Strategic Combination EnerCom Oil & Gas Conference Denver, Colorado August 19, 2014
Presenters Ray Singleton Frank A. Lodzinski Director, CEO, and President Director, CEO, and President 303-296-3076 281-298-4246 rsingletonearthstoneenergy.com frankoakvalleyllc.com 3
Transaction Overview Earthstone Energy Inc. Oak Valley Resources, LLC NYSE MKT: ESTE 142mm in Cash 3.2 MMBoe 11.4 MMBoe 82% Liquids / 60% PD 65% Liquids / 32% PD 16% Ownership in Combined Company 84% Ownership in Combined…
Strategic Rationale Creating a growth-oriented company with significant upside for shareholders The combination Strengths: creates: Strengths: Stable production and Critical mass Significant production and reserves cash flow…
Earthstone Pro Forma Organizational Structure Public Members Shareholders 100% Oak Valley Resources, LLC (Privately Held) 16% 84% Earthstone Energy, Inc. 16% (NYSE MKT: ESTE) 100% 100% 100% 100% Oak Valley Operating,…
Combined Company Overview Proven, growth-oriented management team Pro Forma Asset Location Oil-weighted with strong cash margins Initially focused on the Eagle Ford and Bakken Robust liquidity with clean balance sheet 125.8mm in pro…
Investment Highlights Management team with proven ability to Well-capitalized to pursue drill-bit growth create shareholder value and acquisitions Initial investors(1) of GeoResources since Liquidity of 182.3mm, consisting of the…
Oak Valley is Backed by Top Tier Equity Investors Oak Valley Management EnCap Investments L.P. Management team recently led GeoResources prior to Leading provider of private equity to the independent sale to Halcn Resources in 2012 E&P…
Oak Valley Management Track Record Oak Valley management team has repeatedly executed its strategy of 2005 2007 Southern Bay Energy, LLC Gulf Coast, Permian Basin creating significant value for shareholders Initial investors 40% IRR…
GeoResources Performance Summary (Oak Valley managements most recent public company) Stock Performance (%) Reserves Growth (MMBoe)(1) Merger with Southern Bay to Sale to Halcn 40.0 35.9 40 CAGR = 57% Initial Investors: 29.2 IRR =…
Go-Forward Strategy Managements strategy is similar to that used in prior entities which delivered significant returns to shareholders Asset Strategy Corporate Strategy Optimize Existing Properties Align shareholders and management…
Management Strong management and technical team with demonstrated ability and prior success Most underlying professional and support staff are also Oak Valley investors and have been involved in prior successful ventures with the same…
Asset Overview
Operated Eagle Ford 49,150 gross leasehold acres controlled by Oak Valley in Gonzales and Fayette counties (oil window) 14,745 net leasehold acres 30% operated working interest Current gross production of 4,400 Boepd 43 producing wells…
Operated Eagle Ford 2 rigs currently drilling Eagle Ford locations Newtonville North 5 well pad, 500 ft spacing Flatonia SW 5 well pad, 500 ft spacing Offset by Sanchez, Penn Virginia, and Argent Eagle Ford Kolar-Labatt lease drilled…
Unit Comparison Average Drilling Days vs Depth Average number of days to drill Oak Valleys three most recent units have totaled 19 days (Kolar Labatt), 18 days (Newtonville North), and 15 days (Flatonia Southwest) per well 0…
Progression in Completion Design Oak Valley continues to refine its completion techniques to optimize recoveries while also considering economics Since Oak Valley initiated its drilling program in late 2013, it has increased the amount…
Non-Operated Eagle Ford Non-op position with BHP; 60 gross producing wells Two areas totaling 3,130 net acres White Kitchen 15% working interest HBP Gas and liquids 7,625 gross / 1,265 net acres Martin Ranch 10% working…
Non-Operated Bakken Summary Near-Term Plans 88 gross / 7 net wells producing Expand acreage 10,919 net acres in North Dakota and Acquire production Montana (3,813 in ND / 7,106 net acres in MT) Establish operating presence…
Other Areas Milam County, Texas Webb County, Texas 18,925 net acres prospective for multiple 2,486 net acres liquids-rich plays (Austin Chalk, Buda, South Texas oilfield under waterflood Georgetown, Eagle Ford, Woodbine)…
Property Overview Oak Valley Portfolio of conventional LeFlore County: 13,900 net acres with 34 PDP and unconventional wells in Red Oak Field assets located in: South Texas (Eagle Ford) Oklahoma Grayson County: East Texas 1,300 net…
CY 2014 Combined Capital Expenditure Budget mm D&C Spend by Area Drilling and Completion Operated Eagle Ford 49.9 (Fayette / Gonzales Counties) Non-Operated Bakken 10.9 15% Operated Austin Chalk 70% 6.0 (Fayette County) 8%…
Pro Forma Earthstone 12/31/13 Proved Reserves (MMBoe)(1) CQ1 14 Production (Boepd) 16.0 14.6 3,500 357% 356% 2,878 3,000 12.0 2,500 2,000 8.0 1,500 3.2 1,000 631 4.0 500 0.0 0 Standalone Pro Forma Standalone Pro Forma %…
Pro Forma Liquidity Pro forma liquidity of 182.3mm Combined Pro Forma Liquidity Pro forma cash and equivalents of 125.8mm (mm) Earthstone Oak Valley Transaction 6/30/2014 3/31/2014 Adjustments1 Pro Forma At closing, all debt…
Contact Information Earthstone Energy, Inc. Oak Valley Resources, LLC Ray Singleton Frank Lodzinski Neil Cohen Director, CEO, Director, CEO, VP, Finance and President and President Corporate Headquarters Corporate…
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