##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the transition period fromto
 Commission file number: 001-33801
 
 APPROACH RESOURCES INC.
 (Exact name of registrant as specified in its charter)
 
 Delaware
    
    51-0424817(State or other jurisdiction of
    
    (I.R.S. employerincorporation or organization)
    
    identification number)
 One Ridgmar Centre6500 W. Freeway, Suite 800Fort Worth, Texas
    
    76116(Address of principal executive offices)
    
    (Zip Code)
 (Registrants telephone number, including area code)
 
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONItem 1. Financial statementsItem 2. Managements discussion and analysis of financial condition and results of operationsItem 3. Quantitative and qualitative disclosures about market riskItem 4T. Controls and proceduresPART II  OTHER INFORMATIONItem 1. Legal proceedingsItem 1A. Risk factorsItem 2. Unregistered sales of equity securities and use of proceedsItem 3. Defaults upon senior securitiesItem 4. Submission of matters to a vote of security holdersItem 5. Other informationItem 6. ExhibitsSIGNATURESIndex to ExhibitsCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906    Table of Contents  
 PART I  FINANCIAL INFORMATION
 
 Item 1. Financial statements.
 APPROACH RESOURCES INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    December 31,(In thousands, except shares and per share amounts)
    
    2008
    
    
    2007ASSETSCURRENT ASSETS:Cash
    
    $
    1,336
    
    
    $
    4,785Accounts receivable:Joint interest owners
    
    
    7,422
    
    
    
    5,272Oil and gas sales
    
    
    8,589
    
    
    
    5,524Unrealized gain on commodity derivatives
    
    
    
    
    
    
    793Prepaid expenses and other current assets
    
    
    1,232
    
    
    
    773Total current assets
    
    
    18,579
    
    
    
    17,147PROPERTIES AND EQUIPMENT:Oil and gas properties, at cost, using the successful efforts method of accounting
    
    
    281,985
    
    
    
    266,905Furniture, fixtures and equipment
    
    
    530
    
    
    
    433282,515
    
    
    
    267,338Less accumulated depletion, depreciation and amortization
    
    
    (42,072
    )
    
    
    (36,860
    )Net properties and equipment
    
    
    240,443
    
    
    
    230,478INVESTMENT
    
    
    917
    
    
    
    917UNREALIZED GAIN ON COMMODITY DERIVATIVES
    
    
    
    
    
    
    75OTHER ASSETS
    
    
    98
    
    
    
    109Total assets
    
    $
    260,037
    
    
    $
    248,726LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    3,068
    
    
    $
    5,459Oil and gas sales payable
    
    
    3,377
    
    
    
    1,794Accrued liabilities
    
    
    11,265
    
    
    
    14,764Unrealized loss on commodity derivatives
    
    
    3,644
    
    
    
    Total current liabilities
    
    
    21,354
    
    
    
    22,017NON-CURRENT LIABILITIES:Long-term debt
    
    
    7,290
    
    
    
    Unrealized loss on commodity derivatives
    
    
    367
    
    
    
    Deferred income taxes
    
    
    27,601
    
    
    
    26,342Asset retirement obligations
    
    
    588
    
    
    
    548Total liabilities
    
    
    57,200
    
    
    
    48,907COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY :Preferred stock, $0.01 par value, 10,000,000 shares authorized none outstanding
    
    
    
    
    
    
    Common stock, $0.01 par value, 90,000,000 shares authorized, 20,622,746 shares
issued and outstanding
    
    
    206
    
    
    
    206Additional paid-in capital
    
    
    166,367
    
    
    
    166,141Retained earnings
    
    
    36,129
    
    
    
    33,367Accumulated other comprehensive income
    
    
    135
    
    
    
    105Total stockholders equity
    
    
    202,837
    
    
    
    199,819Total liabilities and stockholders equity
    
    $
    260,037
    
    
    $
    248,726
 See accompanying notes to these consolidated financial statements.
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APPROACH RESOURCES INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months EndedMarch 31,(In thousands, except shares and per share amounts)
    
