Samson Oil & Gas (NYSE MKT: SSN, ASX: SSN)

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1 MARKET DATA (AS OF ) Share Price $ Week Range $0.50 $1.14 Average Volume 156,800 Debt Market Capitalization Enterprise Value Shares Outstanding A Low-Risk Opportunity to Capture High Returns Since our last Prism Profile report of January 26, 2017, reported updated production data and last night reported year-end 2016 proved reserves. HIGHLIGHTS RBL $18.9MM Pro Forma Promissory Note $4.0MM $9.22MM $35.88MM 16.1MM Last night, reported proved reserves as of December 31, 2016, consisting of 9.7 MMBOE, 90% crude oil with an SEC PV-10 value of $103.2MM. Total proved reserves volumes declined by 14%, and the drop is primarily attributable to a reduction in PDNP volumes resulting of management s decision not to include the potential of freshwater clean-outs and acid jobs until all work has been completed. From our perspective, we view this as taking a more conservative approach to volume estimates. The relatively modest 10% decline in PDP volumes is attributable to natural production declines and PUD volumes remained essentially unchanged. We note the SEC PV-10 value of the Company s PUD reserves increased to $55.3 million at year-end 2016, as compared to $44.3 million at June 30, The 18 identified PUD drilling locations provide the Company with visible growth potential. In Q4 16, Samson produced at the rate of 791 BOEPD from its Foreman Butte oil and gas asset, up 164% from the time the company took control of the project earlier that year, and marking the third consecutive quarter of production growth from the asset. The production increase was achieved by reestablishing production on 32 shut-in wells with block and tackle operations and engineering work. (e.g., pump replacement, rod replacement, facility repairs, etc.) The market has yet to recognize the gap between the intrinsic value of Samson s oil and gas assets and the company s prevailing share price. We have estimated the company s NAV using PDP assets only at $24.1MM, or $1.50 per share, which is 2.6x higher than the company s recent share price of $0.57. If we include the value of all proved reserves, we estimate Samson s NAV at $83.1MM or $5.16 per share. The company has near-term growth opportunities from relatively low-cost, low-risk workovers of legacy wells and additional drilling of PUD locations that are economic even at $40.00 per barrel. 1

2 OPERATIONS DATA Production Q BOEPD (net) Production Growth Proved Reserves (as of Dec.31, 2016) 11% sequential increase to 71,201 BOE (net) for Q4 16 vs. 64,397 (net) BOE for Q3 16 (Foreman Butte only, 3rd consecutive quarter of growth) 9,727 MBOE PV-10 $103.2MM 90% Oil Proved Reserves (MBOE) Proved Reserves PV-10 Value ($MM) PDNP, 326 PDNP, $3.6 PDP, 3,361 PROVED RESERVES 90% OIL Total 9,727 MBOE PUD, $55.3 Total $103.2 MM PDP, $44.2 PUD, 6,040 COMPANY OVERVIEW LOW-COST OIL DEVELOPMENT is a micro-cap exploration and production company operating conventional, horizontally-developed oil-weighted assets in the Williston Basin of North Dakota and developing an oil exploration play in the Paradox Basin of northeastern Utah. In 2016, Samson completed its strategic repositioning as an operator of low-cost conventional oil and gas assets, and the company now controls 51,305 net acres in the Williston Basin, 98% of which is held by production, and has optionality on an attractive exploration opportunity in the Paradox Basin. On a company-wide basis, Samson produced at the rate of 881 BOEPD in Q4 16, which was lower than the 1,091 BOEPD produced in Q

3 The decline is primarily attributable to the sale of the Company s North Stockyard property on October 29, Importantly, production from the core Foreman Butte asset increased for the third consecutive quarter, and was 791 BOEPD in Q4 16, despite inclement winter weather conditions. PROVED RESERVES UPDATE DURABLE PUD GROWTH POTENTIAL The Company s year-end 2016 reserves report reflects a more conservative approach to booking the PDNP assets, which we believe is prudent, although we believe the market is not giving SSN any value for them. Considering that Samson has yet to drill a PUD location since June 30, 2016, the last date reserves were reported prior to year-end, we consider the PUD value durable at prevailing commodity prices. The PUD volumes are an important value driver. Samson has visible growth opportunities from reestablishing production from shut-in wells and developing the 6,080 MBOE of PUD drilling locations. In fact, the PV-10 value of Samson s PUD reserves increased to $55.3 million at year-end 2016, up from $47.3 million at June 30, Additional growth potential exists from two opportunities including (1) workovers of 18 wells costing approximately $100,000 each, and (2) development of 18 infill PUD locations holding 6,030 MBOE, valued at $55.3MM at June 30, 2016, as estimated by the independent reservoir engineering firm of Netherland, Sewell and Associates, Inc. The infill drilling opportunities at Foreman Butte target the Ratcliffe interval. Samson estimates drilling and completion costs of $2.8MM for horizontal Ratcliffe wells, as compared to two to three times as much for Bakken/Three Forks wells in the same area. The cost difference is attributable to completion technique. Like their unconventional cousins, Ratcliffe horizontal wells are drilled horizontally through the formation, typically with a lateral leg length of 5,000 feet or more, however, unlike Bakken/Three Forks wells, the wells drilled into the porous Ratcliffe interval are completed open-hole and do not require multi-stage hydraulic fracture stimulation. Consequently, Samson can grow oil production in a more capital efficient way. Near-term, Samson is planning to drill two new horizontal laterals out of an existing wellbore in the Maris 1-16H well in the Spring. The first lateral will test the Ratcliffe formation and the second will test the Mission Canyon Formation. The Ratcliffe test is designed to test 3

