MIDLAND BASIN REPORTFebruary 2017

REPORT SAMPLE

1

Midland Basin Report | Table of Contents

This presentation is for discussion purposes only. Information is provided "as is" without warranty of any kind, either expressed or implied. You assume all risk using the information. In no event shall Detring & Associates, LLC or its representatives be liable for any direct, indirect, special or consequential damages resulting from the use of this information.

The materials are confidential, for your private use only, and may not be shared with others (other than your advisors) without Detring & Associates, LLC’s written permission.

1. Introduction

2. Horizontal Activity Update

3. Public Disclosure

4. Top Operator Detail

5. County Detail

6. Well Performance Analysis

7. Lower Spraberry

8. Wolfcamp A

9. Wolfcamp B

10. Wolfcamp C

11. Wolfcamp D

12. Middle Spraberry

Pecos

Irion

Crockett

Upton Reagan

Scurry

Martin

Borden

Sterling

MitchellHoward

Dawson

Midland

Gaines

Ector

Crane

Glasscock

Andrews

Schleicher

2

Introduction | Location Map

4236%

1412%14

12%

1311%

108%

109%

98%

54%

Midland Howard Martin Upton

Glasscock Reagan Andrews Other

Rigs by County

1. Horizontal wells spud since 1/1/2010.

3

Introduction | Top Zones Location Map(1)

Pecos

Irion

Crockett

Upton Reagan

Scurry

Martin

Borden

Sterling

MitchellHoward

Dawson

Midland

Gaines

Ector

Crane

Glasscock

Andrews

Wolfcamp DSpraberry (NA)Wolfcamp (NA)

Wolfcamp AWolfcamp BWolfcamp C

Lower Spraberry

Upper SpraberryMiddle Spraberry

Legend

Total Spuds(1)

13%

34%

2%3%

6%

42%

Wolfcamp A Wolfcamp BWolfcamp C Wolfcamp DLower Spraberry NA

1. Horizontal wells spud since 1/1/2010.

0

100

200

300

400

500

600

Jan-

10

Jan-

11

Jan-

12

Jan-

13

Jan-

14

Jan-

15

Jan-

16

Jan-

17

Act

ual

Mon

thly

Sp

ud

s

0

20

40

60

80

100

120

Oct

-14

Apr

-15

Oct

-15

Apr

-16

Oct

-16

Mon

thly

Sp

ud

s vs

. Oct

-14

42

39

30 29

2220

17 16 15 15 14 14 14 13 1311 10 10 10 9

Mid

land

(TX

)

Ree

ves

(TX

)

Lov

ing

(TX

)

Bla

ine

(OK

)

Lea

(NM

)

Wel

d (C

O)

Kar

nes

(TX

)

De

Soto

(LA

)

McK

enzi

e (N

D)

Edd

y (N

M)

How

ard

(TX

)

Gra

dy (O

K)

Mar

tin (T

X)

Upt

on (T

X)

Kin

gfis

her

(OK

)

Cul

bers

on (T

X)

Rea

gan

(TX

)

Dim

mit

(TX

)

Gla

ssco

ck (T

X)

Pec

os (T

X)

20%

24%

16%

12%

6%

4%

4% 14%Midland

Delaware

SCOOP/STACK

Eagle Ford

Appalachian

Williston

DJ

Other

4

Introduction | Midland Basin vs. Top U.S. Resource Plays

Hz Rigs Running by County

Hz Spuds Through Time

590 Hz Rigs Running

Nov-14 collapse in oil pricing

Nov-14 collapse in oil pricing

30%

43%

43%

136%

121%

Midland Delaware Eagle Ford SCOOP/STACK Williston

5

Introduction | U.S. Resource Play A&D Activity Update

Unconventional Oil A&D activity has re-focused on the Permian & STACK following the

collapse in oil price, while the Bakken and Eagleford have cooled. Valuations remain elevated in

high returning plays - $10M-$15M in STACK and ~$30M+/ac in the Permian.

