Extraction Oil & Gas IHS HEROLD. IPO Summary. Market Research. ihs.com. 15 September 2016

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1 IHS HEROLD Market Research IPO Summary 15 September 2016 ihs.com Extraction Oil & Gas Raoul LeBlanc, Managing Director, Financial Services, , Andrea Anderson, Senior Analyst, Financial Services, ,

2 Extraction s Portfolio Position Extraction s position in the Wattenburg Extraction s Permits and Spuds Extraction has 402 producing wells, almost all of which are located in the Wattenburg play. They have an additional 290 permits and spuds. While the majority of these are also located in the Wattenburg, there are 18 located in the Niobrara. Pursuing these permits would result in their first activity in the Niobrara. 2

3 Comparative Ranking On an average peak/1000 lat ft basis, Extraction is the fifth most productive operator in the Wattenburg, but is able to accomplish their average productivity with about 150 wells, which is more than six times the sum of the four higher-ranked operators combined. It is important to note, however, that the Wattenburg can be characterized as homogeneous in terms of normalized productivity. As evidenced by the Peak per lat ft Quintile production curves above, there is much less variability between the best and worst wells in this play compared to many others. This can make the play less predictable, and contribute to mixed operator portfolio compositions. 3

4 Vintage Production Extraction s production for April 2016 was 93.6 Mmcf/d of gas and about 20,500 bbl/d of liquids production made up the largest percentage of total annual production for liquids, while 2014 was the largest percentage of gas production. 4

5 Operated Reserves Extraction s largest reserves come from their 2014 wells. Despite higher IP rates in 2015, steeper declines have negatively impacted the 2015 EURs. Extraction s 2014 wells had an average decline rate of 50% compared to their 2015 wells, which decline at 56% on average. 5

6 Peak and Normalized Peak Productivity Peak rates climb as Extraction shifts to horizontal drilling Average normalized peak productivity have declined to the point of stagnation Improved peak rates beginning in 2013 can be attributed to Extraction s venture into horizontal drilling, however, as they have drilled more wells, average normalized productivity for those horizontal wells has continued to drop since the same time period. Early horizontal well results were strong, and Extraction has been able to sustain a steady inventory of first quintile wells. However, with an increase in monthly drilling, wells in the bottom quintiles have become more numerous and reached a state of stagnancy. 6

7 Completions Trends Improved peak rates beginning in 2013 can be attributed to Extraction s venture into horizontal drilling, however, as they have drilled more wells, average normalized productivity for those horizontal wells has continued to drop since the same time period. Early horizontal well results were strong, and Extraction has been able to sustain a steady inventory of first quintile wells. However, with an increase in monthly drilling, wells in the bottom quintiles have become more numerous and reached a state of stagnancy. 7

8 Production Curves by Vintage Extraction s annual production curves have continued to show improvements. However, as their peak productivity has grown, their decline rates have steepened. Their average 6 month post-peak decline was 55% in 2014 compared to 63% in

9 Breakeven Price Evolution Breakevens based on Current costs Breakevens based on Historical Costs In a $50 oil price world, Extraction s third and fourth quarter of 2015 wells are economic. Early 2016 results, however, do not indicate a continued trend towards low breakevens, and the operator will have to drill some significant wells in order to change the trajectory of this years productivity. These improvements, however, are due to dropping costs rather than improvements by Extraction. 9

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