The following are abbreviations and definitions of certain terms which are commonly used in the oil and natural gas industry:
| ● | “basis” means when referring to commodity pricing, the difference between the NYMEX WTI, for oil prices, and NYMEX Henry Hub, for gas prices, and the corresponding sales price at various regional sales points. The differential commonly is related to factors such as product quality, location, transportation capacity availability and contract pricing; |
| ● | “Bbl” means one stock tank barrel or 42 U.S. gallons liquid volume; |
| ● | “Boe” means one barrel of oil equivalent, calculated by converting natural gas to oil equivalent barrels at a ratio of six Mcf of natural gas to one Bbl of oil equivalent. This is an energy content correlation and does not reflect a value or price relationship between the commodities; |
| ● | “Boe/d” means one Boe per day; |
| ● | “British thermal unit” or “Btu” means a measure of the amount of energy required to raise the temperature of one pound of water by one-degree Fahrenheit; |
| ● | “collar” means a financial arrangement that effectively establishes a price range for the underlying commodity. The producer bears the risk and benefit of fluctuation between the minimum (floor) price and the maximum (ceiling) price; |
| ● | “drilled and uncompleted well” or “DUC” means a wellbore in which horizontal drilling has been completed but has yet to be stimulated through hydraulic fracturing; |
| ● | “drilling locations” means total gross locations that may be able to be drilled on our existing acreage. A portion of our drilling locations constitute estimated locations based on our acreage and spacing assumptions; |
| ● | “EBITDAX” means earnings before interest, taxes, depletion, depreciation, amortization, and exploration expense; |
| ● | “gas” means natural gas; |
| ● | “GHG” means greenhouse gas; |
| ● | “hedging” means the use of derivative commodity and interest rate instruments to reduce financial exposure to commodity price and interest rate volatility; |
| ● | “Henry Hub” means the distribution hub on the natural gas pipeline system in Erath, Louisiana, owned by Sabine Pipe Line LLC; |
| ● | “horizontal drilling” means drilling that ultimately is horizontal or near horizontal to increase the length of the wellbore penetrating the target formation; |
| ● | “horizontal wells” means wells that are drilled horizontal or near horizontal to increase the length of the wellbore penetrating the target formation; |
| ● | “LNG” means liquified natural gas; |
| ● | “MBoe” means one thousand barrels of oil equivalent; |
| ● | “MBoe/d” means one thousand barrels of oil equivalent per day; |
iv
| ● | “Mcf” means one thousand standard cubic feet of natural gas; |
| ● | “MMBtu” means one million British thermal units; |
| ● | “MMBtu/d” means one MMBtu per day; |
| ● | “MMcf” means one million standard cubic feet of natural gas; |
| ● | “natural gas liquids” or “NGLs” means hydrocarbons, in the same family of molecules as natural gas and crude oil, composed exclusively of carbon and hydrogen. Ethane, propane, butane, isobutane, and pentane are all NGLs; |
| ● | “net acres” means the percentage of total acres an owner owns or has leased out of a particular number of acres, or a specified tract. An owner who has 50% interest in 100 acres owns 50 net acres; |
| ● | “NYMEX” means the New York Mercantile Exchange; |
| ● | “option” means a contract that gives the buyer the right, but not the obligation, to buy or sell a specified quantity of a commodity or other instrument at a specific price within a specified period of time; |
| ● | “proved developed nonproducing reserves” or “PDNP” means reserves that can be expected to be recovered through existing wells with existing equipment and operating methods but are not yet producing; |
| ● | “proved developed producing reserves” or “PDP” means reserves that can be expected to be recovered through existing wells with existing equipment and operating methods, according to the Securities and Exchange Commission or Society of Petroleum Engineers definitions of proved reserves; |
| ● | “proved reserves” means the summation of reserves within the PDP, PDNP and PUD reservoir categories; |
| ● | “proved undeveloped reserves” or “PUDs” means proved reserves that are expected to be recovered from undrilled well locations on existing acreage or from existing wells where a relatively major expenditure is required for recompletion within the five-year development window, according to the Securities and Exchange Commission or Society of Petroleum Engineers definition of PUD; |
| ● | “reservoir” means a porous and permeable underground formation containing a natural accumulation of producible oil and/or natural gas that is confined by impermeable rock and is separate from other reservoirs; |
| ● | “undeveloped acreage” means acreage under lease on which wells have not been drilled or completed; |
| ● | “Up-C” means umbrella partnership - C Corporation |
| ● | “well pad” or “pad” means an area of land that has been cleared and leveled to enable a drilling rig to operate in the exploration and development of a natural gas or oil well; |
| ● | “wellbore” or “well” means a drilled hole that is equipped for the production of hydrocarbons; |
| ● | “working interest” means the right granted to the lessee of a property to explore for and to produce and own oil, natural gas or other minerals. The working interest owners bear the exploration, development, and operating costs on either a cash, penalty, or carried basis; and |
| ● | “WTI” means West Texas Intermediate. |
v