Activity & Valuation Through Time(1)

Key Statistics by Time Period(3)

2011-2012 ($11Bn/23 Tnx) 2013-2014 ($45Bn/62 Tnx) 2015-2017 YTD ($55Bn/95 Tnx)

1. Upside $/Acre = (Total Value – Est. PDP Value)/Net Acres. A&D transactions plotted by announced date. 2. Values = Avg. 2013-14/2015-16. 3. Pie graphs representative of value by play.

Pre-Collapse (2011-2014)Bakken & Eagleford Dominate A&D Landscape

Midland Ramps in 2014

Post-Collapse (2015-Present)Midland Continues Momentum

Delaware Gains Steam

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17

Ups

ide

Val

ue (

$/A

cre)

Delaware Bakken Eagle Ford SCOOP/STACK Midland

WTI (Scale Not Shown)

11%

63%

21%

5% 0%0%

Midland Bakken Delaware Eagleford Denver Julesberg SCOOP/STACK

39%

24%2%

34%

1%

0%

21%

4%

52%

11%

1%11%

[Bubble Size = Tnx Size ($)]

Horizontal Activity Update | Development Through Time

Pecos

Irion

Crockett

Upton Reagan

Scurry

Martin

Borden

Sterling

MitchellHoward

Dawson

Midland

Gaines

Ector

Crane

Glasscock

Andrews

2013

2016-1720152014

Legend

6

2016-17 activity focused in the northern portion of the basin.

Horizontal Activity Update | Treated Lateral Length Heat Map

Pecos

Irion

Crockett

Upton Reagan

Scurry

Martin

Borden

Sterling

MitchellHoward

Dawson

Midland

Gaines

Ector

Crane

Glasscock

Andrews

Coke

< 4,0004,000 - 5,0005,000 - 6,0006,000 - 7,0007,000 - 8,0008,000 - 9,000

> 9,000

TLL (Ft)

7

Horizontal Activity Update | Well Performance Map

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Pecos Crockett

Irion

Upton Reagan

Martin

Sterling

Howard

Midland

Mitchell

Ector

Crane

Glasscock

Andrews

ScurryBordenDawsonGaines

Terrell

Schleicher

Coke

Sutton

EUR vs. GOR (Entire Midland)

Legend (Size = EUR)

100% Oil 100% Gas

8

Horizontal Activity Update | Wellhead Production Detail

Production Through Time (MBoed)

Top Operators & Counties (July 2016)

9

171

52

50

46

45

Pioneer

XTO

Apache

Encana

Laredo

211

131

113

111

63

Midland (TX)

Reagan (TX)

Upton (TX)

Martin (TX)

Glasscock (TX)

0

100

200

300

400

500

600

700

800

900

Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

Gas (Boed) Oil (Bbld)Oil Gas

4,157 horizontal wells were declined across the Midland Basin (Wolfcamp & Spraberry)(1)

– Both hydrocarbon streams forecast (wellhead oil and gas)

– Wells parsed by data quality to increase accuracy (see following page)

Economics by well generated using actual & forecast production and economic parameters above

– Capex calculated by well based on lateral length, measured depth and proppant pumped

Type curve subsets generated within each play based on well vintage, geography, performance, hydrocarbon content and completion parameters

– IP-30 and EUR based on statistical distributions (wellhead oil and gas) per pound of proppant

– Curvature (“b” factor) and final decline (“Dm”) based on average of Type 1A wells within subset

– Initial decline (“Di”) varied until IP-30 and EUR match statistical data

Type curves generated by area normalized to 15 MMlb frac’s (i.e., 7,500 ft laterals at 2,000 lb/ft)

