Profile: Vanguard Natural Resources LLC (VNR.O)

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Vanguard Natural Resources, LLC (VNR), incorporated on October 10, 2006, is a limited liability company focused on the acquisition and development of oil and natural gas properties in the United States. Through its operating subsidiaries, as of December 31, 2014, the Company owned properties, and oil and natural gas reserves primarily located in nine operating basins: the Green River Basin in Wyoming; the Piceance Basin in Colorado; the Permian Basin in West Texas and New Mexico; the Gulf Coast Basin in Texas, Louisiana and Mississippi; the Big Horn Basin in Wyoming and Montana; the Arkoma Basin in Arkansas and Oklahoma; the Williston Basin in North Dakota and Montana; the Wind River Basin in Wyoming, and the Powder River Basin in Wyoming. The Company's total estimated proved reserves as at December 31, 2014, were 2,031.3 billion cubic feet equivalents (Bcfe), of which approximately 15% were oil reserves, 73% were natural gas reserves and 12% were NGLs reserves.

As at December 31, 2014, VNR owned working interests in 9,759 gross (3,664 net) productive wells. The Company's operated wells accounted for approximately 53% of its total estimated proved reserves as at December 31, 2014. As of December 31, 2014, the Company owned approximately 870,140 gross undeveloped leasehold acres surrounding its existing wells. As of December 31, 2014, VNR had identified 1,254 proved undeveloped drilling locations and over 3,931 other drilling locations on its leasehold acreage. For the year ended December 31, 2014, sales of oil, natural gas and natural gas liquids (NGLs) to Anadarko Petroleum Corporation, Marathon Oil Company, Cardinal Midstream LLC, Plains Marketing, LP and Bill Barrett Corporation accounted for approximately 19%, 12%, 9%, 7% and 5%, respectively, of VNR's oil, natural gas and NGLs revenues. VNR conducts its operations through its subsidiaries, namely, Vanguard Natural Gas, LLC (VNG), VNR Holdings, LLC (VNRH), Vanguard Permian, LLC (Vanguard Permian), Vanguard Operating, LLC (VO), VNR Finance Corp. (VNRF), Encore Energy Partners Operating LLC (OLLC) and Encore Clear Fork Pipeline LLC.

Green River Basin Properties

The Company's Green River Basin properties consist of assets in the Pinedale and Jonah Fields of southwestern Wyoming. Production in the Green River Basin is dominated by natural gas and NGLs from tight sands formations. The Pinedale Field lies at depths between 8,000 to 14,000 feet with similar depths in the adjacent Jonah Field. As of December 31, 2014, VNR's Green River Basin properties consisted of 126,420 gross (35,038 net) leasehold acres. During the year ended December 31, 2014, the Green River Basin properties produced approximately 39,921 million cubic feet equivalent (MMcfe), of , which 77% was natural gas. As at December 31, 2014, the properties had total proved reserves of approximately 764,877 MMcfe, of , which 52% were proved developed and 84% were natural gas. The Company markets its Green River Basin residue natural gas into the Rockies market through the use of multiple pipeline connections.

Piceance Basin Properties

VNR's Piceance Basin properties, which it operates, are located in the Gibson Gulch. The Piceance Basin is located in northwestern Colorado. The Gibson Gulch area is a basin-centered gas play along the north end of the Divide Creek anticline near the eastern limits of the Piceance Basin's productive Mesaverde (Williams Fork) trend at depths of approximately 7,500 feet. As of December 31, 2014, the Company's Piceance Basin properties consisted of 24,040 gross (16,075 net) leasehold acres. During the year ended December 31, 2014, VNR's properties in the Piceance Basin produced approximately 16,094 MMcfe, of , which 77% was natural gas. As at December 31, 2014, the Piceance Basin properties accounted for approximately 441,673 MMcfe, of , which 77% were proved developed and 78% were natural gas. VNR markets its natural gas production into the Rockies market.

