IPAA Leaders in Industry Luncheon

IPAA Leaders in Industry Luncheon Upstream Deal Flow Environment Past, Present and Future Are Those Green Shoots Growing or Weeds? January 11, 2017 William A. Marko Managing Director Jefferies LLC Member SIPC

Jefferies Energy Group - 2016 Completed M&A December 2016 Pending December 2016 Pending December 2016 Pending December 2016 Pending $1,240,000,000 $2,428,000,000 $1,850,000,000 $915,000,000 Sale of Marcellus Shale assets to Alta Marcellus Development Sole Financial Advisor Sale of Delaware Basin assets to Diamondback Energy, Inc. Sole Financial Advisor Sale of SCOOP assets to Gulfport Energy Corporation Sole Financial Advisor Sale of Haynesville assets to Undisclosed Buyers Sole Financial Advisor October 2016 Pending October 2016 Pending September 2016 August 2016 $1,600,000,000 $2,400,000,000 $2,000,000,000 $980,000,000 Sale of Midland Basin assets to SM Energy Company Sole Financial Advisor Sale of Delaware Basin assets to RSP Permian, Inc. Sole Financial Advisor Purchase of GOM assets from Freeport McMoRan Sole Financial Advisor Sale of Midland Basin assets to SM Energy Company Lead Financial Advisor June 2016 June 2016 May 2016 April 2016 $888,000,000 Sale of STACK assets to Marathon Oil Corporation Sole Financial Advisor $1,832,000,000 Sale of Various N. American assets to Undisclosed Buyers Lead Financial Advisor $407,000,000 Sale of West Virginia assets to EQT Corporation Sole Financial Advisor $303,000,000 Acquisition of Midland Basin assets From Big Star Oil and Gas, LLC Financial Advisor April 2016 March 2016 February 2016 $200,000,000 Sale of Mississippian assets to White Star Petroleum, LLC Lead Financial Advisor $420,000,000 Sale of Haynesville and Bossier assets to Covey Park Energy Sole Financial Advisor $385,000,000 Acquisition of Western Anadarko assets from Chesapeake Exploration, LLC Sole Financial Advisor (1) Source: PLS. League tables include transactions since January 1, 2016 with announced sellside advisors. For transactions with more than one advisor, the total transaction value was assigned equally to each advisor. (2) Source: PLS. League tables include transactions since January 1, 2010 with announced sellside advisors. For transactions with more than one advisor, the total transaction value was assigned equally to each advisor. 1

Worldwide Energy Demand China and India and Other Energy Emerging Economies The two key drivers for future energy use GDP per capita expected to triple in China and India 50% of worldwide growth in energy India expected to pass China in population by 2040 (1.6 billion people) Other key energy growth economies which will drive 30% of energy growth - Brazil - Egypt - Indonesia - Iran - Mexico - Nigeria - Saudi Arabia - South Africa - Thailand - Turkey GDP per capita is expected to double in these countries According to Brookings Institute, number of people considered middle class will rise from 2 billion in 2014 to 5 billion in 2030, with most of the growth in India and China Natural gas is the largest growing energy supply, increasing 40% 2

Massive Economic Growth Drives Increased Need for Energy Fortunately, Energy Efficiency Vastly Lowers Energy Use Per GDP GDP Trillion 2010$ Energy Demand Quadrillion BTUs Source: ExxonMobil - The Outlook for Energy: A View to 2040 3

North America Swings to a Net Exporter as Shale Growth Continues Source: ExxonMobil - The Outlook for Energy: A View to 2040 4

By 2040, Unconventional Gas Will Account for About 1/3rd of Global Gas Source: ExxonMobil - The Outlook for Energy: A View to 2040 5

Oil Remains the World s Top Fuel, But Natural Gas Grows the Most Global Fuel Demand in 2040 Projections Quadrillion BTUs Source: ExxonMobil - The Outlook for Energy: A View to 2040 6

Current Market Overview The M&A market has seen significant improvement recently $50 / Bbl oil and $3 / MMBtu gas price is a healthy capitulation point for buyers and sellers Large scale deals have recently been done which fit one of three themes: 1. Growth acquisitions in existing core areas with equity component and / or overnight equity raise 2. Strategic acquisitions in new core area to build diversification 3. Private capital backed major initial or follow on acquisition Non-core asset sales continuing, increasing supply of asset sales in a number of plays / basins Financial markets showed a material improvement in 2016 Yields have tightened considerably since the Q1 2016 trough; High yield markets are open for business recent issuances have priced at attractive yields Public E&P equity indices are up over 50% from February lows Robust demand in the equity markets; most active new issue market since Q1 2015 More aggressive deals in terms of use of proceeds and market cap have recently priced Private capital markets are still active and remain a primary source of transaction financing The universe of private capital providers is expanding; abundance of capital ready to be deployed in the space There is still $100 billion in private capital seeking energy deals Private capital continues to increase its flexibility in terms of geography, deal structure, terms, and other aspects 7

