Jagged Peak Energy Inc. (Form: S-1, Received: 12/19/2016 17:11:18)

JAGGED PEAK ENERGY INC.

/s/ JOSEPH N. JAGGERS

Joseph N. Jaggers

Chairman, Chief Executive Officer and President

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INDEX TO FINANCIAL STATEMENTS

As filed with the Securities and Exchange Commission on December 19, 2016

Registration No. 333-

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Jagged Peak Energy Inc.
(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		1311 (Primary Standard Industrial Classification Code Number)		81-3943703 (IRS Employer Identification Number)

1125 17th Street, Suite 2400
Denver, Colorado 80202
(720) 215-3700
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

Robert W. Howard
Executive Vice President, Chief Financial Officer
1125 17th Street, Suite 2400
Denver, Colorado 80202
(720) 215-3700
(Name, address, including zip code, and telephone number, including area code, of agent for service)


Copies to:
Douglas E. McWilliams Julian J. Seiguer Vinson & Elkins L.L.P. 1001 Fannin Street, Suite 2500 Houston, Texas 77002 (713) 758-2222		G. Michael O'Leary George Vlahakos Andrews Kurth Kenyon LLP 600 Travis, Suite 4200 Houston, Texas 77002 (713) 220-4200

Approximate date of commencement of proposed sale of the securities to the public:
As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of 'large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer o		Accelerated filer o		Non-accelerated filer ý (Do not check if a smaller reporting company)		Smaller reporting company o

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee




Common Stock, par value $0.01 per share	$100,000,000	$11,590

(1): Includes shares issuable upon exercise of the underwriters' over-allotment option.
(2): Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED DECEMBER 19, 2016

PROSPECTUS

Shares

Jagged Peak Energy Inc.

Common stock
$ per share

This is the initial public offering of our common stock. We are selling shares of our common stock, and the selling stockholders are selling shares of our common stock. We will not receive any proceeds from the shares of our common stock sold by the selling stockholders.

Prior to this offering, there has been no public market for our common stock. The initial public offering price of the common stock is expected to be between $ and $ per share. We have been authorized to apply to list our common stock on the New York Stock Exchange under the symbol "JAG".

To the extent that the underwriters sell more than shares of common stock, the underwriters have the option to purchase up to an additional shares from the selling stockholders at the public offering price less the underwriting discount and commissions.

We are an "emerging growth company" as that term is used in the Jumpstart Our Business Startups Act of 2012, and as such, we have elected to take advantage of certain reduced public company reporting requirements for this prospectus and future filings. See "Risk Factors" and "Summary—Emerging Growth Company".

Investing in our common stock involves risks. See "Risk Factors" beginning on page 22.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares to purchasers on or about , 2016 through the book-entry facilities of The Depository Trust Company.

	Per Share	Total

Public Offering Price	$	$
Underwriting Discount	$	$
Proceeds to Jagged Peak Energy Inc. (before expenses)	$	$
Proceeds to the Selling Stockholders	$	$


Citigroup		Credit Suisse		J.P. Morgan

The date of this prospectus is , 2016.

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[Cover art to come]

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TABLE OF CONTENTS


Summary		1
Risk Factors		22
Cautionary Statement Regarding Forward-Looking Statements		52
Use of Proceeds		54
Capitalization		55
Dilution		57
Selected Historical Consolidated Financial Data		59
Management's Discussion and Analysis of Financial Condition and Results of Operations		61
Business		85
Corporate Reorganization		114
Management		118
Dividend Policy		124
Executive Compensation and Other Information		125
Principal and Selling Stockholders		129
Certain Relationships and Related Party Transactions		131
Description of Capital Stock		134
Shares Eligible for Future Sale		139
Material U.S. Federal Income Tax Considerations for Non-U.S. Holders		141
Underwriting (Conflicts of Interest)		145
Legal Matters		153
Experts		153
Where You Can Find More Information		153
Index to Financial Statements		F-1
Annex A: Glossary of Oil and Natural Gas Terms		A-1

You should rely only on the information contained in this prospectus and any free writing prospectus prepared by us or on behalf of us or the information to which we have referred you. Neither we, the selling stockholders nor the underwriters have authorized anyone to provide you with information different from that contained in this prospectus and any free writing prospectus. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We, the selling stockholders and the underwriters are offering to sell shares of common stock and seeking offers to buy shares of common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the common stock. Our business, financial condition, results of operations and prospects may have changed since that date.

This prospectus contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. See "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements".

Until (25 days after commencement of this offering), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

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Commonly Used Defined Terms

As used in this prospectus, unless the context indicates or otherwise requires, the terms listed below have the following meanings:

•: "Jagged Peak", the "Company", "us", "we", "our" or "ours" or like terms refer to Jagged Peak Energy LLC before the completion of our corporate reorganization described in "Corporate Reorganization", and to Jagged Peak Energy Inc. following the completion of our corporate reorganization;
•: "Quantum" refers, as applicable, to Quantum Energy Partners and its affiliates, including Q-Jagged Peak Energy Investment Partners, LLC;
•: "Management Members" refers, collectively, to our individual officers and employees and other individuals who, together with Quantum, own equity interests in Jagged Peak Energy LLC;
•: "Existing Owners" refers, collectively, to Quantum and the Management Members; and
•: "Management Holdco" refers to JPE Management Holdings LLC, a Delaware limited liability company, which will be formed to hold shares of our common stock that will be distributed in respect of certain management incentive units in Jagged Peak Energy LLC held by the Management Members, as further described under "Corporate Reorganization".

Industry and Market Data

The market data and certain other statistical information used throughout this prospectus are based on independent industry publications, government publications and other published independent sources. Although we believe these third-party sources are reliable as of their respective dates, neither we, the selling stockholders nor the underwriters have independently verified the accuracy or completeness of this information. Some data is also based on our good faith estimates. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section entitled "Risk Factors". These and other factors could cause results to differ materially from those expressed in these publications.

Trademarks and Trade Names

We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties' trademarks, service marks, trade names or products in this prospectus is not intended to, and does not imply, a relationship with us or an endorsement or sponsorship by or of us. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the ®, TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, service marks and trade names.

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SUMMARY

This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the information under the headings "Risk Factors", "Cautionary Statement Regarding Forward-Looking Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and the notes to those financial statements appearing elsewhere in this prospectus. The information presented in this prospectus assumes (i) an initial public offering price of $ per common share (the midpoint of the price range set forth on the cover of this prospectus) and (ii) unless otherwise indicated, that the underwriters do not exercise their option to purchase additional shares of common stock.

Unless indicated otherwise or the context otherwise requires, references in this prospectus to "Jagged Peak", the "Company", "us", "we", "our" or "ours" refer to Jagged Peak Energy LLC before the completion of our corporate reorganization described in "Corporate Reorganization", and to Jagged Peak Energy Inc. following the completion of our corporate reorganization. This prospectus includes certain terms commonly used in the oil and natural gas industry, which are defined elsewhere in this prospectus in the "Glossary of Oil and Natural Gas Terms".

Our Company

Business Overview

We are a growth-oriented, independent oil and natural gas company focused on the acquisition and development of unconventional oil and associated liquids-rich natural gas reserves in the Southern Delaware Basin, a sub-basin of the Permian Basin of West Texas and one of the most prolific unconventional resource plays in North America. Our acreage is located on large, contiguous blocks in the adjacent counties of Winkler, Ward, Reeves and Pecos, with significant original oil-in-place within multiple stacked hydrocarbon-bearing formations. We are focused on increasing stockholder value by (i) growing production and reserves through the development of our multi-year inventory of 1,265 gross horizontal drilling locations with an average lateral length of 7,426 feet, (ii) expanding and improving the resource potential of our existing acreage position and (iii) growing our acreage position through acquisitions and leasing efforts.

As of September 30, 2016, we held an average 89% working interest in approximately 68,121 gross (60,875 net) leased or acquired acres, and we operated approximately 98% of our acreage position. Both our production and our proved reserves consist of greater than 80% oil. Our acreage is exclusively located in the core oil window of the Southern Delaware Basin. We generally consider the core oil window of the Southern Delaware Basin to be the eastern and southern portion of the basin, which is characterized by high oil saturation and favorable over-pressured conditions.

Jagged Peak was formed in April 2013 by an affiliate of Quantum Energy Partners, a leading energy private equity firm that has managed more than $11 billion of equity commitments since 1998, and key members of our management team. Our management and technical teams, which have extensive engineering, geoscience, land, marketing and finance capabilities, are led by Joseph N. Jaggers, an industry veteran with over 35 years of experience growing oil and natural gas operations. Mr. Jaggers and his teams have a proven track record of achieving significant production and reserve growth in unconventional plays in the United States, including at Ute Energy, LLC, where Mr. Jaggers served as President and Chief Executive Officer, and at Bill Barrett Corporation, where he served as President and Chief Operating Officer.

We were formed with the goal of building a premier acquisition and development company focused on horizontal drilling in the core oil window of the Southern Delaware Basin. We plan to achieve this goal by using advanced drilling and completion techniques and leveraging our management team's extensive experience and technical expertise. At our inception, we specifically targeted the Southern Delaware Basin due to the abundant amount of oil-in-place, stacked pay potential, low breakeven-prices, attractive well economics, favorable operating environment and in-place midstream infrastructure. We have assembled our current acreage position by executing privately sourced acquisitions of largely undeveloped acreage and through grassroots leasing.

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As of September 30, 2016, we have drilled and completed 16 horizontal wells. Based on the wells we have drilled to date and wells drilled by other operators, we believe the Lower Wolfcamp A, Upper Wolfcamp A, Wolfcamp B and 3 ^rd Bone Spring Sand formations are significantly delineated across our acreage. The top of the Wolfcamp formation ranges from approximately 8,850 feet to 11,420 feet, and the top of the Bone Spring formation ranges from approximately 8,600 feet to 10,900 feet. We also believe that significant additional development opportunities exist on our acreage in the Brushy Canyon, Avalon Shale, 1 ^st Bone Spring Lime, 1 ^st Bone Spring Sand, 2 ^nd Bone Spring Sand, 3 ^rd Bone Spring Lime, Wolfcamp C and Wolfcamp D formations.

Our contiguous acreage position enables the drilling of long laterals, resulting in significant drilling efficiencies that enhance the economic development of our acreage position. The ability to drill long-lateral wells improves our returns by (i) increasing our EUR per well, (ii) allowing us to contact more reservoir rock with fewer vertical wellbores (thus reducing drilling and completion costs on a per unit basis) and (iii) allowing us to hold more acreage per horizontal well drilled. Additionally, the contiguous nature of our acreage provides economies of scale by allowing us to better share our infrastructure.

Since commencing our drilling program in late 2013, we have consistently increased EURs and improved our well and field-level returns by refining our landing zones, drilling longer length laterals and enhancing our completion techniques. Over the same period, we have also improved our returns by reducing our drilling times and drilling and completion costs. We expect that continued optimization in the field, employment of pad drilling and expansion of our infrastructure will further increase stockholder value.

The prolific nature of our long-lateral horizontal drilling locations and continually modified and improved completion designs have allowed us to increase our average net daily production from 345 Boe/d in the first quarter of 2014 (normalized for five days of production) to 6,366 Boe/d in the third quarter of 2016 while operating an average of one horizontal drilling rig through June 30, 2016. We began operating our second and third rigs in July of 2016, which are expected to result in incremental well completions and production growth beginning in the fourth quarter of 2016. In 2017, we expect our drilling program to grow to six horizontal rigs, allowing us to continue our rapid production growth. Assuming this 2017 level of drilling activity, we have over 26 years of drilling inventory. The chart below shows our historical production over time.

(1): Q1 2014 production normalized for five days of production.
(2): The increase in production from Q3 2014 to Q4 2014 was partially attributable to the acquisition of three producing wells in September 2014 with average daily production of 74 Boe/d during Q4 2014.
(3): We added our second and third rigs during July 2016. There have been no completions or production attributable to these rigs as of September 30, 2016.

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We have made a strategic decision to construct and operate water handling infrastructure within our project areas, which allows us to consistently realize significant operating and cost efficiencies. We intend to install additional water handling infrastructure to accommodate our projected future production growth. Our infrastructure strategy includes owning a sufficient amount of surface acreage in our project areas to control both fresh water supply for drilling and completions and disposal of flowback and produced water.

As of September 30, 2016, we had identified 1,265 gross horizontal drilling locations in the Lower Wolfcamp A, the Upper Wolfcamp A, the Wolfcamp B and the 3 ^rd Bone Spring Sand formations, assuming 880-foot horizontal spacing in an offset pattern and a minimum vertical separation of 175 feet within target formations. 69% of our identified locations are classified as long or extra-long laterals, with an average length of 8,806 feet. We expect to significantly add to our drilling inventory over time as we continue to decrease the horizontal and vertical spacing of horizontal wells, acquire additional acreage and establish the productive capability of additional zones.

We classify our acreage position into three project areas: Whiskey River, Cochise and Big Tex. As of September 30, 2016, we had drilled and completed eight operated wells in the Whiskey River project area targeting the Lower Wolfcamp A, Upper Wolfcamp A and Wolfcamp B. We had drilled and completed six operated wells in the Cochise project area targeting the Lower Wolfcamp A. We had drilled and completed two operated wells in the Big Tex project area targeting the Lower Wolfcamp A. The following table provides a summary of our gross horizontal drilling locations by project area, targeted formation and lateral length as of September 30, 2016.

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Gross Identified Horizontal Drilling Locations(1)(2)(3)



*By Target*
3 ^rd Bone Spring Sand	66		225		—		291
Upper Wolfcamp A	53		171		84		308
Lower Wolfcamp A	57		219		99		375
Wolfcamp B	66		225		—		291

Total Locations	242		840		183		1,265



*By Lateral Length Category*
Extra Long (Two Sections)	175		355		76		606
Long (One and One-Half Sections)	46		151		72		269
Standard (One Section)	21		334		35		390

Total Locations	242		840		183		1,265



*Avg. Completed Lateral Length (in feet)*
Extra Long	9,587		9,534		9,480		9,543
Long	6,900		7,273		7,041		7,147
Standard	4,290		4,538		4,071		4,328
Gross Acres	12,894		35,912		19,315		68,121
Net Acres	12,244		30,796		17,835		60,875
Avg. Working Interest	95.0	%	85.8	%	92.3	%	89.4	%

(1): Our total identified horizontal drilling locations include 26 locations associated with proved undeveloped reserves as of November 30, 2016. We have estimated our drilling locations based on well spacing assumptions and upon the evaluation of our horizontal drilling results and those of other operators in our area, combined with our interpretation of available geologic and engineering data. The drilling locations that we actually drill will depend on the availability of capital, regulatory approvals, commodity prices, costs, actual drilling results and other factors. Any drilling activities we are able to conduct on these identified locations may not be successful and may not result in additional proved reserves. Further, to the extent the drilling locations are associated with acreage that expires, we would lose our right to develop the related locations. See "Risk Factors—Risks Related to Our Business—Our identified drilling locations are scheduled out over many years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling. In addition, we may not be able to raise the substantial amount of capital that would be necessary to drill such locations".
(2): Our horizontal drilling location count implies 880-foot spacing in an offset pattern and minimum vertical separation of 175 feet.
(3): 1,186 of our 1,265 horizontal drilling locations are on acreage that we operate. We have an 89% average working interest in our acreage.

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For the month ended September 30, 2016, our average net daily production was 6,601 Boe/d, of which approximately 83% was oil, 9% was NGLs and 8% was natural gas. The following table provides summary information regarding our proved reserves as of November 30, 2016, based on a reserve report prepared by Ryder Scott Company, L.P. ("Ryder Scott"), a third-party engineering firm.

Estimated Total Proved Reserves

Oil (MMBbls)		NGLs (MMBbls)		Natural Gas (Bcf)		Total (MMBoe)		% Oil		% Liquids(1)		% Developed
	26.4		3.8		15.3		32.7		80.7		92.2		39.7

(1): Includes oil and NGLs.

The following table presents data on Jagged Peak's operated horizontal wells drilled and completed since commencement of our drilling program in late 2013 through November 30, 2016.

Year of First Production					Average Drilling and Completion Costs per 1,000' (in thousands)

2014(1)	3	6,556	649	99	$	2,517
2015	7	9,164	950	104		1,481
2016 through 11/30	9	9,134	1,036	113

(1): Does not include the results of one well that was drilled in 2014, but was not completed in accordance with our completion design due to mechanical issues.
(2): EUR represents the sum of gross reserves remaining as of a given date and cumulative production as of that date. EUR is based on the estimated gross reserves attributable to each location in our reserve report as of November 30, 2016.

The Permian Basin is an attractive operating area due to its multiple stacked hydrocarbon-bearing formations that are prospective for horizontal development. The basin is further characterized by a favorable operating environment, high oil and liquids-rich natural gas content, significant in-place midstream infrastructure, a well-developed network of oilfield service providers, long-lived reserves with consistent geologic attributes and reservoir quality and historically high development success rates. According to the Energy Information Administration of the U.S. Department of Energy, the Permian Basin is the most prolific oil producing area in the United States, accounting for 25% of total U.S. crude oil production during September 2016.

Over the past decade, the Delaware Basin has experienced significant growth in horizontal drilling activity. According to Baker Hughes, as of September 30, 2016, the Permian Basin remains the most active basin in the United States based on 167 active horizontal rigs, with the Delaware Basin representing approximately 50% of that activity. From January 2013 through September 30, 2016, production in the Delaware Basin has grown at a 30% compounded annual production growth rate, outpacing other regions in the United States, as illustrated in the following chart.

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Compounded Annual Production Growth Rate for Major Oil Basins and Plays
(January 2013 to September 2016)

Source: Wood Mackenzie as of September 2016.

Business Strategies

Our primary business objective is to increase stockholder value through the execution of the following strategies:

•: Economically grow production, cash flow and reserves by developing our extensive drilling inventory in the core oil window of the Southern Delaware Basin. Our technical acumen and horizontal drilling expertise have enabled us to drill highly productive horizontal wells in multiple formations. While operating an average of one horizontal drilling rig through June 30, 2016, we grew our average net daily production from 345 Boe/d in the first quarter of 2014 (normalized for five days of production) to 6,366 Boe/d in the third quarter of 2016, representing a compounded annual production growth rate of 220%. We began operating our second and third rigs in July of 2016, which are expected to result in incremental well completions and production growth beginning in the fourth quarter of 2016. In 2017, we expect our drilling program to grow to six horizontal rigs, allowing us to continue our rapid production growth. We intend to continue to economically grow production, cash flow and reserves by utilizing our technical expertise to develop our multi-year drilling inventory while efficiently allocating capital to maximize the value of our resource base.
•: Expand drilling inventory over time. In addition to the 1,265 gross horizontal locations identified in the Lower Wolfcamp A, the Upper Wolfcamp A, the Wolfcamp B and the 3 ^rd Bone Spring Sand formations, we intend to add to our drilling inventory over time as we (i) decrease the horizontal and vertical spacing of our horizontal wells, (ii) acquire additional acreage by leveraging our technical acumen and horizontal drilling expertise to identify strategic acquisition opportunities and (iii) establish the productive capability of additional zones.
•: Maximize returns by optimizing drilling and completion techniques through the experience and expertise of our management and technical teams. Our experienced management and technical teams have a proven track record of optimizing drilling and completion techniques to drive well and field-level returns. We have experienced a significant decrease in our drilling and completion costs since 2014, which has continued into 2016. This trend has been driven by efficiency

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improvements in the field, including reduced drilling days, the modification of well designs and a continued focus on procurement throughout our operations. In addition, we believe our contiguous acreage position and our ability to drill long-lateral wells will enhance our returns by increasing our EUR per well, reducing drilling and completion costs and providing economies of scale by allowing us to better share our infrastructure.

•: Strategically manage infrastructure and midstream services contracts to lower our costs. We vigorously pursue cost reductions throughout our operations. We have made a strategic decision to construct and operate water handling infrastructure within our project areas to enable us to achieve high operating efficiency. We intend to install additional water handling infrastructure to accommodate our projected future production growth. Our oil and natural gas gathering and transportation contracts are structured as acreage dedications, which allows us to avoid incurring fees or penalties associated with minimum volume commitments.
•: Leverage extensive industry experience to evaluate and execute strategic acquisitions. Our management and technical teams have an extensive track record of forming and building businesses in North American resource plays. We also have significant experience in successfully sourcing, evaluating and executing acquisition opportunities, including multiple privately sourced acquisitions that make up the majority of our current acreage position. We regularly initiate and review acquisition opportunities and intend to pursue future acquisitions that meet our strategic and financial objectives. We believe our understanding of the geology, geophysics and reservoir properties of potential acquisition targets will allow us to identify and acquire highly prospective acreage in order to grow our resource base and maximize stockholder value.
•: Maintain a high degree of operational control. We seek to maintain operational control of our properties in order to better execute on our strategy of enhancing returns through operating improvements and cost efficiencies. As the operator of approximately 98% of our acreage, we are able to effectively manage (i) the timing and level of our capital spending, (ii) our development drilling strategies and (iii) our operating costs. We believe this flexibility to manage our development program allows us to optimize our field-level returns and profitability.
•: Preserve financial flexibility to pursue organic and external growth opportunities. We seek to maintain a conservative financial position. We expect to fund our growth with cash flow from operations, availability under our senior secured revolving credit facility ("credit facility") and capital markets offerings when appropriate. We intend to continue allocating capital in a disciplined manner and proactively manage our cost structure to achieve our business objectives. Consistent with our disciplined approach to financial management, we expect to maintain an active hedging program to reduce our exposure to commodity price volatility and protect our cash flow, returns and the funding of our capital program.

Our Competitive Strengths

We believe that the following strengths will allow us to successfully execute our business strategies:

•: Attractive portfolio of contiguous acreage in the core oil window of the Southern Delaware Basin. Our current leasehold acreage is located in the oil-rich southern portion of the Delaware Basin in Winkler, Ward, Reeves and Pecos Counties. This acreage is characterized by a multi-year, oil-weighted inventory of horizontal drilling locations that provide attractive growth and return opportunities. As of November 30, 2016, our estimated proved reserves consisted of 80.7% oil, 11.5% NGLs and 7.8% natural gas. The extensive original oil-in-place, favorable over-pressured conditions and other attractive geologic characteristics of the Southern Delaware Basin give us a high degree of confidence in our current drilling inventory.

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•: Large horizontal drilling inventory and significant number of long-lateral wells across multiple pay formations. We have identified a multi-year inventory of 1,265 gross horizontal drilling locations with an average lateral length of 7,426 feet. 69% of our identified locations are classified as long or extra-long laterals, with an average length of 8,806 feet. We believe our extensive inventory of long and extra-long lateral locations will generate superior economic returns relative to shorter laterals. Assuming six rigs in operation, which is our 2017 level of budgeted drilling activity, we have over 26 years of drilling inventory. We intend to significantly add to our drilling inventory over time as we continue to reduce and refine well spacing, acquire additional acreage and establish the productive capability of additional zones.
•: Proven horizontal drilling expertise and technical acumen in the Delaware Basin. We believe our horizontal drilling and multi-stage fracturing stimulation experience in the Delaware Basin provides us with a competitive strength. Since commencement of our drilling program in late 2013, we have substantially reduced drilling days for our horizontal wells. The average time from spud to rig release for our seven horizontal wells drilled during the nine months ended September 30, 2016 was approximately 42 days, compared to an average of 67 days for the thirteen horizontal wells we drilled in 2015 and 2014. In addition, we continually modify our completion design to optimize the performance of our wells and expect to realize further drilling efficiencies going forward.
•: High degree of operational control. We are the operator of approximately 98% of our acreage. This operating control allows us to better execute our strategies of enhancing returns through operational and cost efficiencies and increasing ultimate hydrocarbon recovery. As the operator of substantially all of our acreage, we retain the flexibility to adjust our capital expenditures based on the prevailing commodity price environment and other factors. We also believe that our significant level of operational control will enable us to implement pad drilling and other drilling and completion optimization strategies, which will result in the continued reduction of spud-to-rig release days, engineered completion designs and efficient use of infrastructure.
•: Highly effective and cost efficient water sourcing, transportation, storage and disposal. Our infrastructure strategy includes owning sufficient tracts of surface acreage to (i) allow us to control fresh water supply for drilling and completions, (ii) provide ease of pipeline installation, (iii) allow construction of storage for both fresh and produced water and (iv) simplify construction of facilities for disposal of flowback and produced water. In addition, we have supplemental agreements that provide for fresh water sourcing and produced water storage and disposal services from adjacent landowners. Our installed and contracted capacities are (i) 4.7 million barrels of water storage capacity, (ii) 10.5 miles of fresh water pipelines and 63.6 miles of produced water transportation pipelines, which allows us to largely eliminate water trucking in all phases of our operation, (iii) 162 thousand barrels per day of water sourcing capacity and (iv) 86 thousand barrels per day of water disposal capacity. Accordingly, we have disposal capacity more than three times our current produced water volumes and sufficient sources of fresh water to support our current drilling program, and we believe it is scalable to support additional rigs. This infrastructure position provides important cost advantages compared to utilizing third-party services.
•: Experienced and incentivized management team. With an average of 32 years of industry experience, our senior management team has a proven track record of building and running successful businesses focused on the acquisition and development of oil and natural gas properties and enhancing returns through operational efficiencies. Prior to forming Jagged Peak, a subset of our management team, including Joseph N. Jaggers, our Chief Executive Officer and President, and Gregory S. Hinds, our Executive Vice President, Development, Planning & Acquisitions, led the growth of Ute Energy LLC's upstream oil and natural gas assets to over 7,800 Boe/d of production and over 156,800 net acres of undeveloped properties and built a

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natural gas gathering and processing network servicing Ute Energy and other third parties in the Uinta Basin. In November 2012, Ute Energy's upstream and midstream subsidiaries were sold for consideration in excess of $1.0 billion. We believe our team's experience building and operating multiple successful upstream oil and natural gas companies provides us with a distinct competitive advantage. Additionally, after giving effect to this offering, our management team will hold approximately % of our common stock, which provides a meaningful incentive to increase the value of our business for the benefit of all stockholders.

•: Conservatively capitalized balance sheet and strong liquidity profile. After giving effect to this offering and the use of proceeds therefrom, we expect to have no outstanding debt, $160.0 million of borrowing capacity under our credit facility and approximately $ million of cash on the balance sheet. We believe our borrowing capacity, cash on hand and cash flow from operations will provide us with sufficient liquidity to execute our 2017 capital program.

Capital Program

Our 2017 capital budget for drilling, completion and recompletion activities and facilities costs is approximately $ million, excluding potential acquisitions. We expect to allocate approximately $ million of our 2017 capital budget for the drilling and completion of operated wells. In the nine months ended September 30, 2016, we incurred capital costs of approximately $86.6 million, excluding acquisitions. In addition, we incurred capital costs of $39.3 million for acquiring undeveloped properties.

Corporate Reorganization

We have incorporated under the laws of the State of Delaware to become a holding company for Jagged Peak Energy LLC and its assets and operations. Jagged Peak Energy LLC, which is our accounting predecessor, was formed as a Delaware limited liability company in 2013 with equity commitments from Quantum and certain of our Management Members. The Management Members also hold management incentive units in Jagged Peak Energy LLC that entitle the holders thereof to a portion of any proceeds distributed by Jagged Peak Energy LLC following the achievement of certain return thresholds by the capital interest owners of Jagged Peak Energy LLC.

Pursuant to the terms of certain reorganization transactions that will be completed immediately prior to the closing of this offering, (i) the equity interests (both capital interests and management incentive units) in Jagged Peak Energy LLC will be recapitalized into a single class of units ("Units"), with the Units to be allocated among the Existing Owners in accordance with the terms of the limited liability company agreement of Jagged Peak Energy LLC and calculated using an implied valuation for Jagged Peak Energy LLC based on the initial public offering price of our common stock, (ii) the Management Members will contribute to Management Holdco certain of the Units issued to the Management Members in the recapitalization described above in exchange for membership interests in Management Holdco and (iii) Jagged Peak Energy LLC will merge into a subsidiary of Jagged Peak Energy Inc., and the Existing Owners and Management Holdco will receive as consideration in the merger shares of Jagged Peak Energy Inc. common stock, with such shares of common stock to be allocated among the Existing Owners and Management Holdco pro rata based on their relative ownership of Units. As a result of these transactions, Jagged Peak Energy LLC will become a wholly

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owned subsidiary of Jagged Peak Energy Inc. The membership interests in Management Holdco that will be issued to the Management Members in exchange for their Units will generally vest in equal installments on each of the first three anniversaries of this offering, subject to continued employment and other conditions, and will be settled in shares of our common stock upon vesting. See "Corporate Reorganization".

The following diagram indicates the current simplified ownership structure of Jagged Peak Energy LLC, assuming an initial offering price of $ per share of common stock, the midpoint of the price range set forth on the cover page of this prospectus.

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The following diagram indicates our simplified ownership structure after giving effect to our corporate reorganization and this offering (assuming that the underwriters' option to purchase additional shares is not exercised).

(1): Assumes an initial offering price of $ per share of common stock, the midpoint of the price range set forth on the cover page of this prospectus.
(2): Includes shares of common stock held directly by the Management Members and shares of common stock held indirectly by the Management Members through Management Holdco.

Our Principal Stockholder

We have a valuable relationship with Quantum, which has made significant equity investments in us since our formation. Upon completion of this offering, Quantum will own approximately % of our common stock. Please see "Principal and Selling Stockholders".

Quantum Energy Partners is a Houston-based private investment firm founded in 1998. Focused exclusively on the energy sector, Quantum Energy Partners has built one of the leading energy private equity franchises and has managed more than $11 billion of equity commitments since its inception. Quantum Energy Partners has invested in and built over 70 companies in the upstream, midstream, oil field service and power sectors, both domestically and globally.

Risk Factors

Investing in our common stock involves risks that include the speculative nature of oil and natural gas development and production, competition, volatile oil, natural gas and NGL prices and other material factors. You should read carefully the section of this prospectus entitled "Risk Factors" for an explanation of these risks before investing in our common stock. In particular, the following considerations may offset our competitive strengths or have a negative effect on our strategy or

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operating activities, which could cause a decrease in the price of our common stock and a loss of all or part of your investment:

•: Oil, natural gas and NGL prices are volatile. A further reduction or sustained decline in oil, natural gas and NGL prices could adversely affect our business, financial condition and results of operations and our ability to meet our capital expenditure obligations and financial commitments.
•: Our acquisition and development projects require substantial capital expenditures. We may be unable to obtain required capital or financing on satisfactory terms, which could lead to a decline in our ability to access or grow production and reserves.
•: Part of our strategy involves using some of the latest available horizontal drilling and completion techniques, which involve risks and uncertainties in their application.
•: Drilling for and producing oil and natural gas are high risk activities with many uncertainties that could adversely affect our business, financial condition or results of operations.
•: Our identified drilling locations are scheduled out over many years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling. In addition, we may not be able to raise the substantial amount of capital that would be necessary to drill such locations.
•: Reserve estimates depend on many assumptions that may turn out to be inaccurate. Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.
•: Unless we replace our reserves with new reserves and develop those reserves, our reserves and production will decline, which would adversely affect our future cash flows and results of operations.
•: We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under applicable debt instruments, which may not be successful.
•: Certain of our undeveloped leasehold acreage is subject to leases that will expire over the next several years unless production is established on units containing the acreage, the primary term is extended through continuous drilling provisions or the leases are renewed.
•: Our producing properties are located in the Delaware Basin, a sub-basin of the Permian Basin, in West Texas, making us vulnerable to risks associated with operating in a single geographic area.
•: We are dependent on third party pipeline and trucking systems to transport our production and gathering and processing systems to prepare our production. The lack of available capacity in these systems could interfere with our ability to market the oil and natural gas we produce, and could materially and adversely affect our cash flow and results of operations.
•: The development of our estimated proved undeveloped reserves ("PUDs") may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our estimated PUDs may not be ultimately developed or produced.
•: If commodity prices decrease to a level such that our future undiscounted cash flows from our properties are less than their carrying value, we may be required to take write-downs of the carrying values of our properties.
•: We depend upon several significant purchasers for the sale of most of our oil, natural gas and NGL production.

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•: Our operations may be exposed to significant delays, costs and liabilities as a result of environmental and occupational health and safety requirements applicable to our business activities.
•: We may incur substantial losses and be subject to substantial liability claims as a result of our operations. Additionally, we may not be insured for, or our insurance may be inadequate to protect us against, these risks.
•: Climate change laws and regulations restricting emissions of GHGs could result in increased operating costs and reduced demand for the oil and natural gas that we produce, while potential physical effects of climate change could disrupt our production and cause us to incur significant costs in preparing for or responding to those effects.
•: Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing as well as governmental reviews of such activities could result in increased costs and additional operating restrictions or delays in the completion of oil and natural gas wells and adversely affect our production.
•: The requirements of being a public company, including compliance with the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the requirements of the Sarbanes-Oxley Act, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.
•: Quantum will have the ability to direct the voting of a majority of our common stock, and its interests may conflict with those of our other stockholders.
•: We expect to be a "controlled company" within the meaning of the rules of the New York Stock Exchange (the "NYSE") and, as a result, will qualify for and intend to rely on exemptions from certain corporate governance requirements.

Emerging Growth Company

We are an "emerging growth company" as such term is used in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). For as long as we are an emerging growth company, unlike public companies that are not emerging growth companies under the JOBS Act, we will not be required to:

•: provide an auditor's attestation report on management's assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002;
•: provide more than two years of audited financial statements and related management's discussion and analysis of financial condition and results of operations;
•: comply with any new requirements adopted by the Public Company Accounting Oversight Board (the "PCAOB") requiring mandatory audit firm rotation or a supplement to the auditor's report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer;
•: provide certain disclosure regarding executive compensation required of larger public companies or hold stockholder advisory votes on executive compensation required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"); or
•: obtain stockholder approval of any golden parachute payments not previously approved.

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We will cease to be an emerging growth company upon the earliest of:

•: the last day of the fiscal year in which we have $1.0 billion or more in annual revenues;
•: the date on which we become a "large accelerated filer" (the fiscal year-end on which the total market value of our common equity securities held by non-affiliates is $700 million or more as of June 30);
•: the date on which we issue more than $1.0 billion of non-convertible debt over a three-year period; or
•: the last day of the fiscal year following the fifth anniversary of our initial public offering.

In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Securities Act"), for complying with new or revised accounting standards, but we hereby irrevocably opt out of the extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates in which adoption of such standards is required for other public companies.

Principal Executive Offices and Internet Address

Our principal executive offices are located at 1125 17th Street, Suite 2400, Denver, Colorado 80202, and our telephone number at that address is (720) 215-3700.

Our website address is www.jaggedpeakenergy.com . We expect to make our periodic reports and other information filed with or furnished to the Securities and Exchange Commission (the "SEC"), available free of charge through our website as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. Information on our website or any other website is not incorporated by reference into, and does not constitute a part of, this prospectus.

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The Offering


Issuer		Jagged Peak Energy Inc.
Common stock offered by us		shares.
Common stock offered by the selling stockholders		shares (or shares, if the underwriters exercise in full their option to purchase additional shares).
Common stock outstanding after this offering		shares.
Option to purchase additional shares		The selling stockholders have granted the underwriters a 30-day option to purchase up to an aggregate of additional shares of our common stock to the extent the underwriters sell more than shares of common stock in this offering.
Use of proceeds		We expect to receive approximately $ million of net proceeds (assuming the midpoint of the price range set forth on the cover of this prospectus) from the sale of the common stock offered by us, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any proceeds from the sale of shares by the selling stockholders.
Conflicts of Interest		Because an affiliate of each of and is a lender under our credit facility and will receive 5% or more of the net proceeds of this offering due to the repayment of borrowings thereunder, each of and is deemed to have a conflict of interest within the meaning of Rule 5121 of the Financial Industry Regulatory Authority, Inc. ("FINRA"). Accordingly, this offering will be conducted in accordance with Rule 5121, which requires, among other things, that a "qualified independent underwriter" participate in the preparation of, and exercise the usual standards of "due diligence" with respect to, the registration statement and this prospectus. Citigroup Global Markets Inc. has agreed to act as a qualified independent underwriter for this offering and to undertake the legal responsibilities and liabilities of an underwriter under the Securities Act, including specifically those inherent in Section 11 thereof. Citigroup Global Markets Inc. will not receive any additional fees for serving as a qualified independent underwriter in connection with this offering. We have agreed to indemnify Citigroup Global Markets Inc. against liabilities incurred in connection with acting as a qualified independent underwriter, including liabilities under the Securities Act. See "Underwriting (Conflicts of Interest)—Conflicts of Interest".

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		We intend to use a portion of the net proceeds we receive from this offering to fully repay the outstanding indebtedness under our credit facility and the remaining net proceeds to fund our 2017 capital program. As of September 30, 2016, we had $90.0 million of outstanding borrowings under our credit facility. Please read "Use of Proceeds".
Dividend policy		We do not anticipate paying any cash dividends on our common stock. In addition, our credit agreement places certain restrictions on our ability to pay cash dividends. Please read "Dividend Policy".
Directed share program		The underwriters have reserved for sale at the initial public offering price up to % of the common stock being offered by this prospectus for sale to our employees, executive officers, directors, business associates and related persons who have expressed an interest in purchasing common stock in this offering. We do not know if these persons will choose to purchase all or any portion of these reserved shares, but any purchases they do make will reduce the number of shares available to the general public. Please read "Underwriting (Conflicts of Interest)".
Listing and trading symbol		We have been authorized to apply to list our common stock on the NYSE under the symbol "JAG".
Risk factors		You should carefully read and consider the information set forth under the heading "Risk Factors" and all other information set forth in this prospectus before deciding to invest in our common stock.

The information above does not include shares of common stock reserved for issuance pursuant to our 2017 Long-Term Incentive Plan.

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Summary Historical Financial Data

The following table shows the summary historical consolidated financial data for the periods and as of the dates indicated, of Jagged Peak Energy LLC, our accounting predecessor. The summary historical interim consolidated financial data of our predecessor as of September 30, 2016, and for the nine months ended September 30, 2016 and 2015, were derived from the unaudited interim consolidated financial statements of our predecessor included elsewhere in this prospectus. The summary historical consolidated financial data of our predecessor as of and for the years ended December 31, 2015 and 2014, were derived from the audited historical consolidated financial statements of our predecessor included elsewhere in this prospectus.

Our historical results are not necessarily indicative of future results. You should read the following table in conjunction with "Use of Proceeds", "Capitalization", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical consolidated financial statements of our predecessor and accompanying notes included elsewhere in this prospectus.

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	Nine Months Ended September 30,						Year Ended December 31,

	2016			2015			2015			2014
	(unaudited)
	(in thousands, except per share data)
Statement of Operations Data:
Revenues:
Oil sales	$	47,215		$	21,445		$	31,534		$	14,605
Natural gas sales		1,450			690			948			646
NGL sales		2,023			848			1,329			1,029
Other operating revenues		693			10			—			—

Total revenues		51,381			22,993			33,811			16,280
Operating expenses:
Lease operating expenses		5,221			2,357			3,165			2,041
Gathering and transportation expenses		662			98			171			121
Production and ad valorem taxes		3,173			1,588			2,244			920
Depletion, depreciation, amortization and accretion		29,430			14,488			22,685			8,444
Impairment of oil and natural gas properties and dry hole costs		1,509			7			6,489			1,414
Other operating expenses		1,671			257			261			64
General and administrative		7,878			5,906			7,446			7,330

Total operating expenses		49,544			24,701			42,461			20,334

Income (loss) from operations		1,837			(1,708	)		(8,650	)		(4,054	)
Other income (expense):
(Loss) gain on commodity derivatives		(8,208	)		1,086			1,323			5,375
Interest expense and other		(1,471	)		(77	)		(197	)		—
Other income		—			—			40			—

Total other (expense) income		(9,679	)		1,009			1,166			5,375

Net (loss) income	$	(7,842	)	$	(699	)	$	(7,484	)	$	1,321



Pro Forma Per-Share Data (unaudited)(1):
Net loss per common share:
Basic and diluted	$						$
Weighted average common shares outstanding:
Basic and diluted
Balance Sheet Data (at period end):
Cash and cash equivalents	$	5,420		$	12,662		$	14,165		$	33,628
Total assets		436,636			309,095			327,732			257,084
Total liabilities		128,606			30,981			43,402			16,270
Total members' equity		308,030			278,114			284,330			240,814
Cash Flow Data:
Net cash provided by operating activities	$	16,632		$	11,905		$	20,372		$	7,615
Net cash used in investing activities		(125,984	)		(80,318	)		(110,232	)		(187,067	)
Net cash provided by financing activities		100,607			47,448			70,397			199,800
Other Financial Data:
Adjusted EBITDAX(2)	$	32,899		$	16,921		$	26,510		$	6,631

(1): The net loss per common share and weighted average common shares outstanding reflect the estimated number of shares of common stock we expect to have outstanding upon the completion of our corporate reorganization described under "Corporate Reorganization". The pro forma per-share data also reflects additional pro forma income tax benefit of $ million and $ million for the nine months ended September 30, 2016 and the year ended December 31, 2015, respectively, associated with the income tax effects of the corporate reorganization described under "Corporate Reorganization" and this offering. Jagged Peak Energy Inc. is a Subchapter C corporation ("C-corp") under the Internal Revenue Code of 1986, as amended (the "Code"), and as a result, will be subject to U.S. federal, state and local income taxes. Although our predecessor was subject to franchise tax in the State of Texas, it generally passed through its taxable income to its owners for other income tax purposes and thus was not subject to U.S. federal income taxes or other state or local income taxes.
(2): Adjusted EBITDAX is a non-GAAP financial measure. For a definition of Adjusted EBITDAX and a reconciliation of Adjusted EBITDAX to net income, see "—Non-GAAP Financial Measure" below.

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Non-GAAP Financial Measure

Adjusted EBITDAX

Adjusted EBITDAX is a supplemental non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies.

Management believes Adjusted EBITDAX is useful because it allows them to more effectively evaluate our operating performance and compare the results of our operations from period to period and against our peers without regard to our financing methods or capital structure. We exclude the items listed above from net income in arriving at Adjusted EBITDAX because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDAX should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of our operating performance. Certain items excluded from Adjusted EBITDAX are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historic costs of depletable and depreciable assets and exploration expenses, none of which are components of Adjusted EBITDAX. Our presentation of Adjusted EBITDAX should not be construed as an inference that our results will be unaffected by such items. Our computations of Adjusted EBITDAX may not be comparable to other similarly titled measures of other companies.

The following table presents a reconciliation of Adjusted EBITDAX to net income, our most directly comparable financial measure calculated and presented in accordance with GAAP.

	Nine Months Ended September 30,						Year Ended December 31,

	2016			2015			2015			2014
	(in thousands)
Adjusted EBITDAX reconciliation to net income (loss):
Net income (loss)	$	(7,842	)	$	(699	)	$	(7,484	)	$	1,321
Interest expense, net of capitalized interest		1,471			77			197			—
Depletion, depreciation, amortization and accretion		29,430			14,488			22,685			8,444
Impairment of oil and natural gas properties and dry hole costs		1,509			7			6,489			1,414
Exploration expenses(1)		1,282			7			11			64
Income tax expense (benefit)		—			—			—			—
(Gain) loss on commodity derivatives, net, less net cash from derivative settlements(2)		7,049			3,041			4,612			(4,612	)

Adjusted EBITDAX	$	32,899		$	16,921		$	26,510		$	6,631

(1): Primarily includes delay rental costs to maintain leases.
(2): Has the effect of adjusting net income (loss) for changes in the fair value of derivative instruments, which are recognized at the end of each accounting period because we do not designate commodity derivative instruments as cash flow hedges.

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Summary Historical Reserve and Operating Data

The following tables present, for the periods and as of the dates indicated, summary data with respect to our estimated net proved reserves and our production and operating data.

The reserve estimates attributable to our properties as of November 30, 2016, presented in the table below are based on a reserve report prepared by Ryder Scott. All of these reserve estimates were prepared in accordance with the SEC's rules regarding reserve reporting that are currently in effect. The following tables also contain summary unaudited information regarding production and sales of oil and natural gas with respect to such properties.

Please read "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business—Oil and Natural Gas Data—Proved Reserves" in evaluating the material presented below.



Proved Reserves:
Oil (MBbls)	26,371
Natural gas (MMcf)	15,290
NGLs (MBbls)	3,761

Total proved reserves (MBoe)(2)	32,680
Proved Developed Reserves:
Oil (MBbls)	10,644
Natural gas (MMcf)	5,953
NGLs (MBbls)	1,338

Total proved developed reserves (MBoe)(2)	12,974
Proved developed reserves as a percentage of total proved reserves	39.7	%
Proved Undeveloped Reserves:
Oil (MBbls)	15,727
Natural gas (MMcf)	9,337
NGLs (MBbls)	2,423

Total proved undeveloped reserves (MBoe)(2)	19,706

(1): Our estimated net proved reserves were determined using average first-day-of-the-month prices for the prior 12 months in accordance with SEC guidance. For oil and NGL volumes, the average West Texas Intermediate posted price of $41.98 per barrel as of November 30, 2016, was adjusted for gravity, quality, local conditions, gathering, transportation fees and distance from market. For natural gas volumes, the average Henry Hub spot price of $2.39 per MMBtu as of November 30, 2016, was similarly adjusted for gravity, quality, local conditions, gathering, transportation fees and distance from market. All prices are held constant throughout the lives of the properties. The average adjusted product prices weighted by production over the remaining lives of the properties are $38.62 per barrel of oil, $14.70 per barrel of NGL and $2.18 per Mcf of natural gas as of November 30, 2016.
(2): Totals may not sum or recalculate due to rounding.

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	Nine Months Ended September 30, 2016		Year Ended December 31, 2015

Production and Operating Data:
Production:
Oil (MBbls)		1,210		718
Natural gas (MMcf)		669		404
NGLs (MBbls)		141		89

Total (MBoe)(1)		1,463		874



Average net daily production (Boe/d)		5,339		2,395
Average sales price:
Oil (per Bbl) (before impact of cash-settled derivatives)	$	39.02	$	43.92
Oil (per Bbl) (after impact of cash-settled derivatives)		38.06		52.19
Natural gas (per Mcf)		2.17		2.35
NGLs (per Bbl)		14.35		14.93

Total (per Boe) (before impact of cash-settled derivatives)		34.65		38.69
Total (per Boe) (after impact of cash-settled derivatives)		33.85		45.48
Operating expenses per Boe:
Lease operating expenses	$	3.57	$	3.62
Gathering and transportation expenses		0.45		0.20
Production and ad valorem taxes		2.17		2.57
Depletion, depreciation, amortization and accretion		20.12		25.94
Impairment of oil and natural gas properties and dry hole costs		1.03		7.42
Other operating expenses		1.14		0.30
General and administrative(2)		5.38		8.52

Total operating expenses per Boe	$	33.86	$	48.57

(1): Totals may not sum or recalculate due to rounding.
(2): General and administrative does not include additional expenses we would have incurred as a result of being a public company.

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RISK FACTORS

Investing in our common stock involves risks. You should carefully consider all of the information in this prospectus, including the matters addressed under "Cautionary Statement Regarding Forward-Looking Statements", and the following risks before making an investment decision. Our business, financial condition and results of operations could be materially and adversely affected by, and the trading price of our common stock could decline, due to any of these risks, and you may lose all or part of your investment. The risks described below are not the only ones facing us. Additional risks not presently known to us or which we consider immaterial may also adversely affect us.

Risks Related to Our Business

Oil, natural gas and NGL prices are volatile. A further reduction or sustained decline in oil, natural gas and NGL prices could adversely affect our business, financial condition and results of operations and our ability to meet our capital expenditure obligations and financial commitments.

Oil, natural gas and NGLs are commodities, and their prices may fluctuate widely in response to market uncertainty and relatively minor changes in the supply of and demand for oil, natural gas and NGLs. Historically, oil, natural gas and NGL prices have been volatile. For example, during the period from January 1, 2014 through December 16, 2016, the WTI spot price for oil has declined from a high of $107.95 per Bbl on June 20, 2014, to $26.19 per Bbl on February 11, 2016, and the Henry Hub spot price for natural gas has declined from a high of $8.15 per MMBtu on February 10, 2014, to a low of $1.49 per MMBtu on March 4, 2016. Likewise, NGLs, which are made up of ethane, propane, isobutene, normal butane and natural gasoline, all of which have different uses and different pricing characteristics, have suffered significant recent declines in realized prices. The prices we receive for our oil, natural gas and NGL production heavily influence our revenue, profitability, access to capital, future rate of growth and carrying value of our properties. The prices we receive for our production, and the levels of our production, depend on numerous factors beyond our control, which include the following:

•: worldwide and regional economic conditions impacting the global supply and demand for oil, natural gas and NGLs;
•: the price and quantity of foreign imports of oil, natural gas and NGLs;
•: political and economic conditions in or affecting other producing regions or countries, including the Middle East, Africa, South America and Russia;
•: actions of the Organization of the Petroleum Exporting Countries, its members and state-controlled oil companies relating to oil price and production controls;
•: the level of global exploration, development and production;
•: the level of global inventories;
•: prevailing prices on local price indexes in the area in which we operate;
•: the proximity, capacity, cost and availability of gathering and transportation facilities;
•: localized and global supply and demand fundamentals and transportation availability;
•: the cost of exploring for, developing, producing and transporting reserves;
•: weather conditions and other natural disasters;
•: technological advances affecting energy consumption;
•: the price and availability of alternative fuels;

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•: expectations about future commodity prices; and
•: U.S. federal, state and local and non-U.S. governmental regulation and taxes.

In the second half of 2014, oil prices began a rapid and significant decline as the global oil supply began to outpace demand. During 2015 and thus far in 2016, the global oil supply has continued to outpace demand, resulting in a sustained decline in realized prices for oil production. In general, this imbalance between supply and demand reflects the significant supply growth achieved in the United States as a result of shale drilling and oil production increases by certain other countries, including Russia and Saudi Arabia, as part of an effort to retain market share, combined with only modest demand growth in the United States and less-than-expected demand in other parts of the world, particularly in Europe and China. Although there has been a dramatic decrease in drilling activity in the industry, oil storage levels in the United States remain at historically high levels. Until supply and demand balance and the overhang in storage levels begins to decline, prices will likely remain under pressure. The U.S. dollar has also strengthened relative to other leading currencies, which has caused oil prices to weaken, as they are U.S. dollar-denominated. In addition, the lifting of economic sanctions on Iran has resulted in increasing supplies of oil from Iran, adding further downward pressure to oil prices. NGL prices generally correlate to the price of oil. Also adversely affecting the price for NGLs is the supply of NGLs in the United States, which has continued to grow due to an increase in industry participants targeting projects that produce NGLs in recent years. Prices for domestic natural gas began to decline during the third quarter of 2014 and remained weak throughout 2015 and thus far in 2016. The declines in natural gas prices are primarily due to an imbalance between supply and demand across North America. The continued duration and magnitude of these commodity price declines cannot be accurately predicted. Compared to 2014, our average realized oil price before the effects of derivative settlements for 2015 fell 43% to $43.92 per barrel, and our average realized oil price for the nine months ended September 30, 2016, has further decreased to $39.02 per barrel. Similarly, our average realized natural gas price for 2015 dropped 38% to $2.35 per Mcf and our average realized price for NGLs declined 49% to $14.93 per barrel. For the nine months ended September 30, 2016, our average realized price for natural gas was $2.17 per Mcf and our average realized price for NGLs was $14.35 per barrel.

Lower commodity prices may reduce our cash flows and borrowing ability. If we are unable to obtain needed capital or financing on satisfactory terms, our ability to develop future reserves could be adversely affected. Furthermore, using lower prices in estimating proved reserves may result in a reduction in proved reserve volumes due to economic limits. In addition, sustained periods with oil and natural gas prices at levels lower than current West Texas Intermediate or Henry Hub strip prices and the resultant effect such prices may have on our drilling economics and our ability to raise capital may require us to re-evaluate and postpone or eliminate our development drilling, which could result in the reduction of some of our proved undeveloped reserves and related standardized measure. If we are required to curtail our drilling program, we may be unable to continue to hold leases that are scheduled to expire, which may further reduce our reserves. As a result, a substantial or extended decline in commodity prices may materially and adversely affect our future business, financial condition, results of operations, liquidity and ability to finance planned capital expenditures.

Our acquisition and development projects require substantial capital expenditures. We may be unable to obtain required capital or financing on satisfactory terms, which could lead to a decline in our ability to access or grow production and reserves.

The oil and natural gas industry is capital intensive. We make and expect to continue making substantial capital expenditures related to our acquisition and development projects. Our 2017 capital budget for drilling, completion and recompletion activities and facilities costs is approximately $ million, excluding potential acquisitions. In addition, our production costs may increase as we continue to use enhanced recovery techniques and other new drilling technologies, which are capital

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intensive and may not produce oil and natural gas in paying quantities or at all. Further, we regularly evaluate potential acquisition opportunities as an important aspect of our growth strategy, and any such acquisitions we pursue could require substantial capital expenditures. We expect to fund our capital expenditures with cash generated by operations, borrowings under our credit facility and a portion of the proceeds from this offering; however, our financing needs may require us to alter or increase our capitalization substantially through the issuance of debt or equity securities or the sale of assets. The issuance of additional indebtedness would require that a portion of our cash flow from operations be used for the payment of interest and principal on our indebtedness, thereby reducing our ability to use cash flow from operations to fund working capital, capital expenditures and acquisitions. The issuance of additional equity securities would be dilutive to our other stockholders. The actual amount and timing of our future capital expenditures may differ materially from our estimates as a result of, among other things, oil, natural gas and NGL prices; actual drilling results; the availability of drilling rigs and other services and equipment; and regulatory, technological and competitive developments. A reduction in commodity prices from current levels may result in a decrease in our actual capital expenditures, which would negatively impact our ability to grow production.

Our cash flow from operations and access to capital are subject to a number of variables, including:

•: the prices at which our production is sold;
•: our proved reserves;
•: the level of hydrocarbons we are able to produce from existing wells;
•: our ability to acquire, locate and produce new reserves;
•: the levels of our operating expenses; and
•: our ability to borrow under our credit facility and our ability to access the capital markets.

If our revenues or the borrowing base under our credit facility decrease as a result of lower oil, natural gas and NGL prices, operating difficulties, declines in reserves or for any other reason, we may have limited ability to obtain the capital necessary to sustain our operations at current levels. If additional capital is needed, we may not be able to obtain debt or equity financing on terms acceptable to us, if at all. For a period of 180 days following the date of this prospectus, we will not be able to sell any shares of our common stock, whether pursuant to a private or public offering, without the prior written consent of Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC. See "Underwriting (Conflicts of Interest)" for more information. If cash flow generated by our operations or available borrowings under our credit facility are not sufficient to meet our capital requirements, the failure to obtain additional financing could result in a curtailment of our operations relating to development of our properties, which in turn could lead to a decline in our reserves and production, and could materially and adversely affect our business, financial condition and results of operations.

Part of our strategy involves using some of the latest available horizontal drilling and completion techniques, which involve risks and uncertainties in their application.

Our operations involve utilizing some of the latest drilling and completion techniques as developed by us and our service providers. Risks that we face while drilling horizontal wells include the following:

•: landing our wellbore in the desired drilling zone;
•: staying in the desired drilling zone while drilling horizontally through the formation;

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•: running our casing the entire length of the wellbore; and
•: being able to run tools and other equipment consistently through the horizontal wellbore.

Risks that we face while completing our wells include the following:

•: the ability to fracture stimulate the planned number of stages;
•: the ability to run tools the entire length of the wellbore during completion operations; and
•: the ability to successfully clean out the wellbore after completion of the final fracture stimulation stage.

In addition, certain of the new techniques we are adopting may cause irregularities or interruptions in production due to offset wells being shut in and the time required to drill and complete multiple wells before any such wells begin producing. If our drilling results are less than anticipated, the return on our investment for a particular project may not be as attractive as we anticipated, we could incur material write-downs of unevaluated properties and the value of our undeveloped acreage could decline in the future.

Drilling for and producing oil and natural gas are high risk activities with many uncertainties that could adversely affect our business, financial condition or results of operations.

Our future financial condition and results of operations will depend on the success of our development, acquisition and production activities, which are subject to numerous risks beyond our control, including the risk that drilling will not result in commercially viable oil and natural gas production.

Our decisions to develop or purchase prospects or properties will depend in part on the evaluation of data obtained through geophysical and geological analyses, production data and engineering studies, the results of which are often inconclusive or subject to varying interpretations. For a discussion of the uncertainty involved in these processes, see "—Reserve estimates depend on many assumptions that may turn out to be inaccurate. Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves". In addition, our cost of drilling, completing and operating wells is often uncertain.

Further, many factors may curtail, delay or cancel our scheduled drilling projects, including the following:

•: delays imposed by or resulting from compliance with regulatory requirements including limitations on wastewater disposal, additional regulation related to seismic activity, discharge of greenhouse gases ("GHGs") and limitations on hydraulic fracturing;
•: pressure or irregularities in geological formations;
•: shortages of or delays in obtaining equipment and qualified personnel or in obtaining materials required for our drilling activities, including water for hydraulic fracturing activities;
•: equipment failures, accidents or other unexpected operational events;
•: lack of available and economic gathering and takeaway capacity, including gathering facilities and interconnecting transmission pipelines;
•: adverse weather conditions;
•: issues related to compliance with environmental regulations;

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•: environmental hazards, such as oil and natural gas leaks, oil spills, pipeline and tank ruptures and unauthorized discharges of brine, well stimulation and completion fluids, toxic gases or other pollutants into the surface and subsurface environment;
•: declines in oil and natural gas prices;
•: limited availability of financing at acceptable terms;
•: title problems; and
•: limitations in the market for oil and natural gas.

Furthermore, the results of any drilling in new or emerging formations are more uncertain initially than drilling results in areas that are more developed and have a longer history of established production.

Our identified drilling locations are scheduled out over many years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling. In addition, we may not be able to raise the substantial amount of capital that would be necessary to drill such locations.

Our management team has specifically identified and scheduled certain drilling locations as an estimation of our future multi-year drilling activities on our existing acreage. These drilling locations represent a significant part of our growth strategy. Our ability to drill and develop these locations depends on a number of uncertainties, including oil and natural gas prices, the availability and cost of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, gathering system and pipeline transportation constraints, access to and availability of water sourcing and distribution systems, regulatory approvals and other factors. Because of these uncertain factors, we do not know if the numerous drilling locations we have identified will ever be drilled or if we will be able to produce natural gas or oil from these or any other drilling locations. In addition, unless production is established within the spacing units covering the undeveloped acres on which some of the drilling locations are obtained, the leases for such acreage will expire. As such, our actual drilling activities may materially differ from those presently identified.

As of September 30, 2016, we had identified 1,265 gross horizontal drilling locations on our acreage based on approximately 880-foot spacing in an offset pattern with five to six wells per 640-acre section, consisting of laterals with an average length of 7,426 feet. As a result of the limitations described above, we may be unable to drill many of our identified locations. In addition, we will require significant additional capital over a prolonged period in order to pursue the development of these locations, and we may not be able to raise or generate the capital required to do so. See "—Our acquisition and development projects require substantial capital expenditures. We may be unable to obtain required capital or financing on satisfactory terms, which could lead to a decline in our ability to access or grow production and reserves". Any drilling activities we are able to conduct on these locations may not be successful or result in our ability to add additional proved reserves to our overall proved reserves or may result in a downward revision of our estimated proved reserves, which could have a material adverse effect on our future business and results of operations. Additionally, if we curtail our drilling program, we may lose a portion of our acreage through lease expirations.

Reserve estimates depend on many assumptions that may turn out to be inaccurate. Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.

The process of estimating reserves is complex. It requires interpretations of available technical data and many assumptions, including assumptions relating to current and future economic conditions and commodity prices. Any significant inaccuracies in these interpretations or assumptions could materially affect the estimated quantities and present value of our reserves. In order to prepare reserve estimates,

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we must project production rates and timing of development expenditures. We must also analyze available geological, geophysical, production and engineering data. The extent, quality and reliability of this data can vary. The process also requires economic assumptions about matters such as oil and natural gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds.

Actual future production, oil and natural gas prices, revenues, taxes, development expenditures, operating expenses and quantities of recoverable reserves may vary from our estimates. For instance, initial production rates reported by us or other operators may not be indicative of future or long-term production rates, our recovery efficiencies may be worse than expected and production declines may be greater than we estimate and may be more rapid and irregular when compared to initial production rates. In addition, we may adjust reserve estimates to reflect additional production history, results of development activities, current commodity prices and other existing factors. Any significant variance could materially affect the estimated quantities and present value of our reserves.

You should not assume that the present value of future net revenues from our reserves is the current market value of our estimated reserves. We generally base the estimated discounted future net cash flows from reserves on prices and costs on the date of the estimate. Actual future prices and costs may differ materially from those used in the present value estimate. If spot prices are below such calculated amounts, using more recent prices in estimating proved reserves may result in a reduction in proved reserve volumes due to economic limits.

Unless we replace our reserves with new reserves and develop those reserves, our reserves and production will decline, which would adversely affect our future cash flows and results of operations.

Producing oil and natural gas reservoirs generally are characterized by declining production rates that vary depending upon reservoir characteristics and other factors. Unless we conduct successful ongoing exploration and development activities or continually acquire properties containing proved reserves, our proved reserves will decline as those reserves are produced. Our future reserves and production, and therefore our future cash flow and results of operations, are highly dependent on our success in efficiently developing our current reserves and economically finding or acquiring additional recoverable reserves. We may not be able to develop, find or acquire sufficient additional reserves to replace our current and future production. If we are unable to replace our current and future production, the value of our reserves will decrease, and our business, financial condition and results of operations would be materially and adversely affected.

We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under applicable debt instruments, which may not be successful.

Our ability to make scheduled payments on or to refinance our indebtedness obligations, including our credit facility, depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and certain financial, business and other factors beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

If our cash flows and capital resources are insufficient to fund debt service obligations, we may be forced to reduce or delay investments and capital expenditures, sell assets, seek additional capital or restructure or refinance indebtedness. Our ability to restructure or refinance indebtedness will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of indebtedness could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict business operations. The terms of existing or future debt instruments may restrict us from adopting some of these alternatives. In addition, any failure to make payments of interest and principal on outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness. In the

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absence of sufficient cash flows and capital resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet debt service and other obligations. We may not be able to consummate those dispositions, and the proceeds of any such disposition may not be adequate to meet any debt service obligations then due. These alternative measures may not be successful and may not permit us to meet scheduled debt service obligations.

Restrictions in our existing and future debt agreements could limit our growth and our ability to engage in certain activities.

Our credit agreement contains a number of significant covenants, including restrictive covenants that may limit our ability to, among other things:

•: incur additional indebtedness;
•: incur liens;
•: make investments;
•: make loans to others;
•: merge or consolidate with another entity;
•: sell assets;
•: make certain payments;
•: enter into transactions with affiliates;
•: hedge interest rates; and
•: engage in certain other transactions without the prior consent of the lenders.

In addition, our credit agreement requires us to maintain certain financial ratios or to reduce our indebtedness if we are unable to comply with such ratios. Further, under our credit agreement, we are required to hedge a minimum of 75% of our projected oil volumes from proved developed producing ("PDP") reserves for each calendar month on a two-year rolling basis, and we may hedge up to the greater of 85% of our proved reserves and 75% of our reasonably anticipated production for up to 24 months in the future, and up to the greater of 75% of our proved reserves and 50% of our reasonably anticipated production for 25 to 60 months in the future, provided that no hedges may have a term beyond five years.

The restrictions in our credit agreement may also limit our ability to obtain future financings to withstand a future downturn in our business or the economy in general, to maintain cash balances in excess of certain specified threshold amounts or to otherwise conduct necessary corporate activities. We may also be prevented from taking advantage of business opportunities that arise because of the limitations that the restrictive covenants under our credit agreement impose on us.

A breach of any covenant in our credit agreement would result in a default under the applicable agreement after any applicable grace periods. A default, if not waived, could result in acceleration of the indebtedness outstanding under our credit agreement and in a default with respect to, and an acceleration of, the indebtedness outstanding under other debt agreements. The accelerated indebtedness would become immediately due and payable. If that occurs, we may not be able to make all of the required payments or borrow sufficient funds to refinance such indebtedness. Even if new financing were available at that time, it may not be on terms that are acceptable to us.

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Any significant reduction in our borrowing base under our credit facility as a result of the periodic borrowing base redeterminations or otherwise may negatively impact our ability to fund our operations.

Our credit facility limits the amounts we can borrow up to a borrowing base amount, which the lenders, in their sole discretion, determine semiannually on April 1 and October 1. The borrowing base depends on, among other things, projected revenues from, and asset values of, the proved oil and natural gas properties securing our loan. The value of our proved reserves is dependent upon, among other things, the prevailing and expected market prices of the underlying commodities in our estimated reserves. See "—Oil, natural gas and NGL prices are volatile. A further reduction or sustained decline in oil, natural gas and NGL prices could adversely affect our business, financial condition and results of operations and our ability to meet our capital expenditure obligations and financial commitments" and "Reserve estimates depend on many assumptions that may turn out to be inaccurate. Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves". The lenders can unilaterally adjust the borrowing base and the borrowings permitted to be outstanding under our credit facility. Any increase in the borrowing base requires the consent of the lenders holding 100% of the commitments. Our borrowing base was $160.0 million as of September 30, 2016. Our next scheduled borrowing base redetermination is expected on or about December 31, 2016.

In the future, we may not be able to access adequate funding under our credit facility as a result of a decrease in borrowing base due to the issuance of new indebtedness, the outcome of a subsequent borrowing base redetermination or an unwillingness or inability on the part of lending counterparties to meet their funding obligations and the inability of other lenders to provide additional funding to cover the defaulting lender's portion. Declines in commodity prices could result in a determination to lower the borrowing base in the future and, in such a case, we could be required to repay any indebtedness in excess of the redetermined borrowing base. As a result, we may be unable to implement our drilling and development plan, make acquisitions or otherwise carry out business plans, which would have a material adverse effect on our financial condition and results of operations and impair our ability to service our indebtedness.

Certain of our undeveloped leasehold acreage is subject to leases that will expire over the next several years unless production is established on units containing the acreage, the primary term is extended through continuous drilling provisions or the leases are renewed.

As of September 30, 2016, approximately 29.6% of our total net acreage was held by production or drilling operations. The leases for our net acreage not held by production will expire at the end of their primary term unless production is established in paying quantities under the units containing these leases, the leases are held beyond their primary terms under continuous drilling provisions of the leases or the leases are renewed. If our leases expire and we are unable to renew the leases, we will lose our right to develop the related properties. Our ability to drill and develop these locations depends on a number of uncertainties, including oil and natural gas prices, the availability and cost of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, gathering system and pipeline transportation constraints, access to and availability of water sourcing and distribution systems, regulatory approvals and other factors.

Our derivative activities could result in financial losses or could reduce our earnings.

We enter into derivative instrument contracts for a portion of our oil production. Accordingly, our earnings may fluctuate significantly as a result of changes in fair value of any derivative instruments.

Derivative instruments also expose us to the risk of financial loss in some circumstances, including when:

•: production is less than the volume covered by the derivative instruments;
•: the counterparty to the derivative instrument defaults on its contractual obligations;

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•: there is an increase in the differential between the underlying price in the derivative instrument and actual prices received; or
•: there are issues with regard to legal enforceability of such instruments.

The use of derivatives may, in some cases, require the posting of cash collateral with counterparties. If we enter into derivative instruments that require cash collateral and commodity prices or interest rates change in a manner adverse to us, our cash otherwise available for use in our operations would be reduced which could limit our ability to make future capital expenditures and make payments on our indebtedness, and which could also limit the size of our borrowing base. Future collateral requirements will depend on arrangements with our counterparties, highly volatile oil and natural gas prices and interest rates. In addition, derivative arrangements could limit the benefit we would receive from increases in the prices for oil and natural gas, which could also have a material adverse effect on our financial condition.

Our commodity derivative contracts expose us to risk of financial loss if a counterparty fails to perform under a contract. Disruptions in the financial markets could lead to sudden decreases in a counterparty's liquidity, which could make the counterparty unable to perform under the terms of the contract, and we may not be able to realize the benefit of the contract. We are unable to predict sudden changes in a counterparty's creditworthiness or ability to perform. Even if we do accurately predict sudden changes, our ability to negate the risk may be limited depending upon market conditions.

During periods of declining commodity prices, our derivative contract receivable positions generally increase, which increases our counterparty credit exposure. If the creditworthiness of our counterparties deteriorates and results in their nonperformance, we could incur a significant loss with respect to our commodity derivative contracts.

Adverse weather conditions may negatively affect our operating results and our ability to conduct drilling activities.

Adverse weather conditions may cause, among other things, increases in the costs of, and delays in, drilling or completing new wells, power failures, temporary shut-in of production and difficulties in the transportation of our oil, natural gas and NGLs. Any decreases in production due to poor weather conditions will have an adverse effect on our revenues, which will in turn negatively affect our cash flow from operations.

Our operations are substantially dependent on the availability of water. Restrictions on our ability to obtain water may have an adverse effect on our financial condition, results of operations and cash flows.

Water is an essential component of deep shale oil and natural gas production during both the drilling and hydraulic fracturing processes. Drought conditions have persisted in Texas in past years. These drought conditions have led governmental authorities to restrict the use of water subject to their jurisdiction for hydraulic fracturing to protect local water supplies. If we are unable to obtain water to use in our operations, we may be unable to economically produce oil and natural gas, which could have a material and adverse effect on our financial condition, results of operations and cash flows.

Our producing properties are located in the Delaware Basin, a sub-basin of the Permian Basin, in West Texas, making us vulnerable to risks associated with operating in a single geographic area.

All of our producing properties are geographically concentrated in the Delaware Basin, a sub-basin of the Permian Basin, in West Texas. At November 30, 2016, all of our total estimated proved reserves were attributable to properties located in this area. As a result of this concentration, we may be disproportionately exposed to the impact of regional supply and demand factors, delays or interruptions

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of production from wells in this area caused by governmental regulation, processing or transportation capacity constraints, market limitations, availability of equipment and personnel, water shortages or other drought related conditions or interruption of the processing or transportation of oil, natural gas or NGLs. For example, since our production originates in Midland, Texas, our realizations on sales of our oil production may be affected by the Midland-Cushing price differential, which reflects the difference between the price of crude at Midland, Texas, versus the price of crude at Cushing, Oklahoma, a major hub where production from Midland is often transported via pipeline. The price we currently realize on barrels of oil we sell is reduced by the value of the Midland-Cushing differential, which reached as high as $21 per barrel in August 2014. If the Midland-Cushing differential, or other price differentials pursuant to which our production is subject, were to widen due to oversupply or other factors, our revenue could be negatively impacted.

We are dependent on third party pipeline and trucking systems to transport our production and gathering and processing systems to prepare our production. The lack of available capacity in these systems could interfere with our ability to market the oil and natural gas we produce, and could materially and adversely affect our cash flow and results of operations.

Market conditions or the unavailability of satisfactory oil and natural gas transportation arrangements may hinder our access to oil and natural gas markets or delay our production getting to market. The marketability of our oil and natural gas and production depends in part on the availability, proximity and capacity of gathering, processing, pipeline and trucking systems. The amount of oil and natural gas that can be produced and sold is subject to limitation in certain circumstances, such as a lack of contracted capacity on such systems. As a result, we may be required to shut in wells due to the inadequacy or unavailability of crude oil or natural gas pipelines or gathering system capacity. Any significant curtailment in gathering, processing or pipeline system capacity or lack of availability of transport would interfere with our ability to market the oil and natural gas we produce, and could materially and adversely affect the expected results of our drilling program, as well as our cash flow and results of operations.

The marketability of our production is dependent upon transportation and other facilities, certain of which we do not control. If these facilities experience disruptions, our operations could be interrupted and our revenues reduced.

The marketability of our oil and natural gas production depends in part upon the availability, proximity and capacity of transportation facilities owned by third parties. Insufficient production from our wells to support the construction of pipeline facilities by our purchasers or a significant disruption in the availability of our or third-party transportation facilities or other production facilities could adversely impact our ability to deliver to market or produce our oil and natural gas and thereby cause a significant interruption in our operations. If, in the future, we are unable, for any sustained period, to implement acceptable delivery or transportation arrangements or encounter production related difficulties, we may be required to shut in or curtail production. Any such shut in or curtailment, or an inability to obtain favorable terms for delivery of the oil and natural gas produced from our fields, would materially and adversely affect our financial condition and results of operations.

We may incur losses as a result of title defects in the properties in which we invest.

The existence of a material title deficiency can render a lease worthless and can adversely affect our results of operations and financial condition. While we typically obtain title opinions prior to commencing drilling operations on a lease or in a unit, the failure of title may not be discovered until after a well is drilled, in which case we may lose the lease and the right to produce all or a portion of the minerals under the property.

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The development of our estimated PUDs may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our estimated PUDs may not be ultimately developed or produced.

As of November 30, 2016, approximately 60% of our total estimated proved reserves were classified as proved undeveloped. Development of these proved undeveloped reserves may take longer and require higher levels of capital expenditures than we currently anticipate. Delays in the development of our reserves, increases in costs to drill and develop such reserves or decreases in commodity prices will reduce the value of our estimated PUDs and future net revenues estimated for such reserves and may result in some projects becoming uneconomic. In addition, delays in the development of reserves could cause us to have to reclassify our PUDs as unproved reserves. Further, we may be required to write-down our PUDs if we do not drill those wells within five years after their respective dates of booking.

If commodity prices decrease to a level such that our future undiscounted cash flows from our properties are less than their carrying value, we may be required to take write-downs of the carrying values of our properties.

Accounting rules require that we periodically review the carrying value of our properties for possible impairment. Based on prevailing commodity prices and specific market factors and circumstances at the time of prospective impairment reviews, and the continuing evaluation of development plans, production data, economics and other factors, we may be required to write-down the carrying value of our properties. A write-down constitutes a non-cash charge to earnings. We incurred no impairment charges of proved properties during 2015; however, if spot or future commodity prices remain at depressed levels or decline further, we may incur impairments in future periods. On December 16, 2016, the WTI spot price for crude oil was $52.03 per barrel and the Henry Hub spot price for natural gas was $3.38 per MMBtu, representing decreases of 52% and 59%, respectively, from the high of $107.95 per barrel of oil and $8.15 per MMBtu for natural gas during 2014. Likewise, NGLs have suffered significant recent declines in realized prices. Lower commodity prices in the future could result in further impairments of our properties, which could have a material adverse effect on our results of operations for the periods in which such charges are taken.

Conservation measures and technological advances could reduce demand for oil and natural gas.

Fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to oil and natural gas, technological advances in fuel economy and energy generation devices could reduce demand for oil and natural gas. The impact of the changing demand for oil and natural gas may have a material adverse effect on our business, financial condition, results of operations and cash flows.

We depend upon several significant purchasers for the sale of most of our oil, natural gas and NGL production.

We normally sell our production to a relatively small number of customers, as is customary in our business. For the nine months ended September 30, 2016, two purchasers accounted for more than 10% of our revenue: Trafigura Trading, LLC (47%) and Sunoco Partners Marketing (40%). For the year ended December 31, 2015, two purchasers accounted for more than 10% of our revenue: Sunoco Partners Marketing (68%) and Shell Trading (21%). For the year ended December 31, 2014, two purchasers accounted for more than 10% of our revenue: Shell Trading (72%) and Plains Marketing, LP (15%). During such periods, no other purchaser accounted for 10% or more of our revenue. The loss of any of these purchasers could materially and adversely affect our revenues.

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Our operations may be exposed to significant delays, costs and liabilities as a result of environmental and occupational health and safety requirements applicable to our business activities.

Our operations are subject to stringent and complex federal, state and local laws and regulations governing the discharge of materials into the environment, health and safety aspects of our operations or otherwise relating to environmental protection. These laws and regulations may impose numerous obligations applicable to our operations, including the acquisition of a permit or other approval before conducting regulated activities; the restriction of types, quantities and concentration of materials that can be released into the environment; the limitation or prohibition of drilling activities on certain lands lying within wilderness, wetlands and other protected areas; the application of specific health and safety criteria addressing worker protection; and the imposition of substantial liabilities for pollution resulting from our operations. Numerous governmental authorities, such as the U.S. Environmental Protection Agency ("EPA") and analogous state agencies, have the power to enforce compliance with these laws and regulations and the permits issued under them. Such enforcement actions often involve taking difficult and costly compliance measures or corrective actions. Failure to comply with these laws and regulations may result in the assessment of sanctions, including administrative, civil or criminal penalties, natural resource damages, the imposition of investigatory or remedial obligations and the issuance of orders limiting or prohibiting some or all of our operations. In addition, we may experience delays in obtaining, or be unable to obtain, required permits, which may delay or interrupt our operations and limit our growth and revenue.

Certain environmental laws impose strict as well as joint and several liability for costs required to remediate and restore sites where hazardous substances, hydrocarbons or solid wastes have been stored or released. We may be required to remediate contaminated properties currently or formerly operated by us or facilities of third parties that received waste generated by our operations regardless of whether such contamination resulted from the conduct of others or from consequences of our own actions that were in compliance with all applicable laws at the time those actions were taken. In connection with certain acquisitions, we could acquire, or be required to provide indemnification against, environmental liabilities that could expose us to material losses. In addition, claims for damages to persons or property, including natural resources, may result from the environmental, health and safety impacts of our operations. Our insurance may not cover all environmental risks and costs or may not provide sufficient coverage if an environmental claim is made against us. Moreover, public interest in the protection of the environment has increased dramatically in recent years. The trend of more expansive and stringent environmental legislation and regulations applied to the crude oil and natural gas industry could continue, resulting in increased costs of doing business and consequently affecting profitability. To the extent laws are enacted or other governmental action is taken that restricts drilling or imposes more stringent and costly operating, waste handling, disposal and cleanup requirements our business, prospects, financial condition or results of operations could be materially adversely affected.

We may incur substantial losses and be subject to substantial liability claims as a result of our operations. Additionally, we may not be insured for, or our insurance may be inadequate to protect us against, these risks.

We are not insured against all risks. Losses and liabilities arising from uninsured and underinsured events could materially and adversely affect our business, financial condition or results of operations.

Our development activities are subject to all of the operating risks associated with drilling for and producing oil and natural gas, including the possibility of:

•: environmental hazards, such as uncontrollable releases of oil, natural gas, brine, well fluids, toxic gas or other pollution into the environment, including groundwater, air and shoreline contamination;
•: abnormally pressured formations;

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•: mechanical difficulties, such as stuck oilfield drilling and service tools and casing collapse;
•: fires, explosions and ruptures of pipelines;
•: personal injuries and death;
•: natural disasters; and
•: terrorist attacks targeting oil and natural gas related facilities and infrastructure.