Permian Basin Properties

The Permian Basin is an oil and natural gas producing basin in the United States extending over West Texas and southeast New Mexico. The Company's producing wells in the Permian Basin are mature oil wells that also produce high-British thermal unit (Btu) casinghead gas with NGLs content. As of December 31, 2014, VNR's Permian Basin properties consisted of 131,797 gross (93,389 net) leasehold acres. During the year ended December 31, 2014, the Company's Permian Basin operations produced approximately 15,504 MMcfe, of , which 59% was oil, condensate and NGLs. As at December 31, 2014, the Permian Basin properties accounted for approximately 241,286 MMcfe, of , which 77% were proved developed and 51% were oil, condensate and NGLs. VNR sells oil production from its operated Permian Basin properties at the wellhead to third-party gathering and marketing companies.

Gulf Coast Basin Properties

The Company's Gulf Coast Basin properties include properties in the onshore Gulf Coast area, North Louisiana, East Texas, South Texas and Mississippi. Production from the North Louisiana properties comes from the East Haynesville and Cotton Valley fields. The Company's properties include multiple productive zones, including Cotton Valley, James Lime, Pettet, Haynesville, Smackover and Hosston. East Haynesville is located in Claiborne Parish, Louisiana and lies at a depth of about 10,000 to 13,000 feet. The Cotton Valley field is located in Webster Parish, Louisiana and is about 9,000 to 11,000 feet deep. VNR's production from East Texas properties comes from the Fairway (James Lime Unit) Field in Henderson and Anderson counties. Most of the Company's South Texas properties are operated by Lewis Petroleum and are located in two fields, Gold River North Field and Sun TSH Field, located in Webb and LaSalle Counties, Texas, respectively. Most of the production is high-Btu gas that is produced from the Olmos and Escondido sand formations from a depth averaging 7,500 feet. VNR operates the majority of its Mississippi properties , which are located in the Mississippi Salt Basin. Most of its production comes from the Parker Creek Field in Jones County, Mississippi. VNR also has a license for 10 square miles of 3-D seismic data for the development of Parker Creek Field. The Company's production is mainly oil that produces from the Hosston Formation from a depth ranging from approximately 13,000 feet to 15,000 feet. Production from the Company's properties in the onshore Gulf Coast Basin comes from the Silsbee Field in Hardin County, Texas. Most of the Silsbee production is oil produced from the Yegua formation. As of December 31, 2014, the Company's Gulf Coast Basin properties consisted of 93,432 gross (45,099 net) leasehold acres. During the year ended December 31, 2014, the Gulf Coast Basin properties produced approximately 5,654 MMcfe, of , which 54% were oil, condensate and NGLs. As at December 31, 2014, the Gulf Coast Basin properties accounted for approximately 181,509 MMcfe, of , which 61% were proved developed and 63% were natural gas.

Big Horn Basin Properties

The Company's Elk Basin field is located in Park County, Wyoming and Carbon County, Montana. VNR operate the properties in the Elk Basin area , which includes the Embar-Tensleep, Madison and Frontier formations. The Company's wells in the Embar-Tensleep formation of the Elk Basin field are drilled to a depth of 5,100 to 6,600 feet. The wells in the Madison formation of the Elk Basin field are drilled to a depth of 4,400 to 7,000 feet. The wells in the Frontier formation of the Elk Basin field are typically drilled to a depth of 1,400 to 2,700 feet. The Company operates and owns a 62% interest in the Elk Basin natural gas processing plant near Powell, Wyoming, which is a refrigeration natural gas processing plant that receives natural gas supplies through a natural gas gathering system from Elk Basin fields. VNR also operates and owns the Wildhorse pipeline system, which is an approximately 12-mile natural gas gathering system that transports approximately 1.0 million cubic feet per day (MMcf/day) of low-sulfur natural gas from the South Elk Basin fields to the Elk Basin natural gas processing plant. The Company's Big Horn Basin properties consist of assets in Wyoming and the Elk Basin field in south central Montana. The Big Horn Basin properties consisted of 24,512 gross (15,632 net) leasehold acres as of December 31, 2014. During the year ended December 31, 2014, VNR's properties in the Big Horn Basin produced approximately 6,799 MMcfe, of , which 88% was oil. As at December 31, 2014, the Big Horn Basin properties accounted for approximately 104,437 MMcfe, of , which 95% were proved developed and 95% were oil, condensate and NGLs. The marketing of heavy sour crude oil production from VNR's Big Horn Basin properties is done through its Clearfork pipeline, which transports the crude oil to local and other refiners through connections with other pipelines. VNR's Big Horn Basin sweet crude oil production is transported from the field by a third-party trucking company that delivers the crude oil to a centralized facility connected to a common carrier pipeline with delivery points accessible to local refiners in the Salt Lake City, Utah and Guernsey, Wyoming market centers.