Well Performance Analysis | Summary

Location Map

Methodology

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s Crockett

IrionUpton

ws

es

Reagan

tor

Martin

ane T

Sch

Sterling

MitchellHoward

Midland

ScurryBorden

Glasscock

Dawson

Legend

DeclinedUndeclined

Economic Assumptions

Pricing: NYMEX strip as of 1/29/2017

Differentials: ($5.00)/Bbl oil, ($0.50)/Mcf, 35% of NYMEX NGL realized pricing

LOE:– Fixed $10,000/well/month for 12 months,

$5,000/well/month thereafter– Variable $4.00/Boe

Gas Stream: 25% shrink, 120 Bbl/MMcf NGL yield Production Taxes:

– Severance: 4.6% Oil, 7.5% Gas– Ad Valorem: 2.5%

Capex: Based on public disclosure (Avg. ~$6MM/well at 7,500 ft)

Acreage Valuation/Drill-Out (Base Case): Rigs: 1 rig Spud-to-Spud Timing: 30 days Gross Acres: 15,000 Spacing: 120 acres Location Count: 125 gross locations

10

2017 2018 2019 2020 2021+Oil ($/Bbl) $53.57 $53.93 $54.08 $54.61 $55.32Gas ($/MMBtu) $3.38 $3.04 $2.90 $2.91 $2.94

1. Horizontal wells with first production after 1/1/2012 and publicly availableproduction data at time of publication.

Threshold Oil Price Capex ($/Bbl) @ ROR of: EUR IP30

Area Pre-Tax ROR ($MM) 10% 20% $M/Acre MBoe % Liq (Boed)Lower Spraberry 1 99% $6.1 $28.26 $33.05 $22 1,213 88% 1,034Lower Spraberry 2 32% 6.1 38.42 46.51 6 842 90% 632Lower Spraberry 3 61% 6.0 34.54 40.44 12 930 88% 1,436Lower Spraberry 4 44% 6.0 37.76 43.65 8 743 87% 887Lower Spraberry 5 52% 5.8 35.93 42.45 10 887 89% 1,240Lower Spraberry 6 137% 5.9 27.80 31.69 25 1,062 94% 1,120Middle Spraberry 1 134% 5.9 27.07 31.25 26 1,224 87% 1,132Wolfcamp A 1 78% 6.0 31.99 37.03 15 952 90% 1,220Wolfcamp A 2 44% 5.8 39.81 45.67 7 690 88% 1,235Wolfcamp A 3 31% 6.0 39.35 46.42 5 739 89% 955Wolfcamp A 4 38% 6.0 38.24 45.22 7 798 91% 1,078Wolfcamp A 5 44% 5.9 39.40 45.02 7 660 90% 1,015Wolfcamp A 6 65% 6.0 31.85 37.71 14 1,082 85% 1,276Wolfcamp A 7 25% 6.1 40.37 49.69 2 1,054 67% 882Wolfcamp A 8 60% 6.1 34.42 40.16 11 959 83% 1,387Wolfcamp A 9 28% 6.1 41.57 49.02 4 779 80% 1,000Wolfcamp A 10 92% 5.9 31.59 36.68 16 1,107 77% 1,499Wolfcamp A 11 57% 5.8 33.48 39.92 10 1,153 70% 1,336Wolfcamp A 12 11% 5.9 51.82 61.92 0 631 77% 862Wolfcamp B 1 47% 5.8 37.19 43.43 8 822 86% 1,246Wolfcamp B 2 14% 6.1 48.18 57.00 0 608 82% 762Wolfcamp B 3 13% 6.2 49.71 60.43 0 653 82% 559Wolfcamp B 4 157% 6.1 27.67 31.97 24 1,303 83% 1,813Wolfcamp B 5 18% 6.1 47.28 55.62 0 628 86% 1,165Wolfcamp B 6 46% 6.1 35.70 42.23 9 952 82% 1,019Wolfcamp B 7 53% 6.1 35.72 41.73 10 909 85% 1,535Wolfcamp B 8 42% 5.9 37.43 44.56 7 976 74% 993Wolfcamp B 9 57% 6.1 34.07 39.63 10 1,008 75% 1,505Wolfcamp B 10 50% 6.0 36.35 42.54 9 969 75% 1,381Wolfcamp B 11 45% 6.1 36.67 42.80 8 873 81% 1,182Wolfcamp B 12 84% 6.1 31.79 36.87 15 1,071 81% 1,548Wolfcamp B 13 33% 6.0 39.86 47.30 5 835 81% 1,068Wolfcamp B 14 89% 6.0 30.49 35.51 18 1,082 86% 1,203Wolfcamp B 15 40% 5.9 38.46 45.13 7 803 85% 1,067Wolfcamp B 16 33% 6.0 40.07 46.68 4 833 74% 1,100Wolfcamp B 17 91% 5.9 29.14 34.71 15 1,399 68% 1,604Wolfcamp B 18 37% 5.9 36.84 44.46 6 1,084 68% 1,149Wolfcamp B 19 6% 5.9 59.99 71.75 0 540 76% 738Wolfcamp B 20 10% 5.7 56.00 68.12 0 798 61% 863Wolfcamp B 21 15% 5.7 48.71 59.77 0 914 61% 901Wolfcamp B 22 10% 5.6 55.70 67.72 0 823 59% 954Wolfcamp C 1 38% 6.2 33.53 40.52 8 1,039 82% 897Wolfcamp C 2 21% 6.1 45.20 54.08 1 715 82% 726Wolfcamp C 3 46% 5.9 32.66 40.89 8 1,451 64% 1,363Wolfcamp C 4 0% 5.6 80.04 99.60 0 598 61% 655Wolfcamp D 1 4% 6.2 58.43 68.54 0 434 84% 519Wolfcamp D 2 132% 6.2 31.22 35.10 18 973 83% 1,867Wolfcamp D 3 30% 6.0 41.26 49.08 4 883 74% 1,003Wolfcamp D 4 106% 6.0 28.13 33.12 17 1,388 70% 1,741Average 51% $6.0 $39.33 $46.62 $9 916 80% 1,130

