The document provides an overview of the company's fourth quarter and full-year 2015 results. Some key points: - Production for Q4 was 1.33 MMBoe and 5.53 MMBoe for the full year, in line with guidance. No capital expenditures were incurred in Q4 due to low commodity prices. - Proved reserves increased 14% year-over-year to 166.6 MMBoe with a PV-10 of $504 million. Drilling replaced 603% of production at a drill-bit F&D cost of $4.32/Boe. - The company has $177 million in liquidity and reduced total debt from $515.6 million to $

1. Fourth Quarter & Full-Year
2015 Results
MARCH 3, 2016

2. Forward-looking statements
Fourth Quarter 2015 Results – March 2016 2
This presentation 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 presentation 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
presentation specifically include the expectations of management regarding plans, strategies, objectives, anticipated financial and operating results of the Company, including
as to the Company’s Wolfcamp shale resource play, estimated resource potential and recoverability of the oil and gas, estimated reserves and drilling locations, capital
expenditures, typical well results and well profiles, type curve, and production and operating expenses guidance included in the presentation. 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 presentation, the words “will,” “potential,” “believe,” “intend,” “expect,” “may,”
“should,” “anticipate,” “could,” “estimate,” “plan,” “predict,” “project,” “target,” “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. In particular, careful consideration should be given to the cautionary statements and risk factors described in the Company's
most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. 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.
The Securities and Exchange Commission (“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 or resource “potential,” 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, identified drilling locations and resource potential estimates have not been risked by the Company. Actual locations drilled and quantities that may be
ultimately recovered from the Company’s interest may differ substantially from the Company’s estimates. 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 drilling project, which will be directly affected by
the availability of capital, drilling and production costs, availability of drilling and completion services and equipment, drilling results, lease expirations, regulatory approval and
actual drilling results, as well as geological and mechanical factors. Estimates of unproved reserves, type/decline curves, per well EUR and resource potential may change
significantly as development of the Company’s oil and gas assets provides additional data.
Type/decline curves, estimated EURs, resource potential, recovery factors and well costs represent Company estimates based on evaluation of petrophysical analysis, core
data and well logs, well performance from limited drilling and recompletion results and seismic data, and have not been reviewed by independent engineers. These are
presented as hypothetical recoveries if assumptions and estimates regarding recoverable hydrocarbons, recovery factors and costs prove correct. The Company has limited
production experience with this project, and accordingly, such estimates may change significantly as results from more wells are evaluated. Estimates of resource potential
and EURs do not constitute reserves, but constitute estimates of contingent resources which the SEC has determined are too speculative to include in SEC filings. Unless
otherwise noted, IRR estimates are before taxes and assume NYMEX forward-curve oil and gas pricing and Company-generated EUR and decline curve estimates based
on Company drilling and completion cost estimates that do not include land, seismic or G&A costs.
Cautionary statements regarding oil & gas quantities

3. Company overview
AREX OVERVIEW ASSET OVERVIEW
Enterprise value $541MM
High-quality reserve base
167 MMBoe proved reserves
63% Liquids, 33% oil
$504 MM proved PV-10 (non-GAAP)
Permian core operating area
138,000 gross (126,000 net) acres
~1+ BnBoe gross, unrisked resource potential
~1,800 Identified HZ drilling locations targeting
Wolfcamp A/B/C
2016 Capital program focused on aligning
capex with cash flow
Stable leasehold that is largely HBP provides for
flexible budget
Improving commodity prices would allow us to
seamlessly increase capital budget from ~$20 MM
to ~$80 MM
Note: Proved reserves and acreage as of 12/31/2015. All Boe and Mcfe calculations are based on a 6 to 1 conversion ratio. Enterprise value is equal to market capitalization using the closing share
price of $1.11 per share on 3/3/2016, plus net debt as of 12/31/2015. See “PV-10 (unaudited)” slide for reconciliation to GAAP measure.
3Fourth Quarter 2015 Results – March 2016