Arkoma Basin Properties

The Company's Arkoma Basin properties include properties in the Woodford Shale, located in eastern Oklahoma, the Fayetteville Shale, located in Arkansas, and royalty interests and non-operated working interest in both states. As of December 31, 2014, VNR's Arkoma Basin properties consisted of 148,467 gross (73,140 net) leasehold acres. During the year ended December 31, 2014, the Arkoma Basin properties produced approximately 20,113 MMcfe, of , which 92% was natural gas. As at December 31, 2014, the Arkoma Basin properties had total proved reserves of approximately 211,503 MMcfe, of , which 80% were proved developed and 91% were natural gas. The natural gas production is gathered by multiple third-party entities with the processed natural gas ultimately delivered to the Atlas Resources natural gas processing complex.

Williston Basin Properties

VNR's Williston Basin properties are located in North Dakota and Montana, which include the Horse Creek Field, the Charlson Madison Unit and the Elk field. VNR's Horse Creek field is located in Bowman County, North Dakota and has producing oil wells from multiple horizons in the Red River formation. The Charlson Madison Unit produces from the unitized Madison formation. The Elk field is operated and produces from wells in McKenzie County, North Dakota. As of December 31, 2014, VNR's Williston Basin properties consisted of 550,996 gross (71,960 net) leasehold acres. During the year ended December 31, 2014, the properties produced approximately 2,843 MMcfe, of , which 93% was oil. The Company's Williston Basin properties had estimated proved reserves, as at December 31, 2014, 25,097 MMcfe, of , which 96% were proved developed and 94% were oil.

Wind River Basin Properties

The Company's activities are concentrated primarily in the eastern Wind River Basin, along the greater Waltman Arch. VNR's natural gas production in this basin is gathered through its own gathering systems and delivered to markets through pipelines owned by Kinder Morgan Interstate and Colorado Interstate Gas (CIG). As of December 31, 2014, VNR's Wind River Basin properties consisted of 231,685 gross (197,369 net) leasehold acres. During the year ended December 31, 2014, VNR's Wind River Basin properties produced approximately 3,791 MMcfe, of , which 87% was natural gas. As at December 31, 2014, the properties had total proved reserves of approximately 36,842 MMcfe, of , which 95% were proved developed and 82% were natural gas. Wind River Basin's residue natural gas is sold into the Rockies market while the NGLs are sold to a third-party natural gas processor pursuant to a processing agreement.

Powder River Basin Properties

The Company's Powder River Basin properties are primarily located in northeastern Wyoming. VNR's development operations are conducted in its coalbed methane (CBM) fields. VNR's natural gas production in this basin is gathered through gathering and pipeline systems owned by Fort Union Gas Gathering, LLC and Thunder Creek Gas Services. As of December 31, 2014, the Company's Powder River Basin properties consisted of 114,287 gross (66,866 net) leasehold acres. During the year ended December 31, 2014, the properties produced approximately 8,676 MMcfe, which was 100% natural gas. As at December 31, 2014, the properties had total proved reserves of approximately 24,111 MMcfe, of , which 77% were proved developed.

Company Address

Vanguard Natural Resources LLC

5847 San Felipe St Ste 3000
HOUSTON   TX   77057-3399
P: +1832.3272259
F: +1832.3272260

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