional resource potential that highlights our commitment to delivering long-term stockholder value."

Wolffork Shale Oil Resource Play

Approach identified the Wolffork through extensive regional mapping, using 3-D seismic data from over 135,000 acres and well data from over 400 wellbores that we have drilled and completed while targeting the deeper Canyon, Strawn and Ellenburger zones. The Wolffork is comprised of three stacked pay zones, the Clearfork, Dean and Wolfcamp Shale formations. Petrophysical analyses indicate more than 2,500 feet of gross pay from the Wolffork.

Based on log data and whole-core analyses, we believe that the Wolfcamp Shale has total organic carbon content ranging from 2.2% to 7.2%, porosity ranging from 4% to 11% (density porosity ranges from 8% to 15%) and high concentration of natural fractures.

Wolffork Reserve Potential

Approach estimates that, based on whole-core and detailed petrophysical analyses, there is significant potential oil and gas in place attributable to the Wolffork.

Formation Estimated

Oil and Gas In Place /

640 Acres (MMBoe)

Wolfcamp 118.9
Wolfcamp, Dean 125.6
Wolfcamp, Dean, Clearfork 181.7

The Wolfcamp Shale is over 1,000 feet thick and heavily fractured, ideal for horizontal drilling. We estimate 343 MBoe of potential recoverable reserves for a horizontal well targeting the Wolfcamp.

Results from Wolfcamp Shale Pilot Program and Estimated Ultimate Recovery ("EUR")

To date, we have recompleted four wells in the Wolfcamp Shale. All four pilot wells became producers. Based on our regional study, production data from our pilot wells and from adjacent operators, we estimate EURs ranging from 55 MBoe to 83 MBoe for a Wolfcamp recompletion, 90 MBoe to 135 MBoe for a Wolffork recompletion, 204 MBoe to 306 MBoe for a Canyon Wolffork new drill and 354 MBoe to 530 MBoe for a Wolfcamp horizontal well.

Fourth Quarter 2010 Plans

During the fourth quarter of 2010, we plan to further delineate the Wolffork trend across our acreage position. Our Wolffork pilot program for the fourth quarter of 2010 is outlined below.

  • Drill one horizontal well, the Cinco Terry "M" 901-H, targeting the Wolfcamp Shale at the end of October 2010. Approach expects to complete the horizontal well during the first quarter of 2011.
  • Recomplete the Cinco Terry 1601, targeting the Wolfcamp Shale zone.
  • Recomplete two wells in Ozona Northeast, targeting the Wolffork.
  • Complete the Baker "C" 1201, targeting the Wolffork and Canyon Sands zones.

Liquidity Update

We have a $200 million revolving credit agreement with a $115 million borrowing base, of which $51.1 million was drawn at September 30, 2010. At September 30, 2010, our liquidity was $64 million. We expect our borrowing base will increase by $35 million to $150 million by November 2010. Including the borrowing base increase, our liquidity was $99 million at September 30, 2010. See "Supplemental Financial Measure - Liquidity" below for our definition of "liquidity."

Supplemental Financial Measure - Liquidity

Liquidity 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 Company's ability to fund development and exploration activities. However, this measurement has limitations. This measurement can vary from year to year for the Company and can vary among companies based on what is or is not included in the measurement on a company's financial statements. This measurement is provided in addition to, and not as an alternative for, and should be read in conjunction with, the information contained in our financial statements prepared in accordance with GAAP (including the notes), included in our Securities and Exchange Commission ("SEC") filings and posted on our website at

($ in thousands) 9/30/2010



Pro Forma for

Borrowing Base


Cash and cash equivalents $ 417 $ 417
Borrowings under credit facility $ 51,069 $ 51,069
Total credit facility 115,000 150,000
% Available 56% 66%
Unused letters of credit 350 350
Liquidity $ 63,998 $ 98,998

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the expectations of management regarding plans, strategies, objectives, anticipated financial and operating results of the Company, including as to the Company's Wolffork shale resource play, estimated oil and gas in place and recoverability of the oil and gas, estimated reserves and drilling locations, capital expenditures, typical well results and well profiles, internal rates of return and future production included in the press release. These statements are based on certain assumptions made by the Company based on management's experience and technical analyses, current conditions, anticipated future developments and other factors believed to be appropriate and believed to be reasonable by management. When used in this press release, the words "will," "potential," "believe," "intend," "expect," "may," "should," "anticipate," "could," "estimate," "plan," "predict," "project," "profile," "model," or their negatives, other similar expressions or the statements that include those words, are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. Further information on such assumptions, risks and uncertainties is available in the Company's SEC filings. Our SEC filings are available on our website at Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

Cautionary Statements Regarding Oil and Gas Quantities

The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves that meet the SEC's definitions for such terms, and price and cost sensitivities for such reserves, and prohibits disclosure of resources that do not constitute such reserves. The Company uses the terms "estimated ultimate recovery" or "EUR," reserve "potential," "upside," "oil and gas in place" or "OGIP," "OIP," "OOIP" or "GIP," and other descriptions of volumes of reserves potentially recoverable through additional drilling or recovery techniques that the SEC's rules may prohibit the Company from including in filings with the SEC. These estimates are by their nature more speculative than estimates of proved, probable and possible reserves and accordingly are subject to substantially greater risk of being actually realized by the Company.

EUR estimates, drilling locations and OGIP estimates have not been risked by the Company. Actual locations drilled and quantities that may be ultimately recovered from the Company's interest will differ substantially. There is no commitment by the Company to drill all of the drilling locations that have been attributed these quantities. Factors affecting ultimate recovery include the scope of the Company's ongoing drilling program, which will be directly affected by the availability of capital, drilling and production costs, availability of drilling and completion services and equipment, drilling results, leases expirations, regulatory approval and actual drilling results, including geological and mechanical factors affecting recovery rates. Estimates of unproved reserves, per well EUR, OGIP and upside potential may change significantly as development of the Company's oil and gas assets provides additional data.

Glossary of Oil and Gas Terms

For a glossary of oil and gas terms and abbreviations used in this release, please see our Annual Report on Form 10-K filed with the SEC on March 12, 2010.

About Approach Resources Inc.

Approach Resources Inc. is an independent energy company engaged in the exploration, development, production and acquisition of oil and gas properties in the United States. The Company's core operations, production and reserve base are located in the Permian Basin in West Texas. The Company targets multiple oil and liquids-rich formations in the Permian Basin, where the Company operates over 93,000 net acres. At June 30, 2010, the Company's estimated proved reserves were 278.3 Bcfe, 50% oil and NGLs and 50% natural gas. For more information about the Company, please visit Please note that the Company routinely posts important information about the Company under the Investor Relations section of its website.

SOURCE: Approach Resources Inc.

Approach Resources Inc.
Investor Relations and Corporate Communications
Megan P. Brown, 817-989-9000

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  • Approach Resources Inc.
    One Ridgmar Centre
    6500 West Freeway, Ste 800
    Fort Worth, Texas 76116USA
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