Approach Resources Inc
One Ridgmar Centre 6500 , West Freeway, Suite 800 , Fort Worth, Texas, United States

Our management team has extensive experience drilling for oil and natural gas in the Permian Basin. They have established a track record that demonstrates financial discipline, innovation and exploratory success. The core strategy behind our success is listed below:

• We have a large, multi-year inventory of identified drilling locations that provide us the opportunity to continue increasing production and reserves at a competitive cost. Focusing on the Wolfcamp shale oil resource play allows us to use our operating, technical and regional expertise important to interpreting geological and operating trends, enhancing production rates and maximizing well recovery.
• We believe our concentrated acreage position in the Midland Basin enables us to capture economies of scale and operating efficiencies. Through our investment in field infrastructure systems, we have reduced drilling and completion costs, per-unit lease operating expense and our fresh water use. We also drill multiple wells from a single pad, which reduces facilities costs and surface impact. We operate 100% of our reserve base, which allows us to better manage timing and risk.
• We continually review opportunities to acquire producing properties, undeveloped acreage and drilling prospects in our existing core area in the Permian Basin. We focus particularly on opportunities where we believe our operational efficiency, reservoir management and geological expertise in unconventional oil and gas properties will enhance value and performance. We remain focused on unconventional resource opportunities, but will also look at conventional opportunities based on individual project economics.
• We believe that over the long term we will be able to maintain and grow our production substantially out of operating cash flow.  We have the operational flexibility to adjust our capital spending upward in response to a continued commodity price recovery.  Operating our business at or near operating cash flow allows us to preserve liquidity so that we will be able to accelerate execution of our long-term strategy.

OPERATIONS MAP

We are applying outside the box thinking, using advanced technology and infrastructure to improve recoveries while maintaining our industry leading cost controls and operating efficiencies.  Our extensive network of centralized production facilities, water transportation, handling and recycling systems, gas lift lines and salt water disposal wells reduces the need for trucks, reduces fresh water usage, improves drilling and completion efficiencies and drives down drilling and completion and operating costs. We were able to reduce our lease operating expenses by 7% or $1.3 million, in 2017, partially due to this infrastructure investment.  As of December 31, 2017, we had drilled and completed more than 180 horizontal Wolfcamp wells. We have successful wells targeting each of the Wolfcamp benches, and we continue development of the Wolfcamp shale in 2018.

COMMUNITY

We are passionate about investing our time and money to improve the lives of those around us who are in need.  Currently, our efforts focus on supporting the health and well-being of children and youth in the communities where we operate.  We realize that these young people will soon be our future leaders.    Employees lead these charitable efforts, seeking out organizations and initiatives they wish to support, and often times, their efforts are supplemented with generous sponsorships from Approach.  Recent initiatives include construction of wooden playground equipment at the Ozona Community Center, which provides daycare services in our core operational area.  We have also been a supporter of the Special Olympics, a non-profit that helps young people with disabilities foster a sense of success through sports competition, as well as the Rutledge Foundation, an organization focused on attaining better treatment and care of young people with cancer.  Our employees have also led toy and food drives to donate to the Fort Worth Ronald McDonald House and Cook Children’s Hospital, and these efforts have been supported with corporate funds.

ENVIRONMENT

At Approach, our dedication to environmental stewardship is evidenced throughout the organization.  With a focus on continuous improvement, our field operations staff is embracing the latest in technologies, many of which help us to reduce our environmental impact.  For example, we drill multiple wells from a single drilling pad, a process that greatly reduces surface disturbance when compared to historical drilling methods. In addition, we have tapped into non-potable water sources in our drilling activities, reducing our fresh water consumption. In another effort to preserve the precious West Texas water supplies, we have implemented water reuse and recycling - a process by which produced water is captured in water containment systems, treated and reused.  We have also installed vapor capture systems designed to improve air quality around our facilities.  Finally, we have eliminated a substantial amount of truck traffic in our area of operations, by installing oil and water transportation pipelines.  Our goal is to meet or exceed all regulations and requirements pertaining to our operations.  More than that, our efforts are driven by responsible and caring employees who want to preserve the beauty and viability of our environment for generations to come.

SAFETY/HEALTH

Safety is a core value at Approach and ranks among our highest priorities.  We have a highly involved and committed management team that seeks to establish a proactive safety culture, focused on preventing incidents rather than responding to them.  While we are proud of our strong safety track record, we continuously seek to improve.  When a new employee arrives at Approach, we begin safety training on their first day of employment.  We then match the employee with a mentor who supervises, instructs and models proper safety practices.  Ongoing safety training includes monthly meetings to reinforce our safety protocols and drive increased awareness throughout the organization.  In addition, we regularly conduct facility inspections and proactively review all job responsibilities in an attempt to identify potential safety hazards before an incident occurs.  Our goal is to be an industry leader in the area of