4. Fourth quarter and full-year 2015 operating highlights
4
FY 2015 Q4 2015
Low cost, on
time, and on
budget
Higher well
recoveries and
lower D&C costs
improve returns
Solid execution
• Drilled 20 HZ wells and completed 28 HZ
wells
• Total production 5,532 MBoe vs guidance
of 5,475 MBoe
• No D&C activity during the quarter given
sustained low commodity prices
• Total production 1,330 MBoe
• FY2015 capex of $151 MM ($139 MM
D&C), in-line with ~$150 MM budget
• Cash operating expense (non-GAAP) of
$10.93/Boe (down 24% YoY)
• No capital expenditures incurred during
the quarter, free cash flow used to pay
down debt
• Cash operating expense (non-GAAP) of
$10.01/Boe (down 26% YoY)
• Continued to gain efficiencies and
negotiate lower service costs throughout
2015, recent AFEs now $3.7 MM
• Wells completed during 3Q15 using
enhanced completion design are tracking
well above current HZ Wolfcamp typecurve
Fourth Quarter 2015 Results – March 2016
Note: See “Cash Operating Expenses (unaudited)” slide for reconciliation to GAAP measure.

5. Fourth Quarter 2015 Results – March 2016
The business is anchored by long-lived, low-cost proved reserve
base
5
• 12/31/2015 reserve summary prepared by DeGolyer and MacNaughton (“D&M”)
• Replaced 603% of produced reserves at a drill-bit F&D cost (non-GAAP) of $4.32 per Boe1
• Total proved reserves up 14% YoY, proved PV-10 (non-GAAP) of $504 million2
Oil (MBbls) NGLs (MBbls) Natural Gas (MMcf) 3 Total (MBoe) PV-10 ($ MM) 2
PDP 15,476 20,362 154,202 61,539 $390.8
PDNP 191 52 450 317 $1.1
PUD 38,829 29,072 221,336 104,790 $112.1
Total Proved 54,496 49,486 375,988 166,646 $504.0
Total Proved Reserves Reserves by Commodity Proved PV-10
33%
30%
37%
Oil NGLs Natural Gas
37%
<1%
63%
PDP PDNP PUD
78%
< 1%
22%
PDP PDNP PUD
1. Drill-bit F&D costs are calculated by dividing the sum of exploration costs and development costs for the year by the total of reserve extensions and discoveries for the year. See “F&D costs (unaudited)”
slide for reconciliation to GAAP measure.
2. PV-10 calculated based on the first-of-the-month, 12-month average prices for oil, NGLs and natural gas, of $50.16 per Bbl of oil, $15.13 per Bbl of NGLs and $2.64 per MMBtu of natural gas. See “PV-10
(unaudited)” slide for reconciliation to GAAP measure.
3. The gas reserves contain 42,617 MMcf of gas that will be produced and used as field fuel (primarily for compressors and artificial lifts) before the gas is delivered to a sales point.

6. Fourth quarter and full-year 2015 financial highlights
6
FY 2015 Q4 2015
Aligning capital
expenditures
with cash flow
Reduced
leverage
Maximizing
profitability in a
challenging
environment
• Revenues of $131.3 MM
• LOE of $5.24/Boe, a 19% reduction over
prior year
• Cash G&A of $3.68/Boe, a 22% reduction
over prior year
• Net loss of $174.1 MM, or $4.30 per diluted
share
• Adjusted net loss (non-GAAP) of $15.0 MM,
or $0.37 per diluted share
• Revenues of $25.5 MM
• LOE of $5.44/Boe, 18% reduction over
prior year
• Cash G&A of $2.63/Boe, 39% reduction
over prior year
• Net loss of $5.8 MM, or $0.14 per diluted
share
• Adjusted net loss (non-GAAP) of $5.0 MM,
or $0.12 per diluted share
• EBITDAX (non-GAAP) of $123.6 MM, or
$3.05 per diluted share
• Capital expenditures of $151.2 MM, a 62%
reduction over prior year
• EBITDAX (non-GAAP) of $27.0 MM, or
$0.66 per diluted share
• No capital expenditures incurred during
the quarter
• Liquidity of $177 MM at 12/31/15
• Reduced current liabilities from $45.2 million at 9/30/15 to $28.5 million at 12/31/15
• Reduced total debt from $515.6 million at 9/30/15 to $496.6 million at 12/31/15
Fourth Quarter 2015 Results – March 2016
Note: See “Adjusted net (loss) income (unaudited)” and “EBITDAX (unaudited)” slides for reconciliation to GAAP measures.