Any of these risks could adversely affect our ability to conduct operations or result in substantial loss to us as a result of claims for:

•: injury or loss of life;
•: damage to and destruction of property, natural resources and equipment;
•: pollution and other environmental damage;
•: regulatory investigations and penalties;
•: suspension of our operations; and
•: repair and remediation costs.

We may elect not to obtain insurance for any or all of these risks if we believe that the cost of available insurance is excessive relative to the risks presented. In addition, pollution and environmental risks generally are not fully insurable. The occurrence of an event that is not fully covered by insurance could have a material adverse effect on our business, financial condition and results of operations.

Properties that we decide to drill may not yield oil or natural gas in commercially viable quantities.

Properties that we decide to drill that do not yield oil or natural gas in commercially viable quantities will adversely affect our results of operations and financial condition. There is no way to predict in advance of drilling and testing whether any particular prospect will yield oil or natural gas in sufficient quantities to recover drilling or completion costs or to be economically viable. The use of micro-seismic data and other technologies and the study of producing fields in the same area will not enable us to know conclusively prior to drilling whether oil or natural gas will be present or, if present, whether oil or natural gas will be present in commercial quantities. We cannot assure you that the analogies we draw from available data from other wells, more fully explored prospects or producing fields will be applicable to our drilling prospects. Further, our drilling operations may be curtailed, delayed or cancelled as a result of numerous factors, including:

•: unexpected drilling conditions;
•: title problems;
•: pressure or lost circulation in formations;
•: equipment failure or accidents;
•: adverse weather conditions;
•: compliance with environmental and other governmental or contractual requirements; and
•: increases in the cost of, shortages or delays in the availability of, electricity, supplies, materials, drilling or workover rigs, equipment and services.

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We may be unable to make attractive acquisitions or successfully integrate acquired businesses, and any inability to do so may disrupt our business and hinder our ability to grow.

In the future we may make acquisitions of assets or businesses that complement or expand our current business. However, there is no guarantee we will be able to identify attractive acquisition opportunities. In the event we are able to identify attractive acquisition opportunities, we may not be able to complete the acquisition or do so on commercially acceptable terms. Competition for acquisitions may also increase the cost of, or cause us to refrain from, completing acquisitions.

The success of any completed acquisition will depend on our ability to integrate effectively the acquired business into our existing operations. The process of integrating acquired businesses may involve unforeseen difficulties and may require a disproportionate amount of our managerial and financial resources. In addition, possible future acquisitions may be larger and for purchase prices significantly higher than those paid for earlier acquisitions. No assurance can be given that we will be able to identify additional suitable acquisition opportunities, negotiate acceptable terms, obtain financing for acquisitions on acceptable terms or successfully acquire identified targets. Our failure to achieve consolidation savings, to integrate the acquired businesses and assets into our existing operations successfully or to minimize any unforeseen operational difficulties could have a material adverse effect on our financial condition and results of operations.

In addition, our credit agreement imposes certain limitations on our ability to enter into mergers or combination transactions. Our credit agreement also limits our ability to incur certain indebtedness, which could indirectly limit our ability to engage in acquisitions of businesses.

Certain of our properties are subject to land use restrictions, which could limit the manner in which we conduct our business.

Certain of our properties are subject to land use restrictions, including city ordinances, which could limit the manner in which we conduct our business. Such restrictions could affect, among other things, our access to and the permissible uses of our facilities as well as the manner in which we produce oil and natural gas and may restrict or prohibit drilling in general. The costs we incur to comply with such restrictions may be significant in nature, and we may experience delays or curtailment in the pursuit of development activities and perhaps even be precluded from the drilling of wells.

The unavailability or high cost of additional drilling rigs, equipment, supplies, personnel and oilfield services could adversely affect our ability to execute our development plans within our budget and on a timely basis.

The demand for drilling rigs, pipe and other equipment and supplies, as well as for qualified and experienced field personnel to drill wells and conduct field operations, geologists, geophysicists, engineers and other professionals in the oil and natural gas industry, can fluctuate significantly, often in correlation with oil and natural gas prices, causing periodic shortages. Our operations are concentrated in areas in which industry had increased rapidly, and as a result, demand for such drilling rigs, equipment and personnel, as well as access to transportation, processing and refining facilities in these areas, had increased, as did the costs for those items. To the extent that commodity prices improve in the future, any delay or inability to secure the personnel, equipment, power, services, resources and facilities access necessary for us to resume or increase our development activities could result in production volumes being below our forecasted volumes. In addition, any such negative effect on production volumes, or significant increases in costs, could have a material adverse effect on our cash flow and profitability. Furthermore, if we are unable to secure a sufficient number of drilling rigs at reasonable costs, we may not be able to drill all of our acreage before our leases expire.

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We could experience periods of higher costs if commodity prices rise. These increases could reduce our profitability, cash flow and ability to complete development activities as planned.

Historically, our capital and operating costs have risen during periods of increasing oil, natural gas and NGL prices. These cost increases result from a variety of factors beyond our control, such as increases in the cost of electricity, steel and other raw materials that we and our vendors rely upon; increased demand for labor, services and materials as drilling activity increases; and increased taxes. Decreased levels of drilling activity in the oil and natural gas industry in recent periods have led to declining costs of some drilling equipment, materials and supplies. However, such costs may rise faster than increases in our revenue if commodity prices rise, thereby negatively impacting our profitability, cash flow and ability to complete development activities as scheduled and on budget. This impact may be magnified to the extent that our ability to participate in the commodity price increases is limited by our derivative activities.

Should we fail to comply with all applicable FERC administered statutes, rules, regulations and orders, we could be subject to substantial penalties and fines.

Under the Domenici-Barton Energy Policy Act of 2005 ("EP Act of 2005"), the Federal Energy Regulatory Commission ("FERC") has civil penalty authority under the Natural Gas Act of 1938 (the "NGA") and the Natural Gas Policy Act ("NGPA") to impose penalties for current violations of up to $1 million per day for each violation and disgorgement of profits associated with any violation. While our operations have not been regulated by FERC as a natural gas company under the NGA, FERC has adopted regulations that may subject certain of our otherwise non-FERC jurisdictional operations to FERC annual reporting and posting requirements. We also must comply with the anti-market manipulation rules enforced by FERC. Additional rules and legislation pertaining to those and other matters may be considered or adopted by FERC from time to time. Failure to comply with those regulations in the future could subject us to civil penalty liability, as described in "Business—Regulation of the Oil and Natural Gas Industry".

A change in the jurisdictional characterization of some of the natural gas assets we use by federal, state or local regulatory agencies or a change in policy by those agencies could result in increased regulation of the natural gas assets we use, which could cause our revenues to decline and operating expenses to increase.

Section 1(b) of the NGA exempts natural gas gathering facilities from the jurisdiction of FERC. We believe that the natural gas pipelines we use meet the traditional tests FERC has used to determine if a pipeline is a gathering pipeline and are, therefore, not subject to FERC jurisdiction. The distinction between FERC-regulated transmission services and federally unregulated gathering services is the subject of substantial ongoing litigation and, over time, FERC policy concerning where to draw the line between activities it regulates and activities excluded from its regulation has changed. The classification and regulation of the gathering facilities we use are subject to change based on future determinations by FERC, the courts or Congress. State regulation of gathering facilities generally includes various safety, environmental and, in some circumstances, nondiscriminatory take requirements and complaint-based rate regulation. In recent years, FERC has taken a more light-handed approach to regulation of the gathering activities of interstate pipeline transmission companies, which has resulted in a number of such companies transferring gathering facilities to unregulated affiliates. As a result of these activities, natural gas gathering may begin to receive greater regulatory scrutiny at both the state and federal levels.

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Climate change laws and regulations restricting emissions of GHGs could result in increased operating costs and reduced demand for the oil and natural gas that we produce, while potential physical effects of climate change could disrupt our production and cause us to incur significant costs in preparing for or responding to those effects.

In response to findings that emissions of carbon dioxide, methane and other GHGs present an endangerment to public health and the environment, the EPA has adopted regulations pursuant to the federal Clean Air Act that, among other things, require preconstruction and operating permits for certain large stationary sources. Facilities required to obtain preconstruction permits for their GHG emissions are also required to meet "best available control technology" standards that are being established by the states or, in some cases, by the EPA on a case-by-case basis. These regulatory requirements could adversely affect our operations and restrict or delay our ability to obtain air permits for new or modified sources. In addition, the EPA has adopted rules requiring the monitoring and reporting of GHG emissions from specified onshore and offshore oil and natural gas production sources in the United States on an annual basis, which include certain of our operations. Furthermore, in May 2016, the EPA finalized rules that establish new controls for emissions of methane from new, modified or reconstructed sources in the oil and natural gas source category, including production, processing, transmission and storage activities. The rules include first-time standards to address emissions of methane from equipment and processes across the source category, including hydraulically fractured oil and natural gas well completions. In addition, the rules impose leak detection and repair requirements intended to address methane leaks known as "fugitive emissions" from equipment, such as valves, connectors, open-ended lines, pressure-relief devices, compressors, instruments and meters. The EPA has also announced that it intends to impose methane emission standards for existing sources as well but, to date, has not yet issued a proposal. Compliance with these rules will require enhanced record-keeping practices, the purchase of new equipment, such as optical gas imaging instruments to detect leaks, and increased frequency of maintenance and repair activities to address emissions leakage. The rules will also likely require additional personnel time to support these activities or the engagement of third party contractors to assist with and verify compliance. The federal Bureau of Land Management ("BLM") also finalized similar rules regarding the control of methane emissions in November 2016 that apply to oil and natural gas exploration and development activities on public and tribal lands. The rules seek to minimize venting and flaring of emissions from storage tanks and other equipment, and also impose leak detection and repair requirements. These new and proposed rules could result in increased compliance costs on our operations.

While Congress has from time to time considered legislation to reduce emissions of GHGs, there has not been significant legislative activity at the federal level in recent years. In the absence of such federal climate legislation, a number of state and regional efforts have emerged that are aimed at tracking and/or reducing GHG emissions by means of cap and trade programs. These programs typically require major sources of GHG emissions to acquire and surrender emission allowances in return for emitting those GHGs.

Although it is not possible at this time to predict how legislation or new regulations that may be adopted to address GHG emissions would impact our business, any such future laws and regulations imposing reporting obligations on, or limiting emissions of GHGs from, our equipment and operations could require us to incur costs to reduce emissions of GHGs associated with our operations. Demand for our products may also be adversely affected by conservation plans and efforts undertaken in response to global climate change, including plans developed in connection with the recent Paris climate conference in December 2015, which came into effect in November 2016. Many governments also provide, or may in the future provide, tax advantages and other subsidies to support the use and development of alternative energy technologies. Substantial limitations on GHG emissions could adversely affect demand for the oil and natural gas we produce and lower the value of our reserves.

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Finally, increasing concentrations of GHGs in the Earth's atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, floods and other climatic events; if any such effects were to occur, they could have a material adverse effect on our operations. At this time, we have not developed a comprehensive plan to address the legal, economic, social or physical impacts of climate change on our operations.

Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing as well as governmental reviews of such activities could result in increased costs and additional operating restrictions or delays in the completion of oil and natural gas wells and adversely affect our production.

Hydraulic fracturing is an important and common practice that is used to stimulate production of oil and/or natural gas from dense subsurface rock formations. The hydraulic fracturing process involves the injection of water, proppants and chemicals under pressure into targeted subsurface formations to fracture the surrounding rock and stimulate production. We regularly use hydraulic fracturing as part of our operations. Hydraulic fracturing is typically regulated by state oil and natural gas commissions, but federal agencies have asserted jurisdiction over certain aspects of the process. The EPA has asserted federal regulatory authority pursuant to the federal Safe Drinking Water Act ("SDWA") over certain hydraulic fracturing activities involving the use of diesel fuels and published permitting guidance in February 2014 addressing the performance of such activities using diesel fuels. The EPA has also taken the following actions: issued final regulations under the federal Clean Air Act establishing various performance standards, including standards for the capture of air emissions released during hydraulic fracturing, leak detection and permitting; issued an advanced notice of proposed rulemaking under the Toxic Substances Control Act to require companies to disclose information regarding the chemicals used in hydraulic fracturing; and, in June 2016, published an effluent limited guideline final rule prohibiting the discharge of wastewater from onshore unconventional oil and natural gas extraction facilities to publicly owned wastewater treatment plants. In addition, the BLM finalized rules in March 2015 that impose new or more stringent standards for performing hydraulic fracturing on federal and American Indian lands. The U.S. District Court of Wyoming struck down the final rule, finding that the BLM lacked congressional authority to promulgate the rule. The BLM has appealed this decision, and a final decision remains pending. In addition, Congress has from time to time considered legislation to provide for federal regulation of hydraulic fracturing under the SDWA and to require disclosure of the chemicals used in the hydraulic fracturing process. It is unclear how any additional federal regulation of hydraulic fracturing activities may affect our operations.

Certain governmental reviews are either underway or being proposed that focus on environmental aspects of hydraulic fracturing practices. For example, in December 2016, the EPA released its final report on the potential impacts of hydraulic fracturing on drinking water resources. The final report concluded that "water cycle" activities associated with hydraulic fracturing may impact drinking water resources "under some circumstances", noting that the following hydraulic fracturing water cycle activities and local- or regional-scale factors are more likely than others to result in more frequent or more severe impacts: water withdrawals for fracturing in times or areas of low water availability; surface spills during the management of fracturing fluids, chemicals or produced water; injection of fracturing fluids into wells with inadequate mechanical integrity; injection of fracturing fluids directly into groundwater resources; discharge of inadequately treated fracturing wastewater to surface waters; and disposal or storage of fracturing wastewater in unlined pits. These ongoing or proposed studies could spur initiatives to further regulate hydraulic fracturing under the federal SDWA or other regulatory mechanisms.

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includes new testing and reporting requirements, such as (i) the requirement to submit cementing reports after well completion or after cessation of drilling, whichever is later, and (ii) the imposition of additional testing on wells less than 1,000 feet below usable groundwater. The well integrity rule took effect in January 2014. Local governments also may seek to adopt ordinances within their jurisdictions regulating the time, place and manner of drilling activities in general or hydraulic fracturing activities in particular. If new or more stringent federal, state or local legal restrictions relating to the hydraulic fracturing process are adopted in areas where we operate, we could incur potentially significant added costs to comply with such requirements, experience delays or curtailment in the pursuit of development activities and perhaps even be precluded from drilling wells.

Legislation or regulatory initiatives intended to address seismic activity could restrict our drilling and production activities, as well as our ability to dispose of produced water gathered from such activities, which could have a material adverse effect on our business.

State and federal regulatory agencies recently have focused on a possible connection between the disposal of wastewater in underground injection wells and the increased occurrence of seismic activity, and regulatory agencies at all levels are continuing to study the possible linkage between oil and natural gas activity and induced seismicity. For example, in 2015, the United States Geological Study identified eight states, including Texas, with areas of increased rates of induced seismicity that could be attributed to fluid injection or oil and natural gas extraction. In addition, a number of lawsuits have been filed in other states, most recently in Oklahoma, alleging that disposal well operations have caused damage to neighboring properties or otherwise violated state and federal rules regulating waste disposal. In response to these concerns, regulators in some states are seeking to impose additional requirements, including requirements in the permitting of produced water disposal wells or otherwise to assess any relationship between seismicity and the use of such wells. For example, in October 2014, the Railroad Commission of Texas published a new rule governing permitting or re-permitting of disposal wells that would require, among other things, the submission of information on seismic events occurring within a specified radius of the disposal well location, as well as logs, geologic cross sections and structure maps relating to the disposal area in question. If the permittee or an applicant of a disposal well permit fails to demonstrate that the produced water or other fluids are confined to the disposal zone or if scientific data indicates such a disposal well is likely to be or determined to be contributing to seismic activity, then the agency may deny, modify, suspend or terminate the permit application or existing operating permit for that well.

We dispose of large volumes of produced water gathered from our drilling and production operations pursuant to permits issued to us by governmental authorities overseeing such disposal activities. While these permits are issued pursuant to existing laws and regulations, these legal requirements are subject to change, which could result in the imposition of more stringent operating constraints or new monitoring and reporting requirements, owing to, among other things, concerns of the public or governmental authorities regarding such gathering or disposal activities. The adoption and implementation of any new laws or regulations that restrict our ability to use hydraulic fracturing or dispose of produced water gathered from our drilling and production activities by limiting volumes, disposal rates, disposal well locations or otherwise or requiring us to shut down disposal wells, could have a material adverse effect on our business, financial condition and results of operations.

Competition in the oil and natural gas industry is intense, making it more difficult for us to acquire properties, market oil or natural gas and secure trained personnel.

Our ability to acquire additional prospects and to find and develop reserves in the future will depend on our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment for acquiring properties, marketing oil and natural gas and securing trained personnel. Also, there is substantial competition for capital available for investment in the oil

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and natural gas industry. Many of our competitors possess and employ financial, technical and personnel resources substantially greater than ours. Those companies may be able to pay more for productive properties and exploratory prospects and to evaluate, bid for and purchase a greater number of properties and prospects than our financial or personnel resources permit. In addition, other companies may be able to offer better compensation packages to attract and retain qualified personnel than we are able to offer. The cost to attract and retain qualified personnel may increase substantially in the future. We may not be able to compete successfully in the future in acquiring prospective reserves, developing reserves, marketing hydrocarbons, attracting and retaining quality personnel and raising additional capital, which could have a material adverse effect on our business.

The loss of senior management or technical personnel could adversely affect operations.

We depend on the services of our senior management and technical personnel. We do not maintain, nor do we plan to obtain, any insurance against the loss of any of these individuals. The loss of the services of our senior management or technical personnel could have a material adverse effect on our business, financial condition and results of operations.

Increases in interest rates could adversely affect our business.

Our business and operating results can be harmed by factors such as the availability, terms of and cost of capital, increases in interest rates or a reduction in credit rating. These changes could cause our cost of doing business to increase, limit our ability to pursue acquisition opportunities, reduce cash flow used for drilling and place us at a competitive disadvantage. For example, as of September 30, 2016, outstanding borrowings subject to variable interest rates were approximately $90.0 million, and a 1.0% increase in interest rates would result in an increase in annual interest expense of approximately $0.9 million, assuming the $90.0 million of debt was outstanding for the full year. Recent and continuing disruptions and volatility in the global financial markets may lead to a contraction in credit availability impacting our ability to finance our operations. We require continued access to capital. A significant reduction in cash flows from operations or the availability of credit could materially and adversely affect our ability to achieve our planned growth and operating results.

We may be subject to risks in connection with acquisitions of properties.

The successful acquisition of producing properties requires an assessment of several factors, including:

•: recoverable reserves;
•: future oil and natural gas prices and their applicable differentials;
•: operating costs; and
•: potential environmental and other liabilities.

The accuracy of these assessments is inherently uncertain. In connection with these assessments, we perform a review of the subject properties that we believe to be generally consistent with industry practices. Our review will not reveal all existing or potential problems nor will it permit us to become sufficiently familiar with the properties to fully assess their deficiencies and capabilities. Inspections may not always be performed on every well, and environmental problems, such as groundwater contamination, are not necessarily observable even when an inspection is undertaken. Even when problems are identified, the seller may be unwilling or unable to provide effective contractual protection against all or part of the problems. We often are not entitled to contractual indemnification for environmental liabilities and acquire properties on an "as-is" basis.

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Future legislation may result in the elimination of certain U.S. federal income tax deductions currently available with respect to oil and natural gas exploration and development. Additionally, future federal, state or local legislation may impose new or increased taxes or fees on oil and natural gas extraction.

Potential legislation, if enacted into law, could make significant changes to U.S. federal and state income tax laws, including the elimination of certain key U.S. federal income tax incentives currently available to oil and natural gas exploration and production companies. These changes include, but are not limited to, (i) the repeal of the percentage depletion allowance for oil and natural gas properties, (ii) the elimination of current deductions for intangible drilling and development costs, (iii) the elimination of the deduction for certain U.S. production activities and (iv) an extension of the amortization period for certain geological and geophysical expenditures. It is unclear whether these or similar changes will be enacted and, if enacted, how soon any such changes could become effective. The passage of this legislation or any other similar changes in U.S. federal income tax laws, as well as any similar changes in state law, could eliminate or postpone certain tax deductions that are currently available with respect to oil and natural gas exploration and development, and any such change could negatively affect our financial condition and results of operations. Additionally, future legislation could be enacted that increases the taxes or fees imposed on oil and natural gas extraction. Any such legislation could result in increased operating costs and/or reduced consumer demand for petroleum products, which in turn could affect the prices we receive for our oil.

Our use of seismic data is subject to interpretation and may not accurately identify the presence of oil and natural gas, which could adversely affect the results of our drilling operations.

Even when properly used and interpreted, seismic data and visualization techniques are only tools used to assist geoscientists in identifying subsurface structures and hydrocarbon indicators and do not enable the interpreter to know whether hydrocarbons are, in fact, present in those structures. As a result, our drilling activities may not be successful or economical. In addition, the use of advanced technologies, such as 3-D seismic, requires greater pre-drilling expenditures than traditional drilling strategies, and we could incur losses as a result of such expenditures.

Restrictions on drilling activities intended to protect certain species of wildlife may adversely affect our ability to conduct drilling activities in areas where we operate.

Oil and natural gas operations in our operating areas may be adversely affected by seasonal or permanent restrictions on drilling activities designed to protect various wildlife. Seasonal restrictions may limit our ability to operate in protected areas and can intensify competition for drilling rigs, oilfield equipment, services, supplies and qualified personnel, which may lead to periodic shortages when drilling is allowed. These constraints and the resulting shortages or high costs could delay our operations or materially increase our operating and capital costs. Permanent restrictions imposed to protect endangered species could prohibit drilling in certain areas or require the implementation of expensive mitigation measures. The designation of previously unprotected species in areas where we operate as threatened or endangered could cause us to incur increased costs arising from species protection measures or could result in limitations on our activities that could have a material and adverse impact on our ability to develop and produce our reserves.

Laws regulating the derivatives market could adversely affect our ability to use derivative instruments to reduce the effect of commodity price, interest rate and other risks associated with our business.

The Dodd-Frank Act established federal oversight and regulation of the over-the-counter derivatives market and entities, such as us, that participate in that market. Under the Dodd-Frank Act, the Commodity Futures Trading Commission ("CFTC") and the SEC have promulgated rules, and are in the process of promulgating other rules, required to implement the derivatives regulatory provisions of the Dodd-Frank Act. Among the rules currently proposed for adoption by the CFTC are proposed

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rules that would place limits on positions in certain core futures and equivalent swaps contracts for or linked to certain physical commodities, subject to exceptions for certain bona fide hedging transactions. These new position limit rules are not yet final, and the impact of the final position rules on us is uncertain at this time.

The Dodd-Frank Act also made the clearing of swaps over a derivatives clearing organization mandatory and the execution of cleared swaps over a board of trade or swap execution facility mandatory, subject to certain exemptions. The CFTC has designated certain interest rate swaps and credit default swaps for mandatory clearing. The CFTC has not yet proposed rules designating any other classes of swaps, including physical commodity swaps, for mandatory clearing. Although we expect to qualify for the exception from mandatory clearing available to commercial end-users of swaps, if we were to have to clear any swap we enter, we might not have the same flexibility we have with the bilateral swaps we now enter and would have to post margin with the derivatives clearing organization for such cleared swaps, which could adversely our ability to execute hedges to reduce risk and protect our cash flow, could adversely affect our liquidity and could reduce cash available to us for capital expenditures.

Certain banking regulators and the CFTC have recently adopted final rules establishing minimum margin requirements for uncleared swaps. Although we expect to qualify for exemptions from such margin requirements available to users of swaps who are non-financial end-users entering into uncleared swaps to hedge their commercial risks with respect to any swaps we enter for such purpose, the application of such requirements to other market participants, such as swap dealers, may change the cost and availability of the swaps that we use for hedging. If we do not qualify for an exemption from the margin rules, we could have to post initial and variation margin with the counterparties to our swaps, which could impact our liquidity and reduce cash available to us for capital expenditures, therefore reducing our ability to execute hedges to reduce risk and protect our cash flow.

The full impact of the Dodd-Frank Act's swap regulatory provisions and the related rules of the CFTC and SEC on our business will not be known until all of the rules to be adopted under the Dodd-Frank Act have been adopted and fully implemented and the market for derivatives contracts has adjusted. The Dodd-Frank Act, the existing rules and any new rules could significantly increase the cost of derivative contracts, materially alter the terms of derivative contracts, reduce the availability of derivatives to protect against risks we encounter, and reduce our ability to monetize or restructure our existing derivative contracts. If we reduce our use of derivatives as a result of the Dodd-Frank Act's swap regulatory provisions and the related rules, our results of operations may become more volatile and our cash flows may be less predictable, which could adversely affect our ability to plan for and fund capital expenditures. Finally, the Dodd-Frank Act's swap regulatory provisions were intended, in part, to reduce the volatility of oil and natural gas prices, which some legislators attributed to speculative trading in derivatives and commodity instruments related to oil and natural gas. Our revenues could therefore be adversely affected if a consequence of the Dodd-Frank Act and implementing rules is to lower commodity prices. Any of these consequences could have a material and adverse effect on us and our financial condition.

In addition, the European Union and other non-U.S. jurisdictions have implemented or may implement regulations with respect to the derivatives market. If we enter into swaps with counterparties based in foreign jurisdictions, we may become subject to such regulations, which could have adverse effects on our operations similar to the possible effects on our operations of the Dodd-Frank Act's swap regulatory provisions and the rules of the CFTC, SEC and U.S. banking regulators.

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The standardized measure of our estimated reserves is not an accurate estimate of the current fair value of our estimated reserves.

Standardized measure is a reporting convention that provides a common basis for comparing oil and natural gas companies subject to the rules and regulations of the SEC. Standardized measure requires the use of specific pricing as required by the SEC as well as operating and development costs prevailing as of the date of computation. Consequently, it may not reflect the prices ordinarily received or that will be received for oil and natural gas production because of varying market conditions, nor may it reflect the actual costs that will be required to produce or develop the oil and natural gas properties. In addition, our predecessor generally passed through its taxable income to its owners for income tax purposes and was not subject to U.S. federal, state or local income taxes other than franchise tax in the State of Texas. Accordingly, our standardized measure does not provide for U.S. federal, state or local income taxes other than franchise tax in the State of Texas. However, following our corporate reorganization, we will be subject to U.S. federal, state and local income taxes. Accordingly, estimates included herein of future net cash flow may be materially different from the future net cash flows that are ultimately received. Therefore, the standardized measure of our estimated reserves included in this prospectus should not be construed as accurate estimates of the current fair value of our proved reserves.

Our business is difficult to evaluate because we have a limited operating history, and we are susceptible to the potential difficulties associated with rapid growth and expansion.

Jagged Peak Energy LLC was formed in 2013. As a result, there is only limited historical financial and operating information available upon which to base your evaluation of our performance.

In addition, we have grown rapidly over the last several years. Our management believes that our future success depends on our ability to manage the rapid growth that we have experienced and the demands from increased responsibility on management personnel. The following factors could present difficulties:

•: increased responsibilities for our executive level personnel;
•: increased administrative burden;
•: increased capital requirements; and
•: increased organizational challenges common to large, expansive operations.

Our operating results could be adversely affected if we do not successfully manage these potential difficulties. The historical financial information incorporated herein is not necessarily indicative of the results that may be realized in the future. In addition, our operating history is limited and the results from our current producing wells are not necessarily indicative of success from our future drilling operations.

We may not be able to keep pace with technological developments in our industry.

The oil and natural gas industry is characterized by rapid and significant technological advancements and introductions of new products and services using new technologies. As others use or develop new technologies, we may be placed at a competitive disadvantage or may be forced by competitive pressures to implement those new technologies at substantial costs. In addition, other oil and natural gas companies may have greater financial, technical and personnel resources that allow them to enjoy technological advantages and that may in the future allow them to implement new technologies before we can. We may not be able to respond to these competitive pressures or implement new technologies on a timely basis or at an acceptable cost. If one or more of the

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technologies we use now or in the future were to become obsolete, our business, financial condition or results of operations could be materially and adversely affected.

Risks Related to this Offering and Our Common Stock

The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act, and the requirements of the Sarbanes-Oxley Act, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.

As a public company, we will need to comply with new laws, regulations and requirements, certain corporate governance provisions of the Sarbanes-Oxley Act of 2002, related regulations of the SEC and the requirements of the NYSE, with which we are not required to comply as a private company. Complying with these statutes, regulations and requirements will occupy a significant amount of time of our board of directors and management and will significantly increase our costs and expenses. We will need to:

•: institute a more comprehensive compliance function;
•: comply with rules promulgated by the NYSE;
•: continue to prepare and distribute periodic public reports in compliance with our obligations under the federal securities laws;
•: establish new internal policies, such as those relating to insider trading; and
•: involve and retain to a greater degree outside counsel and accountants in the above activities.

Furthermore, while we generally must comply with Section 404 of the Sarbanes Oxley Act of 2002 for our fiscal year ending December 31, 2017, we are not required to have our independent registered public accounting firm attest to the effectiveness of our internal controls until our first annual report subsequent to our ceasing to be an "emerging growth company" within the meaning of Section 2(a)(19) of the Securities Act. Accordingly, we may not be required to have our independent registered public accounting firm attest to the effectiveness of our internal controls until as late as our annual report for the fiscal year ending December 31, 2022. Once it is required to do so, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed, operated or reviewed. Compliance with these requirements may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.

In addition, we expect that being a public company subject to these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating these rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

If we fail to develop or maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our common stock.

Effective internal controls are necessary for us to provide reliable financial reports, prevent fraud and operate successfully as a public company. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results would be harmed. We cannot be certain that our efforts to

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develop and maintain our internal controls will be successful, that we will be able to maintain adequate controls over our financial processes and reporting in the future or that we will be able to comply with our obligations under Section 404 of the Sarbanes Oxley Act of 2002. Any failure to develop or maintain effective internal controls, or difficulties encountered in implementing or improving our internal controls, could harm our operating results or cause us to fail to meet our reporting obligations. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the trading price of our common stock.

The initial public offering price of our common stock may not be indicative of the market price of our common stock after this offering. In addition, an active, liquid and orderly trading market for our common stock may not develop or be maintained, and our stock price may be volatile.

Prior to this offering, our common stock was not traded on any market. An active, liquid and orderly trading market for our common stock may not develop or be maintained after this offering. Active, liquid and orderly trading markets usually result in less price volatility and more efficiency in carrying out investors' purchase and sale orders. The market price of our common stock could vary significantly as a result of a number of factors, some of which are beyond our control. In the event of a drop in the market price of our common stock, you could lose a substantial part or all of your investment in our common stock. The initial public offering price will be negotiated between us, the selling stockholders and the representatives of the underwriters, based on numerous factors which we discuss in "Underwriting (Conflicts of Interest)", and may not be indicative of the market price of our common stock after this offering. Consequently, you may not be able to sell shares of our common stock at prices equal to or greater than the price paid by you in this offering.

The following factors could affect our stock price:

•: our operating and financial performance and drilling locations, including reserve estimates;
•: quarterly variations in the rate of growth of our financial indicators, such as net income per share, net income and revenues;
•: the public reaction to our press releases, our other public announcements and our filings with the SEC;
•: strategic actions by our competitors;
•: changes in revenue or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts;
•: speculation in the press or investment community;
•: the failure of research analysts to cover our common stock;
•: sales of our common stock by us or the selling stockholders or the perception that such sales may occur;
•: changes in accounting principles, policies, guidance, interpretations or standards;
•: additions or departures of key management personnel;
•: actions by our stockholders;
•: general market conditions, including fluctuations in commodity prices;
•: domestic and international economic, legal and regulatory factors unrelated to our performance; and
•: the realization of any risks described under this "Risk Factors" section.

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The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock. Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company's securities. Such litigation, if instituted against us, could result in very substantial costs, divert our management's attention and resources and harm our business, operating results and financial condition.

Quantum will have the ability to direct the voting of a majority of our common stock, and its interests may conflict with those of our other stockholders.

Upon completion of this offering, Quantum will beneficially own approximately % of our outstanding common stock (or approximately % if the underwriters' over-allotment option is exercised in full). As a result, Quantum will be able to control matters requiring stockholder approval, including the election of directors, changes to our organizational documents and significant corporate transactions. This concentration of ownership makes it unlikely that any other holder or group of holders of our common stock will be able to affect the way we are managed or the direction of our business. The interests of Quantum with respect to matters potentially or actually involving or affecting us, such as future acquisitions, financings and other corporate opportunities and attempts to acquire us, may conflict with the interests of our other stockholders. Given this concentrated ownership, Quantum would have to approve any potential acquisition of us. In addition, certain of our directors are currently employees of Quantum. These directors' duties as employees of Quantum may conflict with their duties as our directors, and the resolution of these conflicts may not always be in our or your best interest. Furthermore, in connection with this offering, we will enter into a stockholders' agreement with Quantum, Management Holdco and the Management Members. Among other things, the stockholders' agreement is expected to provide that the Management Members and Management Holdco will vote all of their shares of common stock in accordance with the direction of Quantum. Further, the stockholders' agreement is expected to provide Quantum with the right to designate a certain number of nominees to our board of directors so long as it and its affiliates collectively beneficially own at least 5% of the outstanding shares of our common stock. See "Certain Relationships and Related Party Transactions—Stockholders' Agreement". The existence of a significant stockholder and the stockholders' agreement may have the effect of deterring hostile takeovers, delaying or preventing changes in control or changes in management or limiting the ability of our other stockholders to approve transactions that they may deem to be in our best interests. Moreover, Quantum's concentration of stock ownership may also adversely affect the trading price of our common stock to the extent investors perceive a disadvantage in owning stock of a company with a significant stockholder.

Certain of our directors have significant duties with, and spend significant time serving, entities that may compete with us in seeking acquisitions and business opportunities and, accordingly, may have conflicts of interest in allocating time or pursuing business opportunities.

Certain of our directors, who are responsible for managing the direction of our operations and acquisition activities, hold positions of responsibility with other entities (including affiliates of Quantum) that are in the business of identifying and acquiring oil and natural gas properties. For example, three of our directors, Messrs. Davidson, VanLoh, Jr. and Webster, serve as Venture Partner, Founder and Chief Executive Officer and Managing Director, respectively, of Quantum Energy Partners, which is in the business of investing in oil and natural gas companies with independent management teams that also seek to acquire oil and natural gas properties. The existing positions held by these directors may give rise to fiduciary or other duties that are in conflict with the duties they owe to us. These directors may become aware of business opportunities that may be appropriate for presentation to us as well as to the other entities with which they are or may become affiliated. Due to

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these existing and potential future affiliations, they may present potential business opportunities to other entities prior to presenting them to us, which could cause additional conflicts of interest. They may also decide that certain opportunities are more appropriate for other entities with which they are affiliated, and as a result, they may elect not to present those opportunities to us. These conflicts may not be resolved in our favor. For additional discussion of our management's business affiliations and the potential conflicts of interest of which our stockholders should be aware, see "Certain Relationships and Related Party Transactions".

Quantum and its affiliates are not limited in their ability to compete with us, and the corporate opportunity provisions in our amended and restated certificate of incorporation could enable Quantum to benefit from corporate opportunities that might otherwise be available to us.

Our governing documents will provide that Quantum and its affiliates (including portfolio investments of Quantum and its affiliates) are not restricted from owning assets or engaging in businesses that compete directly or indirectly with us. In particular, subject to the limitations of applicable law, our amended and restated certificate of incorporation will, among other things:

•: permit Quantum and its affiliates and our directors to conduct business that competes with us and to make investments in any kind of property in which we may make investments; and
•: provide that if Quantum or any of its affiliates or any employee, partner, member, manager, officer or director of Quantum or any its affiliates who is also one of our directors becomes aware of a potential business opportunity, transaction or other matter, they will have no duty to communicate or offer that opportunity to us.

Quantum or its affiliates may become aware, from time to time, of certain business opportunities (such as acquisition opportunities) and may direct such opportunities to other businesses in which they have invested, in which case we may not become aware of or otherwise have the ability to pursue such opportunity. Further, such businesses may choose to compete with us for these opportunities, possibly causing these opportunities to not be available to us or causing them to be more expensive for us to pursue. In addition, Quantum and its affiliates may dispose of oil and natural gas properties or other assets in the future, without any obligation to offer us the opportunity to purchase any of those assets. As a result, our renouncing our interest and expectancy in any business opportunity that may be from time to time presented to Quantum and its affiliates could adversely impact our business or prospects if attractive business opportunities are procured by such parties for their own benefit rather than for ours.

Quantum and its affiliates are established participants in the oil and natural gas industry and have resources greater than ours, which may make it more difficult for us to compete with such persons with respect to commercial activities as well as for potential acquisitions. We cannot assure you that any conflicts that may arise between us and our stockholders, on the one hand, and Quantum, on the other hand, will be resolved in our favor. As a result, competition from Quantum and its affiliates could adversely impact our results of operations.

Our amended and restated certificate of incorporation and amended and restated bylaws, as well as Delaware law, will contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price of our common stock.

Our amended and restated certificate of incorporation will authorize our board of directors to issue preferred stock without stockholder approval. If our board of directors elects to issue preferred stock, it could be more difficult for a third party to acquire us. In addition, some provisions of our amended and restated certificate of incorporation and amended and restated bylaws could make it

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more difficult for a third party to acquire control of us, even if the change of control would be beneficial to our stockholders, including:

•: limitations on the removal of directors;
•: our classified board of directors, under which a director only comes up for election once every three years;
•: limitations on the ability of our stockholders to call special meetings;
•: establishing advance notice provisions for stockholder proposals and nominations for elections to the board of directors to be acted upon at meetings of stockholders;
•: providing that the board of directors is expressly authorized to adopt, or to alter or repeal our amended and restated bylaws; and
•: establishing advance notice and certain information requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.

Our amended and restated certificate of incorporation will designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.

Our amended and restated certificate of incorporation will provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law (the "DGCL"), our amended and restated certificate of incorporation or our amended and restated bylaws or (iv) any action asserting a claim against us that is governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of, and consented to, the provisions of our amended and restated certificate of incorporation described in the preceding sentence. This choice of forum provision may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and such persons. Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations.

Investors in this offering will experience immediate and substantial dilution of $ per share.

Based on an assumed initial public offering price of $ per share (the midpoint of the range set forth on the cover of this prospectus), purchasers of our common stock in this offering will experience an immediate and substantial dilution of $ per share in the as-adjusted net tangible book value per share of common stock from the initial public offering price, and our as-adjusted net tangible book value as of September 30, 2016, after giving effect to this offering would be $ per share. This dilution is due in large part to earlier investors having paid substantially less than the initial public offering price when they purchased their shares. See "Dilution".

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We do not intend to pay cash dividends on our common stock, and our credit agreement places certain restrictions on our ability to do so. Consequently, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates.

We do not plan to declare cash dividends on shares of our common stock in the foreseeable future. Additionally, our credit agreement places certain restrictions on our ability to pay cash dividends. Consequently, your only opportunity to achieve a return on your investment in us will be if you sell your common stock at a price greater than you paid for it. There is no guarantee that the price of our common stock that will prevail in the market will ever exceed the price that you pay in this offering.

Future sales of our common stock in the public market, or the perception that such sales may occur, could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us.

We may sell additional shares of common stock in subsequent public offerings. We may also issue additional shares of common stock or securities convertible into shares of our common stock. After the completion of this offering, we will have outstanding shares of common stock. This number includes shares that we and the selling stockholders are selling in this offering and shares that the selling stockholders may sell in this offering if the underwriters' over-allotment option is fully exercised, which may be resold immediately in the public market. Following the completion of this offering, and assuming full exercise of the underwriters' over-allotment option, Quantum will own shares of our common stock, or approximately % of our total outstanding shares, all of which are restricted from immediate resale under the federal securities laws and are subject to the lock-up agreements between them and the underwriters described in "Underwriting (Conflicts of Interest)", but may be sold into the market in the future. Quantum will be party to a registration rights agreement, which will require us to effect the registration of its shares in certain circumstances no earlier than the expiration of the lock-up period contained in the underwriting agreement entered into in connection with this offering.

In connection with this offering, we intend to file a registration statement with the SEC on Form S-8 providing for the registration of shares of our common stock issued or reserved for issuance under our 2017 Long-Term Incentive Plan. Subject to the satisfaction of vesting conditions, the expiration of lock-up agreements and the requirements of Rule 144, shares registered under the registration statement on Form S-8 may be made available for resale immediately in the public market without restriction.

We cannot predict the size of future issuances of our common stock or securities convertible into common stock or the effect, if any, that future issuances and sales of shares of our common stock will have on the market price of our common stock. Sales of substantial amounts of our common stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices of our common stock.

The underwriters of this offering may waive or release parties to the lock-up agreements entered into in connection with this offering, which could adversely affect the price of our common stock.

We, all of our directors and executive officers and the selling stockholders have entered or will enter into lock-up agreements pursuant to which we and they will be subject to certain restrictions with respect to the sale or other disposition of our common stock for a period of 180 days following the date of this prospectus. Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC, at any time and without notice, may release all or any portion of the common stock subject to the foregoing lock-up agreements. See "Underwriting (Conflicts of Interest)" for more information on these agreements. If the restrictions under the lock-up agreements are waived,

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then the common stock, subject to compliance with the Securities Act or exceptions therefrom, will be available for sale into the public markets, which could cause the market price of our common stock to decline and impair our ability to raise capital.

We may issue preferred stock the terms of which could adversely affect the voting power or value of our common stock.

Our amended and restated certificate of incorporation will authorize us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designations, preferences, limitations and relative rights, including preferences over our common stock respecting dividends and distributions, as our board of directors may determine. The terms of one or more classes or series of preferred stock could adversely impact the voting power or value of our common stock. For example, we might grant holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred stock could affect the residual value of the common stock.

We expect to be a "controlled company" within the meaning of the NYSE rules and, as a result, will qualify for and intend to rely on exemptions from certain corporate governance requirements.

Upon completion of this offering, Quantum will beneficially control a majority of the combined voting power of all classes of our outstanding voting stock. As a result, we expect to be a controlled company within the meaning of the NYSE corporate governance standards. Under the NYSE rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a controlled company and may elect not to comply with certain NYSE corporate governance requirements, including the requirements that:

•: a majority of the board of directors consist of independent directors;
•: the nominating and governance committee be composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities;
•: the compensation committee be composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities; and
•: there be an annual performance evaluation of the nominating and governance and compensation committees.

These requirements will not apply to us as long as we remain a controlled company. Following this offering, we intend to utilize some or all of these exemptions. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE. See "Management".

For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, that apply to other public companies.

In April 2012, President Obama signed into law the JOBS Act. We are classified as an "emerging growth company" under the JOBS Act. For as long as we are an emerging growth company, which may be up to five full fiscal years, unlike other public companies, we will not be required to, among other things: (i) provide an auditor's attestation report on management's assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; (ii) comply with any new requirements adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor's report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer; (iii) provide certain

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disclosure regarding executive compensation required of larger public companies; or (iv) hold nonbinding advisory votes on executive compensation. We will remain an emerging growth company for up to five years, although we will lose that status sooner if we have more than $1.0 billion of revenues in a fiscal year, have more than $700.0 million in market value of our common stock held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period.

To the extent that we rely on any of the exemptions available to emerging growth companies, you will receive less information about our executive compensation and internal control over financial reporting than issuers that are not emerging growth companies. If some investors find our common stock to be less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our common stock or if our operating results do not meet their expectations, our stock price could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if one or more of the analysts who cover our company downgrades our common stock or if our operating results do not meet their expectations, our stock price could decline.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The information in this prospectus includes "forward-looking statements". All statements, other than statements of historical fact included in this prospectus, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this prospectus, the words "could", "believe", "anticipate", "intend", "estimate", "expect", "project" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management's current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading "Risk Factors" and the other information included in this prospectus.

Forward-looking statements may include statements about:

•: our business strategy;
•: our reserves;
•: our drilling prospects, inventories, projects and programs;
•: our ability to replace the reserves we produce through drilling and property acquisitions;
•: our financial strategy, liquidity and capital required for our drilling program;
•: our realized oil, natural gas and NGL prices;
•: the timing and amount of our future production of oil, natural gas and NGLs;
•: our future drilling plans;
•: our competition and government regulations;
•: our ability to obtain permits and governmental approvals;
•: our pending legal or environmental matters;
•: our marketing of oil, natural gas and NGLs;
•: our leasehold or business acquisitions;
•: our costs of developing our properties;
•: our hedging strategy and results;
•: general economic conditions;
•: credit markets;
•: uncertainty regarding our future operating results; and
•: our plans, objectives, expectations and intentions contained in this prospectus that are not historical.

We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the development, production, gathering and sale of oil, natural gas and NGLs. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating reserves and in projecting future rates of production,

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cash flow and access to capital, the timing of development expenditures and the other risks described under "Risk Factors" and elsewhere in this prospectus.

Reserve engineering is a process of estimating underground accumulations of hydrocarbons that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reserve engineers. In addition, the results of drilling, testing and production activities may justify revisions of estimates that were made previously. If significant, such revisions could impact our strategy and change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of oil and natural gas that are ultimately recovered.

Should one or more of the risks or uncertainties described in this prospectus occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

All forward-looking statements, expressed or implied, included in this prospectus are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this prospectus.

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USE OF PROCEEDS

We expect to receive approximately $ million of net proceeds (assuming the midpoint of the price range set forth on the cover of this prospectus) from the sale of the common stock offered by us after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any proceeds from the sale of shares by the selling stockholders.

We intend to use a portion of the net proceeds we receive from this offering to fully repay the $ million of outstanding indebtedness under our credit facility. We intend to fund our $ million 2017 capital program with cash flow from operations, the remaining $ million of net proceeds from this offering and borrowings under our revolving credit facility.

As of September 30, 2016, we had $90.0 million of outstanding borrowings under our credit facility. Our credit facility matures on June 19, 2020, and bears interest at a variable rate. At September 30, 2016, the weighted average interest rate on borrowings under our credit facility was 3.54%. We also pay a commitment fee on unused amounts of our credit facility of 0.500%. The outstanding borrowings under our credit facility were incurred to fund a portion of our 2015 and 2016 capital expenditures, as well as general and administrative expenses. We may at any time reborrow amounts repaid under our credit facility, and we expect to do so in the future to fund our capital program.

Affiliates of certain of the underwriters are lenders under our credit facility and accordingly will receive 5% or more of the net proceeds of this offering due to the repayment of borrowings thereunder. Accordingly, this offering is being made in compliance with FINRA Rule 5121. Please read "Underwriting (Conflicts of Interest)".

A $1.00 increase or decrease in the assumed initial public offering price of $ per share (the midpoint of the price range set forth on the cover page of this prospectus) would cause the net proceeds from this offering, after deducting the underwriting discounts and commissions and estimated offering expenses, received by us to increase or decrease, respectively, by approximately $ million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same. If the proceeds increase due to a higher initial public offering price, we would use the additional net proceeds to fund additional future capital expenditures or for general corporate purposes. If the proceeds decrease due to a lower initial public offering price, then we would first reduce by a corresponding amount the net proceeds directed to general corporate purposes and then, if necessary, the net proceeds directed to repay outstanding borrowings under our credit facility.

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CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2016:

•: on an actual basis for our predecessor; and
•: on an as-adjusted basis to give effect to our corporate reorganization as described under "Corporate Reorganization" and the sale of shares of our common stock in this offering at an assumed initial offering price of $ per share (which is the midpoint of the range set forth on the cover of this prospectus) and the application of the net proceeds we receive from this offering as set forth under "Use of Proceeds".

The information set forth in the "As Adjusted" column of the table below is illustrative only and will be adjusted based on the actual initial public offering price and other final terms of this offering. This table should be read in conjunction with "Use of Proceeds" and the historical financial statements and accompanying notes included elsewhere in this prospectus.

	As of September 30, 2016

	Predecessor Actual			As Adjusted(1)
	(in thousands, except number of shares and par value)
Cash and cash equivalents	$	5,420		$



Long-term debt, including current maturities:
Credit facility(2)		90,000			—

Total long-term debt	$	90,000		$	—



Equity:
Members' equity		326,098			—
Preferred stock—$0.01 par value; no shares authorized, issued or outstanding, actual; shares authorized, no shares issued and outstanding, as adjusted		—			—
Common stock—$0.01 par value; no shares authorized, issued or outstanding, actual; shares authorized, shares issued and outstanding, as adjusted		—
Additional paid-in capital		—
Accumulated deficit		(18,068	)

Total equity	$	308,030		$



Total capitalization	$	398,030		$

(1): A $1.00 increase (decrease) in the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) additional paid-in capital, total equity and total capitalization by approximately $ million, $ million and $ million, respectively, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, after deducting the estimated underwriting discounts and commissions payable by us. We may also increase or decrease the number of shares we are offering. An increase (decrease) of one million shares offered by us at an assumed offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) additional paid-in capital, total equity and total capitalization by approximately $ million,

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$ million and $ million, respectively, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

(2): As of September 30, 2016, the borrowing base under our credit facility was $160.0 million. As of December 16, 2016, we had $132.0 million of outstanding borrowings under our credit facility with $28.0 million of additional indebtedness available. After giving effect to the sale of shares of our common stock in this offering and the application of the anticipated net proceeds we receive from this offering, we expect to have $160.0 million of available borrowing capacity under our credit facility.

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DILUTION

Purchasers of our common stock in this offering will experience immediate and substantial dilution in the net tangible book value (tangible assets less total liabilities) per share of our common stock for accounting purposes. Our net tangible book value as of September 30, 2016, after giving pro forma effect to our corporate reorganization, was approximately $ million, or $ per share.

Pro forma net tangible book value per share is determined by dividing our net tangible book value, or total tangible assets less total liabilities, by our shares of common stock that will be outstanding immediately prior to the closing of this offering, including giving effect to our corporate reorganization. Assuming an initial public offering price of $ per share (which is the midpoint of the price range set forth on the cover page of this prospectus), after giving effect to the sale of the shares in this offering and further assuming the receipt of the estimated net proceeds (after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us), our adjusted pro forma net tangible book value as of September 30, 2016, would have been approximately $ million, or $ per share. This represents an immediate increase in the net tangible book value of $ per share to our existing stockholders and an immediate dilution to new investors purchasing shares in this offering of $ per share, resulting from the difference between the offering price and the pro forma as-adjusted net tangible book value after this offering. The following table illustrates the per share dilution to new investors purchasing shares in this offering:


Assumed initial public offering price per share		$
Pro forma net tangible book value per share as of September 30, 2016 (after giving effect to our corporate reorganization)	$
Increase per share attributable to new investors in this offering

As-adjusted pro forma net tangible book value per share (after giving effect to our corporate reorganization and this offering)

Dilution in pro forma net tangible book value per share to new investors in this offering		$

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) our as-adjusted pro forma net tangible book value per share after the offering by $ and increase (decrease) the dilution to new investors in this offering by $ per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The following table summarizes, on an adjusted pro forma basis as of September 30, 2016, the total number of shares of common stock owned by existing stockholders and to be owned by new investors at $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and the total consideration paid and the average price per share paid by our existing stockholders and to be paid by new investors in this offering at $ , the midpoint of the price

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range set forth on the cover page of this prospectus, calculated before deduction of estimated underwriting discounts and commissions.

	Shares Acquired				Total Consideration

	Shares Acquired				Total Consideration				Average Price Per Share
	Number	Percent			Amount	Percent			Average Price Per Share
Existing stockholders(1)				%	$			%	$
New investors in this offering(2)

Total			100	%	$		100	%	$

(1): The number of shares disclosed for the existing stockholders includes shares being sold by the selling stockholders in this offering.
(2): The number of shares disclosed for the new investors does not include shares being purchased by the new investors from the selling stockholders in this offering.

The data in the table excludes shares of common stock reserved for issuance under our 2017 Long-Term Incentive Plan (which amount may be increased each year in accordance with the terms of the Plan). If the underwriters' over-allotment option is exercised in full, the number of shares held by new investors will be increased to , or approximately % of the total number of shares of common stock.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following table shows the summary historical consolidated financial data, for the periods and as of the dates indicated, of Jagged Peak Energy LLC, our accounting predecessor. The summary historical interim consolidated financial data of our predecessor as of September 30, 2016, and for the nine months ended September 30, 2016 and 2015, were derived from the unaudited interim consolidated financial statements of our predecessor included elsewhere in this prospectus. The summary historical consolidated financial data of our predecessor as of and for the years ended December 31, 2015 and 2014, were derived from the audited historical consolidated financial statements of our predecessor included elsewhere in this prospectus.

Our historical results are not necessarily indicative of future results. You should read the following table in conjunction with "Use of Proceeds", "Capitalization", "Management's Discussion and Analysis of Financial Condition and Results of Operations", the historical consolidated financial statements of our predecessor and accompanying notes included elsewhere in this prospectus.

	Nine Months Ended September 30,						Year Ended December 31,

	2016			2015			2015			2014
	(unaudited)
	(in thousands, except per share data)
Statement of Operations Data:
Revenues:
Oil sales	$	47,215		$	21,445		$	31,534		$	14,605
Natural gas sales		1,450			690			948			646
NGL sales		2,023			848			1,329			1,029
Other operating revenues		693			10			—			—

Total revenues		51,381			22,993			33,811			16,280
Operating expenses:
Lease operating expenses		5,221			2,357			3,165			2,041
Gathering and transportation expenses		662			98			171			121
Production and ad valorem taxes		3,173			1,588			2,244			920
Depletion, depreciation, amortization and accretion		29,430			14,488			22,685			8,444
Impairment of oil and natural gas properties and dry hole costs		1,509			7			6,489			1,414
Other operating expenses		1,671			257			261			64
General and administrative		7,878			5,906			7,446			7,330

Total operating expenses		49,544			24,701			42,461			20,334

Income (loss) from operations		1,837			(1,708	)		(8,650	)		(4,054	)
Other income (expense):
(Loss) gain on commodity derivatives		(8,208	)		1,086			1,323			5,375
Interest expense and other		(1,471	)		(77	)		(197	)		—
Other income		—			—			40			—

Total other (expense) income		(9,679	)		1,009			1,166			5,375

Net (loss) income	$	(7,842	)	$	(699	)	$	(7,484	)	$	1,321

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	Nine Months Ended September 30,						Year Ended December 31,

	2016			2015			2015			2014
Pro Forma Per-Share Data (unaudited)(1):
Net loss per common share:
Basic and diluted	$						$
Weighted average common shares outstanding:
Basic and diluted
Balance Sheet Data (at period end):
Cash and cash equivalents	$	5,420		$	12,662		$	14,165		$	33,628
Total assets		436,636			309,095			327,732			257,084
Total liabilities		128,606			30,981			43,402			16,270
Total members' equity		308,030			278,114			284,330			240,814
Cash Flow Data:
Net cash provided by operating activities	$	16,632		$	11,905		$	20,372		$	7,615
Net cash used in investing activities		(125,984	)		(80,318	)		(110,232	)		(187,067	)
Net cash provided by financing activities		100,607			47,448			70,397			199,800
Other Financial Data:
Adjusted EBITDAX(2)	$	32,899			16,921		$	26,510		$	6,631

(1): The net loss per common share and weighted average common shares outstanding reflect the estimated number of shares of common stock we expect to have outstanding upon the completion of our corporate reorganization described under "Corporate Reorganization". The pro forma per-share data also reflects additional pro forma income tax benefit of $ million and $ million for the nine months ended September 30, 2016 and the year ended December 31, 2015, respectively, associated with the income tax effects of the corporate reorganization described under "Corporate Reorganization" and this offering. Jagged Peak Energy Inc. is a C-corp under the Code, and as a result, will be subject to U.S. federal, state and local income taxes. Although our predecessor was subject to franchise tax in the State of Texas, it generally passed through its taxable income to its owners for other income tax purposes and thus was not subject to U.S. federal income taxes or other state or local income taxes.
(2): Adjusted EBITDAX is a non-GAAP financial measure. For a definition of Adjusted EBITDAX and a reconciliation of Adjusted EBITDAX to net income, see "Summary—Summary Historical Financial Data—Non-GAAP Financial Measure".

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the "Selected Historical Consolidated Financial Data" and the historical financial statements and related notes included elsewhere in this prospectus. The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, market prices for oil and natural gas, production volumes, estimates of proved reserves, capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed below and elsewhere in this prospectus, particularly in "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements", all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. We do not undertake any obligation to update any forward-looking statements except as otherwise required by applicable law.

Overview

Market Conditions

The oil and natural gas industry is cyclical and commodity prices are highly volatile. In the second half of 2014, oil prices began a rapid and significant decline as the global oil supply began to outpace demand. In general, the imbalance between supply and demand reflects the significant supply growth achieved in the United States as a result of shale drilling and oil production increases by certain other countries, including Russia and Saudi Arabia, as part of an effort to retain market share, combined with only modest demand growth in the United States and less-than-expected demand in other parts of the world, particularly in Europe and China. In addition, the lifting of economic sanctions on Iran has resulted in increasing supplies of oil from Iran, adding further downward pressure to oil prices. Although there has been a dramatic decrease in drilling activity in the industry, oil storage levels in the United States remain at historically high levels. Until supply and demand balance and the overhang in storage levels begins to decline, prices are expected to remain under pressure. The U.S. dollar has also strengthened relative to other leading currencies, which has caused oil prices to weaken, as they are U.S. dollar-denominated. NGL prices generally correlate to the price of oil. Also adversely affecting the price for NGLs is the supply of NGLs in the United States, which has continued to grow due to an increase in industry participants targeting projects that produce NGLs in recent years. Prices for domestic natural gas began to decline during the third quarter of 2014 and have continued to be weak throughout 2015 and thus far in 2016. The declines in natural gas prices are primarily due to an imbalance between supply and demand across North America. The duration and magnitude of commodity price declines cannot be accurately predicted.

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Our revenue, profitability and future growth are highly dependent on the prices we receive for our oil, natural gas and NGL production. Compared to 2014, our realized oil price for 2015 fell 43% to $43.92 per barrel, and our realized oil price for the nine months ended September 30, 2016, has further decreased to $39.02 per barrel. Similarly, our realized natural gas price for 2015 dropped 38% to $2.35 per Mcf and our realized price for NGLs declined 49% to $14.93 per barrel. For the nine months ended September 30, 2016, our realized prices for natural gas and NGLs further declined to $2.17 per Mcf and $14.35 per barrel, respectively. Lower oil, natural gas and NGL prices not only may decrease our revenues, but also may reduce the amount of oil, natural gas and NGLs that we can produce economically and therefore, potentially lower our oil, natural gas and NGL reserves. Lower commodity prices in the future could result in impairments of our properties and may materially and adversely affect our future business, financial condition, results of operations, operating cash flows, liquidity and ability to finance planned capital expenditures. See "Risk Factors—Risks Related to Our Business—If commodity prices decrease to a level such that our future undiscounted cash flows from our properties are less than their carrying value, we may be required to take write-downs of the carrying values of our properties". Lower oil, natural gas and NGL prices may also reduce the borrowing base under our credit agreement, which is determined at the discretion of the lenders and is based on the collateral value of our proved reserves that have been mortgaged to the lenders. See "Risk Factors—Risks Related to Our Business—Any significant reduction in our borrowing base under our credit facility as a result of the periodic borrowing base redeterminations or otherwise may negatively impact our ability to fund our operations".

Alternatively, higher oil and natural gas prices may result in significant non-cash fair value losses being incurred on our derivatives, which could cause us to experience net losses. Further, our capital and operating costs have historically risen during periods of increasing oil, natural gas and NGL prices. These cost increases result from a variety of factors beyond our control, such as increases in the cost of electricity, steel and other raw materials that we and our vendors rely upon; increased demand for labor, services and materials as drilling activity increases; and increased taxes. Such costs may rise faster than increases in our revenue if commodity prices rise, thereby negatively impacting our profitability, cash flow and ability to complete development activities as scheduled and on budget. This impact may be magnified to the extent that our ability to participate in the commodity price increases is limited by our derivative activities. See "Risk Factors—We could experience periods of higher costs if commodity prices rise. These increases could reduce our profitability, cash flow and ability to complete development activities as planned".

How We Evaluate Our Operations

We use a variety of financial and operational metrics to assess the performance of our oil and natural gas operations, including:

•: realized prices on the sale of oil, natural gas and NGLs, after the effects of our commodity derivative contracts on our oil production;
•: production results;
•: lease operating expenses; and
•: Adjusted EBITDAX.

See "—Sources of Our Revenues", "—Production Results", "—Operating Costs and Expenses" and "—Adjusted EBITDAX" and "Summary—Non-GAAP Financial Measure—Adjusted EBITDAX" for a discussion of these metrics.

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Sources of Our Revenues

Our revenues are derived from the sale of our oil and natural gas production, including the sale of NGLs that are extracted from our natural gas during processing. For the nine months ended September 30, 2016, our revenues were derived 93% from oil sales, 3% from natural gas sales and 4% from NGL sales. Our oil, natural gas and NGL revenues do not include the effects of derivatives.

Increases or decreases in our revenue, profitability and future production growth are highly dependent on the commodity prices we receive. Oil, natural gas and NGL prices are market driven and have been historically volatile, and we expect that future prices will continue to fluctuate due to supply and demand factors, seasonality and geopolitical and economic factors. See "—Market Conditions" for information regarding the current commodity price environment. A $1.00 per barrel change in our realized oil price would have resulted in a $1.2 million change in oil revenues for the first nine months of 2016. A $0.10 per Mcf change in our realized natural gas price would have resulted in a $0.07 million change in our natural gas revenues for the first nine months of 2016. A $1.00 per barrel change in NGL prices would have changed revenue by $0.1 million for the first nine months of 2016.

The following table presents our average realized commodity prices, as well as the effects of derivative settlements.

	Nine Months Ended September 30,				Year Ended December 31,

	2016		2015		2015		2014
Crude Oil (per Bbl):
Average NYMEX price	$	41.53	$	51.01	$	48.76	$	92.91
Realized price, before the effects of derivative settlements	$	39.02	$	46.72	$	43.92	$	77.28
Realized price, after the effects of derivative settlements	$	38.06	$	55.71	$	52.19	$	81.32
Natural Gas (per Mcf):
Average NYMEX price	$	2.35	$	2.76	$	2.63	$	4.26
Realized price	$	2.17	$	2.57	$	2.35	$	3.76
NGLs (per Bb l):
Average realized NGL price	$	14.35	$	14.88	$	14.93	$	29.40

While quoted NYMEX oil and natural gas prices are generally used as a basis for comparison within our industry, the prices we receive are affected by quality, energy content, location and transportation differentials for these products.

See "—Predecessor Results of Operations" below for an analysis of the impact changes in realized prices had on our revenues.

In addition to sales of oil, natural gas, and NGLs, we derive a minimal portion of our revenues from third party sales of fresh water and water disposal services. These revenues are reflected as other operating revenues in the Condensed Consolidated Statements of Operations.

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Production Results

The following table presents historical production volumes for our properties for the nine months ended September 30, 2016 and 2015, and the years ended December 31, 2015 and 2014:

	Nine Months Ended September 30,				Year Ended December 31,

	2016		2015		2015		2014
Oil (MBbls)		1,210		459		718		189
Natural gas (MMcf)		669		269		404		172
NGLs (MBbls)		141		57		89		35

Total (MBoe)(1)		1,463		561		874		253



Average net daily production (Boe/d)(1)		5,339		2,055		2,395		693

(1): May not sum or recalculate due to rounding.

As reservoir pressures decline, production from a given well or formation decreases. Growth in our future production and reserves will depend on our ability to continue to add proved reserves in excess of our production. Accordingly, we plan to maintain our focus on adding reserves through drilling as well as acquisitions. Our ability to add reserves through drilling projects and acquisitions is dependent on many factors, including our ability to borrow or raise capital, obtain regulatory approvals, procure materials, services and personnel and successfully identify and consummate acquisitions. Please read "Risk Factors—Risks Related to Our Business" for a discussion of these and other risks affecting our proved reserves and production.

Derivative Activity

Pricing for oil and natural gas production has been volatile and unpredictable for several years, and we expect this volatility to continue in the future. Due to this volatility, we expect to use commodity derivative instruments, such as collars, swaps and basis swaps to hedge price risk associated with our oil production. These hedging instruments will allow us to reduce, but not eliminate, the potential variability in cash flow from operations due to fluctuations in oil prices. This will provide increased certainty of cash flows for funding our drilling program and debt service requirements. These instruments provide only partial price protection against declines in oil prices and may partially limit our potential gains from future increases in prices. We may seek to hedge price risk associated with our natural gas and NGL production in the future. See "—Quantitative and Qualitative Disclosure About Market Risk—Commodity Price Risk" for information regarding our exposure to market risk, including the effects of changes in commodity prices, and our commodity derivative contracts.

We expect to continue to use commodity derivative instruments to hedge our price risk in the future. Subject to restrictions in our revolving credit agreement, our hedging strategy and future hedging transactions will be determined at our discretion and may be different than what we have done on a historical basis. Under our credit agreement, we are required to hedge a minimum of 75% of our projected oil volumes from PDP reserves for each calendar month on a two-year rolling basis, and we may hedge up to the greater of 85% of our proved reserves and 75% of our reasonably anticipated production for up to 24 months in the future, and up to the greater of 75% of our proved reserves and 50% of our reasonably anticipated production for 25 to 60 months in the future, provided that no hedges may have a term beyond five years.

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Operating Costs and Expenses

Costs associated with producing oil, natural gas and NGLs are substantial. Some of these costs vary with commodity prices, some trend with the type and volume of production and others are a function of the number of wells we own. As of September 30, 2016, and December 31, 2015, we owned interests in 46 and 39 gross producing wells, respectively.

Lease Operating Expenses. Lease operating expenses ("LOE") are the costs incurred in the operation of producing properties and workover costs. Expenses for utilities, direct labor, water transportation, injection and disposal, materials and supplies comprise the most significant portion of our LOE. Certain items, such as direct labor and materials and supplies, generally remain relatively fixed across broad production volume ranges, but can fluctuate depending on activities performed during a specific period. For instance, repairs to our pumping equipment or surface facilities result in increased LOE in periods during which they are performed. Certain operating cost components are variable and increase or decrease as the level of produced hydrocarbons and water increases or decreases. For example, certain power and water disposal costs vary directly with the amount of hydrocarbons and water we produce.

We monitor our operations to ensure that we are incurring LOE at an acceptable level. For example, we monitor our LOE per Boe to determine if any wells or properties should be shut in, repaired, recompleted or sold. This unit rate also allows us to monitor these costs in certain fields and geographic areas to identify trends and to benchmark against other producers. Although we strive to reduce our LOE, these expenses can increase or decrease on a per unit basis as a result of various factors as we operate our properties or make acquisitions and dispositions of properties. For example, we may increase field level expenditures to optimize our operations, incurring higher expenses in one quarter relative to another, or we may acquire or dispose of properties that have different LOE per Boe. These initiatives would influence our overall operating cost and could cause fluctuations when comparing LOE on a period-to-period basis.

Gathering and Transportation Expenses. Gathering and transportation expenses principally consist of expenditures to prepare and transport production from the wellhead to a specified sales point and natural gas processing costs. These costs will fluctuate with increases or decreases in production volumes, contractual fees and changes in fuel and compression costs.

Production and Ad Valorem Taxes. Production taxes are paid on produced oil and natural gas based on a percentage of revenues from production sold at fixed rates established by federal, state or local taxing authorities. In general, the production taxes we pay correlate to changes in our oil, natural gas and NGL revenues. We are also subject to ad valorem taxes in the counties where our production is located. Ad valorem taxes are generally based on the valuation of our oil and natural gas properties, which also trend with oil and natural gas prices and vary across the different counties in which we operate.

Depletion, Depreciation, Amortization and Accretion. Depletion, depreciation, amortization and accretion ("DD&A") is the systematic expensing of the capitalized costs incurred to acquire and develop oil and natural gas properties. We use the successful efforts method of accounting for oil and natural gas activities and, as such, we capitalize all costs incurred related to the acquisition of oil and natural gas properties and the costs of drilling development wells and successful exploratory wells. Please read "—Critical Accounting Policies and Estimates—Successful Efforts Method of Accounting for Oil and Natural Gas Activities" for further discussion.

Impairment of Oil and Natural Gas Properties and Dry Hole Costs. Impairment of oil and natural gas properties and dry hole costs represent (i) the cost to reduce impaired proved oil and gas properties to their fair value, (ii) the cost of unproved properties that will no longer be held by production or extensions of leases and (iii) the costs of unsuccessful exploratory wells. The financial

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statements included herein reflect certain impairments described in clauses (ii) and (iii) above. Please read "—Critical Accounting Policies and Estimates—Successful Efforts Method of Accounting for Oil and Natural Gas Activities" and "—Critical Accounting Policies and Estimates—Impairment of Oil and Natural Gas Properties" for further discussion.

Other Operating Expenses. Other operating expenses represent delay rentals for leases on certain unproved properties, payments to landowners for water sourcing and disposal related to third party sales, and other costs associated with our oil and natural gas properties.

General and Administrative. General and administrative ("G&A") consists of costs incurred for overhead, including payroll and benefits for our corporate staff, costs of maintaining our headquarters, costs of managing our production and development operations, audit and other fees for professional services and legal compliance.

Interest Expense. We finance a portion of our working capital requirements and capital expenditures with borrowings under our credit facility. As a result, we incur interest expense that is affected by both fluctuations in interest rates and our financing decisions. We reflect interest paid to the lenders under our credit facility in interest expense. Interest expense is reflected net of capitalized interest.

Adjusted EBITDAX

We define Adjusted EBITDAX as net income before interest expense, net of capitalized interest, depletion, depreciation, amortization and accretion, impairment of oil and natural gas properties, exploration expenses, income taxes, and net gains or losses on derivatives less net cash from derivative settlements. Adjusted EBITDAX should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of our operating performance. Certain items excluded from Adjusted EBITDAX are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historic costs of depreciable assets and exploration expenses, none of which are components of Adjusted EBITDAX. Our computations of Adjusted EBITDAX may not be comparable to other similarly titled measures of other companies. For further discussion, please read "Summary—Summary Historical Financial Data—Non-GAAP Financial Measure".

Factors Affecting the Comparability of Our Results of Operations to the Historical Results of Our Predecessor

Our future results of operations may not be comparable to the historical results of operations of our predecessor for the periods presented, primarily for the reasons described below.

Public Company Expenses

Upon completion of this offering, we expect to incur direct, incremental G&A expenses as a result of being a publicly traded company, including, but not limited to, costs associated with hiring new personnel, implementation of compensation programs that are competitive with our public company peer group, annual and quarterly reports to stockholders, tax return preparation, independent auditor fees, investor relations activities, registrar and transfer agent fees, incremental director and officer liability insurance costs and independent director compensation. These direct, incremental G&A expenses are not included in our historical results of operations.

Income Taxes

Jagged Peak Energy Inc. is a C-corp under the Code, and as a result, will be subject to U.S. federal, state and local income taxes. Although our predecessor was subject to franchise tax in the state

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of Texas (at a statutory rate of up to 1.00% of a portion of gross revenues apportioned to Texas), it generally passed through its taxable income to its owners for other income tax purposes and thus was not subject to U.S. federal income taxes or other state or local income taxes. Accordingly, the financial data attributable to our predecessor contains no provision for U.S. federal income taxes or income taxes in any state or locality other than franchise tax in the State of Texas. We estimate that Jagged Peak Energy Inc. will be subject to U.S. federal, state and local taxes at a blended statutory rate of 35.5% of pre-tax earnings. Further, if the corporate reorganization discussed under "Corporate Reorganization" had occurred on September 30, 2016, our predecessor would have recognized a deferred tax liability of approximately $ million, primarily related to the tax basis of its long-lived assets being less than its book basis in those assets.

Corporate Reorganization

The corporate reorganization that will be completed simultaneously with the closing of this offering provides a mechanism by which the shares of our common stock to be allocated amongst the Existing Owners, including the holders of our management incentive units, will be determined. As a result, the satisfaction of all conditions relating to certain management incentive units in Jagged Peak Energy LLC held by the Management Members will be probable. Accordingly, we will record a compensation cost of approximately $ million related to the estimated fair value of the management incentive units at the closing of this offering, which includes $14.7 million related the management incentive advance payment made in April 2016. Of this compensation cost, $ million will be recognized as a non-cash operating expense at the closing of this offering and the balance of $ million will be recognized as a non-cash charge over the next three years as vesting conditions are satisfied.

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Predecessor Results of Operations

Nine Months Ended September 30, 2016, Compared to Nine Months Ended September 30, 2015

Oil and Natural Gas Revenues. The following table provides the components of our revenues for the periods indicated, as well as each period's respective average prices and production volumes:

	Nine Months Ended September 30,

	2016		2015		Change			% Change
	(unaudited)
Revenues (in thousands):
Oil sales	$	47,215	$	21,445	$	25,770			120	%
Natural gas sales		1,450		690		760			110	%
NGL sales		2,023		848		1,175			139	%
Other operating revenues		693		10		683			NM

Total revenues	$	51,381	$	22,993	$	28,388			123	%



Average sales price(1):
Oil (per Bbl)	$	39.02	$	46.72	$	(7.70	)		(16	)%
Natural gas (per Mcf)	$	2.17	$	2.57	$	(0.40	)		(16	)%
NGLs (per Bbl)	$	14.35	$	14.88	$	(0.53	)		(4	)%

Total (per Boe)	$	34.65	$	40.97	$	(6.32	)		(15	)%



Production volumes:
Oil (MBbls)		1,210		459		751			164	%
Natural gas (MMcf)		669		269		400			149	%
NGLs (MBbls)		141		57		84			147	%

Total (MBoe)(2)		1,463		561		902			161	%



Average daily production volume:
Oil (Bbls/d)		4,416		1,681		2,735			163	%
Natural gas (Mcf/d)		2,442		985		1,457			148	%
NGLs (Bbls/d)		515		209		306			146	%

Total (Boe/d)(2)		5,339		2,055		3,284			160	%

NM—Not meaningful

(1): Average prices shown in the table reflect prices before the effects of our realized commodity derivative transactions.
(2): Totals may not sum or recalculate due to rounding.

As reflected in the table above, our total revenue for the first nine months of 2016 was 123%, or $28.4 million, higher than our total revenue for the first nine months of 2015. The increase in total revenue is primarily due to an increase of 161% in our total production, offset in part by a 15% decrease in the average sales price compared to the prior period.

Oil sales for the first nine months of 2016 increased 120% to $47.2 million, from $21.4 million for the nine months ended September 30, 2015. The increase in oil sales between periods is attributable to an increase in oil production volumes of 751 MBbls, or 164%, partially offset by a $7.70 per Bbl, or 16%, decrease in our average realized price for oil.

Natural gas sales for the first nine months of 2016 increased 110% to $1.5 million from $0.7 million for the nine months ended September 30, 2015. The increase in natural gas sales relates to

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an increase in natural gas production volumes of 400 MMcf, or 149%, partially offset by a 16%, or $0.40 per Mcf, decline in natural gas prices.

NGL sales for the first nine months of 2016 increased 139% to $2.0 million, compared to $0.8 million for nine months ended September 30, 2015. The increase in NGL sales is primarily due to an increase in NGL production of 147%, or 84 MBbls, partially offset by a $0.53 per Bbl, or 4%, decrease in our average realized price for NGLs.

Other operating revenues for the first nine months of 2016 increased to $0.7 million, compared to $0.01 million for the nine months ended September 30, 2015. This increase is due to increased sales of our excess fresh water and water disposal capacity between periods.

Operating Expenses. We present per-Boe information because we use this information to evaluate our performance relative to our peers and to identify and measure trends we believe may require additional analysis.

The following table summarizes our expenses for the periods indicated:

	Nine Months Ended September 30,

	2016		2015		Change			% Change
	(unaudited)
Operating expenses (in thousands):
Lease operating expenses	$	5,221	$	2,357	$	2,864			122	%
Gathering and transportation expenses		662		98		564			576	%
Production and ad valorem taxes		3,173		1,588		1,585			100	%
Depletion, depreciation, amortization and accretion		29,430		14,488		14,942			103	%
Impairment of oil and natural gas properties and dry hole costs		1,509		7		1,502			NM
Other operating expenses		1,671		257		1,414			550	%
General and administrative		7,878		5,906		1,972			33	%

Total operating expenses	$	49,544	$	24,701	$	24,843			101	%



Expenses per Boe:
Lease operating expenses	$	3.57	$	4.20	$	(0.63	)		(15	)%
Gathering and transportation expenses		0.45		0.17		0.28			165	%
Production and ad valorem taxes		2.17		2.83		(0.66	)		(23	)%
Depletion, depreciation, amortization and accretion		20.12		25.83		(5.71	)		(22	)%
Impairment of oil and natural gas properties and dry hole costs		1.03		0.01		1.02			NM
Other operating expenses		1.14		0.46		0.68			148	%
General and administrative		5.38		10.53		(5.15	)		(49	)%

Total operating expenses per Boe	$	33.86	$	44.03	$	(10.17	)		(23	)%

NM—Not meaningful

Lease Operating Expenses. Our LOE varies in conjunction with our level of production, the timing of our workover expenses and variations in industry activity that cause fluctuations in service provider costs. LOE increased 122% to $5.2 million for the nine months ended September 30, 2016 from $2.4 million for the nine months ended September 30, 2015. The increase was primarily related to higher production between periods, which resulted in additional costs for contract labor, chemicals and electricity. In addition, in 2016 we generally increased our repair and maintenance program for our operating wells. While our LOE costs increased overall, our LOE per Boe decreased $0.63 per Boe, or

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15%, for the nine months ended September 30, 2016 compared with the same period in 2015. The decrease in LOE per Boe is largely the result of scale benefits associated with higher volumes (a higher percentage of our production was from new wells with higher production and lower operating costs relative to our older wells). Additionally, we have improved our overall operating cost efficiencies, including reduced water disposal costs resulting from the increased use of our internal water disposal infrastructure over higher-priced third-party alternatives.