    2008
    
    
    2007REVENUES:Oil and gas sales
    
    $
    19,018
    
    
    $
    9,392EXPENSES:Lease operating
    
    
    1,397
    
    
    
    980Severance and production taxes
    
    
    753
    
    
    
    375Exploration
    
    
    491
    
    
    
    623General and administrative
    
    
    1,946
    
    
    
    1,512Depletion, depreciation and amortization
    
    
    5,216
    
    
    
    3,091Total expenses
    
    
    9,803
    
    
    
    6,581OPERATING INCOME
    
    
    9,215
    
    
    
    2,811OTHER:Interest expense, net
    
    
    (148
    )
    
    
    (956
    )Realized gain on commodity derivatives
    
    
    61
    
    
    
    2,155Unrealized loss on commodity derivatives
    
    
    (4,879
    )
    
    
    (4,626
    )INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES
    
    
    4,249
    
    
    
    (616
    )PROVISION (BENEFIT) FOR INCOME TAXES
    
    
    1,487
    
    
    
    (35
    )NET INCOME (LOSS)
    
    $
    2,762
    
    
    $
    (581
    )EARNINGS (LOSS) PER SHARE:Basic
    
    $
    0.13
    
    
    $
    (0.06
    )Diluted
    
    $
    0.13
    
    
    $
    (0.06
    )WEIGHTED AVERAGE SHARES OUTSTANDING:Basic
    
    
    20,622,746
    
    
    
    9,501,390Diluted
    
    
    20,757,513
    
    
    
    9,501,390
 See accompanying notes to these consolidated financial statements.
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##### Table of Contents



APPROACH RESOURCES INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months EndedMarch 31,(In thousands)
    
    2008
    
    
    2007OPERATING ACTIVITIES:Net income (loss)
    
    $
    2,762
    
    
    $
    (581
    )Adjustments to reconcile net income (loss) to net
cash provided by operating activities:Depletion, depreciation and amortization
    
    
    5,216
    
    
    
    3,091Unrealized loss on commodity derivatives
    
    
    4,879
    
    
    
    4,626Exploration expense
    
    
    491
    
    
    
    623Share-based compensation expense
    
    
    226
    
    
    
    Deferred income taxes
    
    
    1,259
    
    
    
    (35
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (5,215
    )
    
    
    2,347Prepaid expenses and other assets
    
    
    (448
    )
    
    
    (404
    )Accounts payable
    
    
    (2,391
    )
    
    
    (2,449
    )Oil and gas sales payable
    
    
    1,583
    
    
    
    467Accrued liabilities
    
    
    (3,499
    )
    
    
    (1,997
    )Cash provided by operating activities
    
    
    4,863
    
    
    
    5,688INVESTING ACTIVITIES:Additions to oil and gas properties
    
    
    (15,509
    )
    
    
    (9,717
    )Additions to other property and equipment, net
    
    
    (97
    )
    
    
    (1
    )Cash used in investing activities
    
    
    (15,606
    )
    
    
    (9,718
    )FINANCING ACTIVITIES:Loan origination fees
    
    
    
    
    
    
    (57
    )Borrowings under credit facility
    
    
    13,790
    
    
    
    22,600Repayment of amounts outstanding under credit facility
    
    
    (6,500
    )
    
    
    (18,050
    )Cash provided by financing activities
    
    
    7,290
    
    
    
    4,493CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    (3,453
    )
    
    
    463EFFECT OF FOREIGN CURRENCY TRANSLATION ON CASH AND CASH
EQUIVALENTS
    
    
    4
    
    
    
    CASH AND CASH EQUIVALENTS, beginning of period
    
    $
    4,785
    
    
    $
    4,911CASH AND CASH EQUIVALENTS, end of period
    
    $
    1,336
    
    
    $
    5,374SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest
    
    $
    221
    
    
    $
    1,273Cash paid for income taxes
    
    $
    
    
    
    $
    1,200SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTION:Retirement of loans to stockholders in exchange for
shares of common stock
    