7. Fourth Quarter 2015 Results – March 2016
Balance sheet detail
7
AREX Liquidity and Capitalization• At 12/31/2015 we had a $1 billion senior secured revolving
credit facility in place, with aggregate lender commitments
and borrowing base of $450 MM
• Liquidity of $177 MM and 2016 capital budget targeted to
cash flow
• LTM EBITDAX / LTM Interest of 4.9x, well above minimum
2.5x covenant requirement
• Current ratio of 6.7x, well above minimum 1.0x covenant
requirement
• No near-term debt maturities
AREX Debt Maturity Schedule ($ MM)
AREX Capitalization as of 12/31/2015 ($ MM)
Cash $0.6
Credit Facility 270.8
7.0% Senior Notes due 2021 225.8
Total Long-Term Debt 1
$496.6
Shareholders’ Equity 608.0
Total Book Capitalization $1,104.6
AREX Liquidity as of 12/31/2015
Borrowing Base $450.0
Cash and Cash Equivalents 0.6
Borrowings under Credit Facility (273.0)
Undrawn Letters of Credit (0.3)
Liquidity $177.3
$273.0
$230.3
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
$350.0
$400.0
$450.0
2016 2017 2018 2019 2020 2021
$177 MM undrawn
borrowing capacity
7.0% Senior Notes
1. Long-term debt is net of debt issuance costs of $6.7 million as of December 31, 2015

8. Fourth Quarter 2015 Results – March 2016
Lowest cost structure in the Permian Basin
8
$7.36
$6.18
$5.87
$6.65
$5.55
$4.97 $5.04
$5.44
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15
AREX LOE Historical Track Record ($/Boe) 2015 Permian Peer LOE ($/Boe)
AREX D&C Historical Track Record ($ MM) Current Permian Peer D&C Cost ($ MM)
$12.99
$9.51
$8.84
$7.83 $7.71
$7.46 $7.34
$6.92 $6.63 $6.39
$5.24
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 AREX
$8.6
$7.0
$5.8
$5.5
$4.5
$3.7
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
2011 2012 2013 2014 2015 Current AFE
$7.8
$6.8
$6.6 $6.5
$5.8
$5.5 $5.5
$5.3 $5.2 $5.0
$3.7
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 AREX
Source: Latest available company presentations and public filings. Peers include CPE, CWEI, CXO, EGN, FANG, LPI, MTDR, PE, PXD, and RSPP.

9. Fourth Quarter 2015 Results – March 2016
0
20,000
40,000
60,000
80,000
100,000
120,000
1 31 61 91 121 151 181 211 241 271 301 331 361
2015 Wolfcamp B&C bench completions
Average completed lateral length = 6886'
Enhanced completion design drives outperformance from
2015 wells
9
Note: Production data normalized for operational downtime
CumulativeProduction(Boe)
Time (Day)

10. Strong track record of reserve and production growth
10
RESERVE GROWTH
0
20
40
60
80
100
120
140
160
180
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Gas (MMBoe) Oil & NGLs (MMBbls)
• YE15 reserves up 14% YoY
• Replaced 603% of produced reserves at a drill-
bit F&D cost (non-GAAP) of $4.32/Boe
• 154.6 MMBoe proved reserves booked to HZ
Wolfcamp play
Note: See “F&D costs (unaudited)” slide for reconciliation to GAAP measure.
MMBoe
PRODUCTION GROWTH
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Natural Gas (MBoe/d) Oil & NGLs (Mbbls/d)
• 2015 Production increased 10% YoY to a
record 15.2 MBoe/d
• Anticipating production decline in 2016 with
significantly reduced capital budget
MBoe/d
Fourth Quarter 2015 Results – March 2016

