Equity Research. E&P: Shantytown -- Revisiting E&Ps At The Strip. January 23, Exploration & Production

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1 January 23, 2015 Equity Research E&P: Shantytown -- Revisiting E&Ps At The Strip Lowering Natural Gas Price Forecast Summary. Getting Acquainted With Lower Oil. The U.S. E&P industry is at the front end of what will be a structural transformation. Executives have finally begun to accept a new near-term pricing reality, including very bearish natural gas fundamentals, and focus has moved to the balance sheet. Capital cuts about to take hold, and at the strip, we estimate our 2015 capex for universe will be down 38% from 2014 levels, $32 billion. Needless to say, at the front end of a structural transformation there are high levels of uncertainty and volatility, and that has kept the Street from jumping back into an EPX which has underperformed the SPX by 46% since last June. Regarding equities, we are not ready to call the bottom, but feel we are closer than not and will begin to look for entry points in upcoming weeks. Within this note we re-run our numbers for the crude strip, incorporate our new lower natural gas price forecast, and revise our estimates across the board. Getting Closer to Bottom, But Not There Yet. Shares discounting ahead, but we still think Street needs to get more clarity on oil price, production profile and capital budgets, and general shape of oil price recovery. For investors wanting to play the group longer term (and recognizing this is opposite the current hedge fund trade), we continue to recommend the high quality names (see page 2 for Outperform-rated names). Natural Gas Fundamentals Could They Be Worse Than Oil? Lowering Forecast. Yes, the outlook is that bad. Simply too much supply, even with an associated gas production reduction. Lower prices needed to resolve the supplydemand imbalance. Our new 2015/2016 forecast is $2.85/$3.00/MMBtu which is down from $3.70/$4.15 prior. We are now using $4.00 long term, down from $4.50 prior. Cash Flow and Capex Get Hammered... We have re-run our models using last Friday s crude strip (1/16/15) and our revised natural gas forecast. The prices hammer 2015 discretionary cash flow and capex estimates, cash flow now down 37% and capex down 38% from 2014 levels. But Production Still Growing in At the strip, 2014 momentum and backlog will likely carry 2015, and we model our universe to show aggregate production growth of 7% in Leverage An Issue. As we illustrate within, balance sheets an issue with 2015 Net debt/ebitdax levels high, but ballooning to 7.0x for small caps in Revolver re-determinations will be closely watched, with the Fall period likely to be more onerous. 2015E EPS Down 123%; 2015E CFPS Down 20% 2015E/2016E EPS move down by 123%/133% versus prior estimates. 2015/2016 CFPS moves down 20%/25% versus prior estimates. Hedged or Unhedged, Oil or Gas Valuations Not Attractive. 2015E/2016E hedged EV/EBITDAX multiples are at 9.0x/10.1x. On an unhedged basis, the group is trading at 22.1x in 2015 and 13.4x in Keep in mind this is at the crude strip and $3.00/MMBtu natural gas, but just not comforting. Please see page 25 for rating definitions, important disclosures and required analyst certifications All estimates/forecasts are as of 01/23/15 unless otherwise stated. Exploration & Production David Tameron, Senior Analyst (303) [email protected] Gordon Douthat, CFA, Senior Analyst (303) [email protected] Jamil Bhatti, CFA, Associate Analyst (303) [email protected] Richard Vidal, Associate Analyst (303) [email protected] Wells Fargo Securities, LLC does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of the report and investors should consider this report as only a single factor in making their investment decision.

2 Exploration & Production Structural Changes Ahead; Getting Closer to the Bottom But Not There Yet As we wrote about late last year, at the risk of sounding dramatic, if current prices hold we are in the midst of a structural change within the U.S. E&P industry. Years of elevated commodity prices and above average returns resulted in an influx of capital and while it was fun while it lasted, the market is doing what it does in a commodity business and the market is telling us we need a reset. We are not calling for the death of the E&P industry, but we believe the next 2 years will look dramatically different than the last. Assuming the commodity holds, the sector needs to retrench, refocus, and frankly there needs to be some consolidation, in our view. As it pertains to public E&P companies, which have significantly less flexibility than their private counterparts, 2015 becomes a year of transition for some, and a year of survival for others. The largest and better balance sheet companies should be able to weather the storm. But for others, and we would point to the majority of small and some mid-cap names, the downturn in crude puts significant pressure on cash flow, balance sheets, debt metrics, etc. For these companies, it becomes more about managing a balance sheet through a difficult environment very much a survivor mentality and trying to do what gets a company through the next 3-6 months. There will likely be a number of companies forced to fund liquidity needs, which could force asset sales and capital market activity. In our view, the risk/reward among the small cap group especially remains very high. The only difference from our view a few months prior and the view today is the shape and the severity of the downturn. Oil prices are down another $20/bbl since early December, and we have finally begun to see the industry respond aggressively, cutting capital budgets and capital. With our latest cut, if prices hold we estimate E&P 2015 cash flows will be down 37% from 2014 levels, and capital budgets will follow, down 38% from 2014 levels. And keep in mind that is with respect to the public E&P universe which need to be more conscientious with regard to numbers our conversations with various private companies indicate those companies have gotten even more aggressive in cutting activity levels. What Does It Mean For Stocks? - Not Quite There. While the industry is just beginning its restructuring process, shares look ahead and have already discounted a large portion of the downturn. And while still not cheap and recognizing there is some downside risk if prices hold at current levels for another 6-12 months (not likely in our view), we feel shares en masse are closer to a bottom than not. But we are not quite there yet. We may be trying to be too cute with the timing, but we still need to see a few items before we get more aggressive, and we think that still takes another month or so. As for what it s worth, we think the generalists need to see some version of below as well before stepping in. Oil Prices Oil prices have stopped going down (for now), although some volatility remains. Just need to see some time pass and see oil remain in a band, whatever that band may be. Capital Budgets We are forecasting capital budgets to be down 38% from 2014 levels. While we have received guidance from some of the universe, the majority has come from the smaller cap names. Still uncertainty with regards to capital budget reductions (which we believe have a chance to be in excess of Street expectations), and as we start to see aggregated numbers (i.e. E&P capex down $32.4B from 2014 levels). Production Profile Our internal expectations remain that U.S. production tops out mid-summer, and we think Street expectations are along the same line. Some color from Lower-48 upstream as to the general shape of that curve would provide more confidence (could get some with guidance). Length and Shape of Recovery Tying into capital and production bullets above, is the shape of the recovery: V shaped, U shaped, or bathtub (Anadarko term). While we don t know until we know, magnitude of recent cuts suggest a quicker bounce back but getting clarity on capital budgets and production should help with that thesis. With regards to specific names, at the top of the list remain the high quality names in our coverage. In David Tameron s coverage, Outperform ratings include large-caps EOG, DVN, APC, mid-cap CXO, and small-caps PDCE and CRZO. In Gordon Douthat s coverage, Outperform ratings remain on large-cap PXD, mid-caps COG and FANG, and small-cap ROSE. We recognize that hedge funds are shorting some subset of the highquality names near-term given their recent outperformance, but still continue to like those names longer term. What might be more interesting for some is our next tier of stocks, those shares which we have Market Perform rated, but that may warrant a look, especially if we look out over the next 3-6 months. In our combined universe, these include AR, CHK, EQT, GPOR, JONE, NFX, PE, QEP, RRC, and WLL. 2

3 E&P: Shantytown -- Revisiting E&Ps At The Strip Lowering Natural Gas Price Forecast - Fundamentals Remain Challenged (And That s Being Generous). We are lowering our 2015 and 2016 natural gas price forecast to $2.85/MMBtu and $3.00/MMBtu from $3.70/MMBtu and $4.15/MMBtu, respectively. For 2017, we are introducing a $3.75/MMBtu forecast and for our long term assumption, we are now using $4.00 from $4.50 prior. Simply put, we forecast supply to continue to overwhelm demand, at least for the next months. Below we present a snapshot of our natural gas supply/demand model. We will keep it brief, but a few nuances. For 2015, we are showing supply/demand balance essentially in line. But in order to get to that balance, we had to assume a significant uptick in natural gas power demand related to lower natural gas prices (i.e. had we not assumed sub-$3.00 prices then we would have had a large supply imbalance). As far as the absolute 2015 dry gas supply level of 73.9 Bcf/d, which is up 4 Bcf/d from 2014, we think that forecast could be on the conservative side. While we have yet to see EIA November or December 2014, Bentek recently reported that dry gas production levels were in excess of 73 Bcf/d. From that level we would only have to see about 2 Bcf/d increase over the entire year to average 74 Bcf/d. Thus, given that dry gas supply was up 5 Bcf/d in Nov 14 vs. Nov 13, we don t think our 2 Bcf/d is aggressive. Of note, embedded in our number is an assumed slowdown of associated gas production growth, which should slow given the dramatic cutback expected in liquids drilling. Associated gas production remains an unknown, particularly for 2H15 and into For 2016, we have included a small amount of LNG exports in our model. But as has been well documented, the bigger increase in LNG export demand is not expected until 2H 2017 or into Exhibit 1: US Natural Gas Supply & Demand U.S. Natural Gas Overview E 2015E 2016E Supply (Bcf/d) US Dry Gas Prod'n LNG Net Imports (0.1) (0.8) Pipeline Net Imports Supplemental Fuels Balancing Item 0.3 (0.3) (0.3) (0.4) 0.9 Total Supply Consumption (Bcf/d) Residential Commercial Industrial Power Lease/Plant Fuel Pipeline/Vehicle Total Consumption Inventory Injection / (Withdrawal) (Bcf/d) (1.7) (0.5) Source: Wells Fargo Securities, LLC estimates, EIA, and Bentek Energy. Bentek estimates the current backlog in the Marcellus and Utica is at 1,600 wells. According to their model, and assuming only minimal drilling, the backlog alone will fill up all available Marcellus capacity into

4 Exploration & Production Continuing to Use The Strip for Oil. Until we get further clarity in the crude markets, we continue to use the strip as our commodity deck. We have done this for a number of reasons, including: 1) uncertainty around crude prices; 2) anticipation of price levels used in 2015 E&P capital budget outlook; 3) need to find a baseline and reference point. Looking at the magnitude of upcoming capital cuts and activity level reductions, we think there is significant upside potential to both the strip and the official Wells Fargo forecast, which is set by Senior Analyst Roger Read and holds at $62.50/bbl in 2015 and $73/bbl in But we think the strip today best approximates Street mindset and again, is more in line with where capital budgets will be set. That is obviously important for our stocks. Exhibit 2: Natural Gas, Oil, and NGL Prices Commodity 1Q15E 2Q15E 3Q15E 4Q15E 2015E 1Q16E 2Q16E 3Q16E 4Q16E 2016E 1Q17E 2Q17E 3Q17E 4Q17E 2017E Natural Gas ($/ MMBtu) Updated Estimate $ 3.14 $ 2.75 $ 2.65 $ 2.85 $ 2.85 $ 3.10 $ 2.90 $ 2.75 $ 3.25 $ 3.00 $ 3.75 $ 3.75 $ 3.75 $ 3.75 $ 3.75 Prior Est imat e Bloomberg Consensus Crude (WTI, $/bbl) Strip (1/ 16/ 15) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Current WF Estimate Bloomberg Consensus Natural Gas Liquids ($/ bbl) Strip (1/ 16/ 15) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Source: Bloomberg LP and Wells Fargo Securities, LLC estimates. Consensus as of 1/22/ E Cash Flows Down 37% vs Based on strip pricing, crude at ~$50.72/bbl versus $93.10/bbl in 2014, cash flows in our universe decrease by 37% in 2015 vs Looking at 2016, the crude strip moves to ~$57.34/bbl, and our gas estimate moves to $3.00/MMBtu from $4.15/MMBtu; our 2016 cash flow estimates come down by roughly 3% in 2016 vs Driving Capex Down 38% vs Based on our revised cash flows, we have taken down capex accordingly across the board. In total, our new 2015 estimates are down 38% from 2014 levels. F0r 2016, our capex budgets are slightly lower by 2% versus 2015 levels. 4

