Carbon Energy Corporation

Carbon Energy Corporation Annual Meeting Presentation June 14, 2018 1

IMPORTANT DISCLOSURES Forward-Looking Statements The slides contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act ), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act ). Except for historical information, statements made in the slide presentation, including those relating to the Company s strategies, estimated and anticipated production, expenditures, infrastructure, estimated costs, number of wells to be drilled, estimated reserves, reserve potential, recoverable reserves, and financial position are forward-looking statements as defined by the Securities and Exchange Commission. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management s assumptions and the Company's future performance are subject to a wide range of business risks and uncertainties and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from those in the forwardlooking statements, including, but not limited to, the volatility of oil and gas prices, the costs and results of drilling and operations, the timing of production, mechanical and other inherent risks associated with oil and gas production, weather, the availability of drilling equipment, changes in interest rates, litigation, uncertainties about reserve estimates, and environmental risk. We caution you not place undue reliance on these forward-looking statements, which speak only as of the date reflected in the slide presentation, and we undertake no obligation to publicly update or revise any forward-looking statements. Further information on risks and uncertainties is available in the Company s filings with the Securities and Exchange Commission, which are incorporated by reference. Actual quantities of oil and gas that may be ultimately recovered from Carbon s interests will differ substantially from our estimates. Factors affecting ultimate recovery include the scope of Carbon s drilling program, which will be directly affected by the availability of capital, drilling and production costs, commodity prices, availability of drilling services and equipment, drilling results, lease expirations, transportation constraints, regulatory approvals, field spacing rules, recovery of gas in place, length of horizontal laterals, actual drilling results, and geological and mechanical factors affecting recovery rates and other factors. Estimates of resource potential may change significantly as development of our resource plays provides additional data. Investors are urged to consider closely the disclosure in our filings with the SEC available upon request to: Corporate Secretary, Carbon Natural Gas Company, 1700 Broadway, Suite 1170, Denver, Colorado 80290; tel: (720) 407-7043. You can also obtain our public filings from the SEC s website, http://www.sec.gov. Non-GAAP Measures The slide presentation contains certain references to EBITDA and Adjusted EBITDA value, which are non-gaap financial measures, as defined under Regulation G of the rules and regulations of the SEC. EBITDA and Adjusted EBITDA EBITDA and Adjusted EBITDA are non-gaap financial measures. We define EBITDA as net income or loss before interest expense, taxes, depreciation, depletion and amortization. We define Adjusted EBITDA as EBITDA prior to accretion of asset retirement obligations, ceiling test write downs of oil and gas properties, non-cash stock-based compensation expense and the gain or loss on sold investments or properties. EBITDA and Adjusted EBITDA is consolidated including non-controlling interests and as used and defined byus, may not be comparable to similarly titled measures employed by other companies and are not measures of performance calculated in accordance with GAAP. EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows provided by or used in operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. EBITDA and Adjusted EBITDA provide no information regarding a company s capital structure, borrowings, interest costs, capital expenditures, and working capital movement or tax position. EBITDA and Adjusted EBITDA do not represent funds available for discretionary use because those funds are required for debt service, capital expenditures, working capital, income taxes, franchise taxes, exploration and development expenses, and other commitments and obligations. However, our management believes EBITDA and Adjusted EBITDA are useful to an investor in evaluating our operating performance because these measures are widely used by investors in the oil and natural gas industry to measure a company s operating performance without regard to items excluded from the calculation of such term, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors; and help investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our capital structure from our operating structure; and are used by our management for various purposes, including as a measure of operating performance, in presentations to our board of directors, as a basis for strategic planning and forecasting and by our lenders pursuant to a covenant under our credit facility. There are significant limitations to using EBITDA and Adjusted EBITDA as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect our net income or loss, the lack of comparability of results of operations of different companies and the different methods of calculating EBITDA and Adjusted EBITDA reported by different companies. 2

Carbon Strategy Acquire at attractive metrics oil and gas producing assets with development potential and with emphasis on oil assets Appalachian Basin Ventura Basin Build value from acquired assets through Lease operating expense reductions Gathering and compression optimization Return to production projects Recompletions Operational synergies Emphasize Health, Safety and Environmental best practices and compliance Utilize science and technology to develop assets with rate of return on capital invested as top priority Develop assets through drilling as commodity prices warrant Maintain favorable debt metrics and financial flexibility Management team has long-term successful track record of creating value for its shareholders and partners Strong technical team with acquisition, production and drilling expertise 3