11. Established infrastructure in place is critical to low cost
structure
11
Benefits of water recycling
• Reduce D&C cost
• Reduce LOE
• Increase project profit margin
• Minimize fresh water use, truck
traffic and surface disturbance
Fourth Quarter 2015 Results – March 2016

12. Fourth Quarter 2015 Results – March 2016
Current hedge position
12
• Based on the midpoint of current 2016 guidance, approximately 40% of forecasted oil production and 65% of
forecasted natural gas production are hedged at weighted average prices of $51.33/Bbl and $2.60/MMBtu,
respectively.
Commodity & Period Contract Type Volume Contract Price
Crude Oil
January 2016 – December 2016 Swap 750 Bbls/d $62.52/Bbl
January 2016 – June 2016 Swap 1,000 Bbls/d $40.00/Bbl
January 2016 – June 2016 Swap 500 Bbls/d $40.25/Bbl
Natural Gas
March 2016 – December 2016 Swap 200,000 MMBtu/month $2.93/MMBtu
February 2016 – March 2017 Swap 400,000 MMBtu/month $2.45/MMBtu
April 2017 – December 2017 Collar 200,000 MMBtu/month $2.30/MMBtu - $2.60/MMBtu

13. Fourth Quarter 2015 Results – March 2016
Production and expense guidance
13
2016 Guidance
Production
Oil (MBbls) 1,300 – 1,400
NGLs (MBbls) 1,440 – 1,540
Natural Gas (MMcf) 9,600 – 10,100
Total (MBoe) 4,340 – 4,625
Cash operating costs (per Boe)
Lease operating $5.00 - $6.00
Production and ad valorem taxes 8.0% of oil & gas revenues
Cash general and administrative $3.50 - $4.00
Non-cash operating costs (per Boe)
Non-cash general and administrative $1.00 - $1.50
Exploration (non-cash) $0.50 - $1.00
Depletion, depreciation and amortization $18.00 - $20.00
Capital expenditures (in millions) ~$20

14. Appendix

15. AREX Wolfcamp acreage is offset by large operators
15
Pangea West
EOG
HENRY
ENERVEST
EP ENERGY
others
APA
PXD
DVN
AREX
AREX
AREX
AREX
APA
APA
DVN
DVN
ELEVATION
PXD
DVN
APA
APA
APA
EOG
Pangea
ENERVEST
EOG /
EAP
EAP
BROADOAK
ENDEAVOR
APA
UPTON
CROCKETT
REAGAN
IRION
SCHLEICHER
SUTTON
EP ENERGY
AREX
AREX
AREX
AREX
EOG
Fourth Quarter 2015 Results – March 2016

16. Fourth Quarter 2015 Results – March 2016
Adjusted net (loss) income (unaudited)
16
(in thousands, except per-share amounts)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2015 2014 2015 2014
Net (loss) income $ (5,759) $ 26,987 $ (174,104) $ 56,172
Adjustments for certain items:
Unrealized loss (gain) on commodity
derivatives
10,285 (36,907) 33,214 (42,113)
Rig termination fees - - 2,199 -
Impairment of oil and gas properties - - 220,197 -
Termination costs - - 1,436 -
Gain on debt extinguishment (9,080) - (10,563) -
Related income tax effect (422) 13,287 (87,348) 15,161
Adjusted net (loss) income $ (4,976) $ 3,367 $ (14,969) $ 29,220
Adjusted net (loss) income per diluted share $ (0.12) $ 0.08 $ (0.37) $ 0.74
The amounts included in the calculation of adjusted net (loss) income and adjusted net (loss) income per diluted share below were computed in accordance with GAAP.
We believe adjusted net (loss) income and adjusted net (loss) income per diluted share are useful to investors because they provide readers with a more meaningful measure of
our profitability before recording certain items whose timing or amount cannot be reasonably determined. However, these measures are 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 SEC filings and posted on our website.
The following table provides a reconciliation of adjusted net (loss) income to net (loss) income for the three and twelve months ended December 31, 2015 and 2014.