Improvement in Commodity Prices Driving E&P Momentum Historical NYMEX Oil Prices ($ / Bbl) $60.00 $50.00 $55.33 $52.33 Oil Price ($/Bbl) $40.00 $30.00 $20.00 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Spot 3 Year Fwd Historical NYMEX Natural Gas Prices ($ / MMBtu) $4.00 Gas Price ($/MMBtu) $3.50 $3.39 $3.00 $3.08 $2.50 $2.00 $1.50 $1.00 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Spot 3 Year Fwd Source: Bloomberg as of 1/03/2017. 8

M&A Market Activity Continues to Accelerate How About Q4 2016! Date Buyer Seller Amount ($MM) Location 1/3/17 $800 Eagle Ford 12/21/16 $1,450 Marcellus Shale 12/14/16 $1,850 SCOOP / STACK 12/14/16 $2,400 Delaware Basin 12/13/16 $615 Delaware Basin 12/12/16 $292 Bakken 12/5/2016 Undisclosed $450 North Louisiana 11/21/2016 Endurance Resources $430 Delaware Basin 11/8/2016 $299 Midland Basin 10/31/2016 J. Cleo / Multiple Sellers $1,765 Delaware Basin 10/31/2016 $1,000 East Texas 10/25/2016 Multiple Sellers $683 Appalachia 10/24/2016 $400 Eagle Ford, Austin Chalk 10/20/2016 $360 Appalachia 10/18/2016 $1,600 Midland Basin 10/18/2016 $785 Bakken 10/14/2016 $742 California 10/13/2016 $2,400 Delaware Basin 10/3/2016 $235 Permian Basin 9/26/2016 $2,700 Appalachia, Barnett 9/12/2016 $2,000 Gulf of Mexico 9/9/2016 $420 Mid-Continent Jefferies Advisory Role 9

Capital Markets Environment Continues to Improve E&P Equity Index Performance 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 - Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Small Cap Large Cap Majors MLPs SPDR XOP S&P 500 E&P Debt Performance (1) (2) (3) (4) (5) (6) (7) A Index BBB Index BB Index B Index CCC Index Permian Comps 60% 50% Peak Yield % 54.3% 40% 23.7% 30% 20% 12.5% 11.5% 11.2% 5.9% 4.8% 10% 4.6% 8.1% 3.1% 4.0% 1.9% 0% Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Source: CapIQ as of 1/03/17. (1) Yield indices illustrate weighted average yield based on size of issuance. (2) A Index includes issues from COP and OXY. (3) BBB Index includes issues from APA, APC, DVN, ECA, EOG, EQT, HES, MRO, MUR, NBL, PXD and XEC. (4) BB Index includes issues from the following : AR, CXO, CLR, EGN, FANG, NFX, PDCE, QEP and SWN. (5) B Index includes issues from the following: CRZO, CrownRock, GPOR, LPI, MRD, MTDR, OAS, RICE, RSPP, SM, SN, WLL and WPX. 10 (6) CCC Index includes issues from the following : ALTA, AREX, BBG, CRC, CWEI, DNR, EVEP, LGCY, LNR and NOG. (7) Permian comps include AREX, CPE, CXO, FANG, EGN, LPI, MTDR, PE, PXD, REI, CWEI and RSPP.

Upstream Public Market New Issue Activity Equity and Debt Capital Markets Still Willing to Participate for High Quality Assets and Operators Public Equity Issuances ($MM) 2016 YTD: ~$31.7 B (60 deals) Transaction Value ($MM) $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $- $996 1H 2015: ~$13.3 B (34 deals) $3,044 $5,511 2H 2015: ~$2.6 B (9 deals) $1,529 $2,119 $1,415 $1,286 $792 $303 $466 $176 $116 $256 $6,900 $972 $2,824 $2,084 $2,319 $1,463 $1,533 $5,544 $2,460 $72 $3,403 # of Issues 3 6 12 3 6 4 1 1 3 2 1 1 4 8 4 5 6 5 6 4 5 4 1 8 Public Debt Issuances ($MM) Transaction Value ($MM) $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 1H 2015: ~$17.7 B (32 deals) $- $- $350 $6,100 $3,050 $4,845 2H 2015: ~$5.4 B (9 deals) $3,400 $2,789 $200 $- $- $1,520 $1,530 $850 $1,250 2016 YTD: ~$27.8 B (50 deals) $7,425 $- $711 $1,656 $142 $3,488 $7,582 $1,150 $500 $2,450 # of Issues 0 1 9 7 10 5 5 1 0 0 2 1 3 4 8 0 2 5 1 7 12 2 1 5 Note: Analysis excludes private company issuances, private placements, and exchange offers. 11