Gathering and Transportation Expenses. Gathering and transportation expenses largely consist of contractual costs to gather, transport and process our natural gas and NGLs, and generally fluctuate with our production. Gathering and transportation expenses increased $0.6 million for the nine months ended September 30, 2016 compared to the nine months ended September 30, 2015, due to increased production, as well as an increase in our per unit gathering and transportation expense. The period over period increase in our per unit gathering and transportation expense was due to a shift away from marketing our natural gas under percent-of-proceeds contracts toward marketing a larger portion of our natural gas under fixed fee contracts. Under percent-of-proceeds contracts, we receive a percentage of the total proceeds received by the marketer, which is net of transportation expense. Accordingly, we do not book a separate charge for gathering and transportation expense under those contracts. Whereas, under our fixed fee natural gas marketing contracts, we receive a topline revenue amount and are separately charged for the associated gathering and transportation expense.

Production and Ad Valorem Taxes. Production taxes are based on the market value of our production, and ad valorem taxes are primarily based on the valuation of our producing oil and natural gas properties. Production and ad valorem taxes increased 100% to $3.2 million for the nine months ended September 30, 2016 from $1.6 million for the nine months ended September 30, 2015. The increase is primarily due to an increase in revenues and the addition of several new high-volume wells between periods.

Depletion, Depreciation, Amortization and Accretion. Our DD&A expense increased 103% to $29.4 million for the nine months ended September 30, 2016 from $14.5 million for the nine months ended September 30, 2015. The increase in DD&A is largely due to an increase in production, partially offset by a decrease in our DD&A rate. Our DD&A rate can vary due to changes in proved reserve volumes, acquisition and disposition activity, development costs and impairments. The DD&A rate decreased 22% to $20.12 per Boe for the nine months ended September 30, 2016 from $25.83 per Boe for the nine months ended September 30, 2015. The decrease in our DD&A rate was largely due to an increase in reserve volumes due to successful drilling activities, partly offset by an increase in capitalized costs in proved property from these same activities.

Impairment of Oil and Natural Gas Properties and Dry Hole Costs. We incurred $1.5 million of impairment and dry hole costs for the nine months ended September 30, 2016 primarily due to $1.2 million of dry hole costs related to a vertical test well drilled to a shallow horizon we no longer consider prospective. Additionally, we incurred $0.3 million of impairment costs related to the expiration of certain leases on unproved properties. No impairments were recorded on proved properties for the nine month periods ended September 30, 2016 and September 30, 2015.

Other Operating Expenses. We incurred $1.7 million of other operating expenses for the nine months ended September 30, 2016 primarily due to $1.3 million in delay rentals on certain unproved properties, $0.2 million in landowner payments related to third party sales of fresh water and water disposal and $0.2 million due to the termination of a rig contract. We incurred $0.3 million of other operating expenses for the nine months ended September 30, 2015 in conjunction with the termination of a rig contract.

General and Administrative. G&A increased 33% to $7.9 million for the nine months ended September 30, 2016 from $5.9 million for the nine months ended September 30, 2015. The increase was

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due to a $1.0 million employee separation payment paid in the first quarter of 2016, $0.7 million of additional employee and contractor costs required to manage our expanding capital program and production levels and $0.2 million of additional legal, audit, tax and travel costs during the first nine months of 2016. While our G&A costs increased overall, our G&A per Boe decreased $5.15, or 49%, between periods due primarily to increased production.

Other Income and Expenses. The following table summarizes our other income and expenses for the periods indicated:

	Nine Months Ended September 30,

	2016			2015			Change
Other (expense) income (in thousands):
Gain (loss) on commodity derivates	$	(8,208	)	$	1,086		$	(9,294	)
Interest expense and other		(1,471	)		(77	)		(1,394	)

Total other income (expense)	$	(9,679	)	$	1,009		$	(10,688	)

Gain (loss) on Commodity Derivatives. During the nine months ended September 30, 2016, we incurred an $8.2 million net loss on commodity derivatives primarily because the oil forward price curve at September 30, 2016 was generally higher than when we entered into the derivative contracts that were open at September 30, 2016. We also paid $1.2 million in net cash payments to settle derivative contracts during the first nine months of 2016. During the nine months ended September 30, 2015, we recorded a $1.1 million net gain due largely to $4.1 million of net cash receipts from derivative contracts settled during the period, offset by a fair value loss because the forward price curve at September 30, 2015 was generally higher than when we entered into the derivative contracts open at September 30, 2015.

Interest Expense and Other. During the nine months ended September 30, 2016 and 2015, we recorded $1.5 million and $0.07 million, respectively, of interest expense related to the borrowings on our credit facility. We began borrowing on our credit facility in July 2015.

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Year Ended December 31, 2015, Compared to the Year Ended December 31, 2014

Oil and Natural Gas Revenues. The following table provides the components of our revenues for the years indicated, as well as each year's respective average prices and production volumes:

	Year Ended December 31,

	2015		2014		Change			% Change
Revenues (in thousands):
Oil sales	$	31,534	$	14,605	$	16,929			116	%
Natural gas sales		948		646		302			47	%
NGL sales		1,329		1,029		300			29	%

Total revenues	$	33,811	$	16,280	$	17,571			108	%



Average sales price:(1)
Oil (per Bbl)	$	43.92	$	77.28	$	(33.36	)		(43	)%
Natural gas (per Mcf)		2.35		3.76		(1.41	)		(38	)%
NGLs (per Bbl)		14.93		29.40		(14.47	)		(49	)%

Total (per Boe)	$	38.69	$	64.35	$	(25.66	)		(40	)%



Production:
Oil (MBbls)		718		189		529			280	%
Natural gas (MMcf)		404		172		232			135	%
NGLs (MBbls)		89		35		54			154	%

Total (MBoe)(2)		874		253		622			246	%



Average daily production volumes:
Oil (Bbls/d)		1,967		518		1,449			280	%
Natural gas (Mcf/d)		1,107		471		636			135	%
NGLs (Bbls/d)		244		96		148			154	%

Total (Boe/d)(2)		2,395		693		1,702			246	%

(1): Average prices shown in the table reflect prices before the effects of our realized commodity derivative transactions.
(2): Totals may not sum or recalculate due to rounding.

Our total oil and natural gas revenues for 2015 were 108%, or $17.5 million, higher than in 2014 despite a 40% decrease in commodity prices. The increase in oil and natural gas revenues is due to an increase in production volumes of 622 MBoe, or 246%, as a result of having several additional high-producing wells on production in 2015 as compared to 2014.

Oil sales increased 116%, or $16.9 million, due to a 280% increase in production volumes, partially offset by a 43% decrease in average sales price for 2015 as compared to the prior year. Natural gas sales increased 47%, or $0.3 million, primarily due to a 135% increase in sales volumes from new wells in 2015, partially offset by a 38% decrease in average sales price as compared to the prior year. NGL sales increased 29%, or $0.3 million, primarily due to a 154% increase in sales volumes from new wells in 2015, partially offset by a 49% decrease in average sales price as compared to 2014.

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Operating Expenses. The following table summarizes our expenses for the periods indicated:

	Year Ended December 31,

	2015		2014		Change			% Change
Operating expenses (in thousands):
Lease operating expenses	$	3,165	$	2,041	$	1,124			55	%
Gathering and transportation expenses		171		121		50			41	%
Production and ad valorem taxes		2,244		920		1,324			144	%
Depletion, depreciation, amortization and accretion		22,685		8,444		14,241			169	%
Impairment of oil and natural gas properties and dry hole costs		6,489		1,414		5,075			359	%
Other operating expenses		261		64		197			308	%
General and administrative		7,446		7,330		116			2	%

Total operating expenses	$	42,461	$	20,334	$	22,127			109	%



Operating expenses per Boe:
Lease operating expenses	$	3.62	$	8.07	$	(4.45	)		(55	)%
Gathering and transportation expenses		0.20		0.48		(0.28	)		(58	)%
Production and ad valorem taxes		2.57		3.64		(1.07	)		(29	)%
Depletion, depreciation, amortization and accretion		25.94		33.38		(7.44	)		(22	)%
Impairment of oil and natural gas properties and dry hole costs		7.42		5.58		1.84			33	%
Other operating expenses		0.30		0.25		0.05			20	%
General and administrative		8.52		28.97		(20.45	)		(71	)%

Total operating expenses per Boe	$	48.57	$	80.37	$	(31.80	)		(40	)%

Lease Operating Expenses. LOE increased 55%, or $1.1 million, in 2015 as compared to 2014, due primarily to higher production between periods, resulting in increased needs for utilities, produced water disposal, repairs and maintenance. While our LOE increased overall, LOE per Boe decreased by $4.45, or 55%, from $8.07 in 2014 to $3.62 in 2015, due primarily to a higher percentage of our production coming from new high-producing, low-operating costs wells. We also improved our overall operating efficiencies, including the continued construction of our water disposal infrastructure.

Gathering and Transportation Expenses. Gathering and transportation expenses increased 41%, or $0.1 million, in 2015 as compared to 2014, primarily due to an increase in production volumes, as well as an increase in the amount of natural gas being sold under sales contracts that provided for certain gathering and transportation costs to be passed through to the producer.

Production and Ad Valorem Taxes. Production and ad valorem taxes increased 144%, or $1.3 million in 2015 as compared to 2014, primarily due to higher production revenue. Production and ad valorem taxes as a percentage of our revenue was 6.6% for 2015 compared to 5.7% for 2014. In addition, ad valorem taxes increased largely because of the addition of several new high-value wells.

Depletion, Depreciation, Amortization and Accretion. Our DD&A expense increased 169%, or $14.2 million, in 2015 as compared to 2014, primarily due to increased production partially offset by a decrease in our DD&A rate. The DD&A rate decreased 22% to $25.94 in 2015 from $33.38 in 2014. The decrease in the DD&A rate was largely due to an increase in reserve volumes due to successful drilling activities, offset by an increase in capitalized costs in proved properties from these same activities.

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Impairment of Oil and Natural Gas Properties and Dry Hole Costs. In 2015 and 2014, we recorded $6.5 million and $1.4 million, respectively, of impairment expense related to the expiration of certain leases on unproved properties. Please read "—Operating Costs and Expenses—Impairment of Oil and Natural Gas Properties and Dry Hole Costs" for further discussion. No impairments were recorded on proved properties during 2015 or 2014.

Other Operating Expenses. We incurred $0.3 million of other operating expenses in 2015 primarily related to the termination of a rig contract. We incurred $0.1 million of other operating expenses in 2014, primarily due to delay rentals on certain unproved properties.

General and Administrative. G&A in 2015 increased 2%, or $0.1 million, as compared to 2014, primarily due to increased employee and contractor costs to manage our growing production and capital program. While our G&A costs increased overall, our G&A per Boe decreased $20.45, or 71%, between periods due primarily to our increasing production.

Other Income and Expenses. The following table summarizes our other income and expenses for the periods indicated:

	Year Ended December 31,

	2015			2014		Change			% Change
Other income (expense) (in thousands):
Gain on commodity derivatives	$	1,323		$	5,375	$	(4,052	)		(75	)%
Interest expense and other		(197	)		—		(197	)		NM
Other income		40			—		40			NM

Total other income (expense)	$	1,166		$	5,375	$	(4,029	)		(78	)%

NM—Not meaningful.

Gain on Commodity Derivatives. During 2015, we incurred a $1.3 million net gain primarily related to $5.9 million of cash receipts from derivatives settled during 2015. This gain was partially offset because the forward price curve at the end of the period was generally lower than the forward price curves that were in effect when we entered into the majority of the related derivative contracts. During 2014, we incurred a $5.4 million net gain primarily because the forward price curve at the end of 2014 was generally lower than forward price curves that were in effect when we entered into the majority of the related derivative contracts. In addition, we received cash of approximately $0.8 million related to derivatives settled during 2014.

Interest Expense and Other. We incurred $0.2 million of interest expense in 2015 in conjunction with borrowings under our credit facility.

Capital Requirements and Sources of Liquidity

Our acquisition and development activities require us to make significant operating and capital expenditures. Historically, our primary sources of liquidity have been capital contributions from our equity owners, borrowings under our credit facility and cash flows from operations. To date, our primary use of capital has been for the acquisition and development of oil and natural gas properties.

The amount and allocation of future capital expenditures will depend upon a number of factors, including the number and size of acquisition opportunities, our cash flows from operating, investing and financing activities and our ability to assimilate acquisitions and execute our drilling program. We periodically review our capital expenditure budget to assess changes in current and projected cash flows, acquisition and divestiture activities, debt requirements and other factors. If we are unable to

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obtain funds when needed or on acceptable terms, we may not be able to complete acquisitions that may be favorable to us or finance the capital expenditures necessary to maintain our production or proved reserves.

We plan to continue our practice of entering into hedging arrangements to reduce the impact of commodity price volatility on our cash flow from operations. Under this strategy, we expect to maintain an active hedging program that seeks to reduce our exposure to commodity price volatility and protect our cash flow, returns and the funding of our capital program while also providing stability to our borrowing base.

Our 2017 capital budget for drilling, completion and recompletion activities and facilities costs is approximately $ million, excluding potential acquisitions. We expect to allocate approximately $ million of our 2017 capital budget for the drilling and completion of operated wells. In the nine months ended September 30, 2016, we incurred capital costs of approximately $86.6 million, excluding leasehold and acquisition costs. In addition, we incurred capital costs of $39.3 million for acquiring undeveloped properties.

Because we operate a high percentage of our acreage, capital expenditure amounts and timing are largely discretionary and within our control. We determine our capital expenditures depending on a variety of factors, including, but not limited to, the success of our drilling activities, prevailing and anticipated prices for oil and natural gas, the availability of necessary equipment, infrastructure and capital, the receipt and timing of required regulatory permits and approvals, seasonal conditions, drilling and acquisition costs and the level of participation by other working interest owners. A deferral of planned capital expenditures, particularly with respect to drilling and completing new wells, could result in a reduction in anticipated production and cash flows. Additionally, if we curtail our drilling program, we may lose a portion of our acreage through lease expirations. See "Business—Oil and Natural Gas Production Prices and Costs—Developed and Undeveloped Acreage". In addition, we may be required to reclassify some portion of our reserves currently booked as proved undeveloped reserves to no longer be proved reserves if such a deferral of planned capital expenditures means we will be unable to develop such reserves within five years of their initial booking.

As of September 30, 2016, we had $90.0 million outstanding under our credit facility with $70.0 million of additional borrowing capacity available. We intend to use a portion of the net proceeds from this offering to fully repay the outstanding borrowings under our revolving credit facility. Our borrowing base was $160.0 million as of September 30, 2016. Our next scheduled borrowing base redetermination is expected on or about December 31, 2016.

Based upon our current oil and natural gas price expectations for the remainder of 2016 and 2017, following the closing of this offering, we believe that our cash flow from operations, additional borrowings under our credit facility and a portion of the proceeds from this offering will provide us with sufficient liquidity to execute our current capital program through 2017. However, future cash flows are subject to a number of variables, including the level of oil and natural gas production and prices, and significant additional capital expenditures will be required to more fully develop our properties. If we require additional capital for capital expenditures, acquisitions or other reasons, we may seek such capital through traditional reserve base borrowings, joint venture partnerships, production payment financings, asset sales, offerings of debt and equity securities or other means. If we are unable to obtain funds when needed or on acceptable terms, we may be required to curtail our current drilling program, which could result in a loss of acreage through lease expirations. In addition, we may not be able to complete acquisitions that may be favorable to us or finance the capital expenditures necessary to maintain our production or replace our reserves.

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Working Capital

Our working capital, which we define as current assets minus current liabilities, totaled a deficit of $19.8 million at September 30, 2016. At December 31, 2015, we had a working capital surplus of approximately $0.05 million, and at December 31, 2014, we had a working capital surplus of approximately $25.3 million. We may incur additional working capital deficits in the future due to the amounts that accrue related to our drilling program. Our collection of receivables has historically been timely, and losses associated with uncollectible receivables have historically not been significant. Our cash and cash equivalents balance totaled approximately $5.4 million, $14.2 million and $33.6 million at September 30, 2016, December 31, 2015 and December 31, 2014, respectively. We expect that our cash flows from operating activities, availability under our credit facility after application of the estimated net proceeds from this offering as described under "Use of Proceeds" and the remaining portion of the proceeds from this offering will be sufficient to fund our working capital needs through 2017. We expect that our pace of development, production volumes, commodity prices and differentials to NYMEX prices for our oil and natural gas production will be the largest variables affecting our working capital.

Cash Flows

The following table summarizes our cash flows for the periods indicated:

	Nine Months Ended September 30,						Year Ended December 31,

	2016			2015			2015			2014
	(unaudited)
	(in thousands)
Net cash provided by operating activities	$	16,632		$	11,905		$	20,372		$	7,615
Net cash used in investing activities	$	(125,984	)	$	(80,318	)	$	(110,232	)	$	(187,067	)
Net cash provided by financing activities	$	100,607		$	47,448		$	70,397		$	199,800

Analysis of Cash Flow Changes Between the Nine Months Ended September 30, 2016 and 2015

Operating Activities. Net cash provided by operating activities is primarily affected by the price of oil, natural gas and NGLs, production volumes and changes in working capital. The increase in net cash provided by operating activities for the first nine months of 2016 compared to the prior-year period is primarily due to an increase in revenue of $27.7 million and a favorable change in operating assets and liabilities of $6.0 million, partially offset by a $14.7 million non-recurring management incentive advance, a $5.3 million decrease in net cash received for settlements of derivatives, and higher operating costs due to an increase in production.

Investing Activities. Net cash used in investing activities is primarily comprised of acquisition and development of oil and natural gas properties, net of dispositions. The increased amount of cash used in investing activities was primarily due to a $31.0 million increase in leasehold and acquisition costs and a $12.5 million increase in costs to develop oil and natural gas properties for the first nine months of 2016 as compared to the prior-year period.

Financing Activities. Net cash provided by financing activities in the first nine months of 2016 primarily included $70.0 million of borrowings under our credit facility and $31.5 million of proceeds from the issuance of equity interests, partially offset by $1.0 million of debt issuance cost. Net cash provided by financing activities in the first nine months of 2015 primarily included $38.0 million of cash

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provided by equity issuances and $10.0 million of borrowings under our credit facility, partially offset by $0.6 million of debt issuance cost.

Analysis of Cash Flow Changes Between the Year Ended December 31, 2015 and 2014

Operating Activities. The increase in net cash provided by operating activities for the year ended December 31, 2015 as compared to the prior-year period is primarily due to a $17.5 million increase in total revenues and a $5.2 million increase in net cash received for settlements of derivatives, offset by an $7.0 million decrease in operational assets and liabilities and higher operating costs due to an increase in production.

Investing Activities. In 2015, net cash used for investing activities included $110.5 million for the acquisition and development of oil and natural gas properties, offset by proceeds from asset sales of $0.4 million. In 2014, net cash used for investing activities included $188.9 million for the acquisition and development of oil and natural gas properties and $1.1 million of other property, plant and equipment, offset by proceeds from asset sales of $2.9 million.

Financing Activities. Net cash provided by financing activities in 2015 included $51.0 million of cash provided by equity issuances and $20.0 million of borrowings under our credit facility, offset by debt issuance costs of $0.6 million. Net cash provided by financing activities in 2014 consisted of $199.8 million of cash provided by equity issuances.

Our Credit Facility

On June 19, 2015, we entered into a credit agreement (as amended to date, our "credit agreement") with Wells Fargo Bank, National Association, as administrative agent and issuing lender, and the lenders named therein, that provides for a senior secured revolving credit facility (our "credit facility") with commitments of $500.0 million (subject to the borrowing base). As of September 30, 2016, the borrowing base under our credit facility was $160.0 million. Our next scheduled borrowing base redetermination is expected on or about December 31, 2016. As of September 30, 2016, we had $90.0 million outstanding under our credit facility with $70.0 million of additional borrowing capacity available. We intend to use a portion of the net proceeds of this offering to fully repay the outstanding borrowings under our credit facility. Our credit facility matures on June 19, 2020.

The amount available to be borrowed under our credit facility is subject to a borrowing base that is redetermined semiannually each April 1 and October 1 by the lenders at their sole discretion. Additionally, at our option, we may request up to two additional redeterminations per year to be effective on or about January 1 and July 1, respectively. The borrowing base depends on, among other things, the volumes of our proved reserves and estimated cash flows from these reserves and our commodity hedge positions as well as any other outstanding debt. Upon a redetermination of the borrowing base, if borrowings in excess of the revised borrowing capacity are outstanding, we could be required to immediately repay a portion of the debt outstanding under our credit agreement.

At September 30, 2016, the weighted average interest rate on borrowings under our credit facility was approximately 3.54%. We also pay a commitment fee on unused amounts of our credit facility of 0.500%. We may repay any amounts borrowed prior to the maturity date without any premium or penalty other than customary LIBOR breakage costs.

Our credit agreement contains restrictive covenants that limit our ability to, among other things:

•: incur additional indebtedness;
•: incur liens;
•: make investments;
•: make loans to others;
•: merge or consolidate with another entity;

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•: sell assets;
•: make certain payments;
•: enter into transactions with affiliates;
•: hedge interest rates; and
•: engage in certain other transactions without the prior consent of the lenders.

Our credit agreement also requires us to maintain cash balances below certain specified threshold amounts and to maintain compliance with the following financial ratios:

•: a current ratio, which is the ratio of our consolidated current assets (including unused commitments under our credit facility and excluding non-cash assets related to asset retirement obligations ("AROs") and derivatives) to our consolidated current liabilities (excluding the current portion of long-term debt under our credit agreement and non-cash liabilities related to AROs and derivatives), as of the last day of each fiscal quarter, of not less than 1.0 to 1.0; and
•: a leverage ratio, which is the ratio of our consolidated Debt (as defined in our credit agreement) as of the last day of each fiscal quarter, subject to certain exclusions (as described in our credit agreement) to consolidated EBITDAX (as defined in our credit agreement) for the last 12 months ending on the last day of that fiscal quarter, of not greater than 4.0 to 1.0.

Further, under our credit agreement, we are required to hedge a minimum of 75% of our projected oil volumes from PDP reserves for each calendar month on a two-year rolling basis, and we may hedge up to the greater of 85% of our proved reserves and 75% of our reasonably anticipated production for up to 24 months in the future, and up to the greater of 75% of our proved reserves and 50% of our reasonably anticipated production for 25 to 60 months in the future, provided that no hedges may have a term beyond five years.

Contractual Obligations

A summary of our contractual obligations as of December 31, 2015 is provided in the following table:

	Payments Due by Period for the Year Ending December 31,

	2016		2017		2018		2019		2020		Thereafter		Total
	(in thousands)
Credit facility(1)	$	—	$	—	$	—	$	—	$	20,000	$	—	$	20,000
Operating leases(2)		737		703		525		—		—		—		1,965
Service and purchase contracts(3)		1,057		—		—		—		—		—		1,057
Rig contracts		240		—		—		—		—		—		240

Total	$	2,034	$	703	$	525	$	—	$	20,000	$	—	$	23,262

(1): This table does not include future commitment fees, amortization of deferred financing costs, interest expense or other fees on our credit facility because obligations thereunder are floating rate instruments and we cannot determine with accuracy the timing of future loan advances, repayments or future interest rates to be charged. As of September 30, 2016, we had $90.0 million outstanding under our credit facility and $70.0 million of additional borrowing capacity available. We intend to use a portion of the net proceeds from this offering to fully repay borrowings under our credit facility. Please see "Use of Proceeds".
(2): Primarily relates to the lease of our corporate offices.

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(3): Primarily relates to our obligation to purchase lease automatic custody transfer units in conjunction with oil gathering for current and future wells.

Quantitative and Qualitative Disclosure About Market Risk

We are exposed to market risk, including the effects of adverse changes in commodity prices and interest rates as described below. The primary objective of the following information is to provide quantitative and qualitative information about our potential exposure to market risks. The term "market risk" refers to the risk of loss arising from adverse changes in oil and natural gas prices and interest rates. The disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonably possible losses. All of our market risk sensitive instruments were entered into for purposes other than speculative trading.

Commodity Price Risk

Our major market risk exposure is in the pricing that we receive for our oil, natural gas and NGLs production. Pricing for oil, natural gas and NGLs has been volatile and unpredictable for several years, and we expect this volatility to continue in the future. During the period from January 1, 2014 through September 30, 2016, the WTI spot price for oil has declined from a high of $107.95 per Bbl on June 20, 2014, to $26.19 per Bbl on February 11, 2016. NGL prices generally correlate to the price of oil, and accordingly prices for these products have likewise declined and are likely to continue following that market. Prices for domestic natural gas began to decline during the third quarter of 2014 and have continued to be weak throughout 2015 and thus far in 2016. During the period from January 1, 2014 through September 30, 2016, the Henry Hub spot price for natural gas has declined from a high of $8.15 per MMBtu on February 10, 2014, to a low of $1.49 per MMBtu on March 4, 2016. The prices we receive for our oil, natural gas and NGLs production depend on numerous factors beyond our control, some of which are discussed in "Risk Factors—Risks Related to Our Business—Oil, natural gas and NGL prices are volatile. A further reduction or sustained decline in oil, natural gas and NGL prices could adversely affect our business, financial condition and results of operations and our ability to meet our capital expenditure obligations and financial commitments".

A $1.00 per barrel change in our realized oil price would have resulted in a $0.7 million change in oil revenues for 2015. A $0.10 per Mcf change in our realized natural gas price would have resulted in a $0.04 million change in our natural gas revenues for 2015. A $1.00 per barrel change in NGL prices would have changed NGL revenue by $0.09 million for 2015. Oil sales contributed 93% of our total revenues for 2015. Natural gas sales contributed 3% and NGL sales contributed 4% of our total revenues for 2015. Our oil, natural gas and NGL revenues do not include the effects of derivatives.

Due to this volatility, we expect to use commodity derivative instruments such as collars, swaps and basis swaps to hedge price risk associated with our oil production. These hedging instruments will allow us to reduce, but not eliminate, the potential variability in cash flow from operations due to fluctuations in oil prices. This will provide increased certainty of cash flows for funding our drilling program and debt service requirements. These instruments provide only partial price protection against declines in oil prices and may partially limit our potential gains from future increases in prices. We may seek to hedge price risk associated with our natural gas and NGL production in the future. Under our credit agreement, we are required to hedge a minimum of 75% of our projected oil volumes from PDP reserves for each calendar month on a two-year rolling forward basis, and we may hedge up to the greater of 85% of our proved reserves and 75% of our reasonably anticipated production for up to 24 months in the future, and up to the greater of 75% of our proved reserves and 50% of our reasonably anticipated production for 25 to 60 months in the future, provided that no hedges may have a term beyond five years.

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The table below presents our open hedge positions as of December 16, 2016:

Description & Production Period		Swap Price ($/Bbl)(1)

Crude Oil Swaps:
December 2016	21,700	$	41.95
December 2016	7,750	$	43.35
December 2016	4,650	$	44.00
December 2016	8,525	$	49.00
December 2016	3,100	$	49.65
December 2016	8,525	$	50.00
December 2016	7,750	$	50.00
December 2016	7,750	$	52.50
December 2016 - December 2017	458,900	$	41.80
January 2017 - December 2017	109,400	$	46.00
January 2017 - December 2017	54,750	$	50.75
January 2017 - December 2017	91,250	$	51.25
January 2017 - December 2017	100,375	$	52.25
January 2017 - December 2017	91,250	$	53.55
January 2017 - December 2017	91,250	$	53.70
January 2017 - December 2017	182,500	$	55.00
January 2017 - June 2017	54,025	$	50.00
July 2017 - September 2017	23,000	$	50.00
January 2018 - March 2018	86,750	$	47.00
January 2018 - June 2018	27,150	$	51.50
January 2018 - June 2018	36,200	$	52.75
January 2018 - June 2018	40,725	$	53.75
January 2018 - March 2018	29,250	$	51.30
January 2018 - December 2018	91,250	$	53.60
January 2018 - December 2018	91,250	$	53.65
January 2018 - December 2018	182,500	$	56.00
April 2018 - June 2018	83,400	$	47.50
April 2018 - June 2018	25,025	$	51.55
July 2018 - September 2018	78,200	$	52.00
July 2018 - September 2018	34,500	$	53.25
July 2018 - September 2018	34,500	$	54.25
July 2018 - September 2018	69,000	$	55.25

(1): Reference price is NYMEX WTI price.

Counterparty and Customer Credit Risk

Our derivative contracts expose us to credit risk in the event of nonperformance by counterparties. While we do not require counterparties to our derivative contracts to post collateral, we do evaluate the credit standing of such counterparties as we deem appropriate. The counterparties to our derivative contracts currently in place have investment grade ratings.

Our principal exposures to credit risk are through receivables resulting from joint interest receivables and receivables from the sale of our oil and natural gas production due to the concentration of our oil and natural gas receivables with several significant customers. The inability or failure of our significant customers to meet their obligations to us or their insolvency or liquidation may adversely affect our financial results.

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Joint operations receivables arise from billings to entities that own partial interests in the wells we operate. These entities participate in our wells primarily based on their ownership in leases on which we intend to drill. We have little ability to control whether these entities will participate in our wells.

Interest Rate Risk

At September 30, 2016, we had $90.0 million of debt outstanding, with an assumed weighted average interest rate of 3.54%. Interest is calculated under the terms of our credit agreement based on the greatest of certain specified base rates plus an applicable margin that varies based on utilization. Assuming no change in the amount outstanding, the impact on interest expense of a 1% increase or decrease in the assumed weighted average interest rate would be approximately $0.9 million per year. We do not currently have any derivative arrangements to protect against fluctuations in interest rates applicable to our outstanding indebtedness.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our predecessor's consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our predecessor's financial statements requires it to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ from these estimates.

A complete list of our predecessor's significant accounting policies are described in the notes to our predecessor's audited financial statements for the year ended December 31, 2015, included elsewhere in this prospectus.

Successful Efforts Method of Accounting for Oil and Natural Gas Activities

Our oil and natural gas exploration and developments costs are accounted for using the successful efforts method. Under the successful efforts method, all costs incurred related to the acquisition of oil and natural gas properties and the costs of drilling development wells and successful exploratory wells are capitalized, while the costs of unsuccessful exploratory wells are expensed if and when the well is determined not to have found reserves in commercial quantities. Other items charged to expenses generally include geological and geophysical costs, delay rentals and lease and well operating costs.

Proved Oil and Natural Gas Properties. Capitalized leasehold costs attributable to proved properties are depleted using the units-of-production method based on proved reserves on a field basis. Capitalized well costs, including asset retirement obligations, are depleted based on proved developed reserves on a field basis.

Unproved Properties. Unproved oil and natural gas properties consist of costs to acquire undeveloped leases and unproved reserves, and are capitalized when incurred. When a successful well is drilled on undeveloped leasehold or reserves are otherwise attributable to a property, unproved property costs are transferred to proved properties.

Exploration Costs. Exploration costs consist of costs incurred to identify and evaluate areas that are prospective for oil and natural gas reserves. Explorations costs include geological and geophysical costs, delay rentals and unsuccessful exploratory wells.

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Exploratory Well Costs. Exploratory well costs are capitalized as incurred pending determination of whether the well has discovered proved commercial reserves. If the exploratory well is determined to be unsuccessful, the cost of the well is transferred to expense.

Impairment of Oil and Natural Gas Properties

Proved oil and natural gas properties are reviewed for impairment when events and circumstances indicate a possible decline in the recoverability of the carrying amount of such property. We estimate the expected future cash flows of oil and natural gas properties and compare these undiscounted cash flows to the carrying amount of the oil and natural gas properties to determine if the carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, we will write down the carrying amount of the oil and natural gas properties to fair value. The factors used to determine fair value include, but are not limited to, estimates of reserves, future commodity prices, future production estimates, cash flow from commodity hedges, estimated future capital expenditures and a commensurate discount rate.

Unproved properties are periodically assessed for impairment on a property-by-property basis. We evaluate significant unproved properties for impairment based on remaining lease term, drilling results, reservoir performance, seismic interpretation or future plans to develop acreage, and record impairment expense for any decline in value.

Oil and Natural Gas Reserve Quantities

We engage Ryder Scott, our independent petroleum engineer, to prepare our total estimated proved reserves. We expect proved reserve estimates will change as additional information becomes available and as commodity prices and operating and capital costs change. We evaluate and estimate our proved reserves each year-end. For purposes of depletion and impairment, reserve quantities are adjusted in accordance with GAAP for the impact of additions and dispositions. Reserve estimates are inherently imprecise. Accordingly, the estimates are expected to change as more current information becomes available. It is possible that, because of changes in market conditions or the inherent imprecision of reserve estimates, the estimates of future cash inflows, future gross revenue, the amount of oil and natural gas reserves, the remaining estimated lives of oil and natural gas properties or any combination of the above may be increased or reduced. Increases in recoverable economic volumes generally reduce per unit depletion rates while decreases in recoverable economic volumes generally increase per unit depletion rates.

Derivative Instruments

We utilize commodity derivative instruments to manage our exposure to commodity price volatility. All of our commodity derivative instruments are utilized to manage price risk attributable to our expected production, and we do not enter into such instruments for speculative trading purposes. We do not designate any derivative instruments as cash flow hedges for financial reporting purposes. We record all derivative instruments on the balance sheet as either assets or liabilities measured at their estimated fair value. We record gains and losses from the change in fair value of derivative instruments in current earnings as they occur. We do not currently utilize any derivative instruments to manage exposure to variable interest rates, but may do so in the future.

Asset Retirement Obligations

Our asset retirement obligations relate to future costs associated with the plugging and abandonment of oil and natural gas wells, removal of equipment and facilities from leased acreage and restoration in accordance with local, state and federal laws. The discounted fair value of an asset retirement obligation liability is required to be recognized in the period in which it is incurred, with the

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associated asset retirement capitalized in proved oil and natural gas property costs as part of the carrying cost of the oil and natural gas asset. The recognition of the asset retirement obligation requires management to make numerous assumptions regarding such factors as the estimated probabilities, amounts and timing of settlements, credit-adjusted risk-free discount rates, inflation rates and future advance in technology. In periods subsequent to the initial measurement of the asset retirement obligation, we recognize period-to-period changes in the liability resulting from the passage of time and revisions to either the timing or the amount of the original estimate of undiscounted cash flows. Increases in the asset retirement obligation liability due to the passage of time impact net earnings and accretion expense. The related capital cost, including revisions thereto, is charged to expense through accumulated depletion, depreciation, amortization and accretion.

We recognize an estimated liability for future costs associated with the abandonment of our oil and natural gas properties. A liability for the fair value of an asset retirement obligation and corresponding increase to the carrying value of the related long-lived asset are recorded at the time a well is spud or acquired. The increase in carrying value is included in proved oil and natural gas properties in the balance sheet. We deplete the amount added to proved oil and natural gas property costs and recognize expenses in connection with the accretion of the discounted liability over the remaining economic lives of the respective wells.

Recently Issued Accounting Pronouncements

In March 2016, the FASB issued Accounting Standard Update ("ASU") 2016-09, "Compensation—Stock Compensation Topic 718: Improvements to Employee Share-Based Payment Accounting", which simplifies several aspects of the accounting for share-based payment award transactions. These simplifications include the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 will be effective for reporting periods beginning on or after December 15, 2016, and early adoption is permitted. We are currently evaluating the impact of its pending adoption of this guidance on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)", which requires all lease transactions with terms in excess of 12 months to be recognized on the balance sheet as lease assets and lease liabilities. ASU 2016-02 becomes effective on January 1, 2019, and requires the use of the modified retrospective transition method. Although early application is permitted, we do not intend to early adopt the new standard. We are currently evaluating the impact of its pending adoption of this guidance on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs . This ASU changes the presentation of debt issuance costs in the financial statements, and requires that debt issuance costs be presented in the balance sheet as a direct reduction from the carrying amount of the corresponding debt liability, consistent with debt discounts. As the guidance in this ASU did not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements, the FASB issued ASU 2015-15, Interest—Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements in August 2015 to clarify that these presentation requirements did not apply to line-of-credit arrangements. ASU 2015-03 is effective for the annual periods beginning after December 15, 2016 and for interim periods within that annual period, and is required to be adopted retrospectively. ASU 2015-15 is effective upon adoption of ASU 2015-03. We do not expect the adoption of these standards will have a material impact on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)", which establishes a comprehensive new revenue recognition standard. ASU 2014-09 allows for the use of either the full or modified retrospective transition method, and the standard will be effective for annual reporting periods beginning after December 15, 2017 including interim periods

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within that period, with early adoption permitted only for annual reporting periods beginning after December 15, 2016. We are currently evaluating which transition approach to use and the impact of the adoption of this standard on our consolidated financial statements.

Other than as disclosed above, there are no other new accounting standards that would have a material impact on our condensed consolidated financial statements and disclosures.

Internal Controls and Procedures

We are not currently required to comply with the SEC's rules implementing Section 404 of the Sarbanes Oxley Act of 2002, and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Upon becoming a public company, we will be required to comply with the SEC's rules implementing Section 302 of the Sarbanes-Oxley Act of 2002, which will require our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting. We will not be required to make our first assessment of our internal control over financial reporting under Section 404 until our first annual report subsequent to our ceasing to be an "emerging growth company" within the meaning of Section 2(a)(19) of the Securities Act.

Inflation

Inflation in the United States has been relatively low in recent years and did not have a material impact on our results of operations for the years ended December 31, 2015 or 2014. Although the impact of inflation has been insignificant in recent years, it is still a factor in the United States economy and we tend to experience inflationary pressure on the cost of oilfield services and equipment as increasing oil and natural gas prices increase drilling activity in our areas of operations.

Off-Balance Sheet Arrangements

Currently, neither we nor our predecessor have any material off-balance sheet arrangements.

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BUSINESS

The following discussion should be read in conjunction with the "Selected Historical Consolidated Financial Data" and the accompanying financial statements and related notes included elsewhere in this prospectus.

The estimated proved reserve information for our properties as of November 30, 2016 and December 31, 2015 and 2014, contained in this prospectus is based on a reserve report relating to our properties prepared by Ryder Scott, our independent petroleum engineer.

Our Company

Business Overview

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the top of the Bone Spring formation ranges from approximately 8,600 feet to 10,900 feet. We also believe that significant additional development opportunities exist on our acreage in the Brushy Canyon, Avalon Shale, 1 ^st Bone Spring Lime, 1 ^st Bone Spring Sand, 2 ^nd Bone Spring Sand, 3 ^rd Bone Spring Lime, Wolfcamp C and Wolfcamp D formations.

(1): Q1 2014 production normalized for five days of production.
(2): The increase in production from Q3 2014 to Q4 2014 was partially attributable to the acquisition of three producing wells in September 2014 with average daily production of 74 Boe/d during Q4 2014.
(3): We added our second and third rigs during July 2016. There have been no completions or production attributable to these rigs as of September 30, 2016.

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Gross Identified Horizontal Drilling Locations(1)(2)(3)



*By Target*
3 ^rd Bone Spring Sand	66		225		—		291
Upper Wolfcamp A	53		171		84		308
Lower Wolfcamp A	57		219		99		375
Wolfcamp B	66		225		—		291

Total Locations	242		840		183		1,265



*By Lateral Length Category*
Extra Long (Two Sections)	175		355		76		606
Long (One and One-Half Sections)	46		151		72		269
Standard (One Section)	21		334		35		390

Total Locations	242		840		183		1,265



*Avg. Completed Lateral Length (in feet)*
Extra Long	9,587		9,534		9,480		9,543
Long	6,900		7,273		7,041		7,147
Standard	4,290		4,538		4,071		4,328
Gross Acres	12,894		35,912		19,315		68,121
Net Acres	12,244		30,796		17,835		60,875
Avg. Working Interest	95.0	%	85.8	%	92.3	%	89.4	%

(1): Our total identified horizontal drilling locations include 26 locations associated with proved undeveloped reserves as of November 30, 2016. We have estimated our drilling locations based on well spacing assumptions and upon the evaluation of our horizontal drilling results and those of other operators in our area, combined with our interpretation of available geologic and

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engineering data. The drilling locations that we actually drill will depend on the availability of capital, regulatory approvals, commodity prices, costs, actual drilling results and other factors. Any drilling activities we are able to conduct on these identified locations may not be successful and may not result in additional proved reserves. Further, to the extent the drilling locations are associated with acreage that expires, we would lose our right to develop the related locations. See "Risk Factors—Risks Related to Our Business—Our identified drilling locations are scheduled out over many years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling. In addition, we may not be able to raise the substantial amount of capital that would be necessary to drill such locations".

(2): Our horizontal drilling location count implies 880-foot spacing in an offset pattern and minimum vertical separation of 175 feet.
(3): 1,186 of our 1,265 horizontal drilling locations are on acreage that we operate. We have an 89% average working interest in our acreage.

Estimated Total Proved Reserves

Oil (MMBbls)		NGLs (MMBbls)		Natural Gas (Bcf)		Total (MMBoe)		% Oil		% Liquids(1)		% Developed
	26.4		3.8		15.3		32.7		80.7		92.2		39.7

(1): Includes oil and NGLs.

The following table presents data on Jagged Peak's operated horizontal wells drilled and completed since commencement of our drilling program in late 2013 through November 30, 2016.

Year of First Production					Average Drilling and Completion Costs per 1,000' (in thousands)

2014(1)	3	6,556	649	99	$	2,517
2015	7	9,164	950	104		1,481
2016 through 11/30	9	9,134	1,036	113

(1): Does not include the results of one well that was drilled in 2014, but was not completed in accordance with our completion design due to mechanical issues.
(2): EUR represents the sum of gross reserves remaining as of a given date and cumulative production as of that date. EUR is based on the estimated gross reserves attributable to each location in our reserve report as of November 30, 2016.

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Compounded Annual Production Growth Rate for Major Oil Basins and Plays
(January 2013 to September 2016)

Source: Wood Mackenzie as of September 2016.

Business Strategies

Our primary business objective is to increase stockholder value through the execution of the following strategies:

•: Economically grow production, cash flow and reserves by developing our extensive drilling inventory in the core oil window of the Southern Delaware Basin . Our technical acumen and horizontal drilling expertise have enabled us to drill highly productive horizontal wells in multiple formations. While operating an average of one horizontal drilling rig through June 30, 2016, we grew our average net daily production from 345 Boe/d in the first quarter of 2014 (normalized for five days of production) to 6,366 Boe/d in the third quarter of 2016, representing a compounded annual production growth rate of 220%. We began operating our second and third rigs in July of 2016, which are expected to result in incremental well completions and production growth beginning in the fourth quarter of 2016. In 2017, we expect our drilling program to grow to six horizontal rigs, allowing us to continue our rapid production growth. We intend to continue to economically grow production, cash flow and reserves by utilizing our technical expertise to develop our multi-year drilling inventory while efficiently allocating capital to maximize the value of our resource base.
•: Expand drilling inventory over time. In addition to the 1,265 gross horizontal locations identified in the Lower Wolfcamp A, the Upper Wolfcamp A, the Wolfcamp B and the 3 ^rd Bone Spring Sand formations, we intend to add to our drilling inventory over time as we (i) decrease the horizontal and vertical spacing of our horizontal wells, (ii) acquire additional acreage by

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leveraging our technical acumen and horizontal drilling expertise to identify strategic acquisition opportunities and (iii) establish the productive capability of additional zones.

•: Maximize returns by optimizing drilling and completion techniques through the experience and expertise of our management and technical teams. Our experienced management and technical teams have a proven track record of optimizing drilling and completion techniques to drive well and field-level returns. We have experienced a significant decrease in our drilling and completion costs since 2014, which has continued into 2016. This trend has been driven by efficiency improvements in the field, including reduced drilling days, the modification of well designs and a continued focus on procurement throughout our operations. In addition, we believe our contiguous acreage position and our ability to drill long-lateral wells will enhance our returns by increasing our EUR per well, reducing drilling and completion costs and providing economies of scale by allowing us to better share our infrastructure.
•: Strategically manage infrastructure and midstream services contracts to lower our costs. We vigorously pursue cost reductions throughout our operations. We have made a strategic decision to construct and operate water handling infrastructure within our project areas to enable us to achieve high operating efficiency. We intend to install additional water handling infrastructure capacity to accommodate our projected future production growth. Our oil and natural gas gathering and transportation contracts are structured as acreage dedications, which allows us to avoid incurring fees or penalties associated with minimum volume commitments.
•: Leverage extensive industry experience to evaluate and execute strategic acquisitions. Our management and technical teams have an extensive track record of forming and building businesses in North American resource plays. We also have significant experience in successfully sourcing, evaluating and executing acquisition opportunities, including multiple privately sourced acquisitions that make up the majority of our current acreage position. We regularly initiate and review acquisition opportunities and intend to pursue future acquisitions that meet our strategic and financial objectives. We believe our understanding of the geology, geophysics and reservoir properties of potential acquisition targets will allow us to identify and acquire highly prospective acreage in order to grow our resource base and maximize stockholder value.
•: Maintain a high degree of operational control. We seek to maintain operational control of our properties in order to better execute on our strategy of enhancing returns through operating improvements and cost efficiencies. As the operator of approximately 98% of our acreage, we are able to effectively manage (i) the timing and level of our capital spending, (ii) our development drilling strategies and (iii) our operating costs. We believe this flexibility to manage our development program allows us to optimize our field-level returns and profitability.
•: Preserve financial flexibility to pursue organic and external growth opportunities. We seek to maintain a conservative financial position. We expect to fund our growth with cash flow from operations, availability under our credit facility and capital markets offerings when appropriate. We intend to continue allocating capital in a disciplined manner and proactively manage our cost structure to achieve our business objectives. Consistent with our disciplined approach to financial management, we expect to maintain an active hedging program that seeks to reduce our exposure to commodity price volatility and protect our cash flow, returns and the funding of our capital program.

Our Competitive Strengths

We believe that the following strengths will allow us to successfully execute our business strategies:

•: Attractive portfolio of contiguous acreage in the core oil window of the Southern Delaware Basin . Our current leasehold acreage is located in the oil-rich southern portion of the Delaware Basin in

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Winkler, Ward, Reeves and Pecos Counties. This acreage is characterized by a multi-year, oil-weighted inventory of horizontal drilling locations that provide attractive growth and return opportunities. As of November 30, 2016, our estimated proved reserves consisted of 80.7% oil, 11.5% NGLs and 7.8% natural gas. The extensive original oil-in-place, favorable over-pressured conditions and other attractive geologic characteristics of the Southern Delaware Basin give us a high degree of confidence in our current drilling inventory.

•: Large horizontal drilling inventory and significant number of long-lateral wells across multiple pay formations . We have identified a multi-year inventory of 1,265 gross horizontal drilling locations with an average lateral length of 7,426 feet. 69% of our identified locations are classified as long or extra-long laterals, with an average length of 8,806 feet. We believe our extensive inventory of long and extra-long lateral locations will generate superior economic returns relative to shorter laterals. Assuming six rigs in operation, which is our 2017 level of budgeted drilling activity, we have over 26 years of drilling inventory. We intend to significantly add to our drilling inventory over time as we continue to reduce and refine well spacing, acquire additional acreage and establish the productive capability of additional zones.
•: Proven horizontal drilling expertise and technical acumen in the Delaware Basin. We believe our horizontal drilling and multi-stage fracturing stimulation experience in the Delaware Basin provides us with a competitive strength. Since commencement of our drilling program in late 2013, we have substantially reduced drilling days for our horizontal wells. The average time from spud to rig release for our seven horizontal wells drilled during the nine months ended September 30, 2016 was approximately 42 days, compared to an average of 67 days for the thirteen horizontal wells we drilled in 2015 and 2014. In addition, we continually modify our completion design to optimize the performance of our wells and expect to realize further drilling efficiencies going forward.
•: High degree of operational control. We are the operator of approximately 98% of our acreage. This operating control allows us to better execute our strategies of enhancing returns through operational and cost efficiencies and increasing ultimate hydrocarbon recovery. As the operator of substantially all of our acreage, we retain the flexibility to adjust our capital expenditures based on the prevailing commodity price environment and other factors. We also believe that our significant level of operational control will enable us to implement pad drilling and other drilling and completion optimization strategies, which will result in the continued reduction of spud-to-rig release days, engineered completion designs and efficient use of infrastructure.
•: Highly effective and cost efficient water sourcing, transportation, storage and disposal. Our infrastructure strategy includes owning sufficient tracts of surface acreage to (i) allow us to control fresh water supply for drilling and completions, (ii) provide ease of pipeline installation, (iii) allow construction of storage for both fresh and produced water and (iv) simplify construction of facilities for disposal of flowback and produced water. In addition, we have supplemental agreements that provide for fresh water sourcing and produced water storage and disposal services from adjacent landowners. Our installed and contracted capacities are (i) 4.7 million barrels of water storage capacity, (ii) 10.5 miles of fresh water pipelines and 63.6 miles of produced water transportation pipelines, which allows us to largely eliminate water trucking in all phases of our operation, (iii) 162 thousand barrels per day of water sourcing capacity and (iv) 86 thousand barrels per day of water disposal capacity. Accordingly, we have disposal capacity more than three times our current produced water volumes and sufficient sources of fresh water to support our current drilling program, and we believe it is scalable to support additional rigs. This infrastructure position provides important cost advantages compared to utilizing third-party services.

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•: Experienced and incentivized management team. With an average of 32 years of industry experience, our senior management team has a proven track record of building and running successful businesses focused on the acquisition and development of oil and natural gas properties and enhancing returns through operational efficiencies. Prior to forming Jagged Peak, a subset of our management team, including Joseph N. Jaggers, our Chief Executive Officer and President, and Gregory S. Hinds, our Executive Vice President, Development, Planning & Acquisitions, led the growth of Ute Energy LLC's upstream oil and natural gas assets to over 7,800 Boe/d of production and over 156,800 net acres of undeveloped properties and built a natural gas gathering and processing network servicing Ute Energy and other third parties in the Uinta Basin. In November 2012, Ute Energy's upstream and midstream subsidiaries were sold for consideration in excess of $1.0 billion. We believe our team's experience building and operating multiple successful upstream oil and natural gas companies provides us with a distinct competitive advantage. Additionally, after giving effect to this offering, our management team will hold approximately % of our common stock, which provides a meaningful incentive to increase the value of our business for the benefit of all stockholders.
•: Conservatively capitalized balance sheet and strong liquidity profile. After giving effect to this offering and the use of proceeds therefrom, we expect to have no outstanding debt, $160.0 million of borrowing capacity under our credit facility and approximately $ million of cash on the balance sheet. We believe our borrowing capacity, cash on hand and cash flow from operations will provide us with sufficient liquidity to execute our 2017 capital program.

Our Properties

Our properties include working interests in approximately 68,121 gross (60,875 net) acres, all of which are located in Winkler, Ward, Reeves and Pecos Counties in the oil-rich core of the Southern Delaware Basin. The Southern Delaware Basin is a sub-basin of the Permian Basin of West Texas characterized by high oil saturation and favorable over-pressured conditions. We view our acreage position in three distinct project areas: Whiskey River, Cochise and Big Tex. The following table summarizes our acreage by project area as of September 30, 2016.



Project Area:
Whiskey River	35,912	30,796
Cochise	12,894	12,244
Big Tex	19,315	17,835

Total	68,121	60,875

Permian Basin. The Permian Basin consists of mature, legacy, onshore oil and liquids-rich natural gas reservoirs that span approximately 86,000 square miles in West Texas and New Mexico. The Basin is composed of five sub regions: The Delaware Basin, the Central Basin Platform, the Midland Basin, the Northwest Shelf and the Eastern Shelf. The Permian Basin is an attractive operating area due to its multiple stacked hydrocarbon-bearing formations that are prospective for horizontal development. The basin is further characterized by a favorable operating environment, high quality oil and liquids-rich natural gas reservoirs, well-developed network of oilfield service providers, long-lived reserves from well-understood geologic features of predictable reservoir quality with historically high development success rates.

Delaware Basin. The present-day structural configuration of the Delaware Basin, a well-defined sub-basin of the larger Permian, began to take shape in the early Pennsylvanian period when movement on deep faults caused uplift of the adjacent Central Basin Platform. This period was characterized by deposition of marine shales interbedded with limestones and marls with periodic influxes of siliciclastic

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sediments during relative lowstands of sea-level. In early Permian time, the stratigraphic record reflects a rapid deepening of the Delaware Basin. Deep-basin anoxic conditions resulted in preservation of high levels of organic matter in marine shales. Carbonate debris flows and turbiditic sandstones sourced from the adjacent uplifts are also common deposits in the Delaware Basin from this period. Subsequent burial and thermal maturation of this thick succession of Permian-aged strata containing high concentrations of preserved organic material resulted in what is widely recognized as one of the most prolific oil fields in the world.

The Delaware Basin encompasses an estimated 12,637 square miles and contains over 17,000 active producing wells as of the second quarter of 2016, with production from certain wells dating back to 1924. Beginning in 2010, horizontal drilling in the Delaware Basin has led a renaissance of development in this once over-looked basin. According to Baker Hughes, as of September 30, 2016, the Delaware Basin contains three of the top five most-active Permian Basin counties by horizontal rig count.

The vast majority of our acreage is located in the core of the Southern Delaware Basin, primarily in the adjacent Texas counties of Winkler, Ward, Reeves and Pecos. We divide our current areas of operation into three distinct projects: Cochise, Whiskey River and Big Tex. Cochise, where we have drilled and completed six operated wells, lies in the northern part of our acreage position and straddles Ward and Winkler Counties. Whiskey River, where we have drilled and completed eight operated wells, is in the central part of our overall leasehold position and is just west of the junction between Ward, Reeves and Pecos Counties. The Whiskey River project area also includes a leasehold block informally named County Line, which is in northern Pecos County, just south of the majority of the Whiskey River leasehold. The Big Tex project area, where we have drilled and completed two operated wells, is our southernmost leasehold position and lies in northern Pecos County.

We believe that our properties are prospective for oil and associated liquids-rich natural gas from multiple producing stratigraphic horizons. For the nine months ended September 30, 2016, our net daily production averaged 83% oil, 7% natural gas and 10% NGLs and had a greater liquids-content than other areas of the Delaware Basin.

Our horizontal drilling has been widespread with locations across the majority of our leasehold and includes 16 drilled and completed horizontal wells as of September 30, 2016. We have established commercial production in three distinct zones: Lower Wolfcamp A, Upper Wolfcamp A and Wolfcamp B. As a result, we have broadly appraised our acreage across all three project areas and several stratigraphic zones. Our successful drilling and completion of long-lateral wells has been a catalyst for activity from offset operators. We will closely monitor this offset activity, especially with respect to downspacing pilots, and adjust our future development plans accordingly to allow for the optimal development of our acreage position.

We operate approximately 98% of our net acreage and have an 89% average working interest in our acreage. This operational control gives us flexibility in development strategy and pace. We are currently operating three horizontal drilling rigs and expect to add one additional rig in 2016. In 2017, we expect our drilling program to grow to six horizontal rigs. During 2014 and 2015, we operated an average of one rig and placed five and seven horizontal wells on production, respectively. Our development drilling plan is comprised exclusively of horizontal drilling with an ongoing focus on reducing drilling times, optimizing completions and reducing costs. The average time from spud to rig release for our seven horizontal wells drilled during the nine months ended September 30, 2016 was approximately 42 days compared to an average of 67 days for the thirteen horizontal wells we drilled in 2015 and 2014. We expect that further optimization in the field (i.e. increased drilling of longer laterals, pad drilling, use of shared facilities and zipper fracs) will improve our well economics going forward.

The effective execution of completion design, target identification and refined geosteering are the predominant factors that dictate relative well performance in an area or zone. We have an evolving strategy that includes methodical adjustments of completion parameters, experimentation of different

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designs on wells with similar rock characteristics and constant monitoring and re-evaluation of results that ultimately tailor completions to the conditions specific to an area or zone. Our current completion method is a slickwater design utilizing predominantly 180 feet stage lengths, 30 foot cluster spacing, 85 barrels of total fluid per foot of lateral length and 2,500 to 3,500 pounds of varying sizes and types of sand per foot of lateral length. We expect that continued optimization in the field and our evolving completion strategy will both serve to further increase stockholder value.

Our drilling program is focused primarily on the Upper Wolfcamp A, Lower Wolfcamp A, Wolfcamp B and 3 ^rd Bone Spring Sand. However, based on our well results and those of other operators, combined with our analysis of geologic and engineering data, we believe that significant additional development opportunities exist on our acreage in the Brushy Canyon, Avalon Shale, 1 ^st Bone Spring Lime, 1 ^st Bone Spring Sand, 2 ^nd Bone Spring Sand, 3 ^rd Bone Spring Lime, Wolfcamp C and Wolfcamp D formations.

Ryder Scott, our independent petroleum engineering firm, has estimated that as of November 30, 2016, proved reserves net to our interest in our properties were approximately 32,680 MBoe, of which 40% were classified as proved developed. The proved reserves are generally characterized as long-lived, with predictable production profiles.

Production Status. For the nine months ended September 30, 2016, our average net daily production was 5,339 Boe/d (approximately 83% oil, 7% natural gas and 10% NGLs). During the nine months ended September 30, 2015, our average net daily production was 2,055 Boe/d (approximately 82% oil, 8% natural gas and 10% NGLs). As of September 30, 2016, we produced from 33 operated horizontal wells (16 of which we drilled and completed) and 14 operated vertical wells.

Recent and Future Activity. During the nine months ended September 30, 2016, 6.0 gross (5.9 net) wells were placed on production on our acreage. All of these wells were horizontal wells. We are currently operating three rigs in the Southern Delaware Basin and currently plan to add one additional rig in the fourth quarter of 2016 and two additional rigs in 2017. During the remainder of 2016, an additional six gross operated horizontal wells are scheduled to be placed on production.

As of September 30, 2016, we had identified 1,265 gross horizontal drilling locations on our acreage based on approximately 880-foot spacing in an offset pattern with five or six wells placed across a 5,280-foot wide drilling unit. If future downspacing pilots are successful, we will add additional locations to our multi-year inventory through decreasing the horizontal lateral spacing as well as the staggered vertical offset. Lateral length is dependent on the size of the drilling unit, with our current inventory consisting of laterals with an average length of 7,426 feet. In this prospectus, we define identified gross drilling locations as locations specifically identified and scheduled by management as an estimation of our multi-year drilling activities on existing acreage, based on an evaluation of applicable geologic and engineering data. We have estimated our horizontal drilling locations based on well spacing assumptions and upon the evaluation of our horizontal drilling results as well as those of other operators in our area, along with our interpretation of available geologic and engineering data. In particular, we have analyzed and interpreted open-hole logs, whole and sidewall core data, production data and drill cuttings that were acquired through drilling in connection with our horizontal drilling program. The horizontal locations for which we actually drill wells will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, oil and natural gas prices, operating costs, actual drilling results and other factors.

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Oil and Natural Gas Data

Proved Reserves

Evaluation and Audit of Proved Reserves. Our proved reserve estimates as of November 30, 2016 and December 31, 2015 and 2014, were prepared by Ryder Scott, our independent petroleum engineers. The technical persons responsible for preparing our proved reserve estimates meet the requirements with regard to qualifications, independence, objectivity and confidentiality set forth in the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers. Ryder Scott does not own an interest in any of our properties, nor is it employed by us on a contingent basis. A copy of Ryder Scott's proved reserve reports as of November 30, 2016 and December 31, 2015 and 2014, are included as exhibits to the registration statement of which this prospectus forms a part.

We maintain an internal staff of petroleum engineers and geoscience professionals who worked closely with our independent reserve engineers to ensure the integrity, accuracy and timeliness of the data used to calculate our proved reserves. Our internal technical team members meet with our independent reserve engineers periodically during the period covered by the proved reserve report to discuss the assumptions and methods used in the proved reserve estimation process. We provide historical information to Ryder Scott for our properties, such as ownership interest, oil and natural gas production, well test data, commodity prices and operating and development costs. James T. Jaggers, our Senior Reservoir Engineer, is primarily responsible for overseeing the preparation of all of our reserve estimates. James T. Jaggers is a reservoir engineer with over 11 years of reservoir and operations experience, and our geoscience staff has an average of approximately 11 years of energy industry experience.

The preparation of our proved reserve estimates were completed in accordance with our internal control procedures. These procedures, which are intended to ensure reliability of reserve estimations, include the following:

•: review and verification of historical production data, which data is based on actual production as reported by us;
•: review of reserve estimates by James T. Jaggers or under his direct supervision;
•: review by our Executive Vice President, Development, Planning & Acquisitions of all of our reported proved reserves, including the review of all significant reserve changes and all new PUDs additions;
•: direct reporting responsibilities by our Executive Vice President, Development, Planning & Acquisitions to our Chief Executive Officer and President; and
•: verification of property ownership by our land department.

Estimation of Proved Reserves. Under SEC rules, proved reserves are those quantities of oil and natural gas which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible. If deterministic methods are used, the SEC has defined reasonable certainty for proved reserves as a "high degree of confidence that the quantities will be recovered". All of our proved reserves as of November 30, 2016, December 31, 2015 and December 31, 2014 were estimated using a deterministic method. The estimation of reserves involves two distinct determinations. The first determination results in the estimation of the quantities of recoverable oil and natural gas and the second determination results in the estimation of the uncertainty associated with those estimated quantities in accordance with the definitions set forth by the SEC's regulations. The process of estimating the quantities of recoverable oil and natural gas reserves relies on the use of certain generally accepted analytical procedures. These analytical procedures fall into three broad categories or methods: (i) performance-based methods; (ii) volumetric-based methods; and (iii) analogy.

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These methods may be used individually or in combination by the reserve evaluator in the process of estimating the quantities of reserves. Proved reserves for our properties were estimated by performance methods for the majority of properties. Certain new producing properties with inadequate historical production data were forecast using analogy or a combination of methods. Non-producing reserve estimates, for developed and undeveloped properties, were forecast using analogy methods.

To estimate economically recoverable proved oil and natural gas reserves and related future net cash flows, Ryder Scott considered many factors and assumptions including, but not limited to, the use of reservoir parameters derived from geological, geophysical and engineering data that cannot be measured directly, economic criteria based on current costs and the SEC pricing requirements and forecasts of future production rates.

Under SEC rules, reasonable certainty can be established using techniques that have been proven effective by actual production from projects in the same reservoir or an analogous reservoir or by other evidence using reliable technology that establishes reasonable certainty. Reliable technology is a grouping of one or more technologies (including computational methods) that have been field tested and have been demonstrated to provide reasonably certain results with consistency and repeatability in the formation being evaluated or in an analogous formation. To establish reasonable certainty with respect to our estimated proved reserves, the technologies and economic data used in the estimation of our proved reserves have been demonstrated to yield results with consistency and repeatability, and include production and well test data, downhole completion information, geologic data, electrical logs, radioactivity logs, core analyses, available seismic data and historical well cost and operating expense data.

Summary of Reserves. The following table presents our estimated net proved reserves as of November 30, 2016 and December 31, 2015 and 2014, based on the proved reserve report as of such dates by Ryder Scott, our independent petroleum engineering firm, prepared in accordance with the rules and regulations of the SEC. Copies of the proved reserve reports as of November 30, 2016 and December 31, 2015 and 2014, prepared by Ryder Scott with respect to our properties are included as

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exhibits to the registration statement of which this prospectus forms a part. All of our proved reserves are located in the United States.

	As of November 30, 2016(1)		As of December 31, 2015(2)		As of December 31, 2014(3)

Proved Developed Reserves:
Oil (MBbls)		10,644		4,848		1,529
Natural gas (MMcf)		5,953		2,547		1,319
NGLs (MBbls)		1,338		621		288

Total (MBoe)(4)		12,974		5,894		2,037
Proved Undeveloped Reserves:
Oil (MBbls)		15,727		5,645		389
Natural gas (MMcf)		9,337		3,610		310
NGLs (MBbls)		2,423		870		77

Total (MBoe)(4)		19,706		7,117		518
Total Proved Reserves:
Oil (MBbls)		26,371		10,493		1,918
Natural gas (MMcf)		15,290		6,157		1,629
NGLs (MBbls)		3,761		1,491		365

Total (MBoe)(3)		32,680		13,011		2,555
Oil and Natural Gas Prices:
Oil—WTI posted price per Bbl	$	41.98	$	50.28	$	94.99
Natural gas—Henry Hub spot price per MMBtu	$	2.39	$	2.58	$	4.35

(1): Our estimated net proved reserves were determined using average first-day-of-the-month prices for the prior 12 months in accordance with SEC guidance. For oil and NGL volumes, the average West Texas Intermediate posted price of $41.98 per barrel as of November 30, 2016, was adjusted for gravity, quality, local conditions, gathering, transportation fees and distance from market. For natural gas volumes, the average Henry Hub spot price of $2.39 per MMBtu as of November 30, 2016, was similarly adjusted for gravity, quality, local conditions, gathering, transportation fees and distance from market. All prices are held constant throughout the lives of the properties. The average adjusted product prices weighted by production over the remaining lives of the properties are $38.62 per barrel of oil, $14.70 per barrel of NGL and $2.18 per Mcf of natural gas as of November 30, 2016.
(2): Our estimated net proved reserves were determined using average first-day-of-the-month prices for the prior 12 months in accordance with SEC guidance. For oil and NGL volumes, the average West Texas Intermediate posted price of $50.28 per barrel as of December 31, 2015, was adjusted for gravity, quality, local conditions, gathering, transportation fees and distance from market. For natural gas volumes, the average Henry Hub spot price of $2.58 per MMBtu as of December 31, 2015, was similarly adjusted for gravity, quality, local conditions, gathering, transportation fees and distance from market. All prices are held constant throughout the lives of the properties. The average adjusted product prices weighted by production over the remaining lives of the properties are $46.29 per barrel of oil, $16.49 per barrel of NGL and $2.36 per Mcf of natural gas as of December 31, 2015.
(3): Our estimated net proved reserves were determined using average first-day-of-the-month prices for the prior 12 months in accordance with SEC guidance. For oil and NGL volumes, the average West Texas Intermediate posted price of $94.99 per barrel as of December 31, 2014, was adjusted for gravity, quality, local conditions, gathering,

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transportation fees and distance from market. For natural gas volumes, the average Henry Hub spot price of $4.35 per MMBtu as of December 31, 2014, was similarly adjusted for was adjusted for gravity, quality, local conditions, gathering, transportation fees and distance from market. All prices are held constant throughout the lives of the properties. The average adjusted product prices weighted by production over the remaining lives of the properties are $84.54 per barrel of oil, $31.17 per barrel of NGL and $4.21 per Mcf of natural gas as of December 31, 2014.

(4): Totals may not sum or recalculate due to rounding.

Estimated proved reserves at November 30, 2016 were 32.7 MMBoe, compared to 13.0 MMBoe and 2.6 MMBoe at December 31, 2015 and 2014, respectively. The increases in proved reserves during the eleven months ended November 30, 2016 and the year ended December 31, 2015 were primarily related to drilling activities. During the eleven months ended November 30, 2016, we drilled and completed nine wells and added 20 PUD locations. We also drilled and were in the process of completing two additional wells. This activity resulted in a combined increase of 19.9 MMBoe through extensions and discoveries. We acquired two wells and an additional 25% working interest in another well, which added a combined 0.5 MMBoe. Over this time period we've also had approximately 1.0 MMBoe of upward revisions to prior forecasts due to increased performance from our wells, despite negative impacts from the decline in average oil and natural gas pricing between periods. During the year ended December 31, 2015, we drilled and completed seven wells and added nine PUD locations, leading to a combined increase of 10.8 MMBoe through extensions and discoveries. We also had 0.6 MMBoe of upward revisions of prior reserve estimates due to increased performance from our wells, partially offset by negative impacts from the decline in average oil and natural gas pricing between periods.

Reserve engineering is and must be recognized as a subjective process of estimating volumes of economically recoverable oil and natural gas that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation. As a result, the estimates of different engineers often vary. In addition, the results of drilling, testing and production may justify revisions of such estimates. Accordingly, reserve estimates often differ from the quantities of oil and natural gas that are ultimately recovered. Estimates of economically recoverable oil and natural gas and of future net revenues are based on a number of variables and assumptions, all of which may vary from actual results, including geologic interpretation, prices and future production rates and costs. Please read "Risk Factors" appearing elsewhere in this prospectus.

Additional information regarding our proved reserves can be found in the notes to our financial statements included elsewhere in this prospectus and the proved reserve reports as of November 30, 2016 and December 31, 2015 and 2014, which are included as exhibits to the registration statement of which this prospectus forms a part.

PUDs

As of December 31, 2014, we had one PUD location totaling 389 MBbls of oil, 310 MMcf of natural gas and 77 MBbls of NGLs, for a total of 518 MBoe. As of December 31, 2015, our PUDs totaled 5,645 MBbls of oil, 3,610 MMcf of natural gas and 870 MBbls of NGLs, for a total of 7,117 MBoe. As of November 30, 2016, our PUDs totaled 15,727 MBbls of oil, 9,337 MMcf of natural gas and 2,423 MBbls of NGLs, for a total of 19,706 MBoe. PUDs will be converted from undeveloped to developed as the applicable wells are drilled and completed and begin production.

Of the 6,599 MBoe of PUDs we added during 2015, 1,656 MBoe resulted from improved production from two wells we completed in the last four months of 2014. This additional production history led to an increase in the reserves of our PUD location booked in 2014 as well as two additional PUD locations offsetting a well that came on production in December 2014. Our increase in PUD reserves in 2015 also included seven new PUD locations, totaling 4,943 MBoe, added as a result of offset drilling during 2015.

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We saw a net increase of 12,589 MBoe in PUD reserves during the eleven months ended November 30, 2016. The increase in PUD reserves during these eleven months included 20 new PUD locations, totaling 15,108 MBoe, that were added as a result of offset drilling during this time period. Of the ten PUD locations that we had booked at December 31, 2015, four have been developed and the remaining six are still carried as PUDs. Reserves booked to these six PUDs have increased by 517 MBoe. An additional 25% working interest in one of the sections resulted in 192 MBoe of that increase, while the remaining 319 MBoe increase was as a result of upward revisions due to increased performance in surrounding wells.

We do not plan to begin drilling efforts on our December 31, 2014 PUD location until 2017. Therefore, during the twelve months ended December 31, 2015, we incurred no expenses converting PUDs to proved developed reserves. During the eleven months ended November 30, 2016, however, we incurred $ of expenses converting four of our December 31, 2015 PUD locations to proved developed producing.

All of our PUD drilling locations are scheduled to be drilled within five years of their initial booking. As of November 30, 2016, 1,565 MBoe of our total proved reserves were classified as PDNP.

Oil and Natural Gas Production Prices and Costs

Production and Price History

The following table sets forth information regarding net production of oil, natural gas and NGLs and certain price and cost information for each of the periods indicated:

	Nine Months Ended September 30,				Year Ended December 31,

	2016		2015		2015		2014
Production :
Oil (MBbls)		1,210		459		718		189
Natural gas (MMcf)		669		269		404		172
NGLs (MMBbls)		141		57		89		35

Total (MBoe)(1)		1,463		561		874		253
Average sales price :
Oil (per Bbl)	$	39.02	$	46.72	$	43.92	$	77.28
Natural gas (per Mcf)		2.17		2.57		2.35		3.76
NGLs (per Bbl)		14.35		14.88		14.93		29.40

Total (per Boe)	$	34.65	$	40.97	$	38.69	$	64.35
Average sales price after impact of cash-settled derivatives :
Oil (per Bbl)	$	38.06	$	55.71	$	52.19	$	81.32
Natural gas (per Mcf)		2.17		2.57		2.35		3.76
NGLs (per Bbl)		14.35		14.88		14.93		29.40

Total (per Boe)	$	33.85	$	48.33	$	45.48	$	67.37
Operating expenses per Boe :
Lease operating expenses	$	3.57	$	4.20	$	3.62	$	8.07
Gathering and transportation expenses		0.45		0.17		0.20		0.48
Production and ad valorem taxes		2.17		2.83		2.57		3.64
Depletion, depreciation, amortization and accretion		20.12		25.83		25.94		33.38
Impairment of oil and natural gas properties and dry hole costs		1.03		0.01		7.42		5.58
Other operating expenses		1.14		0.46		0.30		0.25
General and administrative(2)		5.38		10.53		8.52		28.97

Total operating expenses per Boe	$	33.86	$	44.03	$	48.57	$	80.37

(1): Total may not sum or recalculate due to rounding.
(2): General and administrative does not include additional expenses we would have to incur as a result of being a public company.

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Productive Wells

As of September 30, 2016, we owned a 98% average working interest in 46 gross (44.9 net) productive wells. Our wells are oil wells that produce associated liquids-rich natural gas. Productive wells consist of producing wells, wells capable of production and wells awaiting connection to production facilities. Gross wells are the total number of producing wells in which we have an interest, operated and non-operated, and net wells are the sum of our fractional working interests owned in gross wells.

Developed and Undeveloped Acreage

The following table sets forth information as of September 30, 2016, relating to our leasehold acreage. Developed acreage consists of acres spaced or assigned to productive wells and does not include undrilled acreage held by production under the terms of the lease. Undeveloped acreage is defined as acres on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil or natural gas, regardless of whether such acreage contains proved reserves.

Developed Acreage		Undeveloped Acreage		Total Acreage

Gross(1)	Net(2)	Gross(1)	Net(2)	Gross(1)		Net(2)
3,905	3,783	64,216	57,092		68,121		60,875

(1): A gross acre is an acre in which a working interest is owned. The number of gross acres is the total number of acres in which a working interest is owned.
(2): A net acre is deemed to exist when the sum of the fractional ownership working interests in gross acres equals one. The number of net acres is the sum of the fractional working interests owned in gross acres expressed as whole numbers and fractions thereof.

Many of the leases comprising the undeveloped acreage set forth in the table above will expire at the end of their respective primary terms unless production from the leasehold acreage has been established prior to such date, in which event the lease will remain in effect until the cessation of production. Substantially all of the leases governing our acreage have continuous development clauses that permit us to continue to hold the acreage under such leases after the expiration of the primary term if we initiate additional development within 120 to 180 days after the completion of the last well drilled on such lease, without the requirement of a lease extension payment. Thereafter, the lease is held with additional development every 120 to 180 days until the entire lease is held by production. None of our horizontal drilling locations associated with proved undeveloped reserves are scheduled for drilling outside of a lease term that is not accounted for with a continuous development schedule or primary term. The following table sets forth the net undeveloped acreage, as of September 30, 2016, that will expire over the next five years unless production is established within the spacing units covering the acreage or the lease is renewed or extended under continuous drilling provisions prior to the primary term expiration dates.

Remaining 2016		2017			2018			2019			2020

249			12,346			9,131			8,354			8,216

Based on our current development plans, we expect to maintain substantially all of the acreage that would otherwise expire during 2016 and 2017 either through drilling and establishing production or making lease extension payments. Given our currently planned drilling activities, we do not expect the amount of any such lease extension payments to be material.

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Drilling Results

The following table sets forth the results of our drilling activity, as defined by wells having been placed on production, for the periods indicated. The information should not be considered indicative of future performance, nor should it be assumed that there is necessarily any correlation among the number of productive wells drilled, quantities of reserves found or economic value. Productive wells are those that produce, or are capable of producing, commercial quantities of hydrocarbons, regardless of whether they produce a reasonable rate of return. Dry wells are those that prove to be incapable of producing hydrocarbons in sufficient quantities to justify completion.

	For the Nine Months Ended September 30,								For the Year Ended December 31,

	2016				2015				2015				2014
	Gross		Net		Gross		Net		Gross		Net		Gross		Net
Exploratory Wells :
Productive(1)		—		—		—		—		—		—		—		—
Dry(2)		—		—		—		—		1.0		1.0		—		—

Total Exploratory		—		—		—		—		1.0		1.0		—		—



Development Wells :
Productive(1)		6.0		5.9		5.0		4.9		7.0		6.4		5.0		4.8
Dry(3)		—		—		—		—		—		—		—		—

Total Development		6.0		5.9		5.0		4.9		7.0		6.4		5.0		4.8



Total Wells :
Productive(1)		6.0		5.9		5.0		4.9		7.0		6.4		5.0		4.8
Dry		—		—		—		—		1.0		1.0		—		—

Total		6.0		5.9		5.0		4.9		8.0		7.4		5.0		4.8

(1): Although a well may be classified as productive upon completion, future changes in oil and natural gas prices, operating costs and production may result in the well becoming uneconomical, particularly exploratory wells where there is no production history.
(2): Relates to a vertical test well drilled to an unproductive shallow horizon.
(3): Does not include a wellbore temporarily abandoned due to mechanical failure.

Operations

General

We are the operator of approximately 98% of our net acreage. As operator, we design and manage the development of our wells and supervise operation and maintenance activities on a day-to-day basis. Independent contractors engaged by us provide all the equipment and personnel associated with these activities. We employ petroleum engineers, geologists and land professionals who work to improve production rates, increase reserves, acquire properties, obtain permitting and lower the cost of operating our oil and natural gas properties.

Transportation and Marketing

We are party to a long-term gathering agreement entered into in 2015 pursuant to which we have dedicated all of our oil production from our Whiskey River and Cochise acreage. We sell substantially all of our oil production from our Whiskey River and Cochise acreage pursuant to a short-term

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marketing agreement. We sell substantially all of our natural gas from our Cochise acreage under a long-term gathering and processing agreement entered into in September 2015, and substantially all of our natural gas from our Whiskey River and Big Tex acreage pursuant to a gathering and processing agreement expiring in the fall of 2017, with substantially all of such natural gas transported from the wellhead by third-party gathering lines to natural gas processing facilities. None of our sales and transportation agreements contain minimum volume commitments or other similar provisions.

In October 2016, we entered into a long-term natural gas gathering and processing agreement for our Whiskey River acreage. We expect to begin selling natural gas under this agreement in early 2017.

Customers

We sell our oil, natural gas and NGL production to purchasers at market prices. We sell our production to a relatively small number of customers, as is customary in our business. For the nine months ended September 30, 2016, two purchasers accounted for more than 10% of our revenue: Trafigura Trading, LLC (47%) and Sunoco Partners Marketing (40%). For the year ended December 31, 2015, two purchasers accounted for more than 10% of our revenue: Sunoco Partners Marketing (68%) and Shell Trading (21%). For the year ended December 31, 2014, two purchasers accounted for more than 10% of our revenue: Shell Trading (72%) and Plains Marketing, LP (15%). During such periods, no other purchaser accounted for 10% or more of our revenue. The loss of any of these purchasers could materially and adversely affect our revenues in the short-term. However, based on the current demand for oil and natural gas and the availability of other purchasers, we believe that the loss of any of our purchasers would not have a long-term material adverse effect on our financial condition and results of operations because crude oil and natural gas are fungible products with well-established markets.