5 5 Exhibit 3: 2014E, 2015E, 2016E Discretionary Cash Flow, Capex (Ex-A&D), and Outspend (all figures in $MM) Large-Cap Mid-Cap Small-Cap Company Ticker 2014E 2015E 2016E DCF Capex Outspend DCF Δ Capex Δ DCF Capex Outspend DCF Δ Capex Δ DCF Capex Outspend DCF Δ Capex Δ Apache Corporation APA $ 7,503 $ 11,070 $ (3,567) -23% -1% $ 4,158 $ 5,050 $ (892) -45% -54% $ 4,490 $ 4,450 $ 40 8% -12% Anadarko Petroleum Corp. APC $ 8,635 $ 9,187 $ (552) 8% 19% $ 4,368 $ 4,750 $ (382) -49% -48% $ 4,859 $ 5,100 $ (241) 11% 7% Chesapeake Energy Corp CHK $ 4,759 $ 5,200 $ (441) 14% -21% $ 2,847 $ 3,790 $ (943) -40% -27% $ 2,383 $ 3,100 $ (717) -16% -18% Devon Energy Corp. DVN $ 5,721 $ 6,895 $ (1,174) 0% 2% $ 4,526 $ 4,950 $ (424) -21% -28% $ 3,904 $ 4,500 $ (596) -14% -9% EOG Resources, Inc. EOG $ 8,150 $ 8,275 $ (125) 13% 17% $ 4,018 $ 4,690 $ (672) -51% -43% $ 4,622 $ 4,760 $ (138) 15% 1% Noble Energy NBL $ 2,964 $ 4,935 $ (1,971) -7% 25% $ 1,514 $ 2,850 $ (1,336) -49% -42% $ 1,503 $ 2,800 $ (1,297) -1% -2% Pioneer Natural Resources PXD $ 2,435 $ 3,400 $ (965) 10% 29% $ 1,649 $ 3,237 $ (1,589) -32% -5% $ 1,407 $ 3,503 $ (2,097) -15% 8% Company Ticker 2014E 2015E 2016E DCF Capex Outspend DCF Δ Capex Δ DCF Capex Outspend DCF Δ Capex Δ DCF Capex Outspend DCF Δ Capex Δ Antero Resources AR $ 969 $ 3,379 $ (2,410) 97% 49% $ 1,071 $ 1,650 $ (579) 10% -51% $ 1,114 $ 1,800 $ (686) 4% 9% Cabot Oil & Gas Corp. COG $ 1,262 $ 1,500 $ (238) 15% 26% $ 754 $ 1,411 $ (656) -40% -6% $ 1,144 $ 1,776 $ (632) 52% 26% Concho Resources Inc. CXO $ 1,690 $ 2,605 $ (915) 16% 41% $ 1,385 $ 1,708 $ (322) -18% -34% $ 1,279 $ 1,600 $ (321) -8% -6% Eclipse Resources ECR $ 22 $ 739 $ (717) -141% 417% $ 83 $ 552 $ (469) 280% -25% $ 186 $ 556 $ (370) 122% 1% EP Energy Corp. EPE $ 1,666 $ 2,024 $ (358) 87% 5% $ 1,230 $ 1,475 $ (245) -26% -27% $ 1,057 $ 1,433 $ (376) -14% -3% EQT Corporation EQT $ 1,445 $ 2,149 $ (704) 24% 27% $ 1,163 $ 2,525 $ (1,362) -20% 17% $ 1,351 $ 2,568 $ (1,217) 16% 2% Diamondback Energy, Inc. FANG $ 372 $ 471 $ (99) 149% 61% $ 369 $ 431 $ (62) -1% -8% $ 355 $ 509 $ (154) -4% 18% Gulfport Energy Corporation GPOR $ 367 $ 748 $ (381) 95% 29% $ 324 $ 621 $ (297) -12% -17% $ 356 $ 735 $ (379) 10% 18% Laredo Petroleum LPI $ 379 $ 1,250 $ (871) -13% 72% $ 342 $ 498 $ (156) -10% -60% $ 223 $ 398 $ (175) -35% -20% Newfield Exploration Company NFX $ 1,119 $ 1,752 $ (633) -1% -13% $ 988 $ 1,100 $ (112) -12% -37% $ 935 $ 1,100 $ (165) -5% 0% Oasis Petroleum Inc. OAS $ 653 $ 1,423 $ (770) -10% 59% $ 525 $ 543 $ (18) -20% -62% $ 183 $ 360 $ (177) -65% -34% QEP Resources, Inc. QEP $ 1,409 $ 1,739 $ (331) 10% 11% $ 831 $ 1,000 $ (169) -41% -43% $ 729 $ 1,000 $ (271) -12% 0% Range Resources Corp. RRC $ 1,143 $ 1,520 $ (377) 70% 31% $ 767 $ 870 $ (103) -33% -43% $ 680 $ 850 $ (170) -11% -2% SM Energy Company SM $ 1,305 $ 1,933 $ (629) -3% 24% $ 881 $ 1,130 $ (249) -33% -42% $ 712 $ 1,000 $ (288) -19% -12% Ultra Petroleum Corp. UPL $ 627 $ 609 $ 18 24% 62% $ 395 $ 450 $ (55) -37% -26% $ 247 $ 350 $ (103) -37% -22% Whiting Petroleum Corp. WLL $ 1,930 $ 2,786 $ (856) 15% 19% $ 778 $ 2,325 $ (1,547) -60% -17% $ 814 $ 2,200 $ (1,386) 5% -5% Company Ticker 2014E 2015E 2016E DCF Capex Outspend DCF Δ Capex Δ DCF Capex Outspend DCF Δ Capex Δ DCF Capex Outspend DCF Δ Capex Δ Approach Resources Inc. AREX $ 170 $ 400 $ (230) 49% 35% $ 131 $ 186 $ (55) -23% -53% $ 122 $ 271 $ (149) -7% 46% Bill Barrett Corporation BBG $ 186 $ 561 $ (375) -179% 26% $ 198 $ 280 $ (82) 6% -50% $ 96 $ 200 $ (104) -51% -29% Carrizo Oil and Gas CRZO $ 440 $ 697 $ (257) 15% -7% $ 423 $ 428 $ (5) -4% -39% $ 315 $ 400 $ (85) -26% -7% Goodrich Petroleum Corp. GDP $ 92 $ 327 $ (235) 10% 50% $ 82 $ 175 $ (94) -12% -46% $ 31 $ 151 $ (120) -62% -14% Halcón Resources Corp. HK $ 638 $ 1,338 $ (700) 14% -33% $ 539 $ 523 $ 15-16% -61% $ 385 $ 701 $ (315) -29% 34% Jones Energy JONE $ 258 $ 507 $ (249) 29% 119% $ 228 $ 300 $ (72) -12% -41% $ 199 $ 260 $ (61) -12% -13% Midstates Petroleum MPO $ 342 $ 544 $ (203) 35% -5% $ 210 $ 250 $ (40) -38% -54% $ 47 $ 160 $ (113) -78% -36% PDC Energy PDCE $ 328 $ 652 $ (325) 149% 65% $ 382 $ 454 $ (72) 17% -30% $ 399 $ 450 $ (51) 4% -1% Parsley Energy PE $ 159 $ 496 $ (337) 143% 136% $ 138 $ 400 $ (262) -13% -19% $ 115 $ 385 $ (270) -17% -4% Penn Virginia Corporation PVA $ 317 $ 778 $ (460) 25% 54% $ 170 $ 330 $ (160) -46% -58% $ 144 $ 280 $ (136) -15% -15% Resolute Energy REN $ 114 $ 151 $ (38) -12% -42% $ 46 $ 48 $ (2) -59% -68% $ 55 $ 48 $ 7 18% 0% Rex Energy Corp. REXX $ 139 $ 365 $ (226) 24% 18% $ 31 $ 200 $ (169) -78% -45% $ 31 $ 170 $ (139) -1% -15% Rice Energy Inc. RICE $ 171 $ 905 $ (734) 705% 95% $ 269 $ 817 $ (549) 57% -10% $ 288 $ 1,011 $ (723) 7% 24% Rosetta Resources Inc. ROSE $ 642 $ 1,200 $ (558) 16% 38% $ 487 $ 746 $ (259) -24% -38% $ 376 $ 837 $ (461) -23% 12% Swift Energy Company SFY $ 280 $ 396 $ (116) -10% -24% $ 39 $ 115 $ (76) -86% -71% $ 27 $ 174 $ (147) -31% 52% Triangle Petroleum TPLM $ 224 $ 525 $ (301) 96% 54% $ 153 $ 196 $ (43) -32% -63% $ 123 $ 243 $ (120) -20% 24% Large-Cap $ 40,166 $ 48,962 $ (8,796) $ 23,080 $ 29,317 $ (6,237) $ 23,168 $ 28,213 $ (5,046) % -0.3% 6.6% -42.5% -40.1% 0.4% -3.8% Mid-Cap $ 16,358 $ 26,628 $ (10,270) $ 11,887 $ 18,288 $ (6,402) $ 11,364 $ 18,234 $ (6,870) % 24.3% 29.4% -27.3% -31.3% -4.4% -0.3% Small-Cap $ 4,499 $ 9,842 $ (5,343) $ 3,527 $ 5,449 $ (1,923) $ 2,753 $ 5,740 $ (2,987) % 47.6% 17.6% -21.6% -44.6% -21.9% 5.3% Total $ 61,023 $ 85,431 $ (24,409) $ 38,493 $ 53,055 $ (14,562) $ 37,284 $ 52,188 $ (14,904) % 8.0% 14.1% -36.9% -37.9% -3.1% -1.6% Source: Wells Fargo Securities, LLC estimates and Company filings. E&P: Shantytown -- Revisiting E&Ps At The Strip

6 Exploration & Production Still Showing Production Growth, Even at $50/bbl. While keeping one eye on the balance sheet, our conversations with E&Ps and from guidance updates we have received thus far, it appears that companies still have one eye on production growth targets--we model 2015 aggregate production growth of 7% y/y (vs. prior 10%). This is true even if it means continued cash flow outspend, which we model at $14.6 billion in aggregate across our coverage universe. Every management team has different reasons cash flow, operational momentum, years of Street conditioning, eternal optimism - and we get it s not that easy to ramp down rig count and ramp back up, but we wish we could see management teams act just a little more like private companies rather than wait for a price recovery bailout. We continue to hear from companies that prices will recover and generally we sense hesitancy on behalf of E&Ps to try to get in front and drastically reduce activity levels (both for operational reasons and 2016 production profiles). And again, having worked in industry, we understand companies can t ramp from 20 rigs to 2 back to 16 overnight. Just seems to us that E&Ps are a little slow in reacting to what has the potential to be very challenging in 6 months. In a strip pricing environment (which few management teams seem willing to accept), many E&Ps do not have a sustainable strategy in our view. And yes, that is us saying that if oil stays at $50/bbl for months, we will see the E&P universe shrink dramatically, either voluntarily or involuntarily. Exhibit 4: Yr/Yr Annual Production Growth (%) Large-Cap Company Ticker 2014E 2015E 2016E Q4 '15E vs. Q4 '14E Apache Corporation APA -15.4% -1.5% -8.4% -5.4% Anadarko Petroleum Corp. APC 7.9% 1.1% 1.5% -1.3% Chesapeake Energy Corp CHK 5.3% -5.2% -2.5% -9.5% Devon Energy Corp. DVN -3.6% -1.5% 2.2% 2.2% EOG Resources, Inc. EOG 17.1% 3.7% 2.0% 1.3% Noble Energy NBL 9.1% 8.5% 3.2% 1.8% Pioneer Natural Resources PXD 5.7% 14.4% 4.8% 3.9% Average 3.7% 2.8% 0.4% -1.0% Mid-Cap Company Ticker 2014E 2015E 2016E Q4 '15E vs. Q4 '14E Antero Resources AR 92.7% 40.4% 20.7% 18.6% Cabot Oil & Gas Corp. COG 29.1% 20.6% 12.1% 4.3% Concho Resources Inc. CXO 19.0% 11.7% 0.0% 4.8% Eclipse Resources ECR 234.6% 25.0% 114.8% EP Energy Corp. EPE 15.3% 0.4% -4.3% -10.3% EQT Corporation EQT 23.6% 22.1% 19.8% 17.5% Diamondback Energy, Inc. FANG 166.0% 35.4% 24.1% 7.2% Gulfport Energy Corporation GPOR 247.3% 94.0% 29.7% 33.6% Laredo Petroleum LPI 3.2% 12.3% -6.9% -12.6% Newfield Exploration Company NFX 0.4% 7.7% 5.5% 13.3% Oasis Petroleum Inc. OAS 32.9% 0.0% -11.1% -9.7% QEP Resources, Inc. QEP 1.8% -0.5% -2.7% 0.2% Range Resources Corp. RRC 23.5% 20.8% 13.6% 18.2% SM Energy Company SM 10.2% 1.6% -5.4% -8.4% Ultra Petroleum Corp. UPL 7.4% 10.7% -7.8% -4.6% Whiting Petroleum Corp. WLL 23.2% 38.9% -9.9% 12.4% Average 46.4% 35.6% 8.6% 14.5% Small-Cap Company Ticker 2014E 2015E 2016E Q4 '15E vs. Q4 '14E Approach Resources Inc. AREX 46.3% 11.1% -2.9% -1.0% Bill Barrett Corporation BBG -33.8% -31.5% -3.8% 3.4% Carrizo Oil and Gas CRZO 18.8% 8.5% 0.6% -2.5% Goodrich Petroleum Corp. GDP -9.1% -3.6% -5.2% -10.5% Halcón Resources Corp. HK 23.2% -0.9% -2.9% -5.5% Jones Energy JONE 38.6% 14.0% 2.3% 11.3% Midstates Petroleum MPO 36.2% -0.9% -17.5% -14.1% PDC Energy PDCE 41.6% 32.7% 18.8% 35.3% Parsley Energy PE 38.1% 3.5% 7.2% Penn Virginia Corporation PVA 23.4% 14.2% -4.5% -6.6% Resolute Energy REN 2.1% -7.7% -10.8% -11.8% Rex Energy Corp. REXX 66.5% 31.4% 12.9% 1.4% Rice Energy Inc. RICE 111.9% 82.9% 29.1% 45.2% Rosetta Resources Inc. ROSE 32.2% 16.3% -5.1% 1.3% Swift Energy Company SFY 5.1% -7.5% -28.6% -18.4% Triangle Petroleum TPLM 111.8% 9.8% -0.4% -10.6% Average 37.2% 15.4% 1.7% 4.2% Source: Wells Fargo Securities, LLC estimates and Company Filings. 6

7 E&P: Shantytown -- Revisiting E&Ps At The Strip Consolidation Likely Coming But Not Yet. Some companies have built cash war chests, intentionally or not, and are on the hunt for either asset specific or corporate level opportunities. However according to nearly all our conversations, the current bid-ask spread remains too wide. But we do expect that by mid-year, after going through the revolver redetermination process, that potential pool will likely expand if commodities hold flat. Given the magnitude of commodity price declines, the structure of industry likely undergoes fundamental changes over the next year, with fat trimmed, inefficiencies removed, returns move to a more normalized level, and activity levels (and companies themselves) are rationalized. A cyclical business and industry should be healthier as a result of the adjustment process, though more pain is likely needed before consolidation gains momentum in our view. Put simply, money needs to come out of the sector. Service Cost Reductions Starting To Show Up Modeling 20-25%, But That Could Be Light. Service cost reductions are starting to make their way through the supply chain, with many E&Ps hopeful that by midyear, further reductions will allow for economics to begin to reset at lower commodity price levels wherever they settle. We don t expect an even progression with between 10-30% reductions expected depending on the area, with most management teams citing 20-25% on average. We are modeling 20% reductions in well costs from midyear 2014 levels along with reductions in operating costs on a company specific basis. Thus far in the down cycle, E&Ps have seen movement on drilling costs which seem to be down ~10% from the peak, though pressure pumping costs remain sticky given the backlog of uncompleted wells that must be worked off. In any case, we expect that by midyear cost reductions will more meaningfully be reflected in well costs. However, we would also caution that these reductions won t fully translate 1:1 to well cost reductions as various components remain inelastic to commodity prices; nonetheless should provide some relief as capacity loosens. Revolver Redeterminations Fall Worse Than Spring, But Both Likely Painful. With the first round of redeterminations coming in March/April following proved reserve reports, we expect to gain a better handle on liquidity outlook, and we get the sense from our conversations that most companies expect borrowing bases to be reduced, with a few exceptions. While banks will work with companies to manage a soft landing, at least for Spring redeterminations, for those with elevated leverage, we wouldn t be surprised to see combination of waivers and covenant restructuring. However, for the next round of redeterminations in October/November we believe that banks will need to see concrete steps made to improve leverage with companies forced to raise equity, sell assets, raise second lien debt, or risk further base reductions. Not exactly an ideal market to raise equity, high yield debt, or sell assets, so tough sledding ahead in our view. With lower overall hedge positions and a relatively flat strip compared to the recovery in 2009, we will be keeping a close eye on redeterminations this year. In Exhibit 5 (next page) we provide James Spicer s (Wells Fargo High Yield Energy Senior Research Analyst) liquidity snapshot that we believe contains valuable information. Please keep in mind that this was published in early December and only reflects available information as of end-q