Recent A&D Trends Extremely Correlated to Oil Price Fall / Volatility U.S. E&P Deal Volume Since 2013 ($B) $40 $33 $30 $27 $25 $ Millions $20 $21 $17 $21 $18 $20 $10 $8 $9 $13 $9 $12 $11 $6 $2 $0 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Asset Corporate JV Source: Jefferies internal transactions database. 12

First Half of 2016 Driven by Private Capital, Second Half Driven by Public Companies Total E&P A&D Transactions by Buyer Type 70% 60% 50% 40% 30% 20% 10% 0% 2011 2012 2013 2014 2015 2016 YTD Public Private Private Equity MLP Majors/Int'ls Other Source: Jefferies internal transactions database. 13

2016 U.S. Upstream M&A Transactions by Play Permian Leads the Way 2016 U.S. Upstream M&A Transaction Volume ($B) $24.9 $17.8 $20.3 $5.7 $11.2 $11.8 $1.3 $3.8 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Permian Midcontinent Ark-La-Tex Rockies Eastern Other 2016 U.S. Upstream M&A Transaction Count 85 81 49 61 22 25 18 8 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Permian Midcontinent Ark-La-Tex Rockies Eastern Other Source: PLS and public company filings. Note: Other category includes Alaska, Gulf Coast, Gulf of Mexico, Multi-Region and West Coast transactions. 14

Three Themes Single Play Bolt-on, New Core Area Diversification, or New Private Capital Backed Rank Date Buyer Seller Size ($MM) Play Consideration 1 May-16 Range Resources Memorial Resource Development $ 4,400 Ark-La-Tex Stock 2 Sep-16 Rice Energy Vantage Energy 2,700 Marcellus Cash and Stock 3 Sep-16 EOG Resources Yates Petroleum 2,451 Delaware Cash and Stock 4 Dec-16 Diamondback Energy Brigham Resources 2,430 Delaware Cash and Stock 5 Oct-16 RSP Permian Silver Hill Energy 2,400 Delaware Cash and Stock 6 Sep-16 Anadarko Petroleum Freeport-McMoRan 2,000 Gulf of Mexico Cash 7 Dec-16 Gulfport Energy Vitruvian Exploration II 1,850 SCOOP/STACK Cash and Stock 8 Oct-16 Occidental Petroleum J Cleo Thompson, Permian Resources, Browning Oil 1,765 Delaware Cash 9 Jul-16 Riverstone, Silver Run Centennial Resource Development 1,735 Delaware Cash 10 Aug-16 Concho Resources Reliance Energy, Peregrine Petroleum 1,625 Midland Cash and Stock 11 Oct-16 SM Energy QStar 1,600 Midland Cash and Stock 12 Aug-16 PDC Energy Arris Petroleum, 299 Resources 1,505 Delaware Cash and Stock 13 Dec-16 Alta Resources Anadarko Petroleum 1,240 Marcellus Cash 14 Oct-16 Castleton Commodities Anadarko Petroleum 1,000 Haynesville Cash Total $ 28,701 Source: PLS and public company filings. Energy deal is either 1) Single play bolt-on, 2) New core area to diversify, 3) New private capital backed company. 15

Improvement in EURs for Selected Plays Drives Increasing Valuations Normalized EUR Evolution Eagle Ford Shale (MBoe / 1,000 ) (1) Williston Basin (MBoe / 1,000 ) (2) 151 159 77 82 103 62 2014 2015 Current Haynesville Shale (Bcf / 1,000 ) (3) 2014 2015 Current Delaware Basin (MBoe / 1,000 ) (4) 2.7 158 2.0 121 132 1.4 2014 2015 Current 2014 2015 Current (1) Metrics include publicly available data from the following operators: CHK, CRZO, CWEI (Eastern Eagle Ford), ECA, EOG, EPE, MRO, NBL, PXD, SFY and SM. Current represents the most recent publicly reported data for each operator. Public disclosures represent Lower Eagle Ford completions. EURs represent type wells across all phase windows, including wet gas. (2) Metrics include publicly available data from the following operators: CLR, HES, EOG, ERF, MRO, OAS, QEP, SM, WLL and WPX. Current represents the most recent publicly reported data for each operator. Public disclosures represent Middle Bakken and Three Forks completions. (3) Metrics include publicly available data from the following operators: CHK, ECA and EPE. (4) Metrics include publicly available data from the following operators: APA, APC, CWEI, CXO, EGN, EOG, MTDR, OXY, REN, WPX, XEC. Current represents the most recent publicly reported data for each operator. Public disclosures represent Bone Spring and Wolfcamp completions. 16

