Vanguard Natural Resources: 2Q15 Activity Review


Sep. 1 2015, Updated 9:07 a.m. ET

Vanguard Natural Resources

Vanguard Natural Resources (VNR) focuses on the acquisition and development of mature, long-lived oil and natural gas properties in the United States. VNR constitutes 0.5% of the Global X SuperDividend Alternatives ETF (ALTY) and 3% of the First Trust ISE-Revere Natural Gas Index Fund (FCG).

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Vanguard Natural Resources properties

Vanguard Natural Resources’ crude oil and natural gas assets are located in nine core operating areas in the United States, as shown in the above image. As of December 31, 2014, VNR had ~2.03 Tcfe (trillion cubic feet equivalent) or 339 MMBoe (million barrels of oil equivalent) of proved reserves, of which 73% were gas and 27% were liquids.

Property impairments

VNR recorded $733.4 million in impairments related to its oil and natural gas properties in 2Q15. Impairment charges for 1Q15 were $132.6 million. Impairment charges for the six months ended June 30, 2015, totaled $866 million and were caused by lower oil and natural gas prices. We’ll discuss VNR’s 2Q15 earnings performance in the next part.

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Vanguard and Eagle Rock to merge

In a press release published on May 21, 2015, Vanguard Natural Resources and Eagle Rock Energy Partners (EROC) announced that the two MLPs have agreed to merge. VNR agrees to pay a total consideration of $474 million for all of EROC’s outstanding common units. VNR already has a merger pending with LRR Energy (LRE), announced in April 2015. VNR expects both transactions to close in the third quarter of 2015

According to Scott W. Smith, Vanguard’s president and chief executive officer, “…we believe that all three companies’ unitholders will benefit from a larger, more diversified entity with lower financial leverage and strong positions in several key U.S. basins.  The all-unit nature of the transaction will allow Vanguard, LRR Energy and Eagle Rock unitholders to jointly reap the value growth in an improving commodity price cycle.”


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