Approach Resources, Inc.
(NASDAQ: AREX) is an independent energy company focused on the exploration,
development, production and acquisition of unconventional oil and gas reserves
in the Midland Basin of the greater Permian Basin in West Texas. As of December
31, 2014, the company owned and operated 729 producing oil and gas wells
throughout Texas, providing access to reserves of nearly 150 million barrels of
oil equivalent in Crockett and Schleicher counties alone.
According to the Railroad
Commission of Texas, the Permian Basin is a significant oil-producing area for
the state. In 2010, the region produced more than 270 million barrels of oil, and
production increased slightly in 2011, reaching 280 million barrels. To date,
the basin has produced more than 29 billion barrels of oil, in addition to 75
trillion cubic feet of gas, demonstrating Approach’s immense potential for
sustained production into the future.
Moving forward, Approach will
continue to focus on the development of its Wolfcamp shale oil resource play.
In recent years, the company has built a large, multi-year inventory of
identified drilling locations that should allow for continued increases of
production and reserves at a competitive cost. By investing in improved field
infrastructure systems, Approach has effectively reduced drilling and
completion costs, allowing the company to thrive as a low-cost producer in the
increasingly competitive oil and gas industry.
In the first quarter of 2015,
Approach shifted its focus towards enhanced cost-reduction measures in order to
remain profitable with slumping oil prices. In addition to recording a 21
percent year-over-year increase in total production, the company located
significant savings in operating costs, allowing Approach to protect its
balance sheet while increasing efficiency. As crude oil prices recover, these
efforts should place the company in a formidable position to capture upside for
investors.
“During the first quarter of
2015, we concentrated our efforts on identifying and implementing various
cost-reduction initiatives and completing our backlog of uncompleted wells,”
stated J. Ross Craft, President and Chief Executive Officer of Approach. “I am
pleased to report our current well costs have been reduced to approximately
$4.6 million as a result of our water recycling facility and service cost
concessions.”
By entering into commodity price
swaps and collars from time-to-time, Approach is well-positioned to partially
mitigate the risk of commodity price volatility, which has proven a valuable
strategy in recent months. As US crude oil inventories continue to drop and
support greater oil prices, Approach is in a favorable position to further
increase production throughout the Permian Basin.
For more information, visit
www.approachresources.com
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