8 Exploration & Production Exhibit 5: Liquidity Snapshot by Company as of Q (all units in $MM) Company Revolver Type Maturity Date Current Borrowing Capacity(a) Borrowings (b) Revolver Avail.(c) Cash Balance (b) Total Liquidity Revolver % Util. Alta Mesa Holdings (ALTMES) Sec. RBL May-16 $375 $290 $85 $6 $91 77% Antero Resources (AR) Sec. RBL May-19 3, , ,463 27% Approach Resources (AREX) Sec. RBL May % Atlas Resources Partners (ARP) Sec. RBL Jul % Bill Barrett Corp (BBG) Sec. RBL Oct % Bonanza Creek Energy (BCEI) Sec. RBL Sep % Breitburn Energy Partners (BBEP) Sec. RBL May-17 2,500 1, % Carrizo Oil & Gas (CRZO) Sec. RBL Jul % Chaparral Energy (CHAPAR) Sec. RBL Nov % Chesapeake Energy (CHK) Sec. RBL Dec-15 4, , ,090 0% Cimarex Energy (XEC) Unsecured Jul-18 1, , ,564 0% Clayton Williams Energy (CWEI) Sec. RBL Apr % Comstock Resources (CRK) Sec. RBL Nov % Concho Resources (CXO) Sec. RBL May-19 2, , ,599 0% Denbury Resources (DNR) Sec. RBL May-16 1, , ,209 26% Diamondback Energy (FANG) Sec. RBL Nov % Energy XXI (EXXI) Sec. RBL Apr-18 1, % EP Energy (EPENEG) Sec. RBL May-17 2, , ,902 31% EV Energy Partners (EVEP) Sec. RBL Apr % EXCO Resources (XCO) Sec. RBL Jul % Goodrich Petroleum (GDP) Sec. RBL Feb % Gulfport Energy (GPOR) Sec. RBL Jun % Halcón Resources (HK) Sec. RBL Feb-17 1, % Hilcorp Energy I (HILCRP) Sec. RBL Jul-16 1, , ,625 0% Laredo Petroleum (LPI) Sec. RBL Nov % Legacy Reserves (LGCY) Sec. RBL Apr % LINN Energy (LINE) Sec. RBL Apr-19 5,425 2,683 2, ,801 49% Magnum Hunter Resources (MHR) Sec. RBL Oct % Midstates Petroleum (MPO) Sec. RBL May % Newfield Exploration (NFX) Unsecured Jun-18 1, , ,377 18% Oasis Petroleum (OAS) Sec. RBL Apr-18 1, , ,217 23% PDC Energy (PDCE) Sec. RBL May % Penn Virginia Corp (PVA) Sec. RBL Sep % Petroquest Energy (PQ) Sec. RBL Oct % QEP Resources (QEP) Unsecured Aug-16 1, ,500 1,417 2,917 0% Quicksilver Resources (KWK) Sec. RBL Sep % Range Resources (RRC) Sec. RBL Oct-19 2, , ,351 32% Resolute Energy (REN) Sec. RBL Mar % Rex Energy (REXX) Sec. RBL Sep % Rosetta Resources (ROSE) Sec. RBL Apr % RSP Permian (RSPP) Sec. RBL Aug % Sabine Oil & Gas (NFREGY) Sec. RBL Apr-16 1, % Samson Invest. Co. (SAIVST)d Sec. RBL Dec-16 1, % SandRidge Energy (SD) Sec. RBL Oct ,490 0% SM Energy (SM) Sec. RBL Apr-18 1, , ,501 0% Stone Energy (SGY) Sec. RBL Jul % Swift Energy (SFY) Sec. RBL Nov % Triangle Petroleum Corp (TPLM) Sec. RBL Oct % Ultra Petroleum (UPL) Unsecured Oct-16 1, % Unit Corp. (UNT) Unsecured Sep % Vanguard Natural Resources (VNR) Sec. RBL Apr-18 2,000 1, % Venoco Inc. (VQ) Sec. RBL Mar % W&T Offshore (WTI) Sec. RBL Nov % Whiting Petroleum (WLL) Sec. RBL Aug-19 3, , ,558 28% WPX Energy (WPX) Unsecured Oct-19 1, , ,649 14% (a) Lesser of pro forma borrowing base or bank lending commitments. (b) Pro forma based on most recently reported quarter end, adjusted for M&A and capital markets transactions. Does not account for revolver borrowings/repayments as a result of free cash flow generation or shortfalls. (c) Excludes letters of credit and does not reflect the potential limiting effect of covenants on actual availability. (d) SAIVST borrowing capacity includes $500 MM in second lien availability. *FANG, LINE, and TPLM reflect availability from more than one credit facility. Source: Wells Fargo Securities, LLC, Company Filings, and Bloomberg L.P. 8

9 E&P: Shantytown -- Revisiting E&Ps At The Strip Hedging Still Under-Hedged at 50%/23% of 2015E/2016E Crude Production. On average, our universe has hedged 50% and 23% of 2015E and 2016E crude oil production, respectively. This is slightly higher than the 47%/24% level for 2015E/2016E oil production from our last update ( E&P: Coal In E&P Stockings Structural Changes Ahead ; 12/18/14), but keep in mind this takes into account production revisions which mathematically drive the number higher. Excluding gassy names, the oilier companies have hedged 63% and 30% of 2015E and 2016E oil production. For natural gas, companies in our universe have hedged roughly 40%/12% for 2015E/2016E; this compares to our prior update of 33%/14% for 2015E/2016E gas production. Exhibit 6: 2015E Oil Hedges 2015E % Oil Production Hedged 100% 80% 60% Average: 50% 40% 20% 0% BBG EPE LPI NFX RRC ROSE HK PXD PDCE REN CHK PVA JONE OAS MPO AREX NBL SM DVN AR PE CRZO FANG CXO GDP TPLM QEP REXX WLL EOG APC UPL COG SFY APA EQT GPOR RICE ECR Source: Wells Fargo Securities, LLC and Company Filings. Exhibit 7: 2016E Oil Hedges 2016E % Oil Production Hedged 100% 80% 60% 40% 20% Average: 23% 0% NFX REN EPE PDCE JONE PXD LPI AREX HK BBG SM AR CHK CXO ROSE PVA PE NBL CRZO WLL RRC QEP UPL APC EOG COG DVN FANG SFY APA EQT MPO GPOR OAS REXX TPLM RICE GDP ECR Source: Wells Fargo Securities, LLC and Company Filings. 9

10 Exploration & Production Exhibit 8: 2015E Gas Hedges 2015E % Gas Production Hedged 100% 80% 60% 40% Average: 40% 20% 0% AR EPE HK PXD JONE NFX BBG PDCE LPI MPO RICE GPOR EQT ROSE SM CRZO UPL RRC AREX REXX PE CHK DVN COG NBL ECR CXO APC QEP EOG REN SFY PVA FANG WLL APA OAS TPLM GDP Source: Wells Fargo Securities, LLC and Company Filings. Exhibit 9: 2016E Gas Hedges 2016E % Gas Production Hedged 100% 80% 60% 40% 20% Average: 12% 0% AR PDCE JONE LPI AREX ROSE RICE SM GPOR PXD EQT BBG EPE HK RRC CHK UPL APC EOG COG DVN REN FANG QEP SFY CRZO WLL APA CXO MPO NBL NFX PVA OAS REXX TPLM PE GDP ECR Source: Wells Fargo Securities, LLC and Company Filings. 10

11 E&P: Shantytown -- Revisiting E&Ps At The Strip NAV Industry Doesn t Work At $50/bbl. As mentioned on prior pages, we ran the oil strip through the models, and incorporated our lower gas price estimates. In addition, we also reduced service cost assumptions in our well costs, which are now down an additional 7% from our prior 13% reduction, bringing total well costs lower, on average, 20% versus mid-year 2014 levels. As expected, our NAVs on average are dramatically different from previous levels (which were run with 2015/2016 crude at $60/$64 per bbl and natural gas prices at $4.00/MMBtu and $4.50/MMBtu longer term). Big caveat - we view this NAV exercise as largely academic and would caution against reading too much into the numbers for several reasons. First, we are using the crude strip for the next 3 years and then long term prices of $75/bbl. While the $75/bbl may be accurate, we would view the current 3-year strip as unsustainable at +/- $50/bbl. If $50/bbl does end up being the right price, then equities have significant meaningful downside risk from here. Second, in our well economics calculation, we have chosen to stay on the conservative side and only assume a 20% reduction in well costs. As we have written about earlier, we expect service costs to be down closer to 25%, if not greater. And in theory, if $50/bbl is the right crude number, then well costs would be down even a greater magnitude, perhaps closer to 35-40%. The whole entire cost structure of the value chain would need to adjust while we have attempted to capture some of those economics in our latest run, we likely haven t captured the magnitude that would be associated with a $50/bbl environment. What this means mechanically is that our NAVs, which are driven by a blow down in PV-10 values and future rig schedules, are now incorporating well economics that have very low returns or in some cases are uneconomic with our current assumptions. Thus, NAVs get impacted to varying degrees. The biggest takeaway from this analysis, in our opinion, is that the E&P industry as configured today wouldn t work at $50/bbl. Not exactly a groundbreaking conclusion, but always nice to see the numbers confirm conventional wisdom. 11

12 Exploration & Production Exhibit 10: New vs. Old Company NAV s and Val Range (all units in $/share) Ticker NAVs Valuation Ranges New Old Change New Old Price Rating APA $44.03 $ % $56-$64 $56-$64 $63.76 Market Perform APC $76.62 $ % $88-$96 $88-$96 $81.52 Outperform AR $30.74 $ % $35-$40 $45-$49 $35.91 Market Perform AREX $4.63 $ % $5-$8 $5-$8 $6.54 Market Perform BBG $10.74 $ % $9-$13 $9-$13 $10.36 Market Perform CHK $8.18 $ % $19-$24 $17-$23 $19.62 Market Perform COG $23.74 $ % $36-$40 $36-$40 $28.58 Outperform CRZO $49.52 $ % $48-$54 $44-$50 $44.13 Outperform CXO $63.82 $ % $110-$120 $102-$112 $ Outperform DVN $42.51 $ % $68-74 $63-69 $61.25 Outperform ECR $4.52 $ % $5-$7 $6-$10 $5.70 Market Perform EOG $55.83 $ % $ $ $90.36 Outperform EPE $8.92 $ % $8-$10 $8-$10 $9.48 Market Perform EQT $63.70 $ % $74-$78 $78-$82 $75.86 Market Perform FANG $59.65 $ % $76-$80 $76-$80 $67.98 Outperform GDP $0.09 $ % $2-$3 $4-$6 $2.60 Market Perform GPOR $27.50 $ % $38-$42 $44-$48 $38.59 Market Perform HK NM $1.41 $1.00-$1.50 $1.25-$1.75 $1.41 Market Perform JONE $5.01 $ % $9-$13 $11-$16 $9.68 Market Perform LPI $7.43 $ % $8-$12 $8-$12 $9.92 Market Perform MPO NM $0.83 $0-$2 $0-$2 $1.23 Market Perform NBL $31.88 $ % $43-51 $46-54 $46.74 Market Perform NFX $3.42 $ % $25-31 $25-31 $28.53 Market Perform OAS $1.76 $ % $10-$16 $13-$19 $13.35 Market Perform PDCE $45.60 $ % $53-$57 $47-$51 $44.72 Outperform PE $5.95 $ % $12-$16 $12-$16 $16.69 Market Perform PVA $0.91 $ % $4-$8 $4-$8 $5.62 Market Perform PXD $ $ % $165-$175 $165-$175 $ Outperform QEP $4.93 $ % $19-$23 $19-$23 $19.91 Market Perform REN $0.64 $ % $0-$2 $1-$3 $0.87 Market Perform REXX NM $5.92 $2-$3 $5-$7 $2.83 Market Perform RICE $15.52 $ % $26-$30 $30-$34 $17.11 Outperform ROSE $18.37 $ % $26-$30 $26-$30 $17.80 Outperform RRC $26.81 $ % $46-$55 $63-$69 $49.03 Market Perform SFY NM $2.42 $1.75-$2.25 $2.00-$2.50 $2.12 Market Perform SM $8.33 $ % $33-$39 $38-$44 $35.83 Market Perform TPLM $3.43 $ % $4-$7 $4-$7 $5.14 Market Perform UPL $9.74 $ % $12-$16 $12-$18 $13.92 Market Perform VNOM $18.07 $ % $17-$22 $17-$22 $17.00 Outperform WLL $15.04 $ % $28-$34 $30-$36 $28.24 Market Perform Source: Wells Fargo Securities, LLC estimates and Company Filings. Prices as of 1/22/

13 E&P: Shantytown -- Revisiting E&Ps At The Strip Debt/EBITDAX Not Pretty - Limits Ability To Ramp in Very significant balance sheet challenges for the group over the near to medium term, assuming crude prices stay anywhere near current levels. And we remind our readers that revolver bases are established using a combination of proven developed producing (PDP) levels plus cash value of hedges (nearly 1:1). As we showed on pages 9-10, companies have less hedges in 2016 vs. 2015, meaning if nothing changed, there would be a downward bias on revolvers. But combine hedges rolling off with lower bank decks, and we believe that will more than offset any additional PDP value gained through additional reserves. We would expect the majority of our universe to have Spring redetermination lower than current values. As we mentioned earlier in this note, while it is apparent that many would breach covenant restrictions should current prices hold, we also believe that bank syndicates will try to work with companies to grant temporary waivers, or find other solutions to resolve excessive leverage brought about by crude price declines. An important nuance that we believe some on the Street are overestimating the ability of small- and mid-cap names to ramp back up headed into Again, this is assuming current prices hold near current levels, but we believe there will be a number of E&Ps facing a revolver deficiency (and thus will need to get revolver balances down by Fall). But thinking on 2016, this would limit the ability of companies to ramp. Just mathematically Debt/EBITDAX is headed higher given the lower prices, but the denominator (EBITDA) will be multiples less what is being used in 2015 calculations, driving ratios higher. This would put even more pressure on revolvers, which stand alone will be meaningfully lower just based on price deck. As we showed in Exhibit 3, we project every small- and mid-cap company to outspend cash flow this is something that can t hold if Fall revolvers remain down from year ago levels. In our view, companies will be forced to sell assets (but of course the highest potential proceed assets are best cash flow generators), issue equity, look for private equity injections, etc. And in some cases, there will be those companies forced to sell as they are caught in what one CFO referred to as the death spiral (cut capex or raise capex; there is no solution). Exhibit 11: Leverage Forecast (2015E and 2016E: Net Debt/EBITDAX) Large-Cap Company Ticker 2015E 2016E Apache Corporation APA 2.4x 2.1x Anadarko Petroleum Corp. APC 3.6x 3.3x Chesapeake Energy Corp CHK 4.2x 5.5x Devon Energy Corp. DVN 2.3x 2.8x EOG Resources, Inc. EOG 1.1x 1.0x Noble Energy NBL 3.3x 3.9x Pioneer Natural Resources PXD 2.0x 3.3x Average 2.7x 3.1x Mid-Cap Company Ticker 2015E 2016E Antero Resources AR 4.2x 4.4x Cabot Oil & Gas Corp. COG 2.7x 2.3x Concho Resources Inc. CXO 2.6x 3.0x Eclipse Resources ECR 3.8x 3.9x EP Energy Corp. EPE 3.1x 3.7x EQT Corporation EQT 2.2x 2.6x Diamondback Energy, Inc. FANG 1.5x 2.0x Gulfport Energy Corporation GPOR 2.8x 3.5x Laredo Petroleum LPI 4.2x 5.9x Newfield Exploration Company NFX 2.7x 2.9x Oasis Petroleum Inc. OAS 4.2x 8.6x QEP Resources, Inc. QEP 1.9x 2.6x Range Resources Corp. RRC 3.7x 4.1x SM Energy Company SM 2.6x 3.5x Ultra Petroleum Corp. UPL 5.6x 7.3x Whiting Petroleum Corp. WLL 5.8x 6.4x Average 3.4x 4.2x Small-Cap Company Ticker 2015E 2016E Approach Resources Inc. AREX 4.0x 5.3x Bill Barrett Corporation BBG 3.0x 5.3x Carrizo Oil and Gas CRZO 3.4x 4.5x Goodrich Petroleum Corp. GDP 5.9x 9.7x Halcón Resources Corp. HK 5.6x 7.6x Jones Energy JONE 3.6x 4.3x Midstates Petroleum MPO 5.2x 9.8x PDC Energy PDCE 1.6x 1.6x Parsley Energy PE 4.6x 6.2x Penn Virginia Corporation PVA 5.0x 5.9x Resolute Energy REN 8.9x 10.8x Rex Energy Corp. REXX 10.3x 10.7x Rice Energy Inc. RICE 5.9x 6.7x Rosetta Resources Inc. ROSE 4.0x 5.8x Swift Energy Company SFY 11.1x 12.9x Triangle Petroleum TPLM 4.1x 5.5x Average 5.4x 7.0x Source: Wells Fargo Securities, LLC estimates and Bloomberg, LP. 13

