Permian Resources Corporation · NYSE:PR
Permian Resources — Silver Run Acquisition — SPAC Merger (July 2016)
52 slides from Permian Resources's SPAC merger presentation, Jul 22, 2016
Slide 1: Important Information
Important Information This Investor Presentation (“Investor Presentation”) is for informational purposes only and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation to purchase any equity, debt or other financial instruments of Silver Run Acquisition Corpora
Slide 2: Presenters
Presenters Mark Chief Papa Executive Officer 3
Slide 3: Proven Senior Leadership and Sponsor
Proven Senior Leadership and Sponsor Mr. Papa brings 45 years of operating experience, most recently as Chairman, Director and CEO of EOG Resources (1) Riverstone is the largest private equity firm dedicated solely to the energy industry (3) Under Mr. Papa’s leadership, EOG: $34 billion raised since
Slide 4: Transaction Summary
Transaction Summary Mark Papa and Riverstone raised $500 million in the form of a Special Purpose Acquisition Company (“SPAC”) in February 2016, called Silver Run Acquisition Corporation (“Silver Run”) Silver Run was established to take advantage of the existing dislocation in the energy markets and
Slide 5: Agenda
Agenda Delivering on Investment Criteria Centennial Highlights Path to Value Creation Centennial Overview Financial Overview Transaction Overview Appendix 6
Slide 6: Delivering on Investment Criteria
Delivering on Investment Criteria Centennial Meets the Criteria Discussed in February 2016 Oil-weighted assets vs. gas Located in 1 of 5 target North American oil shale plays Capital injection will deliver production growth with low geologic risk Low debt level to maximize financial flexibility Near
Slide 7: Centennial Highlights
Centennial Highlights Unique Delaware Pure-Play Opportunity ~3,000 ft oil column in the deep, high pressured oily core of the Southern Delaware Basin ~42,500 net acres ~32.5 MMBoe 1P reserves (1) Oil-Rich Delaware Core Producing ~7,200 Boe/d from 62 operated Hz wells in 5 different shale zones (2) ~
Slide 8: Path to Value Creation
Path to Value Creation Seek to Replicate EOG Operating and Execution Excellence and Expand Position Begin Manufacturing Mode Deliver Operational Efficiencies Aggressively deploy drilling rigs to bring future value forward Drilling Plan: October 2016 + 2 Rigs (3 total); April 2017 + 1 Rig (4); Januar
Slide 9: Path to Value Creation
Path to Value Creation Seek to Replicate EOG Operating and Execution Excellence and Expand Position ‘Begin Manufacturing Mode Deliver Operational Efficiencies Aggressively deploy dling rigs to bring future value Improve footage drilled per day at lower cost per foot bled) Expand from 2-well pads to
Slide 10: Core Delaware Basin Pure-Play
Core Delaware Basin Pure-Play Large, contiguous core position in Southern Delaware Basin Acreage in the Oily Southern Delaware Core – – – ~42,500 net acres; ~80% operated ~84% WI in operated acreage ~79% HBP in operated Reeves and Ward counties Net Acres by County: 6/30/16 Reeves Ward Pecos 35,800 1
Slide 11: Activity Ramping Up in Delaware Basin
Activity Ramping Up in Delaware Basin US Total Hz Rig Count – Top 5 Oil Basins 69 64 Midland Delaware Eagle Ford Cana Woodford Williston US Total Hz Rig Count – Top 15 Oil Counties 28 11 10 10 10 10 Midland Delaware Cana / Woodford Bakken Niobrara Eagle Ford Source: Rig count data per Baker Hughes a
Slide 12: Centennial Acreage in Geological Sweetspot
