WildHorse Resource Development (WRD) Offers Update on Reserves and Guidance

WildHorse Resource Development Corporation (NYSE: WRD) announced today year-end 2016 reserves, an operational update, and 2017 guidance. Highlights include:

Year-End 2016 Reserves:

• Reported year-end 2016 proved reserves of 152.5 MMboe, an increase of 48% from 103.0 MMboe at year-end 2015
• Increased proved, probable and possible (“3P”)(1) reserves by 59% to 818.9 MMboe at year-end 2016 from 515.8 MMboe at June 30, 2016 (WRD’s last 3P reserve audit date)
  • At year-end 2016, 3P reserves were 494.2 MMboe in the Eagle Ford and 324.8 MMboe in North Louisiana, an increase of 90% and 27% from June 30, 2016, respectively
  • WRD increased its audited Burleson Main type curve used to evaluate PUD reserves by 9% to an EUR of 584 Mboe from 535 Mboe at year-end 2015
• PV-10 of proved reserves increased by 66% to $750 million at year-end 2016 from $452 million at year-end 2015 despite lower SEC commodity pricing
• Drill-bit finding and development (“F&D”) costs excluding acquisitions and price revisions averaged $4.73 per Boe, based on preliminary unaudited capital expenditure amounts for 2016(4)
• Replaced 464% of estimated production in 2016 including performance revisions and excluding price revisions and acquisitions

Operational Update:

• Estimated fourth quarter 2016 production of 17.5 Mboe/d pro-forma for the Burleson North acquisition (closed on 12/19/16)
• Turned online 7.0 gross (7.0 net) Eagle Ford wells during the fourth quarter 2016
  • Drilled 16 gross (16.0 net) wells and completed 16 gross (16.0 net) wells in the Eagle Ford for full year 2016
  • Drilled 1 gross (0.8 net) wells and completed 2 gross (1.5 net) wells in North Louisiana for full year 2016
• As of December 31, 2016, WRD had 16 Gen 3 wells on production in the Eagle Ford averaging above the Burleson Main EUR type curve of 91 Mboe per thousand feet of lateral

2017 Financial and Operational Guidance:

• Project 2017 daily production to average 23.0 – 27.0 Mboe/d
  • Represents an approximate 36% increase over 2016's average daily production pro-forma for the Burleson North acquisition (using the mid-point of WRD's guidance range)
• WRD currently operates 3 rigs in the Eagle Ford and 1 rig in North Louisiana and expects to operate an average of approximately 6 total drilling rigs in 2017
• Estimated fiscal year 2017 D&C capex is approximately $450 - $600 million
  • D&C capex allocates 88% of the budget to the Eagle Ford and 12% of the budget to North Louisiana
  • Capital budget expected to be funded with cash on hand and WRD’s credit facility while targeting a Net Debt / EBITDAX ratio of approximately 2.0x or less

"With sixteen Gen 3 wells online at the end of 2016, our latest completion design now outnumbers the total of Gen 2 wells. We are tracking above our Burleson Main Eagle Ford type curve and are beginning to see the impact of our choke management strategy with shallower declines on the most recent wells. In addition, we will now control over 378,000 net acres in the Eagle Ford and North Louisiana after the closing of our most recent Burleson County acquisition. Furthermore, at year end 2016, we have expanded our proved reserves to 152.5 MMboe, an increase of 48% since the previous year. We look forward to delineating more of our acreage and expanding it as opportunities present themselves. Our top priorities for 2017 will include continuing to improve our completion design, while delivering industry-leading growth and maintaining a strong balance sheet,” said Jay Graham, Chairman and Chief Executive Officer of WRD.

Year-End 2016 Proved Reserves

WRD reported year-end 2016 proved reserves of 152.5 MMboe an increase of 48% from 103.0 MMboe at year-end 2015. At year-end 2016, WRD's proved reserves consisted of 57% oil, 36% natural gas and 7% NGLs.

Cawley, Gillespie & Associates (“CG&A”), an independent reserve engineering firm, audited WRD’s year-end reserves estimates as of December 31, 2016. WRD’s 2016 development program was primarily in the Eagle Ford with only two wells brought online in North Louisiana. Due to the Burleson North acquisition and greater activity in the Eagle Ford, the majority of added proved reserves were in the Eagle Ford. However, on a 3P basis, reserves increased in both areas with a 3P increase of 90% in the Eagle Ford and a 3P increase of 27% in North Louisiana since June 30, 2016. The table below provides additional information relating to WRD's reserves for the periods indicated:

Using SEC prices, the present value discounted at 10% ("PV-10")(3) of WRD’s proved reserves at December 31, 2016 was $750 million (excluding WRD's hedges). The SEC rules require that proved reserve calculations be based on the average of the closing prices for the first day of each month in 2016. For the year-end 2016 reserve evaluation, the benchmark prices were $42.75 per barrel for crude oil and $2.48 per MMBtu for natural gas which compares to $50.28 per barrel for crude oil and $2.59 per MMBtu for natural gas at year-end 2015. This represents a 15% and 4% year-over-year decrease in benchmark crude oil and natural gas prices, respectively.