14 Exploration & Production Valuation - Group At The Strip? Ugly. We have adjusted our models to a strip at $50/bbl 2015 crude world. Based on the new valuations, despite the 41.5% drop in the EPX index since its mid-june peak, if one assumes strip pricing, group en masse is significantly overvalued in our view. EV/EBITDAX multiples move the wrong way and expand in 2016 versus 2015 levels (with the exception of the natural gas names), returns are unattractive, and nearly all metrics look ugly. But as we touched on in our NAV section, we do not believe (nor does the Street) that 6 months from now the strip will be at current levels we believe it will be higher. And as we wrote about on page 2, we would guess current crude levels, and in theory share prices, are closer to a bottom than not. The current volatility and uncertainty makes it very hard for generalists or long only money to step up right now, and we expect that group to stay on the sidelines until we get more clarity. Net-net, we think we may be setting up for a better entry point in the next month or so. Some mechanics on our modeling. Across the universe we have revised our capital expectations, our cash flow estimates, and have revised service costs lower (primarily in 2H15 and beyond). Finally, we have revised our individual type curve economic assumptions in every play, with the primary change an average per well cost reduction of 20% versus prior 13% ( E&P: Coal In E&P Stockings Structural Changes Ahead ; 12/18/14). 2015/2016 Multiples Not Encouraging... Below we show 2015E and 2016E EV/EBITDAX multiples, which don t look encouraging. Based on the aforementioned flattish 2H15 production growth profiles and hedges rolling off, multiples move higher in 2016 versus 2015 at 10.1x and 9.0x, respectively. Exhibit 12: Comp Sheet Large-Cap Company Ticker EV / Mcfe P / DCF EV / EBITDAX ROCE EV / Mcfe/ d ($1,000) 2015E 2016E 2015E 2016E 2015E 2016E 2015E 2016E 2015E 2016E Apache Corporation APA $2.14 $ x 5.3x 8.9x 7.7x -1.9% -0.5% $8.5 $9.4 Anadarko Petroleum Corp. APC x 8.6x 11.1x 9.8x -0.6% 0.7% Chesapeake Energy Corp CHK x 6.6x 9.9x 12.2x 0.8% -0.2% Devon Energy Corp. DVN x 6.5x 7.3x 8.5x 2.8% 1.6% EOG Resources, Inc. EOG x 10.8x 11.4x 10.1x 0.5% 2.1% Noble Energy NBL x 11.5x 10.8x 11.4x -1.2% -1.2% Pioneer Natural Resources PXD x 16.2x 13.5x 15.7x 3.5% 2.5% Average $3.00 $ x 9.3x 10.4x 10.8x 0.5% 0.7% $12.2 $12.5 Mid-Cap Company Ticker EV / M cfe P / DCF EV / EBITDAX ROCE EV / Mcfe/ d ($1,000) 2015E 2016E 2015E 2016E 2015E 2016E 2015E 2016E 2015E 2016E Antero Resources AR $1.07 $ x 8.7x 11.5x 11.2x 4.4% 3.2% $10.7 $9.4 Cabot Oil & Gas Corp. COG x 10.6x 15.9x 11.0x 1.6% 6.3% Concho Resources Inc. CXO x 9.6x 10.2x 11.0x 2.7% 2.0% Eclipse Resources ECR x 7.1x 10.2x 7.7x -0.8% 1.0% EP Energy Corp. EPE x 2.2x 4.6x 5.4x 5.3% 4.5% EQT Corporation EQT x 8.7x 10.0x 9.2x 3.0% 3.3% Diamondback Energy, Inc. FANG x 11.4x 10.7x 11.4x 4.6% 3.2% Gulfport Energy Corporation GPOR x 9.3x 12.2x 11.7x -1.7% -2.6% Laredo Petroleum LPI x 6.4x 7.1x 9.6x 4.4% 2.6% Newfield Exploration Company NFX x 4.1x 6.0x 6.3x 2.4% 1.5% Oasis Petroleum Inc. OAS x 7.6x 6.2x 12.4x 4.3% 0.1% QEP Resources, Inc. QEP x 5.0x 6.0x 7.2x -0.9% -1.8% Range Resources Corp. RRC x 12.2x 11.8x 12.6x 2.8% 1.2% SM Energy Company SM x 3.4x 5.1x 6.4x 2.0% 0.4% Ultra Petroleum Corp. UPL x 9.0x 9.1x 11.7x 5.2% 2.3% Whiting Petroleum Corp. WLL x 5.8x 9.5x 9.8x -3.2% -1.1% Average $2.51 $ x 7.6x 9.1x 9.7x 2.3% 1.6% $11.8 $11.8 Small-Cap Company Ticker EV / M cfe P / DCF EV / EBITDAX ROCE EV / Mcfe/ d ($1,000) 2015E 2016E 2015E 2016E 2015E 2016E 2015E 2016E 2015E 2016E Approach Resources Inc. AREX $0.92 $ x 2.1x 5.9x 7.3x 1.3% 1.3% $8.7 $10.6 Bill Barrett Corporation BBG x 5.2x 4.9x 8.3x 3.2% 0.2% Carrizo Oil and Gas CRZO x 6.4x 7.7x 9.8x 3.5% 0.9% Goodrich Petroleum Corp. GDP x 4.9x 9.5x 14.8x -15.6% -22.7% Halcón Resources Corp. HK x 1.4x 6.5x 8.8x 1.6% 0.3% Jones Energy JONE x 2.5x 5.5x 6.3x 3.2% 2.0% Midstates Petroleum MPO x 1.8x 5.4x 10.2x 0.7% -4.5% PDC Energy PDCE x 4.4x 5.6x 5.5x 5.0% 3.8% Parsley Energy PE x 18.1x 15.3x 17.4x 3.1% 2.2% Penn Virginia Corporation PVA x 2.7x 7.1x 8.1x -3.6% -3.5% Resolute Energy REN x 1.2x 9.6x 11.6x -1.6% -1.9% Rex Energy Corp. REXX x 5.3x 14.0x 14.0x -2.9% -2.5% Rice Energy Inc. RICE x 7.4x 12.9x 11.1x 2.2% 2.9% Rosetta Resources Inc. ROSE x 3.0x 6.0x 8.2x 0.7% -0.3% Swift Energy Company SFY x 3.5x 11.9x 13.8x -3.1% -1.2% Triangle Petroleum TPLM x 4.3x 7.1x 9.2x 3.3% 2.1% Average $2.19 $ x 4.6x 8.4x 10.3x 0.1% -1.3% $12.8 $14.2 Source: Wells Fargo Securities, LLC estimates and Bloomberg, LP. Prices as of 1/22/

15 E&P: Shantytown -- Revisiting E&Ps At The Strip And Unhedged Multiples Show A Cleaner (But Just As Dirty) Picture. Multiples in Exhibit 13 include hedge positions across our universe, which one could argue are artificially supporting EBITDA/cash flows. While we recognize the value of hedges in the current environment, if the current strip were to hold, we find it instructive to see how the group stacks up on a unhedged basis as indicated in the below chart. On average, the group becomes 13.0x more expensive in 2015 and 3.2x in Previously we mentioned that the group does not look cheap including hedges in the current environment, but if current pricing just holds at the strip, this would indicate to us that more downside potential exists in stocks as valuations do not improve in out years as hedges roll off. Exhibit 13: Hedged Vs. Unhedged Multiples 2015E: EV/EBITDAX 2016E: EV/EBITDAX APA APC APA APC Large-Cap CHK DVN EOG NBL CHK DVN EOG NBL PXD 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x PXD 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x AR COG CXO ECR EPE EQT FANG AR COG CXO ECR EPE EQT FANG Mid-Cap GPOR LPI NFX GPOR LPI NFX OAS QEP RRC SM UPL WLL 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x OAS QEP RRC SM UPL WLL 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x AREX BBG CRZO GDP HK JONE AREX BBG CRZO GDP HK JONE Small-Cap MPO PDCE PE PVA MPO PDCE PE PVA REXX RICE ROSE SFY TPLM 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x Hedged Unhedged REXX RICE ROSE SFY TPLM 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x Hedged Unhedged Source: Wells Fargo Securities, LLC estimates and Bloomberg, LP. Prices as of 1/22/

16 Exploration & Production EPS and CFPS Estimates Move Lower for Our Universe. We revised our Q4 2014, FY2015, and FY2016 EPS/CFPS estimates. As shown in the following exhibits (14-17), on average our Q EPS/CFPS estimates decreased by 30% and 3%, respectively, while our FY2015 EPS/CFPS estimates decreased by 123% and 20%, respectively. Lastly, FY2016 EPS/CFPS estimates decreased by 133% and 25%, respectively. Versus the Street, our 2015/2016 EPS estimates are 150%/180% below for 2015/2016 CFPS we are 25%/45% below. Exhibit 14: EPS Old vs. New EPS Company Q4 14E 2014E Q1 15E Q2 15E Q3 15E Q4 15E 2015E Q1 16E Q2 16E Q3 16E Q4 16E 2016E Anadarko Petroleum Corp. $0.77 $4.51 ($0.44) ($0.38) ($0.33) ($0.22) ($1.38) ($0.19) ($0.23) ($0.17) ($0.01) ($0.60) Old Estimate $0.88 $4.63 $0.05 $0.07 $0.13 $0.21 $0.45 $0.22 $0.18 $0.40 $0.38 $1.18 Consensus $0.84 $4.67 $0.32 $0.36 $0.51 $0.73 $1.36 $0.52 $0.45 $0.66 $0.84 $3.20 Antero Resources $0.26 $1.16 $0.28 $0.19 $0.22 $0.26 $0.94 $0.17 $0.14 $0.12 $0.15 $0.59 Old Estimate $0.31 $1.22 $0.20 $0.19 $0.21 $0.22 $0.81 $0.29 $0.25 $0.27 $0.31 $1.12 Consensus $0.31 $1.17 $0.28 $0.25 $0.29 $0.37 $1.10 $0.39 $0.40 $0.45 $0.54 $2.01 Apache Corporation $0.57 $5.40 ($0.69) ($0.63) ($0.51) ($0.38) ($2.21) ($0.25) ($0.20) ($0.16) ($0.05) ($0.66) Old Estimate $0.71 $5.54 ($0.13) ($0.04) ($0.01) $0.03 ($0.15) $0.23 $0.29 $0.29 $0.34 $1.14 Consensus $0.87 $5.79 $0.08 $0.12 $0.25 $0.43 $0.62 $0.59 $0.61 $0.72 $0.91 $2.50 Approach Resources Inc. $0.11 $0.76 $0.03 ($0.05) ($0.04) ($0.03) ($0.08) $0.02 ($0.05) ($0.05) ($0.04) ($0.12) Old Estimate $0.13 $0.79 $0.06 $0.01 $0.01 $0.02 $0.10 $0.05 ($0.00) $0.01 $0.01 $0.07 Consensus $0.09 $0.75 $0.04 ($0.00) $0.02 $0.04 $0.05 ($0.05) ($0.08) ($0.05) ($0.03) $0.05 Bill Barrett Corporation $0.10 ($0.19) $0.14 $0.10 $0.06 $0.05 $0.36 ($0.19) ($0.19) ($0.25) ($0.24) ($0.88) Old Estimate $0.12 ($0.17) $0.10 $0.07 $0.05 $0.04 $0.27 ($0.15) ($0.16) ($0.21) ($0.21) ($0.73) Consensus ($0.02) ($0.29) $0.02 ($0.00) ($0.02) ($0.00) ($0.10) ($0.11) ($0.12) ($0.11) ($0.07) ($0.19) Cabot Oil & Gas Corp. $0.21 $0.95 $0.05 ($0.05) ($0.08) $0.04 ($0.03) $0.16 $0.09 $0.05 $0.25 $0.55 Old Estimate $0.23 $0.98 $0.18 $0.09 $0.09 $0.21 $0.57 $0.37 $0.28 $0.31 $0.45 $1.40 Consensus $0.23 $0.97 $0.18 $0.14 $0.17 $0.24 $0.63 $0.32 $0.27 $0.33 $0.44 $1.41 Carrizo Oil and Gas $0.30 $2.20 $0.18 $0.25 $0.28 $0.32 $1.03 ($0.17) ($0.15) ($0.12) ($0.06) ($0.49) Old Estimate $0.57 $2.47 $0.31 $0.39 $0.40 $0.42 $1.52 $0.01 $0.00 $0.02 $0.04 $0.06 Consensus $0.54 $2.44 $0.42 $0.47 $0.55 $0.63 $1.79 $0.56 $0.55 $0.65 $0.71 $2.13 Chesapeake Energy Corp $0.21 $1.55 $0.05 ($0.02) $0.02 $0.09 $0.14 ($0.05) ($0.09) ($0.09) $0.06 ($0.16) Old Estimate $0.31 $1.65 $0.21 $0.18 $0.23 $0.27 $0.88 $0.19 $0.14 $0.16 $0.24 $0.73 Consensus $0.29 $1.61 $0.25 $0.23 $0.25 $0.30 $1.01 $0.13 $0.17 $0.21 $0.26 $1.19 Concho Resources Inc. $0.83 $3.97 $0.22 $0.19 $0.23 $0.27 $0.90 $0.04 $0.03 $0.03 $0.13 $0.24 Old Estimate $0.88 $4.02 $0.45 $0.42 $0.44 $0.47 $1.78 $0.32 $0.29 $0.32 $0.35 $1.28 Consensus $0.86 $3.95 $0.41 $0.38 $0.42 $0.49 $1.62 $0.61 $0.61 $0.72 $0.75 $2.78 Devon Energy Corp. $0.91 $4.99 $0.42 $0.39 $0.43 $0.49 $1.73 $0.10 $0.11 $0.14 $0.30 $0.66 Old Estimate $1.00 $5.08 $0.68 $0.66 $0.69 $0.71 $2.74 $0.44 $0.42 $0.47 $0.52 $1.84 Consensus $1.12 $5.18 $0.79 $0.80 $0.92 $1.06 $3.64 $0.75 $0.68 $0.87 $1.07 $3.76 Diamondback Energy, Inc. $0.56 $2.40 $0.45 $0.35 $0.41 $0.43 $1.63 $0.17 $0.22 $0.29 $0.36 $1.04 Old Estimate $0.59 $2.43 $0.51 $0.44 $0.51 $0.52 $1.97 $0.33 $0.37 $0.46 $0.53 $1.69 Consensus $0.57 $2.41 $0.56 $0.49 $0.53 $0.60 $2.06 $0.46 $0.51 $0.56 $0.61 $2.48 Eclipse Resources ($0.09) ($0.36) ($0.06) ($0.06) ($0.07) ($0.05) ($0.23) ($0.02) ($0.02) ($0.02) $0.00 ($0.06) Old Estimate ($0.09) ($0.36) ($0.03) ($0.03) ($0.01) $0.02 ($0.04) $0.05 $0.04 $0.06 $0.08 $0.23 Consensus ($0.10) ($0.39) ($0.05) ($0.04) ($0.01) $0.04 ($0.20) $0.13 $0.14 $0.16 $0.19 $0.16 EOG Resources, Inc. $0.97 $5.14 ($0.03) $0.00 ($0.06) $0.05 ($0.04) $0.10 $0.13 $0.18 $0.28 $0.69 Old Estimate $1.03 $5.19 $0.30 $0.36 $0.31 $0.39 $1.36 $0.43 $0.45 $0.49 $0.53 $1.91 Consensus $1.06 $5.27 $0.38 $0.48 $0.49 $0.66 $1.92 $0.60 $0.55 $0.62 $0.71 $3.35 EP Energy Corp. $0.23 $0.88 $0.22 $0.21 $0.25 $0.25 $0.92 $0.17 $0.14 $0.17 $0.18 $0.68 Old Estimate $0.10 $0.75 $0.23 $0.21 $0.25 $0.24 $0.93 $0.16 $0.13 $0.16 $0.16 $0.61 Consensus $0.24 $0.88 $0.23 $0.23 $0.26 $0.28 $0.92 $0.36 $0.39 $0.43 $0.45 $0.86 EQT Corporation $0.62 $3.08 $0.41 $0.23 $0.22 $0.34 $1.20 $0.37 $0.24 $0.18 $0.55 $1.34 Old Estimate $0.64 $3.09 $0.67 $0.48 $0.46 $0.58 $2.18 $0.76 $0.63 $0.69 $0.95 $3.03 Consensus $0.68 $3.11 $0.71 $0.48 $0.49 $0.72 $2.33 $1.17 $0.89 $0.92 $1.05 $3.53 Goodrich Petroleum Corp. ($0.49) ($2.01) ($0.64) ($0.62) ($0.58) ($0.54) ($2.38) ($0.80) ($0.87) ($0.86) ($0.81) ($3.33) Old Estimate ($0.50) ($2.02) ($0.57) ($0.55) ($0.51) ($0.49) ($2.12) ($0.70) ($0.77) ($0.75) ($0.72) ($2.95) Consensus ($0.43) ($1.94) ($0.44) ($0.43) ($0.39) ($0.36) ($1.89) ($0.54) ($0.53) ($0.53) ($0.52) ($2.01) Gulfport Energy Corporation ($0.01) $0.39 ($0.19) ($0.27) ($0.23) ($0.19) ($0.88) ($0.26) ($0.38) ($0.45) ($0.32) ($1.41) Old Estimate $0.00 $0.40 ($0.14) ($0.20) ($0.16) ($0.13) ($0.63) ($0.06) ($0.19) ($0.20) ($0.11) ($0.56) Consensus $0.00 $0.40 ($0.05) ($0.06) ($0.04) $0.02 ($0.33) ($0.04) ($0.14) ($0.12) ($0.04) $0.11 Halcón Resources Corp. $0.01 $0.12 ($0.01) ($0.00) ($0.02) ($0.02) ($0.06) ($0.05) ($0.05) ($0.06) ($0.05) ($0.22) Old Estimate $0.02 $0.13 ($0.01) $0.00 ($0.01) ($0.01) ($0.02) ($0.04) ($0.04) ($0.04) ($0.04) ($0.15) Consensus $0.01 $0.13 $0.00 $0.01 $0.01 $0.01 $0.02 ($0.01) ($0.01) ($0.01) ($0.01) ($0.06) Jones Energy $0.11 $0.92 $0.13 $0.10 $0.10 $0.08 $0.40 ($0.00) ($0.01) ($0.00) $0.02 $0.00 Old Estimate $0.12 $0.93 $0.15 $0.14 $0.13 $0.11 $0.53 $0.05 $0.05 $0.05 $0.06 $0.21 Consensus $0.15 $1.06 $0.18 $0.18 $0.22 $0.24 $0.47 $0.30 $0.31 $0.34 $0.37 $0.74 Laredo Petroleum $0.17 $0.63 $0.09 $0.10 $0.09 $0.07 $0.35 ($0.02) ($0.03) ($0.02) ($0.01) ($0.08) Old Estimate $0.16 $0.62 $0.10 $0.09 $0.09 $0.09 $0.37 $0.03 $0.02 $0.01 $0.01 $0.07 Consensus $0.17 $0.81 $0.10 $0.09 $0.09 $0.10 $0.39 $0.04 $0.08 $0.09 $0.10 $0.33 Source: Wells Fargo Securities, LLC estimates and Bloomberg, LP. Consensus as of 1/22/