Centennial Acreage in Geological Sweetspot Optimum Conditions for Strong and Repeatable Results Basin Bottom Location with Simple Structure Thickest Part of Wolfcamp Depth to Wolfcamp ~10,500 ft on average Away from significant faulting (and associated geo-hazards, excessive heat flow, pressure brea
Slide 13: Delaware Oil Productivity and GOR
Delaware Oil Productivity and GOR Convergence of High Productivity and High Oil Content Oil Productivity: 3 Mo Avg. Daily Oil per 1,000 ft (1) Reservoir Fluid Trend: Gas-Oil Ratio (2) Condensate-Rich Trend Gas-Rich Trend Oil-Rich Trend (1)Source: IHS Performance Evaluator; Includes horizontal wells
Slide 14: Stacked Pay Provides Extensive Resource Potential
Stacked Pay Provides Extensive Resource Potential Centennial Producing from Five Unique Zones with Upside for Seven More Multiple Stacked Pay Zones World-class petroleum system in the Avalon, Bone Spring and Wolfcamp – Total gross column thickness of over 3,000 ft – Up to 12 potential target zones C
Slide 15: Stratigraphic Cross Section
Stratigraphic Cross Section Consistent and Delineated Across Acreage Position s BS Shale Arroyo Toyah N 3rd BS Sand Centennial PDP 0 0 e Operated Hz 0 Non-Op Hz Ward • Jrd BS Sd Well •Upr WC A Well LwrWCAWell e wcBWell e wcCWell CENTENNIAL 16
Slide 16: Undeveloped Location Inventory
Undeveloped Location Inventory 12 Years of Operated Inventory with 5 rigs Current Inventory Summary (6/30/16) Inventory Locator Map Lateral Length (ft) 4,500 7,500 9,500 Total 175 Illustrative Spacing 1,320 ft Spacing Sand 880 ft Spacing Centennial Acreage 17 2 Zones Upper WC A Lower WC A 3rd Bone S
Slide 17: Large Resource Base
Large Resource Base Large Resource Potential with Future Potential Upside from Additional Zones Net Resources (MBoe) (1) PV-10 ($M) (2) PD / PDNP PUD Unproven Total NYMEX $65/Bbl $75/Bbl Net Revenue by Hydrocarbon PV-10 by Formation at NYMEX PV-10 by Operated at NYMEX Gas NGLs Non Operated 7% 3rd BS
Slide 18: Net Operated Production
Net Operated Production Maintained Flat Production for 18+ Months Spending Effectively Within Cash Flow 100,000 12 Stack-and-Staggered 10,000 8 1,000 4 100 0 Upr WC A Completion Lwr WC A Completion WC B Completion WC C Completion Daily Production Last 18 Mo Avg Downtime Note: Production data exclude
Slide 19: Proven Track Record of Performance
Proven Track Record of Performance Operational Improvements Driving Well Performance IP30 Boe/d/1,000ft Lateral (3-Stream) Delivering best-in-class performance 400 350 Last ~30 well average at or above premier operators in Southern Reeves 300 250 200 Optimizing completions, landing zones and effecti
Slide 20: Recent Well Results Extend Core Southward
Recent Well Results Extend Well Performance Continues to Improve Core Southward Oil Production – Centennial Wells Since 2015 (1) (2) Locator Map – Centennial Wells Since 2015 (1) Arroyo Wells Centennial Acreage Arroyo Wells Toyah Wells Big Chief Wells Gibson L 3RH 150 120 90 60 30 0 0 60 120 180 240
Slide 21: Driving Operational Improvements
Driving Operational Improvements Efficiency Gains Driving Costs Lower Spud-to-Rig Release per 4,500 ft Lateral (Days) CAPEX per 4,500 ft Lateral ($MM) $ 11.7 Facilities & Artificial Lift Avg Lateral Length (ft) 55 4,556 2013 2014 2015 Last 3 Wells 2013 2014 2015 Last 3 Wells CAPEX – Last 7 Wells Dri
Slide 22: Advantaged Midstream Infrastructure