    $
    
    
    
    $
    4,184
 See accompanying notes to these consolidated financial statements.
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APPROACH RESOURCES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2008
(Unaudited)
 1. Summary of significant accounting policies
 Organization and nature of operations
  Consolidation, basis of presentation and significant estimates
   Comprehensive income
  Net income
    
    $
    2,762Other comprehensive income:Foreign currency translation adjustments
    
    
    30Comprehensive income
    
    $
    2,792
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APPROACH RESOURCES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2008
(Unaudited)
 Earnings (loss) per common share
  Three Months Ended March 31, 2008Income (numerator)
    
    Shares (denominator)
    
    Per-share amountBasic earnings per share:Net income
    
    $
    2,762
    
    
    
    20,622,746
    
    
    $
    0.13Effect of dilutive securities:Share-based compensation,
treasury method
    
    
    
    
    
    
    134,767Net income plus assumed conversions
    
    $
    2,762
    
    
    
    20,757,513
    
    
    $
    0.13
 Three Months Ended March 31, 2007Income (numerator)
    
    Shares (denominator)
    
    Per-share amountBasic loss per share:Net loss
    
    $
    (581
    )
    
    
    9,501,390
    
    
    $
    (0.06
    )Effect of dilutive securities:Share-based compensation,
treasury method(1)
    
    
    
    
    
    
    Net loss plus assumed conversions
    
    $
    (581
    )
    
    
    9,501,390
    
    
    $
    (0.06
    )
 
 (1)
    
    Options to acquire approximately 350,000 shares of our common stock were anti-dilutive for
the three months ended March 31, 2007. 2. Line of credit
  5




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APPROACH RESOURCES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2008
(Unaudited)
   3. Income taxes
  4. Derivatives
  Volume (MMBtu)
    
    $/MMBtuPeriod
    
    Monthly
    
    Total
    
    Floor
    
    Ceiling
    
    FixedNYMEX  Henry HubCostless collars 2008
    
    
    182,000
    
    
    
    1,640,000
    
    
    $
    7.50
    
    
    $
    11.45Costless collars 2008 (3rd quarter)
    
    
    100,000
    
    
    
    300,000
    
    
    $
    7.00
    
    
    $
    9.10Costless collars 2008 (2nd  4th quarter)
    
    
    200,000
    
    
    
    1,800,000
    
    
    $
    9.00
    
    
    $
    12.20Costless collars 2009
    
    
    180,000
    
    
    
    2,160,000
    
    
    $
    7.50
    
    
    $
    10.50Costless collars 2009
    
    
    130,000
    
    
    
    1,560,000
    
    
    $
    8.50
    
    
    $
    11.70Fixed price swaps2nd quarter 2008
    
    
    100,000
    
    
    
    300,000
    
    
    
    
    
    
    
    
    
    
    $
    8.104th quarter 2008
    
    
    100,000
    
    
    
    300,000
    
    
    
    
    
    
    
    
    
    
    $
    8.63WAHA differentialFixed price swaps 2008
    
    
    182,000
    
    
    
    1,640,000
    
    
    
    
    
    
    
    
    
    
    
    (0.69
    )Fixed price swaps 2008 (2nd  4th quarter)
    
    
    100,000
    
    
    
    900,000
    
    
    
    
    
    
    
    
    
    
    
    (0.67
    )Fixed price swaps 2009
    
    
    200,000
    
    
    
    2,400,000
    
    
    
    
    
    
    
    
    
    
    
    (0.61
    )
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APPROACH RESOURCES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2008
(Unaudited)
 Adoption of Statement of Financial Accounting Standards No. 157 (FAS 157)
  
    
    Level 1  Quoted prices are available in active markets for identical assets or
liabilities as of the reporting date. At March 31, 2008, we have no Level 1 measurements.
    