Carbon Strategy Appalachian Basin Legacy Appalachian producers are divesting southern Appalachia production and midstream assets. This creates opportunity for Carbon to acquire producing and midstream assets, build on existing operations, and consolidate a southern Appalachia position. Ventura Basin, California Legacy producers are divesting Ventura Basin production and midstream assets. This creates an opportunity to establish a portfolio of light oil, low operating cost producing properties and expand on existing operations. 4

2017 Highlights Creation of Appalachian and Ventura Basin investment entities to facilitate growth through acquisitions and asset development Creation of Carbon California Company LLC Acquire Ojai Field Assets from CRC Creation of Carbon Appalachian Company LLC Acquire Tennessee assets from Consol Acquire West Virginia assets from Enervest Acquire West Virginia assets from Cabot Emphasis on Health, Safety and Environmental best practices and compliance Integration of assets with existing Carbon properties Significant cost reductions Increase in reserves, production and cash flow through development programs 5

Carbon Financial Summary (1) December 31 2017 2016 Natural Gas (mcf of gas per day) 13,414 7,712 Oil (barrels of oil per day) 236 216 Mcfe of gas per day (@6:1) 14,832 9,008 Adjusted EBITDA (000) $8,351 -$3,584 Lease Operating Expense ($/mcfe) $1.13 $.96 Total Debt (000) $22,140 $16,230 Reserves (mmcfe) 87,216 79,557 NPV10 % of Proved Reserves (000) $68,706 $49,344 (1) Carbon only, no contribution from Carbon Appalachia nor Carbon California 6

2018 Plans Name change to Carbon Energy Corporation Public offering of Carbon shares to provide funds for acquisitions, development, debt reduction - $100,000,000 Integrate Sespe Field acquisition, Ventura Basin, closed May 1, 2018 Acquire balance of interest in Carbon Appalachian Company, LLC Continue acquisitions of producing properties with development potential Southern Appalachian Basin Ventura Basin Emphasis on Health, Safety and Environmental best practices and compliance Create incremental value from assets Continue lease operating experience optimization Identify and execute workover and recompletion opportunities Optimize gas gathering compression, marketing and transportation Develop properties through development drilling as commodity prices warrant 7

Proforma for Offering and Acquisition (1) (2) Pro Forma Post- Closing Natural Gas (mcf of gas per day) Oil & NGLs (barrels of oil per day) Mcfe of gas per day (@6:1) Lease Operating Expense ($/mcfe) Total Debt (000) Reserves (mmcfe) 62,756 1,098 69,346 1.25 $87,792 517,763 NPV10 % of Proved Reserves (000) $329,768 (1) Presents 100% of Nytis USA (excluding non-controlling interests), 100% of Carbon Appalachia (excluding non-controlling interests) and 53.92% of Carbon California on a historical basis as of December 31, 2017 (2) Average net production and lease operating expense are provided for the month of December 2017. The average net production information resulting from the Ventura Basin acquisitions is provided for the month of November 2017 because the wells acquired in these acquisitions were shut-in during December 2017 due to wildfires in California 8

Carbon Credit Facilities Carbon Credit Facilities ($000) Senior Debt Senior Subordinated Total Borrowing Debt Debt Debt Base Carbon Energy Corporation $ 23,000 $ - $ 23,000 $ 25,000 Carbon Appalachian Company, LLC $ 38,000 $ - $ 38,000 $ 50,000 Combined & Restated Carbon Energy Corp. Credit Facility Post Offering $ 61,000 $ - $ 61,000 $ 100,000 Carbon California Company, LLC Current, March 31, 2018 $ 13,000 $ 9,000 $ 22,000 $ 15,000 Pro Forma for Seneca Acquistion $ 24,000 $ 3,000 $ 27,000 $ 26,000 Total $ 37,000 $ 12,000 $ 49,000 $ 41,000 9