17. Fourth Quarter 2015 Results – March 2016
EBITDAX (unaudited)
17
We define EBITDAX as net (loss) income, plus (1) exploration expense, (2) depletion, depreciation and amortization expense, (3) share-based compensation expense, (4)
impairment of oil and gas properties, (5) unrealized loss (gain) on commodity derivatives, (6) gain on debt extinguishment, (7) termination costs, (8) interest expense, net, and (9)
income tax (benefit) provision. EBITDAX is not a measure of net income or cash flow as determined by GAAP. The amounts included in the calculation of EBITDAX were
computed in accordance with GAAP. EBITDAX is presented herein and reconciled to the GAAP measure of net income because of its wide acceptance by the investment
community as a financial indicator of a company's ability to internally fund development and exploration activities. This measure 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 SEC
filings and posted on our website.
The following table provides a reconciliation of EBITDAX to net (loss) income for the three and twelve months ended December 31, 2015 and 2014.
(in thousands, except per-share amounts)
Three Months Ended
December 31,
2015 2014
Net (loss) income $ (5,759) $ 26,987
Exploration 228 236
Depletion, depreciation and amortization 23,173 28,664
Share-based compensation 1,954 2,521
Impairment of oil and gas properties - -
Unrealized loss (gain) on commodity derivatives 10,285 (36,907)
Gain on debt extinguishment (9,080) -
Termination costs - -
Interest expense, net 6,436 5,715
Income tax (benefit) provision (284) 17,102
EBITDAX $ 26,953 $ 44,318
EBITDAX per diluted share $ 0.66 $ 1.12
Twelve Months Ended
December 31,
2015 2014
$ (174,104) $ 56,172
4,439 3,831
109,319 106,802
7,954 8,247
220,197 -
33,214 (42,113)
(10,563) -
1,436 -
25,066 21,651
(93,405) 33,692
$ 123,553 $ 188,282
$ 3.05 $ 4.78

18. Fourth Quarter 2015 Results – March 2016
Cash operating expenses (unaudited)
18
Cash operating expenses
We define cash operating expenses as operating expenses, excluding (1) exploration expense, (2) depletion, depreciation and amortization
expense, (3) share-based compensation expense, (4) termination costs, and (5) impairment of oil and gas properties. Cash operating expenses is
not a measure of operating expenses as determined by GAAP. The amounts included in the calculation of cash operating expenses were
computed in accordance with GAAP. Cash operating expenses is presented herein and reconciled to the GAAP measure of operating expenses.
We use cash operating expenses as an indicator of the Company’s ability to manage its operating expenses and cash flows. This measure 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 SEC filings and posted on our website.
The following table provides a reconciliation of cash operating expenses to operating expenses for the three and twelve months ended December
31, 2015 and 2014.
(in thousands, except per-Boe amounts)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2015 2014 2015 2014
Operating expenses $ 38,671 $ 50,136 $ 403,789 $ 191,372
Exploration (228) (236) (4,439) (3,831)
Depletion, depreciation and amortization (23,173) (28,664) (109,319) (106,802)
Share-based compensation (1,954) (2,521) (7,954) (8,247)
Termination costs - - (1,436) -
Impairment of oil and gas properties - - (220,197) -
Cash operating expenses $ 13,316 $ 18,715 $ 60,444 $ 72,492
Cash operating expenses per Boe $ 10.01 $ 13.47 $ 10.93 $ 14.36