    Level 2  Pricing inputs are other than quoted prices in active markets included in
Level 1, which are either directly or indirectly observable as of the reporting date. Level
2 includes those financial instruments that are valued using models or other valuation
methodologies. These models are primarily industry-standard models that consider various
assumptions, including quoted forward prices for commodities, time value, volatility
factors and current market and contractual prices for the underlying instruments, as well
as other relevant economic measures. Our derivatives, which consist primarily of commodity
swaps and collars, are valued using commodity market data which is derived by combining raw
inputs and quantitative models and processes to generate forward curves. Where observable
inputs are available, directly or indirectly, for substantially the full term of the asset
or liability, the instrument is categorized in Level 2. At March 31, 2008, our commodity
derivatives are valued using Level 2 measurements.
    
    Level 3  Pricing inputs include significant inputs that are generally less observable
from objective sources. These inputs may be used with internally developed methodologies
that result in managements best estimate of fair value. At March 31, 2008, we have no
Level 3 measurements.
 
 7




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APPROACH RESOURCES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2008
(Unaudited)
 5. Share-based compensation
  Sharessubject tostockoptionsOutstanding at January 1, 2008
    
    
    479,991Granted
    
    
    11,835Canceled
    
    
    (34,050
    )Outstanding at March 31, 2008
    
    
    457,776
  8




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Item 2. Managements discussion and analysis of financial condition and results of operations.
  Cautionary statement regarding forward-looking statements
   
    
    our business strategy,
    
    estimated quantities of gas and oil reserves,
    
    uncertainty of commodity prices in oil and gas,
    
    our financial position,
    
    our cash flow and liquidity,
    
    replacing our gas and oil reserves,
    
    our inability to retain and attract key personnel,
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
    
    uncertainty regarding our future operating results,
    
    uncertainties in exploring for and producing gas and oil,
    
    high costs, shortages, delivery delays or unavailability of drilling rigs, equipment, labor
or other services,
    
    disruptions to, capacity constraints in or other limitations on the pipeline systems which
deliver our gas and other processing and transportation considerations,
    
    our inability to obtain additional financing necessary to
fund our operations and capital expenditures and to meet our other obligations,
    
    competition in the oil and gas industry,
    
    marketing of gas and oil,
    
    exploitation or property acquisitions,
    
    technology,
    
    the effects of government regulation and permitting and other legal requirements,
    
    plans, objectives, expectations and intentions contained in this report that are not historical,
and
    
    other factors discussed in our Annual Report on Form 10-K for the year ended December 31,
2007 and filed with the SEC on March 28, 2008.
 
 10




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Overview
   West Texas
 
    
    Ozona Northeast (Wolfcamp and Canyon Sands)
    
    Cinco Terry (Wolfcamp, Canyon Sands, Ellenburger)
 East Texas
 
    
    North Bald Prairie (Cotton Valley Sands, Bossier and Cotton Valley Lime)
 Northeast British Columbia
 
    
    Montney tight gas and Doig Shale
 Northern New Mexico
 
    
    El Vado East (Mancos Shale)
 Southwest Kentucky
 
    
    Boomerang (New Albany Shale)
    11




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Recent developments
 Cinco Terry acreage acquisition
 th
 Northern New Mexico update
   12




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Results of operations
 Three Months EndedMarch 31,2008
    
    2007Revenues (in thousands):Gas
    
    $
    14,872
    
    
    $
    8,255Oil
    
    
    3,085
    
    
    
    1,090NGLs
    
    
    1,061
    
    
    
    47Total oil and gas sales
    
    
    19,018
    
    
    
    9,392Realized gain on commodity derivatives
    
    
    61
    
    
    
    2,155Total oil and gas sales including derivative impact
    
    $
    19,079
    
    
    $
    11,547Production:Gas (MMcf)
    
    
    1,666
    
    
    
    1,231Oil (MBbls)
    
    
    32
    
    
    
    19NGLs (MBbls)
    
    
    21
    
    
    
    2Total (MMcfe)
    
    
    1,979
    
    
    
    1,357Average prices:Gas (per Mcf)
    
    $
    8.93
    
    
    $
    6.70Oil (per Bbl)
    
    
    97.91
    
    
    