WRD replaced 464% of estimated production in 2016 including performance revisions and excluding price revisions and acquisitions. Drill-bit finding and development (“F&D”)(4) costs for proved reserve additions from costs incurred for D&C capital expenditures, including facilities and capital workovers, averaged $4.73 per Boe, based on preliminary unaudited capital expenditure amounts for 2016. The reserve life of WRD’s proved reserves, based on the 2016 drilling program, is approximately 28.8 years. Additional detail regarding WRD’s calculation of its F&D costs can be found in the "Appendix" section of this press release.

Year-End 2016 3P Reserves

CG&A audited 3P reserves at year-end 2016 were 818.9 MMboe, a 59% increase over 515.8 MMboe at June 30, 2016 (WRD’s last 3P reserve audit date). Year-end 3P reserves were 494.2 MMboe in the Eagle Ford and 324.8 MMboe in North Louisiana, an increase of 90% and 27% from June 30, 2016, respectively. The table below summarizes CG&A audited 3P reserve volumes using SEC pricing:

Acreage and Horizontal Drilling Location Update

As of December 31, 2016, management estimates 2,350 net horizontal drilling locations in the Eagle Ford and North Louisiana. Specifically, this includes 1,702 net locations in the Eagle Ford and 648 net locations in North Louisiana.

Of WRD’s total 2,350 net horizontal locations, 1,700 or 72%, are included within CG&A’s 3P geographic area as of the year-end 2016 reserve report. This is 566 net locations greater than the 1,134 net locations, or 49%, within the 3P geographic area reported at WRD’s recent initial public offering. Of the additional 566 net locations in the 3P geographic area, 411 net locations are part of the Burleson North acquisition. The majority of the remaining new 3P locations are in other Eagle Ford operational areas with 3P locations added to North Louisiana as well.

In addition to the greater 3P location count, WRD has continued to increase its acreage position through organic leasing and acquisitions. Since the IPO, WRD has added another 12,843 net acres in the Eagle Ford including the recently announced acquisition of 10,535 net acres in Burleson County from multiple sellers for $15.6 million. The acquisition comes with 16 producing wells and 195 net barrels of oil equivalent per day of production, with an implied acquisition cost of approximately $812 per acre. One transaction has closed and the other transactions are expected to close in April 2017. Pro-forma for the acquisition, WRD’s total acreage position is now 378,024 net acres. WRD will continue to actively evaluate further acquisition opportunities as they arise.

Fourth Quarter and Full Year 2016 Operational Update

WRD expects to report estimated fourth quarter 2016 average daily production of 14.3 Mboe/d, which represents a 1% increase from the fourth quarter 2015. WRD’s estimated production mix during the fourth quarter 2016 consisted of approximately 40% oil, 50% natural gas, and 10% NGLs. WRD’s estimated full year 2016 production was 14.5 Mboe/d, a 39% increase from 10.4 MBoe/d for full year 2015. Fourth quarter 2016 production was impacted by downtime associated with workover activity and maintenance on several existing wells in North Louisiana. In addition, the timing of wells in the Eagle Ford also had a limited effect on fourth quarter 2016 production.

Full fourth quarter 2016 production pro-forma for the closed Burleson North acquisition was 17.5 Mboe/d consisting of approximately 47% oil, 44% natural gas, and 9% NGLs. Pro-forma full year 2016 production was 18.4 Mboe/d, a 14% increase from 16.2 MBoe/d for full year 2015. Pro-forma estimated production mix during the full year 2016 consisted of approximately 45% oil, 47% natural gas, and 8% NGLs.

As of December 31, 2016, WRD had 16 Gen 3 wells on production in the Eagle Ford averaging above the Burleson Main EUR type curve of 91 Mboe per thousand feet of lateral. WRD turned to sales 7.0 gross (7.0 net) Eagle Ford wells during the fourth quarter 2016. The preliminary estimate of D&C capital expenditures, including facilities and capital workovers, totaled $35.7 million in the fourth quarter 2016. For the full year 2016, WRD’s preliminary estimate of D&C capital expenditures, including facilities and capital workovers, was approximately $116.4 million. Land and leasehold acquisitions totaled $397.3 million in 2016 of which $294.2 million was attributable to the Burleson North acquisition.