Advantaged Midstream Infrastructure Oil, Gas and Water Piped – Efficient Access to Market Oil – Oryx Midstream Services Gas – PennTex | Water – Centennial Wellhead to Midland system being constructed and operated by Oryx; Operations begin Q3 2016 Oryx gathering from five anchor shippers and building
Slide 23: Single Well Returns
Single Well Returns Lower D&C Costs and Extended Laterals Drive Superior Economics Single Well Statistics IRR Sensitivities SEC Assumptions (1) Current Assumptions (1) NSAI Avg PUD (4,500 ft): EUR vs D&C CAPEX NSAI Avg Gibson L NSAI Avg Gibson L (2) (2) (2) (2) PUD 3RH PUD 3RH 120% Lateral Length (f
Slide 24: Centennial Horizontal Development Plan
Centennial Horizontal Development Shifting to Extended Laterals and Pad Development Plan Prospect Areas Near-term development planned across three project areas – ~40/60 split between 4,500-ft and extended laterals – Wolfcamp A is primary target and Wolfcamp B&C and 3rd Bone Spring Sand are secondar
Slide 25: Centennial Horizontal Development Plan
Centennial Horizontal Development Plan Shifting to Extended Laterals and Pad Development Prospect Areas + Near-term development planned across three project areas — ~40/60 split between 4,500-ft and extended laterals - Wolfcamp A is primary target and Wolfcamp B&C and 3 Bone Spring Sand are secondar
Slide 26: Disciplined Financial Management
Disciplined Financial Management Strong Liquidity and Modest Financial Leverage Judicious Capital Allocation Flexibility through the cycle No debt and $100 million of cash at close Bias to equity fund large acquisitions Long-term target < 2.0 – 2.5x Debt / Adj. EBITDAX IRR-driven investment decision
Slide 27: Sources & Uses and Pro Forma Capitalization
Sources & Uses and Pro Forma Capitalization Capitalization as of 3/31/16 Acquisition entirely funded with equity results in debt free balance sheet and ample liquidity to fund drilling program Pro forma liquidity of $260 million based on $100 million of cash on the balance sheet and $160 million of
Slide 28: Capital Budget Overview
Capital Budget Overview 2015 and 2016 planning focused on capital preservation & discipline, maintaining liquidity, retaining acreage and acquisitions – Maintained flat production with a one rig program over the past 18 months Centennial is currently running one horizontal rig, with plans to add two
Slide 29: Hedging Activity
Hedging Activity Consistently Hedging to Protect Cash Flow Cal 2016 Crude Swap Hedging Activity – Volumes Swapped (Bbls/d) | Avg Hedge Price ($/Bbl) $ 42.46/Bbl $ 61.58/Bbl $ 77.25/Bbl 6/30/15 3Q15 4Q15 12/31/15 1Q16 Current Period End Hedge Summary Hedges Added in Period Cal 2017 Crude Swap Hedging
Slide 30: Hedging Activity
Hedging Activity Consistently Hedging to Protect Cash Flow Cal 2016 Crude Swap Hedging Activity - Volumes Swapped (Bbls/d) | Avg Hedge Price ($/Bbl) sas ssc | a —-200Bbisid 2,592 Bbisid Ml Period End Hedge Summary Hedges Added in Period Cal 2017 Crude Swap Hedging Activity - Volumes Swapped (Bbis/d)
Slide 31: Transaction Overview
Transaction Overview On July 6th, certain funds controlled by Riverstone entered into an agreement to acquire a majority interest in Centennial(1) Riverstone and certain affiliates(2) will contribute approximately $810 million of cash to Silver Run in exchange for shares of Class A Common Stock at $
Slide 32: Financial Forecast Summary
(1) Financial Forecast Summary D&C CAPEX ($MM) Daily Production (Boe/d) $ 326 % YoY Growth 24,138 % of Adj. EBITDAX 2015A 2016E 2017E 2018E 2015A 2016E 2017E 2018E Adj. EBITDAX ($MM) | WTI Oil Price ($/Bbl) Total Liquidity ($MM) | Debt / TTM Adj. EBITDAX (2) Liquidity (3) Debt / TTM Adj. EBITDAX Avg