    56.22NGLs per (Bbl)
    
    
    50.95
    
    
    
    30.12Total (per Mcfe)
    
    $
    9.61
    
    
    $
    6.92Realized gain on commodity derivatives (per Mcfe)
    
    
    0.03
    
    
    
    1.59Total per Mcfe including derivative impact
    
    $
    9.64
    
    
    $
    8.51Costs and expenses (per Mcfe):Lease operating expenses
    
    $
    0.71
    
    
    $
    0.72Severance and production taxes
    
    
    0.38
    
    
    
    0.28Exploration
    
    
    0.25
    
    
    
    0.46General and administrative
    
    
    0.98
    
    
    
    1.11Depletion, depreciation and amortization
    
    
    2.64
    
    
    
    2.28
 Three months ended March 31, 2008 compared to three months ended March 31, 2007
 Oil and gas sales
 13




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Commodity derivative activities
 Lease operating
 Severance and production taxes
 Exploration
 General and administrative
 Depletion, depreciation and amortization (DD&A)
 14




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Interest expense, net.
 Income taxes
 Liquidity and capital resources
    Three Months EndedMarch 31,(in thousands)
    
    2008
    
    2007Cash flows provided by operating
activities
    
    $
    4,863
    
    
    $
    5,688Cash flows used in investing activities
    
    
    (15,606
    )
    
    
    (9,718
    )Cash flows provided by financing
activities
    
    
    7,290
    
    
    
    4,493Effect of Canadian exchange rate
    
    
    4
    
    
    
    Net (decrease) increase in cash and
cash equivalents
    
    $
    (3,449
    )
    
    $
    463
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Operating activities
  Investing activities
  Future capital expenditures for 2008
  
 Estimatedyear endedDecember 31,(in thousands)
    
    2008Capital expenditures:Ozona Northeast
    
    $
    37,500Cinco Terry
    
    
    20,200North Bald Prairie
    
    
    14,400British Columbia
    
    
    3,000El Vado East
    
    
    Boomerang
    
    
    1,800Lease acquisition, geological, geophysical and
other
    
    
    3,100Total capital expenditures
    
    $
    80,000
 16




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Financing activities
    Credit facility
   Contractual obligations
  Off-balance sheet arrangements
 
 
 Item 3. Quantitative and qualitative disclosures about market risk.
  17




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Commodity price risk
   Volume (MMBtu)
    
    $/MMBtuPeriod
    
    Monthly
    
    Total
    
    Floor
    
    Ceiling
    
    FixedNYMEX  Henry HubCostless collars 2008
    
    
    182,000
    
    
    
    1,640,000
    
    
    $
    7.50
    
    
    $
    11.45Costless collars 2008 (3rd quarter)
    
    
    100,000
    
    
    
    300,000
    
    
    $
    7.00
    
    
    $
    9.10Costless collars 2008 (2nd  4th quarter)
    
    
    200,000
    
    
    
    1,800,000
    
    
    $
    9.00
    
    
    $
    12.20Costless collars 2009
    
    
    180,000
    
    
    
    2,160,000
    
    
    $
    7.50
    
    
    $
    10.50Costless collars 2009
    
    
    130,000
    
    
    
    1,560,000
    
    
    $
    8.50
    
    
    $
    11.70Fixed price swaps2nd quarter 2008
    
    
    100,000
    
    
    
    300,000
    
    
    
    
    
    
    
    
    
    
    $
    8.104th quarter 2008
    
    
    100,000
    
    
    
    300,000
    
    
    
    
    
    
    
    
    
    
    $
    8.63WAHA differentialFixed price swaps 2008
    
    
    182,000
    
    
    
    1,640,000
    
    
    
    
    
    
    
    
    
    
    
    (0.69
    )Fixed price swaps 2008 (2nd  4th quarter)
    
    
    100,000
    
    
    
    900,000
    
    
    
    
    
    
    
    
    
    
    
    (0.67
    )Fixed price swaps 2009
    
    
    200,000
    
    
    
    2,400,000
    
    
    
    
    
    
    
    
    
    
    
    (0.61
    )
   
 Item 4T. Controls and procedures.
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PART II  OTHER INFORMATION
 
 Item 1. Legal proceedings.
  