2017 Operational and Financial Guidance

During 2017, WRD expects to operate an average of approximately 6.0 rigs with an average of 4.5 drilling rigs in the Eagle Ford and 1.5 rigs in North Louisiana. WRD currently projects 2017 daily production between 23.0 – 27.0 Mboe/d. At the mid-point, this represents an approximate 36% increase over 2016's average daily production pro-forma for the Burleson North acquisition. WRD anticipates 2017 average daily production to consist of approximately 52% - 56% oil, 35% - 38% natural gas and 8% - 10% NGLs.

WRD estimates a total fiscal year 2017 D&C capex of approximately $450 - $600 million with 88% of the budget to the Eagle Ford and 12% of the budget to North Louisiana. WRD expects this capital budget outspend to be funded by cash on hand and the currently undrawn credit facility.

For the full year 2017, WRD expects to spud 90 to 110 gross wells and to bring online 80 to 100 gross wells. WRD estimates an average working interest of approximately 89% for wells brought online in 2017. For the full year 2017, a summary of the guidance is presented below:

The operational and financial guidance provided in this press release is subject to the cautionary statements and limitations described under “Cautionary Statements and Additional Disclosures – Forward-Looking Statements” in the Appendix of this press release. WRD’s guidance is based on, among other things, its current expectations regarding capital expenditure levels and the assumption that market demand and prices for oil, natural gas and NGLs will continue at a level that allows for economic production of these products.

Financial Update

As of December 31, 2016, total outstanding debt was $242.7 million drawn on WRD’s revolving credit facility. Pro-forma for the recent over-allotment exercise proceeds received of $32.6 million and the issuance of $350 million in senior unsecured notes, total debt is $350.0 million leaving the revolving credit facility fully undrawn with a borrowing base of $362.5 million. As of December 31, 2016, WRD’s pro-forma liquidity of $495.9 million consisted of $133.4 million of cash and cash equivalents and $362.5 million of availability under its revolving credit facility. WRD is projected to exit 2017 with a net debt to annualized EBITDAX ratio of less than 2.0 times. WRD's liquidity position is expected to be sufficient to finance anticipated working capital and capital expenditures.

Hedging Overview

WRD utilizes its hedging program to mitigate financial risks and commodity price volatility. As of February 23, 2017, WRD has hedged approximately 72% of its expected 2017 production (using the mid-point of WRD’s guidance range). In 2017, WRD has hedged approximately 72% of expected oil volumes and approximately 89% of expected natural gas volumes (using the mid-point of WRD’s guidance range). WRD’s weighted average hedge price in 2017 is $53.75 per Bbl of oil and $3.21 per MMBtu of natural gas.

WRD uses a combination of swaps, collars, and puts to hedge its production. In 2017, 28% of expected oil volumes and 16% of natural expected gas volumes are hedged with put option contracts which do not limit the potential upside from rising commodity prices (using the mid-point of WRD’s guidance range).

The following table reflects WRD’s hedged volumes and corresponding weighted-average price, as of February 23, 2017:

Fourth Quarter and Full Year 2016 Earnings Conference Call

WRD will report its fourth quarter and full year 2016 financial and operating results after the market closes for trading on March 29, 2017. On the morning of March 30, 2017, management will host a fourth quarter and full year 2016 earnings conference call at 8 a.m. Central (9 a.m. Eastern). Interested parties are invited to participate on the call by dialing (877) 883-0383 (Conference ID: 0311954), or (412) 902-6506 for international calls, (Conference ID: 0311954) at least 15 minutes prior to the start of the call or via the internet at www.wildhorserd.com. A replay of the call will be available on WRD’s website or by phone at (877) 344-7529 (Conference ID: 10102013) for a seven-day period following the call.

About WildHorse Resource Development Corporation

WildHorse Resource Development Corporation is an independent oil and natural gas company focused on the acquisition, exploration, development and production of oil, natural gas and NGL properties primarily in the Eagle Ford Shale in East Texas and the Over-Pressured Cotton Valley in North Louisiana. For more information, please visit our website at www.wildhorserd.com.

Appendix

The tables set forth below provide additional information relating to WRD's reserves. See “Cautionary Statements and Additional Disclosures” for more information regarding 3P reserves.

3P Reserve Detail (as of December 31, 2016)(2):

Proved Reserve – Developed and Undeveloped

Drill-Bit Finding and Development (“F&D”) Cost Calculation:

Drill-bit F&D cost is an indicator used to assist in the evaluation of the historical cost of adding proved reserves on a per Boe basis. Consistent with industry practice, future capital cost to develop proved undeveloped reserves are not included in costs incurred. Drill-bit F&D costs are calculated as D&C capital expenditures, including facilities and capital workovers, divided by reserve additions from extensions, discoveries, additions and performance revisions.

You May Also Be Interested In

• Cerebras CEO says investors misunderstood margin guidance
• Goldman Sachs plans 11% dividend increase after Fed stress test
• Identiv to sell IoT assets to Trackonomy for $50M in preferred equity