17 E&P: Shantytown -- Revisiting E&Ps At The Strip Exhibit 15: EPS Old vs. New (continued) EPS Company Q4 14E 2014E Q1 15E Q2 15E Q3 15E Q4 15E 2015E Q1 16E Q2 16E Q3 16E Q4 16E 2016E Midstates Petroleum $0.04 $0.67 ($0.14) ($0.13) ($0.48) ($0.45) ($1.19) ($0.72) ($0.72) ($0.71) ($0.66) ($2.81) Old Estimate $0.10 $0.73 ($0.04) ($0.05) ($0.35) ($0.35) ($0.79) ($0.53) ($0.56) ($0.56) ($0.54) ($2.20) Consensus $0.04 $0.60 $0.06 $0.07 ($0.07) ($0.04) ($0.35) ($0.73) ($0.73) ($0.73) ($0.73) ($0.73) Newfield Exploration Company $0.45 $1.85 ($0.01) $0.05 $0.12 $0.12 $0.28 ($0.02) ($0.07) ($0.09) ($0.06) ($0.25) Old Estimate $0.44 $1.84 $0.38 $0.38 $0.42 $0.43 $1.63 $0.42 $0.34 $0.32 $0.31 $1.40 Consensus $0.43 $1.83 $0.34 $0.37 $0.45 $0.51 $1.48 $0.58 $0.56 $0.62 $0.68 $2.01 Noble Energy $0.29 $2.25 ($0.30) ($0.26) ($0.25) ($0.19) ($1.00) ($0.26) ($0.31) ($0.33) ($0.21) ($1.11) Old Estimate $0.30 $2.27 $0.14 $0.11 $0.11 $0.17 $0.53 $0.08 $0.04 $0.05 $0.08 $0.26 Consensus $0.40 $2.45 $0.27 $0.31 $0.37 $0.47 $1.37 $0.31 $0.30 $0.38 $0.45 $1.87 Oasis Petroleum Inc. $0.61 $2.49 $0.33 $0.34 $0.09 $0.09 $0.84 ($0.31) ($0.29) ($0.27) ($0.24) ($1.11) Old Estimate $0.61 $2.48 $0.39 $0.39 $0.19 $0.18 $1.15 ($0.13) ($0.13) ($0.11) ($0.10) ($0.46) Consensus $0.58 $2.46 $0.43 $0.46 $0.34 $0.39 $1.30 $0.18 $0.16 $0.21 $0.26 $0.80 Parsley Energy $0.09 $0.44 $0.02 $0.04 $0.01 $0.02 $0.08 $0.01 $0.02 ($0.06) ($0.05) ($0.07) Old Estimate $0.10 $0.45 $0.08 $0.10 $0.08 $0.06 $0.31 $0.06 $0.07 ($0.00) $0.01 $0.13 Consensus $0.10 $0.42 $0.11 $0.14 $0.16 $0.20 $0.49 $0.25 $0.26 $0.30 $0.35 $1.05 PDC Energy $0.27 $0.70 $0.36 $0.37 $0.40 $0.43 $1.56 $0.24 $0.23 $0.25 $0.30 $1.03 Old Estimate $0.32 $0.75 $0.41 $0.44 $0.49 $0.54 $1.88 $0.43 $0.42 $0.45 $0.47 $1.77 Consensus $0.26 $0.81 $0.35 $0.36 $0.39 $0.42 $1.59 $0.43 $0.46 $0.51 $0.56 $1.93 Penn Virginia Corporation ($0.14) ($0.43) ($0.54) ($0.53) ($0.54) ($0.50) ($2.11) ($0.56) ($0.56) ($0.56) ($0.54) ($2.22) Old Estimate ($0.16) ($0.45) ($0.16) ($0.19) ($0.26) ($0.27) ($0.88) ($0.49) ($0.50) ($0.51) ($0.51) ($2.01) Consensus ($0.08) ($0.49) ($0.11) ($0.10) ($0.12) ($0.09) ($0.69) ($0.23) ($0.23) ($0.22) ($0.22) ($0.89) Pioneer Natural Resources $0.97 $4.93 $0.44 $0.42 $0.44 $0.43 $1.73 $0.12 $0.14 $0.18 $0.26 $0.71 Old Estimate $1.07 $5.04 $0.59 $0.64 $0.53 $0.71 $2.47 $0.52 $0.52 $0.56 $0.64 $2.25 Consensus $1.12 $5.07 $0.54 $0.59 $0.69 $0.82 $2.67 $0.99 $1.05 $1.23 $1.40 $4.54 QEP Resources, Inc. $0.22 $1.38 ($0.16) ($0.16) ($0.13) ($0.08) ($0.53) ($0.26) ($0.25) ($0.23) ($0.14) ($0.87) Old Estimate $0.25 $1.41 $0.03 $0.03 $0.06 $0.08 $0.20 ($0.04) ($0.06) ($0.06) ($0.02) ($0.17) Consensus $0.24 $1.41 ($0.06) ($0.06) ($0.01) $0.11 ($0.08) $0.20 $0.23 $0.24 $0.32 $0.31 Range Resources Corp. $0.31 $1.50 $0.19 $0.07 $0.05 $0.15 $0.46 ($0.02) ($0.10) ($0.13) $0.04 ($0.21) Old Estimate $0.36 $1.56 $0.34 $0.22 $0.22 $0.35 $1.14 $0.33 $0.24 $0.28 $0.36 $1.21 Consensus $0.29 $1.50 $0.25 $0.22 $0.26 $0.35 $0.91 $0.24 $0.21 $0.30 $0.41 $1.46 Resolute Energy ($0.09) ($0.41) ($0.19) ($0.19) ($0.18) ($0.17) ($0.73) ($0.20) ($0.19) ($0.19) ($0.18) ($0.75) Old Estimate ($0.08) ($0.40) ($0.15) ($0.14) ($0.14) ($0.13) ($0.56) ($0.16) ($0.15) ($0.16) ($0.15) ($0.62) Consensus ($0.08) ($0.22) ($0.12) ($0.14) ($0.13) ($0.12) ($0.57) ($0.16) ($0.17) ($0.16) ($0.15) ($0.71) Rex Energy Corp. ($0.05) $0.36 ($0.25) ($0.29) ($0.30) ($0.26) ($1.11) ($0.25) ($0.32) ($0.35) ($0.26) ($1.18) Old Estimate $0.02 $0.43 ($0.14) ($0.17) ($0.18) ($0.15) ($0.65) ($0.13) ($0.20) ($0.22) ($0.18) ($0.73) Consensus ($0.04) $0.36 ($0.11) ($0.13) ($0.14) ($0.10) ($0.49) $0.01 ($0.04) ($0.02) $0.01 ($0.23) Rice Energy Inc. $0.03 $0.11 $0.07 $0.04 $0.03 $0.05 $0.18 $0.04 ($0.01) ($0.04) $0.07 $0.06 Old Estimate $0.09 $0.18 $0.14 $0.10 $0.08 $0.15 $0.48 $0.25 $0.20 $0.26 $0.34 $1.05 Consensus $0.03 $0.18 $0.08 $0.06 $0.08 $0.14 $0.32 $0.18 $0.17 $0.20 $0.26 $0.78 Rosetta Resources Inc. $0.31 $2.41 ($0.06) ($0.16) ($0.18) ($0.15) ($0.56) ($0.32) ($0.33) ($0.34) ($0.30) ($1.30) Old Estimate $0.37 $2.47 ($0.00) ($0.08) ($0.10) ($0.08) ($0.26) ($0.12) ($0.14) ($0.13) ($0.11) ($0.51) Consensus $0.32 $2.42 $0.02 $0.01 $0.03 $0.09 $0.15 $0.05 $0.15 $0.20 $0.25 $0.69 SM Energy Company $1.06 $5.65 $0.48 ($0.09) ($0.12) ($0.05) $0.22 ($0.01) ($0.21) ($0.38) ($0.29) ($0.89) Old Estimate $1.13 $5.71 $0.69 $0.25 $0.19 $0.20 $1.32 $0.28 $0.14 $0.08 $0.07 $0.58 Consensus $1.05 $5.64 $0.74 $0.55 $0.60 $0.73 $2.19 $0.85 $0.72 $0.82 $1.01 $3.93 Swift Energy Company ($0.30) $0.05 ($0.69) ($0.73) ($0.65) ($0.57) ($2.64) ($0.47) ($0.46) ($0.46) ($0.41) ($1.80) Old Estimate ($0.26) $0.09 ($0.49) ($0.50) ($0.45) ($0.43) ($1.86) ($0.36) ($0.40) ($0.40) ($0.40) ($1.56) Consensus ($0.25) $0.11 ($0.41) ($0.44) ($0.42) ($0.38) ($2.03) ($0.57) ($0.41) ($0.42) ($0.40) ($1.59) Triangle Petroleum $0.11 $0.58 $0.04 $0.04 $0.04 $0.05 $0.17 ($0.01) ($0.01) $0.00 $0.01 ($0.00) Old Estimate $0.12 $0.58 $0.07 $0.08 $0.08 $0.08 $0.32 $0.03 $0.03 $0.04 $0.05 $0.15 Consensus $0.12 $0.58 $0.12 $0.15 $0.14 $0.13 $0.59 $0.12 $0.14 $0.16 $0.14 $0.34 Ultra Petroleum Corp. $0.49 $2.42 $0.19 $0.13 $0.15 ($0.01) $0.46 ($0.01) ($0.09) ($0.12) ($0.00) ($0.22) Old Estimate $0.49 $2.42 $0.37 $0.22 $0.27 $0.32 $1.18 $0.31 $0.22 $0.25 $0.34 $1.13 Consensus $0.52 $2.47 $0.38 $0.35 $0.38 $0.39 $1.45 $0.49 $0.50 $0.57 $0.66 $2.12 Whiting Petroleum Corp. $0.71 $4.40 ($0.80) ($0.81) ($0.76) ($0.68) ($3.05) ($0.63) ($0.60) ($0.57) ($0.52) ($2.32) Old Estimate $0.74 $4.42 ($0.38) ($0.41) ($0.38) ($0.33) ($1.50) ($0.32) ($0.30) ($0.27) ($0.24) ($1.12) Consensus $0.59 $4.20 ($0.06) $0.01 $0.18 $0.31 ($0.42) $0.33 $0.39 $0.45 $0.56 $1.47 Source: Wells Fargo Securities, LLC estimates and Bloomberg, LP. Consensus as of 1/22/

