Strengths

The Permian Basin is the largest, most prolific oil and natural gas producing region in the U.S., and one of the largest in the world, with excellent development economics attributable to its multiple stacked horizontal target horizons, high oil and liquids-rich natural gas content, long-lived reserves with consistent reservoir quality, historically high drilling success rates, well-developed oilfield service provider network, substantial existing infrastructure, close proximity to end markets and favorable regulatory environment.

We believe that the following strengths will help us drive shareholder value:

All of our leasehold acreage is located in the Permian Basin of West Texas, and all of our properties are well positioned in the core of the Midland and Delaware Basins. Our properties are characterized by highly prolific wells with strong upfront deliverability and above basin average oil cuts, leading to high revenue per barrel of oil equivalent. Based on industry data, we believe the Permian Basin, and our assets in particular, offer some of the most attractive and resilient returns in the U.S. oil and gas industry.

We believe our contiguous, largely operated acreage positions allow us to optimize our development program to maximize resource recovery and net asset value on a per-section basis. In particular, our position allows for long lateral development and centralized infrastructure, enhancing our well performance, minimizing our drilling, completing and equipping costs per barrel of oil equivalent and maximizing returns. As the operator of the significant majority of our net acreage, we retain the ability to adjust our development program, including the selection of specific drilling locations, the timing of development and the drilling and completion techniques used to efficiently develop our significant resource base.

Our horizontal drilling experience targeting multiple stacked pay zones in the Permian Basin provides us with a competitive advantage. Our initial horizontal focus was on the Wolfcamp B formation in Midland County. We were among the first operators in the core of the Midland Basin to successfully drill and complete a horizontal well in the Wolfcamp B formation. In addition, we believe we were the first operator to successfully drill and complete horizontal wells targeting the Lower Spraberry and Middle Spraberry formations in the Permian Basin. Now with over 230 producing horizontal wells company-wide, we are producing from five zones within our Midland Basin properties and seven zones within our Delaware Basin properties, with future upside to several other zones currently producing offset our position.

We have identified an extensive inventory of horizontal drilling locations that we believe offer excellent rates of return and support a differentiated growth trajectory for the company. Based on our horizontal drilling results and those of other operators in our area, combined with our interpretation of various geologic and engineering data, as of mid-year 2017, we had identified and mapped over 4,200 net horizontal drilling locations. These locations exist across our acreage position and in numerous target zones. Future upside exists from tighter well spacing (tests ongoing) and other prospective target zones not currently carried in our inventory.

We believe the significant collective experience of our management team has enabled us to recognize the potential in the core of the Midland and Delaware Basins and to assemble a portfolio of assets that has been, and we believe will continue to be, highly productive. We believe that our management and technical teams’ expertise in horizontal drilling and completion reduces execution risk and results in peer-leading operational efficiency. Further, our executive team has extensive experience in identifying acquisition targets and evaluating resource potential through its previous involvement in successfully building and monetizing several private equity sponsored Permian Basin companies. We believe our track record and credibility in the market will help us continue to make accretive acquisitions in the future. Our management team has a meaningful economic interest in us, which we believe provides significant incentive to grow the value of our business for the benefit of all stockholders.