19. Fourth Quarter 2015 Results – March 2016
F&D costs (unaudited)
19
F&D Cost reconciliation
Cost summary (in thousands)
Property acquisition costs
Unproved properties $ 653
Proved properties -
Exploration costs 4,439
Development costs 146,237
Total costs incurred $ 151,329
Reserves summary (MBoe)
Balance – 12/31/2014 146,248
Extensions & discoveries 34,895
Production (1) (5,787)
Revisions to previous estimates (8,709)
Balance – 12/31/2015 166,646
F&D cost ($/Boe)
All-in F&D cost $ 5.78
Drill-bit F&D cost 4.32
Reserve replacement ratio
Drill-bit 603%
All-in finding and development (“F&D”) costs are calculated by dividing the sum of
property acquisition costs, exploration costs and development costs for the year by
the sum of reserve extensions and discoveries, purchases of minerals in place and
total revisions for the year.
Drill-bit F&D costs are calculated by dividing the sum of exploration costs and
development costs for the year by the total of reserve extensions and discoveries for
the year.
We believe that providing F&D cost is useful to assist in an evaluation of how much it
costs the Company, on a per Boe basis, to add proved reserves. However, these
measures are 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 previous
SEC filings and to be included in our annual report on Form 10-K to be filed with the
SEC on or before March 15, 2016. Due to various factors, including timing
differences, F&D costs do not necessarily reflect precisely the costs associated with
particular reserves. For example, exploration costs may be recorded in periods
before the periods in which related increases in reserves are recorded, and
development costs may be recorded in periods after the periods in which related
increases in reserves are recorded. In addition, changes in commodity prices can
affect the magnitude of recorded increases (or decreases) in reserves independent of
the related costs of such increases.
As a result of the above factors and various factors that could materially affect the
timing and amounts of future increases in reserves and the timing and amounts of
future costs, including factors disclosed in our filings with the SEC, we cannot assure
you that the Company’s future F&D costs will not differ materially from those set forth
above. Further, the methods used by us to calculate F&D costs may differ
significantly from methods used by other companies to compute similar measures. As
a result, our F&D costs may not be comparable to similar measures provided by other
companies.
The following table reconciles our estimated F&D costs for 2015 to the information
required by paragraphs 11 and 21 of ASC 932-235.
(1) Production includes 1,530 MMcf related to field fuel.

20. Fourth Quarter 2015 Results – March 2016
PV-10 (unaudited)
20
The present value of our proved reserves, discounted at 10% (“PV-10”), was estimated at $504 million at December 31, 2015, and was calculated based on the first-of-the-month,
twelve-month average prices for oil, NGLs and gas, of $50.16 per Bbl of oil, $15.13 per Bbl of NGLs and $2.64 per MMBtu of natural gas, adjusted for basis differentials, grade and
quality.
PV-10 is our estimate of the present value of future net revenues from proved oil and gas reserves after deducting estimated production and ad valorem taxes, future capital costs
and operating expenses, but before deducting any estimates of future income taxes. The estimated future net revenues are discounted at an annual rate of 10% to determine their
“present value.” We believe PV-10 to be an important measure for evaluating the relative significance of our oil and gas properties and that the presentation of the non-GAAP
financial measure of PV-10 provides useful information to investors because it is widely used by professional analysts and investors in evaluating oil and 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, we believe the use of a pre-tax measure is
valuable for evaluating the Company. We believe that PV-10 is a financial measure routinely used and calculated similarly by other companies in the oil and gas industry.
The following table reconciles PV-10 to our standardized measure of discounted future net cash flows, the most directly comparable measure calculated and presented in
accordance with GAAP. PV-10 should not be considered as an alternative to the standardized measure as computed under GAAP.
(in millions) December 31,
2015
PV-10 $ 504
Less income taxes:
Undiscounted future income taxes (307)
10% discount factor 263
Future discounted income taxes (44)
Standardized measure of discounted future net cash flows $ 460

21. Contact information
SERGEI KRYLOV
Executive Vice President & Chief Financial Officer
817.989.9000
ir@approachresources.com
www.approachresources.com