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Approach Resources Inc. Reports Third Quarter 2012 Results

Third Quarter 2012 Financial Results

Net loss for third quarter 2012 was $2.4 million, or $0.07 per diluted share, on revenues of $33.0 million. This compares to net income for third quarter 2011 of $7.1 million, or $0.25 per diluted share, on revenues of $28.0 million. The $5.1 million increase in revenues in third quarter 2012 was attributable to an increase in production volumes ($11.5 million), which was offset by a decrease in oil, NGL and gas prices ($6.4 million). Net loss for third quarter 2012 included an unrealized loss on commodity derivatives of $4.2 million and a realized gain on commodity derivatives of $423,000. The decline in net income was driven by higher operating expenses and an unrealized loss on commodity derivatives, which were partially offset by higher revenues for third quarter 2012.

Excluding the unrealized loss on commodity derivatives and related income tax effect, adjusted net income (non-GAAP) for third quarter 2012 was $407,000, or $0.01 per diluted share, compared to $5.9 million, or $0.21 per diluted share, for third quarter 2011. See “Supplemental Non-GAAP Financial and Other Measures” below for our reconciliation of adjusted net income to net (loss) income.

EBITDAX (non-GAAP) for third quarter 2012 was $21.5 million, or $0.63 per diluted share, compared to $21.7 million, or $0.76 per diluted share, for third quarter 2011. See “Supplemental Non-GAAP Financial and Other Measures” below for our reconciliation of EBITDAX to net (loss) income.

Average realized prices for third quarter 2012, before the effect of commodity derivatives, were $86.38 per Bbl of oil, $30.50 per Bbl of NGLs and $2.73 per Mcf of natural gas, compared to $81.51 per Bbl of oil, $52.08 per Bbl of NGLs and $3.99 per Mcf of natural gas for third quarter 2011. Our average realized price, including the effect of commodity derivatives, was $44.78 per Boe for third quarter 2012, down 7% compared to $47.98 per Boe for third quarter 2011.

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