Infrastructure

Our infrastructure strategy includes owning sufficient tracts of surface acreage to (i) allow us to control fresh water supply for drilling and completions, (ii) provide ease of pipeline installation, (iii) allow construction of storage for both fresh and produced water and (iv) simplify construction of facilities for disposal of flowback and produced water. In addition, we have supplemental agreements that provide for fresh water sourcing and produced water storage and disposal services from adjacent landowners. Our installed and contracted capacities are (i) 4.7 million barrels of water storage capacity, (ii) 10.5 miles of fresh water pipelines and 63.6 miles of produced water transportation pipelines, which allows us to largely eliminate water trucking in all phases of our operation, (iii) 162 thousand barrels per day of water sourcing capacity and (iv) 86 thousand barrels per day of water disposal capacity. Accordingly, we have disposal capacity more than three times our current produced water volumes and sufficient sources of fresh water to support our current drilling program and we believe it is scalable to support additional rigs. This infrastructure position provides important cost advantages compared to utilizing third-party services.

Competition

The oil and natural gas industry is intensely competitive, and we compete with other companies that have greater resources. Many of these companies not only explore for and produce oil and natural gas, but also carry on midstream and refining operations and market petroleum and other products on a regional, national or worldwide basis. These companies may be able to pay more for productive oil and natural gas properties and exploratory prospects or to define, evaluate, bid for and purchase a greater number of properties and prospects than our financial or human resources permit. Our larger or more integrated competitors may be able to absorb the burden of existing, and any changes to, federal, state and local laws and regulations more easily than we can, which would adversely affect our competitive position. Our ability to acquire additional properties and to discover reserves in the future

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will be dependent upon our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. In addition, because we have fewer financial and human resources than many companies in our industry, we may be at a disadvantage in bidding for exploratory prospects and producing oil and natural gas properties.

There is also competition between oil and natural gas producers and other industries producing energy and fuel. Furthermore, competitive conditions may be substantially affected by various forms of energy legislation and/or regulation considered from time to time by the governments of the United States and the jurisdictions in which we operate. It is not possible to predict the nature of any such legislation or regulation which may ultimately be adopted or its effects upon our future operations. Such laws and regulations may substantially increase the costs of developing oil and natural gas and may prevent or delay the commencement or continuation of a given operation. Our larger competitors may be able to absorb the burden of existing, and any changes to, federal, state and local laws and regulations more easily than we can, which would adversely affect our competitive position.

Seasonality of Business

Weather conditions affect the demand for, and prices of, oil and natural gas. Demand for oil and natural gas is typically higher in the fourth and first quarters resulting in higher prices. Due to these seasonal fluctuations, results of operations for individual quarterly periods may not be indicative of the results that may be realized on an annual basis.

Title to Properties

As is customary in the oil and natural gas industry, we initially conduct only a cursory review of the title to our properties in connection with acquisition of leasehold acreage. At such time as we determine to conduct drilling operations on those properties, we conduct a thorough title examination and perform curative work with respect to significant defects prior to commencement of drilling operations. To the extent title opinions or other investigations reflect title defects on those properties, we are typically responsible for curing any title defects at our expense. We generally will not commence drilling operations on a property until we have cured any material title defects on such property. We have obtained title opinions on substantially all of our producing properties and believe that we have satisfactory title to our producing properties in accordance with standards generally accepted in the oil and natural gas industry.

Prior to completing an acquisition of producing oil and natural gas leases, we perform title reviews on the most significant leases and, depending on the materiality of properties, we may obtain a title opinion, obtain an updated title review or opinion or review previously obtained title opinions. Our oil and natural gas properties are subject to customary royalty and other interests, liens for current taxes and other burdens which we believe do not materially interfere with the use of or affect our carrying value of the properties.

We believe that we have satisfactory title to all of our material assets. Although title to these properties is subject to encumbrances in some cases, such as customary interests generally retained in connection with the acquisition of real property, customary royalty interests and contract terms and restrictions, liens under operating agreements, liens related to environmental liabilities associated with historical operations, liens for current taxes and other burdens, easements, restrictions and minor encumbrances customary in the oil and natural gas industry, we believe that none of these liens, restrictions, easements, burdens and encumbrances will materially detract from the value of these properties or from our interest in these properties or materially interfere with our use of these properties in the operation of our business. In addition, we believe that we have obtained sufficient rights-of-way grants and permits from public authorities and private parties for us to operate our business in all material respects as described in this prospectus.

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Oil and Natural Gas Leases

The typical oil and natural gas lease agreement covering our properties provides for the payment of royalties to the mineral owner for all oil and natural gas produced from any wells drilled on the leased premises. The lessor royalties and other leasehold burdens on our properties generally range from 22.5% to 25.0%, resulting in a net revenue interest to us generally ranging from 75.0% to 77.5%.

Regulation of the Oil and Natural Gas Industry

Our operations are substantially affected by federal, state and local laws and regulations. In particular, natural gas production and related operations are, or have been, subject to price controls, taxes and numerous other laws and regulations. All of the jurisdictions in which we own or operate producing oil and natural gas properties have statutory provisions regulating the development and production of oil and natural gas, including provisions related to permits for the drilling of wells, bonding requirements to drill or operate wells, the location of wells, the method of drilling and casing wells, the surface use and restoration of properties upon which wells are drilled, sourcing and disposal of water used in the drilling and completion process and the abandonment of wells. Our operations are also subject to various conservation laws and regulations. These include the regulation of the size of drilling and spacing units or proration units, the number of wells which may be drilled in an area and the unitization or pooling of crude oil or natural gas wells, as well as regulations that generally prohibit the venting or flaring of natural gas and impose certain requirements regarding the ratability or fair apportionment of production from fields and individual wells.

Failure to comply with applicable laws and regulations can result in substantial penalties. The regulatory burden on the industry increases the cost of doing business and affects profitability. Although we believe we are in substantial compliance with all applicable laws and regulations, such laws and regulations are frequently amended or reinterpreted. Therefore, we are unable to predict the future costs or impact of compliance. Additional proposals and proceedings that affect the oil and natural gas industry are regularly considered by Congress, the states, the FERC and the courts. We cannot predict when or whether any such proposals may become effective. We do not believe that we would be affected by any such action materially differently than similarly situated competitors.

We believe we are in substantial compliance with currently applicable laws and regulations and that continued substantial compliance with existing requirements will not have a material adverse effect on our financial position, cash flows or results of operations. However, current regulatory requirements may change, currently unforeseen environmental incidents may occur or past non-compliance with environmental laws or regulations may be discovered.

Regulation of Production of Oil and Natural Gas

The production of oil and natural gas is subject to regulation under a wide range of local, state and federal statutes, rules, orders and regulations. Federal, state and local statutes and regulations require permits for drilling operations, drilling bonds and reports concerning operations. We own interests in properties located in Texas, which regulates drilling and operating activities by requiring, among other things, permits for the drilling of wells, maintaining bonding requirements in order to drill or operate wells, and regulating the location of wells, the method of drilling and casing wells, the surface use and restoration of properties upon which wells are drilled and the plugging and abandonment of wells. The laws of Texas also govern a number of conservation matters, including provisions for the unitization or pooling of oil and natural gas properties, the establishment of maximum allowable rates of production from oil and natural gas wells, the regulation of well spacing or density and plugging and abandonment of wells. The effect of these regulations is to limit the amount of oil and natural gas that we can produce from our wells and to limit the number of wells or the locations at which we can drill, although we can apply for exceptions to such regulations or to have

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reductions in well spacing or density. Moreover, Texas imposes a production or severance tax with respect to the production and sale of oil, natural gas and NGLs within its jurisdiction. We do not believe that we are impacted any differently by these regulations than similarly situated competitors.

The failure to comply with these rules and regulations can result in substantial penalties. Our competitors in the oil and natural gas industry are subject to the same regulatory requirements and restrictions that affect our operations.

Regulation of Sales and Transportation of Oil

Sales of oil, condensate and NGLs are not currently regulated and are made at negotiated prices. Although prices of these energy commodities are currently unregulated, the United States Congress historically has been active in their regulation. We cannot predict whether new legislation to regulate oil and NGLs, or the prices charged for these commodities might be proposed, what proposals, if any, might actually be enacted by the United States Congress or the various state legislatures and what effect, if any, the proposals might have on the our operations. Additionally, such sales may be subject to certain state, and potentially federal, reporting requirement.

Our sales of oil are affected by the availability, terms and cost of transportation. The transportation of oil in common carrier pipelines is also subject to rate and access regulation. The FERC regulates interstate transportation of oil, including natural gas liquids, under the Interstate Commerce Act ("ICA"). Prices received from the sale of oil liquids may be affected by the cost of transporting those products to market. The ICA requires that pipelines maintain a tariff on file with FERC. The tariff sets forth the established rates as well as the rules and regulations governing the service. The ICA requires, among other things, that rates and terms and conditions of service on interstate common carrier pipelines be "just and reasonable". In general, interstate oil pipeline rates must be cost-based, although settlement rates agreed to by all shippers are permitted and market based rates may be permitted in certain circumstances. Such pipelines must also provide jurisdictional service in a manner that is not unduly discriminatory or unduly preferential. Shippers have the power to challenge new and existing rates and terms and conditions of service before FERC.

Intrastate oil pipeline transportation rates are subject to regulation by state regulatory commissions. The basis for intrastate oil pipeline regulation, and the degree of regulatory oversight and scrutiny given to intrastate oil pipeline rates, varies from state to state. Insofar as effective interstate and intrastate rates and regulations regarding access are equally applicable to all comparable shippers, we believe that the regulation of oil transportation will not affect our operations in any way that is of material difference from those of our competitors who are similarly situated.

Regulation of Transportation and Sales of Natural Gas

Historically, the transportation and sale for resale of natural gas in interstate commerce have been regulated by agencies of the U.S. federal government, primarily FERC. In the past, the federal government has regulated the prices at which natural gas could be sold. While sales by producers of natural gas can currently be made at uncontrolled market prices, Congress could reenact price controls in the future. Deregulation of wellhead natural gas sales began with the enactment of the NGPA, and culminated in adoption of the Natural Gas Wellhead Decontrol Act which removed controls affecting wellhead sales of natural gas effective January 1, 1993. The transportation and sale for resale of natural gas in interstate commerce is regulated primarily under the NGA, and by regulations and orders promulgated under the NGA by FERC. In certain limited circumstances, intrastate transportation and wholesale sales of natural gas may also be affected directly or indirectly by laws enacted by Congress and by FERC regulations.

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The EP Act of 2005 is a comprehensive compilation of tax incentives, authorized appropriations for grants and guaranteed loans and significant changes to the statutory policy that affects all segments of the energy industry. Among other matters, the EP Act of 2005 amends the NGA to add an anti-market manipulation provision which makes it unlawful for any entity to engage in prohibited behavior to be prescribed by FERC, and furthermore provides FERC with additional civil penalty authority. The EP Act of 2005 provides FERC with the power to assess civil penalties of up to $1,000,000 per day for violations of the NGA and increases FERC's civil penalty authority under the NGPA from $5,000 per violation per day to $1,000,000 per violation per day. The civil penalty provisions are applicable to entities that engage in the sale of natural gas for resale in interstate commerce. On January 19, 2006, FERC issued Order No. 670, a rule implementing the anti-market manipulation provision of the EP Act of 2005, and subsequently denied rehearing. The rules make it unlawful to: (i) in connection with the purchase or sale of natural gas subject to the jurisdiction of FERC, or the purchase or sale of transportation services subject to the jurisdiction of FERC, for any entity, directly or indirectly, to use or employ any device, scheme or artifice to defraud; (ii) to make any untrue statement of material fact or omit to make any such statement necessary to make the statements made not misleading; or (iii) to engage in any act or practice that operates as a fraud or deceit upon any person. The new anti-market manipulation rule does not apply to activities that relate only to intrastate or other non-jurisdictional sales or gathering, but does apply to activities of natural gas pipelines and storage companies that provide interstate services, as well as otherwise non-jurisdictional entities to the extent the activities are conducted "in connection with" natural gas sales, purchases or transportation subject to FERC jurisdiction, which now includes the annual reporting requirements under Order 704, described below. The anti-market manipulation rule and enhanced civil penalty authority reflect an expansion of FERC's NGA enforcement authority.

On December 26, 2007, FERC issued Order 704, a final rule on the annual natural gas transaction reporting requirements, as amended by subsequent orders on rehearing. Under Order 704, any market participant that engages in wholesale sales or purchases of natural gas that equal or exceed 2.2 million MMBtus of physical natural gas in the previous calendar year, including natural gas producers, gatherers and marketers, are required to report, on May 1 of each year, aggregate volumes of natural gas purchased or sold at wholesale in the prior calendar year to the extent such transactions utilize, contribute to, or may contribute to the formation of price indices to FERC on Form No. 552. It is the responsibility of the reporting entity to determine which individual transactions should be reported based on the guidance of Order 704. Order 704 also requires market participants to indicate whether they report prices to any index publishers, and if so, whether their reporting complies with FERC's policy statement on price reporting.

Gathering service, which occurs upstream of jurisdictional transmission services, is regulated by the states onshore and in state waters. Section 1(b) of the NGA exempts natural gas gathering facilities from regulation by FERC as a natural gas company under the NGA. Although FERC has set forth a general test for determining whether facilities perform a non-jurisdictional gathering function or a jurisdictional transmission function, FERC's determinations as to the classification of facilities are done on a case by case basis. To the extent that FERC issues an order that reclassifies certain jurisdictional transmission facilities as non-jurisdictional gathering facilities, and depending on the scope of that decision, our costs of getting natural gas to point of sale locations may increase. We believe that the natural gas pipelines in the gathering systems we use meet the traditional tests FERC has used to establish a pipeline's status as a gatherer not subject to regulation as a natural gas company. However, the distinction between FERC-regulated transmission services and federally unregulated gathering services is the subject of ongoing litigation, so the classification and regulation of the gathering facilities we use are subject to change based on future determinations by FERC, the courts or Congress. State regulation of natural gas gathering facilities generally includes various occupational safety, environmental and, in some circumstances, nondiscriminatory-take requirements. Although such

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regulation has not generally been affirmatively applied by state agencies, natural gas gathering may receive greater regulatory scrutiny in the future.

The price at which we sell natural gas is not currently subject to federal rate regulation and, for the most part, is not subject to state regulation. However, with regard to our physical sales of these energy commodities, we are required to observe anti-market manipulation laws and related regulations enforced by FERC under the EP Act of 2005 and under the Commodity Exchange Act ("CEA"), and regulations promulgated thereunder by the CFTC. The CEA prohibits any person from manipulating or attempting to manipulate the price of any commodity in interstate commerce or futures on such commodity. The CEA also prohibits knowingly delivering or causing to be delivered false or misleading or knowingly inaccurate reports concerning market information or conditions that affect or tend to affect the price of a commodity. Should we violate the anti-market manipulation laws and regulations, we could also be subject to related third-party damage claims by, among others, sellers, royalty owners and taxing authorities.

Intrastate natural gas transportation is also subject to regulation by state regulatory agencies. The basis for intrastate regulation of natural gas transportation and the degree of regulatory oversight and scrutiny given to intrastate natural gas pipeline rates and services varies from state to state. Insofar as such regulation within a particular state will generally affect all intrastate natural gas shippers within the state on a comparable basis, we believe that the regulation of similarly situated intrastate natural gas transportation in any states in which we operate and ship natural gas on an intrastate basis will not affect our operations in any way that is of material difference from those of our competitors. Like the regulation of interstate transportation rates, the regulation of intrastate transportation rates affects the marketing of natural gas that we produce, as well as the revenues we receive for sales of our natural gas.

Changes in law and to FERC or state policies and regulations may adversely affect the availability and reliability of firm and/or interruptible transportation service on interstate and intrastate pipelines, and we cannot predict what future action FERC or state regulatory bodies will take. We do not believe, however, that any regulatory changes will affect us in a way that materially differs from the way they will affect other natural gas producers and marketers with which we compete.

Regulation of Environmental and Occupational Safety and Health Matters

Our oil and natural gas development operations are subject to numerous stringent federal, regional, state and local statutes and regulations governing occupational safety and health, the discharge of materials into the environment or otherwise relating to environmental protection, some of which carry substantial administrative, civil and criminal penalties for failure to comply. These laws and regulations may require the acquisition of a permit before drilling or other regulated activity commences; restrict the types, quantities and concentrations of various substances that can be released into the environment in connection with drilling, production and transporting through pipelines; govern the sourcing and disposal of water used in the drilling and completion process; limit or prohibit drilling activities in certain areas and on certain lands lying within wilderness, wetlands, frontier and other protected areas; require some form of remedial action to prevent or mitigate pollution from former operations such as plugging abandoned wells or closing earthen pits; establish specific safety and health criteria addressing worker protection; and impose substantial liabilities for pollution resulting from operations or failure to comply with regulatory filings. In addition, these laws and regulations may restrict the rate of production.

The following is a summary of the more significant existing environmental and occupational health and safety laws and regulations, as amended from time to time, to which our business operations are subject and for which compliance may have a material adverse impact on our capital expenditures, results of operations or financial position.

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Hazardous Substances and Waste Handling

The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), also known as the "Superfund" law, and comparable state laws impose liability, without regard to fault or the legality of the original conduct, on certain classes of persons that are considered to have contributed to the release of a "hazardous substance" into the environment. These persons include the current and past owner or operator of the disposal site or the site where the release occurred and companies that disposed or arranged for the disposal of the hazardous substances at the site where the release occurred. Under CERCLA, such persons may be subject to joint and several strict liability for the costs of cleaning up the hazardous substances that have been released into the environment and for damages to natural resources, and it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment. We are able to control directly the operation of only those wells with respect to which we act as operator. Notwithstanding our lack of direct control over wells operated by others, the failure of an operator other than us to comply with applicable environmental regulations may, in certain circumstances, be attributed to us and result in CERCLA liability.

The Resource Conservation and Recovery Act ("RCRA") and analogous state laws, impose detailed requirements for the generation, handling, storage, treatment and disposal of nonhazardous and hazardous solid wastes. RCRA specifically excludes drilling fluids, produced waters and other wastes associated with the development or production of crude oil, natural gas or geothermal energy from regulation as hazardous wastes. However, these wastes may be regulated by the EPA or state agencies under RCRA's less stringent nonhazardous solid waste provisions, state laws or other federal laws. Moreover, it is possible that these particular oil and natural gas development and production wastes now classified as nonhazardous solid wastes could be classified as hazardous wastes in the future. For example, from time to time various environmental groups have challenged the EPA's exemption of certain oil and natural gas wastes from RCRA. A loss of the RCRA exclusion for drilling fluids, produced waters and related wastes could result in an increase in our costs to manage and dispose of generated wastes, which could have a material adverse effect on our results of operations and financial position. In addition, in the course of our operations, we generate some amounts of ordinary industrial wastes, such as paint wastes, waste solvents, laboratory wastes and waste compressor oils that may be regulated as hazardous wastes if such wastes have hazardous characteristics.

We currently own, lease or operate numerous properties that have been used for oil and natural gas development and production activities for many years. Although we believe that we have utilized operating and waste disposal practices that were standard in the industry at the time, hazardous substances, wastes or petroleum hydrocarbons may have been released on, under or from the properties owned or leased by us, or on, under or from other locations, including off-site locations, where such substances have been taken for recycling or disposal. In addition, some of our properties have been operated by third parties or by previous owners or operators whose treatment and disposal of hazardous substances, wastes or petroleum hydrocarbons was not under our control. These properties and the substances disposed or released on, under or from them may be subject to CERCLA, RCRA and analogous state laws. Under such laws, we could be required to undertake response or corrective measures, which could include removal of previously disposed substances and wastes, cleanup of contaminated property or performance of remedial plugging or pit closure operations to prevent future contamination.

Water Discharges

The Clean Water Act and comparable state laws impose restrictions and strict controls regarding the discharge of pollutants, including produced waters and other oil and natural gas wastes, into or near navigable waters. The discharge of pollutants into regulated waters is prohibited, except in

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accordance with the terms of a permit issued by the EPA or the state. The discharge of dredge and fill material in regulated waters, including wetlands, is also prohibited, unless authorized by a permit issued by the U.S. Army Corps of Engineers (the "Corps"). In September 2015, the EPA and the Corps issued new rules defining the scope of the EPA's and the Corps' jurisdiction under the Clean Water Act with respect to certain types of waterbodies and classifying these waterbodies as regulated wetlands. To the extent the rule expands the scope of the Clean Water Act's jurisdiction, we could face increased costs and delays with respect to obtaining permits for dredge and fill activities in wetland areas. The rule has been challenged in court on the grounds that it unlawfully expands the reach of the Clean Water Act, and implementation of the rule has been stayed pending resolution of the court challenge. Obtaining permits has the potential to delay the development of oil and natural gas projects. These laws and any implementing regulations provide for administrative, civil and criminal penalties for any unauthorized discharges of oil and other substances in reportable quantities and may impose substantial potential liability for the costs of removal, remediation and damages.

Pursuant to these laws and regulations, we may be required to obtain and maintain approvals or permits for the discharge of wastewater or storm water and are required to develop and implement spill prevention, control and countermeasure plans, also referred to as "SPCC plans", in connection with on-site storage of significant quantities of oil. We are currently undertaking a review of our properties to determine the need for new or updated SPCC plans and, where necessary, we will be developing or upgrading such plans implementing the physical and operation controls imposed by these plans, the costs of which are not expected to be substantial.

The primary federal law related specifically to oil spill liability is the Oil Pollution Act of 1990 ("OPA"), which amends and augments the oil spill provisions of the Clean Water Act and imposes certain duties and liabilities on certain "responsible parties" related to the prevention of oil spills and damages resulting from such spills in or threatening waters of the United States or adjoining shorelines. For example, operators of certain oil and natural gas facilities must develop, implement and maintain facility response plans, conduct annual spill training for certain employees and provide varying degrees of financial assurance. Owners or operators of a facility, vessel or pipeline that is a source of an oil discharge or that poses the substantial threat of discharge is one type of "responsible party" who is liable. The OPA applies joint and several liability, without regard to fault, to each liable party for oil removal costs and a variety of public and private damages. Although defenses exist, they are limited. As such, a violation of the OPA has the potential to adversely affect our operations.

Air Emissions

The federal Clean Air Act and comparable state laws restrict the emission of air pollutants from many sources, such as compressor stations, through air emissions standards, construction and operating permitting programs and the imposition of other compliance requirements. These laws and regulations may require us to obtain pre-approval for the construction or modification of certain projects or facilities expected to produce or significantly increase air emissions, obtain and strictly comply with stringent air permit requirements or utilize specific equipment or technologies to control emissions of certain pollutants. Over the next several years, we may be required to incur certain capital expenditures for air pollution control equipment or other air emissions related issues. For example, in October 2015, the EPA lowered the National Ambient Air Quality Standard ("NAAQS") for ozone from 75 to 70 parts per billion. State implementation of the revised NAAQS could result in stricter permitting requirements, delay or prohibit our ability to obtain such permits and result in increased expenditures for pollution control equipment, the costs of which could be significant. In addition, the EPA has adopted new rules under the Clean Air Act that require the reduction of volatile organic compound emissions from certain fractured and refractured natural gas wells for which well completion operations are conducted and further require that most wells use reduced emission completions, also known as "green completions". These regulations also establish specific new requirements regarding emissions

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from production-related wet seal and reciprocating compressors and from pneumatic controllers and storage vessels. More recently, in May 2016, the EPA finalized rules regarding criteria for aggregating multiple small surface sites into a single source for air-quality permitting purposes applicable to the oil and natural gas industry. This rule could cause small facilities, on an aggregate basis, to be deemed a major source, thereby triggering more stringent air permitting processes and requirements. See also "—Regulation of GHG Emissions". Compliance with these and other air pollution control and permitting requirements has the potential to delay the development of oil and natural gas projects and increase our costs of development, which costs could be significant.

Regulation of GHG Emissions

In response to findings that emissions of carbon dioxide, methane and other GHGs present an endangerment to public health and the environment, the EPA has adopted regulations pursuant to the federal Clean Air Act that, among other things, require preconstruction and operating permits for certain large stationary sources. Facilities required to obtain preconstruction permits for their GHG emissions are also required to meet "best available control technology" standards that are being established by the states or, in some cases, by the EPA on a case-by-case basis. These regulatory requirements could adversely affect our operations and restrict or delay our ability to obtain air permits for new or modified sources. In addition, the EPA has adopted rules requiring the monitoring and reporting of GHG emissions from specified onshore and offshore oil and natural gas production sources in the United States on an annual basis, which include certain of our operations. Furthermore, in May 2016, the EPA finalized rules that establish new controls for emissions of methane from new, modified or reconstructed sources in the oil and natural gas source category, including production, processing, transmission and storage activities. The rules include first-time standards to address emissions of methane from equipment and processes across the source category, including hydraulically fractured oil and natural gas well completions. In addition, the rules impose leak detection and repair requirements intended to address methane leaks known as "fugitive emissions" from equipment, such as valves, connectors, open-ended lines, pressure-relief devices, compressors, instruments and meters. The EPA has also announced that it intends to impose methane emission standards for existing sources as well but, to date, has not yet issued a proposal. Compliance with these rules will require enhanced record-keeping practices, the purchase of new equipment such as optical gas imaging instruments to detect leaks and increased frequency of maintenance and repair activities to address emissions leakage. The rules will also likely require hiring additional personnel to support these activities or the engagement of third party contractors to assist with and verify compliance. The BLM also finalized similar rules regarding the control of methane emissions in November 2016 that apply to oil and natural gas exploration and development activities on public and tribal lands. The rules seek to minimize venting and flaring of emissions from storage tanks and other equipment, and also impose leak detection and repair requirements. These new and proposed rules could result in increased compliance costs on our operations.

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response to global climate change, including plans developed in connection with the recent Paris climate conference in December 2015, which the U.S. ratified in September 2016. Many governments also provide, or may in the future provide, tax advantages and other subsidies to support the use and development of alternative energy technologies. Substantial limitations on GHG emissions could adversely affect demand for the oil and natural gas we produce and lower the value of our reserves.

Hydraulic Fracturing Activities

Hydraulic fracturing is an important and common practice that is used to stimulate production of oil and/or natural gas from dense subsurface rock formations. The hydraulic fracturing process involves the injection of water, proppants and chemicals under pressure into targeted subsurface formations to fracture the surrounding rock and stimulate production. We regularly use hydraulic fracturing as part of our operations. Hydraulic fracturing is typically regulated by state oil and natural gas commissions, but federal agencies have asserted jurisdiction over certain aspects of the process. The EPA has asserted federal regulatory authority pursuant to the SDWA over certain hydraulic fracturing activities involving the use of diesel fuels and published permitting guidance in February 2014 addressing the performance of such activities using diesel fuels. The EPA has also taken the following actions: issued final regulations under the federal Clean Air Act establishing performance standards, including standards for the capture of air emissions released during hydraulic fracturing; issued an advanced notice of proposed rulemaking under the Toxic Substances Control Act to require companies to disclose information regarding the chemicals used in hydraulic fracturing; and, in June 2016, published an effluent limited guideline final rule prohibiting the discharge of wastewater from onshore unconventional oil and natural gas extraction facilities to publicly owned wastewater treatment plants. In addition, the Bureau of Land Management finalized rules in March 2015 that impose new or more stringent standards for performing hydraulic fracturing on federal and American Indian lands. The U.S. District Court of Wyoming struck down the final rule, finding that the BLM lacked congressional authority to promulgate the rule. The BLM has appealed this decision, and a final decision remains pending. In addition, Congress has from time to time considered legislation to provide for federal regulation of hydraulic fracturing under the SDWA and to require disclosure of the chemicals used in the hydraulic fracturing process. It is unclear how any additional federal regulation of hydraulic fracturing activities may affect our operations.

Certain governmental reviews are either underway or being proposed that focus on environmental aspects of hydraulic fracturing practices. For example, in December 2016, the EPA released its final report on the potential impacts of hydraulic fracturing on drinking water resources. The final report concluded that "water cycle" activities associated with hydraulic fracturing may impact drinking water resources "under some circumstances", noting that the following hydraulic fracturing water cycle activities and local- or regional-scale factors are more likely than others to result in more frequent or more severe impacts: water withdrawals for fracturing in times or areas of low water availability; surface spills during the management of fracturing fluids, chemicals or produced water; injection of fracturing fluids into wells with inadequate mechanical integrity; injection of fracturing fluids directly into groundwater resources; discharge of inadequately treated fracturing wastewater to surface waters; and disposal or storage of fracturing wastewater in unlined pits. Since the report did not find a direct link between hydraulic fracturing itself and contamination of groundwater resources, this years-long study report does not appear to provide any basis for further regulation of hydraulic fracturing at the

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federal level. These ongoing or proposed studies could spur initiatives to further regulate hydraulic fracturing under the federal SDWA or other regulatory mechanisms.

At the state level, several states have adopted or are considering legal requirements that could impose more stringent permitting, disclosure and well construction requirements on hydraulic fracturing activities. For example, in May 2013, the Railroad Commission of Texas issued a "well integrity rule", which updates the requirements for drilling, putting pipe down and cementing wells. The rule also includes new testing and reporting requirements, such as (i) the requirement to submit cementing reports after well completion or after cessation of drilling, whichever is later, and (ii) the imposition of additional testing on wells less than 1,000 feet below usable groundwater. The well integrity rule took effect in January 2014. Local governments also may seek to adopt ordinances within their jurisdictions regulating the time, place and manner of drilling activities in general or hydraulic fracturing activities in particular. If new or more stringent federal, state or local legal restrictions relating to the hydraulic fracturing process are adopted in areas where we operate, we could incur potentially significant added costs to comply with such requirements, experience delays or curtailment in the pursuit of development activities and perhaps even be precluded from drilling wells.

ESA and Migratory Birds

The Endangered Species Act ("ESA") and (in some cases) comparable state laws were established to protect endangered and threatened species. Pursuant to the ESA, if a species is listed as threatened or endangered, restrictions may be imposed on activities adversely affecting that species' habitat. Similar protections are offered to migratory birds under the Migratory Bird Treaty Act. We may conduct operations on oil and natural gas leases in areas where certain species that are listed as threatened or endangered are known to exist and where other species, such as the sage grouse, that potentially could be listed as threatened or endangered under the ESA may exist. The U.S. Fish and Wildlife Service may designate critical habitat and suitable habitat areas that it believes are necessary for survival of a threatened or endangered species. A critical habitat or suitable habitat designation could result in further material restrictions to federal land use and may materially delay or prohibit land access for oil and natural gas development. Moreover, as a result of a settlement approved by the U.S. District Court for the District of Columbia in September 2011, the U.S. Fish and Wildlife Service is required to make a determination on listing of more than 250 species as endangered or threatened under the ESA by no later than completion of the agency's 2017 fiscal year. Similar protections are offered to migratory birds under the Migratory Bird Treaty Act. The federal government recently issued indictments under the Migratory Bird Treaty Act to several oil and natural gas companies after dead migratory birds were found near reserve pits associated with drilling activities. The identification or designation of previously unprotected species as threatened or endangered in areas where underlying property operations are conducted could cause us to incur increased costs arising from species protection measures or could result in limitations on our development activities that could have an adverse impact on our ability to develop and produce reserves. If we were to have a portion of our leases designated as critical or suitable habitat, it could adversely impact the value of our leases.

OSHA

We are subject to the requirements of the Occupational Safety and Health Act ("OSHA") and comparable state statutes whose purpose is to protect the health and safety of workers. In addition, the OSHA hazard communication standard, the Emergency Planning and Community Right-to-Know Act and comparable state statutes and any implementing regulations require that we organize and/or disclose information about hazardous materials used or produced in our operations and that this information be provided to employees, state and local governmental authorities and citizens.

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Related Permits and Authorizations

Many environmental laws require us to obtain permits or other authorizations from state and/or federal agencies before initiating certain drilling, construction, production, operation or other oil and natural gas activities, and to maintain these permits and compliance with their requirements for on-going operations. These permits are generally subject to protest, appeal or litigation, which can in certain cases delay or halt projects and cease production or operation of wells, pipelines and other operations.

We have not experienced any material adverse effect from compliance with environmental requirements; however, there is no assurance that this will continue. We did not have any material capital or other non-recurring expenditures in connection with complying with environmental laws or environmental remediation matters in 2015, nor do we anticipate that such expenditures will be material in 2016.

Related Insurance

We maintain insurance against some risks associated with above or underground contamination that may occur as a result of our development activities. However, this insurance is limited to activities at the well site and there can be no assurance that this insurance will continue to be commercially available or that this insurance will be available at premium levels that justify its purchase by us. The occurrence of a significant event that is not fully insured or indemnified against could have a materially adverse effect on our financial condition and operations. Further, we have no coverage for gradual, long-term pollution events.

Employees

As of September 30, 2016, we had 30 full-time employees. We hire independent contractors on an as needed basis. We have no collective bargaining agreements with our employees. We believe that our employee relationships are satisfactory.

Legal Proceedings

We are party to lawsuits arising in the ordinary course of our business. We cannot predict the outcome of any such lawsuits with certainty, but management believes it is remote that pending or threatened legal matters will have a material adverse impact on our financial condition.

Due to the nature of our business, we are, from time to time, involved in other routine litigation or subject to disputes or claims related to our business activities, including workers' compensation claims and employment related disputes. In the opinion of our management, none of these other pending litigation, disputes or claims against us, if decided adversely, will have a material adverse effect on our financial condition, cash flows or results of operations.

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CORPORATE REORGANIZATION

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(1): Assumes an initial offering price of $ per share of common stock, the midpoint of the price range set forth on the cover page of this prospectus.
(2): Includes shares of common stock held directly by the Management Members and shares of common stock held indirectly by the Management Members through Management Holdco.

Existing Owners' Ownership

The table below sets forth the percentage ownership of our Existing Owners prior to this offering and after the consummation of this offering.

				Equity Interests in Jagged Peak Energy Inc. Following this Offering

	Percentage Ownership in Jagged Peak Energy LLC Prior to this Offering
Existing Owners(1)				Common Stock	Voting Power (%)
Q-Jagged Peak Energy Investment Partners, LLC			%			%
Management Member Executive Officers(2)(3)			%			%
Other Management Members(3)			%			%

		100.0	%			%

(1): The number of shares of common stock to be issued to our Existing Owners is based on an implied equity value of Jagged Peak Energy LLC immediately prior to this offering, based on an initial public offering price of $ per share of common stock, the midpoint of the price range set forth on the cover page of this prospectus. Any increase or decrease (as applicable) of the assumed initial public offering price will result in an increase or decrease in the number of shares

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of common stock to be received by the Management Members, including those who serve as our executive officers, but will not affect the aggregate numbers of shares of common stock held by our Existing Owners. Assuming that the price of our common stock following the closing of this offering is equal to the public offering price of $ per share (the midpoint of the price range set forth on the cover of this prospectus), the Management Members that serve as our executive officers will receive shares of our common stock and the remaining Management Members will receive shares of our common stock. A $1.00 increase (decrease) in this assumed common stock price would increase (decrease) the aggregate number of shares to be received by the Management Members that serve as our executive officers by ( ) shares and the remaining Management Members by ( ) shares.

(2): Includes Messrs. Jaggers, Howard, Hinds and Petry.
(3): The Management Members' ownership includes shares of common stock held directly by the Management Members and shares of common stock held indirectly by the Management Members through Management Holdco. The shares of common stock held directly by the Management Members and indirectly through Management Holdco are subject to a stockholders' agreement that provides for certain restrictions on transfer and further provides that our Management Members and Management Holdco will vote their shares of common stock in accordance with the direction of Quantum. See "Certain Relationships and Related Party Transactions—Stockholders' Agreement". Further, the shares of common stock held through Management Holdco will be subject to the vesting, forfeiture and other provisions set forth in the Amended and Restated Limited Liability Company Agreement of Management Holdco.

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MANAGEMENT

The following table sets forth the names, ages and titles of our directors and executive officers:

Name		Position

Joseph N. Jaggers	63	Chairman, Chief Executive Officer and President
Robert W. Howard	62	Executive Vice President, Chief Financial Officer
Gregory S. Hinds	52	Executive Vice President, Development, Planning & Acquisitions
Christopher I. Humber	43	Executive Vice President, General Counsel & Secretary
Mark R. Petry	61	Executive Vice President, Land
Charles D. Davidson	66	Director
S. Wil VanLoh, Jr.	46	Director
Blake A. Webster	39	Director

Joseph N. Jaggers was appointed as our Chief Executive Officer and President and as Chairman of our board of directors in September 2016, and has served as Chairman, Chief Executive Officer and President of Jagged Peak Energy LLC since April 2013. Prior to that, Mr. Jaggers served as the President and Chief Executive Officer of Ute Energy LLC from July 2010 until its acquisition in November 2012. From November 2012 until April 2013, Mr. Jaggers oversaw the winding down of Ute Energy LLC and evaluated potential opportunities in anticipation of the formation of Jagged Peak Energy LLC. Mr. Jaggers began his career in the oil and natural gas industry in 1981, when he joined Amoco Production Company ("Amoco") in Lake Charles, Louisiana. Mr. Jaggers worked for 19 years with Amoco and its successor, BP p.l.c., holding positions of increasing responsibility, including operations, engineering and executive assignments, in a number of domestic and international locations. In July 2000, Mr. Jaggers joined Barrett Resources Corporation as President and Chief Operating Officer and served in that capacity until Barrett Resources Corporation's merger with The Williams Companies, Inc. in 2001 where he served as Regional Vice President until 2006. Mr. Jaggers served as President, Chief Operating Officer and Director of Bill Barrett Corporation from 2006 until July 2010. In October 2009, Mr. Jaggers was elected into the Wildcatter Hall of Fame for his distinguished work and contributions to the oil and natural gas industry by the Independent Producers Association of the Mountain States. Mr. Jaggers graduated from the United States Military Academy at West Point in 1975 with a bachelor of sciences degree, after which he served his country for six years as a member of the United States Army. Mr. Jaggers is an independent director of National Fuel Gas Company (NYSE: NFG).

We believe that Mr. Jaggers' extensive knowledge of the energy industry and our company, as well as his substantial business, leadership and management experience, bring important and valuable skills to our Board of Directors.

Robert W. Howard was appointed as our Executive Vice President, Chief Financial Officer in November 2016, prior to which he served as our Chief Financial Officer since September 2016. Mr. Howard has also served as Chief Financial Officer of Jagged Peak Energy LLC since April 2016. Prior to that, Mr. Howard served as Chief Financial Officer and Treasurer of Bill Barrett Corporation since March 2007. He served as Chief Financial Officer for Quantum Resources Management, a private oil and natural gas company headquartered in Denver, from May 2006 until March 2007. Previously, Mr. Howard served from January 2002 through May 2006 in various executive positions for Bill Barrett Corporation, including Executive Vice President—Finance and Investor Relations and Treasurer from February 2003 until May 2006 and as Chief Financial Officer from January 2002 until February 2003. From August 2001 until December 2001, Mr. Howard served as Vice President—Finance and Administration and a director of AEC Oil & Gas (USA) Inc. From 1984 through its sale in 2001, Mr. Howard served in various positions at Barrett Resources Corporation, including as Senior Vice President—Investor Relations and Corporate Development and Senior Vice President Accounting and

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Finance and Treasurer. He earned a B.B.A. in Comprehensive Public Accounting from University of Wisconsin-Eau Claire in 1976.

Gregory S. Hinds was appointed as our Executive Vice President, Development, Planning & Acquisitions in November 2016, and has served as Chief Operating Officer of Jagged Peak Energy LLC since April 2013. Prior to that, Mr. Hinds served as Chief Operating Officer of Ute Energy LLC from February 2011 until its acquisition in November 2012. From November 2012 until April 2013, Mr. Hinds oversaw the winding down of Ute Energy LLC and evaluated potential opportunities in anticipation of the formation of Jagged Peak Energy LLC. Mr. Hinds served in various capacities for Bill Barrett Corporation from June 2002 until February 2011, beginning as a geologist and ultimately serving as Vice President for the Uinta Basin. While at Bill Barrett Corporation, Mr. Hinds managed the development of both producing and exploratory plays in the Uinta Basin and was credited with the Discovery of the Year for 2005 by Oil & Gas Investor magazine. Mr. Hinds' prior experience includes work for Marathon Oil Corporation as Manager of Geology, Powder River Basin CBM Business Unit from 2001 to 2002, Pennaco Energy, Inc. as Manager of Geology from 1999 to 2001 and Barrett Resources Corporation as an exploration and operations geologist from 1993 to 1999. Mr. Hinds graduated from Louisiana State University in 1986 where he earned a B.S. in geology. He earned an M.S. in geology from Texas A&M University in 1990.

Christopher I. Humber was appointed as our Executive Vice President, General Counsel & Secretary in November 2016. Prior to joining us, he was a consultant to us and other exploration and production companies since his March 2016 departure from Bonanza Creek Energy, Inc., where he served as its Executive Vice President, General Counsel and Secretary since August 2014 and its Senior Vice President, General Counsel and Secretary prior to that since that company's initial public offering in December 2011. Prior to that, Mr. Humber was a practicing attorney focusing on securities, mergers and acquisitions and corporate finance matters for public and private companies as a partner with the law firm Kendall, Koenig & Oelsner PC in Denver, Colorado and an associate with the law firms Hogan & Hartson LLP (now Hogan Lovells US LLP) in Denver, Colorado and Arnold & Porter LLP (now Arnold & Porter Kaye Scholer LLP) in Washington, D.C. and McLean, Virginia. Mr. Humber graduated with high honors from Emory University School of Law, where he was Editor-in-Chief of the Emory Law Journal, and holds a Bachelor of Arts in Biology from the University of Colorado at Boulder.

Mark R. Petry was appointed as our Executive Vice President, Land in November 2016, and has served as Jagged Peak Energy LLC's Vice President, Land since May 2016. Prior to that, he served as Vice President, Business Development and Land Administration for Laramie Energy II, LLC since September 2007. His prior experience includes Rocky Mountain Land Manager at Anadarko Petroleum Corporation, various positions, including Vice President, Land, at Western Gas Resources, Inc. and various land and accounting positions at Ladd Petroleum Corporation. Mr. Petry graduated with honors from the University of Wyoming with a Bachelor of Science Degree in Finance and is a Certified Professional Landman (CPL). Mark is a member of the American Association of Professional Landmen (AAPL) and the Denver Association of Petroleum Landmen (DAPL).

Charles D. Davidson was appointed as a member of our board of directors in September 2016, and has served as a member of the board of directors of Jagged Peak Energy LLC since February 2016. Mr. Davidson is a Venture Partner with Quantum Energy Partners and serves on the firm's Investment Committee. He served as Chief Executive Officer of Noble Energy, Inc. from 2000 to 2014 and its Chairman from 2000 until his retirement in May 2015. Before joining Noble Energy, Inc. Mr. Davidson was Chairman, President and Chief Executive of Vastar Resources, Inc., a publicly owned subsidiary of Atlantic Richfield Company ("ARCO"), which merged with BP in 2000. Prior to the formation of Vastar, he held a number of engineering, operations and executive assignments at ARCO. Mr. Davidson is currently an independent director of Loews Corporation (NYSE: L) and is a member of the Society of Petroleum Engineers, the American Institute of Chemical Engineers and the

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All-American Wildcatters. During his career, he has served in various professional, industry and community organizations and has been presented with numerous industry awards and honors, including being named by the Harvard Business Review as one of the top 100 Best-Performing CEOs in the World. He holds a bachelor's degree in chemical engineering from Purdue University and a master's degree in management from the University of Texas at Dallas.

We believe that Mr. Davidson's extensive and highly successful experience as a Chief Executive Officer and board member of a large public independent exploration and production company as well as his strong industry, financial and governance knowledge bring important and valuable skills to our Board of Directors.

S. Wil VanLoh, Jr. was appointed as a member of our board of directors in September 2016, and has served as a member of the board of directors of Jagged Peak Energy LLC since April 2013. Mr. VanLoh is the Founder and Chief Executive Officer of Quantum Energy Partners, which he founded in 1998. Quantum Energy Partners manages a family of energy-focused private equity funds, which, together with its affiliates, has had more than $11 billion of capital under stewardship. Mr. VanLoh is responsible for the leadership and overall management of the firm. Additionally, he leads the firm's investment strategy and capital allocation process, working closely with the investment team to ensure its appropriate implementation and execution. Prior to co-founding Quantum Energy Partners, Mr. VanLoh co-founded Windrock Capital, Ltd., an energy investment banking firm specializing in providing merger, acquisition and divestiture advice to and raising private equity for energy companies. Prior to co-founding Windrock, Mr. VanLoh worked in the energy investment banking groups of Kidder, Peabody & Co. and NationsBank. Mr. VanLoh serves on the boards of a number of portfolio companies of Quantum Energy Partners, all of which are private energy companies. Mr. VanLoh holds a B.B.A. in Finance from Texas Christian University.

We believe that Mr. VanLoh's extensive experience, both from investing in the energy industry since 1998 and serving as director for numerous private and public energy companies, brings important and valuable skills to our Board of Directors.

Blake A. Webster was appointed as a member of our board of directors in September 2016, and has served as a member of the board of directors of Jagged Peak Energy LLC since April 2013. Mr. Webster is currently a Managing Director with Quantum Energy Partners and has been with the firm since 2006. Mr. Webster participates in Quantum's investment activities, including investment sourcing, transaction structuring and execution, and working closely with portfolio companies in developing and executing their business plans. Mr. Webster currently serves on the board of directors of several other Quantum portfolio companies, including Crump Energy Partners II, LLC, Intensity Midstream, LLC, Oryx Midstream Services, LLC and Xplorer Midstream, LLC. Prior to joining Quantum in 2006, Mr. Webster was an Associate with Morgan Stanley in its Global Energy and Utilities Equity Research group. Mr. Webster holds a B.A. from the University of Texas at Austin, an M.B.A. from Rice University and is a CFA charterholder.

We believe that Mr. Webster's extensive experience, both from his roles in the energy industry and as a director for several Quantum portfolio companies, brings important and valuable skills to our Board of Directors.

There are no family relationships among any of our directors or executive officers.

Board of Directors

Our board of directors currently consists of four members, including our Chief Executive Officer and President, who serves as Chairman.

In connection with this offering, we will enter into a stockholders' agreement with Quantum, Management Holdco and the Management Members. The stockholders' agreement is expected to

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provide Quantum with the right to designate a certain number of nominees to our board of directors so long as it and its affiliates collectively beneficially own at least 5% of the outstanding shares of our common stock. See "Certain Relationships and Related Party Transactions—Stockholders' Agreement" and "Risk Factors—Risks Related to this Offering and Our Common Stock—Quantum will have the ability to direct the voting of a majority of our common stock, and its interests may conflict with those of our other stockholders".

Initially, our board of directors will be divided into three classes of directors, with each class as equal in number as possible, serving staggered three year terms. For so long as Quantum beneficially owns or controls more than 50% of the voting power of our issued and outstanding common stock, such directors will generally be removable at any time, either for or without "cause", upon the affirmative vote of the holders of a majority of the outstanding shares of our issued and outstanding common stock entitled to vote generally for the election of directors. After Quantum no longer beneficially owns or controls more than 50% of the voting power of our issued and outstanding common stock, such directors will be removable only for "cause" upon the affirmative vote of the holders of at least 66 ² / 3 % of the outstanding shares of our issued and outstanding common stock entitled to vote generally for the election of directors.

In evaluating director candidates, we will assess whether a candidate possesses the integrity, judgment, knowledge, experience, skills and expertise that are likely to enhance the board of directors' ability to manage and direct our affairs and business, including, when applicable, to enhance the ability of the committees of the board of directors to fulfill their duties. Each of our directors holds office for the term for which he was elected, and until his successor shall have been elected and qualified or until the earlier of his death, resignation or removal.

Director Independence

We intend to appoint independent directors to our board of directors contemporaneously with and following the completion of this offering. We also expect that our board of directors will review the independence of our directors using the independence standards of the NYSE.

Status as a Controlled Company

Because Quantum will beneficially own a majority of our outstanding common stock following the completion of this offering, we expect to be a controlled company under the NYSE corporate governance standards. A controlled company need not comply with NYSE corporate governance rules that require its board of directors to have a majority of independent directors and independent compensation and nominating and governance committees. Notwithstanding our status as a controlled company, we will remain subject to the NYSE corporate governance standard that requires us to have an audit committee composed entirely of independent directors. As a result, we must have at least one independent director on our audit committee by the effective date of the registration statement of which this prospectus forms a part, at least two independent directors within 90 days of such effective date and at least three independent directors within one year of such effective date.

If at any time we cease to be a controlled company, we will take all action necessary to comply with the rules, including appointing a majority of independent directors to our board of directors and ensuring we have a compensation committee and a nominating and corporate governance committee, each composed entirely of independent directors, subject to a permitted "phase-in" period. We will cease to qualify as a controlled company once Quantum ceases to control a majority of our voting stock.

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Committees of the Board of Directors

Upon the conclusion of this offering, we intend to have an audit committee of our board of directors, and may have such other committees as the board of directors shall determine from time to time. We anticipate that each of the standing committees of the board of directors will have the composition and responsibilities described below.

Audit Committee

We will establish an audit committee prior to the completion of this offering. We anticipate that following completion of this offering, our audit committee will consist of at least one director who will be independent under the rules of the SEC. As required by the rules of the SEC and listing standards of the NYSE, the audit committee will consist solely of independent directors. SEC rules also require that a public company disclose whether or not its audit committee has an "audit committee financial expert" as a member. An "audit committee financial expert" is defined as a person who, based on his or her experience, possesses the attributes outlined in such rules. We anticipate that at least one of our independent directors will satisfy the definition of "audit committee financial expert".

This committee will oversee, review, act on and report on various auditing and accounting matters to our board of directors, including: the selection of our independent accountants, the scope of our annual audits, fees to be paid to the independent accountants, the performance of our independent accountants and our accounting practices. In addition, the audit committee will oversee our compliance programs relating to legal and regulatory requirements. We expect to adopt an audit committee charter defining the committee's primary duties in a manner consistent with the rules of the SEC and applicable stock exchange or market standards.

Compensation Committee

Because we will be a "controlled company" within the meaning of the NYSE corporate governance standards, we will not be required to, and do not currently expect to, have a compensation committee.

If and when we are no longer a "controlled company" within the meaning of the NYSE corporate governance standards, we will be required to establish a compensation committee. We anticipate that such a compensation committee would consist of three directors who will be "independent" under the rules of the SEC. This committee would establish salaries, incentives and other forms of compensation for officers and other employees. Any compensation committee would also administer our incentive compensation and benefit plans. Upon formation of a compensation committee, we would expect to adopt a compensation committee charter defining the committee's primary duties in a manner consistent with the rules of the SEC and applicable stock exchange or market standards.

Nominating and Corporate Governance Committee

Because we will be a "controlled company" within the meaning of the NYSE corporate governance standards, we will not be required to, and do not currently expect to, have a nominating and corporate governance committee.

If and when we are no longer a "controlled company" within the meaning of the NYSE corporate governance standards, we will be required to establish a nominating and corporate governance committee. We anticipate that such a nominating and corporate governance committee would consist of three directors who will be "independent" under the rules of the SEC. This committee would identify, evaluate and recommend qualified nominees to serve on our board of directors, develop and oversee our internal corporate governance processes and maintain a management succession plan. Upon formation of a nominating and corporate governance committee, we would expect to adopt a

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nominating and corporate governance committee charter defining the committee's primary duties in a manner consistent with the rules of the SEC and applicable stock exchange or market standards.

Compensation Committee Interlocks and Insider Participation

Because we will be a "controlled company" within the meaning of the NYSE corporate governance standards, we will not be required to, and do not currently expect to, have a compensation committee at the completion of this offering. None of our executive officers serve on the board of directors or compensation committee of a company that has an executive officer that serves on our board or compensation committee. No member of our board is an executive officer of a company in which one of our executive officers serves as a member of the board of directors or compensation committee of that company.

Code of Business Conduct and Ethics

Prior to the completion of this offering, our board of directors will adopt a code of business conduct and ethics applicable to our employees, directors and officers, in accordance with applicable U.S. federal securities laws and the corporate governance rules of the NYSE. Any waiver of this code may be made only by our board of directors and will be promptly disclosed as required by applicable U.S. federal securities laws and the corporate governance rules of the NYSE.

Corporate Governance Guidelines

Prior to the completion of this offering, our board of directors will adopt corporate governance guidelines in accordance with the corporate governance rules of the NYSE.

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DIVIDEND POLICY

We do not anticipate declaring or paying any cash dividends to holders of our common stock in the foreseeable future. We currently intend to retain future earnings, if any, to finance our operations and the growth of our business. Our future dividend policy is within the discretion of our board of directors and will depend upon then-existing conditions, including our results of operations, financial condition, capital requirements, investment opportunities, statutory restrictions on our ability to pay dividends and other factors our board of directors may deem relevant. In addition, our credit agreement places restrictions on our ability to pay cash dividends.

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EXECUTIVE COMPENSATION AND OTHER INFORMATION

Executive Compensation

We are an "emerging growth company," as defined in the JOBS Act. As such, our named executive officers, or NEOs, consist of our predecessor's principal executive officer and the next two most highly compensated executive officers. For the fiscal year ending December 31, 2015, the NEOs were:

•: Joseph N. Jaggers, Chairman, Chief Executive Officer and President;
•: Laurie A. Bales, former Chief Financial Officer and Secretary; and
•: Gregory S. Hinds, Chief Operating Officer.

Summary compensation table

The table below sets forth the annual compensation earned during the fiscal year ended December 31, 2015 by our NEOs.

Name and Principal Position

Joseph N. Jaggers.	2015	322,996	173,982	24,000	520,978
( Chairman, Chief Executive Officer and President )
Laurie A. Bales	2015	296,080	—	18,000	314,080
( Former Chief Financial Officer and Secretary )(3)
Gregory S. Hinds	2015	296,080	148,706	17,078	461,864
( Chief Operating Officer )

(1): Amounts shown represent the payment of annual bonuses for 2015. For a description of annual bonuses for 2015 see the "Narrative to Disclosure to Summary Compensation Table—Cash bonus" section below.
(2): "All Other Compensation" represents the matching contributions paid under our 401(k) plan. We also provide partial parking and cell phone reimbursement benefits to all of our employees, including our NEOs, that are not disclosed as perquisites because the total amount of perquisites does not exceed the applicable disclosure threshold for any NEO.
(3): Ms. Bales resigned on February 5, 2016.

Narrative Disclosure to Summary Compensation Table

Employment agreements

Each of our NEOs has entered into an employment agreement (together, the "NEO Employment Agreements") with Jagged Peak Energy Management LLC, our predecessor's management company.

The NEO Employment Agreements provide for an initial base salary, which may be adjusted from time to time, as well as annual bonuses and long-term incentives in the form of management incentive units, each of which is described in greater detail below.

Under the terms of the NEO Employment Agreements, our NEOs are entitled to a lump sum severance payment equal to 200% of the sum of the executive's then-current annual base salary and target annual bonus upon their respective terminations of employment by us without "cause" or by the executive for "good reason" (as those terms are defined in the applicable NEO Employment Agreement), subject to the executive's execution of a release of claims.

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We do not currently provide any additional or enhanced payments or benefits to our NEOs in connection with any change in control transactions.

Base salary

Each NEO's base salary is a fixed component of compensation for each year, which may be increased from time to time based on the individual's performance. Our NEOs' base salaries were originally set pursuant to negotiations with our Chief Executive Officer and President (or, in the case of our Chief Executive Officer and President, negotiations with certain members of the board of directors of our predecessor). As of December 31, 2015, each of our NEO's annualized base salaries was as follows: $324,450 for Mr. Jaggers and $297,412 for each of Ms. Bales and Mr. Hinds.

Cash bonus

The NEO Employment Agreements set a bonus potential for each NEO expressed as a percentage of the NEO's base salary. The board of directors of our predecessor has sole discretion to determine the bonus amount for each NEO, if any, based on numerous factors, including performance of Jagged Peak Energy LLC and individual performance. During 2016, Mr. Jaggers and Mr. Hinds each received an annual bonus for 2015 equal to the bonus potential set forth in their respective employment agreements. The bonus potential set forth in each of the NEO Employment Agreements (expressed as a percentage of base salary) is as follows: 60% for Mr. Jaggers and 50% for each of Ms. Bales and Mr. Hinds.

Long-term incentives

We have historically offered long-term incentives to our executive officers through grants of management incentive units in Jagged Peak Energy LLC. The management incentive units represent an interest in the future profits of Jagged Peak Energy LLC and are intended to be treated as "profits interests" for federal income tax purposes. The management incentive units are subject to time-vesting requirements and vesting upon certain corporate events (as described in further detail below). In addition to tax distributions on the management incentive units, which are paid if those holders are allocated taxable income in any quarter and are calculated based on a predetermined formula, after the other equity holders of Jagged Peak Energy LLC have received distributions equal to the capital contributed by such holders plus an annual internal rate of return equal to 8%, the management incentive units participate in distributions to all equity holders. We did not make any grants of management incentive units to our NEOs in 2015.

The number of management incentive units granted to our NEOs vest with respect to 18.75% on each of the first four anniversaries of May 3, 2013, with the remaining 25% vesting only upon a qualifying sale or public offering of Jagged Peak Energy LLC (a "Vesting Event"). Management incentive units vest over time, with a portion vesting only to the extent a Vesting Event occurs. However, both vested and unvested management incentive units will be forfeited upon a holder's termination of employment other than in limited circumstances. Notwithstanding the foregoing, all unvested management incentive units will automatically fully vest immediately prior to a Vesting Event. In accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 710 ("ASC Topic 710"), no compensation cost has been recorded with respect to the management incentive units because no distributions have occurred.

In addition, in connection with the grant of management incentive units to our NEOs, each executive has agreed not to solicit our employees or compete with us for a period of 12 months following the date such executive ceases to hold management incentive units for any reason other than due to a termination of such executive's employment without "cause" (as defined in the management Incentive Pool Plan or the applicable award letter).

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In connection with this offering, we intend to convert the value of the management incentive units into shares of our common stock, a portion of which will be allocated to our NEOs and other executive officers in connection with this offering and a portion of which will be reserved for future issuances. A portion of the equity granted to our executive officers in connection with this offering will be vested and the remainder will be held by Management Holdco and generally will vest in equal installments on each of the first three anniversaries of this offering, so long as the holder remains continuously employed by us through each vesting date. The unvested equity will be held indirectly by management through Management Holdco as "Units". Each Unit will correspond to a share of our common stock. As each Unit vests, the employee will receive a share of our common stock, subject to certain negotiated transfer restrictions. Units that are forfeited will be reallocated to other members of management. Upon completion of this offering, the terms of vesting, forfeiture and the reallocation of forfeited Units will be governed by and set forth in, and may be amended only in certain limited circumstances in accordance with, the Amended and Restated Limited Liability Company Agreement of Management Holdco.

In addition to interests in Management Holdco, prior to the completion of this offering we expect to adopt the 2017 Long Term Incentive Plan, pursuant to which our NEOs and other consultants, employees and directors will be eligible to receive awards at the discretion of our board of directors. The 2017 Long Term Incentive Plan will provide for the award of shares of our common stock directly to eligible participants in the form of options, stock appreciation rights, restricted stock, restricted stock units or other stock-based awards. The form and terms and conditions of such awards will be determined by our board of directors following the completion of this offering.

Other compensation elements

We offer participation in broad-based retirement, health and welfare plans to all of our employees. We currently maintain a plan intended to provide benefits under section 401(k) of the Code, where employees, including our NEOs, are allowed to contribute portions of their base compensation into a tax-qualified retirement account. We provide a matching contribution in amounts up to 6% of the employees' eligible compensation contributed by the employee to the plan.

We provide partial parking, cell phone reimbursement and non-discriminatory group-term life insurance benefits to our employees, including our NEOs, but otherwise do not provide for perquisites.

Outstanding equity awards at fiscal year-end

Although our NEOs hold management incentive units as described above in "Narrative Disclosure to Summary Compensation Table—Long-term incentives," as of December 31, 2015, those awards were accounted for in accordance with ASC Topic 710 rather than ASC Topic 718. Therefore, as of December 31, 2015, the management incentive units did not represent equity awards within the meaning of applicable SEC guidance, and no equity awards were outstanding as of such date.

Additional Narrative Disclosure

Retirement Benefits

We have not maintained, and do not currently maintain a defined benefit pension plan or nonqualified deferred compensation plan. We currently maintain a plan intended to provide benefits under section 401(k) of the Code, where employees, including our NEOs, are allowed to contribute portions of their base compensation into a tax-qualified retirement account. We provide a matching contribution in amounts up to 6% of the employees' eligible compensation contributed by the employee to the plan.

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Potential Payments upon Termination or a Change in Control

For a description of the material terms of the severance provisions of NEO Employment Agreements and the treatment of management incentive units in connection with this offering, please read "Narrative Disclosure to Summary Compensation Table—Employment Agreements" and "—Long-term incentives."

Director Compensation

We did not award any compensation to our non-employee directors during 2015. Going forward, we believe that attracting and retaining qualified non-employee independent directors will be critical to the future value of our growth and governance. We also believe that the compensation package for our non-employee independent directors should require that a portion of the total compensation package be equity-based to align the interests of these directors with our equity holders.

We will be reviewing the non-employee independent director compensation paid by our peers in establishing the appropriate mix and amount of compensation payable to our non-employee independent directors in the future.

We anticipate that directors who are also our employees or affiliated with Quantum will not receive any additional compensation for their service on the board of directors.

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PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth the beneficial ownership of our common stock that, upon the consummation of our corporate reorganization and this offering, will be owned by:

•: each of the selling stockholders;
•: each person known to us to beneficially own more than 5% of any class of our outstanding common stock;
•: each of our directors;
•: our Named Executive Officers; and
•: all of our directors and executive officers as a group.

The selling stockholders are deemed under federal securities laws to be underwriters with respect to the shares of common stock they are offering hereby and any shares of common stock that they may sell pursuant to the underwriters' option to purchase additional shares of our common stock. For further information regarding material transactions between us and the selling stockholders, see "Certain Relationships and Related Party Transactions".

All information with respect to beneficial ownership has been furnished by the respective selling stockholders, 5% or more stockholders, directors or Named Executive Officers, as the case may be. Unless otherwise noted, the mailing address of each listed beneficial owner is c/o Jagged Peak Energy Inc., 1125 17th Street, Suite 2400, Denver, Colorado 80202.

The underwriters have an option to purchase a maximum of additional shares from the selling stockholders to cover over-allotments of shares.

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The table below does not reflect any shares of common stock that directors and executive officers may purchase in this offering through the directed share program described under "Underwriting (Conflicts of Interest)—Directed Share Program."

					Shares Beneficially Owned After this Offering (Assuming No Exercise of the Underwriters' Over-Allotment Option)			Shares Beneficially Owned After this Offering (Assuming the Underwriters' Over-Allotment Option is Exercised in Full)

	Shares Beneficially Owned Before this Offering
	Shares Beneficially Owned Before this Offering			Shares Offered Hereby
Name of Beneficial Owner(1)	Number	Percentage		Shares Offered Hereby	Number	Percentage		Number	Percentage
Selling Stockholders and Other 5% Stockholders:
Q-Jagged Peak Energy Investment Partners, LLC(2)			%				%			%
			%				%			%
			%				%			%
Directors and Named Executive Officers :
Joseph N. Jaggers			%				%			%
Laurie A. Bales			%				%			%
Gregory S. Hinds			%				%			%
Charles D. Davidson			%				%			%
S. Wil VanLoh, Jr.			%				%			%
Blake A. Webster			%				%			%
Directors and Executive Officers as a Group (Eight Persons)			%				%			%

(1): The amounts and percentages of common stock beneficially owned are reported on the bases of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a "beneficial owner" of a security if that person has or shares voting power, which includes the power to vote or direct the voting of such security, or investment power, which includes the power to dispose of or to direct the disposition of such security. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person's ownership percentage, but not for purposes of computing any other person's percentage. Under these rules, more than one person may be deemed beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest. Except as otherwise indicated in these footnotes, each of the beneficial owners has, to our knowledge, sole voting and investment power with respect to the indicated shares of common stock, except to the extent this power may be shared with a spouse.
(2): QEM V, LLC ("QEM V LLC") is the managing member of Q-Jagged Peak Investment Partners, LLC ("Q-Jagged Peak"). QEM V LLC may be deemed to share voting and dispositive power over the securities held by Q-Jagged Peak and may also be deemed to be the beneficial owner of these securities. QEM V LLC disclaims beneficial ownership of such securities in excess of its pecuniary interest in the securities. Any decision taken by QEM V LLC to vote, or to direct to vote, and to dispose, or to direct the disposition of, the securities held by Q-Jagged Peak has to be approved by a majority of the members of its investment committee, which majority must include S. Wil VanLoh, Jr. Therefore, Mr. VanLoh may be deemed to share voting and dispositive power over the securities held by Q-Jagged Peak and may also be deemed to be the beneficial owner of these securities. Mr. VanLoh disclaims beneficial ownership of such securities in excess of his pecuniary interest in the securities. The number of shares reflected in the table above as beneficially owned by Q-Jagged Peak does not include shares held by Management Holdco and the Management Members, including Messrs. Jaggers and Hinds, which are subject to the terms of the stockholders' agreement, pursuant to which, among other things, Management Holdco and the Management Members will agree to vote all of their shares of common stock in accordance with the direction of Q-Jagged Peak.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Historical Transactions with Affiliates

Quantum employs certain members of our board of directors and, after giving effect to this offering, will own % of our common stock. Quantum owns a 41.5% interest in Oryx Midstream Services, LLC. Oryx Midstream Services, LLC provides midstream gathering services to us pursuant to a 12-year crude oil gathering agreement. Since January 1, 2013, we have paid aggregate fees to Oryx Midstream Services, LLC pursuant to the agreement of approximately $3.7 million.

Quantum owns a 61% interest in Phoenix Lease Services, LLC ("Phoenix"), and an indirect interest in Trident Water Services, LLC ("Trident"), a wholly owned subsidiary of Phoenix. We regularly lease frac tanks and other oil field equipment from Phoenix, and we regularly use water transfer services provided by Trident. We are under no obligation to use either provider, and both provide services only when selected as a vendor in our normal bidding process. Since January 1, 2013, we have paid aggregate fees to Phoenix and Trident of approximately $0.9 million and $2.1 million, respectively.

Further, Messrs. James T. Jaggers, Jonathan E. Jaggers and Joseph N. Jaggers, IV, sons of Mr. Joseph N. Jaggers, our Chief Executive Officer and President, are employed by us as Senior Reservoir Engineer, Facilities Engineer and District Production Manager, respectively. Consistent with market compensation for their services, Messrs. James T. Jaggers, Jonathan E. Jaggers and Joseph N. Jaggers, IV have earned approximately $ , $ and $ , respectively, in aggregate compensation since January 1, 2013.

Corporate Reorganization

Registration Rights Agreement

In connection with the closing of this offering, we will enter into a registration rights agreement with Quantum and certain of our existing stockholders, including certain members of our management team. Pursuant to the registration rights agreement, we have agreed to register the sale of shares of our common stock under certain circumstances.

Demand Rights

At any time after the 180 day lock-up period described in "Underwriting (Conflicts of Interest)—Lock-Up Agreements", and subject to the limitations set forth below, Quantum (or its permitted transferees) has the right to require us by written notice to prepare and file a registration statement registering the offer and sale of a certain number of its shares of common stock. Generally, we are required to file such registration statement within 15 days of such written notice. Subject to certain exceptions, we will not be obligated to effect (i) a demand registration within 90 days after the closing of any underwritten offering of shares of our common stock or (ii) more than a total of demand registrations.

We are also not obligated to effect any demand registration in which the amount of common stock to be registered has an aggregate value of less than $ million. Once we are eligible to effect a registration on Form S-3, any such demand registration may be for a shelf registration statement. We will be required to use all commercially reasonable efforts to maintain the effectiveness of any such registration statement until all shares covered by such registration statement have been sold.

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In addition, Quantum (or its permitted transferees) has the right to require us, subject to certain limitations, to effect a distribution of any or all of its shares of common stock by means of an underwritten offering. In general, any demand for an underwritten offering (other than the first requested underwritten offering made in respect of a prior demand registration and other than a requested underwritten offering made concurrently with a demand registration) shall constitute a demand request subject to the limitations set forth above.

Piggyback Rights

Subject to certain exceptions, if at any time we propose to register an offering of common stock or conduct an underwritten offering, whether or not for our own account, then we must notify Quantum and Messrs. and (or their permitted transferees) of such proposal at least five business days before the anticipated filing date or commencement of the underwritten offering, as applicable, to allow them to include a specified number of their shares in that registration statement or underwritten offering, as applicable.

Conditions and Limitations; Expenses

These registration rights are subject to certain conditions and limitations, including the right of the underwriters to limit the number of shares to be included in a registration and our right to delay or withdraw a registration statement under certain circumstances. We will generally pay all registration expenses in connection with our obligations under the registration rights agreement, regardless of whether a registration statement is filed or becomes effective.

Stockholders' Agreement

In connection with this offering, we will enter into a stockholders' agreement with Quantum, Management Holdco and the Management Members. Summaries of certain material terms of the stockholders' agreement are set forth below.

Voting and Governance Matters

Among other things, the stockholders' agreement will provide that the Management Members and Management Holdco will vote all of their shares of common stock in accordance with the direction of Quantum.

Further, the stockholders' agreement will provide Quantum with the right to designate a number of nominees (each, a "Quantum Director") to our board of directors such that:

•: at least a majority of the directors on the board are Quantum Directors for so long as Quantum and its affiliates collectively beneficially own at least 50% of the outstanding shares of our common stock;
•: at least % of the directors of the board are Quantum Directors for so long as Quantum and its affiliates collectively beneficially own less than 50% but at least % of the outstanding shares of our common stock;
•: at least % of the directors of the board are Quantum Directors for so long as Quantum and its affiliates collectively beneficially own less than % but at least % of the outstanding shares of our common stock;
•: at least % of the directors of the board are Quantum Directors for so long as Quantum and its affiliates collectively beneficially own less than % but at least % of the outstanding shares of our common stock; and

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•: once Quantum and its affiliates collectively own less than % of our common stock, Quantum will not have any board designation rights.

Pursuant to the stockholders' agreement, we, Management Holdco and the Management Members will be required to take all necessary action, to the fullest extent permitted by applicable law (including with respect to any fiduciary duties under Delaware law), to cause the election of the nominees designated by Quantum. Further, we, Quantum, Management Holdco and the Management Members will be required to take all necessary action, to the fullest extent permitted by applicable law (including with respect to any fiduciary duties under Delaware law), to cause our board of directors to include our Chief Executive Officer.

The rights granted to Quantum to designate directors are additive to and not intended to limit in any way the rights that Quantum or any of its affiliates may have to nominate, elect or remove our directors under our amended and restated certificate of incorporation, amended and restated bylaws or the DGCL.

Transfer Restrictions

Additionally, the stockholders' agreement will contain several provisions relating to the sale of our common stock by certain of the Management Members. Specifically, Messrs. and have agreed not to transfer any shares of our common stock, subject to certain exceptions, prior to the third anniversary of the consummation of this offering. Such restrictions on transfer shall not apply, however, to shares received by such Management Members in respect of any capital interests that such Management Members held in Jagged Peak Energy LLC prior to the corporate reorganization discussed in "Corporate Reorganization", nor shall such restrictions on transfer apply to certain specified numbers of shares of our common stock received by such Management Members in respect of the management incentive units held by such Management Members prior to the corporate reorganization.

Procedures for Approval of Related Party Transactions

Prior to the closing of this offering, we have not maintained a policy for approval of Related Party Transactions. A "Related Party Transaction" is a transaction, arrangement or relationship in which we or any of our subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any Related Person had, has or will have a direct or indirect material interest. A "Related Person" means:

•: any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors;
•: any person who is known by us to be the beneficial owner of more than 5% of our common stock;
•: any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our common stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our common stock; and
•: any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10% or greater beneficial ownership interest.

We anticipate that our board of directors will adopt a written related party transactions policy prior to the completion of this offering. Pursuant to this policy, we expect that our audit committee will review all material facts of all Related Party Transactions.

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DESCRIPTION OF CAPITAL STOCK

Upon completion of this offering, the authorized capital stock of Jagged Peak Energy Inc. will consist of shares of common stock, $0.01 par value per share, of which shares will be issued and outstanding, and shares of preferred stock, $0.01 par value per share, of which no shares will be issued and outstanding.

The following summary of the capital stock and amended and restated certificate of incorporation and amended and restated bylaws of Jagged Peak Energy Inc. does not purport to be complete and is qualified in its entirety by reference to the provisions of applicable law and to our amended and restated certificate of incorporation and amended and restated bylaws, which are filed as exhibits to the registration statement of which this prospectus is a part.

Common Stock

Except as provided by law or in a preferred stock designation, holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders, will have the exclusive right to vote for the election of directors and do not have cumulative voting rights. Except as otherwise required by law, holders of common stock are not entitled to vote on any amendment to the amended and restated certificate of incorporation (including any certificate of designations relating to any series of preferred stock) that relates solely to the terms of any outstanding series of preferred stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to our amended and restated certificate of incorporation (including any certificate of designations relating to any series of preferred stock) or pursuant to the DGCL. Subject to prior rights and preferences that may be applicable to any outstanding shares or series of preferred stock, holders of common stock are entitled to receive ratably in proportion to the shares of common stock held by them such dividends (payable in cash, stock or otherwise), if any, as may be declared from time to time by our board of directors out of funds legally available for dividend payments. All outstanding shares of common stock are fully paid and non-assessable, and the shares of common stock to be issued upon completion of this offering will be fully paid and non-assessable.

The holders of common stock have no preferences or rights of conversion, exchange, pre-emption or other subscription rights. There are no redemption or sinking fund provisions applicable to common stock. In the event of any voluntary or involuntary liquidation, dissolution or winding-up of our affairs, holders of common stock will be entitled to share ratably in our assets in proportion to the shares of common stock held by them that are remaining after payment or provision for payment of all of our debts and obligations and after distribution in full of preferential amounts to be distributed to holders of outstanding shares of preferred stock, if any.

We do not anticipate declaring or paying any cash dividends to holders of our common stock in the foreseeable future. See "Dividend Policy".

Preferred Stock

Our amended and restated certificate of incorporation will authorize our board of directors, subject to any limitations prescribed by law, without further stockholder approval, to establish and to issue from time to time one or more classes or series of preferred stock, par value $0.01 per share, covering up to an aggregate of shares of preferred stock. Each class or series of preferred stock will cover the number of shares and will have the powers, preferences, rights, qualifications, limitations and restrictions determined by the board of directors, which may include, among others, dividend rights, liquidation preferences, voting rights, conversion rights, preemptive rights and redemption rights. Except as provided by law or in a preferred stock designation, the holders of preferred stock will not be entitled to vote at or receive notice of any meeting of stockholders.

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Anti-Takeover Effects of Provisions of Our Amended and Restated Certificate of Incorporation, Our Amended and Restated Bylaws and Delaware Law

Some provisions of Delaware law contain, and our amended and restated certificate of incorporation and our amended and restated bylaws will contain, provisions that could make the following transactions more difficult: acquisitions of us by means of a tender offer, a proxy contest or otherwise or removal of our incumbent officers and directors. These provisions may also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interest or in our best interests, including transactions that might result in a premium over the market price for our shares.

These provisions are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with us. We believe that the benefits of increased protection and our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging these proposals because, among other things, negotiation of these proposals could result in an improvement of their terms.

Delaware Law

Section 203 of the DGCL prohibits a Delaware corporation, including those whose securities are listed for trading on the NYSE, from engaging in any business combination with any interested stockholder for a period of three years following the date that the stockholder became an interested stockholder, unless:

•: the transaction is approved by the board of directors before the date the interested stockholder attained that status;
•: upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or
•: on or after such time the business combination is approved by the board of directors and authorized at a meeting of stockholders by at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.

We intend to elect to not be subject to the provisions of Section 203 of the DGCL in our amended and restated certificate of incorporation.

Our Amended and Restated Certificate of Incorporation and Our Amended and Restated Bylaws

Provisions of our amended and restated certificate of incorporation and our amended and restated bylaws, which will become effective upon the closing of this offering, may delay or discourage transactions involving an actual or potential change in control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect the price of our common stock.

Among other things, upon the completion of this offering, our amended and restated certificate of incorporation and amended and restated bylaws will:

•: establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of our stockholders. These procedures provide that notice of stockholder proposals must be timely given in writing to our corporate secretary prior to the meeting at which the action is to

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be taken. Generally, to be timely, notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the annual meeting for the preceding year. Our amended and restated bylaws will specify the requirements as to form and content of all stockholders' notices. These requirements may preclude stockholders from bringing matters before the stockholders at an annual or special meeting;

•

provide our board of directors the ability to authorize undesignated preferred stock. This ability makes it possible for our board of directors to issue, without stockholder approval, preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us. These and other provisions may have the effect of deferring hostile takeovers or delaying changes in control or management of our company;

•

provide that the authorized number of directors may be changed only by resolution of the board of directors;

•

provide that all vacancies, including newly created directorships, may, except as otherwise required by law or, if applicable, the rights of holders of a series of preferred stock, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum;

•

provide for our board of directors to be divided into three classes of directors, with each class as nearly equal in number as possible, serving staggered three year terms, other than directors which may be elected by holders of preferred stock, if any. This system of electing and removing directors may tend to discourage a third party from making a tender offer or otherwise attempting to obtain control of us, because it generally makes it more difficult for stockholders to replace a majority of the directors;

•

provide that our amended and restated bylaws can be amended by the board of directors; and

•

at any time after Quantum and its affiliates no longer collectively beneficially own more than 50% of the outstanding shares of our common stock,

•: provide that any action required or permitted to be taken by the stockholders must be effected at a duly called annual or special meeting of stockholders and may not be effected by any consent in writing in lieu of a meeting of such stockholders, subject to the rights of the holders of any series of preferred stock with respect to such series (prior to such time, such actions may be taken without a meeting by written consent of holders of common stock having not less than the minimum number of votes that would be necessary to authorize such action at a meeting);
•: provide our amended and restated certificate of incorporation and amended and restated bylaws may be amended by the affirmative vote of the holders of at least two-thirds of our then outstanding common stock (prior to such time, our amended and restated certificate of incorporation and amended and restated bylaws may be amended by the affirmative vote of the holders of a majority of our then outstanding common stock);
•: provide that special meetings of our stockholders may only be called by the board of directors, the chief executive officer or the chairman of the board (prior to such time, a special meeting may also be called at the request of stockholders holding a majority of the outstanding shares entitled to vote); and
•: provide that the affirmative vote of the holders of at least two-thirds of the voting power of all then outstanding common stock entitled to vote generally in the election of directors, voting together as a single class, shall be required to remove any or all of the directors from office and such removal may only be for cause (prior to such time, directors may be removed either with or without cause by the affirmative vote of holders of a majority of our outstanding shares entitled to vote).