4 the pressure depletion radius from existing producing wellbores to evaluate the number of PUD locations in the reservoir. The Company estimates potential production from this test lateral to be approximately 300 BOPD, and if successful has the potential to increase the number of PUD locations. The Mission Canyon test, if successful, could prove up a new economically productive horizon in the Foreman Butte asset area. Longer-term, Samson has a 100% Working Interest in the Cane Creek Project area in Grand and San Juan Counties of Utah. In its most recent filng, Samson reported it had received a one-year extension on its option to lease the acreage. The 8,080 net acre prospect is located in the heart of the Cane Creek Clastic Play for the Paradox Formation along an established anticline. At this time, the terms and conditions of a Multiple Mineral Development Agreement (MMDA) with another company holding rights to extract potash from the acreage located within the project area have been finalized. Samson is currently in the process of securing a required performance bond, and once that is completed the lessor is obligated to lease the oil and gas rights to the company. What makes the Cane Creek Project so compelling are the results of nearby wells. For example, the Cane Creek Unit 12-1 was the most prolific well drilled in 2012, producing 802,967 barrels of oil in two years with an Estimated Ultimate Recovery of 1.2 MMBO. Samson s conventional asset expertise gives the company an advantage in evaluating the geologic structure and high-grading the best drilling opportunities. At this time, the company s current type curve model estimates Initial Production rates at 1,500 BOPD with modest decline rates. In summary, SSN has a portfolio of oil growth opportunities in the short, medium and long terms, supported by current production and proved reserves value in excess of prevailing market value. INVESTMENT CONSIDERATIONS We believe the following factors are contributing to the gap between Samson s intrinsic value and prevailing market price: DEBT MATURITIES. Samson s debt is a combination of its Reserve Based Lending (RBL) facility and a promissory note with the seller of the Foreman Butte project. At the end of November 2016, the company had $19 million drawn on the RBL, which matures in October The $4 million promissory note is due April Since both debt 4

5 pieces mature in the current year, these liabilities are now classified as current, giving some short-term perception of increased financial risk. Management has previously stated its desire to keep total debt at approximately half of the PV-10 value of its producing (PDP) assets. LIQUIDITY. With approximately $1 million of borrowing capacity on the current RBL, the company lacks sufficient capital to drill PUD locations and drive production growth. Management is currently working with the RBL lender to extend the facility s maturity and increase the borrowing base. This should also address concerns related to financial risk. EXCHANGE COMPLIANCE. As a result of the down cycle, Samson s financial metrics have weakened and created deficiencies in meeting exchange listing requirements. The NYSE has accepted the company s initial plan to regain compliance submitted in June 2016, and its updated plan filed in September The shareholder net worth minimum threshold is $6.0 million, and Samson has until September 14, 2017 to regain compliance with the listing rules. Although these factors create a short-term overhang on the shares, they also represent catalysts that could drive outperformance as management makes constructive progress. $3.50 Proforma Net Asset Value as of February 15, 2017 (PDP Only) $3.00 $2.75 $0.23 $2.50 Value per Share $2.00 $1.50 $1.17 $0.31 $1.50 $1.00 Value Gap $0.57 $0.50 $0.00 PDP Cash Debt Liabilities NAV Share Price 5

6 OPPORTUNITY TO LEVERAGE THE VALUE GAP There is a substantial gap between the intrinsic value of Samson s oil and gas assets and its prevailing market value. We estimate the company s Net Asset Value, pro forma for the North Stockyards asset sale, on a per share basis to be $1.50 based on PDP reserves only, or $5.16 based on all proved reserves, as compared to SSN s share price of $0.57, as of February 15, This gap of 2.6x to 9.0x provides investors with near-term value protection while providing exposure to meaningful share price appreciation resulting from future production growth, accretive bolt-on acquisitions, constructive progress on debt and liquidity factors as well as optionality on a potential acquisition. DISCLAIMER Any views expressed herein reflect the views of Prism Group LLC. The information provided herein is believed to be reliable; however, Prism Group LLC makes no representation or warranty as to its completeness or accuracy. Prism Group LLC s conclusions are based upon information gathered from sources deemed to be reliable. The company or companies covered in this report did not review the report prior to publication. This report is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this report. ABOUT PRISM GROUP Prism Group provides investor relations, marketing and financial consulting solutions to the oil and gas, technology, oilfield services and financial sectors. We provide strategic communications, marketing and financial consulting to leaders who are serious about building value and delivering results. This report was prepared for general circulation and does not provide investment recommendations. All readers of the report must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this report should not be taken as an indication or guarantee of future results. Prism Group LLC is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered in this report or on PrismInvestor.com, and thereby seeks to receive compensation from these companies for its services. At the date of the report, Prism Group LLC is engaged by to provide consulting services, including the preparation of this report. Prism Group, LLC 9457 S University Blvd, #351, Highlands Ranch, CO Prism Group LLC, or its principals or employees, may have an economic interest in any of the companies covered in this report or on PrismInvestor.com. As a result, readers of Prism Group LLC s reports or PrismInvestor.com should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. As of the report date, neither Prism Group LLC nor any of its employees has a financial interest in any equity or debt of Limited. 6