Well Performance Analysis | Type Curve Summary (49 Areas)

111. EUR and IP data are three-stream values.

(1) (1)

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Pecos

IrionUpton

Crockett

Reagan

Martin

Ector Sterling

Crane

MitchellHoward

Midland

Andrews

Glasscock

Schleicher

19

6

4

3

2

Element

Encana

Surge

Oxy

ConchoNA

5

14

20

42

2012 2013 2014 2015 2016

NA

316

599 514 627

NA

68

83 83

137

NA

384

682 597

764

NA

724 696 720 801

NA

99 78 87 123

NA

822 774 807 924

2012 2013 2014 2015 2016

NA

7.0 7.3 7.8 8.5

NA

6.1

9.2

11.5

14.4

2012 2013 2014 2015 2016

TLL Proppant

NA

867

1,254

1,467

1,691

2012 2013 2014 2015 2016

12

Wolfcamp A Type Curve Area 1 | Summary

Location Map

Top Operators (Total Wells Drilled) Spuds Through Time

Avg. EUR (MBoe) and IP-30 (Boed)(1)

Oil Gas

1. 2-phase.

Avg. Frac Density (lbs/ft)

EU

RIP

-30

ROID >2.0x ROID 1.0-2.0x ROID 0.5-1.0x ROID <0.5x

Avg. TLL (Mft) and Proppant (MMlb)

Type Curve Parameters(1) Type Curve Profile

Statistical Distributions

Type Curve Cumulative Production

Wolfcamp A Type Curve Area 1 | Type Curve Summary

1. IP/EUR data in Bod/MBbl (oil), Mcfd/MMcf (gas), and Boed/MBoe (total). “Per MMlb” values assume 15 MMlb proppant.

P99

P90

P50

P10

P1

1 10 100 1,000EUR (MBbl/MMcf) & IP-30 (Bod/Mcfd) per MMlb Prop.