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Forum Selection

Our amended and restated certificate of incorporation will provide that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for:

•: any derivative action or proceeding brought on our behalf;
•: any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders;
•: any action asserting a claim against us arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws; or
•: any action asserting a claim against us that is governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.

Our amended and restated certificate of incorporation will also provide that any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of, and to have consented to, this forum selection provision. Although we believe these provisions will benefit us by providing increased consistency in the application of Delaware law for the specified types of actions and proceedings, the provisions may have the effect of discouraging lawsuits against our directors, officers, employees and agents. The enforceability of similar exclusive forum provisions in other companies' certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with one or more actions or proceedings described above, a court could rule that this provision in our amended and restated certificate of incorporation is inapplicable or unenforceable.

Limitation of Liability and Indemnification Matters

Our amended and restated certificate of incorporation will limit the liability of our directors for monetary damages for breach of their fiduciary duty as directors, except for liability that cannot be eliminated under the DGCL. Delaware law provides that directors of a company will not be personally liable for monetary damages for breach of their fiduciary duty as directors, except for liabilities:

•: for any breach of their duty of loyalty to us or our stockholders;
•: for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
•: for unlawful payment of dividend or unlawful stock repurchase or redemption, as provided under Section 174 of the DGCL; or
•: for any transaction from which the director derived an improper personal benefit.

Any amendment, repeal or modification of these provisions will be prospective only and would not affect any limitation on liability of a director for acts or omissions that occurred prior to any such amendment, repeal or modification.

Our amended and restated bylaws will also provide that we will indemnify our directors and officers to the fullest extent permitted by Delaware law. Our amended and restated bylaws also will permit us to purchase insurance on behalf of any officer, director, employee or other agent for any liability arising out of that person's actions as our officer, director, employee or agent, regardless of whether Delaware law would permit indemnification. We intend to enter into indemnification agreements with each of our current and future directors and executive officers. These agreements will require us to indemnify these individuals to the fullest extent permitted under Delaware law against

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liability that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. We believe that the limitation of liability provision that will be in our amended and restated certificate of incorporation and the indemnification agreements will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is Computershare Trust Company, N.A.

Listing

We have been authorized to apply to list our common stock on the NYSE under the symbol "JAG".

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common stock. Future sales of our common stock in the public market, or the availability of such shares for sale in the public market, could adversely affect the market price of our common stock prevailing from time to time. As described below, only a limited number of shares will be available for sale shortly after this offering due to contractual and legal restrictions on resale. Nevertheless, sales of a substantial number of shares of our common stock in the public market after such restrictions lapse, or the perception that those sales may occur, could adversely affect the prevailing market price of our common stock at such time and our ability to raise equity-related capital at a time and price we deem appropriate.

Sales of Restricted Shares

Upon the closing of this offering, we will have outstanding an aggregate of shares of common stock. Of these shares, all of the shares of common stock to be sold in this offering will be freely tradable without restriction or further registration under the Securities Act, unless the shares are held by any of our "affiliates" as such term is defined in Rule 144 under the Securities Act. All remaining shares of common stock held by existing stockholders will be deemed "restricted securities" as such term is defined under Rule 144. The restricted securities were issued and sold by us in private transactions and are eligible for public sale only if registered under the Securities Act or if they qualify for an exemption from registration under Rule 144 or Rule 701 under the Securities Act, which rules are summarized below.

As a result of the lock-up agreements described below and the provisions of Rule 144 and Rule 701 under the Securities Act, the shares of our common stock (excluding the shares to be sold in this offering) that will be available for sale in the public market are as follows:

•: no shares will be eligible for sale on the date of this prospectus or prior to 180 days after the date of this prospectus; and
•: shares will be eligible for sale upon the expiration of the lock-up agreements, beginning 180 days after the date of this prospectus (subject to extension) and when permitted under Rule 144 or Rule 701.

Lock-up Agreements

We, all of our directors and executive officers, the selling stockholders and certain of our stockholders and employees have agreed or will agree that, subject to certain exceptions and under certain conditions, for a period of 180 days after the date of this prospectus, we and they will not, without the prior written consent of , dispose of or hedge any shares or any securities convertible into or exchangeable for shares of our capital stock. See "Underwriting (Conflicts of Interest)" for a description of these lock-up provisions.

Rule 144

In general, under Rule 144 under the Securities Act as currently in effect, a person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months (including any period of consecutive ownership of preceding non-affiliated holders) would be entitled to sell those shares, subject only to the availability of current public information about us. A non-affiliated person who has beneficially owned restricted securities within the meaning of Rule 144 for at least one year would be entitled to sell those shares without regard to the provisions of Rule 144.

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A person (or persons whose shares are aggregated) who is deemed to be an affiliate of ours and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months would be entitled to sell within any three-month period a number of shares that does not exceed the greater of one percent of the then outstanding shares of our common stock or the average weekly trading volume of our common stock reported through the NYSE during the four calendar weeks preceding the filing of notice of the sale. Such sales are also subject to certain manner of sale provisions, notice requirements and the availability of current public information about us.

Rule 701

In general, under Rule 701 under the Securities Act, any of our employees, directors, officers, consultants or advisors who purchase or otherwise receive shares from us in connection with a compensatory stock or option plan or other written agreement before the effective date of this offering are entitled to sell such shares 90 days after the effective date of this offering in reliance on Rule 144, without having to comply with the holding period requirement of Rule 144 and, in the case of non-affiliates, without having to comply with the public information, volume limitation or notice filing provisions of Rule 144. The SEC has indicated that Rule 701 will apply to typical stock options granted by an issuer before it becomes subject to the reporting requirements of the Exchange Act, along with the shares acquired upon exercise of such options, including exercises after the date of this prospectus.

Stock Issued Under Employee Plans

We intend to file a registration statement on Form S-8 under the Securities Act to register shares issuable under our 2017 Long-Term Incentive Plan. This registration statement on Form S-8 is expected to be filed following the effective date of the registration statement of which this prospectus is a part and will be effective upon filing. Accordingly, shares registered under such registration statement may be made available for sale in the open market following the effective date, unless such shares are subject to vesting restrictions with us, Rule 144 restrictions applicable to our affiliates or the lock-up restrictions described above.

Stockholders' Agreement

In connection with the closing of this offering, we will enter into a stockholders' agreement with Quantum, Management Holdco and the Management Members. Please read "Certain Relationships and Related Party Transactions—Stockholders' Agreement".

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS

The following is a summary of the material U.S. federal income tax considerations related to the purchase, ownership and disposition of our common stock by a non-U.S. holder (as defined below), that holds our common stock as a "capital asset" (generally property held for investment). This summary is based on the provisions of the Code, U.S. Treasury regulations and administrative rulings and judicial decisions, all as in effect on the date hereof, and all of which are subject to change, possibly with retroactive effect. We have not sought any ruling from the Internal Revenue Service ("IRS") with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS or a court will agree with such statements and conclusions.

This summary does not address all aspects of U.S. federal income taxation that may be relevant to non-U.S. holders in light of their personal circumstances. In addition, this summary does not address the Medicare tax on certain investment income, U.S. federal gift or estate tax laws, any state, local or non-U.S. tax laws or any tax treaties. This summary also does not address tax considerations applicable to investors that may be subject to special treatment under the U.S. federal income tax laws, such as (without limitation):

•: banks, insurance companies or other financial institutions;
•: tax-exempt or governmental organizations;
•: qualified foreign pension funds;
•: dealers in securities or foreign currencies;
•: traders in securities that use the mark-to-market method of accounting for U.S. federal income tax purposes;
•: persons subject to the alternative minimum tax;
•: partnerships or other pass-through entities for U.S. federal income tax purposes or holders of interests therein;
•: persons deemed to sell our common stock under the constructive sale provisions of the Code;
•: persons that acquired our common stock through the exercise of employee stock options or otherwise as compensation or through a tax-qualified retirement plan;
•: certain former citizens or long-term residents of the United States;
•: real estate investment trusts or regulated investment companies; and
•: persons that hold our common stock as part of a straddle, appreciated financial position, synthetic security, hedge, conversion transaction or other integrated investment or risk reduction transaction.

PROSPECTIVE INVESTORS ARE ENCOURAGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATION, AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK ARISING UNDER THE U.S. FEDERAL GIFT OR ESTATE TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL, NON-U.S. OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.

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Non-U.S. Holder Defined

For purposes of this discussion, a "non-U.S. holder" is a beneficial owner of our common stock that is not for U.S. federal income tax purposes a partnership or any of the following:

•: an individual who is a citizen or resident of the United States;
•: a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
•: an estate the income of which is subject to U.S. federal income tax regardless of its source; or
•: a trust (i) whose administration is subject to the primary supervision of a U.S. court and which has one or more United States persons who have the authority to control all substantial decisions of the trust or (ii) which has made a valid election under applicable U.S. Treasury regulations to be treated as a United States person.

If a partnership (including an entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our common stock, the tax treatment of a partner in the partnership generally will depend upon the status of the partner, the activities of the partnership and certain determinations made at the partner level. Accordingly, we urge partners in partnerships (including entities or arrangements treated as partnerships for U.S. federal income tax purposes) considering the purchase of our common stock to consult their tax advisors regarding the U.S. federal income tax considerations of the purchase, ownership and disposition of our common stock by such partnership.

Distributions

As described in the section entitled "Dividend Policy", we do not plan to make any distributions on our common stock for the foreseeable future. However, if we do make distributions of cash or property on our common stock, those distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those distributions exceed our current and accumulated earnings and profits, the distributions will be treated as a non-taxable return of capital to the extent of the non-U.S. holder's tax basis in our common stock and thereafter as capital gain from the sale or exchange of such common stock. See "—Gain on Disposition of Common Stock". Subject to the withholding rules under FATCA (as defined below) and with respect to effectively connected dividends, each of which is discussed below, any distribution made to a non-U.S. holder on our common stock generally will be subject to U.S. withholding tax at a rate of 30% of the gross amount of the distribution unless an applicable income tax treaty provides for a lower rate. To receive the benefit of a reduced treaty rate, a non-U.S. holder must provide the applicable withholding agent with an IRS Form W-8BEN or IRS Form W-8BEN-E (or other applicable or successor form) certifying qualification for the reduced rate.

Dividends paid to a non-U.S. holder that are effectively connected with a trade or business conducted by the non-U.S. holder in the United States (and, if required by an applicable income tax treaty, are treated as attributable to a permanent establishment maintained by the non-U.S. holder in the United States) generally will be taxed on a net income basis at the rates and in the manner generally applicable to United States persons (as defined under the Code). Such effectively connected dividends will not be subject to U.S. withholding tax if the non-U.S. holder satisfies certain certification requirements by providing the applicable withholding agent a properly executed IRS Form W-8ECI certifying eligibility for exemption. If the non-U.S. holder is a non-U.S. corporation, it may also be subject to a branch profits tax (at a 30% rate or such lower rate as specified by an applicable income tax treaty) on its effectively connected earnings and profits (as adjusted for certain items), which will include effectively connected dividends.

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Gain on Disposition of Common Stock

Subject to the discussion below under "—Additional Withholding Requirements under FATCA", a non-U.S. holder generally will not be subject to U.S. federal income tax on any gain realized upon the sale or other disposition of our common stock unless:

•: the non-U.S. holder is an individual who is present in the United States for a period or periods aggregating 183 days or more during the calendar year in which the sale or disposition occurs and certain other conditions are met;
•: the gain is effectively connected with a trade or business conducted by the non-U.S. holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by the non-U.S. holder in the United States); or
•: our common stock constitutes a United States real property interest by reason of our status as a United States real property holding corporation ("USRPHC") for U.S. federal income tax purposes.

A non-U.S. holder described in the first bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate as specified by an applicable income tax treaty) on the amount of such gain, which generally may be offset by U.S. source capital losses.

A non-U.S. holder whose gain is described in the second bullet point above or, subject to the exceptions described in the next paragraph, the third bullet point above generally will be taxed on a net income basis at the rates and in the manner generally applicable to United States persons (as defined under the Code) unless an applicable income tax treaty provides otherwise. If the non-U.S. holder is a corporation, it may also be subject to a branch profits tax (at a 30% rate or such lower rate as specified by an applicable income tax treaty) on its effectively connected earnings and profits (as adjusted for certain items), which will include such gain.

Generally, a corporation is a USRPHC if the fair market value of its United States real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business. We believe that we currently are, and expect to remain for the foreseeable future, a USRPHC for U.S. federal income tax purposes. However, as long as our common stock continues to be regularly traded on an established securities market, only a non-U.S. holder that actually or constructively owns, or owned at any time during the shorter of the five-year period ending on the date of the disposition or the non-U.S. holder's holding period for the common stock, more than 5% of our common stock will be taxable on gain realized on the disposition of our common stock as a result of our status as a USRPHC. If our common stock were not considered to be regularly traded on an established securities market during the calendar year in which the relevant disposition by a non-U.S. holder occurs, such holder (regardless of the percentage of our common stock owned) would be subject to U.S. federal income tax on a taxable disposition of our common stock (as described in the preceding paragraph), and a 15% withholding tax would apply to the gross proceeds from such disposition.

Non-U.S. holders should consult their tax advisors with respect to the application of the foregoing rules to their ownership and disposition of our common stock.

Backup Withholding and Information Reporting

Any dividends paid to a non-U.S. holder must be reported annually to the IRS and to the non-U.S. holder. Copies of these information returns may be made available to the tax authorities in the country in which the non-U.S. holder resides or is established. Payments of dividends to a non-U.S. holder generally will not be subject to backup withholding if the non-U.S. holder establishes an

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exemption by properly certifying its non-U.S. status on an IRS Form W-8BEN, IRS Form W-8BEN-E or other appropriate version of IRS Form W-8.

Payments of the proceeds from a sale or other disposition by a non-U.S. holder of our common stock effected by or through a U.S. office of a broker generally will be subject to information reporting and backup withholding (at the applicable rate) unless the non-U.S. holder establishes an exemption by properly certifying its non-U.S. status on an IRS Form W-8BEN, IRS Form W-8BEN-E or other appropriate version of IRS Form W-8 and certain other conditions are met. Information reporting and backup withholding generally will not apply to any payment of the proceeds from a sale or other disposition of our common stock effected outside the United States by a non-U.S. office of a broker. However, unless such broker has documentary evidence in its records that the holder is not a United States person and certain other conditions are met, or the non-U.S. holder otherwise establishes an exemption, information reporting will apply to a payment of the proceeds of the disposition of our common stock effected outside the United States by such a broker if it has certain relationships within the United States.

Backup withholding is not an additional tax. Rather, the U.S. income tax liability (if any) of persons subject to backup withholding will be reduced by the amount of tax withheld. If backup withholding results in an overpayment of taxes, a refund may be obtained, provided that the required information is timely furnished to the IRS.

Additional Withholding Requirements under FATCA

Sections 1471 through 1474 of the Code, and the Treasury regulations and administrative guidance issued thereunder ("FATCA"), impose a 30% withholding tax on any dividends paid on our common stock and on the gross proceeds from a disposition of our common stock (if such disposition occurs after December 31, 2018), in each case if paid to a "foreign financial institution" or a "non-financial foreign entity" (each as defined in the Code) (including, in some cases, when such foreign financial institution or non-financial foreign entity is acting as an intermediary), unless (i) in the case of a foreign financial institution, such institution enters into an agreement with the U.S. government to withhold on certain payments, and to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are non-U.S. entities with U.S. owners); (ii) in the case of a non-financial foreign entity, such entity certifies that it does not have any "substantial United States owners" (as defined in the Code) or provides the applicable withholding agent with a certification identifying the direct and indirect substantial United States owners of the entity (in either case, generally on an IRS Form W-8BEN-E); or (iii) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules and provides appropriate documentation (such as an IRS Form W-8BEN-E). Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing these rules may be subject to different rules. Under certain circumstances, a holder might be eligible for refunds or credits of such taxes.

INVESTORS CONSIDERING THE PURCHASE OF OUR COMMON STOCK ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AND THE APPLICABILITY AND EFFECT OF U.S. FEDERAL GIFT AND ESTATE TAX LAWS AND ANY STATE, LOCAL OR NON-U.S. TAX LAWS AND TAX TREATIES.

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UNDERWRITING (CONFLICTS OF INTEREST)

Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC are acting as joint book-running managers of this offering and as representatives of each of the underwriters named below. Subject to the terms and conditions set forth in an underwriting agreement among us, the selling stockholders and the representatives, we and the selling stockholders have agreed to sell to the underwriters, and each of the underwriters has agreed, severally and not jointly, to purchase from us and the selling stockholders, the number of shares of common stock set forth opposite its name below.

Underwriter		Number of Shares

Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
J.P. Morgan Securities LLC







Total

Subject to the terms and conditions set forth in the underwriting agreement, the underwriters have agreed, severally and not jointly, to purchase all of the shares sold under the underwriting agreement if any of these shares are purchased, other than the shares covered by the option described below unless and until this option is exercised.

We and the selling stockholders have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, and to contribute to payments the underwriters may be required to make for certain liabilities.

The underwriters are offering the shares, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the shares, and other conditions contained in the underwriting agreement, such as the receipt by the underwriters of officer's certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

The selling stockholders are "underwriters" within the meaning of the Securities Act and may be subject to certain statutory liabilities under the Securities Act.

Commissions and Discounts

The underwriters have advised us and the selling stockholders that they propose to offer the shares of common stock directly to the public at the public offering price set forth on the cover page of this prospectus and to dealers at the public offering price less a selling concession not in excess of $ per share. The underwriters also may allow, and dealers may reallow, a concession not in excess of $ per share to brokers and dealers. After the offering, the underwriters may change the offering price and the other selling terms.

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The following table shows the public offering price, underwriting discounts and commissions, proceeds before expenses to us and proceeds to the selling stockholders. The information assumes either no exercise or full exercise by the underwriters of their option to purchase additional shares.

		Per Share			No Exercise			Full Exercise

Public offering price
Underwriting discounts and commissions paid by us
Underwriting discounts and commissions paid by selling stockholders
Proceeds, before expenses, to us
Proceeds to selling stockholders

In addition to the underwriting discounts and commissions to be paid by us, we have agreed to reimburse the underwriters for certain of their out-of-pocket expenses incurred in connection with this offering, which we estimate to be approximately $ million. In addition, we have agreed to pay certain expenses incurred by the selling stockholders in connection with this offering, other than the underwriting discounts and commissions. We estimate that the total expenses of the offering payable by us, other than underwriting discounts and commissions, will be approximately $ million.

Option to Purchase Additional Shares

The selling stockholders have granted to the underwriters a 30-day option to purchase up to an aggregate of additional shares of common stock at the public offering price less the underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of common stock offered by this prospectus. The underwriters may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

Lock-Up Agreements

We, each of our executive officers and directors and certain of our existing stockholders (including the selling stockholders) have agreed not to do, or publicly announce an intention to do, any of the following, directly or indirectly, for 180 days after the date of this prospectus without the prior written consent of Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC:

•: offer, sell, contract to sell, pledge or otherwise dispose of, or enter into any transaction which is designed to or might reasonably be expected to result in the disposition of, shares of our common stock or any securities convertible into, exercisable or exchangeable for shares of our common stock (regardless whether the transaction is settled in securities, cash or otherwise);
•: file or participate in the filing of a registration statement with the SEC in respect of shares of our common stock or any securities convertible into, exercisable or exchangeable for shares of our common stock; or
•: establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act in respect of shares of our common stock or any securities convertible into, exercisable or exchangeable for shares of our common stock

The restrictions described above do not apply to (1) the issuance of common stock by us to the underwriters pursuant to this offering, (2) bona fide gifts, other than by us, or transfers by will or intestacy, (3) transfers, other than by us, to any trust for the direct or indirect benefit of the stockholder or the immediate family of the stockholder and (4) transfers, other than by us, to limited

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partners or stockholders of the stockholder. In the case of (3) and (4) above, (a) the transferee must deliver a signed lock-up agreement for the balance of the 180-day period, (b) the transfer must not involve a disposition for value, (c) the transfer must not be publicly reportable under any law and (d) the stockholder must not otherwise voluntarily effect any public filing, report or announcement regarding such transfer.

Directed Share Program

At our request, the underwriters have reserved up to % of the shares for sale at the initial public offering price to persons who are directors, officers or employees, or who are otherwise associated with us through a directed share program. The number of shares available for sale to the general public will be reduced by the number of directed shares purchased by participants in the program. Except for certain of our officers, directors and employees who have entered into lock-up agreements, each person buying shares through the directed share program has agreed that, for a period of 180 days from the date of this prospectus, he or she will not, without the prior written consent of Citigroup Global Markets Inc., dispose of or hedge any shares purchased in the program or any securities convertible into or exchangeable for our common stock with respect to shares purchased in the program. For certain officers, directors and employees purchasing shares through the directed share program, the lock-up agreements described under "—Lock-Up Agreements" shall govern with respect to their purchases. Any directed shares not purchased will be offered by the underwriters to the general public on the same basis as all other shares offered. We have agreed to indemnify the underwriters against certain liabilities and expenses, including liabilities under the Securities Act, in connection with the sales of the directed shares.

New York Stock Exchange Listing

We have been authorized to apply to list our common stock on the NYSE under the symbol "JAG". In order to meet the requirements for listing on that exchange, the underwriters have undertaken to sell a minimum number of shares to a minimum number of beneficial owners as required by that exchange.

Prior to this offering, there has been no public market for our common stock. The initial public offering price is determined by negotiations between us and the representatives. Among the factors to be considered in determining the initial public offering price will be the information set forth in this prospectus; our history, present state of development and future prospects; an assessment of our management, its past and present operations and the prospects for and timing of future revenues; the history of and future prospects for our industry in general; our sales, earnings and certain other financial and operating information in recent periods; and the price-earnings ratios, price-sales ratios, market prices of securities, valuation multiples and certain financial and operating information of companies engaged in activities similar to ours.

An active trading market for the shares may not develop. It is also possible that after the offering the shares will not trade in the public market at or above the initial public offering price.

Price Stabilization, Short Positions and Penalty Bids

Until the distribution of the shares is completed, SEC rules may limit underwriters from bidding for and purchasing our common stock. However, the underwriters may engage in transactions that stabilize the price of the common stock, such as bids or purchases to peg, fix or maintain that price.

In connection with the offering, the underwriters may purchase and sell our common stock in the open market. These transactions may include over-allotment and stabilizing transactions, passive market making and purchases to cover syndicate short positions created in connection with this offering. Short sales involve the sale by the underwriters of a greater number of shares than they are required to

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purchase in the offering. "Covered" short sales are sales made in an amount not greater than the underwriters' option to purchase additional shares described above. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the option to purchase additional shares. "Naked" short sales are sales in excess of the option to purchase additional shares. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of shares of common stock made by the underwriters in the open market prior to the completion of the offering.

The underwriters also may impose a penalty bid, whereby the underwriters may reclaim selling concessions allowed to syndicate members or other broker-dealers in respect of the common stock sold in the offering for their account if the underwriters repurchase the shares in stabilizing or covering transactions.

These activities may stabilize, maintain or otherwise affect the market price of the common stock, which may be higher than the price that might otherwise prevail in the open market. The underwriters may conduct these transactions on the NYSE, in the over-the-counter market or otherwise.

Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common stock. In addition, neither we nor any of the underwriters make any representation that the representatives will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

Electronic Distribution

In connection with the offering, certain of the underwriters or securities dealers may distribute prospectuses by electronic means, such as e-mail.

Conflicts of Interest

An affiliate of each of and is a lender under our credit facility and will receive 5% or more of the net proceeds of this offering due to the repayment of borrowings thereunder. Therefore, each of and is deemed to have a conflict of interest within the meaning of FINRA Rule 5121. Accordingly, this offering is being conducted in accordance with Rule 5121, which requires, among other things, that a "qualified independent underwriter" participate in the preparation of, and exercise the usual standards of "due diligence" with respect to, the registration statement and this prospectus. Citigroup Global Markets Inc. has agreed to act as a qualified independent underwriter for this offering and to undertake the legal responsibilities and liabilities of an underwriter under the Securities Act, specifically including those inherent in Section 11 thereof. Citigroup Global Markets Inc. will not receive any additional fees for serving as a qualified independent underwriter in connection with this offering. We have agreed to indemnify Citigroup Global Markets Inc. against liabilities incurred in connection with acting as a qualified independent underwriter, including liabilities under the Securities Act.

Pursuant to Rule 5121, neither nor will confirm any sales to any account over which it exercises discretionary authority without the specific written approval of the account holder.

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Other Relationships

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The underwriters and certain of their affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve our securities and/or instruments. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

Notice to Prospective Investors in the European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member State"), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the "Relevant Implementation Date"), no offer of shares may be made to the public in that Relevant Member State other than:

A.: to any legal entity which is a qualified investor as defined in the Prospectus Directive;
B.: to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives; or
C.: in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares shall require us or the representatives to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

Each person in a Relevant Member State (other than a Relevant Member State where there is a Permitted Public Offer) who initially acquires any shares or to whom any offer is made will be deemed to have represented, acknowledged and agreed that (A) it is a "qualified investor" within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive, and (B) in the case of any shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, the shares acquired by it in the offering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than "qualified investors" as defined in the Prospectus Directive, or in circumstances in which the prior consent of the Subscribers has been given to the offer or resale. In the case of any shares being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, each such financial intermediary will be deemed to have represented, acknowledged and agreed that the shares acquired by it in the offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any shares to the public other than their offer or resale in a Relevant Member State to qualified investors as so defined or in circumstances in which the prior consent of the representatives has been obtained to each such proposed offer or resale.

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We, the representatives and their affiliates will rely upon the truth and accuracy of the foregoing representation, acknowledgement and agreement.

This prospectus has been prepared on the basis that any offer of shares in any Relevant Member State will be made pursuant to an exemption under the Prospectus Directive from the requirement to publish a prospectus for offers of shares. Accordingly any person making or intending to make an offer in that Relevant Member State of shares which are the subject of the offering contemplated in this prospectus may only do so in circumstances in which no obligation arises for us or any of the underwriters to publish a prospectus pursuant to Article 3 of the Prospectus Directive in relation to such offer. Neither we nor the underwriters have authorized, nor do they authorize, the making of any offer of shares in circumstances in which an obligation arises for us or the underwriters to publish a prospectus for such offer.

For the purpose of the above provisions, the expression "an offer to the public" in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in the Relevant Member State by any measure implementing the Prospectus Directive in the Relevant Member State and the expression "Prospectus Directive" means Directive 2003/71/EC (including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member States) and includes any relevant implementing measure in the Relevant Member State and the expression "2010 PD Amending Directive" means Directive 2010/73/EU.

Notice to Prospective Investors in Canada

The common stock may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the common stock must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this offering memorandum (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

Notice to Prospective Investors in the United Kingdom

In addition, in the United Kingdom, this document is being distributed only to, and is directed only at, and any offer subsequently made may only be directed at persons who are "qualified investors" (as defined in the Prospectus Directive) (i) who have professional experience in matters relating to investments falling within Article 19 (5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). This document must not be acted on or relied on in the United Kingdom by persons who are not relevant persons. In the

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United Kingdom, any investment or investment activity to which this document relates is only available to, and will be engaged in with, relevant persons.

Notice to Prospective Investors in Switzerland

The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange ("SIX") or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing

Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to the offering, us, the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA ("FINMA"), and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes ("CISA"). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares.

Notice to Prospective Investors in the Dubai International Financial Centre

This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority ("DFSA"). This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The shares to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.

Notice to Prospective Investors in Hong Kong, Singapore and Japan

The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or (ii) to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase,

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whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries' rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.

The securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial Instruments and Exchange Law) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

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LEGAL MATTERS

The validity of our common stock offered by this prospectus will be passed upon for us and the selling stockholders by Vinson & Elkins L.L.P., Houston, Texas. Certain legal matters in connection with this offering will be passed upon for the underwriters by Andrews Kurth Kenyon LLP, Houston, Texas.

EXPERTS

The consolidated financial statements of Jagged Peak Energy LLC as of and for the years ended December 31, 2015 and 2014 and the balance sheet of Jagged Peak Energy Inc. as of September 20, 2016 have been included herein. These reports have been included herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

Estimates of our reserves and related future net cash flows related to our properties as of November 30, 2016 and December 31, 2015 and 2014, included herein and elsewhere in the registration statement were based upon a reserve report prepared by independent petroleum engineers, Ryder Scott Company, LP. We have included these estimates in reliance on the authority of such firm as an expert in such matters.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 (including the exhibits, schedules and amendments thereto) under the Securities Act, with respect to the shares of our common stock offered hereby. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. For further information with respect to the common stock offered hereby, we refer you to the registration statement and the exhibits and schedules filed therewith. Statements contained in this prospectus as to the contents of any contract, agreement or any other document are summaries of the material terms of such contract, agreement or other document and are not necessarily complete. With respect to each of these contracts, agreements or other documents filed as an exhibit to the registration statement, reference is made to the exhibits for a more complete description of the matter involved. A copy of the registration statement, and the exhibits and schedules thereto, may be inspected without charge at the public reference facilities maintained by the SEC at 100 F Street NE, Washington, D.C. 20549. Copies of these materials may be obtained, upon payment of a duplicating fee, from the Public Reference Room of the SEC at 100 F Street N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room. The SEC maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the SEC's website is www.sec.gov .

As a result of this offering, we will become subject to full information requirements of the Exchange Act. We will fulfill our obligations with respect to such requirements by filing periodic reports and other information with the SEC. We intend to furnish our stockholders with annual reports containing financial statements certified by an independent public accounting firm.

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INDEX TO FINANCIAL STATEMENTS

		Page

Jagged Peak Energy Inc.
Audited Balance Sheet
Report of Independent Registered Public Accounting Firm			F-2
Balance Sheet as of September 20, 2016			F-3
Notes to Balance Sheet			F-4
Jagged Peak Energy LLC (Predecessor)
Audited Financial Statements
Report of Independent Registered Public Accounting Firm			F-6
Consolidated Balance Sheets as of December 31, 2015 and 2014			F-7
Consolidated Statements of Operations for the Years Ended December 31, 2015 and 2014			F-8
Consolidated Statements of Members' Equity for the Years Ended December 31, 2015 and 2014			F-9
Consolidated Statements of Cash Flows for the Years Ended December 31, 2015 and 2014			F-10
Notes to Consolidated Financial Statements			F-11
Unaudited Financial Statements
Unaudited Condensed Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015			F-32
Unaudited Condensed Consolidated Statements of Operations for the Nine Months Ended September 30, 2016 and 2015			F-33
Unaudited Condensed Consolidated Statements of Members' Equity for the Nine Months Ended September 30, 2016			F-34
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015			F-35
Notes to Unaudited Condensed Consolidated Financial Statements			F-36

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Report of Independent Registered Public Accounting Firm

The Board of Directors
Jagged Peak Energy Inc.:

We have audited the accompanying balance sheet of Jagged Peak Energy Inc. as of September 20, 2016. This balance sheet is the responsibility of the Company's management. Our responsibility is to express an opinion on this balance sheet based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of Jagged Peak Energy Inc. as of September 20, 2016, in conformity with U.S. generally accepted accounting principles.


		/s/ KPMG LLP

Denver, Colorado
October 11, 2016

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JAGGED PEAK ENERGY INC.

BALANCE SHEET

	September 20, 2016

*ASSETS*
CURRENT ASSETS
Cash and cash equivalents	$	—

TOTAL ASSETS	$	—



*LIABILITIES AND SHAREHOLDER'S EQUITY*
TOTAL LIABILITIES
Total liabilities	$	—
SHAREHOLDER'S EQUITY
Common stock, $0.01 par value, authorized 1,000 shares issued and outstanding		10
Less receivable from Jagged Peak Energy LLC		(10	)

Total shareholder's equity		—

TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY	$	—

The accompanying notes are an integral part of this balance sheet.

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JAGGED PEAK ENERGY INC.

Notes to Balance Sheet

Note 1—Nature of Operations

Jagged Peak Energy Inc. (the "Company") is a Delaware corporation formed as a wholly owned subsidiary of Jagged Peak Energy LLC (the "Parent") on September 20, 2016. The Company was formed to become the holding company of the Parent in connection with the Company's initial public offering. The Company has no prior operating activities.

Pursuant to the terms of a corporate reorganization that will be completed prior to the closing of the initial public offering, the Company will acquire, directly or indirectly, all of the membership interests in the Parent in exchange for the issuance of all of the Company's issued and outstanding shares of common stock (prior to the issuance of shares of common stock in the initial public offering). As a result of these transactions, the Parent will become the Company's direct, wholly owned subsidiary.

Note 2—Basis of Presentation and Summary of Significant Accounting Policies

This balance sheet has been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Separate Statements of Operations, Changes in Stockholder's Equity and of Cash Flows have not been presented because the Company has had no business transactions or activities to date, except for the initial capitalization of the Company which was funded by a receivable from the Parent. In this regard, general and administrative costs associated with the formation and daily management of the Company have been determined by the Company to be insignificant.

In preparing the accompanying balance sheet, the Company considered disclosures of events occurring after September 20, 2016, up until the issuance of the balance sheet.

Estimates

The preparation of the balance sheet, in accordance with generally accepted accounting principles in the United States of America, requires management to make estimates and assumptions that affect the amounts reported in the balance sheet and accompanying notes. Actual results could differ from those estimates.

Receivable from Jagged Peak Energy LLC

Receivable from Jagged Peak Energy LLC represents an amount of $10 due for the issuance of 1,000 shares of $.01 par value common stock to the Parent. Prior to payment by the Parent, this receivable will be recorded as a reduction of shareholder's equity.

Income Taxes

The Company is a subchapter C corporation and is subject to U.S. federal and state income taxes. Income taxes are accounted for under the asset and liability method. The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts and income tax basis of assets and liabilities and the expected benefits of utilizing net operating loss and tax credit carryforwards, using enacted tax rates in effect for the taxing jurisdiction in which the Company operates for the year in which those temporary differences are expected to be recovered or settled. The Company recognizes the financial statement effects of a tax position when it is more-likely-than-not, based on technical merits, that the position will

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JAGGED PEAK ENERGY INC.

Notes to Balance Sheet (Continued)

Note 2—Basis of Presentation and Summary of Significant Accounting Policies (Continued)

be sustained upon examination. Net deferred tax assets are then reduced by a valuation allowance if the Company believes it is more-likely-than-not such net deferred tax assets will not be realized.

Note 3—Shareholder's Equity

The Company has authorized share capital of 1,000 common shares with $0.01 par value. On September 20, 2016, all 1,000 shares were issued and acquired by the Parent for consideration of an amount of $10 receivable from the Parent. Each share has one voting right.

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Report of Independent Registered Public Accounting Firm

The Board of Directors
Jagged Peak Energy LLC:

We have audited the accompanying consolidated balance sheets of Jagged Peak Energy LLC (Predecessor) and its subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of operations, members' equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Predecessor's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Jagged Peak Energy LLC and its subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.


		/s/ KPMG LLP
Denver, Colorado
October 11, 2016

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JAGGED PEAK ENERGY LLC

(PREDECESSOR)

CONSOLIDATED BALANCE SHEETS

(in thousands)

	December 31, 2015			December 31, 2014

*ASSETS*
CURRENT ASSETS
Cash and cash equivalents	$	14,165		$	33,628
Accounts receivable		8,005			1,739
Commodity derivative assets		—			4,612
Other current assets		504			773

Total current assets		22,674			40,752

PROPERTY AND EQUIPMENT
Oil and natural gas properties, successful efforts method		333,067			222,293
Accumulated depletion, depreciation and amortization		(30,341	)		(8,105	)

Total oil and gas properties		302,726			214,188
Other property and equipment, net		1,663			2,000

Total property and equipment, net		304,389			216,188

OTHER NONCURRENT ASSETS
Unamortized debt issuance costs		542			—
Other assets		127			144

Total other assets		669			144

TOTAL ASSETS	$	327,732		$	257,084



*LIABILITIES AND MEMBERS' EQUITY*
CURRENT LIABILITIES
Accounts payable	$	2,452		$	2,202
Accrued liabilities		20,171			13,218

Total current liabilities		22,623			15,420

LONG-TERM LIABILITIES
Senior secured revolving credit facility		20,000			—
Asset retirement obligations		490			401
Other long-term liabilities		289			449

Total long-term liabilities		20,779			850

MEMBERS' EQUITY
Common units		294,556			243,556
Accumulated deficit		(10,226	)		(2,742	)

Total members' equity		284,330			240,814

TOTAL LIABILITIES AND MEMBERS' EQUITY	$	327,732		$	257,084

The accompanying notes are an integral part of these consolidated financial statements.

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JAGGED PEAK ENERGY LLC

(PREDECESSOR)

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

	Years ended December 31,

	2015			2014
REVENUES
Oil sales	$	31,534		$	14,605
Natural gas sales		948			646
NGL sales		1,329			1,029

Total revenues		33,811			16,280

OPERATING EXPENSES
Lease operating expenses		3,165			2,041
Gathering and transportation expenses		171			121
Production and ad valorem taxes		2,244			920
Depletion, depreciation, amortization and accretion		22,685			8,444
Impairment of oil and natural gas properties and dry hole costs		6,489			1,414
Other operating expenses		261			64
General and administrative		7,446			7,330

Total operating expenses		42,461			20,334

LOSS FROM OPERATIONS		(8,650	)		(4,054	)

OTHER INCOME (EXPENSE)
Gain on commodity derivatives		1,323			5,375
Interest expense and other		(197	)		—
Other income		40			—

Total other income		1,166			5,375

NET INCOME (LOSS)	$	(7,484	)	$	1,321

The accompanying notes are an integral part of these consolidated financial statements.

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JAGGED PEAK ENERGY LLC

(PREDECESSOR)

CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY

(in thousands)

	Common Units		Accumulated Deficit			Total Members' Equity

BALANCE AT DECEMBER 31, 2013	$	43,756	$	(4,063	)	$	39,693
Capital contributions		199,800		—			199,800
Net income		—		1,321			1,321

BALANCE AT DECEMBER 31, 2014		243,556		(2,742	)		240,814
Capital contributions		51,000		—			51,000
Net loss		—		(7,484	)		(7,484	)

BALANCE AT DECEMBER 31, 2015	$	294,556	$	(10,226	)	$	284,330

The accompanying notes are an integral part of these consolidated financial statements.

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JAGGED PEAK ENERGY LLC

(PREDECESSOR)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Years ended December 31,

	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$	(7,484	)	$	1,321
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depletion, depreciation, amortization and accretion expense		22,685			8,444
Impairment of oil and natural gas properties and dry hole costs		6,489			1,414
Amortization of debt issuance costs		61			—
Gain on commodity derivatives		(1,323	)		(5,375	)
Net cash receipts on settled derivatives		5,935			763
Other		(155	)		(150	)
Change in operating assets and liabilities:
Accounts receivable and other current assets		(5,997	)		(2,376	)
Other assets		17			(28	)
Accounts payable and accrued liabilities		144			3,602

Net cash provided by operating activities		20,372			7,615

CASH FLOWS FROM INVESTING ACTIVITIES
Oil and natural gas leasehold and acquisition costs		(13,716	)		(124,328	)
Development of oil and natural gas properties		(96,743	)		(64,545	)
Other capital expenditures		(213	)		(1,073	)
Proceeds from sale of oil and natural gas properties		440			2,879

Net cash used in investing activities		(110,232	)		(187,067	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common units issued		51,000			199,800
Proceeds from senior secured revolving credit facility		20,000			—
Debt issuance costs		(603	)		—

Net cash provided by financing activities		70,397			199,800

NET CHANGE IN CASH AND CASH EQUIVALENTS		(19,463	)		20,348
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		33,628			13,280

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	14,165		$	33,628



SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid, net of capitalized interest	$	95		$	—
Cash paid for income taxes		—			—
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES
Accrued capital expenditures	$	17,720		$	10,809
Asset retirement obligations		189			50

The accompanying notes are an integral part of these consolidated financial statements.

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JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements

December 31, 2015 and 2014

Note 1—Organization, Operations and Basis of Presentation

Organization and Operations

Jagged Peak Energy LLC (together with its subsidiaries, the "Predecessor"), a Delaware limited liability company, is a growth-oriented, independent oil and natural gas company focused on the acquisition and development of unconventional oil and associated liquids-rich natural gas reserves in the Delaware Basin, a sub-basin of the Permian Basin of West Texas. The Predecessor's acreage is located on large, contiguous blocks in the adjacent counties of Winkler, Ward, Reeves and Pecos, with significant oil-in-place within multiple stacked hydrocarbon-bearing formations. The Predecessor was formed by an affiliate of Quantum Energy Partners ("Quantum"), a leading energy private equity firm that has managed more than $11 billion of equity commitments since 1998, and key members of its management team.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

The accompanying consolidated financial statements include the accounts of Jagged Peak Energy LLC and its wholly owned subsidiaries. All significant intercompany amounts have been eliminated in consolidation.

Note 2—Significant Accounting Policies and Related Matters

Use of Estimates

In the course of preparing the consolidated financial statements, management makes various assumptions, judgments and estimates to determine the reported amounts of assets, liabilities, revenue and expenses, and in the disclosures of commitments and contingencies. Changes in these assumptions, judgments and estimates will occur as a result of the passage of time and the occurrence of future events. Although management believes these estimates are reasonable, actual results could differ from these estimates.

Estimates made in preparing these consolidated financial statements include, among other things, (1) estimates relating to certain oil and natural gas revenue and costs, (2) estimates of oil and natural gas reserve quantities, which impact depreciation, depletion and amortization and impairment calculations, (3) estimates of timing and costs used in calculating asset retirement obligations and impairment, (4) estimates used in developing fair value assumptions, including future cash flows and discount rates, and (5) estimates and assumptions used in the disclosure of commitments and contingencies. Changes in the assumptions could have a significant impact on results in future periods.

Industry Segment and Geographic Information

The Predecessor has evaluated how it is organized and managed and has identified one operating segment—the production and development of oil and natural gas. All of the Predecessor's assets are located in the United States, and all of its revenues are attributable to customers located in the United States.

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JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements (Continued)

December 31, 2015 and 2014

Note 2—Significant Accounting Policies and Related Matters (Continued)

Fair Value Measurements

The Predecessor's financial instruments are measured at estimated fair value, and consist of derivative instruments, cash and cash equivalents, accounts payable and accrued expenses. The Predecessor's derivative instruments are measured at fair value on a recurring basis, see note 5 for further discussion. The carrying amounts of the Predecessor's other financial instruments are considered to be representative of their fair market value due to their short-term nature.

The Predecessor also applies fair value accounting guidance to measure nonfinancial assets and liabilities, such as the acquisition or impairment of proved oil and gas properties and the inception value of asset retirement obligations. These assets and liabilities are subject to fair value adjustments only in certain circumstances and are not subject to recurring revaluations. See note 6 for further discussion.

Cash and Cash Equivalents

The Predecessor considers all liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Predecessor's cash balances held at commercial banks may at times exceed the Federal Deposit Insurance Corporation limit. The Predecessor has not experienced any credit losses to date.

Revenue Recognition

Oil and natural gas revenue is recognized when production is sold to a purchaser at a fixed and determinable price, delivery has occurred, title has transferred and the collectability of the revenue is probable. Oil and natural gas revenue is recorded using the sales method.

Accounts Receivable

The Predecessor's accounts receivable are generated primarily from the sale of oil and natural gas to various customers, from the billing of working interest partners for work on wells the Predecessor operates, and from derivative settlements receivable shortly after the balance sheet date. The Predecessor monitors the financial strength of its customers, partners, and counterparties. At December 31, 2015 and 2014, the Predecessor did not have any reserves for doubtful accounts and did not incur any bad debt expense in any period presented.

Derivative Instruments

The Predecessor uses commodity derivative instruments to manage its exposure to oil and natural gas price volatility. All of the commodity derivative instruments are utilized to manage price risk attributable to the Predecessor's expected oil and natural gas production, and the Predecessor does not enter into such instruments for speculative trading purposes. The Predecessor does not designate any derivative instruments as hedges for accounting purposes. The Predecessor records all derivative instruments on the balance sheet as either assets or liabilities measured at their estimated fair value. The Predecessor records gains and losses from the change in fair value of derivative instruments in

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JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements (Continued)

December 31, 2015 and 2014

Note 2—Significant Accounting Policies and Related Matters (Continued)

current earnings as they occur. The Predecessor currently does not utilize any derivative instruments to manage exposure to variable interest rates, but may do so in the future.

The cash flow impact of the Predecessor's derivative activities is reflected as cash flows from operating activities. See note 5 for a more detailed discussion of the Predecessor's derivative activities.

Oil and Natural Gas Properties

Proved Oil and Natural Gas Properties

The Predecessor accounts for its oil and natural gas exploration and development costs using the successful efforts method. Under this method, all costs incurred related to the acquisition of oil and natural gas properties and the costs of drilling development wells and successful exploratory wells are capitalized, while the costs of unsuccessful exploratory wells are expensed if and when the well is determined not to have found reserves in commercial quantities. Other items charged to expense generally include geological and geophysical costs, delay rentals and lease and well operating costs.

Capitalized leasehold costs attributable to proved properties are depleted using the units-of-production method based on proved reserves on a field basis. Capitalized well costs, including asset retirement obligations (AROs), are depleted based on proved developed reserves on a field basis. For the years ended December 31, 2015 and 2014, the Predecessor recorded depletion for oil and natural gas properties of $22.2 million and $8.1 million, respectively.

Proved oil and natural gas properties are reviewed for impairment when events and circumstances indicate a possible decline in the recoverability of the carrying amount of such property. The Predecessor estimates the expected future cash flows of oil and natural gas properties and compares these undiscounted cash flows to the carrying amount of the oil and natural gas properties to determine if the carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, the Predecessor will write down the carrying amount of the oil and natural gas properties to fair value. The factors used to determine fair value include, but are not limited to, estimates of reserves, future commodity prices, future production estimates, estimated future capital expenditures and a commensurate discount rate. These assumptions and estimates represent Level 3 inputs, as further discussed in note 6. The Predecessor recorded no impairment of proved properties during the years ended December 31, 2015 and 2014.

Unproved Oil and Natural Gas Properties

Unproved oil and natural gas properties consist of costs to acquire undeveloped leases and unproved reserves, and are capitalized when incurred. When a successful well is drilled on undeveloped leasehold or reserves are otherwise attributable to a property, unproved property costs are transferred to proved properties. Unproved properties are periodically assessed for impairment on a property-by-property basis. The Predecessor evaluates significant unproved properties for impairment based on remaining lease term, drilling results, reservoir performance, seismic interpretation or future plans to develop acreage, and records impairment expense for any decline in value. The Predecessor

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JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements (Continued)

December 31, 2015 and 2014

Note 2—Significant Accounting Policies and Related Matters (Continued)

recorded a $6.5 million and $1.4 million impairment of unproved properties for the years ended December 31, 2015 and 2014, respectively.

Oil and Natural Gas Reserves

The estimates of proved oil and natural gas reserves utilized in the preparation of the financial statements are estimated in accordance with the rules established by the Securities and Exchange Commission ("SEC") and the Financial Accounting Standards Board ("FASB"). The Predecessor's annual reserve estimates were prepared by third-party petroleum engineers. Reserve estimates are inherently imprecise. Accordingly, the estimates are expected to change as more current information becomes available. It is possible that, because of changes in market conditions or the inherent imprecision of reserve estimates, the estimates of future cash inflows, future gross revenue, the amount of oil and natural gas reserves, the remaining estimated lives of oil and natural gas properties, or any combination of the above may be increased or reduced. Increases in recoverable economic volumes generally reduce per unit depletion rates while decreases in recoverable economic volumes generally increase per unit depletion rates. See note 12 for a more detailed discussion of the Predecessor's oil and natural gas reserves.

Other Property and Equipment

Other property and equipment includes equipment used in drilling and completion activities, the Predecessor's field office location, leasehold improvements, vehicles, IT hardware and software and office furniture, and is recorded at cost. Depreciation is recorded using the straight-line method over the estimated useful lives, which range from 2 to 20 years. When property and equipment is sold or retired, the capitalized costs and related accumulated depreciation are removed from the accounting records.

Unamortized Debt Issuance Costs

The Predecessor incurred legal and bank fees in connection with obtaining its senior secured revolving credit facility and incurs such fees when redetermining its borrowing base. These costs are stated at cost, net of amortization, which is computed using the straight-line method and recognized as interest expense in the Consolidated Statement of Operations.

Other Noncurrent Assets

Other noncurrent assets primarily consist of deposits paid for the Predecessor's office lease. As these amounts relate to a long-term lease, they are classified as noncurrent assets.

Deferred Rent

The Predecessor's office lease agreement contains scheduled escalation in lease payments during the term of the lease. In accordance with GAAP, the Predecessor records rent expense on a straight-line basis and a deferred rent liability for the difference between straight-line rent expense recorded and the actual amounts of the lease payments.

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JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements (Continued)

December 31, 2015 and 2014

Note 2—Significant Accounting Policies and Related Matters (Continued)

Asset Retirement Obligations

The Predecessor's AROs relate to future costs associated with the plugging and abandonment of oil and natural gas wells, removal of equipment and facilities from leased acreage and restoration in accordance with local, state and federal laws. The discounted fair value of an ARO liability is required to be recognized in the period in which it is incurred, with the associated asset retirement capitalized in proved oil and gas property costs as part of the carrying cost of the oil and natural gas asset. The recognition of the ARO requires management to make numerous assumptions regarding such factors as the estimated probabilities, amounts and timing of settlements, credit-adjusted risk-free discount rates, inflation rates, and future advances in technology. In periods subsequent to the initial measurement of the ARO, the Predecessor recognizes period-to-period changes in the liability resulting from the passage of time and revisions to either the timing or the amount of the original estimate of undiscounted cash flows. Increases in the ARO liability due to the passage of time impact net earnings and accretion expense. The related capital cost, including revisions thereto, is charged to expense through accumulated depletion, depreciation and amortization.

The Predecessor recognizes an estimated liability for future costs associated with the abandonment of its oil and natural gas properties. A liability for the fair value of an ARO and corresponding increase to the carrying value of the related long-lived asset are recorded at the time a well is spud or acquired. The increase in carrying value is included in proved oil and gas properties in the accompanying balance sheet. The Predecessor depletes the amount added to proved oil and natural gas property costs and recognizes expense in connection with the accretion of the discounted liability over the remaining economic lives of the respective wells.

The Predecessor's AROs are included in its balance sheets within current and long-term liabilities. The changes in the Predecessor's AROs for the years ended December 31, 2015 and 2014 are as follows:

	2015			2014

	(in thousands)
Beginning of period	$	401		$	10
Liabilities assumed		—			316
Liabilities incurred		64			50
Liabilities settled upon plugging and abandoning wells		(25	)		—
Revisions of estimates(1)		125			—
Accretion expense		43			25

End of period	$	608		$	401

(1): The revision of estimates that occurred during the year ended December 31, 2015 is due to a change in the estimated timing for plugging and abandoning one well. The liability to complete the plugging and abandonment of this well is approximately $0.1 million at December 31, 2015 and is classified as a current liability, which is included in accrued liabilities on the Predecessor's December 31, 2015 Consolidated Balance Sheet.

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JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements (Continued)

December 31, 2015 and 2014

Note 2—Significant Accounting Policies and Related Matters (Continued)

Income Taxes

The Predecessor is treated as a partnership for federal and state income tax purposes, with each partner taxed separately on its allocated share of the Predecessor's taxable income. Accordingly, the accompanying consolidated financial statements do not include a provision or liability for federal income taxes. The Predecessor's operations in Texas are subject to an entity-level tax, the Texas franchise tax, at a statutory rate of up to 1.0% of a portion of gross revenues apportioned to Texas. The Predecessor did not have taxable net income for purposes of calculating 2015 and 2014 Texas franchise tax, and did not have a franchise tax liability at December 31, 2015 or 2014.

In accordance with the provisions of Accounting Standards Codification 740, Income Taxes, the Predecessor found no uncertain tax positions and recorded no related liabilities as of December 31, 2015 and 2014. The Predecessor recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2015 and 2014, the Predecessor made no provision for interest or penalties related to uncertain tax positions. The Predecessor files income tax returns in the U.S. federal jurisdiction and various states. There are currently no federal or state income tax examinations underway, and tax returns for the years ended December 31, 2015 and 2014 are still open to examination.

Recent Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2016-09, " Compensation—Stock Compensation Topic 718: Improvements to Employee Share-Based Payment Accounting ," which simplifies several aspects of the accounting for share-based payment award transactions. These simplifications include the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 will be effective for reporting periods beginning on or after December 15, 2016, and early adoption is permitted. The Predecessor is currently evaluating the impact of its pending adoption of this guidance on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, " Leases (Topic 842) ," which requires all lease transactions with terms in excess of 12 months to be recognized on the balance sheet as lease assets and lease liabilities. ASU 2016-02 becomes effective on January 1, 2019, and requires the use of the modified retrospective transition method. Although early application is permitted, the Predecessor does not intend to early adopt the new standard. The Predecessor is currently evaluating the impact of its pending adoption of this guidance on its consolidated financial statements.

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Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements (Continued)

December 31, 2015 and 2014

Note 2—Significant Accounting Policies and Related Matters (Continued)

line-of-credit arrangements. ASU 2015-03 is effective for the annual periods beginning after December 15, 2016 and for interim periods within that annual period, and is required to be adopted retrospectively. ASU 2015-15 is effective upon adoption of ASU 2015-03. The Predecessor does not expect the adoption of these standards will have a material impact on its financial statements.

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU), No. 2014-09, Revenue from Contracts with Customers , which replaces the majority of existing revenue recognition guidance in GAAP, including most industry specific guidance. ASU 2014-09 provides new guidance concerning recognition and measurement of revenue and requires additional disclosures about the nature, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 may be applied with a full retrospective approach or with a modified retrospective approach with the accumulated effect recognized at the date of initial application. ASU 2015-14 deferred the effective reporting periods of ASU 2014-09, and it is now effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019. Early adoption of 2014-09 is permitted for annual periods beginning after December 15, 2016, including interim reporting periods therein. The Predecessor is currently evaluating which transition approach to use and the impact, if any, the adoption of this update will have on its consolidated financial statements and disclosures.

Note 3—Property and Equipment

Property and equipment includes the following (in thousands):

	December 31, 2015			December 31, 2014

Oil and natural gas properties:
Proved oil and natural gas properties	$	204,154		$	96,590
Unproved oil and natural gas properties		128,913			125,703

Total oil and natural gas properties		333,067			222,293
Less: Accumulated depletion		(30,341	)		(8,105	)

Total oil and natural gas properties, net		302,726			214,188

Other property and equipment		2,491			2,422
Less: Accumulated depreciation		(828	)		(422	)

Total other property and equipment, net		1,663			2,000

Total property and equipment, net	$	304,389		$	216,188

Oil and natural gas properties are reviewed for impairment when facts and circumstances indicate their carrying value may not be recoverable. The Predecessor estimates the expected future cash flows of oil and natural gas properties and compares these undiscounted cash flows to the carrying amount of the oil and natural gas properties to determine if the carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, the Predecessor will write down the carrying amount of the oil and natural gas properties to fair value. The factors used to determine fair

F-17

Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements (Continued)

December 31, 2015 and 2014

Note 3—Property and Equipment (Continued)

value include, but are not limited to, estimates of reserves, future commodity prices, future production estimates, cash flow from commodity hedges, estimated future capital expenditures and a commensurate discount rate. Unproved properties are assessed at least annually to determine whether they have been impaired and more frequently when industry conditions dictate an impairment may be possible. An impairment allowance is provided on an unproved property when the Predecessor determines that the property will not be developed.

For the year ended December 31, 2015, the Predecessor recorded an impairment of $6.5 million due to the decision by management to not develop or renew leases of undeveloped properties outside the Predecessor's three core operating areas. For the year ended December 31, 2014, the Predecessor recorded an impairment of $1.4 million due to the decision by management to not develop on renew leases of certain undeveloped properties. The Predecessor did not record dry hole expenses or impairments of proved properties in the years ended December 31, 2015 or 2014.

Note 4—Acquisitions and Disposals

During the year ended December 31, 2015, the Predecessor acquired approximately 11,900 net undeveloped acres for approximately $8.4 million through a series of transactions.

During the third quarter of 2015, the Predecessor sold 40 net undeveloped acres in the Whiskey River area for $0.1 million. During the first quarter of 2015, the Predecessor received $0.3 million in addition to the $2.9 million payment it received in October 2014 for the sale of on a portion of its interests in approximately 8,500 net undeveloped acres in northern Pecos County, Texas. This property was originally acquired as part of the Whiskey River Acquisition (defined below). The Predecessor did not record any gain or loss in conjunction with this transaction.

In September 2014, the Predecessor closed on the acquisition of working interests in three producing wells and approximately 8,500 net acres in Ward and Winkler counties in the Delaware Basin in West Texas (the Cochise Acquisition). The final adjusted purchase price of the Cochise Acquisition was $40.7 million The acquisition was accounted for using the acquisition method, which requires the acquired assets and liabilities to be recorded at fair values as of the acquisition date of September 23, 2014. As of December 31, 2014, the purchase price allocation is as follows (in thousands):


Consideration given:
Cash	$	40,688



Amount recognized for final fair value of assets acquired and liabilities assumed:
Proved property	$	6,243
Unproved property		34,482
Asset retirement obligation		(37	)

Total fair value of oil and natural gas properties acquired	$	40,688

The following unaudited pro forma financial information represents the combined results for the Predecessor and the Cochise Acquisition properties (exclusive of the Whiskey River properties) for the

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Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements (Continued)

December 31, 2015 and 2014

Note 4—Acquisitions and Disposals (Continued)

years ended December 31, 2014, as if the Cochise Acquisition had occurred on January 1, 2014 (in thousands).


Revenue	$	18,655
Net income		3,975

In March 2014, the Predecessor closed on an acquisition of working interests in 25 producing wells, one well waiting on completion and approximately 41,000 net acres in Ward, Reeves, and Pecos counties in the Delaware Basin in West Texas (the Whiskey River Acquisition). The final adjusted purchase price of the Whiskey River Acquisition was $76.1 million The acquisition was accounted for using the acquisition method, which requires the acquired assets and liabilities to be recorded at fair values as of the acquisition date of March 27, 2014. As of December 31, 2014, the purchase price allocation is as follows (in thousands):


Consideration given:
Cash	$	76,095



Amount recognized for final fair value of assets acquired and liabilities assumed:
Proved property	$	15,186
Unproved property		61,188
Asset retirement obligation		(279	)

Total fair value of oil and natural gas properties acquired	$	76,095

The following unaudited pro forma financial information represents the combined results for the Predecessor and the Whiskey River Acquisition properties (exclusive of the Cochise properties) for the years ended December 31, 2014, as if the Whiskey River Acquisition had occurred on January 1, 2014 (in thousands).


Revenue	$	19,123
Net income		4,045

In addition to the acquisitions above, during the year ended December 31, 2014, the Predecessor acquired approximately 4,800 net undeveloped acres for approximately $11.0 million through a series of transactions.

Note 5—Commodity Derivative Instruments

The Predecessor hedges a portion of its crude oil sales using fixed price swap agreements based on futures price contracts for WTI crude oil. This exposes the Predecessor to market basis differential risk if the WTI price does not move in parity with the Predecessor's underlying sales of crude oil produced in the Delaware Basin of West Texas.

The Predecessor's derivative instruments are carried at fair value on the balance sheet. The Predecessor estimates the fair value using risk adjusted discounted cash flow calculations. Cash flows

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Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements (Continued)

December 31, 2015 and 2014

Note 5—Commodity Derivative Instruments (Continued)

are based on published futures commodity price curves for the underlying commodity as of the date of the estimate. Due to the volatility of commodity prices, the estimated fair values of the Predecessor's derivative instruments are subject to fluctuation from period to period, which could result in significant differences between the current estimated fair value and the ultimate settlement price. Refer to note 6.

At December 31, 2015, the Predecessor was not party to any commodity derivatives for future periods. However, the Predecessor will enter into derivative contracts it views as favorable, and may enter into commodity derivative transactions in the future.

As the Predecessor does not apply hedge accounting, its earnings are affected by the use of the mark-to-market method of accounting for derivative financial instruments. The changes in fair value of these instruments are recognized through earnings as other income or expense rather than deferred until the anticipated transaction affects earnings. The use of mark-to-market accounting for financial instruments can cause noncash earnings volatility due to changes in the underlying commodity price indices. The ultimate gain or loss upon settlement of these transactions is recognized in earnings as other income or expense.

The Predecessor does not aggregate the fair value of its derivative instruments, but records the fair value of each individual derivative contract on the balance sheet as a current or noncurrent asset or liability.

The Predecessor recognized the following gains in earnings for the years ended December 31, 2015 and 2014:

	2015			2014

	(in thousands)
Beginning fair value of commodity derivatives	$	4,612		$	—
Gain on commodity derivatives(1)		1,323			5,375
Commodity derivative cash settlements received		(5,935	)		(763	)

Ending fair value of commodity derivatives	$	—		$	4,612

(1): Realized and unrealized gains on commodity derivatives are recorded in the Other Income (Expense) section of the Consolidated Statement of Operations.

Commodity Price Risk

The Predecessor's principal market risks are its exposure to changes in commodity prices, particularly to the prices of oil and natural gas. The prices of oil and natural gas are subject to market fluctuations in response to changes in supply, demand, market uncertainty and a variety of additional factors beyond the Predecessor's control. The Predecessor monitors these risks and enters into commodity derivative transactions designed to mitigate the impact of commodity price fluctuations on its business.

In an effort to reduce the variability of the Predecessor's cash flows, the Predecessor hedged the commodity prices associated with a portion of its expected oil volumes through year-end 2015 by

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Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements (Continued)

December 31, 2015 and 2014

Note 5—Commodity Derivative Instruments (Continued)

entering into swap and collar derivative financial instruments. With swaps, the Predecessor typically receives an agreed upon fixed price for a specified notional quantity of oil or natural gas, and the Predecessor pays the hedge counterparty a floating price for that same quantity based upon published index prices. With collars, the Predecessor enters into a purchased put, which establishes a price floor, and a sold call, which establishes a price ceiling. The Predecessor's commodity derivatives may expose it to the risk of financial loss in certain circumstances. The Predecessor's derivative arrangements provide protection on the hedged volumes if market prices decline below the prices at which these derivatives are set. If market prices rise above the prices at which the Predecessor has hedged, the Predecessor will receive less revenue on the hedged volumes than it would receive in the absence of hedges.

Derivative Counterparty Risk

Where the Predecessor is exposed to credit risk in its financial instrument transactions, management analyzes the counterparty's financial condition prior to entering into an agreement, establishes credit limits and monitors the appropriateness of these limits on an ongoing basis. Generally, the Predecessor does not require collateral and does not anticipate nonperformance by its counterparties.

The Predecessor's counterparty credit exposure related to commodity derivative instruments is represented by the fair value of contracts with a net positive fair value at the reporting date. These outstanding instruments expose the Predecessor to credit risk in the event of nonperformance by the counterparties to the agreements. Should the creditworthiness of the Predecessor's counterparties decline, its ability to mitigate nonperformance risk is limited to a counterparty agreeing to either a voluntary termination and subsequent cash settlement or a novation of the derivative contract to a third party. In the event of a counterparty default, the Predecessor may sustain a loss and its cash receipts could be negatively impacted.

At December 31, 2014 and during 2015, one counterparty accounted for all the Predecessor's counterparty credit exposure related to commodity derivative assets. This counterparty possesses investment grade credit ratings based upon minimum credit ratings assigned by Standard & Poor's Ratings Services. The Predecessor did not have any derivative positions at December 31, 2015.

Note 6—Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The authoritative guidance requires disclosure of the framework for measuring fair value of financial and nonfinancial assets and liabilities. Financial assets and liabilities are measured at fair value on a recurring basis. Nonfinancial assets and liabilities, such as the initial measurement of asset retirement obligations and proved oil and natural gas properties upon acquisition or impairment, are recognized at fair value on a nonrecurring basis.

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JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements (Continued)

December 31, 2015 and 2014

Note 6—Fair Value Measurements (Continued)

The Predecessor categorizes the inputs to the fair value of its financial assets and liabilities using a three-tier fair value hierarchy that prioritizes the significant inputs used in measuring fair value:

Level 1—Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, listed securities and U.S. government treasury securities.

Level 2—Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry standard models that consider various assumptions, including quoted prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in the category include nonexchange-traded derivatives such as over-the-counter forwards, swaps and options.

Level 3—Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management's best estimate of fair value, and the Predecessor does not have sufficient corroborating market evidence to support classifying these assets and liabilities as Level 2.

The following tables set forth, by level within the fair value hierarchy, the Predecessor's financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2014. These financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Predecessor's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

	Total		Level 1		Level 2		Level 3

	(in thousands)
December 31, 2014:
Assets from commodity derivative contracts	$	4,612	$	—	$	4,612	$	—
Liabilities from commodity derivative contracts		—		—		—		—

Fair Value of Other Financial Instruments

The carrying values of items comprising current assets and current liabilities approximate fair value due to the short-term maturities of these instruments.

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Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements (Continued)

December 31, 2015 and 2014

Note 6—Fair Value Measurements (Continued)

Assets and Liabilities Measured on a Nonrecurring Basis

The Cochise and Whiskey River Acquisitions discussed in note 4 qualify as business combinations and, as such, the Predecessor estimated the fair value of each property as of each acquisition date. The Predecessor used a discounted cash flow model based on an income approach and made market assumptions as to future commodity prices, projections of estimated quantities of oil and natural gas reserves, expectations for timing and amount of future development and operating costs, projections of future rates of production, expected recovery rates and risk adjusted discount rates. Given the unobservable nature of the inputs, nonrecurring measurements of business combinations are deemed to be classified within Level 3 inputs.

The Predecessor reviews its proved and unproved oil and natural gas properties for impairment whenever events and circumstances indicate that a decline in the recoverability of their carrying value may have occurred. The Predecessor's analysis takes into account several factors, including future cash flows, the determination of the values of any possible or probable reserves, and, if applicable, appropriate risk-weighting discounts, all of which would be classified within Level 3.

Additionally, the Predecessor uses fair value to determine the inception value of its AROs. The inputs used to determine such fair value are based primarily on the present value of estimated future cash inflows and outflows. Given the unobservable nature of these inputs, they are generally classified within Level 3.

Note 7—Debt Obligations

On June 19, 2015, the Predecessor entered into a credit agreement which provided for a $500.0 million five-year senior secured revolving credit facility that matures on June 19, 2020 (credit facility). The credit facility had an initial borrowing base of $20.0 million and has two scheduled borrowing base redeterminations per year. The Predecessor has the option to request up to two additional redeterminations per year between October 1, 2015 and October 1, 2017. The borrowing base increased to $25.0 million on July 23, 2015 and increased to $35.0 million on October 10, 2015. Future borrowing bases will be computed based on proved oil and natural gas reserves, hedge positions and estimated future cash flow from those reserves, as well as any other outstanding debt.

Borrowings under the credit facility bear interest at the greatest of (a) the prime rate in effect plus an applicable margin, (b) the federal funds rate in effect plus one half of 1.0%, or (c) the daily London Interbank Offered Rate (LIBOR), plus an applicable margin. The applicable margins associated with the prime rate or the federal funds rate vary based on the utilization percentage of the credit facility, and are 0.5% to 1.5% for base rate loans and 1.5% to 2.5% for LIBOR loans. The Predecessor also pays an annual commitment fee based on the unused portion of the outstanding borrowing base. The commitment fee rate is either 0.375% or 0.500%, depending on the utilization percentage of the credit facility. The weighted average interest rate on the Predecessor's credit facility was 2.097% during 2015.

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Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements (Continued)

December 31, 2015 and 2014

Note 7—Debt Obligations (Continued)

on mergers, restrictions on sales of assets, restrictions on dividends and payments to the Predecessor's capital interest holders, and restrictions on the Predecessor's hedging activity. The financial covenants require the Predecessor to maintain a current ratio (as defined) of at least 1.0 to 1.0, a minimum interest coverage ratio (as defined) of at least 2.5 to 1.0 and a leverage ratio (as defined) not greater than 4.0 to 1.0. The financial covenants are measured on a quarterly basis, with the minimum interest coverage ratio and leverage ratio beginning in the second quarter of 2015 and the current ratio beginning in the second quarter of 2016. As of December 31, 2015, the Predecessor was in compliance with its financial covenants.

As of December 31, 2015, the Predecessor had a $35.0 million borrowing base with $20.0 million outstanding and $15.0 million available on the credit facility. The Predecessor capitalized $0.03 million of interest during 2015. The Predecessor did not capitalize any interest during 2016.

Note 8—Members' Equity

Capital Interests

The Predecessor is a limited liability company with capital interests owned by Quantum and the officers of the Predecessor. The total capital commitment from all Jagged Peak Energy LLC capital members is $405.9 million, with Quantum representing 98.55% of the total capital commitment. Capital interests in the Predecessor consist of a single class of units, which receive an internal rate of return threshold of 8% prior to distributions to any other class of equity interests.

Contributions

Capital calls approved by the board of directors are funded on a pro rata basis by all of the capital members. During the years ended December 31, 2015 and 2014, the Predecessor received $51.0 million and $199.8 million, respectively, of capital contributions from its capital members to fund acquisitions and operations.

As of December 31, 2015, the Predecessor had remaining capital commitments of approximately $111.3 million.

Distributions

The Predecessor did not make any distributions of capital during the years ended December 31, 2015 and 2014.

Management Incentive Units

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Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements (Continued)

December 31, 2015 and 2014

Note 8—Members' Equity (Continued)

Vested units will be forfeited if an incentive unit holder's employment is terminated for cause or if the unit holder terminates his or her employment. Compensation expense for the MIUs will be recognized when all performance, market and service conditions are probable of being satisfied, which is generally upon a liquidation event or initial public offering ("Vesting Event"). As of December 31, 2015 and 2014, the Predecessor had issued 2,350,000 and 2,272,500 MIUs, respectively, from the total pool of 2,600,000 authorized MIUs.

MIUs vest 18.75% each year for four years, with the remaining 25% vesting upon a Vesting Event. All MIUs, whether vested or not, vest upon and participate in a Vesting Event. The Predecessor has the right, but not the obligation, to repurchase MIUs if employment is terminated. If the repurchase price cannot be mutually agreed to among the MIU holder and the Predecessor, the amount will be at the fair market value as determined by a third party valuation specialist.

Note 9—Employee Benefit Plans

The Predecessor sponsors a 401(k) defined contribution plan under which it makes matching contributions for participating employees based on a percentage of the employee contributions. Matching contributions totaled approximately $0.2 million during each of the years ended December 31, 2015 and 2014. Benefits under this plan are equally available to all employees, and employees are fully vested in the employer contribution upon receipt.

Note 10—Commitments and Contingencies

Legal Matters

In the ordinary course of business, the Predecessor may at times be subject to claims and legal actions. Management believes it is remote that the impact of such matters will have a material adverse effect on the Predecessor's financial position, results of operations or cash flows.

Environmental Matters

The Predecessor accounts for environmental contingencies in accordance with the accounting guidance related to accounting for contingencies. Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, which do not contribute to current or future revenue generation, are expensed.

Liabilities are recorded when environmental assessments and/or clean-ups are probable and the costs can be reasonably estimated. Such liabilities are generally undiscounted unless the timing of cash payments is fixed and readily determinable. At both December 31, 2015 and December 31, 2014, the Predecessor had no environmental matters requiring specific disclosure or requiring the recognition of a liability.

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Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements (Continued)

December 31, 2015 and 2014

Note 10—Commitments and Contingencies (Continued)

Contractual Obligations

The Predecessor leases its corporate office space in Denver, Colorado under an agreement expiring in 2018. The Predecessor also finances certain office equipment under operating leases, which expire over the next two years. For each of the years ended December 31, 2015 and 2014, rent expense with respect to these lease commitments was approximately $0.6 million. As of December 31, 2015, the Predecessor had one drilling rig under contract. This rig can be released after January 5, 2016 without penalty if a 90-day notice is given. The contract for this rig was renewed for one year starting February 13, 2016. If this rig is cancelled within the first six months of the contract, the Predecessor will be required to pay an early termination fee of up to $0.2 million. After the first six months of the contract, the Predecessor may terminate without penalty if a 30-day notice is given.

As of December 31, 2014, the Predecessor had two drilling rigs under contract. The Predecessor gave notice of termination of one of the rig contracts in early February 2015 and discontinued its use of the rig in early March 2015. Pursuant to the contract terms as of the time the rig was released, the Predecessor paid an early termination fee of $0.25 million, which is reflected as other operating costs in the Consolidated Statements of Operations.

The table below shows the Predecessor's future minimum payments under noncancelable operating leases and other commitments as of December 31, 2015:

	Total		2016		2017		2018		2019		2020

	(in thousands)
Operating leases(1)	$	1,965	$	737	$	703	$	525	$	—	$	—
Service and purchase contracts(2)		1,057		1,057		—		—		—		—
Rig contracts		240		240		—		—		—		—

Total	$	3,262	$	2,034	$	703	$	525	$	—	$	—

(1): Primarily relates to the lease of the Predecessor's corporate offices
(2): Primarily relates to obligation to purchase LACT units in conjunction with oil gathering for current and future wells

Note 11—Related Party Transactions

Quantum owns significant capital interests in the Predecessor, a 41.5% interest in Oryx Midstream Services, LLC (together with Oryx Southern Delaware Holdings, LLC, Oryx), a 61% interest in Phoenix Lease Services, LLC (Phoenix) and an indirect interest in Trident Water Services, LLC (Trident), a wholly owned subsidiary of Phoenix.

During the year ended December 31, 2015, the Predecessor paid aggregate fees of $1.0 million, $0.4 million and $0.4 million to Trident, Phoenix and Oryx, respectively. During the year ended December 31, 2014, the Predecessor paid aggregate fees of $0.3 million and $0.2 million to Trident and Phoenix, respectively.

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Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements (Continued)

December 31, 2015 and 2014

Note 11—Related Party Transactions (Continued)

Trident provides the Predecessor water transfer services and Phoenix rents certain equipment to the Predecessor. The Predecessor is under no obligation to use either provider, and both provide services only when selected as a vendor in the Predecessor's normal bidding process. Oryx provides the Predecessor crude oil gathering services and sells us related equipment and maintenance services. The crude oil gathering services provided by Oryx are pursuant to a 12-year crude oil gathering agreement.

Note 12—Supplemental Oil and Natural Gas Disclosures (Unaudited)

Costs Incurred for Oil and Natural Gas Producing Activities

Net capitalized costs related to the Predecessor's oil and natural gas producing activities at December 31, 2015 and 2014 were as follows:

	2015		2014

	(in thousands)
Acquisition costs:
Proved property	$	—	$	21,431
Unproved property		11,437		103,355
Development costs		115,492		73,829
Exploration costs		852		64

Total costs incurred	$	127,781	$	198,679

Oil and Natural Gas Reserve Quantities

The reserve information presented below is based on estimates of net proved reserves as of December 31, 2015 and 2014 that were prepared by the Predecessor's independent petroleum engineering firm Ryder Scott Company, LP in accordance with guidelines established by the SEC.

Proved oil and gas reserves are the estimated quantities of crude oil and natural gas which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions (i.e., prices and costs as of the date the estimate is made). Proved developed oil and gas reserves are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. A variety of methodoligies are used to determine our proved reserve estimates. The primary methodologies used are decline curve analysis, advance production type curve matching, petro physics/log analysis and analogy. Some combination of these methods is used to determine reserve estimates across substantially all our properties. Reserve estimates are inherently imprecise, and estimates of undeveloped locations are more imprecise than estimates of established proved producing locations. Accordingly, our reserve estimates are expected to change as future information becomes available. The Predecessor's proved reserves are located entirely within the United States.

Proved oil and natural gas reserves were calculated based on the prices for oil and natural gas during the 12-month period before the reporting date, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period. This average price is also used in

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Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements (Continued)

December 31, 2015 and 2014

Note 12—Supplemental Oil and Natural Gas Disclosures (Unaudited) (Continued)

calculating the aggregate amount and changes in future cash inflows related to the standardized measure of discounted future cash flows. In addition, the SEC generally requires that reserves classified as proved undeveloped be capable of conversion into proved developed within five years of classification unless specific circumstances justify a longer time. The Predecessor's development plans at December 31, 2015 related to scheduled drilling over the next five years are subject to many uncertainties and variables, including availability of capital, future oil and natural gas prices, cash flows from operations, future drilling costs, demand for oil and natural gas and other economic factors. See "Business—Oil and Natural Gas Data—Proved Reserves—Summary of Reserves" for additional information regarding the Predecessor's proved developed reserves and PUD development.

The following table sets forth information regarding the Predecessor's estimated net total proved and proved developed oil and gas reserve quantities:



Proved reserves:
Balance December 31, 2013	—		—		—		—
Acquisitions of reserves	837		707		109		1,064
Extensions, discoveries and other additions	1,270		1,094		291		1,744
Revisions of previous estimates	—		—		—		—
Sales of reserves	—		—		—		—
Production	(189	)	(172	)	(35	)	(253	)

Balance December 31, 2014	1,918		1,629		365		2,555
Acquisitions of reserves	—		—		—		—
Extensions, discoveries and other additions	8,734		4,906		1,226		10,778
Revisions of previous estimates	559		26		(11	)	552
Sales of reserves	—		—		—		—
Production	(718	)	(404	)	(89	)	(874	)

Balance December 31, 2015	10,493		6,157		1,491		13,011



Proved developed reserves:
December 31, 2013	—		—		—		—
December 31, 2014	1,529		1,319		288		2,037
December 31, 2015	4,848		2,547		621		5,894
Proved undeveloped reserves:
December 31, 2013	—		—		—		—
December 31, 2014	389		310		77		518
December 31, 2015	5,645		3,610		870		7,117

Estimated proved reserves at December 31, 2015 were 13.0 MMBoe, compared to 2.6 MMBoe at December 31, 2014. The increase in proved reserves during 2015 was primarily related to the Predecessor's drilling activities. During 2015, the Predecessor drilled and completed seven wells and added nine PUD locations, leading to a combined increase of 10.8 MMBoe of extensions and

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Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements (Continued)

December 31, 2015 and 2014

Note 12—Supplemental Oil and Natural Gas Disclosures (Unaudited) (Continued)

discoveries. The Predecessor also had 0.6 MMBoe of upward revisions of prior reserve estimates due to increased performance from the Predecessor's wells, partially offset by negative impacts from the decline in average oil and natural gas pricing between periods.