Slide 33: Valuation Benchmarking (Adj. EBITDAX & Adj. Net Acres)
Valuation Benchmarking (Adj. Attractive Valuation EBITDAX & Adj. Net Acres) Enterprise Value / 2017E Adjusted EBITDAX (1) Enterprise Value / 2018E Adjusted EBITDAX (1) 14.4x 13.2x 12.6x 12.4x 9.2x 9.2x 9.1x FANG PE CRP CXO RSPP CPE FANG RSPP CXO PE CPE CRP Enterprise Value / Adjusted Net Acres (2) $
Slide 34: Valuation Benchmarking (Production)
Valuation Benchmarking (Production) Superior Production Growth EV / 2017E Production (1) EV / 2018E Production (1) $152,079 $124,360 $106,529 $103,366 FANG RSPP PE CRP CXO CPE FANG RSPP CXO PE CPE CRP 2016E / 2017E Production Growth Rate (1) 2017E / 2018E Production Growth Rate (1) 85% 66% CRP PE CP
Slide 35: Centennial Well Performance vs Peers
Centennial Well Performance vs Peers Best-in-Class Results Comparable to Top Midland Basin Operators 250 250 200 200 150 150 100 100 50 50 Centennial's 0 0 0 50 100 150 200 250 300 350 0 50 100 150 200 250 300 350 Days on Production Days on Production 250 250 200 200 150 150 100 100 50 50 ) Centenni
Slide 36: Delaware Basin Activity by Zone
Delaware Basin Activity by Zone Numerous Zones Delineated by Multiple Operators and Area Indicates Most Active Zone Source:Latest investor presentations, Wall Street research and Texas Railroad Commission. (1)Northern Delaware encompasses Eddy, Lea, Loving, Culberson and Northern Reeves counties. 37
Slide 37: Production Expenses & Leverage Benchmarking
Production Expenses & Leverage Benchmarking Competitive Cost Structure Despite Smallest Production Base Q1 2016 Production Expenses ($/Boe) – Centennial vs Public Permian Pure Play Companies (1) (2) $ 14.57 Debt / TTM Adjusted EBITDAX (x) – Centennial vs Permian Public Peers (3) 3.7x Zero Debt + 3.3
Slide 38: Early Innings In the Delaware
Early Innings In the Delaware Significant Potential Upside Remains Lateral Length Progression (ft) Proppant Progression (lbs/ft) 7,358 1,331 7,121 7,046 1,265 6,633 2012 2013 2014 2015 2012 Delaware Basin 2013 2014 2015 Midland Basin Hz Production (MBoe/d) (1) Avg 3 Mo Cum. per 1,000 ft (MBoe/1,000
Slide 39: Anticipated Transaction Timeline
Anticipated Transaction Timeline Date Event Business Combination Agreement Between Riverstone and Centennial Executed July 6th Week of July 25th Preliminary Proxy Materials Filed with SEC Week of Sept 12th Mail Final Proxy Materials to Stockholders 40 Week of Sept 26thHold Stockholder Vote and Close
Slide 40: Anticipated Transaction Timeline
Anticipated Transaction Timeline Date Event july 6 * Business Combination Agreement Between Riverstone and ae Centennial Executed Week of July 168 * Transaction Announced ‘Week of July 25 + Preliminary Proxy Materials Filed with SEC Week of Aug 29 + Set Record Date for Stockholder Vote Week of Sept
Slide 41: Wolfcamp A Activity – Normalized 4,500 ft
Wolfcamp A Activity – Normalized 4,500 ft Hundreds of Hz Producers in Southern Reeves; Centennial Results Best-In-Class Recent Well Results (3-Stream) Centennial Normalized Daily Oil Production (1) (2) CDEV WC A Arroyo CDEV WC A Toyah CDEV WC A Big Chief Stingray – Upper WC A OXY Peck – Upper WC A 1
Slide 42: Active Development Across Multiple Zones
Active Development Across Multiple Zones WC B&C and 3rd BS Sand Development Activity to Increase Over Time Wolfcamp B Wolfcamp C 3rd BS Sand ~20% of operated undeveloped locations Current inventory limited to ~65% of net acreage High quality wells widely distributed across area Primary target in SE