18 Exploration & Production Exhibit 16: CFPS Old vs. New CFPS Company Q4 14E 2014E Q1 15E Q2 15E Q3 15E Q4 15E 2015E Q1 16E Q2 16E Q3 16E Q4 16E 2016E Anadarko Petroleum Corp. $3.74 $17.04 $0.16 $2.03 $2.09 $2.23 $8.54 $2.22 $2.20 $2.40 $2.61 $9.43 Old Estimate $3.88 $17.19 $0.76 $2.61 $2.76 $2.83 $10.86 $2.75 $2.72 $3.22 $3.13 $11.82 Consensus $4.05 $16.95 $3.28 $3.20 $3.40 $3.71 $12.93 $3.84 $3.68 $4.19 $4.64 $15.99 Antero Resources $0.97 $3.70 $1.03 $0.94 $1.01 $1.11 $4.09 $1.03 $1.02 $1.06 $1.14 $4.25 Old Estimate $1.12 $4.06 $0.94 $0.98 $1.07 $1.14 $4.12 $1.30 $1.33 $1.44 $1.58 $5.65 Consensus $1.06 $3.74 $1.07 $1.10 $1.17 $1.32 $4.36 $1.30 $1.40 $1.58 $1.84 $6.65 Apache Corporation $4.47 $19.43 $2.57 $2.64 $2.79 $2.92 $10.91 $2.94 $2.93 $2.94 $2.98 $11.78 Old Estimate $4.67 $19.62 $3.51 $3.58 $3.61 $3.59 $14.28 $3.84 $3.99 $3.94 $4.00 $15.76 Consensus $4.82 $21.14 $3.85 $4.00 $4.16 $4.41 $15.71 $4.59 $4.41 $4.75 $5.30 $19.55 Approach Resources Inc. $1.03 $4.32 $0.92 $0.83 $0.79 $0.79 $3.33 $0.81 $0.70 $0.76 $0.83 $3.10 Old Estimate $1.07 $4.35 $0.97 $0.91 $0.87 $0.86 $3.61 $0.87 $0.77 $0.85 $0.91 $3.40 Consensus $0.96 $4.30 $0.88 $0.84 $0.87 $0.92 $3.43 $0.80 $0.76 $0.80 $0.85 $3.33 Bill Barrett Corporation $1.03 $3.88 $1.09 $1.05 $1.00 $0.99 $4.12 $0.57 $0.54 $0.44 $0.46 $2.01 Old Estimate $1.09 $3.94 $1.16 $0.99 $0.92 $0.90 $3.96 $0.58 $0.54 $0.45 $0.43 $2.00 Consensus $1.06 $4.90 $1.16 $1.18 $1.21 $1.24 $4.55 $0.91 $0.89 $0.98 $1.13 $4.66 Cabot Oil & Gas Corp. $0.75 $3.02 $0.54 $0.39 $0.35 $0.52 $1.81 $0.66 $0.58 $0.59 $0.92 $2.75 Old Estimate $0.79 $3.06 $0.73 $0.61 $0.62 $0.80 $2.75 $1.00 $0.88 $0.98 $1.23 $4.09 Consensus $0.83 $3.09 $0.78 $0.74 $0.79 $0.93 $3.02 $0.89 $0.86 $1.00 $1.21 $4.29 Carrizo Oil and Gas $2.43 $9.56 $2.15 $2.28 $2.34 $2.42 $9.18 $1.62 $1.65 $1.74 $1.83 $6.84 Old Estimate $2.85 $9.99 $2.47 $2.65 $2.59 $2.58 $10.30 $1.89 $1.87 $1.88 $1.91 $7.56 Consensus $2.88 $10.70 $2.82 $3.05 $3.27 $3.51 $11.57 $3.94 $4.13 $4.37 $4.69 $12.79 Chesapeake Energy Corp $1.30 $6.14 $0.94 $0.84 $0.87 $0.97 $3.62 $0.75 $0.68 $0.66 $0.91 $3.00 Old Estimate $1.44 $6.28 $1.19 $1.14 $1.20 $1.26 $4.79 $1.12 $1.04 $1.07 $1.18 $4.41 Consensus $1.43 $6.59 $1.36 $1.33 $1.36 $1.49 $5.28 $1.58 $1.55 $1.62 $1.76 $5.77 Concho Resources Inc. $3.78 $15.36 $3.04 $3.00 $3.07 $3.12 $12.23 $2.75 $2.76 $2.81 $2.98 $11.29 Old Estimate $4.04 $15.63 $3.46 $3.51 $3.56 $3.61 $14.13 $3.33 $3.29 $3.44 $3.51 $13.58 Consensus $4.00 $16.32 $3.61 $3.67 $3.80 $3.98 $14.38 $3.87 $3.89 $4.17 $4.36 $17.73 Devon Energy Corp. $3.41 $13.94 $2.74 $2.69 $2.74 $2.84 $11.01 $2.29 $2.27 $2.35 $2.58 $9.50 Old Estimate $3.56 $14.09 $3.12 $3.11 $3.21 $3.24 $12.68 $2.83 $2.76 $2.85 $2.91 $11.35 Consensus $3.67 $14.78 $3.35 $3.40 $3.58 $3.80 $13.79 $3.05 $2.54 $3.07 $3.64 $14.72 Diamondback Energy, Inc. $1.89 $7.01 $1.58 $1.49 $1.59 $1.63 $6.29 $1.23 $1.37 $1.61 $1.83 $6.04 Old Estimate $1.93 $7.06 $1.70 $1.67 $1.78 $1.81 $6.96 $1.51 $1.65 $1.92 $2.13 $7.21 Consensus $1.91 $7.01 $1.88 $1.85 $1.93 $2.00 $7.53 $1.96 $2.09 $2.24 $2.37 $8.02 Eclipse Resources $0.05 $0.15 $0.06 $0.07 $0.10 $0.14 $0.38 $0.18 $0.19 $0.20 $0.25 $0.83 Old Estimate $0.06 $0.16 $0.10 $0.14 $0.20 $0.27 $0.71 $0.32 $0.35 $0.40 $0.46 $1.54 Consensus $0.10 $0.20 $0.15 $0.21 $0.28 $0.37 $1.00 $0.56 $0.67 $0.75 $0.85 $2.01 EOG Resources, Inc. $3.26 $14.85 $1.76 $1.82 $1.81 $1.93 $7.31 $1.99 $2.04 $2.12 $2.27 $8.41 Old Estimate $3.34 $14.93 $2.25 $2.36 $2.38 $2.48 $9.48 $2.53 $2.56 $2.65 $2.71 $10.45 Consensus $3.59 $15.43 $2.87 $3.00 $3.09 $3.31 $11.80 $3.14 $3.08 $3.23 $3.39 $14.78 EP Energy Corp. $1.34 $6.87 $1.28 $1.24 $1.27 $1.25 $5.04 $1.07 $1.03 $1.10 $1.13 $4.33 Old Estimate $1.15 $6.67 $1.32 $1.29 $1.33 $1.31 $5.25 $1.12 $1.06 $1.12 $1.12 $4.42 Consensus $1.39 $5.22 $1.33 $1.38 $1.43 $1.48 $5.49 $1.64 $1.72 $1.81 $1.89 $5.94 EQT Corporation $2.32 $9.47 $1.99 $1.77 $1.82 $2.06 $7.63 $2.14 $2.02 $2.02 $2.68 $8.87 Old Estimate $2.35 $9.50 $2.40 $2.19 $2.21 $2.44 $9.23 $2.75 $2.61 $2.81 $3.29 $11.46 Consensus $2.25 $9.31 $2.56 $2.33 $2.42 $2.61 $9.41 $3.11 $3.16 $3.39 $3.14 $11.30 Goodrich Petroleum Corp. $0.62 $2.08 $0.47 $0.45 $0.46 $0.46 $1.84 $0.17 $0.16 $0.17 $0.20 $0.70 Old Estimate $0.62 $2.07 $0.54 $0.52 $0.52 $0.51 $2.09 $0.27 $0.27 $0.27 $0.28 $1.08 Consensus $0.58 $1.91 $0.47 $0.50 $0.54 $0.56 $1.90 $0.57 $0.59 $0.62 $0.66 $1.77 Gulfport Energy Corporation $1.15 $4.27 $0.93 $0.89 $0.93 $1.03 $3.77 $0.97 $0.92 $0.97 $1.28 $4.14 Old Estimate $1.20 $4.33 $1.09 $1.10 $1.18 $1.33 $4.70 $1.43 $1.36 $1.47 $1.70 $5.97 Consensus $1.19 $4.17 $1.17 $1.31 $1.44 $1.66 $5.31 $1.94 $2.02 $2.22 $2.52 $8.02 Halcón Resources Corp. $0.34 $1.45 $0.32 $0.33 $0.31 $0.30 $1.26 $0.22 $0.22 $0.23 $0.23 $0.90 Old Estimate $0.35 $1.46 $0.33 $0.33 $0.32 $0.31 $1.29 $0.24 $0.24 $0.24 $0.24 $0.96 Consensus $0.29 $1.28 $0.30 $0.30 $0.30 $0.29 $1.11 $0.26 $0.27 $0.28 $0.29 $0.94 Jones Energy $1.10 $5.22 $1.13 $1.16 $1.18 $1.15 $4.61 $0.99 $0.99 $1.01 $1.05 $4.04 Old Estimate $1.12 $5.24 $1.17 $1.19 $1.21 $1.20 $4.77 $1.08 $1.07 $1.09 $1.10 $4.35 Consensus $1.24 $5.72 $1.35 $1.41 $1.50 $1.57 $5.40 $1.92 $2.00 $2.11 $2.23 $6.24 Laredo Petroleum $0.77 $2.66 $0.63 $0.64 $0.58 $0.54 $2.38 $0.38 $0.37 $0.40 $0.40 $1.55 Old Estimate $0.72 $2.61 $0.61 $0.59 $0.59 $0.59 $2.37 $0.47 $0.43 $0.41 $0.40 $1.71 Consensus $0.79 $3.21 $0.68 $0.68 $0.68 $0.68 $2.60 $0.65 $0.67 $0.70 $0.72 $2.53 Source: Wells Fargo Securities, LLC estimates and Bloomberg, LP. Consensus as of 1/22/

19 E&P: Shantytown -- Revisiting E&Ps At The Strip Exhibit 17: CFPS Old vs. New (continued) CFPS Company Q4 14E 2014E Q1 15E Q2 15E Q3 15E Q4 15E 2015E Q1 16E Q2 16E Q3 16E Q4 16E 2016E Midstates Petroleum $1.29 $5.13 $1.01 $0.98 $0.59 $0.58 $3.15 $0.22 $0.17 $0.15 $0.17 $0.71 Old Estimate $1.31 $5.15 $1.15 $1.16 $0.84 $0.82 $3.96 $0.62 $0.56 $0.55 $0.55 $2.28 Consensus $1.08 $4.31 $1.12 $1.15 $1.08 $1.07 $3.80 $1.46 $1.48 $1.55 $1.63 $3.22 Newfield Exploration Company $2.18 $8.19 $1.58 $1.74 $1.94 $1.96 $7.21 $1.73 $1.68 $1.67 $1.73 $6.82 Old Estimate $2.17 $8.18 $2.15 $2.19 $2.26 $2.31 $8.90 $2.28 $2.16 $2.22 $2.23 $8.89 Consensus $2.17 $9.16 $2.10 $2.19 $2.35 $2.44 $8.61 $2.52 $2.49 $2.66 $2.83 $9.75 Noble Energy $1.66 $8.09 $0.97 $1.03 $1.03 $1.09 $4.12 $1.02 $0.99 $0.99 $1.09 $4.09 Old Estimate $1.68 $8.11 $1.46 $1.46 $1.50 $1.58 $6.00 $1.50 $1.51 $1.55 $1.56 $6.11 Consensus $2.12 $8.98 $2.02 $2.10 $2.22 $2.35 $8.36 $1.97 $1.97 $2.17 $2.30 $10.01 Oasis Petroleum Inc. $2.01 $6.51 $1.53 $1.51 $1.10 $1.09 $5.23 $0.44 $0.44 $0.46 $0.49 $1.83 Old Estimate $1.99 $6.49 $1.63 $1.66 $1.40 $1.34 $6.02 $0.81 $0.76 $0.81 $0.85 $3.24 Consensus $2.05 $8.47 $1.89 $1.98 $1.85 $1.97 $6.64 $1.41 $1.43 $1.58 $1.72 $6.13 Parsley Energy $0.36 $1.26 $0.27 $0.30 $0.26 $0.27 $1.10 $0.27 $0.28 $0.18 $0.19 $0.92 Old Estimate $0.38 $1.28 $0.38 $0.42 $0.38 $0.34 $1.53 $0.33 $0.37 $0.28 $0.30 $1.28 Consensus $0.38 $1.23 $0.43 $0.48 $0.54 $0.56 $1.81 $0.62 $0.64 $0.72 $0.84 $2.72 PDC Energy $1.98 $9.04 $2.43 $2.54 $2.66 $2.76 $10.38 $2.58 $2.65 $2.74 $2.86 $10.83 Old Estimate $2.02 $9.08 $2.31 $2.56 $2.80 $3.07 $10.74 $2.89 $2.95 $3.04 $3.12 $12.00 Consensus $1.93 $7.57 $2.32 $2.51 $2.69 $2.90 $10.33 $2.96 $3.10 $3.30 $3.51 $12.21 Penn Virginia Corporation $1.23 $3.88 $0.65 $0.61 $0.55 $0.57 $2.38 $0.48 $0.49 $0.51 $0.54 $2.02 Old Estimate $1.10 $3.76 $1.04 $1.02 $0.93 $0.92 $3.91 $0.59 $0.55 $0.55 $0.53 $2.22 Consensus $1.02 $4.02 $1.04 $1.10 $1.11 $1.19 $4.11 $1.17 $1.22 $1.31 $1.38 $4.49 Pioneer Natural Resources $3.73 $16.93 $2.70 $2.76 $2.82 $2.81 $11.08 $2.21 $2.26 $2.40 $2.58 $9.46 Old Estimate $3.89 $17.10 $2.99 $3.10 $3.00 $3.31 $12.40 $2.92 $2.97 $3.13 $3.32 $12.33 Consensus $4.12 $16.70 $3.32 $3.49 $3.69 $3.90 $13.79 $4.05 $4.20 $4.56 $4.90 $17.63 QEP Resources, Inc. $1.49 $7.80 $1.11 $1.11 $1.15 $1.22 $4.59 $0.95 $0.96 $0.99 $1.13 $4.03 Old Estimate $1.51 $7.83 $1.38 $1.43 $1.44 $1.44 $5.69 $1.24 $1.22 $1.19 $1.25 $4.90 Consensus $1.78 $8.08 $1.57 $1.63 $1.72 $1.85 $5.99 $1.88 $1.99 $2.11 $2.38 $6.82 Range Resources Corp. $1.42 $6.95 $1.23 $1.03 $1.06 $1.28 $4.61 $0.98 $0.92 $0.93 $1.25 $4.09 Old Estimate $1.56 $7.09 $1.51 $1.33 $1.41 $1.67 $5.92 $1.68 $1.61 $1.78 $1.96 $7.03 Consensus $1.52 $6.15 $1.45 $1.45 $1.56 $1.72 $5.93 $1.73 $1.77 $2.00 $2.28 $7.51 Resolute Energy $0.31 $1.54 $0.13 $0.13 $0.13 $0.23 $0.63 $0.19 $0.19 $0.18 $0.18 $0.74 Old Estimate $0.34 $1.57 $0.20 $0.19 $0.20 $0.19 $0.79 $0.23 $0.23 $0.23 $0.22 $0.91 Consensus $0.36 $1.57 $0.29 $0.26 $0.27 $0.28 $1.12 $0.15 $0.12 $0.13 $0.13 $0.87 Rex Energy Corp. $0.49 $2.48 $0.18 $0.12 $0.09 $0.14 $0.53 $0.17 $0.12 $0.06 $0.19 $0.53 Old Estimate $0.55 $2.55 $0.36 $0.29 $0.26 $0.31 $1.22 $0.35 $0.29 $0.25 $0.31 $1.21 Consensus $0.53 $2.55 $0.45 $0.45 $0.45 $0.51 $1.61 $0.54 $0.55 $0.59 $0.67 $1.95 Rice Energy Inc. $0.40 $1.31 $0.47 $0.47 $0.49 $0.54 $1.97 $0.52 $0.47 $0.46 $0.66 $2.11 Old Estimate $0.50 $1.42 $0.59 $0.57 $0.60 $0.75 $2.51 $0.90 $0.87 $1.02 $1.19 $3.97 Consensus $0.44 $1.30 $0.56 $0.62 $0.70 $0.82 $2.54 $0.98 $1.00 $1.04 $1.14 $4.17 Rosetta Resources Inc. $2.45 $10.41 $2.05 $2.01 $1.93 $1.90 $7.90 $1.49 $1.46 $1.52 $1.63 $6.09 Old Estimate $2.54 $10.50 $2.15 $2.13 $2.06 $2.02 $8.36 $1.80 $1.75 $1.83 $1.92 $7.31 Consensus $2.51 $10.56 $2.22 $2.33 $2.45 $2.60 $9.17 $2.62 $2.68 $2.89 $3.09 $11.19 SM Energy Company $5.05 $19.10 $3.97 $3.04 $2.91 $2.95 $12.87 $2.94 $2.60 $2.36 $2.50 $10.40 Old Estimate $5.14 $19.20 $4.42 $3.85 $3.73 $3.69 $15.69 $3.78 $3.56 $3.57 $3.62 $14.53 Consensus $4.99 $21.24 $4.61 $4.38 $4.52 $4.84 $17.80 $4.87 $4.72 $5.02 $5.49 $21.17 Swift Energy Company $0.93 $6.32 $0.36 $0.20 $0.16 $0.16 $0.88 $0.19 $0.13 $0.11 $0.17 $0.61 Old Estimate $1.00 $6.38 $0.65 $0.52 $0.46 $0.44 $2.07 $0.49 $0.44 $0.46 $0.49 $1.89 Consensus $1.05 $6.35 $0.78 $0.71 $0.72 $0.75 $2.42 $0.77 $0.78 $0.79 $0.82 $2.40 Triangle Petroleum $0.54 $2.19 $0.40 $0.39 $0.39 $0.39 $1.56 $0.27 $0.29 $0.32 $0.36 $1.25 Old Estimate $0.55 $2.20 $0.46 $0.47 $0.47 $0.46 $1.87 $0.36 $0.38 $0.40 $0.44 $1.57 Consensus $0.35 $1.52 $0.40 $0.52 $0.55 $0.59 $2.07 $0.53 $0.59 $0.62 $0.60 $2.13 Ultra Petroleum Corp. $1.04 $4.05 $0.72 $0.66 $0.67 $0.50 $2.55 $0.47 $0.35 $0.30 $0.47 $1.60 Old Estimate $1.04 $4.05 $0.90 $0.76 $0.84 $0.91 $3.41 $1.03 $0.91 $0.98 $1.14 $4.07 Consensus $1.09 $4.36 $0.97 $0.95 $1.00 $1.02 $3.93 $1.18 $1.23 $1.38 $1.51 $4.95 Viper Energy Partners LP $0.25 $0.77 $0.16 $0.17 $0.17 $0.19 $0.68 $0.19 $0.20 $0.21 $0.22 $0.82 Old Estimate $0.25 $0.76 $0.19 $0.20 $0.21 $0.22 $0.82 $0.22 $0.23 $0.24 $0.24 $0.92 Consensus $0.25 $0.73 $0.20 $0.21 $0.23 $0.25 $0.88 $0.36 $0.38 $0.42 $0.45 $1.19 Whiting Petroleum Corp. $3.87 $16.08 $1.16 $1.11 $1.17 $1.20 $4.63 $1.19 $1.18 $1.21 $1.27 $4.85 Old Estimate $3.64 $15.85 $1.68 $1.68 $1.72 $1.77 $6.85 $1.72 $1.72 $1.76 $1.79 $6.99 Consensus $3.58 $16.37 $2.65 $2.82 $3.01 $3.31 $9.96 $2.42 $2.43 $2.71 $2.98 $13.29 Source: Wells Fargo Securities, LLC estimates and Bloomberg, LP. Consensus as of 1/22/

