Commodity Hedging Overview

Transcription

1 Commodity Hedging Overview February 24, 2016 The following information is current as of February 24, Memorial Resource Development Corp. (MRD) intends to update this information quarterly to the extent there are changes within the quarter. MRD may update more or less frequently at its discretion.

2 Forward-Looking Statements This presentation includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can be identified by words such as anticipates, intends, plans, seeks, believes, estimates, expects, targets and similar references to future periods. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond MRD s control. All statements, other than historical facts included in this presentation, that address activities, events or developments that MRD expects or anticipates will or may occur in the future, including such things as MRD s future capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, competitive strengths, goals, expansion and growth of MRD s business and operations, plans, market conditions, references to future success, references to intentions as to future matters and other such matters are forward-looking statements. All forward-looking statements speak only as of the date of this presentation. Although MRD believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions or expectations will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. MRD cautions you that these forward-looking statements are subject to risks and uncertainties, most of which are difficult to predict and many of which are beyond MRD s control, incident to the exploration for and development, production, gathering and sale of natural gas and oil. These risks include, but are not limited to: commodity price volatility; inflation; lack of availability of drilling and production equipment and services; environmental risks; drilling and other operating risks; regulatory changes; the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital; and the timing of development expenditures. Information concerning these and other factors can be found in MRD s filings with the Securities and Exchange Commission, including its Forms 10-K, 10-Q and 8-K. Consequently, all of the forward-looking statements made in this presentation are qualified by these cautionary statements and there can be no assurances that the actual results or developments anticipated by MRD will be realized, or even if realized, that they will have the expected consequences to or effects on MRD, its business or operations. MRD has no intention, and disclaims any obligation, to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise. 2 2

3 MRD Hedging Overview in 2016 & 2017 MRD s commodity risk management policy provides for hedging estimated production from total proved reserves Proactive policy reduces MRD s exposure to movements in commodity prices and provides stability to cash flow All of MRD s trading counterparties have credit ratings of BBB (S&P) or Baa2 (Moody s) or higher MRD s current hedges include fixed price swaps, collars and deferred premium puts Hedge Summary as of February 24, 2016 Natural Gas Hedge Contracts: Total natural gas volumes hedged (MMBtu) 116,040,000 98,040,000 Total weighted-average price (1) $3.76 $3.78 Crude Oil Hedge Contracts: Total crude oil volumes hedged (Bbl) 1,075, ,000 Total weighted-average price (1) $93.04 $84.70 Natural Gas Liquids Hedge Contracts: Total natural gas liquids volumes hedged (Bbl) 5,238,004 Total weighted-average price (1) $40.09 Total Hedge Contracts: Total Hedged Production (MMBtue) 153,923, ,056,000 Total weighted-average price (1) $4.85 $3.99 Percent of expected production hedged (2) ~100% (1) Using the midpoint of collars (2) Using MRD s 2016 production guidance 35 3

4 Natural Gas Hedging in 2016 & 2017 MRD s existing natural gas hedge volumes are 317,049 MMBtu/d for 2016 at a weighted average price of $3.76 per MMBtu Natural Gas Hedging Summary 360, ,000 $3.76 Hedged Volumes (MMBtu/d) 280, , , , ,000 80,000 40,000 $3.51 $4.00 $4.71 $4.09 $3.78 $3.48 $4.00 $5.06 $ Swap Collar Total Put 4

5 Crude Oil Hedging in 2016 & 2017 MRD s existing crude oil hedge volumes are 2,940 Bbl/d for 2016 at a weighted average price of $93.04 per Bbl Crude Oil Hedging Summary 3,500 3,000 $93.04 Hedged Volumes (Bbl/d) 2,500 2,000 1,500 $80.00 $ ,000 $94.42 $ $ Swap Collar 5

6 NGL Hedging in 2016 Hedging NGLs by product helps protect MRD from fluctuations in the NGL to crude oil price relationship Due to a lack of market liquidity, direct hedging of NGLs is typically limited to 12 to 24 months MRD s existing NGL hedge volumes are 14,311 Bbl/d for 2016 at a weighted average price of $40.09 per Bbl 16,000 NGL Hedging Summary 14,000 Hedged Volumes (Bbl/d) 12,000 10,000 8,000 6,000 $ ,000 2, Swap 6

7 Natural Gas Hedges in 2016 & 2017 Natural Gas Hedge Summary Swap contracts: Volume (MMBtu) 30,840,000 21,240,000 Volume (MMBtu/d) 84,262 58,192 Weighted-average fixed price $4.09 $4.24 Collar contracts: Volume (MMBtu) 13,200,000 12,600,000 Volume (MMBtu/d) 36,066 34,521 Weighted-average floor price $4.00 $4.00 Weighted-average ceiling price $4.71 $5.06 Put options (bought): Volume (MMBtu) 72,000,000 64,200,000 Volume (MMBtu/d) 196, ,890 Weighted-average floor price $3.51 $3.48 Weighted-average put premium ($0.34) ($0.32) Total Natural Gas Hedge Contracts: Total natural gas volumes hedged (MMBtu) 116,040,000 98,040,000 Total natural gas volumes hedged (MMBtu/d) 317, ,603 Total Weighted-Average Price Total weighted-average price (excluding puts) $4.17 $4.35 Total weighted-average price (including puts) $3.76 $3.78 7

8 Liquids Hedges in 2016 & 2017 Liquids Hedge Summary Crude Oil Hedge Contracts: Swap contracts: Volume (Bbl) 751, ,000 Volume (Bbl/d) 2, Weighted-average fixed price $94.42 $84.70 Collar contracts: Volume (Bbl) 324,000 Volume (Bbl/d) 885 Weighted-average floor price $80.00 Weighted-average ceiling price $99.70 Total Crude Oil Hedge Contracts: Total crude oil volumes hedged (Bbl) 1,075, ,000 Total crude oil volumes hedged (Bbl/d) 2, Total Weighted-Average Price Total weighted-average price (including puts) $93.04 $84.70 Natural Gas Liquids Hedge Contracts: Swap contracts: Volume (Bbl) 5,238,004 Volume (Bbl/d) 14,311 Weighted-average fixed price $40.09 Total Natural Gas Liquids Hedge Contracts: Total natural gas liquids volumes hedged (Bbl) 5,238,004 Total NGL volumes hedged (Bbl/d) 14,311 % Ethane 28% Total Weighted-Average Price Total weighted-average price $

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