EUR / MMlb Prop IP-30 / MMlb PropMBbl MMcf Bod Mcfd

Stat. Mean 51 52 70 48P10 86 85 105 67P90 23 26 40 31Skew (P10/P90) 3.7x 3.3x 2.6x 2.1xCount 30 30 30 30

Oil85%

Gas15%

IP-3

0 M

ix

Oil90%

Gas10%

EU

R M

ix

Total Per MMlb Proppant %

Oil Gas Equiv. Oil Gas Equiv. Oil

IP 1,285 793 1,417 86 53 94 91%

IP-30 1,044 722 1,164 70 48 78 90%

EUR 760 784 891 51 52 59 85%

Di 99.8% 91.9% NA NA NA NA NA

b 1.305 1.424 NA NA NA NA NA

Dm 8.0% 8.0% NA NA NA NA NA

1

10

100

1,000

10,000

0 2 4 6 8 10

Avg

. Pro

d. (

Bb

ld |

Mcf

d)

Years

Oil (Bod)

Gas (Mcfd)

0

100

200

300

400

500

600

0 2 4 6 8 10

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m. P

rod

. (M

Boe

)

Years

Cum Gas

Cum Oil

1,000 MBoe

13

$14

$12

$11

$9

$16

$19

$20

$20

Spacing

Capex

Pricing

Rigs

$0

$20$40$60$80$100$120$140$160

$180$200

0

2

4

6

8

10

12

14

16

0 2 4 6 8 10 12 14 16 18

An

nu

al EB

ITD

A /

Cap

ex ($MM

)

Avg

. Pro

d. (

MB

oed

)

Year

Net Prod. EBITDA Capex

EUR DetailGas Total % Liq.

Oil WH Sales NGL WH Sales SalesEUR 760 784 588 94 891 952 90%Economic (Pre-Tax) & Capex Parameters

PV-10 PV-15 PV-20 PV-25 PV-30NPV ($MM) $6.26 $4.70 $3.68 $2.94 $2.38ROR 78%Payout (Years) (Undis. / Disc. @ 10%) 1.33 1.42ROI (Undis. / Disc. @ 10%) 3.66x 2.06xBase Case $M/Acre $15.3Capex ($MM) $6.0MD (Mft) / TLL (Mft) / Proppant (MMlb) 16.6 / 7.5 / 15.0

75%

55%

53%

50%

82%

109%

112%

136%

Opex

Type Curve

Price

Capex

$5.3

$2.1 $1.4 $1.1 $0.9

$6.6

$2.7

$1.8$1.5 $1.2

0 1 2 3 4

Year

Taxes LOE

EBITDA Revenue

0%

50%

100%

150%

200%

250%

300%

$35.00 $40.00 $45.00 $50.00 $55.00 $60.00 $65.00

Pre

-Tax

RO

R

Oil Price ($/Bbl)

$5.00$6.00$7.00

Wolfcamp A Type Curve Area 1 | Type Curve Economics

Base Case: 78%

Base Case: $15.3M

Single-Well ROR SensitivitiesType Curve Economics Summary(1)

Single-Well Revenue/EBITDA ($MM) Single-Well Oil Price/Capex Sensitivities

Drill-Out Production & FCF $M/Acre Sensitivities

14

Capex TH Price$5.00 $28.52$6.00 $31.99$7.00 $35.47

15

Wolfcamp A | Top Operators

Upton

Crockett

Irion

Reagan

Pecos

Martin

Sterling

Howard

Midland Glasscock

Mitchell

BordenDawson Scurry

Andrews

Gaines

LegendPioneer (114)Laredo (97)Energen (81)Concho (49)Apache (47)

Others (249)

Encana (42)Oxy (40)Permian Resoueces (36)XTO (34)Enduring (25)

Wolfcamp A | Structure Map (SSTVD Feet)

PecosCrockett

Terrell

Gaines

IrionUpton

Sutton

Andrews

Coke

Reagan

Ector

Scurry

Martin

Crane

Borden

Sterling

KentLynn

Mitchell

Terry

Howard

Dawson

Midland

Fisher

Schleicher

Tom Green

Garza

Ward

Glasscock

Val Verde

Winkler

Yoakum

Edwards0 25 50 75 10012.5

Miles

®

6000

5500

5000

6500

4500

4000

3000

2500

2000

3500

1500

0

- 500

1000

500

16

Top Operator Detail | Pioneer Natural Resources Position

Pioneer is the largest Midland Basin operator with its acreage position mostly held by legacy

vertical wells. The company has mostly targeted the Wolfcamp B to-date but will no doubt

develop the full oil column over the coming decades.

