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Project Ozona Economic & Technical Review[8167]

Project

Project Ozona: Single Well Economics Single Well Economic Overview Date Q4 2017 Q1 Q2 Q3 Q4 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Gross Production (Bbl/d) 19.4 19.4 17.8 16.3 14.9 13.6 15.6 11.1 9.7 9.1 8.6 8.1 7.6 7.1 6.7 6.3 Net Revenue Interest 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% Net Bbls/d 14.6 14.6 13.3 12.2 11.2 10.2 11.7 8.3 7.2 6.8 6.4 6.0 5.7 5.4 5.0 4.8 Oil Price $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 Differential (3.00) (3.00) (3.00) (3.00) (3.00) (3.00) (3.00) (3.00) (3.00) (3.00) (3.00) (3.00) (3.00) (3.00) (3.00) (3.00) Realized Oil Price 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 Gross Revenue $56,286 $56,286 $50,384 $46,614 $43,136 $39,458 $179,593 $127,286 $111,302 $104,512 $98,411 $92,666 $87,501 $82,162 $77,366 $72,850 Lease Operating Expense (3000) (3000) (3000) (3000) (3000) (3000) (12000) (12000) (12000) (12000) (12000) (12000) (12000) (12000) (12000) (12000) Production Taxes (2941) (2941) (2633) (2526) (2254) (2062) (9474) (6651) (5816) (5461) (5142) (4842) (4572) (4293) (4042) (3806) Net Operating Income $50,345 $50,345 $44,751 $41,089 $37,882 $34,397 $158,119 $108,635 $93,487 $87,051 $81,269 $75,824 $70,929 $65,869 $61,324 $57,043 Net to Investor WI $39,088 $39,088 $34,675 $31,856 $29,255 $26,505 $122,290 $83,178 $71,226 $66,149 $61,587 $57,291 $53,429 $49,437 $45,850 $42,473 Well-head Break-even Investor Break-even 11 months 15 months Well-head IRR IRR 158% MOIC 5.9x Investor IRR IRR 98% MOIC 4.5x Assumptions ■ $155,000 to drill & complete (includes cost of facilities) ■ ■ ■ ■ 30-Day Initial Production Rate: 20 bbls/d Production Decline: 35% initial decline for first 24 months, followed by a 6% terminal decline Price Deck: $45.00 flat with a $3.00 differential inclusive of transportation expense $1000/mo/well lease operating expense ■ Project Level Working Interest: 100% ■ Project Level Net Revenue Interest: 75% ■ ■ ■ Investor Working Interest: 80% (included is cost to carry FPG) Spud-to-spud: 10 days Spud-to-sales: 30 days 12

Project Ozona: Single Well Economics Single Well Economic Sensitivities Gross Wellhead Sensitivities Wellhead Sensativities Net Investor Sensitivities Wellhead Sensativities IRR Sensitivity (Price per Barrel vs. Initial Daily Rate of Production) IRR Sensitivity (Price per Barrel vs. Initial Daily Rate of Production) 158% 23 Bbls/d 22 Bbls/d 21 Bbls/d 20 Bbls/d 19 Bbls/d 18 Bbls/d 17 Bbls/d 98% 23 Bbls/d 22 Bbls/d 21 Bbls/d 20 Bbls/d 19 Bbls/d 18 Bbls/d 17 Bbls/d $60.00 418.4% 376.9% 338.5% 303.1% 270.4% 240.3% 212.6% $60.00 244.6% 222.2% 201.3% 181.7% 163.3% 146.2% 130.2% $55.00 337.9% 305.5% 275.4% 247.5% 221.6% 197.5% 175.2% $55.00 200.9% 183.0% 166.1% 150.3% 135.4% 121.4% 108.3% $50.00 269.3% 244.4% 221.1% 199.3% 179.0% 160.0% 142.3% $50.00 162.7% 148.5% 135.1% 122.4% 110.5% 99.2% 88.5% $45.00 211.2% 192.2% 174.4% 157.7% 142.0% 127.3% 113.5% $45.00 129.4% 118.3% 107.8% 97.8% 88.3% 79.3% 70.8% $40.00 162.0% 147.8% 134.5% 121.9% 110.0% 98.7% 88.1% $40.00 100.4% 91.9% 83.7% 76.0% 68.6% 61.5% 54.7% $35.00 120.6% 110.3% 100.5% 91.2% 82.4% 74.0% 66.0% $35.00 75.2% 68.8% 62.6% 56.7% 51.0% 45.5% 40.2% $30.00 85.9% 78.7% 71.7% 65.0% 58.6% 52.4% 46.5% $30.00 53.3% 48.6% 44.0% 39.5% 35.2% 30.9% 26.7% IRR Sensitivity (Price per Barrel vs. Monthly Lease Operating Expense) IRR Sensitivity (Price per Barrel vs. Monthly Lease Operating Expense) 158% $700 $800 $900 $1,000 $1,100 $1,200 $1,300 98% $700 $800 $900 $1,000 $1,100 $1,200 $1,300 $60.00 313.4% 309.9% 306.5% 303.1% 299.7% 296.4% 293.0% $60.00 189.3% 186.8% 184.2% 181.7% 179.1% 176.6% 174.1% $55.00 256.6% 253.5% 250.5% 247.5% 244.5% 241.5% 238.6% $55.00 157.3% 154.9% 152.6% 150.3% 148.0% 145.7% 143.4% $50.00 207.3% 204.6% 202.0% 199.3% 196.6% 194.0% 191.4% $50.00 128.8% 126.7% 124.6% 122.4% 120.3% 118.2% 116.2% $45.00 164.8% 162.4% 160.1% 157.7% 155.3% 153.0% 150.6% $45.00 103.6% 101.7% 99.7% 97.8% 95.9% 93.9% 92.0% $40.00 128.3% 126.1% 124.0% 121.9% 119.8% 117.7% 115.6% $40.00 81.4% 79.6% 77.8% 76.0% 74.2% 72.4% 70.7% $35.00 96.9% 95.0% 93.1% 91.2% 89.3% 87.5% 85.6% $35.00 61.7% 60.0% 58.4% 56.7% 55.0% 53.4% 51.7% $30.00 70.1% 68.4% 66.7% 65.0% 63.3% 61.6% 59.9% $30.00 44.3% 42.7% 41.1% 39.5% 37.9% 36.3% 34.7% 13

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