INDUSTRY BRIEFS

March 16, 2017

Parsley Energy acquires Double Eagle Energy Permian

Parsley Energy Inc. has agreed to acquire certain undeveloped acreage and producing oil and gas properties in the Midland Basin from Double Eagle Energy Permian LLC for approximately $2.8 billion. Upon completion, the acquisition will add approximately 71,000 net acres to the company's Midland Basin acreage portfolio, bringing total Permian Basin net acreage to approximately 227,000 acres. The acreage to be acquired has a current estimated net production of approximately 3,600 Boe per day as of January 1, 2017 and 23 drilled uncompleted wells, variously targeting the Lower Spraberry, Middle Spraberry, Wolfcamp A, and Wolfcamp B formations, with an average lateral length of approximately 8,400 feet. Consideration consists of approximately $1.4 billion of cash and approximately 39.4 million units of Parsley Energy LLC (together with a corresponding number of shares of Parsley Energy class B common stock) valued at approximately $1.4 billion; Parsley intends to finance the cash portion of the consideration through equity and debt offerings announced concurrently with the acquisition. The buy is Parsley's sixth since December 2015, and its largest yet, noted Raymond James analysts following the announcement. With this acquisition, "Parsley will stand as the second largest Midland Basin net acreage holder among publicly-traded E&Ps," the analysts detailed in an investor's note. "The intensity of the Parsley growth strategy-largely acquisition-based and equity-funded to this point-has been unparalleled in our space and the market has taken notice of the value realization Parsley has cast on its asset base with the stock more than doubling over the TTM vs. S&P E&P index up ~50%. And this comes despite the more than 85% dilution since YE2015. Even with the dilution and an incremental ~$500mm in debt issued since December, Parsley still ranks in the top quartile on debt-adjusted production growth in our coverage in 2016-2018," the analysts continued. The deal is scheduled to close on or before April 20, 2017, subject to closing conditions.

DOJ closes investigation of Cobalt International Energy

The United States Department of Justice (DOJ) has closed the investigation into the Angolan operations of Cobalt International Energy Inc., a client of Baker Botts LLP, without any action. This concludes the DOJ investigation of Cobalt and with it all FCPA investigations by US regulatory agencies into Cobalt's Angolan operations. The DOJ and the United States Securities and Exchange Commission (SEC) began investigating Cobalt's operations in Angola in 2011 in response to allegations of a connection between senior Angolan government officials and Nazaki Oil and Gaz, S.A., an Angolan company that, until 2014, held a working interest alongside Cobalt on Blocks 9 and 21 offshore Angola. In January 2015, the SEC investigation also concluded without any enforcement action.

Houston American closes Permian Basin deal

Houston American Energy Corp. has completed the acquisition of a 25% working interest in two lease blocks covering 717.25 acres in Reeves County, Texas. The interest was acquired from Founders Oil & Gas III LLC for a purchase price of $5,500 per net mineral acre, or a total of $986,000. Additional adjacent acreage is expected to be acquired in the coming weeks by Founders, with Houston American acquiring an interest in the same, to bring the total acreage position to approximately 800 gross acres. Founders will serve as operator of the acreage with drilling of an initial well expected to commence by July 1, 2017 targeting potential resources in the Delaware Basin located in west Texas. Based in Houston, Texas, Houston American Energy Corp. is a publicly-traded independent energy company with interests in oil and natural gas wells, minerals and prospects. The company's business strategy includes a property mix of producing and non-producing assets with a focus on Texas, Louisiana and Colombia.

WildHorse Resource Development acquires Eagle Ford acreage

WildHorse Resource Development Corp. has signed purchase and sale agreements to acquire producing and non-producing assets in the Eagle Ford in Burleson County, Texas for approximately $15.6 million from multiple sellers. One transaction has closed and the other transactions are expected to close in April 2017. The newly acquired assets consist of 10,535 net acres and seven operated (nine non-operated) producing wells with combined production of approximately 1,200 gross (195 net) boe/d along with undeveloped leasehold. The properties are immediately contiguous and complementary to WRD's existing East Texas Eagle Ford properties and will increase the company's working interest in over 188 gross locations in the Burleson Main and Burleson North areas.

