Strategy

Drive Growth with Horizontal Drilling

During 2015, our horizontal drilling program drove an increase in Permian proved reserves of nearly 21.5 million barrels of oil equivalent, replacing over 600% of our 2015 production with proved reserve additions. At the end of 2015, our proved reserves had increased over 65% versus 2013 to over 54 million barrels of oil equivalent, and were comprised of over 80% oil. Additionally, we added the Middle Spraberry to our producing zones within the basin, resulting in five producing zones including the Wolfcamp A, Upper & Lower Wolfcamp B and the Middle & Lower Spraberry. We intend to continue building on the success of our development program through our increasing technical knowledge base and by the ongoing expansion of our horizontal pad drilling efforts.

Expand the Drilling Portfolio

Our near-term horizontal drilling activity will target the Lower Spraberry shale as we focus on projects with the highest return potential in the current environment. We will also continue selective delineation of the Middle Spraberry and Wolfcamp A in the Central Midland Basin, and monitor the longer-term performance of other emerging zones such as the Jo-Mill, Cline and Wolfcamp C that have been targeted by other industry players. We currently have an inventory of over 900 identified locations targeting the five zones that are currently producing on our asset base. This location count increases to over 1,500 identified locations after including high-graded opportunities in zones that have been drilled by other operators in offsetting acreage.

Selective Acquisitions/Partnerships

Our acquisition and non-organic growth initiatives are primarily focused on the Midland Basin, but we are also evaluating opportunities in the Delaware Basin that are suited to our operational expertise. We have acquired approximately $650 million of properties in the Midland Basin to date, building a position that currently covers ten counties in Texas. We believe that our reputation as a horizontal operator, a legacy position that is 100% HBP and only modest drilling commitments on our most recently acquired properties will provide unique advantages as we pursue future transactions in the Permian Basin.