Slide 43: WC B&C and 3rd BS Sand vs Avg NSAI PUD
3rd WC B&C and BS Sand vs Avg NSAI PUD Future Development Expected to Meet or Exceed Avg NSAI PUD Type Curve Normalized Wolfcamp B Results (1) (2) WC B is the most extensively developed secondary zone with results meeting the Avg NSAI PUD type curve 1,200 Offset Operator WC B (39 Wells) 1,000 CDEV W
Slide 44: Confirmation of Wolfcamp Stacked-and-Staggered Geometry
Confirmation of Wolfcamp Stacked-and-Staggered Geometry A Spacing Model CH Knight 2H and 3H Flowback CH Knight 2H and 3H sequenced drilling and completion 1,400 1,200 1,000 Laterals spaced ~440’ horizontally and ~175’ vertically in Wolfcamp A 800 600 Microseismic, tracers and performance indicative
Slide 45: Gibson-Faudree DSU – 9,500 ft vs 4,500 ft
Gibson-Faudree DSU – 9,500 ft vs 4,500 ft Long Lateral Performing up to Expectations Equivalent completions for all three wells in 1,280 acre DSU Gibson-Faudree DSU First 120 Day Oil Production (1) – – – Gibson L 3RH | Upper WC A | Lateral: 9,363 ft Gibson 2H | Upper WC A | Lateral: 4,535 ft Faudree
Slide 46: Future Potential Upside from Further Downspacing
Future Potential Upside from Further Downspacing Operators Developing 8 Wells/Zone Spacing vs Centennial’s 6 Wells/Zone Offset Operators’ Downspacing Tests – 8 Wells/Zone Eland 660’ 660-880’ RSP Permian – 8 Wolfcamp Wells/Zone Energen – 8 Wolfcamp Wells/Zone Cimarex – 8 Wolfcamp Wells/Zone Source: P
Slide 47: Delaware to Midland Stratigraphic Correlation
Delaware to Midland Stratigraphic Correlation Third Bone Spring Shale Stratigraphically Equivalent to Lower Spraberry Shale W E Delaware Basin Midland Basin Avalon Leonard Shale First Bone Spring Second Bone Spring Upper Second Bone Spring Lower Upper Spraberry Middle Spraberry Lower Spraberry Third
Slide 48: Historical Financial Results
Historical Financial Results D&C CAPEX ($MM) Daily Production (Boe/d) $ 325 7,317 7,212 % of Adj. EBITDAX 2014 2015 Q1 2016 2014 2015 Q1 2016 Adj. EBITDAX ($MM) (1) | WTI Oil Price ($/Bbl) Total Debt ($MM) | Debt / TTM Adj. EBITDAX (1) Adj. EBITDAX NYMEX WTI Oil Price Total Debt Debt / TTM Adj. EBIT
Slide 49: Production Expenses
Production Expenses Consistent Improvement Despite Small Production Base Historical Production Expenses ($/Boe) Lease Operating Expenses Transportation, Gathering and Processing Production Taxes G&A Expense $ 21.20 2H 2014 1H 2015 2H 2015 1Q 2016 (1)Production expenses includes: lease operating expe
Slide 50: EBITDAX Reconciliation
EBITDAX Reconciliation Three months ended Mar 31, Years ended Dec 31, ($ in thousands) 2016 2015 2015 2014 Net (loss) income $ (14,461) $ (5,937) $ (38,325) $ 17,790 Interest expense 1,641 1,526 6,266 2,475 Income tax (benefit) expense - - (572) 1,524 Depreciation, depletion and amortization and acc
Slide 51: NSAI Year End 2015 Proved Reserves
(1) NSAI Year End 2015 Proved Reserves Net Proved Reserves Oil Gas NGL Total PV-10 Net Revenue by Hydrocarbon Net Reserve by Hydrocarbon Net Reserves by Category NGLs 5% NGLs 12% Gas 5% Gas 17% PDP 40% PUD 60% Oil 71% Oil 90% (1)Reserves per Centennial’s year end 2015 third party reserve report prep
Slide 52: NSAI Year End 2015 Proved Reserves
NSAI Year End 2015 Proved Reserves () Net Proved Reserves oil Gas NGL Total Pv-t0 (NBbIs) (net (NBbIs) (wBoe) | (sump Reserve Category i Proved Developed Producing ("PDP") 9347 12711 1,603 130001 $141,416 Proved Undeveloped ("PUD") 13,852 19.731 2248 19,3891 4,057 ‘otal Proved Reserves: 23,199 32,44