Estimated proved reserves at December 31, 2014 were 2.6 MMBoe, and at December 31, 2013, the Predecessor had not yet recorded proved reserves. The proved reserve quantities for the year ended December 31, 2014 were partly due to the Predecessor's acquisition of 28 producing wells in two separate transactions (see Note 4 to the Consolidated Financial Statements) and partly due to the Predecessor's operated drilling program. The Predecessor completed an additional 5 wells during 2014, 4 of which were drilled by the Predecessor, which added 1.1 MMBOE of proved developed reserves. The Predecessor also added an additional 0.6 MMBOE from one PUD location added during 2014.

Standardized Measure of Discounted Future Net Cash Flows

The standardized measure is calculated using pricing required by the SEC, as explained above, using NYMEX WTI posted prices for oil and natural gas liquids and NYMEX Henry Hub prices for natural gas. For the years ended December 31, 2015 and 2014, benchmark prices used were SEC prices of $50.28 per Bbl and $94.99 per Bbl, respectively, for oil and $2.58 per MMBtu and $4.35 per MMBtu, respectively, for natural gas. For oil and natural gas liquids volumes, the benchmark WTI posted price is adjusted for quality, transportation fees and regional price differentials. For gas volumes, the Henry Hub spot price is adjusted for energy content, transportation fees and regional price differentials.

The assumptions used to calculate estimated future cash inflows do not necessarily reflect the Predecessor's expectations of actual revenues or costs, nor their present worth. In addition, variations from the expected production rate also could result directly or indirectly from factors outside of the Predecessor's control, such as unexpected delays in development, changes in prices or regulatory or environmental policies. The reserve valuation further assumes that all reserves will be disposed of by production. If reserves are sold in place, additional economic considerations could also affect the amount of cash eventually realized.

Future development and production costs are calculated by estimating the expenditures to be incurred in developing and producing the proved oil and gas reserves at the end of the year, based on year-end costs and assuming continuation of existing economic conditions.

A 10% annual discount rate was used to reflect the timing of the future net cash flows relating to proved oil and gas reserves. As a limited liability company, the Predecessor is a pass through entity for tax purposes. The effect of future net income taxes has been excluded from the standardized measure of discounted future net cash flows as the Predecessor is not subject to federal income taxes. The Predecessor is, however, subject to the Texas franchise tax, which is an entity-level tax at a statutory rate of up to 1.0% of a portion of gross revenue apportioned to Texas.

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Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements (Continued)

December 31, 2015 and 2014

Note 12—Supplemental Oil and Natural Gas Disclosures (Unaudited) (Continued)

The following table presents the standardized measure of discounted net cash flows related to proved oil and gas reserves for the periods indicated:

	Year ended December 31,

	2015			2014
	(in thousands)
Future cash inflows	$	524,538		$	180,425
Future production costs		(146,779	)		(53,560	)
Future development costs		(90,661	)		(9,519	)
Future tax expense		(3,467	)		(1,201	)

Future net cash flows		283,631			116,145
10% annual discount		(151,910	)		(51,279	)

Standardized measure of discounted future net cash flows	$	131,721		$	64,866

The present value (at a 10% annual discount) of future net cash flows from the Predecessor's proved reserves is not necessarily the same as the current market value of its estimated oil and natural gas reserves. The Predecessor bases the estimated discounted future net cash flows from its proved reserves on prices and costs in effect on the day of estimate in accordance with the applicable accounting guidance. Actual future net cash flows from the Predecessor's oil and natural gas properties will also be affected by factors such as actual prices the Predecessor receives for oil and natural gas, the amount and timing of actual production, supply of and demand for oil and natural gas and changes in governmental regulations or taxation.

The timing of both the Predecessor's production and incurrence of expenses in connection with the development and production of oil and natural gas properties will affect the timing of actual future net cash flows from proved reserves, and thus their actual present value. In addition, the 10% annual discount factor the Predecessor uses when calculating discounted future net cash flows may not be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with the Predecessor or the oil and natural gas industry in general.

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Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Consolidated Financial Statements (Continued)

December 31, 2015 and 2014

Note 12—Supplemental Oil and Natural Gas Disclosures (Unaudited) (Continued)

A summary of changes in the standardized measure of discounted future net cash flows is as follows:

	Year ended December 31,

	2015			2014
	(in thousands)
Standardized measure of discounted future net cash flows, beginning of period	$	64,866		$	—
Sales of oil and natural gas, net of production costs and taxes		(28,264	)		(13,197	)
Extensions, discoveries and improved recovery, less related costs		118,532			51,089
Revisions of previous quantity estimates		5,187			—
Net changes in prices and production costs		(41,264	)		—
Previously estimated development costs incurred during the period		34			—
Changes in estimated future development costs		1,898			—
Accretion of discount		6,552			—
Acquisitions of reserves		—			27,626
Sales of reserves		—			—
Net change in taxes		(1,042	)		(652	)
Changes in production rates (timing) and other		5,222			—

Standardized measure of discounted future net cash flows, end of period	$	131,721		$	64,866

Note 13—Subsequent Events

On July 20, 2016, the Predecessor acquired, from an unrelated third party, certain oil and gas properties located in Ward County, Texas for approximately $6.3 million in cash. Additional post-closing adjustments may be required.

The Predecessor entered into two drilling rig contracts, effective July 1, 2016 and August 1, 2016, respectively. Each drilling rig contract's term ends December 31, 2017. These contracts can be terminated at any time provided the Predecessor pays a demobilization fee of $0.1 million and a daily rate of approximately $12,000 for up to 90 days after giving notice of termination.

On September 30, 2016, the Predecessor entered into a third amendment to its credit facility. The borrowing base was increased to $160 million. Total fees paid for the September borrowing base increase were $0.3 million and will be amortized over the remaining term of the credit facility. As of September 30, 2016, outstanding borrowings under the credit facility were $90 million.

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JAGGED PEAK ENERGY LLC

(PREDECESSOR)

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands)

	September 30, 2016			December 31, 2015

*ASSETS*
CURRENT ASSETS
Cash and cash equivalents	$	5,420		$	14,165
Accounts receivable		7,818			8,005
Commodity derivative assets		201			—
Other current assets		2,416			504

Total current assets		15,855			22,674

PROPERTY, PLANT AND EQUIPMENT
Oil and natural gas properties, successful efforts method		460,569			333,067
Accumulated depreciation, depletion and amortization		(58,984	)		(30,341	)

Total oil and gas properties		401,585			302,726
Other property and equipment, net		2,921			1,663

Total property, plant and equipment		404,506			304,389

NONCURRENT ASSETS
Unamortized debt issuance costs		1,408			542
Commodity derivative assets		39			—
Other assets		14,828			127

Total other assets		16,275			669

TOTAL ASSETS	$	436,636		$	327,732



*LIABILITIES AND MEMBERS' EQUITY*
CURRENT LIABILITIES
Accounts payable	$	7,055		$	2,452
Accrued liabilities		23,715			20,171
Commodity derivative liabilities		4,860			—

Total current liabilities		35,630			22,623
LONG-TERM LIABILITIES
Senior secured revolving credit facility		90,000			20,000
Commodity derivative liabilities		2,429			—
Asset retirement obligations		380			490
Other long-term liabilities		167			289

Total non-current liabilities		92,976			20,779
MEMBERS' EQUITY
Common units		326,098			294,556
Accumulated defecit		(18,068	)		(10,226	)

Total members' equity		308,030			284,330
TOTAL LIABILITIES AND MEMBERS' EQUITY	$	436,636		$	327,732

The accompanying notes are an integral part of these condensed consolidated financial statements.

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JAGGED PEAK ENERGY LLC

(PREDECESSOR)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands)

	Nine Months Ended September 30,

	2016			2015
REVENUES
Oil sales	$	47,215		$	21,445
Natural gas sales		1,450			690
NGL sales		2,023			848
Other operating revenues		693			10

Total revenues		51,381			22,993

OPERATING EXPENSES
Lease operating expenses		5,221			2,357
Gathering and transportation expenses		662			98
Production and ad valorem taxes		3,173			1,588
Depletion, depreciation, amortization and accretion		29,430			14,488
Impairment of oil and natural gas properties and dry hole cost		1,509			7
Other operating expenses		1,671			257
General and administrative		7,878			5,906

Total operating expenses		49,544			24,701

INCOME (LOSS) FROM OPERATIONS		1,837			(1,708	)

OTHER INCOME(EXPENSE)
(Loss) gain on commodity derivatives		(8,208	)		1,086
Interest expense and other		(1,471	)		(77	)

Total other (expense) income		(9,679	)		1,009

NET LOSS	$	(7,842	)	$	(699	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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JAGGED PEAK ENERGY LLC

(PREDECESSOR)

CONDENSED CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY

(Unaudited)

(in thousands)

	Common Units		Accumulated Defecit			Total Members' Equity

BALANCE AT DECEMBER 31, 2015	$	294,556	$	(10,226	)	$	284,330
Capital contributions		31,542		—			31,542
Net loss		—		(7,842	)		(7,842	)

BALANCE AT SEPTEMBER 30, 2016	$	326,098	$	(18,068	)	$	308,030

The accompanying notes are an integral part of these condensed consolidated financial statements.

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JAGGED PEAK ENERGY LLC

(PREDECESSOR)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	Nine Months Ended September 30,

	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(7,842	)	$	(699	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depletion, depreciation, amortization and accretion		29,430			14,488
Management incentive advance		(14,712	)		—
Impairment of oil and natural gas properties and dry hole cost		1,509			7
Amortization of debt issuance costs		164			30
Loss (gain) on derivative assets		8,208			(1,086	)
Net cash (payments) receipts on settled derivatives		(1,159	)		4,127
Other		(120	)		(116	)
Change in operating assets and liabilities:
Accounts receivable and other current assets		(735	)		(3,933	)
Other assets		11			22
Accounts payable and accrued liabilities		1,878			(935	)

Net cash used in operating activities		16,632			11,905

CASH FLOWS FROM INVESTING ACTIVITIES:
Development of oil and natural gas properties		(84,809	)		(72,198	)
Leasehold and acquisition costs		(39,344	)		(8,356	)
Other capital expenditures		(1,831	)		(204	)
Proceeds from sale of oil and natural gas properties		—			440

Net cash used in investing activities		(125,984	)		(80,318	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility		70,000			10,000
Proceeds from common units issued		31,542			38,000
Deferred offering costs		95
Debt issuance costs		(1,030	)		(552	)

Net cash provided by financing activities		100,607			47,448

NET CHANGE IN CASH AND CASH EQUIVALENTS		(8,745	)		(20,965	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		14,165			33,628

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	5,420		$	12,663



SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid, net of capitalized interest	$	1,189		$	53
Cash paid for income taxes		—			—
SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITY:
Asset retirement obligations	$	(165	)	$	43
Accrued capital expenditures		22,906			16,426
Accrued deferred offering costs		1,086			—

The accompanying notes are an integral part of these condensed consolidated financial statements.

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JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Condensed Consolidated Financial Statements

September 30, 2016

(Unaudited)

Note 1—Organization, Operations and Basis of Presentation

Organization and Operations

Jagged Peak Energy LLC (together with its subsidiaries, the "Predecessor"), a Delaware limited liability company, is a growth-oriented, independent oil and natural gas company focused on the acquisition and development of unconventional oil and associated liquids-rich natural gas reserves in the Delaware Basin, a sub-basin of the Permian Basin of West Texas. The Predecessor's acreage is located on large, contiguous blocks in the adjacent counties of Winkler, Ward, Reeves and Pecos, with significant oil-in-place within multiple stacked hydrocarbon-bearing formations. The Predecessor was formed by an affiliate of Quantum Energy Partners ("Quantum"), a leading energy private equity firm, and key members of the Predecessor's management team.

On September 20, 2016, the Predecessor formed Jagged Peak Energy Inc. (the "Company"), a Delaware corporation, as its wholly owned subsidiary. The Company was formed to become the holding company of the Predecessor in connection with the Company's initial public offering ("IPO"). The Company has no prior operating activities.

Pursuant to the terms of a corporate reorganization (the "Corporate Reorganization") that will be completed prior to the closing of the IPO, the Company will acquire, directly or indirectly, all of the membership interests in the Predecessor in exchange for the issuance to the Predecessor's existing owners of all of the Company's issued and outstanding shares of common stock (prior to the issuance of shares of common stock in the IPO). As a result of these transactions, the Predecessor will become the Company's direct, wholly owned subsidiary.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). They reflect all adjustments that are, in the opinion of management, necessary for a fair statement of results of the interim periods, on a basis consistent with the audited annual financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation of interim financial information, have been included. Operating results for the periods presented are not necessarily indicative of expected results for the full year. Certain prior period amounts have been reclassified to conform to the current presentation on the accompanying unaudited condensed consolidated financial statements.

Note 2—Significant Accounting Policies and Related Matters

Significant Accounting Policies

Deferred Offering Costs. In conjunction with a possible IPO or Corporate Reorganization, incremental costs directly related to the IPO are capitalized as deferred offering costs within other current assets until the common shares are issued or the potential offering is terminated. Upon issuance of common shares, these costs will be offset against the proceeds received. If the IPO does not occur, they will be expensed.

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Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Condensed Consolidated Financial Statements (Continued)

September 30, 2016

(Unaudited)

Note 2—Significant Accounting Policies and Related Matters (Continued)

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting periods. Actual results could differ from those estimates. For a complete description of the Predecessor's significant accounting policies, recent accounting pronouncements and critical estimates, see "Note 1—Organization, Operations and Basis of Presentation" in the Predecessor's consolidated financial statements for the year ended December 31, 2015.

Note 3—Acquisitions and Divestitures

July 20, 2016 Oil and Natural Gas Property Acquisition

On July 20, 2016, the Predecessor acquired, from an unrelated third party, certain oil and gas properties located in Ward County, Texas for an adjusted purchase price of approximately $6.2 million. The acquisition contributed $0.3 million of revenue to the Predecessor for the nine months ended September 30, 2016. The acquisition was accounted for using the acquisition method under Accounting Standards Codification ("ASC") Topic 805, " Business Combinations," which requires the acquired assets and liabilities to be recorded at fair values as of the acquisition date.

The following table summarizes the preliminary purchase price and the preliminary estimated values of assets acquired and liabilities assumed (in thousands):


Preliminary purchase price:
Cash			$	6,206

Total consideration given			$	6,206



Preliminary fair value allocation of purchase price:
Oil and natural gas properties:
Proved properties	$	6,220
Unproved properties		—

Total oil and natural gas properties			$	6,220
Asset retirement obligation assumed				(14	)

Total consideration and fair value			$	6,206

The following unaudited pro forma financial information represents the combined results for the Predecessor and the properties acquired for the nine months ended September 30, 2016 and 2015 as if the acquisition had occurred on January 1, 2015. The following pro forma results include the operating

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Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Condensed Consolidated Financial Statements (Continued)

September 30, 2016

(Unaudited)

Note 3—Acquisitions and Divestitures (Continued)

revenues and net income for the acquired properties for the nine months ended September 30, 2016 and 2015 (in thousands):

	Nine Months Ended September 30,

	2016			2015
Operating revenues	$	51,515		$	24,753

Net income	$	(7,465	)	$	482

Note 4—Property and Equipment

	September 30, 2016			December 31, 2015

Oil and natural gas properties:
Proved oil and natural gas properties	$	314,383		$	204,154
Unproved oil and natural gas properties		146,186			128,913

Total oil and natural gas properties		460,569			333,067
Less: Accumulated depletion		(58,984	)		(30,341	)

Total oil and natural gas properties, net		401,585			302,726

Other property and equipment		4,330			2,491
Less: Accumulated depreciation		(1,409	)		(828	)

Total other property and equipment, net		2,921			1,663

Total property, plant and equipment, net	$	404,506		$	304,389

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Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Condensed Consolidated Financial Statements (Continued)

September 30, 2016

(Unaudited)

Note 4—Property and Equipment (Continued)

properties are assessed at least annually to determine whether they have been impaired and more frequently when industry conditions dictate an impairment may be possible. An impairment allowance is provided on an unproved property when the Predecessor determines that the property will not be developed.

For the nine months ended September 30, 2016, the Predecessor recorded an impairment of $0.3 million due to unproved property leases that expired during the period and incurred dry hole costs of $1.1 million related to a vertical test well drilled to an unproductive shallow horizon. The Predecessor did not record impairments of proved properties for the nine months ended September 30, 2016 and September 30, 2015.

Impairment and dry hole costs are presented in the unaudited condensed consolidated statements of operations within "Impairment of oil and natural gas properties and dry hole cost."

Note 5—Asset Retirement Obligations

The following table summarizes the changes in asset retirement obligations for the nine months ended September 30, 2016 (in thousands):


Balance, December 31, 2015	$	608
Liabilities incurred and assumed		62
Liabilities settled upon plugging and abandoning wells		(113	)
Revisions to estimated cash flows(1)		(213	)
Liabilities eliminated through asset sale		(6	)
Accretion		42

Balance, September 30, 2016		380
Less current portion of obligations		—

Noncurrent asset retirement obligations	$	380

(1): Revisions in estimated cash flows during the nine months ended September 30, 2016 are primarily attributable to decreased estimates of future costs for oil field goods and services required to plug and abandon wells.

Any asset retirement obligation classified as current is included in accrued liabilities on the condensed consolidated balance sheet. At September 30, 2016, all asset retirement obligations were classified as noncurrent.

Note 6—Commodity Derivative Instruments

The Predecessor hedges a portion of its crude oil sales using fixed price swap agreements based on futures price contracts for WTI crude oil. The Predecessor has not designated its commodity derivative contracts as hedging instruments for financial reporting purposes. Accordingly, commodity derivative

F-39

Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Condensed Consolidated Financial Statements (Continued)

September 30, 2016

(Unaudited)

Note 6—Commodity Derivative Instruments (Continued)

contracts are marked to market each quarter, with the change in fair value during the reporting period recognized currently as a gain or loss in "Gain (loss) on commodity derivatives" in the unaudited condensed consolidated statements of operations. The Predecessor estimates the fair value using risk adjusted discounted cash flow calculations. Cash flows are based on published futures commodity price curves for the underlying commodity as of the date of the estimate. Due to the volatility of commodity prices, the estimated fair values of the Predecessor's derivative instruments are subject to fluctuation from period to period, which could result in significant differences between the current estimated fair value and the ultimate settlement price.

At December 31, 2015, the Predecessor was not party to any commodity derivatives for future periods.

The following table summarizes the approximate volumes and average contract prices of swap contracts in place as of September 30, 2016 expiring during the periods indicated:

	Three Months Ended December 31, 2016		Year Ended December 31, 2017		Year Ended December 31, 2018

Notional volume (Bbl)		293,575		870,000		475,700
Weighted average floor price ($/Bbl)(1)	$	45.39	$	45.81	$	50.66

(1): Derivative prices are based on NYMEX oil prices. The prices we receive are affected by quality, energy content, location, and transportation differentials.

The Predecessor has agreements in place with all counterparties that allow for the financial right of offset for derivative assets and derivative liabilities at settlement or in the event of a default under the agreements. Although these agreements are in place, the derivative assets and liabilities in the Predecessor's condensed consolidated balance sheets are shown without effect of counterparty netting arrangements.

Gains and losses on derivatives are reported in the consolidated statements of operations. The following table presents the Predecessor's gains and losses on derivative instruments (in thousands):

	Nine Months Ended September 30,

	2016
Beginning fair value of commodity derivatives	$	—
(Loss) gain on commodity derivatives(1)		(8,208	)
Commodity derivative cash settlements paid (received)		1,159

Ending fair value of commodity derivatives	$	(7,049	)

(1): Realized and unrealized (Loss) gain on commodity derivatives is recorded in the Other Income (Expense) section of the Condensed Consolidated Statements of Operations.

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Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Condensed Consolidated Financial Statements (Continued)

September 30, 2016

(Unaudited)

Note 6—Commodity Derivative Instruments (Continued)

Note 7—Fair Value Measurements

The Predecessor has categorized its assets and liabilities measured at fair value, based on the priority of inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets or identical assets of liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

Assets and liabilities recorded at fair value on the consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:

Level 1—Assets and liabilities recorded at fair value for which unadjusted quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, listed securities and U.S. government treasury securities.

Level 2—Assets and liabilities recorded at fair value for which pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry standard models that consider various assumptions, including quoted prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in the category include nonexchange-traded derivatives such as over-the-counter forwards, swaps and options.

Level 3—Assets and liabilities recorded at fair value using include pricing inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management's best estimate of fair value, and the Predecessor does not have sufficient corroborating market evidence to support classifying these assets and liabilities as Level 2.

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Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Condensed Consolidated Financial Statements (Continued)

September 30, 2016

(Unaudited)

Note 7—Fair Value Measurements (Continued)

Fair Value Measurement on a Recurring Basis

The following table is a listing of the Predecessor's assets and liabilities that are measured at fair value on a recurring basis and where they were classified within the fair value hierarchy as of September 30, 2016 (in thousands):

As of September 30, 2016	Level 1		Level 2		Level 3		Total

Assets:
Commodity derivative instruments	$	—	$	240	$	—	$	240
Liabilities:
Commodity derivative instruments	$	—	$	7,289	$	—	$	7,289

The assets and liabilities are categorized within the above fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. There were no transfers between Level 1, Level 2 or Level 3 during any period presented. The Predecessor had no financial assets or liabilities measured at fair value on a recurring basis as of December 31, 2015.

Fair Value of Other Financial Instruments

The book values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value due to the short-term nature of these instruments. The book value of the Predecessor's credit facility approximates fair value as the variable interest rates are reflective of current market conditions.

Assets and Liabilities Measured on a Nonrecurring Basis

Acquired assets and liabilities are recorded at fair value as of the acquisition date. The valuation techniques that may be used to fair value acquisitions include either the income approach or the market approach. The Predecessor reviews its proved oil and natural gas properties for impairment when events and circumstances indicate a possible decline in the recoverability of the carrying amount of such property. In such circumstances, the income approach is used to determine the fair value of proved oil and natural gas reserves. The income approach uses a discounted cash flow model based on market assumptions as to future commodity prices, projections of estimated quantities of oil and natural gas reserves, expectations for timing and amount of future development and operating costs, projections of future rates of production, expected recovery rates and risk adjusted discount rates. Given the unobservable nature of the inputs, nonrecurring measurements of business combinations using the income approach are deemed to be classified within Level 3 inputs. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable asserts or liabilities.

Unproved oil and natural gas property costs are evaluated for impairment and reduced to fair value when there is an indication that the carrying costs may not be recoverable. To measure the fair

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Table of Contents

JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Condensed Consolidated Financial Statements (Continued)

September 30, 2016

(Unaudited)

Note 7—Fair Value Measurements (Continued)

value of the unproved properties, the Predecessor uses a market approach, which takes into account future development plans, remaining lease term, drilling results, and reservoir performance.

Additionally, the Predecessor uses fair value to determine the inception value of its asset retirement obligations. The inputs used to determine such fair value are based primarily on the present value of estimated future cash inflows and outflows. Given the unobservable nature of these inputs, they are generally classified within Level 3.

Note 8—Debt Obligations

At December 31, 2015, the Predecessor had a $35.0 million borrowing base with $20.0 million outstanding and $15.0 million available on the credit facility.

The credit facility has two scheduled borrowing base redeterminations per year. The Predecessor has the option to request up to two additional quarterly redeterminations per year. Future borrowing bases will be computed based on proved oil and natural gas reserves, hedge positions and estimated future cash flows from those reserves (as governed in the credit agreement), as well as any other outstanding debt.

The credit facility is secured by oil and natural gas properties representing at least 80% of the value of the Predecessor's proved reserves. The credit facility contains certain covenants, including among others, restrictions on indebtedness, restrictions on liens, restrictions on investments, restrictions on mergers, restrictions on sales of assets, restrictions on dividends and payments to the Predecessor's capital interest holders, restrictions on the level of cash balances and restrictions on the Predecessor's hedging activity. The financial covenants require the Predecessor to maintain a current ratio (as defined) of at least 1.0 to 1.0 and a leverage ratio (as defined) not greater than 4.0 to 1.0. The Predecessor was in compliance with the financial covenants as of September 30, 2016.

On April 26, 2016, the Predecessor entered into an amendment of its credit facility that increased the borrowing base from $35.0 million to $65.0 million and increased the number of lenders from one bank to five banks. Additionally, as a result of the amendment, the prime rate and federal funds rate, which vary based on the utilization percentage of the credit facility, were adjusted to 1.5% to 2.5% for base rate loans and 2.5% to 3.5% for LIBOR loans. The commitment fee rate was set to 0.5% for all utilization levels of the credit facility.

On June 29, 2016, the Predecessor entered into an amendment that increased the borrowing base on the credit facility to $100.0 million.

On September 30, 2016, the Predecessor entered into an amendment that increased the credit facility borrowing base from $100.0 million to $160.0 million. As of September 30, 2016, the

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JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Condensed Consolidated Financial Statements (Continued)

September 30, 2016

(Unaudited)

Note 8—Debt Obligations (Continued)

outstanding borrowings under the credit facility were $90.0 million resulting in $70.0 million in borrowing capacity under the credit facility.

The Predecessor capitalized $0.09 million and $0.01 million of interest during the nine months ended September 30, 2016 and September 30, 2015, respectively.

Note 9—Members' Equity

Capital Interests

The Predecessor is a limited liability company with capital interests owned by Quantum and certain officers of the Predecessor. The total capital commitment from all Jagged Peak Energy LLC capital members is $405.9 million, with Quantum representing 98.55% of the total capital commitment. Capital interests in the Predecessor consist of a single class of units, which receive an internal rate of return threshold of 8% prior to distributions to any other class of equity interests.

Management Incentive Units

The Predecessor has established an Incentive Pool Plan, whereby the Predecessor may grant Management Incentive Units ("MIUs") to employees or selected other participants. The MIUs are considered "profits interests" that participate in certain events whereupon distributions are made to MIU holders (only after certain return thresholds are achieved by the capital interests) following a qualifying initial public offering, sale, merger, or other qualifying transaction involving the stock or assets of the Predecessor ("Vesting Event"). The MIUs have no voting rights and partially vest over four years with the remainder vesting upon a Vesting Event. Prior to a Vesting Event, vested units will be forfeited if an incentive unit holder's employment is terminated for cause or if the unit holder terminates his or her employment. Compensation expense for the MIUs will be recognized when all performance, market and service conditions are probable of being satisfied, which is generally upon a Vesting Event.

On March 25, 2016, the Predecessor and certain MIU holders employed by the Predecessor on April 1, 2016 ("MIU advance recipients") entered into the First Amendment to the Limited Liability Company Agreement (the "Distribution Agreement") under which the Predecessor made a $14.7 million cash advance to MIU advance recipients during April 2016. Under the terms of the Distribution Agreement, the distribution will be treated as an advance and will dollar for dollar offset distributions otherwise payable to MIU advance recipients. If a MIU advance recipient's business relationship with the Predecessor is terminated prior to the MIU advance being fully offset by subsequent distributions, the MIU advance recipient will have to return the MIU advance less reasonable taxes paid. The MIU advance is deferred as a long-term asset within other assets, and will be reviewed for recoverability at each reporting period or when changes in circumstances indicate the asset may no longer be recoverable, such as when a MIU advance recipient terminates employment with the Predecessor. Compensation expense will be recognized if the MIU advance asset is no longer recoverable or upon the occurrence of a Vesting Event.

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JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Condensed Consolidated Financial Statements (Continued)

September 30, 2016

(Unaudited)

Note 9—Members' Equity (Continued)

As of September 30, 2016 and December 31, 2015, 2,392,813 and 2,350,000 MIUs, respectively, were outstanding from the total pool of 2,600,000 authorized MIUs.

Contributions and Distributions

Capital calls approved by the board of directors are funded on a pro rata basis by all of the capital members. During the nine months ended September 30, 2016 and September 30, 2015, the Predecessor received $31.5 million and $38.0 million, respectively, of capital contributions from its capital members to fund acquisitions, operations and the MIU advance. As of September 30, 2016, the capital members of the Predecessor had remaining capital commitments of approximately $79.8 million.

Note 10—Related Party Transactions

During the nine months ended September 30, 2016, the Predecessor paid aggregate fees of $0.6 million, $0.3 million and $2.1 million to Trident, Phoenix and Oryx, respectively. During the nine months ended September 30, 2015, the Predecessor paid aggregate fees of $0.4 million, $0.3 million and $0.4 million to Trident, Phoenix and Oryx, respectively.

Trident provides water transfer services to the Predecessor and Phoenix rents certain equipment to the Predecessor. The Predecessor is under no obligation to use either provider, and both provide services only when selected as a vendor in the Predecessor's normal bidding process. Oryx provides the Predecessor crude oil gathering services and sells related equipment and maintenance services to the Predecessor. The crude oil gathering services provided by Oryx are pursuant to a 12-year crude oil gathering agreement.

Note 11—Commitments and Contingencies

Contractual Obligations

As of September 30, 2016, the Predecessor had drilling commitments on three rigs. In the event of early termination, the Predecessor would be obligated to pay up to $3.6 million as of September 30, 2016, as required under the terms of the contracts. In May 2016, the Predecessor provided notice to terminate one of its drilling rigs and incurred an early termination charge of approximately $0.2 million. This amount was recorded in the condensed consolidated statements of operations within the other operating expenses line item.

There have been no other material changes in its contractual commitments and obligations from amounts listed under "Note 10—Commitments and Contingencies" in the Predecessor's consolidated financial statements for the year ended December 31, 2015.

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JAGGED PEAK ENERGY LLC

(PREDECESSOR)

Notes to Condensed Consolidated Financial Statements (Continued)

September 30, 2016

(Unaudited)

Note 12—Income Taxes

The Predecessor is treated as a partnership for federal and state income tax purposes, with each partner taxed separately on its allocated share of the Predecessor's taxable income. Accordingly, the accompanying consolidated financial statements do not include a provision or liability for federal income taxes. The Predecessor's operations in Texas are subject to an entity-level tax, the Texas franchise tax, at a statutory rate of up to 1.0% of a portion of gross revenues apportioned to Texas. The Predecessor did not have taxable net income for purposes of calculating Texas franchise tax for the nine months ended September 30, 2016 and September 30, 2015. As of September 30, 2016 and December 31, 2015, the Predecessor did not have a franchise tax liability.

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ANNEX A

GLOSSARY OF OIL AND NATURAL GAS TERMS

The following are abbreviations and definitions of certain terms used in this document, which are commonly used in the oil and natural gas industry:

3-D seismic. Geophysical data that depict the subsurface strata in three dimensions. 3-D seismic typically provides a more detailed and accurate interpretation of the subsurface strata than 2-D, or two-dimensional, seismic.

Analogous reservoir. Analogous reservoirs, as used in resources assessments, have similar rock and fluid properties, reservoir conditions (depth, temperature and pressure) and drive mechanisms, but are typically at a more advanced stage of development than the reservoir of interest and thus may provide concepts to assist in the interpretation of more limited data and estimation of recovery. When used to support proved reserves, an analogous reservoir refers to a reservoir that shares the following characteristics with the reservoir of interest: (i) same geological formation (but not necessarily in pressure communication with the reservoir of interest); (ii) same environment of deposition; (iii) similar geological structure; and (iv) same drive mechanism. For a complete definition of analogous reservoir, refer to the SEC's Regulation S-X, Rule 4-10(a)(2).

Basin. A large natural depression on the earth's surface in which sediments generally brought by water accumulate.

Bbl. One stock tank barrel of 42 U.S. gallons liquid volume used herein in reference to crude oil, condensate or NGLs.

Bcf. One billion cubic feet of natural gas.

Boe. 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. This is an energy content correlation and does not reflect a value or price relationship between the commodities.

Boe/d. One Boe per day.

British thermal unit or Btu . The quantity of heat required to raise the temperature of a one-pound mass of water from 58.5 to 59.5 degrees Fahrenheit.

Completion. Preparation of a well bore and installation of permanent equipment for production of oil, natural gas or NGLs or, in the case of a dry well, reporting to the appropriate authority that the well has been abandoned.

Condensate. A mixture of hydrocarbons that exists in the gaseous phase at original reservoir temperature and pressure, but that, when produced, is in the liquid phase at surface pressure and temperature.

Delineation. The process of placing a number of wells in various parts of a reservoir to determine its boundaries and production characteristics.

Developed acreage. The number of acres that are allocated or assignable to productive wells or wells capable of production.

Development costs. Costs incurred to obtain access to proved reserves and to provide facilities for extracting, treating, gathering and storing the oil and natural gas. For a complete definition of development costs, refer to the SEC's Regulation S-X, Rule 4-10(a)(7).

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Development project. The means by which petroleum resources are brought to the status of economically producible. As examples, the development of a single reservoir or field, an incremental development in a producing field or the integrated development of a group of several fields and associated facilities with a common ownership may constitute a development project.

Development well. A well drilled within the proved area of an oil or natural gas reservoir to the depth of a stratigraphic horizon known to be productive.

Differential. An adjustment to the price of oil or natural gas from an established spot market price to reflect differences in the quality and/or location of oil or natural gas.

Dry well. A well found to be incapable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of such production exceed production expenses and taxes.

Economically producible. The term economically producible, as it relates to a resource, means a resource which generates revenue that exceeds, or is reasonably expected to exceed, the costs of the operation. For a complete definition of economically producible, refer to the SEC's Regulation S-X, Rule 4-10(a)(10).

Estimated ultimate recovery or EUR . The sum of reserves remaining as of a given date and cumulative production as of that date.

Exploration costs. Costs incurred in identifying areas that may warrant examination and in examining specific areas that are considered to have prospects of containing oil and natural gas reserves, including costs of drilling exploratory wells and exploratory-type stratigraphic test wells. For a complete definition of exploration costs, refer to the SEC's Regulation S-X, Rule 4-10(a)(12).

Exploratory well. A well drilled to find a new field or to find a new reservoir in a field previously found to be productive of oil or natural gas in another reservoir.

Field. An area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations. For a complete definition of field, refer to the SEC's Regulation S-X, Rule 4-10(a)(15).

Formation. A layer of rock which has distinct characteristics that differs from nearby rock.

Gross acres or gross wells . The total acres or wells, as the case may be, in which a working interest is owned.

Held by production. Acreage covered by a mineral lease that perpetuates a company's right to operate a property as long as the property produces a minimum paying quantity of oil or natural gas.

Horizontal drilling. A drilling technique used in certain formations where a well is drilled vertically to a certain depth and then drilled at a right angle within a specified interval.

MBbl. One thousand barrels of crude oil, condensate or NGLs.

MBoe. One thousand Boe.

Mcf. One thousand cubic feet of natural gas.

Mcf/d. One Mcf per day.

MMBbl. One million barrels of crude oil, condensate or NGLs.

MMBoe. One million Boe.

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MMBtu. One million British thermal units.

MMcf. One million cubic feet of natural gas.

Net acres. The percentage of total acres an owner has out of a particular number of acres, or a specified tract. An owner who has 50% interest in 100 acres owns 50 net acres.

Net production. Production that is owned by us less royalties and production due to others.

Net revenue interest. A working interest owner's gross working interest in production less the royalty, overriding royalty, production payment and net profits interests.

NGLs. Natural gas liquids. Hydrocarbons found in natural gas which may be extracted as liquefied petroleum gas and natural gasoline.

NYMEX. The New York Mercantile Exchange.

Offset operator. Any entity that has an active lease on an adjoining property for oil, natural gas or NGLs purposes.

Operator. The individual or company responsible for the development and/or production of an oil or natural gas well or lease.

Play. A geographic area with hydrocarbon potential.

Production costs. Costs incurred to operate and maintain wells and related equipment and facilities, including depreciation and applicable operating costs of support equipment and facilities and other costs of operating and maintaining those wells and related equipment and facilities. For a complete definition of production costs, refer to the SEC's Regulation S-X, Rule 4-10(a)(20).

Productive well. A well that is found to be capable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of the production exceed production expenses and taxes.

Proration unit. A unit that can be effectively and efficiently drained by one well, as allocated by a governmental agency having regulatory jurisdiction.

Prospect. A specific geographic area which, based on supporting geological, geophysical or other data and also preliminary economic analysis using reasonably anticipated prices and costs, is deemed to have potential for the discovery of commercial hydrocarbons.

Proved area. The part of a property to which proved reserves have been specifically attributed.

Proved developed reserves. Reserves that can be expected to be recovered through (i) existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared with the cost of a new well or (ii) through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.

Proved properties. Properties with proved reserves.

Proved reserves. Those quantities of oil, natural gas and NGLs, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence

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the project within a reasonable time. For a complete definition of proved oil and natural gas reserves, refer to the SEC's Regulation S-X, Rule 4-10(a)(22).

Proved undeveloped reserves or PUDs . Proved reserves that are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion.

Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.

Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances justify a longer time.

Under no circumstances shall estimates for proved undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, or by other evidence using reliable technology establishing reasonable certainty.

Realized price. The cash market price less all expected quality, transportation and demand adjustments.

Reasonable certainty. A high degree of confidence that quantities will be recovered. For a complete definition of reasonable certainty, refer to the SEC's Regulation S-X, Rule 4-10(a)(24).

Recompletion. The completion for production of an existing wellbore in another formation from that which the well has been previously completed

Reliable technology. Reliable technology is a grouping of one or more technologies (including computational methods) that has been field tested and has been demonstrated to provide reasonably certain results with consistency and repeatability in the formation being evaluated or in an analogous formation.

Reserves. Estimated remaining quantities of oil and natural gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and natural gas or related substances to market and all permits and financing required to implement the project. Reserves should not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).

Reservoir. A porous and permeable underground formation containing a natural accumulation of producible oil and/or natural gas that is confined by impermeable rock or water barriers and is individual and separate from other reservoirs.

Resources. Quantities of oil and natural gas estimated to exist in naturally occurring accumulations. A portion of the resources may be estimated to be recoverable and another portion may be considered to be unrecoverable. Resources include both discovered and undiscovered accumulations.

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Royalty. An interest in an oil and natural gas lease that gives the owner the right to receive a portion of the production from the leased acreage (or of the proceeds from the sale thereof), but does not require the owner to pay any portion of the production or development costs on the leased acreage. Royalties may be either landowner's royalties, which are reserved by the owner of the leased acreage at the time the lease is granted, or overriding royalties, which are usually reserved by an owner of the leasehold in connection with a transfer to a subsequent owner.

Service well. A well drilled or completed for the purpose of supporting production in an existing field.

Spacing. The distance between wells producing from the same reservoir. Spacing is often expressed in terms of acres, e.g., 40-acre spacing, and is often established by regulatory agencies.

Spot market price. The cash market price without reduction for expected quality, transportation and demand adjustments.

Spud. Commenced drilling operations on an identified location.

Stacked-hydrocarbon bearing formations. Vertically layered geologic zones that exist at differing underground depths and are capable of producing oil, natural gas and NGLs. The existence of stacked-hydrocarbon bearing formations enables the development of multiple hydrocarbon bearing zones from a common surface area.

Standardized measure. Discounted future net cash flows estimated by applying year-end prices to the estimated future production of year-end proved reserves. Future cash inflows are reduced by estimated future production and development costs based on period-end costs to determine pre-tax cash inflows. Future income taxes, if applicable, are computed by applying the statutory tax rate to the excess of pre-tax cash inflows over our tax basis in the oil and natural gas properties. Future net cash inflows after income taxes are discounted using a 10% annual discount rate.

Stratigraphic test well. A drilling effort, geologically directed, to obtain information pertaining to a specific geologic condition. Such wells customarily are drilled without the intent of being completed for hydrocarbon production. The classification also includes tests identified as core tests and all types of expendable holes related to hydrocarbon exploration. Stratigraphic tests are classified as "exploratory type" if not drilled in a known area or "development type" if drilled in a known area.

Success rate. The percentage of wells drilled which produce hydrocarbons in commercial quantities.

Undeveloped acreage. Lease acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and natural gas regardless of whether such acreage contains proved reserves.

Unit, drilling unit or spacing unit . The joining of all or substantially all interests in a reservoir or field, rather than a single tract, to provide for development and operation without regard to separate property interests. Also, the area covered by a unitization agreement.

Unproved properties. Properties with no proved reserves.

Wellbore. The hole drilled by the bit that is equipped for oil, natural gas and NGL production on a completed well. Also called well or borehole.

Working interest. The right granted to the lessee of a property to develop and produce and own natural gas or other minerals. The working interest owners bear the exploration, development and operating costs on either a cash, penalty or carried basis.

Workover. Operations on a producing well to restore or increase production.

WTI. West Texas Intermediate.

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Until (25 days after commencement of this offering), all dealers that effect transactions in our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table sets forth an itemized statement of the amounts of all expenses (excluding underwriting discounts and commissions) payable by us in connection with the registration of the common stock offered hereby. With the exception of the SEC registration fee and the FINRA filing fee, the amounts set forth below are estimates.


SEC registration fee	$	*
FINRA filing fee		*
NYSE listing fee		*
Accounting fees and expenses		*
Legal fees and expenses		*
Printing and engraving expenses		*
Transfer agent and registrar fees		*
Miscellaneous		*

Total	$	*

*: To be provided by amendment

Item 14. Indemnification of Directors and Officers

Section 145 of the DGCL provides that a corporation may indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise), against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. A similar standard is applicable in the case of derivative actions (i.e., actions by or in the right of the corporation), except that indemnification extends only to expenses, including attorneys' fees, incurred in connection with the defense or settlement of such action and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation.

Our amended and restated certificate of incorporation and our amended and restated bylaws will contain provisions that limit the liability of our directors and officers for monetary damages to the fullest extent permitted by the DGCL. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except liability:

•: for any breach of the director's duty of loyalty to our company or our stockholders;
•: for any act or omission not in good faith or that involve intentional misconduct or knowing violation of law;
•: under Section 174 of the DGCL regarding unlawful dividends and stock purchases; or
•: for any transaction from which the director derived an improper personal benefit.

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Any amendment to, or repeal of, these provisions will not eliminate or reduce the effect of these provisions in respect of any act, omission or claim that occurred or arose prior to that amendment or repeal. If the DGCL is amended to provide for further limitations on the personal liability of directors or officers of corporations, then the personal liability of our directors and officers will be further limited to the fullest extent permitted by the DGCL.

In addition, we intend to enter into indemnification agreements with our current directors and officers containing provisions that are in some respects broader than the specific indemnification provisions contained in the DGCL. The indemnification agreements will require us, among other things, to indemnify our directors against certain liabilities that may arise by reason of their status or service as directors and to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified. We also intend to enter into indemnification agreements with our future directors and officers.

We intend to maintain liability insurance policies that indemnify our directors and officers against various liabilities, including certain liabilities arising under the Securities Act and the Exchange Act, that may be incurred by them in their capacity as such.

The proposed form of Underwriting Agreement to be filed as Exhibit 1.1 to this registration statement provides for indemnification of our directors and officers by the underwriters against certain liabilities arising under the Securities Act or otherwise in connection with this offering.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Item 15. Recent Sales of Unregistered Securities

Pursuant to the terms of certain reorganization transactions that will be completed prior to the closing of this offering, as described in further detail under "Corporate Reorganization", we will indirectly acquire all of the membership interests in our predecessor in exchange for the issuance of all of our issued and outstanding shares of common stock (prior to the issuance of shares of common stock in this offering) to the Existing Owners. The issuance of such shares of common stock will not involve any underwriters, underwriting discounts or commissions or a public offering, and we believe that such issuance will be exempt from registration requirements pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

Item 16. Exhibits and Financial Statement Schedules

(a) See the Exhibit Index on the page immediately preceding the exhibits for a list of exhibits filed as part of this registration statement, which Exhibit Index is incorporated herein by reference.

(b) Financial Statement Schedules. Financial statement schedules are omitted because the required information is not applicable, not required or included in the financial statements or the notes thereto included in the prospectus that forms a part of this registration statement.

Item 17. Undertakings

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or

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otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1): For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2): For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Denver, State of Colorado, on December 19, 2016.

Each person whose signature appears below appoints Joseph N. Jaggers, Robert W. Howard, Christopher I. Humber and Ian T. Piper, and each of them, any of whom may act without the joinder of the other, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement and any registration statement (including any amendment thereto) for this offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or would do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities on December 19, 2016.

Signature		Title


/s/ JOSEPH N. JAGGERS Joseph N. Jaggers		Chairman, Chief Executive Officer and President (Principal Executive Officer)
/s/ ROBERT W. HOWARD Robert W. Howard		Executive Vice President, Chief Financial Officer (Principal Financial Officer)
/s/ SHONN D. STAHLECKER Shonn D. Stahlecker		Controller
/s/ CHARLES D. DAVIDSON Charles D. Davidson		Director

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Signature		Title


/s/ S. WIL VANLOH, JR. S. Wil VanLoh, Jr.		Director
/s/ BLAKE A. WEBSTER Blake A. Webster		Director

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EXHIBIT INDEX

		Description

*1.1		Form of Underwriting Agreement

*2.1		Form of Master Reorganization Agreement

*2.2		Form of Agreement and Plan of Merger between Jagged Peak Energy LLC and JPE Merger Sub, LLC

*3.1		Form of Amended and Restated Certificate of Incorporation of Jagged Peak Energy Inc.

*3.2		Form of Amended and Restated Bylaws of Jagged Peak Energy Inc.

*4.1		Form of Common Stock Certificate

*4.2		Form of Registration Rights Agreement

*4.3		Form of Stockholders' Agreement

*5.1		Opinion of Vinson & Elkins L.L.P. as to the legality of the securities being registered

10.1		Credit Agreement, dated June 19, 2015, among Jagged Peak Energy LLC, as borrower, Wells Fargo Bank National Association, as administrative agent and issuing lender, and the other lenders party thereto

10.2		Amendment No. 1 and Agreement, dated April 26, 2016, among Jagged Peak Energy LLC, as borrower, the guarantors party thereto, Wells Fargo Bank National Association, as administrative agent and issuing lender, and the other lenders party thereto

10.3		Amendment No. 2 and Agreement, dated June 29, 2016, among Jagged Peak Energy LLC, as borrower, the guarantors party thereto, Wells Fargo Bank National Association, as administrative agent and issuing lender, and the other lenders party thereto

10.4		Amendment No. 3 and Agreement, dated September 30, 2016, among Jagged Peak Energy LLC, as borrower, the guarantors party thereto, Wells Fargo Bank National Association, as administrative agent and issuing lender, and the other lenders party thereto

*10.5	†	Form of Jagged Peak Energy Inc. 2017 Long-Term Incentive Plan

*10.6	†	Form of Indemnification Agreement between Jagged Peak Energy Inc. and each of the directors and officers thereof

*10.7	†	Form of Amended and Restated Limited Liability Company Agreement of JPE Management Holdings, LLC

10.8	†	Executive Employment Agreement, dated April 1, 2013, between Jagged Peak Energy Management LLC and Joseph. N. Jaggers

10.9	†	Executive Employment Agreement, dated April 3, 2013, between Jagged Peak Energy Management LLC and Gregory S. Hinds

*21.1		List of subsidiaries of Jagged Peak Energy Inc.

23.1		Consent of KPMG LLP

23.2		Consent of KPMG LLP

23.3		Consent of Ryder Scott Company, LP

*23.4		Consent of Vinson & Elkins L.L.P. (included as part of Exhibit 5.1 hereto)

II-6

Table of Contents

Exhibit Number			Description

	24.1		Power of Attorney (included on the signature page of this Registration Statement)

	99.1		Ryder Scott Company, LP, Summary of Reserves at December 31, 2014

	99.2		Ryder Scott Company, LP, Summary of Reserves at December 31, 2015

	99.3		Ryder Scott Company, LP, Summary of Reserves at November 30, 2016

*: To be filed by amendment.
†: Compensatory plan or arrangement.

II-7

Exhibit 10.1

Execution Version

CREDIT AGREEMENT

dated as of June 19, 2015

Among

JAGGED PEAK ENERGY LLC
as Borrower,

WELLS FARGO BANK, NATIONAL ASSOCIATION
as Administrative Agent and Issuing Lender,

and

THE LENDERS NAMED HEREIN
as Lenders

$500,000,000

WELLS FARGO SECURITIES, LLC
AS LEAD ARRANGER AND SOLE BOOKRUNNER

TABLE OF CONTENTS

			Page

ARTICLE 1	DEFINITIONS AND ACCOUNTING TERMS		1

Section 1.1		Certain Defined Terms	1

Section 1.2		Computation of Time Periods	23

Section 1.3		Accounting Terms; Changes in GAAP	23

Section 1.4		Types of Advances	23

Section 1.5		Miscellaneous	24

ARTICLE 2	CREDIT FACILITIES		24

Section 2.1		Commitment for Advances	24

Section 2.2		Borrowing Base	24

Section 2.3		Letters of Credit	31

Section 2.4		Advances	36

Section 2.5		Prepayments	38

Section 2.6		Repayment	41

Section 2.7		Fees	41

Section 2.8		Interest	42

Section 2.9		[Reserved]	42

Section 2.10		Breakage Costs	42

Section 2.11		Increased Costs	43

Section 2.12		Payments and Computations	44

Section 2.13		Taxes	45

Section 2.14		Mitigation Obligations; Replacement of Lenders	49

Section 2.15		Cash Collateral	50

Section 2.16		Defaulting Lenders	51

ARTICLE 3	CONDITIONS OF LENDING		53

Section 3.1		Conditions Precedent to Initial Borrowing	53

Section 3.2		Conditions Precedent to Each Borrowing and to Each Issuance, Extension or Renewal of a Letter of Credit	55

Section 3.3		Determinations Under Sections 3.1 and 3.2	56

ARTICLE 4	REPRESENTATIONS AND WARRANTIES		56

Section 4.1		Organization	56

Section 4.2		Authorization	57

Section 4.3		Enforceability	57

Section 4.4		Financial Condition	57

TABLE OF CONTENTS
(continued)

			Page

Section 4.5		Title; Ownership and Liens; Real Property	58

Section 4.6		True and Complete Disclosure	58

Section 4.7		Litigation; Compliance with Laws	58

Section 4.8		Compliance with Agreements	58

Section 4.9		Pension Plans	58

Section 4.10		Environmental Condition	59

Section 4.11		Subsidiaries	60

Section 4.12		Investment Company Act	60

Section 4.13		Taxes	60

Section 4.14		Permits, Licenses, etc.	60

Section 4.15		Use of Proceeds	60

Section 4.16		Condition of Property; Casualties	60

Section 4.17		Insurance	61

Section 4.18		Security Interest	61

Section 4.19		OFAC; Anti-Terrorism	61

Section 4.20		Solvency	61

Section 4.21		Gas Contracts	61

Section 4.22		Liens, Leases, Etc.	61

Section 4.23		Hedging Agreements	61

Section 4.24		Material Agreements	61

Section 4.25		Foreign corrupt practices	62

ARTICLE 5	AFFIRMATIVE COVENANTS		62

Section 5.1		Organization	62

Section 5.2		Reporting	62

Section 5.3		Insurance	66

Section 5.4		Compliance with Laws	67

Section 5.5		Taxes	67

Section 5.6		New Subsidiaries	67

Section 5.7		Agreement to Pledge; Security	67

Section 5.8		Deposit Accounts	68

Section 5.9		Records; Inspection	68

Section 5.10		Maintenance of Property	68

Section 5.11		Title Evidence and Opinions	68

TABLE OF CONTENTS
(continued)

			Page

Section 5.12		Further Assurances; Cure of Title Defects	68

Section 5.13		Leases; Development and Maintenance	69

Section 5.14		Subordination	70

ARTICLE 6	NEGATIVE COVENANTS		70

Section 6.1		Debt	70

Section 6.2		Liens	71

Section 6.3		Investments	73

Section 6.4		[Reserved]	74

Section 6.5		Agreements Restricting Liens	74

Section 6.6		Use of Proceeds; Use of Letters of Credit	74

Section 6.7		Corporate Actions; Accounting Changes	74

Section 6.8		Sale of Assets	75

Section 6.9		Restricted Payments	76

Section 6.10		Affiliate Transactions	76

Section 6.11		Line of Business	77

Section 6.12		Hazardous Materials	77

Section 6.13		Compliance with ERISA	77

Section 6.14		Sale and Leaseback Transactions	78

Section 6.15		Limitation on Hedging	78

Section 6.16		Leverage Ratio	80

Section 6.17		Current Ratio	80

Section 6.18		Minimum Interest Coverage Ratio	80

Section 6.19		Prepayment of Certain Debt and Other Obligations	80

Section 6.20		Gas Imbalances, Take-or-Pay or Other Prepayments	80

Section 6.21		Sale or Discount of Receivables	80

Section 6.22		Sanctions	80

Section 6.23		Marketing Activities	81

ARTICLE 7	DEFAULT AND REMEDIES		81

Section 7.1		Events of Default	81

Section 7.2		Optional Acceleration of Maturity	83

Section 7.3		Automatic Acceleration of Maturity	83

Section 7.4		Set-off	84

iii

TABLE OF CONTENTS
(continued)

			Page

Section 7.5		Remedies Cumulative, No Waiver	84

Section 7.6		Application of Payments	84

Section 7.7		Equity Right to Cure	85

ARTICLE 8	THE ADMINISTRATIVE AGENT		86

Section 8.1		Appointment, Powers, and Immunities	86

Section 8.2		Rights as a Lender	86

Section 8.3		Exculpatory Provisions	87

Section 8.4		Reliance by Administrative Agent	88

Section 8.5		Delegation of Duties	88

Section 8.6		Resignation of Administrative Agent	88

Section 8.7		Non-Reliance on Administrative Agent and Other Lenders	89

Section 8.8		No Other Duties, etc.	89

Section 8.9		Administrative Agent May File Proofs of Claim	89

Section 8.10		Collateral and Guaranty Matters	90

ARTICLE 9	MISCELLANEOUS		91

Section 9.1		Costs and Expenses	91

Section 9.2		Indemnification; Waiver of Damages	91

Section 9.3		Waivers and Amendments	93

Section 9.4		Severability	94

Section 9.5		Survival of Representations and Obligations	94

Section 9.6		Binding Effect	94

Section 9.7		Successors and Assigns	95

Section 9.8		Confidentiality	98

Section 9.9		Notices, Etc.	99

Section 9.10		Usury Not Intended	99

Section 9.11		Usury Recapture	100

Section 9.12		Governing Law; Service of Process	100

Section 9.13		Submission to Jurisdiction	100

Section 9.14		Execution in Counterparts; Effectiveness; Electronic Execution	101

Section 9.15		Waiver of Jury Trial	101

Section 9.16		USA Patriot Act	101

Section 9.17		Enduring Security	101

TABLE OF CONTENTS
(continued)

		Page

Section 9.18	Keepwell	102

Section 9.19	No Advisory or Fiduciary Responsibility	102

Section 9.20	Integration	102

TABLE OF CONTENTS
(continued)

			Page

SCHEDULES:

Schedule I	–	Commitments, Contact Information
Schedule II	–	Pricing Grid
Schedule III	–	Additional Conditions and Requirements for New Subsidiaries
Schedule IV	–	New Wells
Schedule 4.1	–	Organizational Information
Schedule 4.4	–	Debt
Schedule 4.11	–	Subsidiaries
Schedule 4.13	–	Taxes
Schedule 4.16	–	Material Real Property
Schedule 4.23	–	Hedging Agreements
Schedule 4.24	–	Material Agreements
Schedule 6.1	–	Existing Debt
Schedule 6.2	–	Existing Liens
Schedule 6.3	–	Existing Investments

EXHIBITS:

Exhibit A	–	Form of Assignment and Assumption
Exhibit B	–	Form of Compliance Certificate
Exhibit C	–	Form of Guaranty Agreement
Exhibit D	–	Form of Mortgage
Exhibit E	–	Form of Note
Exhibit F	–	Form of Notice of Borrowing
Exhibit G	–	Form of Notice of Continuation or Conversion
Exhibit H	–	Form of Pledge Agreement
Exhibit I	–	Form of Security Agreement
Exhibit J	–	Form of Transfer Letter
Exhibit K-1	–	Form of U.S Tax Certificate
		(Foreign Lenders; Not Partnerships)
Exhibit K-2	–	Form of Tax Certificate
		(Foreign Participants; Not Partnerships)
Exhibit K-3	–	Form of Tax Certificate
		(Foreign Lenders; Partnerships)
Exhibit K-4	–	Form of Tax Certificate
		(Foreign Participants; Not Partnerships)
Exhibit L	–	Form of Reserve Report Certificate

CREDIT AGREEMENT

This CREDIT AGREEMENT dated as of June 19, 2015 (the “ Agreement ”) is among Jagged Peak Energy LLC, a Delaware limited liability company (the “ Borrower ”), the Lenders (as defined below) and Wells Fargo Bank, National Association as Administrative Agent (as defined below) for the Lenders and as Issuing Lender (as defined below).

In consideration of the mutual covenants and agreements herein contained, the parties hereto hereby agree as follows:

ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS

Section 1.1 Certain Defined Terms . The following terms shall have the following meanings (unless otherwise indicated, such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“ Acceptable Letter of Credit Maturity Date ” has the meaning assigned to it in Section 2.3(a)(ii) of this Agreement.

“ Acceptable Security Interest ” means a security interest which (a) exists in favor of the Administrative Agent for its benefit and the ratable benefit of the Secured Parties, (b) is superior to all other security interests (other than Permitted Liens), (c) secures the Secured Obligations, (d) is enforceable against the Credit Party which created such security interest and (e) is perfected, subject to any exceptions or limitations expressly provided for in the Security Documents.

“ Account Control Agreement ” shall mean, as to any deposit account of any Credit Party held with a bank, an agreement or agreements in form and substance reasonably acceptable to the Administrative Agent, among the Credit Party owning such deposit account, the Administrative Agent and such other bank governing such deposit account.

“ Acquisition ” means the purchase by any Credit Party of any business, division or enterprise, including the purchase of associated assets or operations or any Equity Interests of a Person; provided that a merger or consolidation solely among Credit Parties shall not constitute an Acquisition.

“ Adjusted Base Rate ” means, for any day, the fluctuating rate per annum of interest equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Rate in effect on such day plus one half of 1.00%, and (c) a rate determined by the Administrative Agent to be the Daily One-Month LIBOR plus 1.00%. Any change in the Adjusted Base Rate due to a change in the Prime Rate, Daily One-Month LIBOR or the Federal Funds Rate shall be effective on the effective date of such change in the Prime Rate, Daily One-Month LIBOR or the Federal Funds Rate.

“ Administrative Agent ” means Wells Fargo in its capacity as agent for the Lenders pursuant to Article 8 and any successor agent pursuant to Section 8.6 .

“ Administrative Questionnaire ” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

“ Advance ” means any advance by a Lender to the Borrower as a part of a Borrowing.

“ Affiliate ” means, as to any Person, any other Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person or any Subsidiary of such Person. The term “control” (including the terms “controlled by” or “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of an Equity Interest, by contract, or otherwise.

“ Agreement ” means this Credit Agreement among the Borrower, the Lenders, the Issuing Lender and the Administrative Agent.

“ Applicable Margin ” means, with respect to each Type of Advance and the Letters of Credit, the percentage rate per annum set forth in the Pricing Grid based on the relevant Utilization Level applicable from time to time. The Applicable Margin for any Advance or Letter of Credit shall change when and as the relevant Utilization Level changes.

“ Approved Fund ” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“ Asset Sale ” means (a) any sale, lease, transfer, condemnation, taking, or other disposition of any Property (including any working interest, overriding royalty interest, production payments, net profits interest, royalty interest, or mineral fee interest, but excluding Hedge Events) of any Credit Party and (b) any issuance or sale of any Equity Interests of any Subsidiary of the Borrower, in each case, to any Person other than a Credit Party.

“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 9.7 ), and accepted by the Administrative Agent, in substantially the form of Exhibit A or any other form approved by the Administrative Agent.

“ Availability ” means, as of any date of determination, an amount equal to (a) the lesser of the then effective Borrowing Base and the aggregate Commitments minus (b) (i) the outstanding principal amount of all Advances plus (ii) the Letter of Credit Exposure.

“ Availability Period ” means the period from the Closing Date until the Maturity Date.

“ Banking Services ” means each and any cash management services provided to any Credit Party by any Lender or by any Affiliate of a Lender, including without limitation the following bank services: (a) commercial credit or debit cards, (b) purchase cards, (c) stored value cards and (d) treasury management services (including, without limitation, overdraft, depository, controlled disbursement, electronic funds transfer, automated clearinghouse transactions, return items, overdrafts and interstate depository network services).

“ Banking Services Obligations ” means any and all obligations of the Borrower or any other Credit Party, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor) in connection with Banking Services.

“ Banking Services Provider ” means any Lender or Affiliate of a Lender that provides Banking Services to any Credit Party.

“ Base Rate Advance ” means an Advance which bears interest based upon the Adjusted Base Rate.

“ BB Threshold Amount ” has the meaning set forth in Section 2.2(g) .

“ BB Value ” means, (a) as to any Oil and Gas Property, the value, if any, attributed to such Oil and Gas Property under the then effective Borrowing Base, as determined by the Administrative Agent (after, in the case of an Asset Sale involving a like-kind exchange permitted by Section 6.8(d), taking into account the value attributable to the Oil and Gas Properties received by the Credit Parties as consideration, as determined by the Administrative Agent in its sole discretion; provided that an Acceptable Security Interest is granted on such new Oil and Gas Properties to the extent necessary to comply with the mortgage requirement set forth in Section 5.7 (after giving effect to such Asset Sale)), and (b) as to Hedging Arrangements, the net effect of any Hedge Event on the amount of the Borrowing Base, after taking into account the economic effect of any Replacement Hedging Contracts, as determined by the Administrative Agent.

“ Borrower ” means Jagged Peak Energy LLC, a Delaware limited liability company.

“ Borrowing ” means a borrowing consisting of simultaneous Advances of the same Type made by the Lenders pursuant to Section 2.1(a) or Converted by each Lender to Advances of a different Type pursuant to Section 2.4(b) .

“ Borrowing Base ” means at any particular time, the Dollar amount determined in accordance with Section 2.2 on account of Proven Reserves attributable to Oil and Gas Properties of the Credit Parties described in the most recent Independent Engineering Report or Internal Engineering Report, as applicable, delivered to the Administrative Agent and the Lenders pursuant to Section 2.2 .

“ Borrowing Base Deficiency ” means the excess, if any, of (a) the sum of the outstanding principal amount of all Advances plus the Letter of Credit Exposure over (b) the lesser of (i) the aggregate amount of Commitments, and (ii) the Borrowing Base then in effect.

“ Business Day ” means a day (a) other than a Saturday, Sunday, or other day on which the Administrative Agent is authorized to close under the laws of, or is in fact closed in, Denver, Colorado, and (b) if the applicable Business Day relates to any Eurodollar Advances, on which dealings are carried on by commercial banks in the London interbank market.

“ Capital Leases ” means, for any Person, any lease of any Property by such Person as lessee which would, in accordance with GAAP, be required to be classified and accounted for as a capital lease on the balance sheet of such Person. Any lease that was treated as an operating lease under GAAP at the time it was entered into that later becomes a Capital Lease as a result of a change in GAAP during the life of such lease, including any renewals thereof, shall be treated as an operating lease and not a Capital Lease for all purposes under the Credit Documents.

“ Cash ” means Dollar denominated currency in immediately available funds.

“ Cash Collateral Account ” means a Controlled Account pledged to the Administrative Agent containing cash deposited pursuant to the terms hereof to be maintained with the Administrative Agent in accordance with Section 2.3(h) .

Letter of Credit Obligations or obligations of Lenders to fund participations in respect of Letter of Credit Obligations, cash or deposit account balances or, if the Administrative Agent and the Issuing Lender shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and the Issuing Lender. “ Cash Collateral ” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

“ Casualty Event ” means the damage, destruction or condemnation, including by process of eminent domain or any transfer or disposition of property in lieu of condemnation, as the case may be, of property of any Person or any of its Subsidiaries, including by process of eminent domain or any transfer or disposition of property in lieu of condemnation.

“ CERCLA ” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, state and local analogs, and all rules and regulations and requirements thereunder in each case as now or hereafter in effect.

“ Change in Control ” means the occurrence of any of the following events:

(a) the Borrower ceases to directly or indirectly own 100% of the Equity Interest in any Subsidiary other than as a result of a transaction permitted under Section 6.7 ; or

(b) the Quantum Group collectively cease to directly or indirectly own at least 50.1% of the Equity Interest in the Borrower.

“ Change in Law ” means the occurrence, after the date of this Agreement (or with respect to any Lender, if later, the date on which such Lender becomes a Lender), of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

“ Closing Date ” means June 19, 2015.

“ Code ” means the Internal Revenue Code of 1986, as amended, and the regulations and published interpretations thereof.

“ Collateral ” means all property of the Credit Parties which is “Collateral” or “Mortgaged Property” (as defined in each of the Mortgages or the Security Agreement, as applicable) or similar terms used in the Security Documents.

Section 2.1(c) ; provided that, after the Maturity Date, the Commitment for each Lender shall be zero. The initial aggregate Commitment on the date hereof is $500,000,000.

“ Commitment Fee Rate ” means the per annum commitment fee rate set forth on the Pricing Grid applicable from time to time. The Commitment Fee Rate shall change when and as the relevant Utilization Level changes.

“ Commitment Fees ” means the fees required under Section 2.7(a) .

“ Commodity Exchange Act ” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

“ Compliance Certificate ” means a compliance certificate executed by a Responsible Officer of the Borrower or such other Person as required by this Agreement in substantially the same form as Exhibit B .

“ Connection Income Taxes ” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

“ Controlled Account ” means each deposit account and securities account that is subject to an account control agreement in form and substance satisfactory to the Administrative Agent and the Issuing Lender.

“ Controlled Group ” means all members of a controlled group of corporations and all businesses (whether or not incorporated) under common control which, together with the Borrower or any Subsidiary, are treated as a single employer under Section 414 of the Code.

“ Convert ,” “ Conversion ,” and “ Converted ” each refers to a conversion of Advances of one Type into Advances of another Type pursuant to Section 2.4(b) .

“ Covenant Cure Payment ” has the meaning set forth in Section 7.7 hereof.

“ Credit Documents ” means this Agreement, the Notes, the Letters of Credit, the Letter of Credit Applications, the Guaranties, the Notices of Borrowing, the Notices of Conversion, the Security Documents, the Fee Letter, and each other agreement, instrument, or document executed by any Credit Party at any time in connection with this Agreement.

“ Credit Parties ” means the Borrower and the Guarantors.

“ Daily One-Month LIBOR ” means, for any day, the rate of interest equal to the Eurodollar Rate then in effect for delivery for a one month period.

business); (e) obligations of such Person to pay the deferred purchase price of property or services (including, without limitation, any contingent obligations or other similar obligations associated with such purchase, and including obligations that are non-recourse to the credit of such Person but are secured by the assets of such Person but excluding accounts payable to trade creditors for goods or services and current operating liabilities (other than for borrowed money) incurred in the ordinary course of business and which are not more than 90 days past due, unless such payables are being contested in good faith by appropriate proceedings and adequate reserves for such items have been made in accordance with GAAP); (f) obligations of such Person as lessee under Capital Leases and obligations of such Person in respect of synthetic leases; (g) obligations of such Person under any Hedging Arrangement; (h) all obligations of such Person to mandatorily purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person on a date certain or upon the occurrence of certain events or conditions other than (1) obligations, if any, to repurchase Equity Interests from employees upon their termination of employment prior to the date that is 180 days after the Maturity Date, valued at, in the case of redeemable preferred stock, the greater of the voluntary liquidation preference and the involuntary liquidation preference of such Stock plus accrued and unpaid dividends or (2) obligations, if any, to repurchase or redeem any Repurchase Interest (as that term is defined in the LLC Agreement); (i) the Debt of any partnership or unincorporated joint venture in which such Person is a general partner or a joint venturer, but only to the extent to which there is recourse to such Person for the payment of such Debt; (j) any obligations of such Person owing in connection with any volumetric or production prepayments; (k) obligations of such Person under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) of such Person to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (a) through (j) above; and (l) indebtedness or obligations of others of the kinds referred to in clauses (a) through (k) secured by any Lien on or in respect of any Property of such Person.

“ Debtor Relief Laws ” means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.

“ Default ” means (a) an Event of Default or (b) any event or condition which with notice or lapse of time or both would, unless cured or waived, become an Event of Default.

“ Default Rate ” means a per annum rate equal to (a) in the case of principal of any Advance, 2.00% plus the rate otherwise applicable to such Advance as provided in Sections 2.8(a) or (b) , and (b) in the case of any other Obligation (other than Letter of Credit Fees), 2.00% plus the non-default rate applicable to Base Rate Advances as provided in Section 2.8(a) , and (c) in the case of Letter of Credit Fees, a rate equal to the Applicable Margin for Eurodollar Rate Advances plus 2.00% per annum.

precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder ( provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.16(b) ) upon delivery of written notice of such determination to the Borrower, the Issuing Lender and each Lender.

“ Designated Jurisdiction ” means any country or territory to the extent that such country or territory itself is the subject of any Sanction.

“ Dollars ” and “ $ ” means lawful money of the United States of America.

“ EBITDAX ” means for the Borrower and its Subsidiaries, on a consolidated basis for any period, the sum of (a) Net Income for such period, plus (b) without duplication and to the extent deducted in determining such Net Income (i) Interest Expense for such period, plus (ii) Income Tax Expense for such period, plus (iii) depreciation, amortization, depletion and exploration expenses for such period, plus (iv) non-cash charges resulting from extraordinary, non-recurring events or circumstances for such period (including any provision for the reduction in the carrying value of assets recorded in accordance with GAAP and including non-cash charges resulting from the requirements of ASC 410, 718 and 815), minus (c) to the extent included in determining Net Income, non-cash income resulting from extraordinary, non-recurring events or circumstances for such period and all other non-cash items of income which were included in determining such Net Income (including non-cash income resulting from the requirements of ASC 410, 718 and 815); provided that such EBITDAX shall be subject to pro forma adjustments for permitted acquisitions and non-ordinary course asset sales assuming that such transactions had occurred on the first day of the determination period, which adjustments shall be made in a manner, and subject to supporting documentation, set forth by the SEC in Regulation S-X or otherwise acceptable to the Administrative Agent. For the avoidance of doubt, EBITDAX shall include realized gains and losses with respect to Hedging Arrangements in connection with monthly settlements in the ordinary course of business, but shall not otherwise include realized gains and losses in connection with early hedge unwinds or terminations, and EBITDAX shall also not include unrealized marked-to-market gains and losses with respect to Hedging Arrangements.

“ Eligible Assignee ” means any Person that meets the requirements to be an assignee under Section 9.7(b)(iii) , (v) and (vi) (subject to such consents, if any, as may be required under Section 9.7(b)(iii) ).

“ Engineering Report ” means either an Independent Engineering Report or an Internal Engineering Report.

“ Environment ” or “ Environmental ” shall have the meanings set forth in 42 U.S.C. 9601(8) (1988).

“ Environmental Claim ” means any third party (including governmental agencies and employees) action, lawsuit, claim, demand, regulatory action or proceeding, order, decree, consent agreement or notice of potential or actual responsibility or violation (including claims or proceedings under the Occupational Safety and Health Acts or similar laws or requirements relating to health or safety of employees) which seeks to impose liability under any Environmental Law.

“ Environmental Law ” means all federal, state, and local laws, rules, regulations, ordinances, orders, decisions, agreements, and other requirements, including common law theories, now or hereafter in effect and relating to, or in connection with the Environment, health, or safety, including without limitation CERCLA, relating to (a) pollution, contamination, injury, destruction, loss, protection, cleanup, reclamation or restoration of the air, surface water, groundwater, land surface or subsurface strata, or other natural resources; (b) solid, gaseous or liquid waste generation, treatment, processing, recycling, reclamation, cleanup, storage, disposal or transportation; (c) exposure to pollutants, contaminants, hazardous, or toxic substances, materials or wastes; (d) the safety or health of employees; or (e) the manufacture, processing, handling, transportation, distribution in commerce, use, storage or disposal of hazardous, or toxic substances, materials or wastes.

“ Environmental Permit ” means any permit, license, order, approval, registration or other authorization under Environmental Law.

“ Equity Interest ” means with respect to any Person, any shares, interests, participation, or other equivalents (however designated) of corporate stock, membership interests or partnership interests (or any other ownership interests) of such Person.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ Eurocurrency Liabilities ” has the meaning assigned to that term in Regulation D of the Federal Reserve Board as in effect from time to time.

“ Eurodollar Advance ” means an Advance that bears interest based upon the Eurodollar Rate.

“ Eurodollar Base Rate ” means the rate per annum (rounded upward to the nearest whole multiple of 100th of 1%) equal to the ICEBA LIBOR as designated by Reuters, for deposits in Dollars at 11:00 a.m. (London, England time) two Business Days before the first day of the applicable Interest Period and for a period equal to such Interest Period; provided that if such rate that appears on such screen or page shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement; and provided further that, if such quotation is not available for any reason, then Eurodollar Base Rate shall then be the rate determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in immediately available funds in the approximate amount of the Advances being made, continued or Converted by the Lenders and with a term equivalent to such Interest Period would be offered by the Administrative Agent’s London Branch (or other branch or Affiliate of the Administrative Agent, or in the event that the Administrative Agent does not have a London branch, the London branch of a Lender chosen by the Administrative Agent) to major banks in the London or other

offshore inter-bank market for Dollars at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period).

“ Eurodollar Rate ” means a rate per annum determined by the Administrative Agent pursuant to the following formula:

Eurodollar Rate =	Eurodollar Base Rate
	1.00 – Eurodollar Reserve Percentage

Where,

“ Eurodollar Reserve Percentage ” means, as of any day, the reserve percentage (expressed as a decimal, carried out to five decimal places) in effect on such day, whether or not applicable to any Lender, under regulations issued from time to time by the Federal Reserve Board for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to liabilities or assets consisting of or including Eurocurrency Liabilities. The Eurodollar Rate for each outstanding Advance shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage.

“ Event of Default ” has the meaning specified in Section 7.1 .

“ Excluded Property ” means, collectively, (a) any Excluded Contracts (as defined in the Security Agreement), (b) any “intent to use” applications for trademark or service mark registrations filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. §1051, unless and until an “Amendment to Allege Use” or a “Statement of Use” under Section 1(c) or Section 1(d) of Lanham Act has been filed, solely to the extent that such a grant of a security interest therein prior to such filing would impair the validity or enforceability of any registration that issues from such “intent to use” application, (c) any real property (other than Oil and Gas Properties and other material real property that is integral to the use of any Oil and Gas Properties), (d) vehicles, (e) any Property owned by any Credit Party on the date hereof or hereafter acquired that is subject to a Lien that secures Purchase Money Debt or Capital Lease permitted to be incurred pursuant to the provisions of this Agreement if the contract or other agreement in which such Lien is granted (or the documentation providing for such Capital Lease), and (f) assets to which the granting or perfecting a security interest would violate any applicable law.

“ Excluded Swap Obligations ” means, with respect to any Credit Party other than the Borrower, any Swap Obligation if, and to the extent that, all or a portion of the guarantee of such Credit Party of, or the grant by such Credit Party of a security interest to secure, such Swap Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Credit Party’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guarantee of such Credit Party or the grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such guarantee or security interest is or becomes illegal.

political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Recipient, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Recipient with respect to an applicable interest in an Advance or Commitment pursuant to a law in effect on the date on which (i) such Recipient acquires such interest in the Advance or Commitment (other than pursuant to an assignment request by the Borrower under Section 2.14 ) or (ii) such Recipient changes its lending office, except in each case to the extent that, pursuant to Section 2.13 , amounts with respect to such Taxes were payable either to such Recipient’s assignor immediately before such Recipient became a party hereto or to such Recipient immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.13(g) and (d) any Taxes imposed under FATCA.

“ Extraordinary Receipts ” means (a) with respect to any Asset Sale, all cash and Liquid Investments received by a Credit Party from such Asset Sale after payment of, or provision for, all estimated cash taxes attributable to such Asset Sale and payable by such Credit Party, and other reasonable out of pocket fees and expenses actually incurred by such Credit Party directly in connection with such Asset Sale, (b) with respect to any settlement or litigation proceeding, the proceeds of such settlement or litigation proceeding after payment of all out of pocket fees and expenses actually incurred in connection with such settlement or proceeding, (c) with respect to any Casualty Event (other than a Casualty Event of any Oil and Gas Properties or other property integral to any Oil and Gas Properties, so long as such proceeds are reinvested by the applicable Credit Party), the insurance proceeds or award or other compensation as a result of a Casualty Event after payment of all out of pocket fees and expenses actually incurred by the applicable Credit Party to receive such proceeds, and (d) with respect to any novation, assignment, unwinding, termination, or amendment of any hedge position or any other Hedging Arrangement, the sum of the cash and Liquid Investments received by any Credit Party in connection with such transaction after giving effect to any netting agreements.

“ FATCA ” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code and any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code, to the extent substantially comparable and not materially more onerous to comply with, and any fiscal or regulatory legislation, rules or practices adopted pursuant to such intergovernmental agreement.

“ FCPA ” means the Foreign Corrupt Practices Act of 1977, as amended.

“ Federal Funds Rate ” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to the Administrative Agent (in its individual capacity) on such day on such transactions as determined by the Administrative Agent.

“Federal Reserve Board ” means the Board of Governors of the Federal Reserve System or any of its successors.

“ Fee Letter ” means that certain Engagement Letter dated as of June 19, 2015 among the Borrower, Wells Fargo and Wells Fargo Securities, LLC.

“ Forecasted Production ” means the projected production of oil or gas or natural gas liquids (measured by volume unit or BTU equivalent, not sales price) for the term of the contracts or a particular month, as applicable, from Oil and Gas Properties owned by a Credit Party which are located in or offshore of the United States, as reasonably approved by the Administrative Agent.

“ Foreign Lender ” means a Lender that is not a U.S. Person.

“ Fronting Exposure ” means, at any time there is a Defaulting Lender, such Defaulting Lender’s Pro Rata Share of the outstanding Letter of Credit Obligations with respect to Letters of Credit issued by the Issuing Lender other than Letter of Credit Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.

“ Fund ” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

“ GAAP ” means United States of America generally accepted accounting principles as in effect from time to time, applied on a basis consistent with the requirements of Section 1.3 .

“ Governmental Authority ” means, with respect to any Person, the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, bureau, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) having jurisdiction over such Person.

“ Guarantors ” means (a) the Subsidiaries of the Borrower listed on Schedule 4 . 11 , (b) each other Subsidiary of the Borrower from time to time, and (c) any other Person that becomes a guarantor of all or a portion of the Obligations and which has entered into either a joinder agreement substantially in the form attached to the Guaranty or a new Guaranty.