Carbon Energy Corporation Proved Reserves Summary - Carbon Net Share Pre Transaction As of January 1, 2018 SEC 2017 Prices Total Proved MBO MMCF MBBL MMBOE BCFE %Oil + NGL %GAS NPV @ 10% Carbon 919 81,702-14.5 87.2 6% 94% $ 70,165 Carbon Appalachia 72 90,757-15.2 91.2 0% 100% $ 46,220 Carbon California (1) 1,625 3,012 226 2.4 14.1 79% 21% $ 13,557 Combined 2,616 175,471 226 32.1 192.5 9% 91% $ 129,942 100% Proved Developed Producing MBO MMCF MBBL MMBOE BCFE %Oil + NGL %GAS NPV @ 10% Carbon 887 81,702-14.5 87.0 6% 94% $ 69,518 Carbon Appalachia 72 90,626-15.2 91.1 0% 100% $ 46,112 Carbon California (1) 737 1,570 117 1.1 6.7 77% 23% $ 5,017 Combined 1,696 173,899 117 30.8 184.8 6% 94% $ 120,648 93% Proved Developed Non-Producing MBO MMCF MBBL MMBOE BCFE %Oil + NGL %GAS NPV @ 10% Carbon 16 - - 0.0 0.1 100% 0% $ 434 Carbon Appalachia - 131-0.0 0.1 0% 0% $ 107 Carbon California (1) 269 624 46 0.4 2.5 75% 25% $ 3,026 Combined 285 755 46 0.5 2.7 72% 28% $ 3,567 3% Proved Undeveloped MBO MMCF MBBL MMBOE BCFE %Oil + NGL %GAS NPV @ 10% Carbon 16 - - 0.0 0.1 100% 0% $ 213 Carbon Appalachia - - - - - 0% 0% $ - Carbon California (1) 619 818 63 0.8 4.9 83% 17% $ 5,511 Combined 634 818 63 0.8 5.0 84% 16% $ 5,724 4% SEC Price Basis: CRBO Ownership Position Average First Day of Month Prices 2017 Carbon 100% $51.35 per barrel of oil CAC 27.2% $2.976 per MMBtu of gas CCC 17.8% (1) Carbon California does not include Sespe Field which acquisition closed May 1, 2018 10

Carbon Energy Corporation Proved Reserves Summary - Carbon Net Share Post Transaction As of January 1, 2018 SEC 2017 Prices Total Proved MBO MMCF MBBL MMBOE BCFE %Oil + NGL %GAS NPV @ 10% Carbon 919 81,702-14.5 87.2 6% 94% $ 70,165 Carbon Appalachia 264 333,175-55.8 334.8 0% 100% $ 169,676 Carbon California (1) 11,170 21,794 1,668 16.5 98.8 78% 22% $ 92,927 Combined 12,354 436,671 1,668 86.8 520.8 16% 84% $ 332,768 100% Proved Developed Producing MBO MMCF MBBL MMBOE BCFE %Oil + NGL %GAS NPV @ 10% Carbon 887 81,702-14.5 87.0 6% 94% $ 69,518 Carbon Appalachia 264 332,695-55.7 334.3 0% 100% $ 169,281 Carbon California (1) 4,711 9,446 718 7.0 42.0 78% 22% $ 28,673 Combined 5,862 423,843 718 77.2 463.3 9% 91% $ 267,472 80% Proved Developed Non-Producing MBO MMCF MBBL MMBOE BCFE %Oil + NGL %GAS NPV @ 10% Carbon 16 - - 0.0 0.1 100% 0% $ 434 Carbon Appalachia - 481-0.1 0.5 0% 0% $ 394 Carbon California (1) 2,522 5,431 415 3.8 23.1 76% 24% $ 22,147 Combined 2,538 5,912 415 3.9 23.6 75% 25% $ 22,975 7% Proved Undeveloped MBO MMCF MBBL MMBOE BCFE %Oil + NGL %GAS NPV @ 10% Carbon 16 - - 0.0 0.1 100% 0% $ 213 Carbon Appalachia - - - - - 0% 0% $ - Carbon California (1) 3,937 6,917 535 5.6 33.8 80% 20% $ 42,107 Combined 3,953 6,917 535 5.6 33.8 80% 20% $ 42,320 13% SEC Price Basis: CRBO Ownership Position Average First Day of Month Prices 2017 Carbon 100% $51.35 per barrel of oil CAC 100% $2.976 per MMBtu of gas CCC 53.92% 11 (1) Carbon California does include Sespe Field which acquisition closed May 1, 2018

Investment Partnerships 2017 Carbon Energy Corporation 100% Carbon Appalachian Company, LLC 27.24% Carbon California Company, LLC 17.81% 12