20 Exploration & Production Valuation Range Information: APA Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $44.03 for APA is lower than our Val Range. Risks to our NAV estimate include GOM regulatory uncertainty, material sustained weakness in commodity prices and additional geopolitical risk in Egypt and Argentina compared to its peers given its significant international operations. APC Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $76.62 for APC is lower than our Val Range. Risks to our NAV include but are not limited to: sustained oil and gas price weakness, and the ability of the company to deliver on stated production targets. AR Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $30.74 for AR is lower than our Val Range. Risks to our NAV include material sustained gas and NGL price weakness along with risks specific to the Appalachian Basin. AREX Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $4.63/share for AREX is lower than our Val Range. Risks to our valuation range include material, sustained commodity price weakness and failure of exploration upside to materialize. BBG Basis and Risks: Our range is based on our NAV of $10.74, which includes value for proven and unproven reserves, as well as other net assets and liabilities. Risks include volatility in commodity prices and potential hurdles in the Rockies, including environmental blockades, seasonal issues, and commodity price basis risk. CHK Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $8.18 for CHK is lower than our Val Range. Risks to our valuation range include sustained material weakness in commodity prices as well as the risk of a rising cost structure due to the company's active acquisition strategy. COG Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $23.74/share for COG is lower than our Val Range. Risks to our range include material, sustained commodity price weakness and failure of exploration upside potential to materialize. CRZO Basis and Risks: Our valuation range is based on a combination of multiples and our NAV estimate, which includes value for both proven and unproven reserves. Our NAV estimate for CRZO is $ Risks to our NAV include: material, sustained weakness in commodity prices, infrastructure delays in the Eagle Ford, Niobrara, Marcellus and acreage risk in the Utica. 20

21 E&P: Shantytown -- Revisiting E&Ps At The Strip CXO Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $63.82 for CXO is lower than our Val Range. Risks to our val. range include volatility in commodity prices and potential operational hurdles given the concentrated asset base. DVN Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $42.51 for DVN is lower than our Val Range. Risks to our valuation range include overall volatility in commodity prices and divestiture timing and execution risk as the company shifts its strategic direction. ECR Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $4.52 for ECR is lower than our Val Range." Risks to our range include material, sustained commodity price weakness, rapid rises in service costs, and failure of exploration upside potential to materialize. EOG Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $55.83 for EOG is lower than our Val Range. Risks to our valuation range include overall volatility in commodity prices as well as possible risks of not achieving organic growth targets. EPE Basis and Risks: Our valuation range is based on our NAV estimate, which includes value for both proven and unproven reserves, as well as other net assets and liabilities. Our NAV estimate for EPE is $8.92/share. Risks to our range include cash flow outspend, less favorable results in the Wolfcamp, as well as possible delays in development plans due to permitting in the Uinta. EQT Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $63.70/share for EQT is lower than our Val Range. Risks to our valuation range include commodity price volatility, uncertainty surrounding shale gas development including decline curves and infrastructure needs, and Appalachian regulatory risk. FANG Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $59.65/share for FANG is lower than our Val Range. Risks to our range include material, sustained commodity price weakness and failure of exploration upside potential to materialize. 21

22 Exploration & Production GDP Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $0.09/share for GDP is lower than our Val Range. Risks to our valuation range and thesis include commodity price volatility, the early stage of the TMS program, and relatively high leverage. GPOR Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $27.50/share for GPOR is lower than our Val Range. Risks to our valuation range include material, sustained commodity price weakness, and failure of exploration upside potential to materialize. HK Basis and Risks: Our valuation range is based on our NAV estimate, which includes values for proved and unproved reserves, as well as other net assets and liabilities. Risks to our range include material, sustained commodity price weakness and failure of exploration upside potential to materialize. JONE Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $5.01 for JONE is lower than our Val Range." Risks to our NAV include material sustained oil and gas price weakness and the ability for JONE to execute on joint development agreements. LPI Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $7.43 for LPI is lower than our Val Range." Risks to our valuation range include volatility in commodity prices and potential operational hurdles given the concentrated asset base. MPO Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of -$ 0.43 for MPO is lower than our Val Range." Risks to our valuation range include volatility in commodity prices and potential operational hurdles given the concentrated asset base. NBL Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $31.88 for NBL is lower than our Val Range. Risks to our valuation range include commodity price volatility, midstream constraints, Middle Eastern conflict, and exploration uncertainties. NFX Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $3.42 for NFX is lower than our Val Range. Risks to our valuation range include volatility in commodity prices as well as execution risk in the Woodford/Uinta. 22

23 E&P: Shantytown -- Revisiting E&Ps At The Strip OAS Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $1.76 for OAS is lower than our Val Range. Risks to our valuation range include commodity price volatility, minimal diversification, weather in the Williston Basin, and a relatively early stage on the tight oil learning curve. PDCE Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $45.60 for PDCE is lower than our Val Range. Risks to our val range include material, sustained commodity price weakness, DJ midstream constraints, and potential liquidity issues surrounding the company's small float. PE Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $5.95 for PE is lower than our Val Range." Risks to our range include material, sustained commodity price weakness, rapid rises in service costs, and failure of exploration upside potential to materialize. PVA Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $0.91 for PVA is lower than our Val Range. Risks to our valuation range include volatility in commodity prices and potential operational hurdles given the concentrated asset base. PXD Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $133.38/share for PXD is lower than our Val Range. Notable risks include commodity prices, execution and cost containment in the Spraberry and Eagle Ford as Pioneer ramps activity, and the early stage of the horizontal Wolfcamp Shale. QEP Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $4.93 for QEP is lower than our Val Range." Risks to our range include commodity price volatility, as well as possible delays in development plans due to permitting and environmental concerns. REN Basis and Risks: Our valuation range is based on our NAV estimate, which includes value for both proven and unproven reserves, as well as other net assets and liabilities. Our NAV estimate for REN is $0.64 per share. Risks to our NAV include material sustained oil and gas price weakness and Permian and Powder River Basin development risks. REXX Basis and Risks: Our valuation range is based on our NAV estimate which includes value for both proven and unproven reserves, as well as other net assets and liabilities. Risks to our valuation range include material, sustained commodity price weakness and failure of exploration upside potential to materialize. 23

24 Exploration & Production RICE Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $15.52/share for RICE is lower than our Val Range. Risks to our valuation range include material, sustained commodity price weakness, and failure of exploration upside potential to materialize. ROSE Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $18.37/share for ROSE is lower than our Val Range. Risks to our valuation range include commodity price volatility, uncertainty surrounding shale gas development including decline curves and infrastructure needs, and failure of upside potential to materialize in the Permian. RRC Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $26.81 for RRC is lower than our Val Range. Risks to our valuation range include overall volatility in commodity prices and the potential for equity issuance resulting in dilution as the company looks to fund its large inventory of projects across the company's large acreage position in the Marcellus Shale. SFY Basis and Risks: Our valuation range is based on our NAV estimate, which includes value for both proven and potential reserves, as well as other net assets and liabilities. Risks to our valuation range include commodity price volatility, limited drilling inventory, and Gulf Coast declines. SM Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $8.33 for SM is lower than our Val Range. Risks to our range include overall volatility in commodity prices, as well as possible delays in development plans due to permitting and environmental concerns. TPLM Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $3.43/share for TPLM is lower than our Val Range. Risks to our range include commodity price volatility, minimal diversification, access to capital, and a competitive acquisition environment. UPL Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $9.74 for UPL is lower than our Val Range. Risks to our valuation range include material sustained gas price weakness and failure of operational initiatives to live up to expectations. VNOM Basis and Risks: Our valuation range is based on a blend of (1) our discounted cash flow model, which assumes a required rate of return of 8.0%, and (2) a price-to-dcf multiple of approximately 20.0x our 2015 estimate. Key risks for VNOM units are oil and gas prices, potential tax law changes, lack of control over timing of drilling and completions, and failure of exploration upside potential to materialize. 24

25 E&P: Shantytown -- Revisiting E&Ps At The Strip WLL Basis and Risks: Although near- to intermediate-term commodity prices remained challenged, we result, our NAV of $15.04 for WLL is lower than our Val Range. Risks to our valuation range include overall volatility in commodity prices, less favorable results in the Bakken Shale and unexpected price volatility in key components of the company's EOR projects, such as CO2. Required Disclosures To view price charts for all companies rated in this document, please go to or send an to: Additional Information Available Upon Request I certify that: 1) All views expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuers discussed; and 2) No part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by me in this research report. Wells Fargo Securities, LLC maintains a market in the common stock of Viper Energy Partners LP, Parsley Energy, Inc., Eclipse Resources Corporation, Oasis Petroleum, Inc., QEP Resources, Inc., Midstates Petroleum Company, Inc., Rex Energy Corporation, Diamondback Energy, Inc., Laredo Petroleum, Inc., Halcón Resources Corporation, Resolute Energy Corporation, Jones Energy, Inc., Gulfport Energy Corporation, Antero Resources Corporation, Rice Energy, Inc., Triangle Petroleum Corporation, EP Energy Corporation, Ultra Petroleum Corp., PDC Energy Inc., Swift Energy Company, Approach Resources, Inc., Whiting Petroleum Corporation, Concho Resources Inc., Rosetta Resources, Inc., Goodrich Petroleum Corp., EQT Corporation, SM Energy Company, Range Resources Corp., Bill Barrett Corporation, Carrizo Oil & Gas, Inc., Apache Corporation, Anadarko Petroleum Corporation, Devon Energy Corporation, EOG Resources, Inc., Cabot Oil & Gas Corporation, Penn Virginia Corporation, Chesapeake Energy Corporation, Newfield Exploration Company, Pioneer Natural Resources Company, Noble Energy, Inc. Wells Fargo Securities, LLC or its affiliates managed or comanaged a public offering of securities for Noble Energy, Inc., Chesapeake Energy Corporation, Penn Virginia Corporation, EOG Resources, Inc., Anadarko Petroleum Corporation, Carrizo Oil & Gas, Inc., SM Energy Company, Rosetta Resources, Inc., Concho Resources Inc., Ultra Petroleum Corp., Rice Energy, Inc., Antero Resources Corporation, Gulfport Energy Corporation, Diamondback Energy, Inc., Rex Energy Corporation, Eclipse Resources Corporation, Parsley Energy, Inc., Viper Energy Partners LP within the past 12 months. Wells Fargo Securities, LLC or its affiliates intends to seek or expects to receive compensation for investment banking services in the next three months from Viper Energy Partners LP, Parsley Energy, Inc., Eclipse Resources Corporation, Rex Energy Corporation, QEP Resources, Inc., Oasis Petroleum, Inc., Diamondback Energy, Inc., Halcón Resources Corporation, Laredo Petroleum, Inc., Jones Energy, Inc., Resolute Energy Corporation, Antero Resources Corporation, Rice Energy, Inc., EP Energy Corporation, Triangle Petroleum Corporation, PDC Energy Inc., Whiting Petroleum Corporation, Approach Resources, Inc., Swift Energy Company, Concho Resources Inc., Rosetta Resources, Inc., Goodrich Petroleum Corp., SM Energy Company, EQT Corporation, Carrizo Oil & Gas, Inc., Bill Barrett Corporation, Range Resources Corp., Anadarko Petroleum Corporation, Apache Corporation, EOG Resources, Inc., Devon Energy Corporation, Penn Virginia Corporation, Cabot Oil & Gas Corporation, Chesapeake Energy Corporation, Noble Energy, Inc., Pioneer Natural Resources Company, Newfield Exploration Company. Wells Fargo Securities, LLC or its affiliates received compensation for investment banking services from Newfield Exploration Company, Noble Energy, Inc., Chesapeake Energy Corporation, Cabot Oil & Gas Corporation, Penn Virginia Corporation, Devon Energy Corporation, EOG Resources, Inc., Apache Corporation, Anadarko Petroleum Corporation, Carrizo Oil & Gas, Inc., SM Energy Company, Rosetta Resources, Inc., Concho Resources Inc., Ultra Petroleum Corp., EP Energy Corporation, Rice Energy, Inc., Antero Resources Corporation, Gulfport Energy Corporation, Laredo Petroleum, Inc., Halcón Resources Corporation, Diamondback Energy, Inc., Rex Energy Corporation, Eclipse Resources Corporation, Parsley Energy, Inc., Viper Energy Partners LP in the past 12 months. Wells Fargo Securities, LLC and/or its affiliates, have beneficial ownership of 1% or more of any class of the common stock of Parsley Energy, Inc., Oasis Petroleum, Inc., Diamondback Energy, Inc., PDC Energy Inc., Whiting Petroleum Corporation, Concho Resources Inc., SM Energy Company, Carrizo Oil & Gas, Inc., Range Resources Corp., Bill Barrett Corporation, EOG Resources, Inc., Pioneer Natural Resources Company. Noble Energy, Inc., Newfield Exploration Company, Penn Virginia Corporation, Cabot Oil & Gas Corporation, Chesapeake Energy Corporation, EOG Resources, Inc., Devon Energy Corporation, Anadarko Petroleum Corporation, Apache Corporation, Carrizo Oil & Gas, Inc., SM Energy Company, Concho Resources Inc., Rosetta Resources, Inc., Ultra Petroleum Corp., Diamondback 25