17Hz Rigs 2016-17 Hz Permits Hz Wells

Upton

Irion

Reagan

Martin

Sterling

Howard

Midland Glasscock

Mitchell

Borden

Crockett

Dawson Scurry

Crane

Ector

Andrews

Gaines

Pioneer / Devon (Jun-16)$435MM | $14M/Acre

Pioneer Acreage Position

170 229 295 459 772

64 118 112 158

209

234 346 407

617

982

270 325 450 654 799

52 79 108

146 177

322 405

558

800 976

2012 2013 2014 2015 2016

6.8 7.7 8.1 8.6 9.1

7.5 8.6 9.1

11.3

13.6

2012 2013 2014 2015 2016

TLL Proppant

1,099 1,121 1,121

1,326 1,489

2012 2013 2014 2015 2016

42

123

256

221

252

2012 2013 2014 2015 2016

12%

43%

1%3%

8%

33%

Wolfcamp A Wolfcamp B Wolfcamp CWolfcamp D Lower Spraberry Middle SpraberryUpper Spraberry NA 0

20

40

60

80

100

120

140

160

180

200

Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

Gas (Boed)

Oil (Bbld)

Oil Gas

Top Operator Detail | Pioneer Natural Resources Operational Statistics

Spuds Through Time

Spuds by Reservoir (2010-2016) Gross Operated Production (MBoed)(2)

Avg. EUR (MBoe) and IP-30 (Boed)(1)

Avg. TLL (Mft) and Proppant (MMlb) Avg. Frac Density (lbs/ft)

EU

RIP

-30

1. 2-phase.2. Horizontal wells with first production after 1/1/2012 and publicly available production data

at time of publication.

Oil Gas

County Detail | Martin Co.

Martin County development has focused on the Wolfcamp B and Lower Spraberry to-date. We

anticipate the eastern half of the county to show rapid develop as Endeavor (the largest acreage

holder) ramps up its horizontal drilling program.

19

Martin

Midland

Dawson

Lower Spraberry Wolfcamp A Middle Spraberry Wolfcamp BUpper Spraberry Wolfcamp CSpraberry NA Wolfcamp DHz Rigs Wolfcamp NA

Legend

103 237 295

459 696

21

82 104

127

137

124

319 399

587

833

75 253 357

573 694

18

60 80

101 114

93

314 437

675 808

2012 2013 2014 2015 2016

4.3

6.6 7.1 7.9 8.1

4.9

7.1

9.9

11.2

8.7

2012 2013 2014 2015 2016

TLL Proppant

1,138 1,075

1,402 1,420

1,076

2012 2013 2014 2015 2016

8

38

186

206 195

2012 2013 2014 2015 2016

7%

20%

5%

2%16%

2%1%

47%

Wolfcamp A Wolfcamp B Wolfcamp CWolfcamp D Lower Spraberry Middle SpraberryUpper Spraberry NA 0

20

40

60

80

100

120

Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

Gas (Boed)

Oil (Bbld)

County Detail | Martin Co. Operational Statistics

Spuds Through Time

Spuds by Reservoir (2010-2016) Gross Production (MBoed)(2)

Avg. EUR (MBoe) and IP-30 (Boed)(1)

Avg. TLL (Mft) and Proppant (MMlb) Avg. Frac Density (lbs/ft)

EU

RIP

-30

1. 2-phase.2. Horizontal wells with first production after 1/1/2012 and publicly available production data

at time of publication.

Oil Gas

Oil Gas