Investment Partnerships Proforma 2018 Carbon Energy Corporation 100% Carbon California Company, LLC 53.92% 13

Appalachian Basin Assets Appalachian Basin 1,576,000 net acres 6,927 operated wells 57,300 MCFED 14

Appalachian Basin (1) Approximately 62,000 MCFE net daily production, 90% operated Proved reserves of 410 bcfe at May 1, 2018 Interest in 8,400 wells Ownership of 4,500 miles of midstream gathering pipelines and associated compression facilities 1,635,000 net acres of oil, gas and/or coalbed methane rights >73% Held by Production 78% of remainder expires later than 5 years Multiple direct connect end use customers and pipeline transportation interconnects Multiple Horizontal Resource Play opportunities Berea Sandstone Oil Devonian Lower Huron Shale Devonian Chattanooga Shale Cambrian Rogersville Shale Low lease operating expenses High BTU natural gas in close proximity to market (1) Includes Carbon and Carbon Appalachia 15

Southern Appalachian Basin Investment Strategy Northern and Southern Appalachia are both historical producing regions. Both have same geologic history and similar producing formations Marcellus and Utica Shales in North Very high land, drilling and completion costs Low gas price netback Highly competitive Huron/Chattanooga Shale in the South Reasonable costs Attractive gas price netback Lack of competition Exploration and production companies are divesting legacy production in Southern Appalachia to focus on the Marcellus and Utica Shales in the north. This creates opportunity for Carbon to acquire producing assets in the south, build on existing operations, and to consolidate Southern Appalachian position. 16

Carbon Appalachian Company Acquisitions 2017 Tennessee Mining Closed 4/3/17 Consol Energy Closed 4/3/17 Enervest Closed 8/15/17 Cabot Closed 9/29/17 Tennessee Mining Consol Enervest Cabot Carbon 17

Cost Reduction on Acquired Operations 18

Ventura Basin California 1,270 BOPD and 3,800 MCFD net daily production, ~100% operated Proved reserves of 36 million barrels of oil equivalent, 78% oil and NGL at May 1, 2018 Acquired Sespe Field May 2018 Interest in 544 wells Approximately 16,900 net acres of oil, gas rights 100% Held by Production/Mineral Fee 7,500 Mineral Fee acres Multiple Play opportunities Low lease operating expenses Strong product margins (Brent oil price) Inventory of Return to Production, Behind Pipe Recompletion and Proved Undeveloped drilling projects Facility consolidation and operating cost synergy 19

Ventura Basin Investment Strategy Carbon has identified the Ventura Basin of California as an area which presents an excellent opportunity to establish a portfolio of light oil, low operating cost producing properties Santa Barbara County Ventura County Los Angeles County Carbon has acquired Ojai Field, Timber Canyon Field, Holser Field assets, and Sespe Field is currently implementing production optimization programs Carbon has established a safe, environmentally responsible venture through integration and in-depth technical analysis of acquired oil fields Carbon will grow the California business unit through low-risk exploitation and development of the properties Carbon Operated Fields Oil and Gas Fields Ventura Basin Los Angeles Basin California Acquisition Criteria Shallow decline, long life reserves with low capital maintenance requirements Oil properties with high original oil in place Multipay conventional hydrocarbon assets No thermal / steam flood operations Light crude oil (18 36 API) Low water cut & shallow decline rates Shallow depth (2,000 to 6,500 TVD) Permitted water management systems Favorable land and regulatory environment 20

Cost Reduction on Acquired Operations 21

Average Daily Net Oil Sales (BOPD, BOED) CCC Net Oil and Equivalent Sales 2,200 BOPD BOE/D 2,000 Pre-Closing Sales Volumes Wildfire 1,903 1,800 1,600 1,400 Full-time RTP & RR Program 1,266 1,200 Pilot RTP Program SESPE Acquisition 1,000 800 600 400 200 674 663 670 666 661 404 413 405 389 384 759 460 641 430 848 535 748 772 464 499 841 550 889 588 942 623 168 341 357 696 542 829 751 510 494 - Pilot REC Program Full-time REC Program 154 22

1700 Broadway Suite 1170 Denver, CO 80290 2480 Fortune Drive, Suite 300 Lexington, KY 40509 270 Quail Court, Suite B Santa Paula, CA 93060 www.carbonenergycorp.com