“ Guaranty ” means the Guaranty Agreement executed in substantially the same form as Exhibit C .

“ Hazardous Substance ” means any substance or material identified as such pursuant to CERCLA and those regulated under any other Environmental Law, including without limitation pollutants, contaminants, petroleum, petroleum products, radionuclides, and radioactive materials.

“ Hazardous Waste ” means any substance or material regulated or designated as such pursuant to any Environmental Law, including without limitation, pollutants, contaminants, flammable substances and materials, explosives, radioactive materials, oil, petroleum and petroleum products, chemical liquids and solids, polychlorinated biphenyls, asbestos, toxic substances, and similar substances and materials.

“ Hedge Event ” means any novation, assignment, unwind, early termination or amendment to any Hedging Arrangement, or the entering into of any transaction that has the net effect of offsetting or unwinding any Hedging Arrangement.

reduce or eliminate or otherwise protect against the risk of fluctuations in prices or rates, including interest rates, foreign exchange rates, commodity prices and securities prices.

“ Hydrocarbon Hedge Agreement ” means a Hedging Arrangement related to the price of Hydrocarbons.

“ Hydrocarbons ” means oil, gas, coal seam gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, and all other liquid and gaseous hydrocarbons produced or to be produced in conjunction therewith from a well bore and all products, by-products, and other substances derived therefrom or the processing thereof, and all other minerals and substances produced in conjunction with such substances, including, but not limited to, sulfur, geothermal steam, water, carbon dioxide, helium, and any and all minerals, ores, or substances of value and the products and proceeds therefrom.

“ ICEBA LIBOR ” means the London interbank offered rate as set by the ICE Benchmark Administration (or the successor thereto if the ICE Benchmark Association is no longer making a London interbank offered rate available).

“ Income Tax Expense ” means for Borrower and its Subsidiaries, on a consolidated basis for any period, all state and federal franchise or income taxes paid or due to be paid during such period.

“ Indemnified Taxes ” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Credit Party under any Credit Document and (b) to the extent not otherwise described in (a), Other Taxes.

“ Independent Engineer ” means Ryder Scott Company, L.P., or any other engineering firm acceptable to the Administrative Agent.

“ Independent Engineering Report ” means a report, in form and substance satisfactory to the Administrative Agent, in its reasonable discretion prepared by an Independent Engineer, addressed to the Administrative Agent and the Lenders with respect to the Oil and Gas Properties owned by any Credit Party (or to be acquired by a Credit Party) which are or are to be included in the Borrowing Base, which report shall (a) specify the location, quantity, and type of the estimated Proven Reserves attributable to such Oil and Gas Properties, (b) contain a projection of the rate of production of such Oil and Gas Properties, (c) contain an estimate of the net operating revenues to be derived from the production and sale of Hydrocarbons from such Proven Reserves based on product price and cost escalation assumptions specified by the Administrative Agent and the Lenders, and (d) contain such other information as is customarily obtained from and provided in such reports or is otherwise reasonably requested by the Administrative Agent or any Lender.

“ Interest Expense ” means, for the Borrower and its Subsidiaries, on a consolidated basis for any period, total cash interest expense, letter of credit fees and other fees and expenses incurred by such Persons in connection with any Debt (including but not limited to Debt under this Agreement) for such period, whether paid or accrued (including interest expense attributable to Capital Leases), including, without limitation, all commissions, discounts, and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing, fees owed with respect to the Borrowings, and net costs under Hedging Arrangements entered into addressing interest rates, all as determined in conformity with GAAP.

“ Interest Hedge Agreement ” means a Hedging Arrangement between the Borrower or another Credit Party and one or more financial institutions providing for the exchange of nominal interest obligations between the Borrower or such other Credit Party and such financial institution or the cap of the interest rate on any Debt of the Borrower or such other Credit Party.

“ Interest Period ” means for each Eurodollar Advance comprising part of the same Borrowing, the period commencing on the date of such Eurodollar Advance is made or deemed made and ending on the last day of the period selected by the Borrower pursuant to the provisions below and Section 2.4 , and thereafter, each subsequent period commencing on the day following the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below and Section 2.4 . The duration of each such Interest Period shall be one, two, three, or six months, in each case as the Borrower may select, provided that:

(a) Interest Periods commencing on the same date for Advances comprising part of the same Borrowing shall be of the same duration;

(b) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided that if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day;

(c) any Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month in which it would have ended if there were a numerically corresponding day in such calendar month; and

(d) the Borrower may not select any Interest Period for any Advance which ends after the Maturity Date.

“ Internal Engineering Report ” means a report, in form and substance satisfactory to the Administrative Agent, in its reasonable discretion prepared by the Borrower and certified by a Responsible Officer of the Borrower, addressed to the Administrative Agent and the Lenders with respect to the Oil and Gas Properties owned by any Credit Party (or to be acquired by a Credit Party) which are or are to be included in the Borrowing Base, which report shall (a) specify the location, quantity, and type of the estimated Proven Reserves attributable to such Oil and Gas Properties, (b) contain a projection of the rate of production of such Oil and Gas Properties, (c) contain an estimate of the net operating revenues to be derived from the production and sale of Hydrocarbons from such Proven Reserves based on product prices and cost escalation assumptions specified by the Administrative Agent, and (d) contain such other information as is customarily obtained from and provided in such reports or is otherwise reasonably requested by the Administrative Agent or any Lender.

“ IRS ” means the United States Internal Revenue Service.

“ Issuing Lender ” means Wells Fargo in its capacity as a Lender that issues Letters of Credit for the account of any Credit Party pursuant to the terms of this Agreement.

“ Lead Arranger ” Wells Fargo Securities, LLC.

“ Leases ” means all oil and gas leases, oil, gas and mineral leases, oil, gas and casinghead gas leases or any other instruments, agreements, or conveyances under and pursuant to which the owner thereof has or obtains the right to enter upon lands and explore for, drill, and develop such lands for the production of Hydrocarbons.

“ Legal Requirement ” means any law, statute, ordinance, decree, requirement, order, judgment, rule, regulation (or official interpretation of any of the foregoing) of, and the terms of any license or permit issued by, any Governmental Authority, including, but not limited to, Regulations T, U and X.

“ Lenders ” means the Persons listed on the signature pages hereto as Lenders, any other Person that shall have become a Lender hereto pursuant to Section 2.14 and any other Person that shall have become a Lender hereto pursuant to an Assignment and Assumption, but in any event, excluding any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.

“ Lending Office ” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent.

“ Letter of Credit ” means any standby letter of credit issued or deemed issued by the Issuing Lender for the account of a Credit Party pursuant to the terms of this Agreement, in such form as may be agreed by the Borrower and the Issuing Lender.

“ Letter of Credit Application ” means the Issuing Lender’s standard form letter of credit application for standby letters of credit which has been executed by the Borrower and accepted by such Issuing Lender in connection with the issuance of a Letter of Credit.

“ Letter of Credit Documents ” means all Letters of Credit, Letter of Credit Applications and amendments thereof, and agreements, documents, and instruments entered into in connection therewith or relating thereto.

“ Letter of Credit Exposure ” means, at the date of its determination by the Administrative Agent, the aggregate outstanding undrawn amount of Letters of Credit plus the aggregate unpaid amount of all of the Borrower’s payment obligations under drawn Letters of Credit.

“ Letter of Credit Fees ” means fees payable pursuant to Section 2.7(b)(i) .

“ Letter of Credit Maximum Amount ” means $5,000,000; provided that, on and after the Maturity Date, the Letter of Credit Maximum Amount shall be zero.

“ Letter of Credit Obligations ” means any obligations of the Borrower under this Agreement in connection with the Letters of Credit.

“ Leverage Ratio ” means, as of the end of each fiscal quarter, the ratio of (a) the consolidated Debt of the Borrower and its Subsidiaries (other than obligations under clauses (d), (e) (to the extent relating to earn-out obligations that are not liabilities on the balance sheet in accordance with GAAP and usual and customary purchase price adjustments), (g) and (k) (to the extent in respect of obligations under clauses (d), (e) (to the extent relating to earn-out obligations that are not liabilities on the balance sheet in accordance with GAAP and usual and customary purchase price adjustments) and (g)) of the definition of “Debt”) as of the last day of such fiscal quarter to (b) (i) for the fiscal quarter ending June 30, 2015, EBITDAX for such fiscal quarter times four, (ii) for the fiscal quarter ending September 30, 2015, EBITDAX for the two fiscal quarter period then ended times two, (iii) for the fiscal quarter ending December 31, 2015, EBITDAX for the three fiscal quarter period then ended times 4/3, and (iv) thereafter, EBITDAX for the four-fiscal quarter period then ended.

operation of law, or otherwise (including the interest of a vendor or lessor under any conditional sale agreement, Capital Lease, or other title retention agreement).

“ Liquid Investments ” means (a) readily marketable direct full faith and credit obligations of the United States of America or obligations unconditionally guaranteed by the full faith and credit of the United States of America; (b) commercial paper issued by (i) any Lender or any Affiliate of any Lender or (ii) any commercial banking institutions or corporations rated at least P-1 by Moody’s or A-1 by S&P; (c) certificates of deposit, time deposits, and bankers’ acceptances issued by (i) any of the Lenders or (ii) any other commercial banking institution which is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $250,000,000 and rated Aa by Moody’s or AA by S&P; (d) repurchase agreements which are entered into with any of the Lenders or any major money center banks included in the commercial banking institutions described in clause (c) and which are secured by readily marketable direct full faith and credit obligations of the government of the United States of America or any agency thereof; (e) investments in any money market fund which holds investments substantially of the type described in the foregoing clauses (a) through (d); (f) readily and immediately available cash held in any money market account maintained with any Lender; provided that, such money market accounts and the funds therein shall be unencumbered and free and clear of all Liens and other third party rights other than a Lien in favor of the Administrative Agent pursuant to the Security Documents and Liens imposed by statutory law to the extent such Liens are permitted hereunder; and (g) other investments made through the Administrative Agent or its Affiliates and approved by the Administrative Agent; provided that all the Liquid Investments described in clauses (a) through (d) above shall have maturities of not more than 365 days from the date of issue.

“ LLC Agreement ” means the Limited Liability Company Agreement of the Borrower dated as of April 3, 2013, as amended or otherwise modified in accordance with the Credit Documents.

“ Majority Lenders ” means (a) at any time when there are three or more Lenders, Lenders holding at least 51% of the aggregate Maximum Exposure Amount, (b) at any time when there are two or fewer Lenders, 100% of the Lenders, and (c) at any time when there is only one Lender, such Lender; provided that, if there are two or more Lenders, the Commitment of, and the portion of the Advances and Letter of Credit Exposure held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Majority Lenders unless all Lenders are Defaulting Lenders.

“ Material Adverse Change ” means a material adverse change (a) in the business, assets (including Oil and Gas Properties), condition (financial or otherwise), or operations of the Borrower and the other Credit Parties, taken as a whole; (b) on the Credit Parties’ ability, as a whole, to perform their obligations under this Agreement or any other Credit Document; (c) in any right or remedy of any Secured Party under any Credit Document; or (d) on the validity or enforceability of this Agreement or any of the other Credit Documents.

“ Maturity Date ” means the earlier of (a) June 19, 2020 and (b) the earlier termination in whole of the Commitments pursuant to Section 2.1(c) or Article 7 .

“ Maximum Exposure Amount ” means, at any time for each Lender, the sum of (a) the unfunded Commitment held by such Lender at such time; plus (b) the aggregate unpaid principal amount of the Note held by such Lender at such time, (with the aggregate amount of such Lender’s risk participation and funded participation in the Letter of Credit Exposure (including any such Letter of Credit Exposure that has been reallocated pursuant to Section 2.16 ) being deemed as unpaid principal under such Lender’s Note).

“ Maximum Rate ” means the maximum nonusurious interest rate under applicable law.

“ Minimum Collateral Amount ” means, at any time, (i) with respect to Cash Collateral consisting of cash or deposit account balances, an amount equal to 103% of the Fronting Exposure of the Issuing Lender with respect to Letters of Credit issued and outstanding at such time and (ii) otherwise, an amount determined by the Administrative Agent and the Issuing Lender in its sole discretion.

“ Minimum Interest Coverage Ratio ” means as of any date of determination, and subject to the calculations set forth in the succeeding sentence, the ratio of (a) EBITDAX for the four fiscal quarter period ended as of such date of determination divided by (b) Interest Expense for such four fiscal quarter period. For purposes of the foregoing calculation, both EBITDAX and Interest Expense shall each respectively be calculated as follows: (i) for the fiscal quarter ending June 30, 2015, EBITDAX and Interest Expense for such quarter times four, (ii) for the fiscal quarter ending September 30, 2015, EBITDAX and Interest Expense for such two fiscal quarter period then ended times two, (iii) for the fiscal quarter ending December 31, 2015, EBITDAX and Interest Expense for such three fiscal quarter period then ended times 4 and divided by three, and (iv) thereafter, the EBITDAX and Interest Expense for the four fiscal quarter period then ended.

“ Moody’s ” means Moody’s Investors Service, Inc. and any successor thereto which is a nationally recognized statistical rating organization.

“ Mortgage ” means each mortgage or deed of trust in substantially the same form as Exhibit D , or other form reasonably acceptable to the Administrative Agent, executed by any Credit Party to secure all or a portion of the Secured Obligations.

“ Multiemployer Plan ” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which the Borrower or any member of the Controlled Group is making or accruing an obligation to make contributions.

“ Net Income ” means, for any period and with respect to any Person, the net income for such period for such Person after taxes as determined in accordance with GAAP, including any cash net gain but excluding, however, (a) extraordinary items, including (i) any net cash or non-cash gain or loss during such period arising from the sale, exchange, retirement or other disposition of capital assets (such term to include all fixed assets and all securities) other than in the ordinary course of business, and (ii) any write-up or write-down of assets and (b) the cumulative effect of any change in GAAP.

“ New Wells ” means the wells described in Schedule IV .

“ Non-Consenting Lender ” means any Lender that does not approve (i) any consent, waiver or amendment that (A) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 9.3 , and (B) has been approved by the Majority Lenders, or (ii) any redetermination of the Borrowing Base which has been approved by the Super-Majority Lenders.

“ Non-Defaulting Lender ” means, at any time, each Lender that is not a Defaulting Lender at such time.

“ Note ” means a promissory note of the Borrower payable to a Lender or its registered assigns in the amount of such Lender’s Commitment, in substantially the same form as Exhibit E , evidencing indebtedness of the Borrower to such Lender resulting from Advances owing to such Lender.

“ Notice of Borrowing ” means a Notice of Borrowing signed by the Borrower in substantially the same form as Exhibit F .

“ Notice of Continuation or Conversion ” means a notice of continuation or conversion signed by the Borrower in substantially the same form as Exhibit G .

“ Obligations ” means all principal, interest (including post-petition interest), fees, reimbursements, indemnifications, and other amounts now or hereafter owed by any of the Credit Parties to the Lenders, the Issuing Lender or the Administrative Agent under this Agreement and the Credit Documents, including, the Letter of Credit Obligations, and any increases, extensions, and rearrangements of those obligations under any amendments, supplements, and other modifications of the documents and agreements creating those obligations.

“ OFAC ” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

“ Oil and Gas Properties ” means fee mineral interests, term mineral interests, Leases, subleases, term assignments of Leases, non-participating royalty interests, farm-outs, royalties, overriding royalties, net profit interests, carried interests, production payments and similar mineral interests, and all unsevered and unextracted Hydrocarbons in, under, or attributable to such oil and gas Properties and interests.

“ Other Connection Taxes ” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Credit Document, or sold or assigned an interest in any Advance or Credit Document).

“ Other Taxes ” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Credit Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.14(b) ).

“ Participant ” has the meaning set forth in Section 9.7(d) .

“ Participant Register ” has the meaning set forth in Section 9.7(d) .

“ Patriot Act ” means the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).

“ Payment in Full of Obligations ” means: (a) the termination of this Agreement, (b) the payment in full of the Obligations (other than contingent indemnification and expense reimbursement obligations that are, in each case, not then due and owing), (c) the termination and return of all Letters of Credit (other than Letters of Credit that are Cash Collateralized or as to which arrangements satisfactory to the Issuing Lender in its sole discretion have been made), (d) the termination or novation of all Hedging Arrangements with a Swap Counterparty (other than Hedging Arrangements as to which arrangements satisfactory to the Swap Counterparty in its sole discretion have been made), (e) the termination in full of the Commitments, and (f) the termination and payment in full of all Banking Services Obligations (other than with respect to Banking Services as to which arrangements satisfactory to the Banking Services Provider in its sole discretion have been made).

“ PBGC ” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

“ PDP Reserves ” means the Proven Reserves which are categorized as both “developed” and “producing” under the definitions for oil and gas reserves promulgated by the Society of Petroleum Evaluation Engineers (or any generally recognized successor) as in effect at the time in question and reasonably acceptable to the Administrative Agent.

“ Permit ” means any approval, certificate of occupancy, consent, waiver, exemption, variance, franchise, order, permit, authorization, right or license of or from any Governmental Authority, including without limitation, an Environmental Permit.

“ Permitted Debt ” has the meaning set forth in Section 6.1 .

“ Permitted Investments ” has the meaning set forth in Section 6.3 .

“ Permitted Liens ” has the meaning set forth in Section 6.2 .

“ Permitted Tax Distributions ” means Tax Advances (as such term is defined in the LLC Agreement) made by the Borrower to holders of its Equity Interests in accordance with the provisions of Section 4.3(a) of the LLC Agreement (as in effect on the Closing Date) with respect to any tax year in which the Borrower is treated as a partnership for federal and applicable state and local income tax purposes; provided that such Tax Advances shall only be permitted on an annual basis.

“ Person ” means an individual, partnership, corporation (including a business trust), joint stock company, trust, limited liability company, limited liability partnership, unincorporated association, joint venture, or other entity, or a government or any political subdivision or agency thereof, or any trustee, receiver, custodian, or similar official.

“ Plan ” means an employee benefit plan (other than a Multiemployer Plan) maintained for employees of the Borrower or any member of the Controlled Group and covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code.

“ Pledge Agreement ” means a Pledge Agreement substantially in the form of Exhibit H .

“ Pricing Grid ” means the pricing information set forth in Schedule II .

“ Prime Rate ” means the per annum rate of interest established from time to time by the Administrative Agent at its principal office in San Francisco as its prime rate, which rate may not be the lowest rate of interest charged by such Lender to its customers.

“ Property ” of any Person means any property or assets (whether real, personal, or mixed, tangible or intangible) of such Person, including but not limited to, Oil and Gas Properties and Hedging Arrangements.

“ Pro Rata Share ” means, at any time with respect to any Lender, (i) the ratio (expressed as a percentage) of such Lender’s Commitment at such time to the aggregate Commitments at such time, or (ii) if all of the Commitments have been terminated, the ratio (expressed as a percentage) of such Lender’s aggregate outstanding Advances at such time to the total aggregate outstanding Advances at such time.

“ Proven Reserves ” means, at any particular time, the estimated quantities of Hydrocarbons which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs attributable to Oil and Gas Properties included or to be included in the Borrowing

Base under then existing economic and operating conditions (i.e., prices and costs as of the date the estimate is made).

“ Purchase Money Debt ” means Debt, the proceeds of which are used to finance (or refinance) the acquisition, construction, or improvement of inventory, equipment or other Property in the ordinary course of business; provided, however, that such Debt is incurred no later than 120 days after such acquisition or the completion of such construction or improvement.

“ PV10 ” means estimated future net revenue, discounted at a rate of 10% per annum, after income Taxes and with no price or cost escalation or de-escalation in accordance with guidelines promulgated by the SEC, using the Administrative Agent’s price deck.

“ Qualified ECP Guarantor ” means, in respect of any Swap Obligation, each Credit Party that has total assets exceeding $10,000,000 at the time the relevant guarantee or grant of the relevant security interest becomes effective with respect to such Swap Obligation or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

“ Quantum Group ” means Q-Jagged Peak Energy Investment Partners, LLC and its Affiliates.

“ Quarterly Redetermination ” has the meaning assigned to such term in Section 2.2(c).

“ Recipient ” means (a) the Administrative Agent, (b) any Lender, and (c) the Issuing Lender, as applicable.

“ Register ” has the meaning set forth in Section 9.7(c) .

“ Regulations T, U, and X ” means Regulations T, U, and X of the Federal Reserve Board, as each is from time to time in effect, and all official rulings and interpretations thereunder or thereof. Each of Regulations T, U, or X may be referred to individually as Regulation T, Regulation U, or Regulation X herein.

“ Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

“ Release ” shall have the meaning set forth in CERCLA or under any other Environmental Law.

“ Replacement Hedging Contract ” means any Hedging Arrangement entered into by the end of the Business Day immediately succeeding the day on which a Hedge Event occurs.

“ Reportable Event ” means any of the events set forth in Section 4043(c) of ERISA (other than any such event not subject to the provision for 30-day notice to the PBGC under the regulations issued under such section).

Letter of Credit Exposure held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders unless all Lenders are Defaulting Lenders.

“ Reserve Report Certificate ” has the meaning set forth in Section 5.2(c)(iii) .

“ Response ” shall have the meaning set forth in CERCLA or under any other Environmental Law.

“ Responsible Officer ” means (a) with respect to any Person that is a corporation, such Person’s Chief Executive Officer, President, Chief Financial Officer, Chief Operating Officer or Vice President, (b) with respect to any Person that is a limited liability company, if such Person has officers, then such Person’s Chief Executive Officer, President, Chief Financial Officer, Chief Operating Officer or Vice President, and if such Person is managed by members, then a Responsible Officer of such Person’s managing member, and if such Person is managed by managers, then a manager (if such manager is an individual) or a Responsible Officer of such manager (if such manager is an entity), and (c) with respect to any Person that is a general partnership, limited partnership or a limited liability partnership, a Responsible Officer of such Person’s general partner or partners. Unless expressly provided otherwise, all references herein and in any other Credit Documents to any “Responsible Officer” means a Responsible Officer of the Borrower.

“ Restricted Payment ” means, with respect to any Person, (a) any direct or indirect dividend or distribution (whether in cash, securities or other Property) or any direct or indirect payment of any kind or character (whether in cash, securities or other Property) made in connection with the Equity Interest of such Person, including those dividends, distributions and payments made in consideration for or otherwise in connection with any retirement, purchase, redemption or other acquisition of any Equity Interest of such Person, or any options, warrants or rights to purchase or acquire any such Equity Interest of such Person or (b) principal or interest payments (in cash, Property or otherwise) on, or redemptions of, subordinated debt of such Person; provided that the term “Restricted Payment” shall not include any dividend or distribution payable solely in common Equity Interests of such Person or warrants, options or other rights to purchase such Equity Interests.

“ S&P ” means Standard & Poor’s Rating Agency Group, a division of McGraw-Hill Companies, Inc., or any successor thereof which is a national credit rating organization.

“ Sanction ” means any sanction administered or enforced by the United States Government (including OFAC), the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority.

“ Sanctioned Entity ” means (a) a country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its government, or (d) a Person resident in a country, in each case, that is subject to a country sanctions program administered and enforced by OFAC.

“ Sanctioned Person ” means a person named on the list of Specially Designated Nationals maintained by OFAC.

“ SEC ” means the Securities and Exchange Commission.

“ Secured Obligations” means (a) the Obligations, (b) the Banking Services Obligations, and (c) all obligations of any of the Credit Parties owing to Swap Counterparties under any Hedging Arrangements; provided , however that “Secured Obligations” shall not include the Excluded Swap Obligations.

“ Secured Parties ” means the Administrative Agent, the Issuing Lender, the Lenders, the Swap Counterparties and Banking Service Providers.

“ Security Agreement ” means the Security Agreement among the Credit Parties and the Administrative Agent in substantially the same form as Exhibit I .

“ Security Documents ” means, collectively, the Mortgages, Security Agreement, the Pledge Agreement, the Transfer Letters and any and all other instruments, documents or agreements, including Account Control Agreements, now or hereafter executed by any Credit Party or any other Person to secure the Secured Obligations.

“ Semi-Annual Redetermination ” has the meaning assigned to such term in Section 2.2(b)

“ Scheduled Redetermination ” has the meaning assigned to such term in Section 2.2(e).

“ Solvent ” means, as to any Person, on the date of any determination (a) the fair value of the Property of such Person is greater than the total amount of debts and other liabilities (including without limitation, contingent liabilities) of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts and other liabilities (including, without limitation, contingent liabilities) as they become absolute and matured, (c) such Person is able to realize upon its assets and pay its debts and other liabilities (including, without limitation, contingent liabilities) as they mature in the normal course of business, (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities (including, without limitation, contingent liabilities) beyond such Person’s ability to pay as such debts and liabilities mature, (e) such Person is not engaged in, and is not about to engage in, business or a transaction for which such Person’s Property would constitute unreasonably small capital, and (f) such Person has not transferred, concealed or removed any Property with intent to hinder, delay or defraud any creditor of such Person.

“ Subsidiary ” means, with respect to any Person (the “ holder ”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the holder in the holder’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity, a majority of whose outstanding Voting Securities shall at any time be owned by the holder or one more Subsidiaries of the holder. Unless expressly provided otherwise, all references herein and in any other Credit Document to any “Subsidiary” or “Subsidiaries” means a Subsidiary or Subsidiaries of the Borrower.

“ Super-Majority Lenders ” means (a) at any time when there are three or more Lenders, Lenders holding at least 80% or more of the aggregate Maximum Exposure Amount, (b) if two or fewer Lenders exist, then 100% of the Lenders, and (c) at any time when there is only one Lender, such Lender; provided that, if there are two or more Lenders, the Commitment of, and the portion of the Advances and Letter of Credit Exposure held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Super-Majority Lenders unless all Lenders are Defaulting Lenders.

shall be secured by Liens under the Credit Documents only if such assignee or transferee is also then a Lender or an Affiliate of a Lender and (ii) if a Swap Counterparty ceases to be a Lender hereunder or an Affiliate of a Lender hereunder, obligations owing to such Swap Counterparty shall be secured by Liens under the Credit Documents only to the extent such obligations arise from transactions under such individual Hedging Arrangements (and not the Master Agreement between such parties) entered into prior to the Closing Date or at the time such Swap Counterparty was a Lender hereunder or an Affiliate of a Lender hereunder, without giving effect to any extension, increases, or modifications thereof which are made after such Swap Counterparty ceases to be a Lender hereunder or an Affiliate of a Lender hereunder.

“ Swap Obligation ” means, with respect to any Credit Party other than the Borrower, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

“ Taxes ” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“ Termination Event ” means (a) a Reportable Event with respect to a Plan, (b) the withdrawal of the Borrower or any member of the Controlled Group from a Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under Section 4041(c) of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC, or (e) any other event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan.

“ Transactions ” means, collectively, (a) the initial borrowings and other extensions of credit under this Agreement and (b) the payment of fees, commissions and expenses in connection with each of the foregoing.

“ Transfer Letters ” means, collectively, the letters in lieu of transfer orders in substantially the form of the attached Exhibit J and executed by the Borrower, any Guarantor or any of their respective Subsidiaries executing a Mortgage.

“ Type ” has the meaning set forth in Section 1.4 .

“ Unused Commitment Amount ” means, with respect to a Lender at any time, the lesser of (a) such Lender’s Commitment at such time and (b) such Lender’s Pro Rata Share of the Borrowing Base then in effect at such time minus , in each case the sum of (i) the aggregate outstanding principal amount of all Advances owed to such Lender at such time plus (ii) such Lender’s Pro Rata Share of the aggregate Letter of Credit Exposure at such time.

“ U.S. Person ” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.

“ U.S. Tax Compliance Certificate ” has the meaning assigned to such term in Section 2.13(g)(ii)(B)(iii) .

“ Utilization Level ” means the applicable category (being Level I, Level II, Level III, Level IV or Level V) of pricing criteria contained in Schedule II , which is at any time of its determination based on the percentage obtained by dividing (a) the outstanding principal amount of the Advances and the Letter

of Credit Exposure at such time by (b) the lesser of the Commitments and the Borrowing Base at such time.

“ Voting Securities ” means (a) with respect to any corporation, capital stock of the corporation having general voting power under ordinary circumstances to elect directors of such corporation (irrespective of whether at the time stock of any other class or classes shall have or might have special voting power or rights by reason of the happening of any contingency), (b) with respect to any partnership, any partnership interest or other ownership interest having general voting power to elect the general partner or other management of the partnership or other Person, and (c) with respect to any limited liability company, membership certificates or interests having general voting power under ordinary circumstances to elect managers of such limited liability company.

“ Wells Fargo ” means Wells Fargo Bank, National Association.

“ Withholding Agent ” means any Credit Party and the Administrative Agent.

Section 1.2 Computation of Time Periods . In this Agreement in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”.

Section 1.3 Accounting Terms; Changes in GAAP .

(a) All accounting terms not specifically defined in this Agreement shall be construed in accordance with GAAP applied on a consistent basis with those applied in the preparation of the financial statements of the Borrower delivered to the Administrative Agent for the fiscal year ended December 31, 2014 other than such changes that have been disclosed to the Administrative Agent on the next date on which financial statements are required to be delivered to the Administrative Agent under Section 5.2 .

(b) Unless otherwise indicated, all financial statements of the Borrower, all calculations for compliance with covenants in this Agreement, and all calculations of any amounts to be calculated under the definitions in Section 1.1 shall be based upon the consolidated accounts of the Borrower and its Subsidiaries in accordance with GAAP and consistent with the principles of consolidation applied in preparing the financial statements referred to in Section 4.4 other than such changes have been disclosed to the Administrative Agent on the next date on which financial statements are required to be delivered to the Administrative Agent under Section 5.2 .

(c) If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Credit Document, and either the Borrower or the Majority Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Majority Lenders); provided that , until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

Section 1.4 Types of Advances . Advances are distinguished by “Type”. The “Type” of an Advance refers to the determination of whether such Advance is a Base Rate Advance or a Eurodollar Advance.

Section 1.5 Miscellaneous . Article, Section, Schedule, and Exhibit references are to this Agreement, unless otherwise specified. All references to instruments, documents, contracts, and agreements (including this Agreement) are references to such instruments, documents, contracts, and agreements as the same may be amended, supplemented, and otherwise modified from time to time, unless otherwise specified and shall include all schedules and exhibits thereto unless otherwise specified. Any reference herein to any law shall be construed as referring to such law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time. Any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to the restrictions contained herein). The words “hereof”, “herein”, and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The term “including” means “including, without limitation,”. Paragraph headings have been inserted in this Agreement as a matter of convenience for reference only and it is agreed that such paragraph headings are not a part of this Agreement and shall not be used in the interpretation of any provision of this Agreement.

ARTICLE 2
CREDIT FACILITIES

Section 2.1 Commitment for Advances .

(a) Advances . Each Lender severally agrees, on the terms and conditions set forth in this Agreement, to make Advances to the Borrower from time to time on any Business Day during the Availability Period in an amount for each Lender not to exceed such Lender’s Unused Commitment Amount. Each Borrowing shall, (A) if comprised of Base Rate Advances, be in an aggregate amount not less than $1,000,000 and in integral multiples of $100,000 in excess thereof, (B) if comprised of Eurodollar Advances, be in an aggregate amount not less than $1,000,000 and in integral multiples of $100,000 in excess thereof, and (C) in each case shall consist of Advances of the same Type made on the same day by the Lenders ratably according to their respective Commitments. Within the limits of each Lender’s Commitment, and subject to the terms of this Agreement, the Borrower may from time to time borrow, prepay pursuant to Section 2.5 , and reborrow under this Section 2.1 .

(b) Notes . The indebtedness of the Borrower to each Lender resulting from Advances owing to such Lender shall be evidenced by a Note payable to such Lender or its registered assigns.

(c) Reduction of the Commitments . The Borrower shall have the right, upon at least two Business Days’ irrevocable notice to the Administrative Agent, to terminate in whole or reduce in part the unused portion of the Commitments; provided that each partial reduction shall be in a minimum amount of $3,000,000 and in integral multiples of $1,000,000 in excess thereof. Any reduction or termination of the Commitments pursuant to this Section 2.1(c) shall be applied ratably to each Lender’s Commitment and shall be permanent, with no obligation of the Lenders to reinstate such Commitments, and the applicable Commitment Fees shall thereafter be computed on the basis of the Commitments, as so reduced.

Section 2.2 Borrowing Base .

(a) Borrowing Base . The initial Borrowing Base in effect as of the Closing Date has been set by the Administrative Agent and the Lenders and acknowledged by the Borrower as $20,000,000. Such initial Borrowing Base shall remain in effect until the next redetermination or reduction made pursuant to this Section 2.2 . The Borrowing Base shall be determined in accordance with the standards set forth in Section 2.2(f) and is subject to periodic redetermination pursuant to Sections 2.2(b) , 2.2(c) and 2.2(e) , automatic increases pursuant to Section 2.2(d) and reductions pursuant to Section 2.2(g) .

(b) Semi-Annual Redeterminations .

The Borrowing Base shall be redetermined semi-annually in accordance with this Section 2.2(b) (a “ Semi-Annual Redetermination ”). Each Semi-Annual Redetermination shall be effectuated as follows:

(i) The Borrower shall deliver to the Administrative Agent, on or before each September 1, beginning September 1, 2015, an Internal Engineering Report dated effective as of the immediately preceding July 1, prepared in accordance with the procedures in the Independent Engineering Report effective as of the immediately preceding January 1 and such other information as may be reasonably requested by the Administrative Agent or any Lender with respect to the Oil and Gas Properties included or to be included in the Borrowing Base. The Administrative Agent shall promptly, and in any event within 15 days after the Administrative Agent and the Lenders’ receipt of such Internal Engineering Report and other information, deliver to each Lender the Administrative Agent’s recommendation for the redetermined Borrowing Base (for purposes of this subsection, the “ Proposed Borrowing Base ”). After having received notice of such proposal, the Lenders shall have 15 days to agree or disagree in writing with the Proposed Borrowing Base. If at the end of the 15 days, any Lender has not communicated its approval or disapproval to the Administrative Agent, such silence shall be deemed to be a disapproval of the Proposed Borrowing Base. If at the end of such 15 days, the Required Lenders (or all of the Lenders if the Borrowing Base is to be increased) have approved the Proposed Borrowing Base, then the Proposed Borrowing Base shall become the redetermined Borrowing Base, effective on or about October 1 of each year. To the extent that within such 15 day period the Administrative Agent has not received the requisite number of approvals from the Lenders, the Administrative Agent shall poll the Lenders to ascertain the highest Borrowing Base then acceptable to all of the Lenders, in the case of an increase in the Borrowing Base, or the Required Lenders, in the case of a decrease or maintenance of the Borrowing Base, and such amount shall become the new Borrowing Base, effective on or about October 1 of each year. After a redetermined Borrowing Base is approved by the Required Lenders or all of the Lenders, as applicable, the Administrative Agent shall notify the Borrower of the amount of the redetermined Borrowing Base.

(ii) The Borrower shall deliver to the Administrative Agent, on or before each March 1, beginning March 1, 2016, an Independent Engineering Report dated effective as of the immediately preceding January 1 and such other information as may be reasonably requested by the Administrative Agent or any Lender with respect to the Oil and Gas Properties included or to be included in the Borrowing Base. The Administrative Agent shall promptly, and in any event within 15 days after the Administrative Agent and the Lenders’ receipt of such Independent Engineering Report and other information, deliver to each Lender the Administrative Agent’s recommendation for the redetermined Borrowing Base (for purposes of this subsection, the “ Proposed Borrowing Base ”). After having received notice of such proposal, the Lenders shall have 15 days to agree or disagree in writing with the Proposed Borrowing Base. If at the end of the 15 days, any Lender has not communicated its approval or disapproval to the Administrative Agent, such silence shall be deemed to be a disapproval of the Proposed Borrowing Base. If at the end of such 15 days, the Required Lenders (or all of the Lenders if the Borrowing Base is to be increased) have approved the Proposed Borrowing Base, then the Proposed Borrowing Base shall become the redetermined Borrowing Base, effective on or about April 1 of each year. To the extent that within such 15 day period the Administrative Agent has not received the requisite number of approvals from the Lenders, the Administrative Agent shall poll the Lenders to ascertain the highest Borrowing Base then acceptable to all of the Lenders, in the case of an increase in the Borrowing Base, or the Required Lenders, in the case of a decrease or maintenance of the Borrowing Base, and such amount shall become the new Borrowing Base, effective on or about April 1 of each year. After a redetermined Borrowing Base is approved by

the Required Lenders or all of the Lenders, as applicable, the Administrative Agent shall notify the Borrower of the amount of the redetermined Borrowing Base.

(iii) In the event that the Borrower does not furnish to the Administrative Agent and the Lenders the Independent Engineering Report, Internal Engineering Report or other information specified in clauses (i) and (ii) above by the date specified therein, the Administrative Agent and the Lenders may nonetheless redetermine the Borrowing Base and redesignate the Borrowing Base from time-to-time thereafter in their sole discretion, with notice of such redetermination promptly provided to the Borrower in writing. Upon receipt by the Administrative Agent of the relevant Independent Engineering Report, Internal Engineering Report, or other information, as applicable, the Administrative Agent and the Lenders shall redetermine the Borrowing Base as otherwise specified in this Section 2.2 .

(iv) Each delivery of an Engineering Report by the Borrower to the Administrative Agent and the Lenders shall constitute a representation and warranty by the Borrower to the Administrative Agent and the Lenders that, unless otherwise disclosed to the Administrative Agent prior to or at the time of the delivery of such Engineering Report, (A) the Credit Parties, own the Oil and Gas Properties specified therein free and clear of any Liens (except Permitted Liens), (B) on and as of the date of such Engineering Report each Oil and Gas Property identified as PDP Reserves therein was developed for oil and gas, and the wells pertaining to such Oil and Gas Properties that are described therein as producing wells (“ Wells ”), were each producing oil and/or gas in paying quantities, except for Wells that were utilized as water or gas injection wells, carbon dioxide wells or as water disposal wells (each as noted in such Engineering Report), (C) the descriptions of quantum and nature of the record title interests of the Credit Parties, set forth in such Engineering Report include the entire record title interests of the Credit Parties in such Oil and Gas Properties, are complete and accurate in all respects, and take into account all Permitted Liens, (D) there are no “back-in”, “reversionary” or “carried” interests held by third parties which could reduce the interests of the Credit Parties in such Oil and Gas Properties except as set forth in, or otherwise accounted for in, the Engineering Report, (E) no operating or other agreement to which any Credit Party is a party or by which any Credit Party is bound affecting any part of such Oil and Gas Properties requires any Credit Party to bear any of the costs relating to such Oil and Gas Properties greater than the record title interest of any Credit Party in such portion of such Oil and Gas Properties as set forth in such Engineering Report, except in the event any Credit Party is obligated under an operating agreement to assume a portion of a defaulting party’s share of costs, and (F) the Credit Parties’ ownership of the Hydrocarbons and the undivided interests in the Oil and Gas Properties as specified in such Engineering Report (i) will, after giving full effect to all Permitted Liens, afford the Credit Parties not less than those net interests (expressed as a fraction, percentage or decimal) in the production from or which is allocated to such Hydrocarbons specified as net revenue interest in such Engineering Report and (ii) will cause the Credit Parties to bear not more than that portion (expressed as a fraction, percentage or decimal), specified as working interest in such Engineering Report, of the costs of drilling, developing and operating the wells identified in such Engineering Report or identified in the exhibits to the Mortgages encumbering such Oil and Gas Properties (except for any increases in working interest with a corresponding increase in the net revenue interest in such Oil and Gas Property).

(i) In addition to the Semi-Annual Redeterminations, the Borrower may, during the two year period commencing on October 1, 2015 and ending October 1, 2017, elect to cause the Borrowing Base to be redetermined between Semi-Annual Redeterminations (a “ Quarterly Redetermination ”) in accordance with this Section 2.2(c), provided , that the Borrower shall

request such Quarterly Redetermination by notifying the Administrative Agent and the Lenders concurrent with the delivery of the applicable Engineering Report in connection with the Semi-Annual Redetermination immediately preceding the applicable Quarterly Redetermination that it requests a Quarterly Redetermination be conducted prior to the next Semi-Annual Redetermination. Each such Quarterly Redetermination and Semi-Annual Redetermination shall be referred to herein as a (“ Scheduled Redetermination ).

(ii) Each requested January 1 Quarterly Redetermination shall be effectuated as follows. The Borrower shall deliver to the Administrative Agent on or before the applicable December 1, an Internal Engineering Report effective as of a date that is no later than October 1, prepared in accordance with the procedures in the Independent Engineering Report effective as of the immediately preceding January 1 and such other information as may be reasonably requested by the Administrative Agent or any Lender with respect to the Oil and Gas Properties included or to be included in the Borrowing Base. The Administrative Agent shall promptly, and in any event within 15 days after the Administrative Agent and the Lenders’ receipt of such Internal Engineering Report and other information, deliver to each Lender the Administrative Agent’s recommendation for the redetermined Borrowing Base (for purposes of this subsection, the “ Proposed Borrowing Base ”). After having received notice of such proposal, the Lenders shall have 15 days to agree or disagree in writing with the Proposed Borrowing Base. If at the end of the 15 days, any Lender has not communicated its approval or disapproval to the Administrative Agent, such silence shall be deemed to be a disapproval of the Proposed Borrowing Base. If at the end of such 15 days, the Required Lenders (or all of the Lenders if the Borrowing Base is to be increased) have approved the Proposed Borrowing Base, then the Proposed Borrowing Base shall become the redetermined Borrowing Base, effective on or about January 1. To the extent that within such 15 day period the Administrative Agent has not received the requisite number of approvals from the Lenders, the Administrative Agent shall poll the Lenders to ascertain the highest Borrowing Base then acceptable to all of the Lenders, in the case of an increase in the Borrowing Base, or the Required Lenders, in the case of a decrease or maintenance of the Borrowing Base, and such amount shall become the new Borrowing Base, effective on or about January 1. After a redetermined Borrowing Base is approved by the Required Lenders or all of the Lenders, as applicable, the Administrative Agent shall notify the Borrower of the amount of the redetermined Borrowing Base.

from the Lenders, the Administrative Agent shall poll the Lenders to ascertain the highest Borrowing Base then acceptable to all of the Lenders, in the case of an increase in the Borrowing Base, or the Required Lenders, in the case of a decrease or maintenance of the Borrowing Base, and such amount shall become the new Borrowing Base, effective on or about July 1. After a redetermined Borrowing Base is approved by the Required Lenders or all of the Lenders, as applicable, the Administrative Agent shall notify the Borrower of the amount of the redetermined Borrowing Base.

(iv) In the event that the Borrower does not furnish to the Administrative Agent and the Lenders the Internal Engineering Report or other information specified in clauses (ii) and (iii) above by the date specified therein, the Administrative Agent and the Lenders may nonetheless redetermine the Borrowing Base and redesignate the Borrowing Base from time-to-time thereafter in their sole discretion, with notice of such redetermination promptly provided to the Borrower in writing. Upon receipt by the Administrative Agent of the Internal Engineering Report, or other information, as applicable, the Administrative Agent and the Lenders shall redetermine the Borrowing Base as otherwise specified in this Section 2.2 .

(v) Each delivery of an Engineering Report by the Borrower to the Administrative Agent and the Lenders shall constitute a representation and warranty by the Borrower to the Administrative Agent and the Lenders that, unless otherwise disclosed to the Administrative Agent prior to or at the time of the delivery of such Engineering Report, (A) the Credit Parties, own the Oil and Gas Properties specified therein free and clear of any Liens (except Permitted Liens), (B) on and as of the date of such Engineering Report each Oil and Gas Property identified as PDP Reserves therein was developed for oil and gas, and the wells pertaining to such Oil and Gas Properties that are described therein as producing wells, were each producing oil and/or gas in paying quantities, except for Wells that were utilized as water or gas injection wells, carbon dioxide wells or as water disposal wells (each as noted in such Engineering Report), (C) the descriptions of quantum and nature of the record title interests of the Credit Parties, set forth in such Engineering Report include the entire record title interests of the Credit Parties in such Oil and Gas Properties, are complete and accurate in all respects, and take into account all Permitted Liens, (D) there are no “back-in”, “reversionary” or “carried” interests held by third parties which could reduce the interests of the Credit Parties in such Oil and Gas Properties except as set forth in, or otherwise accounted for in, the Engineering Report, (E) no operating or other agreement to which any Credit Party is a party or by which any Credit Party is bound affecting any part of such Oil and Gas Properties requires any Credit Party to bear any of the costs relating to such Oil and Gas Properties greater than the record title interest of any Credit Party in such portion of such Oil and Gas Properties as set forth in such Engineering Report, except in the event any Credit Party is obligated under an operating agreement to assume a portion of a defaulting party’s share of costs, and (F) the Credit Parties’ ownership of the Hydrocarbons and the undivided interests in the Oil and Gas Properties as specified in such Engineering Report (i) will, after giving full effect to all Permitted Liens, afford the Credit Parties not less than those net interests (expressed as a fraction, percentage or decimal) in the production from or which is allocated to such Hydrocarbons specified as net revenue interest in such Engineering Report and (ii) will cause the Credit Parties to bear not more than that portion (expressed as a fraction, percentage or decimal), specified as working interest in such Engineering Report, of the costs of drilling, developing and operating the wells identified in such Engineering Report or identified in the exhibits to the Mortgages encumbering such Oil and Gas Properties (except for any increases in working interest with a corresponding increase in the net revenue interest in such Oil and Gas Property).

(d) Automatic Increases

(i) Notwithstanding the foregoing and subject to satisfaction of the condition precedent contained in Section 2.2(d)(ii) , the Borrowing Base will automatically increase as follows (A) to $25,000,000.00 when two of the three New Wells as described on Schedule IV attached hereto are completed and produce for at least seven consecutive days at rates materially consistent with the database received by the Administrative Agent from the Borrower in March of 2015 that was dated effective January of 2015 (as determined by the Administrative Agent in its sole discretion) and (B) to $32,500,000 when all three of the New Wells described on Schedule IV are completed and produce for at least seven consecutive days at rates materially consistent with the database received by the Administrative Agent from the Borrower in March of 2015 that was dated effective January of 2015 (as determined by the Administrative Agent in its sole discretion). If the Administrative Agent determines in its sole discretion that such production rates for the New Wells are materially less than the Borrower’s forecast for such New Wells, the Administrative Agent and the Lenders may in their sole discretion reduce the amount of the proposed increases described in clause (A) and (B) in this Section 2.2(d) . Notwithstanding anything to the contrary contained herein, the automatic increases described in clause (A) and (B) in this Section 2.2(d) shall, to the extent either such increase has not already occurred, expire at the first Scheduled Redetermination of the Borrowing Base that occurs on or after October 1, 2015.

(ii) Notwithstanding the foregoing, the Borrowing Base will not automatically increase as described in clause (A) and (B) in Section 2.2(d)(i) unless the Borrower both: (A) executes Mortgages, or supplements to existing Mortgages, granting an Acceptable Security Interest in the applicable New Wells, and (B) provides to the Administrative Agent title information regarding such New Wells that is reasonably satisfactory to the Administrative Agent; provided that such requirement shall not change on a going forward basis the 80% mortgage requirement as described in Section 5.7 herein.

(iii) Notwithstanding the foregoing, the Borrowing Base will not automatically increase as described in either clause (A) or (B) in Section 2.2(d)(i) , as applicable, if the Borrowing Base is reduced pursuant to Section 2.2(g) hereof prior to such applicable automatic increases. If the Borrowing Base is reduced pursuant to Section 2.2(g) hereof prior to the automatic increase described in clause (A) of Section 2.2(d)(i) above, then the Borrowing Base will automatically increase by $5,000,000 when the conditions of clause (A) in Section 2.2(d)(i) and in Section 2.2(d)(ii) above are fully met (as determined by the Administrative Agent in its sole discretion). If the Borrowing Base is reduced pursuant to Section 2.2(g) hereof prior to the automatic increase described in clause (B) of Section 2.2(d)(i) above, then the Borrowing Base will automatically increase by $7,500,000 when the conditions of clause (B) in Section 2.2(d)(i) and in Section 2.2(d)(ii) above are fully met (as determined by the Administrative Agent in its sole discretion).

(e) Interim Redetermination . In addition to the Scheduled Redeterminations, (i) based on such information as the Administrative Agent and the Lenders deem relevant (but in accordance with Section 2.2(f) ), the Administrative Agent may, and shall at the request of the Required Lenders, make one additional redetermination of the Borrowing Base during the period between any two Semi-Annual Redeterminations, and (ii) based on such information as the Administrative Agent and the Lenders deem relevant (but in accordance with Section 2.2(f) ), the Administrative Agent shall at the request of the Borrower, make one additional redetermination of the Borrowing Base during the period between any two Semi-Annual Redeterminations. For the avoidance of doubt, such additional redeterminations of the Borrowing Base shall not constitute nor be construed as a consent to any transaction or proposed

transaction that would not be permitted under the terms of this Agreement. The party requesting the redetermination under this paragraph (e) shall give the other party at least 10 days’ prior written notice that a redetermination of the Borrowing Base pursuant to this paragraph (e) is to be performed; provided that, no such prior written notice shall be required for any redetermination made by the Lenders during the existence of an Event of Default. In connection with any redetermination of the Borrowing Base under this Section 2.2(f) , the Borrower shall provide the Administrative Agent and the Lenders with an Internal Engineering Report prepared in accordance with the procedures used in the immediately preceding Independent Engineering Report or an Independent Engineering Report dated effective as of a date no more than 30 days prior to the redetermination, and such other information as may be reasonably requested by the Administrative Agent or any Lender with respect to the Oil and Gas Properties included or to be included in the Borrowing Base. The Administrative Agent shall promptly notify the Borrower in writing of each redetermination of the Borrowing Base pursuant to this Section 2.2(e) and the amount of the Borrowing Base as so redetermined.

(f) Standards for Redetermination . Each redetermination of the Borrowing Base by the Administrative Agent and the Lenders pursuant to this Section 2.2 shall be made (i) in the sole discretion of the Administrative Agent and the Lenders (but in accordance with the other provisions of this Section 2.2(f) , (ii) in accordance with the Administrative Agent’s and the Lenders’ customary internal standards and practices for valuing and redetermining the value of Oil and Gas Properties in connection with reserve based oil and gas loan transactions, (iii) in conjunction with the most recent Independent Engineering Report or Internal Engineering Report, as applicable, or other information received by the Administrative Agent and the Lenders relating to the Proven Reserves of the Credit Parties, and (iv) based upon the estimated value of the Proven Reserves owned by the Credit Parties as determined by the Administrative Agent and the Lenders. In valuing and redetermining the Borrowing Base, the Administrative Agent and the Lenders may also consider the business, financial condition, and Debt obligations of the Credit Parties and such other factors as the Administrative Agent and the Lenders customarily deem appropriate, including without limitation, commodity price assumptions, projections of production, operating expenses, general and administrative expenses, capital costs, working capital requirements, liquidity evaluations, dividend payments, environmental costs, and legal costs. In that regard, the Borrower acknowledges that the determination of the Borrowing Base contains an equity cushion (market value in excess of loan value), which is essential for the adequate protection of the Administrative Agent and the Lenders. No Proven Reserves shall be included in the Borrowing Base unless the Administrative Agent shall have received (or the Administrative Agent shall have otherwise agreed on the timing of the delivery of), at the Borrower’s expense, (A) evidence of title reasonably satisfactory in form and substance to the Administrative Agent covering at least 80% (by PV10) of the Proven Reserves as evaluated in the most recently delivered Engineering Report, and (B) Mortgages and such other Security Documents requested by the Administrative Agent to the extent necessary to cause the Administrative Agent to have an Acceptable Security Interest in at least 80% (by PV10) of the Proven Reserves as evaluated in the most recently delivered Engineering Report. At all times after the Administrative Agent has given the Borrower notification of a redetermination of the Borrowing Base under this Section 2.2 , the Borrowing Base shall be equal to the redetermined amount or such lesser amount designated by the Borrower and disclosed in writing to the Administrative Agent and the Lenders until the Borrowing Base is subsequently redetermined or reduced in accordance with this Section 2.2 ; provided that the Borrower shall not request that the Borrowing Base be reduced to a level that would result in a Borrowing Base Deficiency. Notwithstanding anything herein to the contrary, (x) to the extent the redetermined Borrowing Base is less than or equal to the Borrowing Base in effect prior to such redetermination, such redetermined Borrowing Base must be approved by the Administrative Agent and the Required Lenders, and (y) to the extent the redetermined Borrowing Base is greater than the Borrowing Base in effect prior to such redetermination (except in the case of the automatic increases provided for in Section 2.2(d) , such redetermined Borrowing Base must be approved by the Administrative Agent and all of the Lenders. If, however, the Administrative Agent and the Lenders or

the Required Lenders, as applicable, have not approved the Borrowing Base in accordance with the preceding sentence, then the Administrative Agent shall poll the Lenders to ascertain the highest Borrowing Base then acceptable to the number of Lenders sufficient to constitute the Required Lenders for purposes of this Section 2.2 and, so long as such amount does not increase the Borrowing Base then in effect, such amount shall become the new Borrowing Base.

(g) Reductions to Borrowing Base . If the sum of (A) the aggregate BB Value of Oil and Gas Properties as determined by the Administrative Agent subject to Asset Sales consummated since the immediately preceding redetermination of the Borrowing Base plus (B) the aggregate BB Value of Hedging Arrangements which have been the subject of a Hedge Event since the immediately preceding redetermination of the Borrowing Base (the sum of clauses (A) and (B) being the “ BB Threshold Amount ”) exceeds 5% of the most recently redetermined Borrowing Base (after taking into account the economic effect of any Replacement Hedging Contracts), then, upon the consummation of any such Asset Sale or such Hedge Event, after which the BB Threshold Amount exceeds 5% of the most recently redetermined Borrowing Base, the Borrowing Base shall be adjusted, effective immediately upon such disposition or Hedge Event by an amount equal to the BB Value of the Oil and Gas Properties subject of such Asset Sale or the BB Value of the Hedging Arrangements subject to of such Hedge Event, as applicable.

Section 2.3 Letters of Credit .

(a) Commitment for Letters of Credit . Subject to the terms and conditions set forth in this Agreement, the Issuing Lender agrees, in reliance upon the agreements of the other Lenders set forth in this Section 2.3 , from time to time on any Business Day during the Availability Period, to issue, increase or extend the expiration date of, Letters of Credit for the account of any Credit Party, provided that no Letter of Credit will be issued, increased, or extended:

(i) if such issuance, increase, or extension would cause the Letter of Credit Exposure to exceed the lesser of (A) the Letter of Credit Maximum Amount and (B) an amount equal to (1) the lesser of the Borrowing Base and the aggregate Commitments, in either case, in effect at such time minus (2) the sum of the aggregate outstanding amount of all Advances;

(ii) unless such Letter of Credit has an expiration date not later than the earlier of (A) one year after its issuance or extension and (B) five Business Days prior to the Maturity Date (an “ Acceptable Letter of Credit Maturity Date ”); provided that, (1) if the Commitments are terminated in whole pursuant to Section 2.1(c) , the Borrower shall either (A) deposit into the Cash Collateral Account cash in an amount equal to 103% of the Letter of Credit Exposure for the Letters of Credit which have an expiry date beyond the date the Commitments are terminated or (B) provide a replacement letter of credit (or other security) reasonably acceptable to the Administrative Agent and the Issuing Lender in an amount equal to 103% of the Letter of Credit Exposure, and (2) any such Letter of Credit with a one-year tenor may expressly provide for an automatic extension of one additional year so long as such Letter of Credit expressly allows the Issuing Lender, at its sole discretion, to elect not to provide such extension; provided that, in any event, such automatic extension may not result in an expiration date that occurs after the fifth Business Day prior to the Maturity Date;

(iii) unless such Letter of Credit (A) is a standby letter of credit and (B) does not support the repayment of indebtedness for borrowed money of any Person;

(iv) unless such Letter of Credit is in form and substance acceptable to the Issuing Lender in its sole discretion;

(v) unless the Borrower has delivered to the Issuing Lender a completed and executed Letter of Credit Application; provided that, if the terms of any Letter of Credit Application conflicts with the terms of this Agreement, the terms of this Agreement shall control;

(vi) unless such Letter of Credit is governed by (A) the Uniform Customs and Practice for Documentary Credits (2007 Revision), International Chamber of Commerce Publication No. 600, or (B) the International Standby Practices (ISP98), International Chamber of Commerce Publication No. 590, in either case, including any subsequent revisions thereof approved by a Congress of the International Chamber of Commerce and adhered to by the Issuing Lender;

(vii) if any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the Issuing Lender from issuing, increasing or extending such Letter of Credit, or any Legal Requirement applicable to the Issuing Lender or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Issuing Lender shall prohibit, or request that the Issuing Lender refrain from, the issuance, increase or extension of letters of credit generally or such Letter of Credit in particular or shall impose upon the Issuing Lender with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the Issuing Lender is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the Issuing Lender any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the Issuing Lender in good faith deems material to it;

(viii) if the issuance, increase or extension of such Letter of Credit would violate one or more policies of the Issuing Lender applicable to letters of credit generally;

(ix) if Letter of Credit is to be denominated in a currency other than Dollars;

(x) if any Lender is at such time a Defaulting Lender hereunder, unless the Issuing Lender has entered into satisfactory arrangements including the delivery of Cash Collateral, satisfactory to the Issuing Lender (in its sole discretion) with the Borrower or such Lender to eliminate the Issuing Lender’s actual or potential Fronting Exposure (after giving effect to Section 2.16(a)(iv) ) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other Letter of Credit Obligations as to which the Issuing Lender has actual or potential Fronting Exposure, as it may elect in its sole discretion; or

(xi) if such Letter of Credit supports the obligations of any Person in respect of (x) a lease of real property, or (y) an employment contract, in each case, if the Issuing Lender reasonably determines that the Borrower’s obligation to reimburse any draws under such Letter of Credit may be limited.

(b) Requesting Letters of Credit . Each Letter of Credit shall be issued pursuant to a Letter of Credit Application given by the Borrower to the Administrative Agent and the Issuing Lender by facsimile, electronic mail or other writing not later than 10:00 a.m. (Denver, Colorado time) on the third Business Day before the proposed date of issuance for the Letter of Credit. Each Letter of Credit Application shall be fully completed and shall specify the information required therein. Each Letter of Credit Application shall be irrevocable and binding on the Borrower. Subject to the terms and conditions hereof, the Issuing Lender shall before 1:00 p.m. (Denver, Colorado time) on the requested issuance date set forth in the Letter of Credit Application issue such Letter of Credit to the beneficiary of such Letter of Credit.

(i) With respect to any Letter of Credit, in accordance with the related Letter of Credit Application, the Borrower agrees to pay on demand to the Administrative Agent on behalf of the Issuing Lender an amount equal to any amount paid by the Issuing Lender under such Letter of Credit. Upon the Issuing Lender’s demand for payment under the terms of a Letter of Credit Application, the Borrower may, with a written notice, request that the Borrower’s obligations to the Issuing Lender thereunder be satisfied with the proceeds of an Advance in the same amount (notwithstanding any minimum size or increment limitations on individual Advances). If the Borrower does not make such request and does not otherwise make the payments demanded by the Issuing Lender as required under this Agreement or the Letter of Credit Application, then the Borrower shall be deemed for all purposes of this Agreement to have requested such an Advance in the same amount and the transfer of the proceeds thereof to satisfy the Borrower’s obligations to the Issuing Lender, and the Borrower hereby unconditionally and irrevocably authorizes, empowers, and directs the Lenders to make such Advance, to transfer the proceeds thereof to the Issuing Lender in satisfaction of such obligations, and to record and otherwise treat such payments as an Advance to the Borrower. The Administrative Agent and each Lender may record and otherwise treat the making of such Borrowings as the making of a Borrowing to the Borrower under this Agreement as if requested by the Borrower. Nothing herein is intended to release any of the Borrower’s obligations under any Letter of Credit Application, but only to provide an additional method of payment therefor. The making of any Borrowing under this Section 2.3(c) shall not constitute a cure or waiver of any Default, other than the payment Default which is satisfied by the application of the amounts deemed advanced hereunder, caused by the Borrower’s failure to comply with the provisions of this Agreement or the Letter of Credit Application.

(ii) Each Lender (including the Lender acting as Issuing Lender) shall, upon notice from the Administrative Agent that the Borrower has requested or is deemed to have requested an Advance pursuant to Section 2.4 and regardless of whether (A) the conditions in Section 3.2 have been met, (B) such notice complies with Section 2.4 , or (C) a Default exists, make funds available to the Administrative Agent for the account of the Issuing Lender in an amount equal to such Lender’s Pro Rata Share of the amount of such Advance not later than 1:00 p.m. (Denver, Colorado time) on the Business Day specified in such notice by the Administrative Agent, whereupon each Lender that so makes funds available shall be deemed to have made an Advance to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the Issuing Lender.

(iii) If any such Lender shall not have so made its Advance available to the Administrative Agent pursuant to this Section 2.3 , such Lender agrees to pay interest thereon for each day from such date until the date such amount is paid at the lesser of (A) the Federal Funds Rate for such day for the first three days and thereafter the interest rate applicable to the Advance and (B) the Maximum Rate. Whenever, at any time after the Administrative Agent has received from any Lender such Lender’s Advance, the Administrative Agent receives any payment on account thereof, the Administrative Agent will pay to such Lender its participating interest in such amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s Advance was outstanding and funded), which payment shall be subject to repayment by such Lender if such payment received by the Administrative Agent is required to be returned. Each Lender’s obligation to make the Advance pursuant to this Section 2.3 shall be absolute and unconditional and shall not be affected by any circumstance, including (1) any set-off, counterclaim, recoupment, defense or other right which such Lender or any other Person may have against the Issuing Lender, the Administrative Agent or any other Person for

any reason whatsoever; (2) the occurrence or continuance of a Default or the termination of the Commitments; (3) any breach of this Agreement by any Credit Party or any other Lender; or (4) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.

(d) Participations . Upon the date of the issuance or increase of a Letter of Credit, the Issuing Lender shall be deemed to have sold to each other Lender and each other Lender shall have been deemed to have purchased from the Issuing Lender a participation in the related Letter of Credit Obligations equal to such Lender’s Pro Rata Share at such date and such sale and purchase shall otherwise be in accordance with the terms of this Agreement. The Issuing Lender shall promptly notify each such participant Lender by facsimile, telephone, or electronic mail (PDF) of each Letter of Credit issued or increased and the actual dollar amount of such Lender’s participation in such Letter of Credit.

(e) Obligations Unconditional . The obligations of the Borrower under this Agreement in respect of each Letter of Credit shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, notwithstanding the following circumstances:

(i) any lack of validity or enforceability of any Letter of Credit Documents;

(ii) any amendment or waiver of or any consent to departure from any Letter of Credit Documents;

(iii) the existence of any claim, set-off, defense or other right which any Credit Party may have at any time against any beneficiary or transferee of such Letter of Credit (or any Persons for whom any such beneficiary or any such transferee may be acting), the Issuing Lender, any Lender or any other person or entity, whether in connection with this Agreement, the transactions contemplated in this Agreement or in any Letter of Credit Documents or any unrelated transaction;

(iv) any statement or any other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect to the extent the Issuing Lender would not be liable therefor pursuant to the following paragraph (g);

(v) payment by the Issuing Lender under such Letter of Credit against presentation of a draft or certificate which does not comply with the terms of such Letter of Credit; or

(vi) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

(f) Prepayments of Letters of Credit . In the event that any Letter of Credit shall be outstanding or shall be drawn and not reimbursed on or prior to the Acceptable Letter of Credit Maturity Date, the Borrower shall pay to the Administrative Agent an amount equal to 103% of the Letter of Credit Exposure allocable to such Letter of Credit, such amount to be due and payable on the Acceptable Letter of Credit Maturity Date, and to be held in the Cash Collateral Account and applied in accordance with paragraph (h) below.

(g) Liability of Issuing Lender . The Borrower assumes all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of Credit. Neither the Issuing Lender nor any of its officers or directors shall be liable or responsible for:

(i) the use which may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith;

(ii) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged;

(iii) payment by the Issuing Lender against presentation of documents which do not comply with the terms of a Letter of Credit, including failure of any documents to bear any reference or adequate reference to the relevant Letter of Credit; or

(iv) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit ( INCLUDING THE ISSUING LENDER’S OWN NEGLIGENCE ),

except that the Borrower shall have a claim against the Issuing Lender, and the Issuing Lender shall be liable to, and shall promptly pay to, the Borrower, to the extent of any direct, as opposed to consequential, damages suffered by the Borrower which the Borrower proves were caused by the Issuing Lender’s willful misconduct or gross negligence (as determined in a final, non-appealable judgment of a court of competent jurisdiction) in determining whether documents presented under a Letter of Credit comply with the terms of such Letter of Credit. In furtherance and not in limitation of the foregoing, the Issuing Lender may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary.

(h) Cash Collateral Account .

(i) If the Borrower is required to deposit funds in the Cash Collateral Account pursuant to Sections 2.5(c) , 2.16 , 7.2(b) or 7.3(b) or any other provision under this Agreement, then the Borrower and the Administrative Agent shall establish the Cash Collateral Account and the Borrower shall execute any documents and agreements, including the Administrative Agent’s standard form assignment of deposit accounts, that the Administrative Agent requests in connection therewith to establish the Cash Collateral Account and grant the Administrative Agent an Acceptable Security Interest in such account and the funds therein. The Borrower hereby pledges to the Administrative Agent and grants the Administrative Agent a security interest in the Cash Collateral Account, whenever established, all funds held in the Cash Collateral Account from time to time, and all proceeds thereof as security for the payment of the Secured Obligations.

(ii) Funds held in the Cash Collateral Account shall be held as cash collateral for obligations with respect to Letters of Credit and promptly applied by the Administrative Agent at the request of the Issuing Lender to any reimbursement or other obligations under Letters of Credit that exist or occur. To the extent that any surplus funds are held in the Cash Collateral Account above the Letter of Credit Exposure during the existence of an Event of Default the Administrative Agent may (A) hold such surplus funds in the Cash Collateral Account as cash collateral for the Secured Obligations or (B) apply such surplus funds to any Secured Obligations in any manner directed by the Required Lenders. If no Default exists, the Administrative Agent shall release any surplus funds held in the Cash Collateral Account above the Letter of Credit Exposure to the Borrower at the Borrower’s written request.

(iii) Funds held in the Cash Collateral Account may be invested in Liquid Investments maintained with, and under the sole dominion and control of, the Administrative Agent or in another investment if mutually agreed upon by the Borrower and the Administrative Agent, but the Administrative Agent shall have no obligation to make any investment of the funds therein. The Administrative Agent shall exercise reasonable care in the custody and preservation of any funds held in the Cash Collateral Account and shall be deemed to have exercised such care if such funds are accorded treatment substantially equivalent to that which the Administrative Agent accords its own property, it being understood that the Administrative Agent shall not have any responsibility for taking any necessary steps to preserve rights against any parties with respect to any such funds.

(i) Letters of Credit Issued for Guarantors or any Subsidiary . Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Guarantor or any Subsidiary, the Borrower shall be obligated to reimburse the Issuing Lender hereunder for any and all drawings under such Letter of Credit issued hereunder by the Issuing Lender. The Borrower hereby acknowledges that the issuance of Letters of Credit for the account of any Guarantor, the Borrower or any Subsidiary inures to the benefit of the Borrower, and that the Borrower’s business (indirectly or directly) derives substantial benefits from the businesses of such other Persons.

Section 2.4 Advances .

(a) Notice . Each Borrowing, shall be made pursuant to the applicable Notice of Borrowing given by Borrower to Administrative Agent not later than (i) 10:00 a.m. (Denver, Colorado time) on the third Business Day before the date of the proposed Borrowing, in the case of a Eurodollar Advance or (ii) 10:00 a.m. (Denver, Colorado time) on the Business Day of the proposed Borrowing in the case of a Base Rate Advance. The Administrative Agent shall give to each Lender prompt notice of such proposed Borrowing, by facsimile, telex or electronic mail. Each Notice of Borrowing shall be by facsimile or telex or electronic mail, confirmed promptly by the Borrower with a hard copy (other than with respect to notice sent by facsimile or electronic mail), specifying (i) the requested date of such Borrowing (which shall be a Business Day), (ii) the requested Type of Advances comprising such Borrowing, (iii) the aggregate amount of such Borrowing, and (iv) if such Borrowing is to be comprised of Eurodollar Advances, the requested Interest Period for each such Advance; provided that, and all Borrowings to be made on the Closing Date shall consist of either (A) only Base Rate Advances which may, subject to the terms of this Agreement, be thereafter Converted into Eurodollar Advances or (B) Eurodollar Advances so long as the Borrower executes a letter concurrently with making the request for such Eurodollar Advance in form and substance satisfactory to the Administrative Agent indemnifying the Administrative Agent and the Lenders for any loss, cost or expense incurred do to the Borrower’s failure to borrow such Eurodollar Advance on the date or in the amount notified by the Borrower and other losses , costs and expenses comparable to those addressed in Section 2.10 . In the case of a proposed Borrowing comprised of Eurodollar Advances, the Administrative Agent shall promptly notify each Lender of the applicable interest rate under Section 2.8(b) . Each Lender shall, before 11:00 a.m. (Denver, Colorado time) on the date of such Borrowing, make available for the account of its applicable Lending Office to the Administrative Agent at its address referred to in Section 9.9 , or such other location as the Administrative Agent may specify by notice to the Lenders, in same day funds, such Lender’s pro rata share of such Borrowing. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article 3, the Administrative Agent will make such funds available to the Borrower at its account with the Administrative Agent or as otherwise directed by the Borrower with written notice to the Administrative Agent.

(b) Conversions and Continuations . In order to elect to Convert or continue an Advance under this paragraph, the Borrower shall deliver an irrevocable Notice of Continuation or Conversion to

the Administrative Agent at the Administrative Agent’s office no later than 10:00 a.m. (Denver, Colorado time) (i) at least one Business Day in advance of the proposed conversion date in the case of a Conversion to a Base Rate Advance and (ii) at least three Business Days in advance of the proposed Conversion or continuation date in the case of a Conversion to, or a continuation of, a Eurodollar Advance. Each such Notice of Conversion or Continuation shall be in writing or by telex, electronic mail or facsimile confirmed promptly by the Borrower with a hard copy (other than with respect to notice sent by facsimile or electronic mail), specifying (i) the requested Conversion or continuation date (which shall be a Business Day), (ii) the amount and Type of the Advance to be Converted or continued, (iii) whether a Conversion or continuation is requested and, if a Conversion, into what Type of Advance, and (iv) in the case of a Conversion to, or a continuation of, a Eurodollar Advance, the requested Interest Period. Promptly after receipt of a Notice of Continuation or Conversion under this paragraph, the Administrative Agent shall provide each Lender with a copy thereof and, in the case of a Conversion to or a Continuation of a Eurodollar Advance, notify each Lender of the applicable interest rate under Section 2.8(b) . The portion of Advances comprising part of the same Borrowing that are Converted to Advances of another Type shall constitute a new Borrowing.

(i) at no time shall there be more than ten (10) Interest Periods applicable to outstanding Eurodollar Advances;

(ii) if the Majority Lenders require, the Borrower may not select Eurodollar Advances for any Borrowing at any time when an Event of Default has occurred and is continuing;

(iii) if any Lender shall, at least one Business Day before the date of any requested Borrowing, notify the Administrative Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or that any central bank or other Governmental Authority asserts that it is unlawful, for such Lender or its applicable Lending Office to perform its obligations under this Agreement to make Eurodollar Advances or to fund or maintain Eurodollar Advances, (A) the obligation of such Lender to make such Eurodollar Advance as part of the requested Borrowing or for any subsequent Borrowing shall be suspended until such Lender shall notify the Borrower that the circumstances causing such suspension no longer exist and such Lender’s portion of such requested Borrowing or any subsequent Borrowing of Eurodollar Advances shall be made in the form of a Base Rate Advance, and (B) such Lender agrees to use commercially reasonable efforts (consistent with its internal policies and legal and regulatory restrictions) to designate a different Lending Office if the making of such designation would avoid the effect of this paragraph and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender;

(iv) if the Administrative Agent is unable to determine the Eurodollar Rate for Eurodollar Advances comprising any requested Borrowing, the right of the Borrower to select Eurodollar Advances for such Borrowing or for any subsequent Borrowing shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist, and each Advance comprising such Borrowing shall be a Base Rate Advance;

(v) if the Required Lenders shall, at least one Business Day before the date of any requested Borrowing, notify the Administrative Agent that the Eurodollar Rate for Eurodollar Advances comprising such Borrowing will not adequately reflect the cost to such Lenders of making or funding their respective Eurodollar Advances, as the case may be, for such Borrowing,

the right of the Borrower to select Eurodollar Advances for such Borrowing or for any subsequent Borrowing shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist, and each Advance comprising such Borrowing shall be a Base Rate Advance; and

(vi) if the Borrower shall fail to select the duration or continuation of any Interest Period for any Eurodollar Advances in accordance with the provisions contained in the definition of Interest Period in Section 1.1 and paragraph (b) above, the Administrative Agent will forthwith so notify the Borrower and the Lenders and such Advances will be made available to the Borrower on the date of such Borrowing as Base Rate Advances or, if an existing Advance, Convert into Base Rate Advances.

(d) Notices Irrevocable . Each Notice of Borrowing and Notice of Continuation or Conversion delivered by the Borrower hereunder, including its deemed request for borrowing made under Section 2.3(c) , shall be irrevocable and binding on the Borrower.

(e) Administrative Agent Reliance . Unless the Administrative Agent shall have received notice from a Lender before the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s applicable pro rata share of any Borrowing, the Administrative Agent may assume that such Lender has made its applicable pro rata share of such Borrowing available to the Administrative Agent on the date of such Borrowing in accordance with Section 2.4(a) , and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made its applicable pro rata share of such Borrowing available to the Administrative Agent, such Lender and the Borrower severally agree to immediately repay to the Administrative Agent on demand such corresponding amount, together with interest on such amount, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable on such day to Advances comprising such Borrowing and (ii) in the case of such Lender, the lesser of (A) the Federal Funds Rate for such day and (B) the Maximum Rate. If such Lender shall repay to the Administrative Agent such corresponding amount and interest as provided above, such corresponding amount so repaid shall constitute such Lender’s Advance as part of such Borrowing for purposes of this Agreement even though not made on the same day as the other Advances comprising such Borrowing.

Section 2.5 Prepayments .

(a) Right to Prepay; Ratable Prepayment . The Borrower shall have no right to prepay any principal amount of any Advance except as provided in this Section 2.5 and all notices given pursuant to this Section 2.5 shall be irrevocable (unless the notice is conditioned on a refinancing, Change of Control, asset sale or transaction of a similar nature, in which case such notice may be revoked on or prior to such date, it being understood that the Borrower shall remain obligated to pay amounts, if any, owing pursuant to Section 2.10 notwithstanding such permitted revocation) and binding upon the Borrower. Each payment of any Advance pursuant to this Section 2.5 shall be made in a manner such that all Advances comprising part of the same Borrowing are paid in whole or ratably in part other than Advances owing to a Defaulting Lender as provided in Section 2.16 .

comprising part of the same Borrowing in whole or ratably in part in an aggregate principal amount equal to the amount specified in such notice, together with accrued interest to the date of such prepayment on the principal amount prepaid and amounts, if any, required to be paid pursuant to Section 2.10 as a result of such prepayment being made on such date; provided that (A) each optional partial prepayment of Eurodollar Advances shall be in a minimum amount not less than $1,000,000 and in multiple integrals of $100,000 in excess thereof and (B) each optional partial prepayment of Base Rate Advances shall be in a minimum amount not less than $1,000,000 and in multiple integrals of $100,000 in excess thereof.

(i) Other than as provided in clause (ii) or clause (iii) below, if a Borrowing Base Deficiency exists (including as a result of a reduction of the Borrowing Base resulting from a Borrowing Base redetermination made under Section 5.12 ), the Borrower shall, after receipt of written notice from the Administrative Agent regarding such deficiency, (x) provide written notice to the Administrative Agent within 30 days of the date such deficiency notice is received by the Borrower from the Administrative Agent, identifying which of the following actions the Borrower shall take (and in the case of option (D), below, identifying the allocation between options (A), (B) and (C)), and (y) proceed to take such actions (and the failure of the Borrower to provide such notice or take such actions within the time periods specified to remedy such Borrowing Base Deficiency shall constitute an Event of Default):

(A) prepay Advances or, if the Advances have been repaid in full, make deposits into the Cash Collateral Account to provide cash collateral for the Letter of Credit Exposure, such that the Borrowing Base Deficiency is cured within 30 days after the date such deficiency notice is received by the Borrower from the Administrative Agent;

(B) pledge as Collateral for the Obligations additional Oil and Gas Properties acceptable to the Administrative Agent and each of the Lenders such that the Borrowing Base Deficiency is cured within 30 days after the date such deficiency notice is received by the Borrower from the Administrative Agent;

(C) repay the Advances and make deposits into the Cash Collateral Account to provide cash collateral for the Letters of Credit, each in five monthly installments equal to one-fifth of such Borrowing Base Deficiency with the first such installment due 30 days after the date such deficiency notice is received by the Borrower from the Administrative Agent and each following installment due 30 days after the preceding installment; or

(D) combine the options provided in clause (A), clause (B) or clause (C) above, to make such prepayment or deposit and deliver such additional Collateral within the time required under clause (A), clause (B) or clause (C) above.

(ii) If, during the existence of a Borrowing Base Deficiency, any Credit Party (or the Administrative Agent as loss payee or assignee) receives Extraordinary Receipts, whether as one payment or a series of payments, then the Borrower shall, within three Business Days after receipt of such proceeds, prepay the Borrowings and provide cash collateral for the Letter of Credit Exposure, in an aggregate amount equal to the lesser of (i) such Borrowing Base Deficiency and (ii) 100% of such proceeds. The amount paid pursuant to this Section 2.5(c)(ii) shall be applied to reduce the amounts required to be prepaid pursuant to Section 2.5(c)(i) pro rata

or, if applicable, to reduce the amount of additional Collateral that needs to be pledged pursuant to Section 2.5(c)(i)(B) or (D) .