26 Exploration & Production Energy, Inc., Halcón Resources Corporation, Laredo Petroleum, Inc., Rex Energy Corporation, Gulfport Energy Corporation, Antero Resources Corporation, Rice Energy, Inc., EP Energy Corporation, Parsley Energy, Inc., Viper Energy Partners LP, Eclipse Resources Corporation currently is, or during the 12-month period preceding the date of distribution of the research report was, a client of Wells Fargo Securities, LLC. Wells Fargo Securities, LLC provided investment banking services to Noble Energy, Inc., Newfield Exploration Company, Penn Virginia Corporation, Cabot Oil & Gas Corporation, Chesapeake Energy Corporation, EOG Resources, Inc., Devon Energy Corporation, Anadarko Petroleum Corporation, Apache Corporation, Carrizo Oil & Gas, Inc., SM Energy Company, Concho Resources Inc., Rosetta Resources, Inc., Ultra Petroleum Corp., Diamondback Energy, Inc., Halcón Resources Corporation, Laredo Petroleum, Inc., Rex Energy Corporation, Gulfport Energy Corporation, Antero Resources Corporation, Rice Energy, Inc., EP Energy Corporation, Parsley Energy, Inc., Viper Energy Partners LP, Eclipse Resources Corporation. Oasis Petroleum, Inc., QEP Resources, Inc., Goodrich Petroleum Corp., Apache Corporation, Anadarko Petroleum Corporation, Devon Energy Corporation, EOG Resources, Inc., Cabot Oil & Gas Corporation, Newfield Exploration Company currently is, or during the 12-month period preceding the date of distribution of the research report was, a client of Wells Fargo Securities, LLC. Wells Fargo Securities, LLC provided noninvestment banking securities-related services to Oasis Petroleum, Inc., QEP Resources, Inc., Goodrich Petroleum Corp., Apache Corporation, Anadarko Petroleum Corporation, Devon Energy Corporation, EOG Resources, Inc., Cabot Oil & Gas Corporation, Newfield Exploration Company. Newfield Exploration Company, Chesapeake Energy Corporation, Apache Corporation, Concho Resources Inc., SM Energy Company, EQT Corporation, Carrizo Oil & Gas, Inc., QEP Resources, Inc., Rice Energy, Inc. currently is, or during the 12-month period preceding the date of distribution of the research report was, a client of Wells Fargo Securities, LLC. Wells Fargo Securities, LLC provided nonsecurities services to Newfield Exploration Company, Chesapeake Energy Corporation, Apache Corporation, Concho Resources Inc., SM Energy Company, EQT Corporation, Carrizo Oil & Gas, Inc., QEP Resources, Inc., Rice Energy, Inc. An affiliate of Wells Fargo Securities, LLC has received compensation for products and services other than investment banking services from Rice Energy, Inc., Triangle Petroleum Corporation, Rosetta Resources, Inc., PDC Energy Inc., Penn Virginia Corporation in the past 12 months. Wells Fargo Securities, LLC received compensation for products or services other than investment banking services from Cabot Oil & Gas Corporation, Chesapeake Energy Corporation, Newfield Exploration Company, Apache Corporation, Anadarko Petroleum Corporation, EOG Resources, Inc., Devon Energy Corporation, Goodrich Petroleum Corp., Concho Resources Inc., Carrizo Oil & Gas, Inc., EQT Corporation, SM Energy Company, Rice Energy, Inc., QEP Resources, Inc., Oasis Petroleum, Inc. in the past 12 months. Wells Fargo Securities, LLC or its affiliates has a significant financial interest in Oasis Petroleum, Inc., QEP Resources, Inc., Rex Energy Corporation, Laredo Petroleum, Inc., Halcón Resources Corporation, Diamondback Energy, Inc., Rice Energy, Inc., Antero Resources Corporation, Gulfport Energy Corporation, Parsley Energy, Inc., SM Energy Company, EQT Corporation, Carrizo Oil & Gas, Inc., Bill Barrett Corporation, Range Resources Corp., Concho Resources Inc., Rosetta Resources, Inc., PDC Energy Inc., Ultra Petroleum Corp., Whiting Petroleum Corporation, Swift Energy Company, Approach Resources, Inc., Devon Energy Corporation, EOG Resources, Inc., Anadarko Petroleum Corporation, Apache Corporation, Newfield Exploration Company, Noble Energy, Inc., Pioneer Natural Resources Company, Chesapeake Energy Corporation, Cabot Oil & Gas Corporation. Wells Fargo Securities, LLC or its affiliates intends to seek or expects to receive compensation for investment banking services in the next three months from an affiliate of Penn Virginia Corporation, Chesapeake Energy Corporation, Pioneer Natural Resources Company, Anadarko Petroleum Corporation, Devon Energy Corporation, Whiting Petroleum Corporation, Goodrich Petroleum Corp., EQT Corporation, Parsley Energy, Inc., Viper Energy Partners LP, Resolute Energy Corporation, Antero Resources Corporation, Rice Energy, Inc., Triangle Petroleum Corporation, EP Energy Corporation, Diamondback Energy, Inc., Halcón Resources Corporation, Rex Energy Corporation, QEP Resources, Inc., Oasis Petroleum, Inc. Wells Fargo Securities, LLC or its affiliates managed or co-managed a public offering of securities for an affiliate of Diamondback Energy, Inc., Antero Resources Corporation, Viper Energy Partners LP, Parsley Energy, Inc., EQT Corporation, Devon Energy Corporation, Anadarko Petroleum Corporation within the past 12 months. Wells Fargo Securities, LLC or its affiliates received compensation for investment banking services from an affiliate of Anadarko Petroleum Corporation, Devon Energy Corporation, Pioneer Natural Resources Company, EQT Corporation, Parsley Energy, Inc., Viper Energy Partners LP, Antero Resources Corporation, Diamondback Energy, Inc. in the past 12 months. 26

27 E&P: Shantytown -- Revisiting E&Ps At The Strip APA: Risks to our NAV estimate include GOM regulatory uncertainty, material sustained weakness in commodity prices and additional geopolitical risk in Egypt and Argentina compared to its peers given its significant international operations. APC: Risks to our NAV include but are not limited to: sustained oil and gas price weakness, and the ability of the company to deliver on stated production targets. AR: Risks to our NAV include material sustained gas and NGL price weakness along with risks specific to the Appalachian Basin. AREX: Risks to our valuation range include material, sustained commodity price weakness and failure of exploration upside to materialize. BBG: Risks include volatility in commodity prices and potential hurdles in the Rockies, including environmental blockades, seasonal issues, and commodity price basis risk. CHK: Risks to our valuation range include sustained material weakness in commodity prices as well as the risk of a rising cost structure due to the company's active acquisition strategy. COG: Risks to our range include material, sustained commodity price weakness and failure of exploration upside potential to materialize. CRZO: Risks to our NAV include: material, sustained weakness in commodity prices, infrastructure delays in the Eagle Ford, Niobrara, Marcellus and acreage risk in the Utica. CXO: Risks to our val. range include volatility in commodity prices and potential operational hurdles given the concentrated asset base. DVN: Risks to our valuation range include overall volatility in commodity prices and divestiture timing and execution risk as the company shifts its strategic direction. ECR: Risks to our range include material, sustained commodity price weakness, rapid rises in service costs, and failure of exploration upside potential to materialize. EOG: Risks to our valuation range include overall volatility in commodity prices as well as possible risks of not achieving organic growth targets. EPE: Risks to our range include cash flow outspend, less favorable results in the Wolfcamp, as well as possible delays in development plans due to permitting in the Uinta. EQT: Risks to our valuation range include commodity price volatility, uncertainty surrounding shale gas development including decline curves and infrastructure needs, and Appalachian regulatory risk. FANG: Risks to our range include material, sustained commodity price weakness and failure of exploration upside potential to materialize. GDP: Risks to our valuation range and thesis include commodity price volatility, the early stage of the TMS program, and relatively high leverage. GPOR: Risks to our valuation range include material, sustained commodity price weakness, and failure of exploration upside potential to materialize. HK: Risks to our range include material, sustained commodity price weakness and failure of exploration upside potential to materialize. JONE: Risks to our NAV include material sustained oil and gas price weakness and the ability for JONE to execute on joint development agreements. LPI: Risks to our valuation range include volatility in commodity prices and potential operational hurdles given the concentrated asset base. MPO: Risks to our valuation range include volatility in commodity prices and potential operational hurdles given the concentrated asset base. NBL: Risks to our valuation range include commodity price volatility, midstream constraints, Middle Eastern conflict, and exploration uncertainties. NFX: Risks to our valuation range include volatility in commodity prices as well as execution risk in the Woodford/Uinta. OAS: Risks to our valuation range include commodity price volatility, minimal diversification, weather in the Williston Basin, and a relatively early stage on the tight oil learning curve. PDCE: Risks to our val range include material, sustained commodity price weakness, DJ midstream constraints, and potential liquidity issues surrounding the company's small float. PE: Risks to our range include material, sustained commodity price weakness, rapid rises in service costs, and failure of exploration upside potential to materialize. PVA: Risks to our valuation range include volatility in commodity prices and potential operational hurdles given the concentrated asset base. PXD: Notable risks include commodity prices, execution and cost containment in the Spraberry and Eagle Ford as Pioneer ramps activity, and the early stage of the horizontal Wolfcamp Shale. QEP: Risks to our range include commodity price volatility, as well as possible delays in development plans due to permitting and environmental concerns. REN: Risks to our NAV include material sustained oil and gas price weakness and Permian and Powder River Basin development risks. REXX: Risks to our valuation range include material, sustained commodity price weakness and failure of exploration upside potential to materialize. RICE: Risks to our valuation range include material, sustained commodity price weakness, and failure of exploration upside potential to materialize. ROSE: Risks to our valuation range include commodity price volatility, uncertainty surrounding shale gas development including 27

28 Exploration & Production decline curves and infrastructure needs, and failure of upside potential to materialize in the Permian. RRC: Risks to our valuation range include overall volatility in commodity prices and the potential for equity issuance resulting in dilution as the company looks to fund its large inventory of projects across the company's large acreage position in the Marcellus Shale. SFY: Risks to our valuation range include commodity price volatility, limited drilling inventory, and Gulf Coast declines. SM: Risks to our range include overall volatility in commodity prices, as well as possible delays in development plans due to permitting and environmental concerns. TPLM: Risks to our range include commodity price volatility, minimal diversification, access to capital, and a competitive acquisition environment. UPL: Risks to our valuation range include material sustained gas price weakness and failure of operational initiatives to live up to expectations. VNOM: Key risks for VNOM units are oil and gas prices, potential tax law changes, lack of control over timing of drilling and completions, and failure of exploration upside potential to materialize. WLL: Risks to our valuation range include overall volatility in commodity prices, less favorable results in the Bakken Shale and unexpected price volatility in key components of the company's EOR projects, such as CO2. Wells Fargo Securities, LLC does not compensate its research analysts based on specific investment banking transactions. Wells Fargo Securities, LLC s research analysts receive compensation that is based upon and impacted by the overall profitability and revenue of the firm, which includes, but is not limited to investment banking revenue. STOCK RATING 1=Outperform: The stock appears attractively valued, and we believe the stock's total return will exceed that of the market over the next 12 months. BUY 2=Market Perform: The stock appears appropriately valued, and we believe the stock's total return will be in line with the market over the next 12 months. HOLD 3=Underperform: The stock appears overvalued, and we believe the stock's total return will be below the market over the next 12 months. SELL SECTOR RATING O=Overweight: Industry expected to outperform the relevant broad market benchmark over the next 12 months. M=Market Weight: Industry expected to perform in-line with the relevant broad market benchmark over the next 12 months. U=Underweight: Industry expected to underperform the relevant broad market benchmark over the next 12 months. VOLATILITY RATING V = A stock is defined as volatile if the stock price has fluctuated by +/-20% or greater in at least 8 of the past 24 months or if the analyst expects significant volatility. All IPO stocks are automatically rated volatile within the first 24 months of trading. As of: January 22, % of companies covered by Wells Fargo Securities, LLC Equity Research are rated Outperform. 54% of companies covered by Wells Fargo Securities, LLC Equity Research are rated Market Perform. 2% of companies covered by Wells Fargo Securities, LLC Equity Research are rated Underperform. Wells Fargo Securities, LLC has provided investment banking services for 43% of its Equity Research Outperform-rated companies. Wells Fargo Securities, LLC has provided investment banking services for 30% of its Equity Research Market Perform-rated companies. Wells Fargo Securities, LLC has provided investment banking services for 22% of its Equity Research Underperform-rated companies. Important Disclosure for International Clients EEA The securities and related financial instruments described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. For recipients in the EEA, this report is distributed by Wells Fargo Securities International Limited ( WFSIL ). WFSIL is a U.K. incorporated investment firm authorized and regulated by the Financial Conduct Authority. For the purposes of Section 21 of the UK Financial Services and Markets Act 2000 ( the Act ), the content of this report has been approved by WFSIL a regulated person under the Act. WFSIL does not deal with retail clients as defined in the Markets in Financial Instruments Directive The FCA rules made under the Financial Services and Markets Act 2000 for the protection of retail clients will therefore not apply, nor will the Financial Services Compensation Scheme be available. This report is not intended for, and should not be relied upon by, retail clients. 28

29 E&P: Shantytown -- Revisiting E&Ps At The Strip Australia Wells Fargo Securities, LLC is exempt from the requirements to hold an Australian financial services license in respect of the financial services it provides to wholesale clients in Australia. Wells Fargo Securities, LLC is regulated under U.S. laws which differ from Australian laws. Any offer or documentation provided to Australian recipients by Wells Fargo Securities, LLC in the course of providing the financial services will be prepared in accordance with the laws of the United States and not Australian laws. Canada This report is distributed in Canada by Wells Fargo Securities Canada, Ltd., a registered investment dealer in Canada and member of the Investment Industry Regulatory Organization of Canada (IIROC) and Canadian Investor Protection Fund (CIPF). This report has not been prepared subject to Canadian disclosure requirements. Hong Kong This report is issued and distributed in Hong Kong by Wells Fargo Securities Asia Limited ( WFSAL ), a Hong Kong incorporated investment firm licensed and regulated by the Securities and Futures Commission of Hong Kong ( the SFC ) to carry on types 1, 4, 6 and 9 regulated activities (as defined in the Securities and Futures Ordinance (Cap. 571 of The Laws of Hong Kong), the SFO ). This report is not intended for, and should not be relied on by, any person other than professional investors (as defined in the SFO). Any securities and related financial instruments described herein are not intended for sale, nor will be sold, to any person other than professional investors (as defined in the SFO). The author or authors of this report is or are not licensed by the SFC. Professional investors who receive this report should direct any queries regarding its contents to Mark Jones at WFSAL ( [email protected] ). Japan This report is distributed in Japan by Wells Fargo Securities (Japan) Co., Ltd, registered with the Kanto Local Finance Bureau to conduct broking and dealing of type 1 and type 2 financial instruments and agency or intermediary service for entry into investment advisory or discretionary investment contracts. This report is intended for distribution only to professional investors (Tokutei Toushika) and is not intended for, and should not be relied upon by, ordinary customers (Ippan Toushika). The ratings stated on the document are not provided by rating agencies registered with the Financial Services Agency of Japan (JFSA) but by group companies of JFSA-registered rating agencies. These group companies may include Moody s Investors Services Inc., Standard & Poor s Rating Services and/or Fitch Ratings. Any decisions to invest in securities or transactions should be made after reviewing policies and methodologies used for assigning credit ratings and assumptions, significance and limitations of the credit ratings stated on the respective rating agencies websites. About Wells Fargo Securities Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including but not limited to Wells Fargo Securities, LLC, a U.S. broker-dealer registered with the U.S. Securities and Exchange Commission and a member of NYSE, FINRA, NFA and SIPC, Wells Fargo Institutional Securities, LLC, a member of FINRA and SIPC, Wells Fargo Prime Services, LLC, a member of FINRA, NFA and SIPC, Wells Fargo Securities Canada, Ltd., a member of IIROC and CIPF, Wells Fargo Bank, N.A. and Wells Fargo Securities International Limited, authorized and regulated by the Financial Conduct Authority. This report is for your information only and is not an offer to sell, or a solicitation of an offer to buy, the securities or instruments named or described in this report. Interested parties are advised to contact the entity with which they deal, or the entity that provided this report to them, if they desire further information. The information in this report has been obtained or derived from sources believed by Wells Fargo Securities, LLC, to be reliable, but Wells Fargo Securities, LLC does not represent that this information is accurate or complete. Any opinions or estimates contained in this report represent the judgment of Wells Fargo Securities, LLC, at this time, and are subject to change without notice. For the purposes of the U.K. Financial Conduct Authority's rules, this report constitutes impartial investment research. Each of Wells Fargo Securities, LLC and Wells Fargo Securities International Limited is a separate legal entity and distinct from affiliated banks. Copyright 2015 Wells Fargo Securities, LLC. SECURITIES: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE 29