 Item 1A. Risk factors.
  
 Item 2. Unregistered sales of equity securities and use of proceeds.
  
 Item 3. Defaults upon senior securities.
  
 Item 4. Submission of matters to a vote of security holders.
  
 Item 5. Other information.
  
 Item 6. Exhibits.
  20




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SIGNATURES
  APPROACH RESOURCES INC.By:
    /s/ J. Ross CraftJ. Ross CraftPresident and Chief Executive Officer  21




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Index to Exhibits
 ExhibitNumber
    

    
    Exhibit3.1
    
    
    
    Restated Certificate of Incorporation of Approach
Resources Inc. (filed as Exhibit 3.1 to the Companys
Quarterly Report on Form 10-Q filed December 13, 2007 and
incorporated herein by reference).3.2
    
    
    
    Restated Bylaws of Approach Resources Inc. (filed as
Exhibit 3.2 to the Companys Quarterly Report on Form 10-Q
filed December 13, 2007 and incorporated herein by
reference).4.1
    
    
    
    Specimen Common Stock Certificate (filed as Exhibit 4.1 to
the Companys Registration Statement on Form S-1/A filed
October 18, 2007 (File No. 333-144512) and incorporated
herein by reference).10.1
    
    
    
    Form of Indemnity Agreement between Approach Resources
Inc. and each of its directors and officers (filed as
Exhibit 10.1 to the Companys Registration Statement on
Form S-1/A filed September 13, 2007 (File No. 333-144512)
and incorporated herein by reference).10.2
    
    
    
    Employment Agreement by and between Approach Resources
Inc. and J. Ross Craft dated January 1, 2003 (filed as
Exhibit 10.3 to the Companys Registration Statement on
Form S-1 filed July 12, 2007 and incorporated herein by
reference).10.3
    
    
    
    Employment Agreement by and between Approach Resources
Inc. and Steven P. Smart dated January 1, 2003 (filed as
Exhibit 10.4 to the Companys Registration Statement on
Form S-1 filed July 12, 2007 and incorporated herein by
reference).10.4
    
    
    
    Employment Agreement by and between Approach Resources
Inc. and Glenn W. Reed dated January 1, 2003 (filed as
Exhibit 10.5 to the Companys Registration Statement on
Form S-1 filed July 12, 2007 and incorporated herein by
reference).10.5
    
    
    
    Approach Resources Inc. 2007 Stock Incentive Plan,
effective as of June 28, 2007 (filed as Exhibit 10.6 to
the Companys Registration Statement on Form S-1 filed
July 12, 2007 and incorporated herein by reference).10.6
    
    
    
    Form of Business Opportunities Agreement among Approach
Resources Inc. and the other signatories thereto (filed as
Exhibit 10.11 to the Companys Registration Statement on
Form S-1/A filed October 18, 2007 (File No. 333-144512)
and incorporated herein by reference).10.7
    
    
    
    Form of Option Agreement under 2003 Stock Option Plan
(filed as Exhibit 10.12 to the Companys Registration
Statement on Form S-1 filed July 12, 2007 and incorporated
herein by reference).10.8
    
    
    
    Restricted Stock Award Agreement by and between Approach
Resources Inc. and J. Curtis Henderson dated March 14,
2007 (filed as Exhibit 10.13 to the Companys Registration
Statement on Form S-1 filed July 12, 2007 and incorporated
herein by reference).
 22




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##### Table of Contents



ExhibitNumber
    

    
    
    Exhibit10.9
    
    
    
    Form of Summary of Stock Option Grant under Approach
Resources Inc. 2007 Stock Incentive Plan (filed as Exhibit
10.14 to the Companys Registration Statement on Form
S-1/A filed October 18, 2007 (File No. 333-144512) and
incorporated herein by reference).10.10
    
    
    