Gastar enters deal with Ares Management

Gastar Exploration Inc. has entered into a definitive securities purchase agreement with funds managed by affiliates of Ares Management LP that provides for $425 million in new financing to the company in the form of a $250 million secured term loan, $125 million secured convertible notes and a $50 million common stock issuance. Proceeds will be used to fully repay Gastar's existing $70.4 million revolving credit facility and redeem its $325 million senior secured notes due May 2018. The closing and funding of the Ares Investment is subject to the finalization of security and collateral documentation and the satisfaction of customary conditions precedent to funding. The Ares Investment key terms are as follows: $250 million first lien secured term loan, 8.5% interest, maturing March 2022; $125 million second lien secured convertible notes, 6.0% interest, convertible, upon receipt of stockholder approval, at an initial conversion price of $2.21 per share at the option of the holder, maturing March 2022; and 29,408,305 common shares issued at $1.7002 per share representing the 30-day volume weighted average sales price as of February 15, 2017. If the conversion rights of the convertible notes are not approved by Gastar's stockholders within four months, the convertible notes will not become convertible and will begin bearing interest at 15% as a straight high-yield debt obligation. In connection with the closing, Gastar expects to call for redemption of all of its outstanding $325 million principal of its 8.625% senior secured notes due May 15, 2018. Ares will be granted the right to nominate, following closing, up to two directors to an expanded board of eight directors subject to certain minimum stock ownership requirements. Seaport Global Securities LLC served as financial advisor and placement agent and Vinson & Elkins LLP served as legal advisor to Gastar. Tudor, Pickering, Holt & Co. served as financial advisor and Latham & Watkins LLP served as legal advisor to Ares.

Samson moves to emerge from Chapter 11

The US Bankruptcy Court for the District of Delaware has confirmed the global settlement joint plan of reorganization of Samson Resources Corp. Samson's settlement plan was approved by voting creditors, including 100% of first lien and second lien lenders and holders of over 99% of unsecured claims. The confirmation will permit the company to emerge from Chapter 11. Samson is advised by PJT Partners, Inc., Alvarez & Marsal North America, LLC, Kirkland & Ellis LLP and Klehr Harrison Harvey Branzburg LLP. Samson Resources is a privately held onshore oil and gas exploration and production company with headquarters in Tulsa, Oklahoma and operations primarily located in East Texas, Louisiana and Wyoming. The company operates, or has royalty or working interests in, approximately 531,000 net acres of oil and gas properties.

Callon closes Delaware Basin acquisition

Callon Petroleum Co. has closed its previously announced acquisition of oil and natural gas assets in the southern Delaware Basin from American Resource Development LLC. On February 13, 2017, the company completed the acquisition of approximately 16,700 net surface acres in Ward and Pecos Counties, Texas, comprised of an initially disclosed amount of 16,098 net acres and an incremental 590 net acres acquired between signing and closing of the transaction that are either within or contiguous to the Ward County footprint. Inclusive of the incremental acreage and the purchase of the midstream assets of Ameredev Midstream Development LLC, total cash consideration paid for the acquisition was $633 million, subject to customary purchase price adjustments. The Corbets 34-149 2WA well, with a 10,000' drilled lateral targeting the Lower Wolfcamp A, is currently flowing back in Ward County. In addition, a second 10,000' drilled lateral targeting the Wolfcamp B is awaiting completion in an offsetting drilling unit. After closing of this transaction, Callon's position in the Permian Basin now totals over 56,000 net surface acres.

IOG, Red Mountain sell STACK position in Woodward County, Oklahoma

IOG Capital LP affiliate, IOG STACK Opportunities LLC, has sold its acreage and production located in Woodward County, Oklahoma to a publicly traded exploration and production company. IOG STACK acquired the position in June 2016 as part of a joint development program with Red Mountain Energy LLC. This sale represents a small portion of IOG's interest in the STACK. Through IOG STACK and other affiliates, IOG's assets span five counties in Northwestern Oklahoma including Blaine, Custer, Dewey, Kingfisher, and Major. As of February 2017, IOG manages equity commitments in excess of $633 million across eight development projects. This investment spans multiple plays including the Midland Basin, STACK, South Texas (Eagle Ford and Austin Chalk), Arkoma Woodford, North Dakota Bakken, and Pennsylvania Marcellus.

Supreme Court of Yukon approves ExxonMobil, interOil transaction

The Supreme Court of Yukon has granted a final order approving the arrangement between InterOil Corp. and Exxon Mobil Corp. The arrangement was approved by more than 91% of the shares voted at a Special Meeting on February 14, 2017 and has now received all necessary approvals. InterOil and ExxonMobil expect the transaction to be completed as of press time. InterOil is an independent oil and gas business with a sole focus on Papua New Guinea.

Covey Park closes $465M Haynesville buy

Covey Park Energy LLC, a Dallas, Texas-based independent oil and gas exploration and production company, has closed on the acquisition of additional assets located in the Haynesville shale area of North Louisiana from Chesapeake Exploration LLC and related companies for $465 million. Covey Park funded a portion of the Chesapeake acquisition with additional equity investments from its existing investor Denham Capital, as well as incremental debt commitments from its core lender group. To fund the balance of the acquisition and to support growth initiatives, Covey Park issued preferred equity to Magnetar Capital, KKR (through the Energy Income & Growth Fund) ,and Triangle Peak Partners. Wells Fargo acted as financial advisor to Covey Park.

Greenwell Energy Solutions acquires Exclusive Energy Services

Greenwell Energy Solutions, an independent specialty provider of completion and production services to the upstream industry, has acquired Exclusive Energy Services. Exclusive provides highly-automated, Data Acquisition System (DAS) mixing plants that enable chemical mixing and delivery for coil tubing, work-over and frac jobs.