Forecasted Permian Basin Production Permian Basin Crude Production 20,000 Permian Basin Oil Production (MBbl/d) 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000-2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Historical Production Base Case 350 Rig Case 400 Rig Case 1,000 Rig Case (1) Represents processed EUR. (2) As of 11/23/2016 per Baker Hughes International. 17

Permian Will Ultimately be Largest Producing Area in the World Total Core Surface Acreage ~7,700,000 acres Total Core Effective Acreage Productive Benches Assumed Spacing ~20,100,000 acres 5 (Delaware) 4 (Midland) 8-15 wells / section Number of Wells to Develop Average EUR / Well Total Recoverable Resource Peak Oil Production (400 Rig Ramp) ~316,000 wells 1,137 MBoe (730 MBo) ~325 BBoe (~212 BBo) ~11,000 MBo/d Oil Reserves Half Life (400 Rig Ramp) ~32 Years Total Capital Needed ~$1.9 Trillion (1) Assumes development of 8 wells / section for the Wolfcamp A-X/Y Sand in southern Eddy County, NM and northern Loving County, TX. 18

What s a Permian Acre Worth? Illustrative Example: 10,000 Acre Midland Basin Development Program PV-15 @ NYMEX ($ / Undeveloped Net Acre) (1) $200,000 $177,452 $150,000 $150,595 $129,458 $113,073 $100,000 $100,031 $50,000 $- 10 15 20 25 30 Project Development Time Frame (Years) Note: Represents ~520 gross locations in the Middle Spraberry, Lower Spraberry, Wolfcamp A and Wolfcamp B across 10,000 net acres in Midland Co. (1) Assumes NYMEX strip pricing as of November 28, 2016. 19

Top 10 Permian Operators Operator Net Acres Current Production Active Permian Rigs ~2,000,000 ~174 MBoe/d 10 rigs ~1,700,000 ~159 MBoe/d 5 rigs ~1,500,000 ~115 MBoe/d 10 rigs ~1,400,000 ~144 MBoe/d 8 rigs ~710,000 ~179 MBoe/d 17 rigs ~705,000 ~153 MBoe/d 18 rigs ~560,000 NA 8 rigs ~300,000 ~67 MBoe/d 5 rigs ~235,000 ~50 MBoe/d 10 rigs ~220,000 ~86 MBoe/d 5 rigs Top 10 Total ~9,330,000 ~1,127 MBoe/d (35% of total) 96 rigs (36% of total) Permian Basin Total ~3,250 MBoe/d (1) 267 rigs Note: Acreage includes non-core Delaware and Midland Basin, Central Basin Platform and New Mexico Shelf. Source: Company filings and investor presentations, EIA and Baker Hughes. (1) Represents 2-stream production. 20

Declining Number of FIDs May Lead to Oil Supply Decrease 18 16 14 Number of Projects 12 10 8 6 4 2 0 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Onshore Shallow Deep Ultra Deep Source: Wood Mackenzie; global upstream data 21

Oil Supply Needed to Meet Future Demand Projected Oil Supply / Demand Dynamics (MMBbls/d) 105 100 Q4 16 Estimated Global Production Capacity: 99.5 MMBbls/d Projected Undersupply 95 90 85 80 Q4 16 Estimated Global Oil Demand: 97.1 MMBbls/d 12.8 MMBbls/d 23.5 MMBbls/d 75 70 33.1 MMBbls/d 65 60 2016 2017 2018 2019 2020 2021 Estimated Global Oil Demand (0.7% Annual Growth) Estimated Global Production Capacity (5.0% Annual Decline) Estimated Global Production Capacity (2.5% Annual Decline) Estimated Global Production Capacity (7.5% Annual Decline) Source: ExxonMobil - The Outlook for Energy: A View to 2040 and IEA Oil Market Report, November 2016. 22

Closing Comments Near Term Outlook Lots of attention on OPEC hanging together to help oil price. Can the various countries meet promises to cut production? Longer term fundamentals for higher oil price look attractive This phase of Permian deal flow is on the back half but there will continue to be a great deal of interest in all types of Permian Longer term outlook for Permian deal flow could include corporate deals Private capital markets will remain robust and will be increasingly flexible Public capital markets will be attractive if oil price holds Play economics will continue to improve with advancing technology Capital costs may have upward pressure because service companies need to be able to make some money Asset deal flow will be good in multiple plays, corporate deals could emerge 23