    Form of Stock Award Agreement under Approach Resources
Inc. 2007 Stock Incentive Plan (filed as Exhibit 10.15 to
the Companys Registration Statement on Form S-1/A filed
October 18, 2007 (File No. 333-144512) and incorporated
herein by reference).10.11
    
    
    
    Registration Rights Agreement dated as of November 14,
2007, by and among Approach Resources Inc. and investors
identified therein (filed as Exhibit 10.1 to the Companys
Current Report on Form 8-K/A filed December 3, 2007 and
incorporated herein by reference).10.12
    
    
    
    Gas Purchase Contract dated May 1, 2004 between Ozona
Pipeline Energy Company, as Buyer, and Approach Resources
I, L.P. and certain other parties identified therein
(filed as Exhibit 10.18 to the Companys Registration
Statement on Form S-1/A filed September 13, 2007 (File No.
333-144512) and incorporated herein by reference).10.13
    
    
    
    Agreement Regarding Gas Purchase Contract dated May 26,
2006 between Ozona Pipeline Energy Company, as Buyer, and
Approach Resources I, L.P. and certain other parties
identified therein (filed as Exhibit 10.19 to the
Companys Registration Statement on Form S-1/A filed
September 13, 2007 (File No. 333-144512) and incorporated
herein by reference).10.14
    
    
    
    Carry and Earning Agreement dated July 13, 2007 by and
between EnCana Oil & Gas (USA) (filed as Exhibit 10.22 to
the Companys Registration Statement on Form S-1/A filed
September 13, 2007 (File No. 333-144512) and incorporated
herein by reference).10.15
    
    
    
    Oil & Gas Lease dated February 27, 2007 between the
lessors identified therein and Approach Oil & Gas Inc., as
successor to Lynx Production Company, Inc. (filed as
Exhibit 10.23 to the Companys Registration Statement on
Form S-1/A filed September 13, 2007 (File No. 333-144512)
and incorporated herein by reference).10.16
    
    
    
    Specimen Oil and Gas Lease for Boomerang prospect between
lessors and Approach Oil & Gas Inc., as successor to The
Keeton Group, LLC, as lessee (filed as Exhibit 10.24 to
the Companys Registration Statement on Form S-1/A filed
September 13, 2007 (File No. 333-144512) and incorporated
herein by reference).10.17
    
    
    
    Lease Crude Oil Purchase Agreement dated May 1, 2004 by
and between ConocoPhillips and Approach Operating LLC
(filed as Exhibit 10.26 to the Companys Registration
Statement on Form S-1/A filed October 18, 2007 (File No.
333-144512) and incorporated herein by reference).10.18
    
    
    
    Gas Purchase Agreement dated as of November 21, 2007
between WTG Benedum Joint Venture, as Buyer, and Approach
Oil & Gas Inc. and Approach Operating, LLC, as Seller
(filed as Exhibit 10.1 to the Companys Current Report on
Form 8-K filed November 28, 2007 and incorporated herein
by reference).
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##### Table of Contents



ExhibitNumber

    
    
    
    Exhibit10.19
    
    
    
    $200,000,000 Revolving Credit Agreement dated as of
January 18, 2008 among Approach Resources Inc., as
borrower, The Frost National Bank, as administrative agent
and lender, and the financial institutions named therein
(filed as Exhibit 10.1 to the Companys Current Report on
Form 8-K filed January 18, 2008 and incorporated herein by
reference).10.20
    
    
    
    Amendment dated February 19, 2008 to Credit Agreement
among Approach Resources Inc., as borrower, The Frost
National Bank, as administrative agent and lender,
JPMorgan Chase Bank, NA, as lender, and Approach Oil & Gas
Inc., Approach Oil & Gas (Canada) Inc. and Approach
Resources I, LP, as guarantors, dated as of January 18,
2008 (filed as Exhibit 10.1 to the Companys Current
Report on Form 8-K filed February 22, 2008 and
incorporated herein by reference).31.1
    
    
    
    Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    
    Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    
    Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    
    Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 24