(iii) Upon each reduction of the Borrowing Base, if any, resulting from a Borrowing Base reduction made under Section 2.2(g) , if a Borrowing Base Deficiency exists, then the Borrower shall no later than one Business Day after the closing of the Hedge Event or Asset Sale, as applicable, prepay the Advances or, if the Advances have been repaid in full, make deposits into the Cash Collateral Account to provide cash collateral for the Letter of Credit Exposure, in an amount equal to (A) such portion of the Borrowing Base Deficiency resulting from such reduction plus (B) if a Borrowing Base Deficiency exists prior to such reduction, then an amount equal to the lesser of (i) the net cash proceeds of the transaction that triggered such Borrowing Base reduction and (ii) such portion of the Borrowing Base Deficiency in existence immediately prior to such reduction. To the extent that a Borrowing Base Deficiency exists prior to such reduction, then any amount prepaid pursuant to this Section 2.5(c)(iii) shall be applied to reduce the amounts required to be prepaid pursuant to Section 2.5(c)(i) pro rata or, if applicable, to reduce the amount of additional Collateral that needs to be pledged pursuant to Section 2.5(c)(i)(B) or (D) .

(iv) Each prepayment pursuant to this Section 2.5(c) shall be accompanied by accrued interest on the amount prepaid to the date of such prepayment and amounts, if any, required to be paid pursuant to Section 2.10 (other than prepayments made to a Defaulting Lender) as a result of such prepayment being made on such date. Each prepayment under this Section 2.5(c) shall be applied to the Advances as determined by the Administrative Agent and agreed to by the Lenders in their sole discretion. The failure of the Borrower to provide a notice of its election within the required 30 days as required in clause (i) above shall be deemed to be an election by the Borrower to take the actions provided in clause (i)(A) above.

(d) Reduction of Commitments . On the date of each reduction of the aggregate Commitments pursuant to Section 2.1(c) , the Borrower agrees to make a prepayment in respect of the outstanding amount of the Advances to the extent, if any, that the aggregate unpaid principal amount of all Advances plus the Letter of Credit Exposure exceeds the lesser of (A) the aggregate Commitments, as so reduced and (B) the Borrowing Base. Each prepayment pursuant to this Section 2.5(d) shall be accompanied by accrued interest on the amount prepaid to the date of such prepayment and amounts, if any, required to be paid pursuant to Section 2.10 as a result of such prepayment being made on such date. Each prepayment under this Section 2.5(d) shall be applied to the Advances as determined by the Administrative Agent and agreed to by the Lenders in their sole discretion.

(e) Illegality . If any Lender shall notify the Administrative Agent and the Borrower that any Change in Law makes it unlawful, or that any central bank or other Governmental Authority asserts that it is unlawful for such Lender or its Lending Office to perform its obligations under this Agreement to maintain any Eurodollar Advances of such Lender then outstanding hereunder, (i) the Borrower shall, no later than 10:00 a.m. (Denver, Colorado time) / 9:00 a.m. (Los Angeles, California time) (A) if not prohibited by law, on the last day of the Interest Period for each outstanding Eurodollar Advance made by such Lender or (B) if required by such notice, on the second Business Day following its receipt of such notice, prepay all of the Eurodollar Advances made by such Lender then outstanding, together with accrued interest on the principal amount prepaid to the date of such prepayment and amounts, if any, required to be paid pursuant to Section 2.10 as a result of such prepayment being made on such date, (ii) such Lender shall simultaneously make a Base Rate Advance to the Borrower on such date in an amount equal to the aggregate principal amount of the Eurodollar Advances prepaid to such Lender, and (iii) the right of the Borrower to select Eurodollar Advances from such Lender for any subsequent Borrowing

shall be suspended until such Lender gives notice referred to above shall notify the Administrative Agent that the circumstances causing such suspension no longer exist.

(f) Interest; Costs . Each prepayment pursuant to this Section 2.5 shall be accompanied by accrued interest on the amount prepaid to the date of such prepayment and amounts, if any, required to be paid pursuant to Section 2.10 as a result of such prepayment being made on such date.

Section 2.6 Repayment . The Borrower shall pay to the Administrative Agent for the ratable benefit of each Lender the aggregate outstanding principal amount of the Advances on the Maturity Date.

Section 2.7 Fees .

(a) Commitment Fees . Subject to Section 2.16 , the Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee equal to the Commitment Fee Rate on the average daily Unused Commitment Amount for such period. Such Commitment Fee is due quarterly in arrears on March 31, June 30, September 30, and December 31 of each year and on the Maturity Date.

(b) Fees for Letters of Credit . The Borrower agrees to pay the following:

(i) Subject to Section 2.16 , to the Administrative Agent for the pro rata benefit of the Lenders a per annum letter of credit fee for each Letter of Credit issued hereunder, for the period such Letter of Credit is to be outstanding, in an amount equal to the greater of (A) the Applicable Margin for Eurodollar Advances per annum on the face amount of such Letter of Credit, and (B) $750 per Letter of Credit. Such fee shall be due and payable quarterly in arrears on March 31, June 30, September 30, and December 31 of each year, and on the Maturity Date. Notwithstanding anything to the contrary contained herein, while any Event of Default exists, at the request of the Majority Lenders, all Letter of Credit fees shall accrue at the Default Rate.

(ii) If there are two or more Lenders, to the Issuing Lender, a fronting fee for each Letter of Credit equal to the greater of (A) 0.125% per annum on the face amount of such Letter of Credit and (B) $750. Such fee shall be due and payable quarterly in arrears on March 31, June 30, September 30, and December 31 of each year, and on the Maturity Date.

(iii) To the Issuing Lender such other usual and customary fees associated with any transfers, amendments, drawings, negotiations or reissuances of any Letters of Credit. Such fees shall be due and payable as requested by the Issuing Lender in accordance with the Issuing Lender’s then current fee policy.

The Borrower shall have no right to any refund of letter of credit fees previously paid by the Borrower, including any refund claimed because any Letter of Credit is canceled prior to its expiration date.

(c) Borrowing Base Upfront Fee . The Borrower agrees to pay the fees as agreed to between the Borrower and the Administrative Agent in connection with any increase in the Borrowing Base.

(d) Administrative Agent Fee . The Borrower agrees to pay the fees to the Administrative Agent as set forth in the Fee Letter.

Section 2.8 Interest .

(a) Base Rate Advances . Each Base Rate Advance shall bear interest at the Adjusted Base Rate in effect from time to time plus the Applicable Margin for Base Rate Advances for such period. The Borrower shall pay to Administrative Agent for the ratable account of each Lender all accrued but unpaid interest on such Lender’s Base Rate Advances on each March 31, June 30, September 30, and December 31, commencing on June 30, 2015, and on the Maturity Date.

(b) Eurodollar Advances . Each Eurodollar Advance shall bear interest during its Interest Period equal to at all times the Eurodollar Rate for such Interest Period plus the Applicable Margin for Eurodollar Advances for such period. The Borrower shall pay to the Administrative Agent for the ratable account of each Lender all accrued but unpaid interest on each of such Lender’s Eurodollar Advances on the last day of the Interest Period therefor (provided that for Eurodollar Advances with Interest Periods of six months or more, accrued but unpaid interest shall also be due on the day three months from the first day of such Interest Period), on the date any Eurodollar Advance is repaid, and on the Maturity Date.

(c) Default Rate . Notwithstanding the foregoing, upon the occurrence and during the continuance of an Event of Default, at the request of the Majority Lenders, all Obligations shall bear interest, after as well as before judgment, at the Default Rate. Interest accrued pursuant to this Section 2.8(c) and all interest accrued but unpaid on or after the Maturity Date shall be due and payable on demand.

Section 2.9 [Reserved]

Section 2.10 Breakage Costs . Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment (including any deemed payment or repayment and any reallocated repayment to Non-Defaulting Lenders provided for in Section 2.12(a) , Section 2.14(b) , or Section 2.16) of any Advance other than a Base Rate Advance on a day other than the last day of the Interest Period for such Advance (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

(b) any failure by the Borrower (for a reason other than the failure of such Lender to make an Advance) to prepay, borrow, or continue any Eurodollar Advance on the date or in the amount notified by the Borrower;

(c) any Conversion by the Borrower of any Eurodollar Advance into a Base Rate Advance on a day other than the last day of the Interest Period for such Advance (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); or

(d) any assignment of an Eurodollar Advance on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 2.14 ;

by it at the Eurodollar Base Rate used in determining the Eurodollar Rate for such Advance by a matching deposit or other borrowing in the offshore interbank market for Dollars for a comparable amount and for a comparable period, whether or not such Eurodollar Advance was in fact so funded.

Section 2.11 Increased Costs .

(a) Eurodollar Advances . If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the Eurodollar Rate Reserve Percentage) or the Issuing Lender;

(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of “Excluded Taxes” and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any Advance or of maintaining its obligation to make any such Advance, or to increase the cost to such Lender, Issuing Lender or such other Recipient of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender, Issuing Lender or other Recipient hereunder (whether of principal, interest or any other amount) then, upon request of such Lender, the Issuing Lender or other Recipient, the Borrower will pay to such Lender, Issuing Lender or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, Issuing Lender or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.

(b) Capital Requirements . If any Lender or the Issuing Lender determines that any Change in Law affecting such Lender or the Issuing Lender or any Lending Office of such Lender or such Lender’s or the Issuing Lender’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Lender’s capital or on the capital of such Lender’s or the Issuing Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Advances made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Lender, to a level below that which such Lender or the Issuing Lender or such Lender’s or the Issuing Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Lender’s policies and the policies of such Lender’s or the Issuing Lender’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the Issuing Lender, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Lender or such Lender’s or the Issuing Lender’s holding company for any such reduction suffered.

(c) Certificates for Reimbursement . A certificate of a Lender or the Issuing Lender setting forth the amount or amounts necessary to compensate such Lender or the Issuing Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section and delivered to the Borrower, shall be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing

Lender, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

(d) Delay in Requests . Failure or delay on the part of any Lender or the Issuing Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or the Issuing Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or the Issuing Lender pursuant to this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or the Issuing Lender, as the case may be, notifies the Borrower and the Administrative Agent of the Change in Law giving rise to such increased costs or reductions, and of such Lender’s or the Issuing Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

Section 2.12 Payments and Computations .

(a) Payments . All payments of principal, interest, and other amounts to be made by the Borrower under this Agreement and other Credit Documents shall be made to the Administrative Agent in Dollars and in immediately available funds, without setoff, deduction, or counterclaim.

(b) Payment Procedures . The Borrower shall make each payment under this Agreement and under the Notes not later than 10:00 a.m. (Denver, Colorado time) on the day when due in Dollars to the Administrative Agent at the location referred to in the Notes (or such other location as the Administrative Agent shall designate in writing to the Borrower) in same day funds. The Administrative Agent will promptly thereafter, and in any event prior to the close of business on the day any timely payment is made, cause to be distributed like funds relating to the payment of principal, interest or fees ratably (other than amounts payable solely to the Administrative Agent or a specific Lender pursuant to Sections 2.9 , 2.10 , 2.11 , 2.13 , 2.14 , and 9.2 and such other provisions herein which expressly provide for payments to a specific Lender, but after taking into account payments effected pursuant to Section 9.1 ) in accordance with each Lender’s applicable Pro Rata Share to the Lenders for the account of their respective applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon receipt of other amounts due solely to the Administrative Agent, the Issuing Lender or a specific Lender, the Administrative Agent shall distribute such amounts to the appropriate party to be applied in accordance with the terms of this Agreement.

(c) Non-Business Day Payments . Whenever any payment shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or fees, as the case may be; provided that if such extension would cause payment of interest on or principal of Eurodollar Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day.

(d) Computations . All computations of interest for Base Rate Advances shall be made by the Administrative Agent on the basis of a year of 365/366 days and all computations of all other interest and fees shall be made by the Administrative Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day, but excluding the last day) occurring in the period for which such interest or fees are payable. Each determination by the Administrative Agent of an amount of interest or fees shall be conclusive and binding for all purposes, absent manifest error.

(e) Sharing of Payments, Etc . If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Advances or other obligations hereunder resulting in such Lender receiving payment of a proportion of the aggregate amount of its Advances and accrued interest thereon or other such obligations greater than its Pro Rata Share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Advances and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Advances and other amounts owing them; provided that:

(i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

(ii) the provisions of this paragraph shall not be construed to apply to (x) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Advances or participations in Letter of Credit Exposure to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply).

Each Credit Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against each Credit Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of each Credit Party in the amount of such participation.

(f) Obligations of Lenders Several . The obligations of the Lenders hereunder to make Advances, to fund participations in Letters of Credit and to make payments pursuant to Section 9.2(b) are several and not joint. The failure of any Lender to make any Advance, to fund any such participation or to make any payment under Section 9.2(b) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Advance, to purchase its participation or to make its payment under Section 9.2(b) .

Section 2.13 Taxes .

(a) Defined Terms . For purposes of this Section 2.13 , the term “Lender” includes any the Issuing Lender and the term “applicable law” includes FATCA.

(b) Payments Free of Taxes . Any and all payments by or on account of any obligation of any Credit Party under any Credit Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Credit Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums

payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

(c) Payment of Other Taxes by the Borrower . The Credit Parties shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

(d) Indemnification by the Borrower . The Credit Parties shall jointly and severally indemnify each Recipient, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable out-of-pocket expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability setting forth in reasonable detail an explanation thereof delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(e) Indemnification by the Lenders . Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the any Credit Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Credit Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.7(d) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Credit Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Credit Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (e).

(f) Evidence of Payments . As soon as practicable after any payment of Taxes by any Credit Party to a Governmental Authority pursuant to this Section 2.13 , such Credit Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(g) Status of Lenders .

anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.13(g)(ii)(A) , (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(ii) Without limiting the generality of the foregoing,

(A) any Recipient that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Recipient becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Recipient is exempt from U.S. federal backup withholding tax;

(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:

(i.) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Credit Document, executed originals of IRS Form W-8BEN (or W-8BEN-E, as applicable) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Credit Document, IRS Form W-8BEN (or W-8BEN-E, as applicable) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(ii.) executed originals of IRS Form W-8ECI;

(iii.) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit K-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “ U.S. Tax Compliance Certificate ”) and (y) executed originals of IRS Form W-8BEN (or W-8BEN-E, as applicable); or

is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit K-4 on behalf of each such direct and indirect partner;

(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and

(D) if a payment made to a Recipient under any Credit Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Recipient were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Recipient shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Recipient has complied with such Recipient’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

Each Recipient agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

(h) If the Administrative Agent (including any successor Administrative Agent) is not a U.S. Person, it shall deliver two duly completed copies of the applicable IRS Form W-8.

(i) Treatment of Certain Refunds . If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.13 (including by the payment of additional amounts pursuant to this Section 2.13) , it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (h), in no event will the

indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (h) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(j) Survival . Each party’s obligations under this Section 2.13 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Credit Document.

Section 2.14 Mitigation Obligations; Replacement of Lenders .

(a) Designation of a Different Lending Office . If any Lender requests compensation under Section 2.11 , or requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.13 , then such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different lending office for funding or booking its Advances hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.11 or 2.13 , as the case may be, in the future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b) Replacement of Lenders . If any Lender requests compensation under Section 2.11 , or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.13 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 2.14(a) , or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 9.7) , all of its interests, rights (other than its existing rights to payments pursuant to Section 2.11 or Section 2.13) and obligations under this Agreement and the related Credit Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:

(i) the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 9.7 ;

(ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Advances and participations in Letter of Credit Exposure, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Credit Documents (including any amounts under Section 2.10) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);

(iii) in the case of any such assignment resulting from a claim for compensation under Section 2.11 or payments required to be made pursuant to Section 2.13 , such assignment will result in a reduction in such compensation or payments thereafter;

(iv) such assignment does not conflict with applicable Legal Requirements; and

(v) in the case of any assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. Solely for purposes of effecting any assignment involving a Defaulting Lender under this Section 2.14 and to the extent permitted under applicable Legal Requirements, each Lender hereby designates and appoints the Administrative Agent as true and lawful agent and attorney-in-fact, with full power and authority, for and on behalf of and in the name of such Lender to execute, acknowledge and deliver the Assignment and Assumption required hereunder if such Lender is a Defaulting Lender and such Lender shall be bound thereby as fully and effectively as if such Lender had personally executed, acknowledged and delivered the same .

Section 2.15 Cash Collateral . At any time that there shall exist a Defaulting Lender, within one Business Day following the written request of the Administrative Agent or the Issuing Lender (with a copy to the Administrative Agent) the Borrower shall Cash Collateralize the Issuing Lender’s Fronting Exposure with respect to such Defaulting Lender (determined after giving effect to Section 2.16(a)(iv) and any Cash Collateral provided by such Defaulting Lender) in an amount not less than the Minimum Collateral Amount.

(a) Grant of Security Interest . The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to the Administrative Agent, for the benefit of the Issuing Lender, and agrees to maintain, a first priority security interest in all such Cash Collateral as security for the Defaulting Lenders’ obligation to fund participations in respect of Letter of Credit Obligations, to be applied pursuant to clause (b) below. If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent and the Issuing Lender as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Borrower will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any Cash Collateral provided by the Defaulting Lender).

(b) Application . Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under this Section 2.15 or Section 2.16 in respect of Letters of Credit shall be applied to the satisfaction of the Defaulting Lender’s obligation to fund participations in respect of Letter of Credit Obligations (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.

(c) Termination of Requirement . Cash Collateral (or the appropriate portion thereof) provided to reduce the Issuing Lender’s Fronting Exposure shall no longer be required to be held as Cash Collateral pursuant to this Section 2.15 following (i) the elimination of the applicable Fronting Exposure (including by the termination of Defaulting Lender status of the applicable Lender), or (ii) the determination by the Administrative Agent and the Issuing Lender that there exists excess Cash Collateral; provided that, subject to Section 2.16 the Person providing Cash Collateral and the Issuing Lender may agree that Cash Collateral shall be held to support future anticipated Fronting Exposure or other obligations and provided further that to the extent that such Cash Collateral was provided by the Borrower, such Cash Collateral shall remain subject to the security interest granted pursuant to the Credit Documents.

Section 2.16 Defaulting Lenders .

(a) Defaulting Lender Adjustments . Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:

(i) Waivers and Amendments . Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Majority Lenders or Required Lenders, as applicable.

(ii) Defaulting Lender Waterfall . Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article 7 or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 7.4 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first , to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second , to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to the Issuing Lender hereunder; third , to Cash Collateralize the Issuing Lender’s Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.15 ; fourth , as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Advance in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth , if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Advances under this Agreement and (y) Cash Collateralize the Issuing Lender’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 2.15 ; sixth , to the payment of any amounts owing to the Lenders, or the Issuing Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, or the Issuing Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh , so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth , to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Advances or Letter of Credit Exposure in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Advances were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 3.2 were satisfied or waived, such payment shall be applied solely to pay the Advances of, and Letter of Credit Exposure owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Advances of, or Letter of Credit Exposure owed to, such Defaulting Lender until such time as all Advances and funded and unfunded participations in Letter of Credit Obligations are held by the Lenders pro rata in accordance with the Commitments without giving effect to Section 2.16(a)(iv) . Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.16(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(iii) Certain Fees .

(A) No Defaulting Lender shall be entitled to receive any Commitment Fee for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

(B) Each Defaulting Lender shall be entitled to receive Letter of Credit Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Pro Rata Share of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 2.15 .

(C) With respect to any Letter of Credit Fee not required to be paid to any Defaulting Lender pursuant to clause (A) or (B) above, the Borrower shall (x) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in Letter of Credit Obligations that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to the Issuing Lender the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to the Issuing Lender’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.

(iv) Reallocation of Participations to Reduce Fronting Exposure . All or any part of such Defaulting Lender’s participation in Letter of Credit Obligations shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Pro Rata Shares (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that (x) the conditions set forth in Section 3.2 are satisfied at the time of such reallocation (and, unless the Borrower shall have otherwise notified the Administrative Agent at such time, the Borrower shall be deemed to have represented and warranted that such conditions are satisfied at such time), and (y) such reallocation does not cause the aggregate outstanding amount of all Advances of any Non-Defaulting Lender plus the Letter of Credit Exposure of such Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Commitment. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

(b) Defaulting Lender Cure . If the Borrower, the Administrative Agent and the Issuing Lender agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Advances of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Advances and funded and unfunded participations in Letters of Credit to be held pro rata by the Lenders in accordance with the Commitments (without giving effect to Section 2.16(a)(iv) , whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further , that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

(c) New Letters of Credit . So long as any Lender is a Defaulting Lender, the Issuing Lender shall not be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.

ARTICLE 3
CONDITIONS OF LENDING

Section 3.1 Conditions Precedent to Initial Borrowing . The obligations of each Lender to make the initial Advance and of the Issuing Lender to issue the initial Letters of Credit, shall be subject to the satisfaction or waiver in writing of the following conditions precedent:

(a) Documentation . The Administrative Agent shall have received the following, duly executed by all the parties thereto, in form and substance reasonably satisfactory to the Administrative Agent and the Lenders:

(i) this Agreement and all attached Exhibits and Schedules and the Notes, if requested by the applicable Lenders, payable to each applicable Lender or its registered assigns;

(ii) the Guaranty executed by all Subsidiaries of the Borrower existing on the Closing Date;

(iii) the Security Agreement executed by each Credit Party, together with appropriate UCC-1 financing statements, if any, necessary or desirable for filing with the appropriate authorities and any other documents, agreements, or instruments necessary to create, perfect or maintain an Acceptable Security Interest in the Collateral described in the Security Agreement;

(iv) the Mortgages encumbering not less than 80% (by PV10) of the Credit Parties’ Proven Reserves described in the initial Independent Engineering Report (but excluding any “buildings” or “structures” as described in Regulation H of the Federal Reserve Board that are not material to the operations of the Oil and Gas Properties comprising such Proven Reserves);

(v) certificates of insurance naming the Administrative Agent as loss payee with respect to property insurance, or additional insured with respect to liability insurance for the insurance required to be carried pursuant to Section 5.3 ;

(vi) a certificate from a Responsible Officer of the Borrower dated as of the Closing Date stating that as of such date (A) all representations and warranties of any Credit Party set forth in this Agreement and in each of the other Credit Documents are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on such date, except that any representation and warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) only as of such specified date, (B) no Default has occurred and is continuing; and (C) all conditions precedent set forth in Sections 3.1(b) , (d) and (g) have been met;

(vii) a secretary’s certificate from each Credit Party certifying such Person’s (A) officers’ incumbency, (B) authorizing resolutions, (C) organizational documents, and (D) governmental approvals, if any, with respect to the Credit Documents to which such Person is a party;

(viii) certificates of good standing for each Credit Party in each state in which each such Person is organized or qualified to do business, which certificate shall be (A) dated a date not earlier than 30 days prior to Closing Date or (B) otherwise effective on the Closing Date;

(ix) a legal opinion of Latham & Watkins, LLP as outside counsel to the Credit Parties, in form and substance reasonably acceptable to the Administrative Agent;

(x) the initial Independent Engineering Report dated no earlier than December 31, 2014, which report shall be acceptable to the Administrative Agent;

(xi) the Pledge Agreement executed by the Borrower and the Guarantors, as applicable, together with any pledged stock or membership interest certificates and instruments of transfer in form and substance acceptable to the Administrative Agent and granting the Administrative Agent an Acceptable Security Interest in such Equity Interests;

(xii) such other documents, governmental certificates, agreements, lien release, UCC-3 Financing Statements, and lien searches as any Agent or any Lender may reasonably request.

(b) Consents; Authorization; Conflicts . The Credit Parties shall have received any consents, licenses and approvals required in accordance with applicable law, or in accordance with any document, agreement, instrument or arrangement to which such Credit Party is a party, in connection with the execution, delivery, performance, validity and enforceability of this Agreement and the other Credit Documents.

(d) Other Proceedings . No action, suit, investigation or other proceeding (including without limitation, the enactment or promulgation of a statute or rule) by or before any arbitrator or any Governmental Authority shall be threatened or pending and no preliminary or permanent injunction or order by a state or federal court shall have been entered (i) in connection with this Agreement, any other credit agreement, or any transaction contemplated hereby or thereby or (ii) which could reasonably be expected to result in a Material Adverse Change.

(e) Other Reports . The Administrative Agent shall have received, in form and substance reasonably satisfactory to it, all environmental reports previously provided to or obtained by the Borrower or any of the other Credit Parties regarding the Borrower’s or its Subsidiaries’ respective Oil and Gas Properties (including all available (i) Phase I Environmental Site Assessment Reports and (ii) Phase II Environmental Site Assessment Reports, if any).

(f) Material Adverse Change . Since December 31, 2014, there shall not have occurred any event, development or circumstance that has or could reasonably be expected to result in a Material Adverse Change.

(g) Solvency . The Administrative Agent shall have received a certificate in form and substance reasonably satisfactory to the Administrative Agent from a senior financial officer or such other officer acceptable to the Administrative Agent of each Credit Party certifying that, before and after giving effect to the initial Borrowings made hereunder on the Closing Date, the Borrower and its Subsidiaries, taken as a whole, are Solvent.

(h) Delivery of Financial Statements . The Administrative Agent shall have received true and correct copies of (i) satisfactory consolidated audited financial statements for the Borrower and its Subsidiaries for the fiscal year ended December 31, 2014, and (ii) satisfactory consolidated unaudited financial statements for the Borrower and its Subsidiaries for the fiscal quarter ended March 31, 2015.

(i) Budget . The Administrative Agent shall have received and be reasonably satisfied with the budget of the Credit Parties for 2015.

(j) Credit Investigations . The Administrative Agent shall be reasonably satisfied with the results of its credit investigation on each of the Credit Parties, their principals, and their owners holding, directly or indirectly, at least 25% of the Equity Interests in the Credit Parties.

(k) Title . The Administrative Agent shall have received satisfactory title information and be satisfied in its sole discretion with the title to the Oil and Gas Properties included in the Borrowing Base, and that such Oil and Gas Properties constitute (i) at least 80% of the PV10 of the Proven Reserves of the Borrower and its Subsidiaries evaluated in the initial Independent Engineering Report, and (ii) that the Borrower has good and marketable title to its Oil and Gas Properties, subject to no other liens (other than Permitted Liens).

(l) Reserve Report Certificate . The Administrative Agent shall have received a completed Reserve Report Certificate duly executed by a Responsible Officer of the Borrower, dated as of the Closing Date.

(m) USA Patriot Act . The Administrative Agent shall have received all documentation and other information that is required by regulatory authorities under applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the Patriot Act.

(n) Capital Structure . The capital and ownership structure and the equityholder arrangements of the Borrower and its Subsidiaries (and all agreements relating thereto) will be reasonably satisfactory to the Administrative Agent.

(o) Due Diligence . The Administrative Agent shall have completed and be satisfied in its sole discretion with the corporate (or other organizational), environmental and financial due diligence of the Credit Parties and its Affiliates. The Administrative Agent shall have reviewed and be satisfied in its sole discretion with the material contracts and agreements of the Credit Parties.

(p) Liens . The Administrative Agent shall have received evidence satisfactory to it that there are no Liens encumbering any of the Credit Parties’ respective Property other than Permitted Liens.

(q) Payment of Fees . The Borrower shall have paid the fees and expenses required to be paid as of the Closing Date by Sections 2.7(c) and 9.1 or any other provision of a Credit Document.

Section 3.2 Conditions Precedent to Each Borrowing and to Each Issuance, Extension or Renewal of a Letter of Credit . The obligation of each Lender to make an Advance on the occasion of each Borrowing (including the initial Borrowing), the obligation of each Issuing Lender to issue, increase, renew or extend a Letter of Credit (including the deemed issuance of Letters of Credit) and of any reallocation of Letter of Credit Exposure provided in Section 2.16 , shall be subject to the further conditions precedent that on the date of such Borrowing or such issuance, increase, renewal or extension:

shall be required to be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) only as of such specified date and each request for the making of any Advance or issuance, increase, renewal or extension of any Letter of Credit and the making of such Advance or the issuance, increase, renewal or extension of such Letter of Credit shall be deemed to be a reaffirmation of such representations and warranties. Each of: (i) the giving of the applicable Notice of Borrowing or Letter of Credit Application, (ii) the acceptance by the Borrower of the proceeds of such Borrowing, and (iii) the issuance, increase, or extension of such Letter of Credit, shall constitute a representation and warranty by the Borrower that on the date of such Borrowing, such issuance, increase, or extension of such Letter of Credit, as applicable, that the foregoing condition precedent has been met.

(b) Event of Default . As of the date of the making of any Advance, the issuance, increase, renewal or extension of any Letter of Credit, as applicable, no Default or Event of Default shall exist, and the making of such Advance or issuance, increase, renewal or extension of such Letter of Credit would not cause a Default or Event of Default. Each of: (i) the giving of the applicable Notice of Borrowing or Letter of Credit Application, (ii) the acceptance by the Borrower of the proceeds of such Borrowing, and (iii) the issuance, increase, or extension of such Letter of Credit shall constitute a representation and warranty by the Borrower that on the date of such Borrowing, such issuance, increase, or extension of such Letter of Credit, as applicable, that the foregoing condition precedent has been met.

(c) Borrowing Request . The making of such Advance or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, is conditioned upon the receipt by the Administrative Agent of a Notice of Borrowing or Letter of Credit Application, as applicable.

(d) The making of such Advance or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, would not conflict with, or cause any Lender or any Issuing Lender to violate or exceed, any applicable Legal Requirement, and no Change in Law shall have occurred, and no litigation shall be pending or threatened, which does or, with respect to any threatened litigation, seeks to, enjoin, prohibit or restrain, the making or repayment of any Advance, the issuance, amendment, renewal, extension or repayment of any Letter of Credit or any participations therein or the consummation of the transactions contemplated by this Agreement or any other Credit Document.

Section 3.3 Determinations Under Sections 3.1 and 3.2 . For purposes of determining compliance with the conditions specified in Sections 3.1 and 3.2 each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Administrative Agent responsible for the transactions contemplated by the Credit Documents shall have received written notice from such Lender prior to the Borrowings hereunder specifying its objection thereto and such Lender shall not have made available to the Administrative Agent such Lender’s ratable portion of such Borrowings.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES

Each Credit Party hereto represents and warrants as follows:

be expected to result in a Material Adverse Change. As of the Closing Date, each Credit Party’s type of organization and jurisdiction of incorporation or formation are set forth on Schedule 4 . 1 .

Section 4.2 Authorization . The execution, delivery, and performance by each Credit Party of each Credit Document to which such Credit Party is a party and the consummation of the Transactions (a) are within such Credit Party’s powers, (b) except in the case of any Credit Party formed or acquired after the Closing Date that has not yet become party to any Credit Documents pursuant to Section 5.6 or 5.7 , have been duly authorized by all necessary corporate, limited liability company or partnership action, (c) do not contravene any articles or certificate of incorporation or bylaws, partnership or limited liability company agreement binding on or affecting such Credit Party, (d) do not contravene any law or any contractual restriction binding on or affecting such Credit Party, (e) do not result in or require the creation or imposition of any Lien prohibited by this Agreement, and (f) do not require any authorization or approval or other action by, or any notice or filing with, any Governmental Authority other than those that have been obtained or provided and other than filings delivered hereunder to perfect Liens created under the Security Documents. At the time of each Advance or the issuance, renewal, extension or increase of each Letter of Credit, such Advance and the use of the proceeds of such Advance or the issuance, renewal, extension or increase of such Letter of Credit are within the Borrower’s limited liability company powers, have been duly authorized by all necessary action and do not contravene (i) the Borrower’s certificate of incorporation, formation or partnership, or its by-laws, partnership agreement or limited liability company agreement, or (ii) any Legal Requirement or any contractual restriction binding on or affecting the Borrower, will not result in or require the creation or imposition of any Lien prohibited by this Agreement, and do not require any authorization or approval or other action by, or any notice or filing with, any Governmental Authority other than those that have been obtained or provided and other than filings delivered hereunder to perfect Liens created under the Security Documents.

Section 4.3 Enforceability . The Credit Documents have each been duly executed and delivered by each Credit Party that is a party thereto and each Credit Document constitutes the legal, valid, and binding obligation of each Credit Party that is a party thereto enforceable against such Credit Party in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws at the time in effect affecting the rights of creditors generally and by general principles of equity whether applied by a court of law or equity.

Section 4.4 Financial Condition .

(a) The Borrower has delivered to the Administrative Agent audited consolidated financial statements for the Borrower and its Subsidiaries dated as of December 31, 2014 and unaudited consolidated financial statements for the Borrower and its Subsidiaries dated as of March 31, 2015 for the fiscal quarters ended thereon. The financial statements referred to in the preceding sentence fairly present, in all material respects, the consolidated financial condition of the Borrower and its Subsidiaries on the date thereof and the results of their operations and cash flows for the periods then ended, have been prepared in accordance with GAAP. As of the date of the aforementioned financial statements, there were no material contingent obligations, liabilities for Taxes, unusual forward or long-term commitments, or unrealized or anticipated losses of the applicable Persons, except as disclosed therein and adequate reserves for such items have been made in accordance with GAAP.

(b) Since December 31, 2014, no event or condition has occurred that could reasonably be expected to result in a Material Adverse Change.

(c) As of the date hereof, the Borrower, the Guarantors and their respective Subsidiaries have no Debt other than the Debt listed on Schedule 4 . 4 .

Section 4.5 Title; Ownership and Liens; Real Property . Each Credit Party (a) has good and marketable title to all of its Oil and Gas Properties in all material respects, free and clear of all Liens except for Permitted Liens, and (b) has good and indefeasible title to all of its other material Properties, free and clear of all Liens except for Permitted Liens. None of the Property owned by a Credit Party is subject to any Lien except Permitted Liens.

Section 4.6 True and Complete Disclosure . All written factual information (whether delivered before or after the date of this Agreement) prepared by or on behalf of the Borrower and its Subsidiaries and furnished to the Administrative Agent or the Lenders for purposes of or in connection with this Agreement, any other Credit Document or any transaction contemplated hereby or thereby, taken as a whole, does not contain any material misstatement of fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. There is no fact known to any Responsible Officer of any Credit Party on the date of this Agreement that has not been disclosed to the Administrative Agent that could reasonably be expected to result in a Material Adverse Change. All projections, estimates, budgets, and pro forma financial information furnished by or on behalf of any Credit Party, were prepared on the basis of assumptions, data, information, tests, or conditions (including current and reasonably foreseeable business conditions) believed to be reasonable at the time such projections, estimates, and pro forma financial information were furnished.

Section 4.7 Litigation; Compliance with Laws . (a) There are no actions, suits, or proceedings pending or, to any Credit Party’s knowledge, threatened against any Credit Party, at law, in equity, or in admiralty, or by or before any Governmental Authority that could reasonably be expected to result in a Material Adverse Change. Additionally, except as disclosed in writing to the Administrative Agent and the Lenders, there is no pending or, to the knowledge of any Credit Party, threatened action or proceeding instituted against any Credit Party which seeks to adjudicate any Credit Party as bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or for any substantial part of its Property.

(b) The Borrower and its Subsidiaries are in compliance in all material respects with all material statutes, rules, regulations, orders and restrictions of any Governmental Authority having jurisdiction over the conduct of their respective businesses or the ownership of their respective Property, except where such non-compliance could not reasonably be expected to result in a Material Adverse Change.

Section 4.8 Compliance with Agreements .

(a) No Credit Party is a party to any indenture, loan or credit agreement or any lease or any other types of agreement or instrument or subject to any charter or corporate restriction the performance of or compliance with which could reasonably be expected to cause a Material Adverse Change. No Credit Party is in default under, or has received a notice of default under, any contract, agreement, lease or any other document or instrument to which the Borrower or its Subsidiaries is a party, which default is continuing (after giving effect to all cure periods applicable thereto) and which, if not cured, could reasonably be expected to cause a Material Adverse Change.

(b) No Default has occurred and is continuing.

Section 4.9 Pension Plans . (a) All Plans are in compliance with all applicable provisions of ERISA, (b) no Termination Event has occurred with respect to any Plan that would result in an Event of

Default under Section 7.1(i) , and each Plan has complied with and been administered in accordance with applicable provisions of ERISA and the Code, (c) no “accumulated funding deficiency” (as defined in Section 302 of ERISA) has occurred with respect to any Plan, and for plan years after December 31, 2007, no unpaid minimum required contribution exists with respect to any Plan, and there has been no excise tax imposed under Section 4971 of the Code with respect to any Plan, (d) the present value of all benefits vested under each Plan (based on the assumptions used to fund such Plan) did not, as of the last annual valuation date applicable thereto, exceed the value of the assets of such Plan allocable to such vested benefits, (e) no Credit Party nor any member of the Controlled Group has had a complete or partial withdrawal from any Multiemployer Plan for which there is any unsatisfied withdrawal liability, and (f) as of the most recent valuation date applicable thereto, no Credit Party nor any member of the Controlled Group would become subject to any liability under ERISA if the Borrower or any Subsidiary has received notice that any Multiemployer Plan is insolvent or in reorganization, except in the case of each of clauses (a) through (f) as would not reasonably be expected , individually or in the aggregate, to cause a Material Adverse Change. Based upon GAAP existing as of the date of this Agreement and current factual circumstances, no Credit Party has any reason to believe that the annual cost during the term of this Agreement to the Borrower or any Subsidiary for post-retirement benefits to be provided to the current and former employees of the Borrower or any Subsidiary under Plans that are welfare benefit plans (as defined in Section 3(1) of ERISA) could, in the aggregate, reasonably be expected to cause a Material Adverse Change.

Section 4.10 Environmental Condition .

(a) Permits, Etc . Each Credit Party (i) has obtained all material Environmental Permits necessary for the ownership and operation of its Properties and the conduct of its businesses; (ii) has at all times been and is in compliance with all terms and conditions of such Environmental Permits and with all other requirements of applicable Environmental Laws, except where the failure to so comply could not reasonably be expected to result in a Material Adverse Change; (iii) has not received written notice of any violation or alleged violation of any Environmental Law or Environmental Permit, which violation or alleged violation could reasonably be expected to result in a Material Adverse Change; and (iv) is not subject to any actual or contingent Environmental Claim which could reasonably be expected to cause a Material Adverse Change.

(b) Certain Liabilities . To the Credit Parties’ knowledge, none of the present or previously owned or operated Property of any Credit Party or of any Subsidiary thereof, wherever located, (i) has been placed on or proposed to be placed on the National Priorities List, the Comprehensive Environmental Response Compensation Liability Information System list, or their state or local analogs, or have been otherwise investigated, designated, listed, or identified as a potential site for removal, remediation, cleanup, closure, restoration, reclamation, or other response activity under any Environmental Laws which could reasonably be expected to result in a material liability to any Credit Party, the Administrative Agent or the any other Secured Parties; (ii) is subject to a Lien, arising under or in connection with any Environmental Laws, that attaches to any revenues or to any Property owned or operated by any Credit Party, wherever located, which could reasonably be expected to cause a Material Adverse Change; or (iii) has been the site of any Release of Hazardous Substances or Hazardous Wastes from present or past operations which has caused at the site or at any third-party site any condition that has resulted in or could reasonably be expected to result in the need for Response that could cause a Material Adverse Change.

undertaken by the Borrower, any of its Subsidiaries or any of the Borrower’s or such Subsidiary’s former Subsidiaries on any of their presently or formerly owned or operated Property, and (ii) the present and, to the Credit Parties’ knowledge, future liability, if any, of the Borrower or of any Subsidiary which could reasonably be expected to arise in connection with requirements under Environmental Laws will not result in a Material Adverse Change.

Section 4.11 Subsidiaries . As of the Closing Date, the Borrower has no Subsidiaries other than those listed on Schedule 4 . 11 . Each Subsidiary of the Borrower (including any such Subsidiary formed or acquired subsequent to the Closing Date) is in compliance with the requirements of Section 5.6 .

Section 4.12 Investment Company Act . No Credit Party is an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended. No Credit Party is subject to regulation under any Federal or state statute, regulation or other Legal Requirement which limits its ability to incur Debt.

Section 4.13 Taxes . Each of the Borrower and each Subsidiary thereof has duly filed or caused to be filed all income, franchise and other material Tax returns required by applicable law to be filed by it, and has paid, caused to be paid or made adequate provision for the payment of all income, franchise and other material Taxes required by applicable law to be paid by it. Proper and accurate amounts have been timely and duly withheld by the Borrower and each of its Subsidiaries from their employees for all periods and timely and duly remitted to the appropriate taxing authorities in compliance respects with withholding provisions of applicable law. Except as listed on Schedule 4.13 , each of the Borrower and each Subsidiary thereof has been treated as a partnership for U.S. federal, and all applicable state and local income tax purposes since the formation thereof. Neither Borrower nor any of its Subsidiaries has any current or contingent liability with respect to Taxes of any other person under any contract, as a successor or transferee, by operation of applicable law or otherwise.

Section 4.14 Permits, Licenses, etc . Each Credit Party possesses all permits, licenses, patents, patent rights or licenses, trademarks, trademark rights, trade names rights, and copyrights which are material to the conduct of its business, except where the failure to so possess could not reasonably be expected to result in a Material Adverse Change; provided that this Section 4.14 does not apply with respect to Environmental Permits.

Section 4.16 Condition of Property ; Casualties . The material Properties used or to be used in the continuing operations of Credit Parties, are in good working order and condition, normal wear and tear excepted and except as caused by a Casualty Event. Neither the business nor the Oil and Gas Properties or material Properties of the Credit Parties has been affected as a result of any fire, explosion, earthquake, flood, drought, windstorm, accident, strike or other labor disturbance, embargo, requisition or taking of such Property or cancellation of contracts, permits or concessions by a Governmental Authority, riot, activities of armed forces or acts of God or of any public enemy (whether or not covered by insurance) that could reasonably be expected to cause a Material Adverse Change. The Credit Parties own no real property (other than Oil and Gas Properties) which either (x) is material to the operations of the Credit Parties or (y) has a fair market value in excess of $1,000,000, except as (a) is set forth on Schedule 4.16 , (b) is disclosed on a schedule to a Compliance Certificate delivered pursuant to Section 5.2(f) , or (c) has been acquired since the delivery of the previous Compliance Certificate.

Section 4.17 Insurance . Each of the Credit Parties carries insurance (which may be carried by the Borrower on a consolidated basis) with reputable insurers in respect of such of their respective Properties, in such amounts and against such risks as is customarily maintained by other Persons of similar size engaged in similar businesses.

Section 4.18 Security Interest . Each Credit Party has authorized the filing of financing statements sufficient when filed to perfect the Lien created by the Security Documents to the extent such Lien may be perfected by the filing of such financing statements. When such financing statements are filed in the offices noted therein, the Administrative Agent will have a valid and perfected security interest in all Collateral that is capable of being perfected by filing financing statements.

Section 4.19 OFAC; Anti-Terrorism . No Credit Party is in violation of any of the country or list based economic and trade sanctions administered and enforced by OFAC. No Credit Party (a) is a Sanctioned Person or a Sanctioned Entity, (b) has its assets located in Sanctioned Entities, or (c) derives revenues from investments in, or transactions with Sanctioned Persons or Sanctioned Entities. No proceeds of any Advance will be used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity.

Section 4.20 Solvency . Immediately before and after giving effect to the making of each Advance and the issuance, increase, or amendment of each Letter of Credit, the Borrower and its consolidated Subsidiaries are, when taken as a whole, Solvent.

Section 4.21 Gas Contracts . No Credit Party, as of the date hereof or as disclosed to the Administrative Agent in writing, (a) is obligated in any material respect by virtue of any prepayment made under any contract containing a “take-or-pay” or “prepayment” provision or under any similar agreement to deliver Hydrocarbons produced from or allocated to any of the Borrower’s and its Subsidiaries’ Oil and Gas Properties at some future date without receiving full payment therefor at the time of delivery or (b) except as has been disclosed to the Administrative Agent, has produced gas, in any material amount, subject to balancing rights of third parties or subject to balancing duties under Legal Requirements.

Section 4.22 Liens, Leases, Etc . None of the Property of any Credit Party is subject to any Lien other than Permitted Liens. On the date of this Agreement, all governmental actions and all other filings, recordings, registrations, third party consents and other actions which are necessary to create and perfect the Liens provided for in the Security Documents will have been made, obtained and taken in all relevant jurisdictions other than filings delivered hereunder to perfect Liens created under the Security Documents. Except as permitted under Section 6.5 , neither the Borrower nor any of its Subsidiaries is a party to any agreement or arrangement (other than this Agreement and the Security Documents), or subject to any order, judgment, writ or decree, that either restricts or purports to restrict its ability to grant Liens to secure the Obligations against their respective Properties.

Section 4.23 Hedging Agreements . Schedule 4.23 sets forth, as of the date hereof, a true and complete list of all Hedging Arrangements of the Credit Parties (and the documents evidencing such Hedging Arrangements), the material terms thereof (including the type, effective date, and notional amounts or volumes on a monthly basis), all credit support agreements relating thereto (including any margin required or supplied), and the counterparty to each such agreement.

to any Debt of the Credit Parties in excess of $250,000 individually or in the aggregate, and such list correctly sets forth the names of the debtor or lessee and creditor or lessor with respect to the Debt or lease obligations outstanding or to be outstanding and the Property subject to any Lien securing such Debt or lease obligation. Also set forth on Schedule 4.24 hereto is a complete and correct list, of all material agreements and other instruments in existence as of the Closing Date of the Borrower and its Subsidiaries relating to the purchase, transportation by pipeline, gas processing, marketing, sale and supply of natural gas and other Hydrocarbons and which either (a) has a term longer than 6 months or (b) provides for liabilities of the Credit Parties in excess of $500,000. As of the Closing Date, the Borrower has heretofore delivered to the Administrative Agent a complete and correct copy of all such material credit agreements, indentures, purchase agreements, contracts, letters of credit, guarantees, joint venture agreements, or other instruments, including any modifications or supplements thereto.

Section 4.25 Foreign corrupt practices . No Credit Party, nor to the knowledge of the Borrower, any director, officer, agent, or employee of the Credit Parties is aware of or has taken any action, directly or, to the knowledge of the Borrower, indirectly, that would result in a material violation by such Persons of the FCPA, including making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “ foreign official ” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA; and, the Credit Parties have conducted their business in material compliance with the FCPA.

ARTICLE 5
AFFIRMATIVE COVENANTS

So long as any Obligation shall remain unpaid (other than contingent indemnification and expense reimbursement obligations not then due), any Lender shall have any Commitment hereunder, or there shall exist any Letter of Credit Exposure (unless Cash Collateralized or other arrangements satisfactory to the Issuing Bank have been made with respect thereto), each Credit Party agrees to comply with the following covenants.

Section 5.1 Organization . Each Credit Party shall, and shall cause each of its respective Subsidiaries to (a) preserve and maintain its partnership, limited liability company or corporate existence, rights, franchises and privileges in the jurisdiction of its organization, and (b) qualify and remain qualified as a foreign business entity in each jurisdiction in which qualification is necessary in view of its business and operations or the ownership of its Properties and where failure to qualify could reasonably be expected to cause a Material Adverse Change; provided , however, that nothing herein contained shall prevent any transaction permitted by Section 6.7 or Section 6.8 .

Section 5.2 Reporting .

(a) Annual Financial Reports . The Borrower shall provide, or shall cause to be provided, to the Administrative Agent, as soon as available, but in any event within 120 days after the end of each fiscal year of the Borrower (commencing with the fiscal year ended December 31, 2015), a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to the Administrative Agent, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going

concern” or like qualification or exception or any qualification or exception as to the scope of such audit, and such consolidated statements to be certified by the chief executive officer or chief financial officer of the Borrower, to the effect that (i) such statements fairly present, in all material respects, the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, and (ii) there were no material contingent obligations, liabilities for Taxes, unusual forward or long-term commitments, or unrealized or anticipated losses of the Borrower and its Subsidiaries, except as disclosed therein and adequate reserves for such items have been made in accordance with GAAP;

(b) Quarterly Financials . The Borrower shall provide, or shall cause to be provided, to the Administrative Agent, as soon as available, but in any event within 60 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower (commencing with the fiscal quarter ending June 30, 2015), consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income or operations, shareholder’s equity and cash flows for such fiscal quarter and for the portion of the Borrower’s fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, such consolidated statements to be certified by the chief executive officer or the chief financial officer of the Borrower as (i) fairly presenting, in all material respects the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes, and (ii) showing that there were no material contingent obligations, liabilities for Taxes, unusual forward or long-term commitments, or unrealized or anticipated losses of the Borrower and its Subsidiaries, except as disclosed therein and adequate reserves for such items have been made in accordance with GAAP.

Documents required to be delivered pursuant to Section 5.2(a) or (b) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (i) upon request, the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrower shall notify the Administrative Agent and, upon request, each Lender (by telecopier or electronic mail) of the posting of any such documents and, upon request, provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents.

(c) Oil and Gas Reserve Reports . The Borrower shall provide, or shall cause to be provided, to the Administrative Agent:

(i) As soon as available but in any event on or before March 1 of each year an Independent Engineering Report dated effective as of the immediately preceding January 1 in connection with the Scheduled Redetermination to occur on or about April 1 of such year;

(ii) As soon as available but in any event on or before September 1 of such year an Internal Engineering Report dated effective as of July 1 for the Scheduled Redetermination to occur on or about October 1 of each year, which Internal Engineering Report shall be prepared in accordance with the procedures in the Independent Engineering Report effective as of the prior January 1;

(iii) Such other information as may be reasonably requested by the Administrative Agent or any Lender with respect to the Oil and Gas Properties included or to be included in the Borrowing Base; and

(iv) With the delivery of each Engineering Report, a certificate from a Responsible Officer in substantially the same form as Exhibit L (a “Reserve Report Certificate”) of the Borrower certifying that, to the best of his knowledge and in all material respects: (A) the information contained in the Engineering Report and any other information delivered in connection therewith is true and correct, and (B) such other information as the Administrative Agent shall reasonably request.

(d) [Reserved] .

(e) Forecasted Production . In the event that the Borrower or any Subsidiary enters into any commodity Hedging Arrangement based upon Forecasted Production rather than upon Proven Reserves to the extent permitted by Section 6.15 hereof, prior to the Borrower or any Subsidiary thereof entering into such commodity Hedging Arrangement, a report certified by a Responsible Officer of the Borrower in form and substance satisfactory to the Administrative Agent prepared by the Borrower covering the Forecasted Production for reserves then owned by the Credit Parties, for the period to be hedged (which shall not exceed five years).

(f) Compliance Certificate . Concurrently with the delivery of the financial statements referred to in Section 5.2(a) and (b) above, the Borrower shall provide to the Administrative Agent a duly completed Compliance Certificate signed by the chief executive officer or chief financial officer of the Borrower, commencing with the fiscal quarter ended December 31, 2015.

(g) Business Plan; Annual Budget . Concurrently with the delivery of the financial statements referred to in Section 5.2(a) above, the Borrower shall provide to the Administrative Agent a business and financial plan for the Borrower and its Subsidiaries, including an annual operating, capital and cash flow budget for such fiscal year and detailed on a quarterly basis;

(h) Defaults . The Credit Parties shall provide to the Administrative Agent promptly, but in any event within five Business Days after the occurrence thereof, a notice of each Default or Event of Default known to the Responsible Officer of the Borrower or to any of its Subsidiaries, together with a statement of a Responsible Officer of the Borrower setting forth the details of such Default or Event of Default and the actions which the Credit Parties have taken and proposes to take with respect thereto;

(i) Other Creditors . The Credit Parties shall provide to the Administrative Agent promptly after the giving or receipt thereof, copies of any default notices given or received by the Borrower or by any of its Subsidiaries pursuant to the terms of any material indenture, loan agreement, credit agreement, or similar agreement;

(j) Litigation . The Credit Parties shall provide to the Administrative Agent promptly after the receipt by a Responsible Officer of a written complaint or official notice from a Governmental Authority (or a Responsible Officer becoming aware of the existence of), and in any event no later than 5 days after such receipt, notice of all actions, suits, and proceedings before any Governmental Authority, affecting the Borrower or any of its Subsidiaries or any of their respective assets that has a claim for damages in excess of $1,000,000 or that could otherwise result in a cost, expense or loss to the Borrower or any of its Subsidiaries in excess of $1,000,000;

(k) Environmental Notices . Promptly upon, and in any event no later than 5 days after, the receipt thereof by a Responsible Officer (or a Responsible Officer becoming aware of the existence of), the Credit Parties shall provide the Administrative Agent with a copy of any form of request, claim, complaint, order, notice, summons or citation received from any Governmental Authority or any other Person, (i) concerning violations or alleged violations of Environmental Laws, which seeks to impose liability therefore in excess of $1,000,000, (ii) concerning any action or omission on the part of any of the Credit Parties or any of their former Subsidiaries in connection with Hazardous Waste or Hazardous Substances which could reasonably result in the imposition of liability on a Credit Party in excess of $1,000,000 or requiring that action be taken to respond to or clean up a Release of Hazardous Substances or Hazardous Waste into the environment and such action or clean-up could reasonably be expected to exceed $1,000,000, including without limitation any information request related to, or notice of, potential responsibility under CERCLA, or (iii) concerning the filing of a Lien upon, against or in connection with the Borrower, any Subsidiary, or any of their respective former Subsidiaries, or any of their material leased or owned Property, wherever located that are not otherwise Permitted Liens;

(l) Material Adverse Changes . The Credit Parties shall provide to the Administrative Agent prompt written notice, after a Responsible Officer has knowledge thereof, of any event, development or circumstance that has had or would reasonably be expected to give rise to a Material Adverse Change;

(m) Termination Events . As soon as possible and in any event (i) within 30 days after the Borrower or any member of the Controlled Group knows or has reason to know that any Termination Event described in clause (a) of the definition of Termination Event with respect to any Plan has occurred, and (ii) within 10 days after the Borrower or any member of the Controlled Group knows or has reason to know that any other Termination Event with respect to any Plan has occurred, the Credit Parties shall provide to the Administrative Agent a statement of an authorized officer of the Borrower describing such Termination Event and the action, if any, which the Borrower or any Affiliate of the Borrower proposes to take with respect thereto;

(n) Termination of Plans . Promptly and in any event within 10 Business Days after receipt thereof by the Borrower or any member of the Controlled Group from the PBGC, the Credit Parties shall provide to the Administrative Agent copies of each notice received by the Borrower or any such member of the Controlled Group of the PBGC’s intention to terminate any Plan or to have a trustee appointed to administer any Plan;

(o) Other ERISA Notices . Promptly and in any event within 10 Business Days after receipt thereof by the Borrower or any of its Subsidiaries from a Multiemployer Plan sponsor, the Credit Parties shall provide to the Administrative Agent a copy of each notice received by the Borrower or any of its Subsidiaries concerning the imposition or amount of withdrawal liability imposed on the Borrower or any of its Subsidiaries pursuant to Section 4202 of ERISA;

(p) Other Governmental Notices . Promptly and in any event within five Business Days after receipt thereof by a Credit Party, the Credit Parties shall provide to the Administrative Agent a copy of any notice, summons, citation, or proceeding seeking to modify in any material respect, revoke, or suspend any material contract, license, permit, or agreement with any Governmental Authority;

(q) Management Letters; Other Accounting Reports . Promptly upon receipt thereof, a copy of each other report or letter submitted to the Borrower or any Subsidiary by independent accountants in connection with any annual, interim or special audit made by them of the books of the Borrower and its Subsidiaries, and a copy of any response by the Borrower or any Subsidiary of the Borrower, or the board of directors or managers (or other applicable governing body) of the Borrower or any Subsidiary of the Borrower, to such letter; and

(r) Flood Disclosures . Promptly following such acquisition or construction thereof, the Credit Parties shall provide written notice to the Administrative Agent of the existence of any “building” or “manufactured (mobile) home” under the Flood Insurance Regulations located on any Property of any Credit Party that is subject to a Mortgage. As used herein, “Flood Insurance Regulations” shall mean (a) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statue thereto, the National Flood Insurance Reform Act of 1994 (amending 42 USC 4001, et seq.), as the same may be amended or recodified from time to time, and (d) the Flood Insurance Reform Act of 2004 and any regulations promulgated thereunder.

(s) Other Information . Promptly upon request, the Credit Parties shall provide to the Administrative Agent such other information respecting the business, operations, or Property of the Borrower or any Subsidiary, financial or otherwise, as any Lender through the Administrative Agent may reasonably request.

Section 5.3 Insurance .

(a) Each Credit Party shall, and shall cause each of its Subsidiaries to, carry and maintain all such other insurance in such amounts and against such risks as is customarily maintained by other Persons of similar size engaged in similar businesses and reasonably acceptable to the Administrative Agent and with reputable insurers reasonably acceptable to the Administrative Agent.

(b) (i) from time to time promptly after requested by the Administrative Agent, copies of all policies of insurance, and (ii) on the Closing Date, and on each anniversary of the Closing Date, certificates of insurance, in each case covering the property or business of the Credit Parties, and endorsements and renewals thereof, shall be delivered by Borrower to and retained by the Administrative Agent. All policies of property insurance with respect to the Collateral either shall have attached thereto a lender’s loss payable endorsement in favor of the Administrative Agent for its benefit and the ratable benefit of the Secured Parties or name the Administrative Agent as loss payee for its benefit and the ratable benefit of the Secured Parties, in either case, in form reasonably satisfactory to the Administrative Agent, and all policies of liability insurance (other than director and officer liability insurance and workers’ compensation insurance) shall name the Administrative Agent for its benefit and the ratable benefit of the Secured Parties as an additional insured. All policies or certificates of insurance shall set forth the coverage, the limits of liability, the name of the carrier, the policy number, and the period of coverage. All such policies shall contain a provision or the Administrative Agent shall have received an endorsement to the effect that the insurer will endeavor to give at least 30 days’ prior notice of any cancellation to the Administrative Agent (10 days for non-payment of premiums) (or such shorter period as may be accepted by the Administrative Agent).

(c) If at any time the area in which any real property that has a building or mobile home located on it and is encumbered by a Mortgage in favor of the Administrative Agent is designated a “flood hazard area” in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), the Borrower shall, and shall cause each of its Subsidiaries to, obtain flood insurance in such total amount as required by Regulation H of the Federal Reserve Board, as from time to time in effect and all official rulings and interpretations thereunder or thereof, and otherwise comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as it may be amended from time to time.

actions, and any other proceeds, shall be paid directly to the Administrative Agent and if necessary, assigned to the Administrative Agent, to be applied in accordance with Section 7.6 of this Agreement, whether or not the Secured Obligations are then due and payable.

(e) In the event that any insurance proceeds are paid to any Credit Party in violation of clause (d), such Credit Party shall hold the proceeds in trust for the Administrative Agent, segregate the proceeds from the other funds of such Credit Party, and promptly pay the proceeds to the Administrative Agent with any necessary endorsement. Upon the request of the Administrative Agent, each of the Borrower and its Subsidiaries shall execute and deliver to the Administrative Agent any additional assignments and other documents as may be necessary or desirable to enable the Administrative Agent to directly collect the proceeds as set forth herein.

Section 5.4 Compliance with Laws . Each Credit Party shall, and shall cause each of its Subsidiaries to, comply with all federal, state, and local laws and regulations (including Environmental Laws) which are applicable to the operations and Property of any Credit Party and maintain all related permits necessary for the ownership and operation of each Credit Party’s Property and business, except in any case where the failure to so comply or maintain could not reasonably be expected to result in a Material Adverse Change. Without limitation of the foregoing, the Borrower shall, and shall cause each of its Subsidiaries to, maintain and possess all authorizations, Permits, licenses, trademarks, trade names, rights and copyrights which are necessary to the conduct of its business, except where the failure to so comply could not reasonably be expected to result in a Material Adverse Change.

Section 5.5 Taxes . Each Credit Party shall, and shall cause each of its Subsidiaries to pay and discharge all material Taxes and all material amounts of Taxes imposed on the Borrower or any of its Subsidiaries prior to the date on which penalties attach other than any Tax which is being contested in good faith and for which adequate reserves have been established in compliance with GAAP.

Section 5.6 New Subsidiaries . The Borrower shall deliver to the Administrative Agent each of the items set forth in Part A of Schedule III attached hereto with respect to each Subsidiary of the Borrower created after the Closing Date and within the time requirements set forth in Schedule III .

Section 5.7 Agreement to Pledge; Security . Each Credit Party agrees that at all times, the Administrative Agent shall have an Acceptable Security Interest in the Collateral to the extent required by this Agreement to secure the performance and payment of the Secured Obligations. Each Credit Party shall, and shall cause each other Credit Party to, subject to the time periods set forth on Schedule III hereto and any exceptions or limitations provided for in the Security Documents, grant to the Administrative Agent a Lien in any Property of such Credit Party or such Subsidiary now owned or hereafter acquired (other than Excluded Property or other property not required to be pledged or mortgaged pursuant to the Security Documents) within 30 days after the acquisition thereof (or, in the case of a new Subsidiary that becomes a Credit Party, within the time periods set forth on Schedule III) promptly and to take such actions as may be required under the Security Documents to ensure that the Administrative Agent has an Acceptable Security Interest in such Property; provided that the Credit Parties shall not be required to grant an Acceptable Security Interest in any Oil and Gas Properties to the extent such grant would result in more than 80% by PV10 of all of the Credit Parties’ Proven Reserves as evaluated in the most recently delivered Engineering Report herein being pledged as Collateral. Notwithstanding the foregoing, the Borrower shall, and shall cause each Subsidiary to take such actions, including execution and delivery of any Security Documents necessary to create, perfect and maintain an Acceptable Security Interest in favor of the Administrative Agent in 100% of Equity Interests issued by any Subsidiaries which are owned by any Credit Party.

Section 5.8 Deposit Accounts . Each Credit Party shall, and shall cause each of its Subsidiaries to maintain their principal operating accounts and other deposit accounts with the Administrative Agent, any Lender or any Affiliate of a Lender (provided that if any such account is with a Person who ceases to be a Lender or an Affiliate of a Lender, the Credit Parties shall have 60 days to move such account to another Person in compliance with this Section 5.8 ); provided that, such Credit Parties shall be permitted to maintain such accounts with any other depositary institution not constituting the Administrative Agent, a Lender or an Affiliate of a Lender that is reasonably acceptable to the Administrative Agent so long as (x) with respect to deposit accounts established after the date of this agreement, such depositary institution executes an Account Control Agreement covering such accounts within 30 days (or such later date as the Administrative Agent shall so agree) after the establishment of such accounts with such depositary institution, and (y) with respect to deposit accounts existing on the date of this Agreement, such depositary institution executes an Account Control Agreement covering such accounts within 45 days of the date of this Agreement or such later date as the Administrative Agent may agree in its sole discretion.

Section 5.9 Records; Inspection . Each Credit Party shall, and shall cause each of its Subsidiaries to maintain proper, complete and consistent books of record with respect to such Person’s operations, affairs, and financial condition. At any reasonable time and from time to time, upon reasonable notice, each Credit Party shall permit the Administrative Agent and shall cause each of its Subsidiaries to permit the Administrative Agent to examine and copy the books and records of such Credit Party or such Subsidiary, to visit and inspect the Property of such Credit Party or such Subsidiary, and to discuss the business operations and Property of such Credit Party or such Subsidiary with the officers and directors thereof; provided, however, that so long as no Event of Default shall have occurred and be continuing, the Credit Parties shall not be responsible for the costs of more than one inspection visit per calendar year.

Section 5.10 Maintenance of Property . Each Credit Party shall, and shall cause each of its Subsidiaries to, maintain their owned, leased, or operated Property material to its business in good condition and repair, normal wear and tear excepted and except as caused by any Casualty Events.

Section 5.11 Title Evidence and Opinions . The Borrower shall from time to time upon the reasonable request of the Administrative Agent, take such actions and execute and deliver such documents and instruments as the Administrative Agent shall require to ensure that the Administrative Agent shall, at all times, have received satisfactory title evidence, which title evidence shall be in form and substance acceptable to the Administrative Agent in its sole reasonable discretion and shall include information regarding the before payout and after payout ownership interests held by the Borrower and the Borrower’s Subsidiaries, for all wells located on the Oil and Gas Properties, covering at least 80% of the PV10 of the Proven Reserves of the Borrower and its Subsidiaries as evaluated in the most recently delivered Engineering Report; provided, that if the Administrative Agent is not satisfied with such title evidence, that shall not trigger a Default hereunder, but the Borrower shall comply with Section 5.12 below if the Administrative Agent provides a notice thereof to the Borrower in accordance with Section 5.12 .

or accomplish the covenants and agreements of the Borrower or any Subsidiary, as the case may be, in the Security Documents and this Agreement, or to further evidence and more fully describe the collateral intended as security for the Obligations, or to correct any omissions in the Security Documents, or to state more fully the security obligations set out herein or in any of the Security Documents, or to perfect, protect or preserve any Liens created pursuant to any of the Security Documents, or to make any recordings, to file any notices or obtain any consents, all as may be necessary or appropriate in connection therewith or to enable the Administrative Agent to exercise and enforce its rights and remedies with respect to any Collateral. Within 30 days (or such later date as determined by the Administrative Agent in its sole discretion) after (a) a request by the Administrative Agent or the Lenders to cure any title defects or exceptions which are not Permitted Liens raised by such information or (b) a notice by the Administrative Agent that the Borrower has failed to comply with Section 5.11 above, the Borrower shall (i) cure such title defects or exceptions which are not Permitted Liens or substitute acceptable Oil and Gas Properties with no title defects or exceptions except for Permitted Liens covering Collateral of an equivalent value and (ii) deliver to the Administrative Agent satisfactory title evidence (including supplemental or new title opinions meeting the foregoing requirements) in form and substance acceptable to the Administrative Agent in its reasonable business judgment as to the Borrower’s and its Subsidiaries’ ownership of such Oil and Gas Properties and the Administrative Agent’s Liens and security interests therein as are required to maintain compliance with Section 5.11 . A default under this Section shall not be a Default or an Event of Default, but instead the Administrative Agent shall have the right to exercise the following remedy in its sole discretion from time to time during the continuance of a default regarding the title defects under this Section, and any failure to so exercise this remedy at any time shall not be a waiver as to future exercise of the remedy by the Administrative Agent or the Lenders. The Administrative Agent may send a notice to the Borrower and the Lenders that the then outstanding Borrowing Base shall be reduced by an amount as determined by the Required Lenders to cause the Borrower to be in compliance with the requirement to provide acceptable title information on 80% of the PV10 of the Proven Reserves of the Borrower and its Subsidiaries shown on the most recently delivered Engineering Report. The new Borrowing Base shall become effective immediately after receipt of such notice. Notwithstanding anything to the contrary contained herein or in any other Credit Document, if the Administrative Agent in its reasonable judgment determines that the cost of creating or perfecting a Lien on any property is excessive in relation to the benefits afforded to the Secured Parties thereby, then such property may be excluded from Collateral for all purposes of the Credit Documents.

Section 5.13 Leases; Development and Maintenance . Except where the failure to do so would not adversely impact a material portion of the Oil and Gas Properties to which Proven Reserves are attributable of the Borrower and its Subsidiaries (with 5% of the value of the Proven Reserves of the Borrower and its Subsidiaries being deemed material), the Borrower shall, and shall cause its Subsidiaries to, (a) pay and discharge promptly, or cause to be paid and discharged promptly, all rentals, delay rentals, royalties, overriding royalties, payments out of production and other indebtedness or obligations accruing under, and comply with each and all of, the oil and gas leases and all other agreements and contracts constituting the Oil and Gas Properties to which Proven Reserves are attributable of the Borrower and its Subsidiaries or any agreements and contracts where the failure to comply hereunder could result in a loss, termination or similar impact upon any Oil and Gas Properties to which Proven Reserves are attributable of the Borrower and its Subsidiaries (except, in each case, where the amount thereof is being contested in good faith by appropriate proceedings or is held in suspension in accordance with such leases or other agreements), (b) do all other things necessary to keep unimpaired its rights thereunder and prevent any forfeiture thereof or default thereunder, and operate or cause to be operated such Oil and Gas Properties to which Proven Reserves are attributable as a prudent operator would in accordance with industry standard practices, and (c) maintain (or cause to be maintained) the Leases, wells, units and acreage to which the Oil and Gas Properties to which Proven Reserves are attributable of the Borrower and its Subsidiaries pertain in a prudent manner consistent with industry standard practices.

Section 5.14 Subordination . The Borrower will cause each Affiliate of the Borrower (other than a Subsidiary of the Borrower) which operates any of the Borrower’s or its Subsidiaries’ Oil and Gas Properties to subordinate pursuant to agreements in form and substance satisfactory to the Administrative Agent, any operators Liens or other Liens in favor of such Affiliate in respect of such Oil and Gas Properties to the Liens in favor of the Secured Parties.

ARTICLE 6
NEGATIVE COVENANTS

Section 6.1 Debt . No Credit Party shall, nor shall it permit any of its Subsidiaries to, create, assume, incur, suffer to exist, or in any manner become liable, directly, indirectly, or contingently in respect of, any Debt other than the following (collectively, the “Permitted Debt”):

(a) the Obligations;

(b) intercompany Debt incurred in the ordinary course of business owed by any Credit Party to any other Credit Party; provided that such Debt is subordinated to the Obligations and is also permitted under Section 6.3 ;

(c) Debt consisting of sureties or bonds and similar obligations provided to any Governmental Authority or other Person and assuring payment of contingent liabilities of a Credit Party in connection with the operation of its Oil and Gas Properties, including with respect to plugging, facility removal and abandonment of its Oil and Gas Properties;

(d) Purchase Money Debt or Capital Leases in an aggregate principal amount not to exceed $5,000,000 at any time;

(e) Hedging Arrangements to the extent not prohibited under Section 6.15 ;

(f) Debt in the form of accounts payable to trade creditors for goods or services and current operating liabilities (other than for borrowed money) which in each case is not more than 90 days past due, in each case incurred in the ordinary course of business, unless contested in good faith by appropriate proceedings and adequate reserves for such items have been made in accordance with GAAP;

(g) Debt arising from the endorsement of instruments for collection in the ordinary course of business;

(h) Debt consisting of liabilities incurred in the ordinary course of business under workers’ compensation claims required by Governmental Authority;

(i) without duplication, guarantees of Debt otherwise permitted under this Section 6.1 ;

(j) Debt existing on the Closing Date and set forth in Schedule 6 . 1 including extensions, replacements and refinancings thereof which do not increase the principal amount (excluding any

expenses or premium incurred in connection with any such extension, replacement or refinancing) of such Debt as of the date of such extension or refinancing;

(k) Debt representing deferred compensation to employees of the Credit Parties incurred in the ordinary course of business in an aggregate amount not to exceed $1,000,000;

(l) Debt consisting of (i) the financing of insurance premiums or (ii) customary take-or-pay obligations contained in supply agreements, in each case, in the ordinary course of business;

(m) unsecured Debt consisting of any purchase price adjustments to which a seller may become entitled to the extent such payment is determined by a closing purchase price adjustment or such payment depends on the positive performance of the Credit Parties after the closing of such purchase so long as (a) the amount of such payment is not determinable by the parties to the purchase or (b) once the amount of such payment has been finally fixed and determined by the parties to such purchase, such amount is paid when due; and

(n) unsecured Debt not otherwise permitted under the preceding provisions of this Section 6.1 ; provided that, the aggregate principal amount thereof shall not exceed $5,000,000 at any time.

Section 6.2 Liens . No Credit Party shall, nor shall it permit any of its Subsidiaries to, create, assume, incur, or suffer to exist any Lien on the Property of any Credit Party or any Subsidiary, whether now owned or hereafter acquired, or assign any right to receive any income, other than the following (collectively, the “ Permitted Liens ”):

(a) Liens securing the Secured Obligations pursuant to the Security Documents;

(b) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s liens, and other similar liens arising in the ordinary course of business securing obligations which are not overdue for a period of more than 90 days or are being contested in good faith by appropriate procedures or proceedings and for which adequate reserves have been established in accordance with GAAP;

(c) Liens for Taxes, fees, assessment, or other governmental charges which are not delinquent or remain payable without penalty or which are being actively contested in good faith by appropriate proceedings and adequate reserves for such items have been made in accordance with GAAP;

(d) Liens securing Purchase Money Debt or Capital Lease obligations permitted under Section 6.1(d) ; provided that each such Lien encumbers only the Property purchased in connection with the creation of any such Purchase Money Debt or the subject of any such Capital Lease, and all proceeds thereof (including insurance proceeds), and the principal amount secured thereby is not increased (other than accrued interest and premiums thereon);

(e) encumbrances consisting of easements, rights-of-way, servitudes, permits, reservations, zoning restrictions, or other restrictions on the use of real property and defects or irregularities in the chain of title that do not, in either case (individually or in the aggregate), materially affect the value of the assets encumbered thereby or materially impair the ability of any Credit Party to use such assets in its business, and none of which is violated in any material aspect by existing or proposed structures or land use;

(f) Liens arising under oil and gas leases, term assignments of Leases, non-participating royalty interests, overriding royalty agreements, net profits agreements, royalty trust agreements, farm-out

agreements, division orders, contracts for the sale, purchase, exchange, transportation, gathering or processing of oil, gas or other hydrocarbons, unitizations and pooling designations, declarations, orders and agreements, development agreements, operating agreements, production sales contracts, area of mutual interest agreements, gas balancing or deferred production agreements, injection, repressuring and recycling agreements, salt water or other disposal agreements, seismic or geophysical permits or agreements, and other agreements that are, in each case of the foregoing, customary in the oil and gas business and that are entered into by any Credit Party in the ordinary course of business provided that: (i) such Liens are taken into account in computing the net revenue interests and working interests of the Borrower or any of its Subsidiaries warranted in the Security Documents or this Agreement, (ii) such Liens do not secure Debt for borrowed money, (iii) such Liens secure amounts that are not yet due or are being contested in good faith by appropriate proceedings, if such reserve as may be required by GAAP shall have been made therefor, (iv) such Liens are limited to the assets that are the subject of such agreements, and (v) if such Liens secure obligations owing to an Affiliate of a Credit Party, such Liens and such obligations shall be subordinated to the Secured Obligations and Liens securing the Secured Obligations on terms and conditions satisfactory to the Administrative Agent;

(g) royalties, overriding royalties, net profits interests, production payments, reversionary interests, calls on production, preferential purchase rights and other burdens on or deductions from the proceeds of production, that do not secure Debt for borrowed money and that are taken into account in computing the net revenue interests and working interests of the Credit Parties warranted in the Security Documents or in this Agreement;

(h) Liens arising in the ordinary course of business out of pledges or deposits under workers’ compensation laws, unemployment insurance, old age pensions or other social security or retirement benefits, or similar legislation or to secure public or statutory obligations of the Borrower or any Subsidiary;

(i) deposits to secure the performance of tenders, bids, trade contracts, leases, statutory obligations, stay, government contracts, surety and appeal bonds, performance and return of money bonds and other obligations of a like nature, in each case in the ordinary course of business and which deposits do not secure Debt for borrowed money;

(j) judgment liens in respect of judgments that do not constitute an Event of Default under Section 7.1(h) ;

(k) the filing of Uniform Commercial Code financing statements solely as a precautionary measure in connection with operating leases, consignment of goods or other similar transactions;

(l) landlords’, lessors’ and sublessors’ Liens (relating to Properties that are not Oil and Gas Properties) and other like Liens in respect of rent not in default so long as the Debt or liabilities under such leases and subleases is secured only by the assets covered thereby;

(m) Liens granted by any Credit Party on its rights under any insurance policy, but only to the extent that such Lien is granted to the insurers under such insurance policies or any insurance premium finance company to secure payment of the premiums and other amounts owed to the insurers or such premium finance company with respect to such insurance policy;

(n) Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights and remedies and burdening only deposit accounts or other funds maintained with a depository institution;

(o) Liens existing on the Closing Date and set forth on Schedule 6.2 ; and

(p) Liens on assets of the Credit Parties not otherwise permitted by this Section 6.2 ; provided, that the aggregate principal amount of all obligations secured under this Section 6.2(p) shall not exceed $1,000,000.

Section 6.3 Investments . No Credit Party shall, nor shall it permit any of its Subsidiaries to, (x) make or hold any direct or indirect investment in any Person, including capital contributions to the Person, investments in or the acquisition of the debt or equity securities or other Equity Interests of the Person, (y) make or hold any loans, guaranties, trade credit, or other extensions of credit to any Person or (z) make an Acquisition, other than the following (collectively, the “ Permitted Investments ”):

(a) investments existing on the Closing Date and described on Schedule 6.3 ;

(b) investments in the form of trade credit to customers of a Credit Party arising in the ordinary course of business and represented by accounts from such customers;

(d) investments, loans, advances and equity contributions by a Credit Party in or to any other Credit Party;

(e) creation of any additional Subsidiaries domiciled in the U.S. in compliance with Section 5.6 and Schedule III ;

(f) (i) investments in and acquisitions of direct ownership interests in Oil and Gas Properties, crude oil and gas gathering systems and related equipment, (ii) investments and acquisitions related to farm-out, farm-in, joint operating, joint venture or area of mutual interest agreements, gathering systems, pipelines or other similar arrangements which are usual and customary in the oil and gas exploration and production business located within the geographic boundaries of the United States of America and (iii) subject to Section 6.11 hereof, acquisitions of any other assets or Property not described in clause (i) or (ii) above; provided that, in the case of any of clauses (i), (ii) or (iii) unless otherwise indicated, (x) if requested by the Administrative Agent, such assets are pledged as Collateral to the extent required by Section 5.7 ; (y) any such investments are not investments in a Person, and (z) in the case of clauses (i) and (ii) above only, no Event of Default or Borrowing Base Deficiency shall exist after giving effect thereto;

(g) investments received by the Borrower and its Subsidiaries in connection with Asset Sales permitted by Section 6.8 ;

(h) guarantees permitted by Section 6.1 ;

(i) Hedging Arrangements to the extent permitted under Section 6.15 ;

(j) loans or advances by any Credit Party to employees made in the ordinary course of business (including travel, entertainment and relocation expenses) in an aggregate amount not to exceed $500,000 at any time;

(k) Investments in the ordinary course of business consisting of (i) endorsements for collection or deposit or (ii) customary trade arrangements with customers;

(l) Investments received in satisfaction or partial satisfaction thereof from financial troubled account debtors to the extent reasonably necessary in order to prevent or limit loss; and

(m) other Investments not otherwise permitted by the foregoing clauses in an amount not to exceed $1,000,000 in the aggregate outstanding at any one time.

provided that this Section 6.3 shall not prohibit a merger or consolidation among the Credit Parties so long as such merger or consolidation is otherwise permitted under Section 6.7 .

Section 6.4 [Reserved] .

Section 6.5 Agreements Restricting Liens . No Credit Party shall, nor shall it permit any of its Subsidiaries to, create, incur, assume or permit to exist any contract, agreement or understanding (other than (a) this Agreement, (b) the Credit Documents, (c) agreements governing Debt permitted by Section 6.1(d) or 6.1(h) to the extent such restrictions govern only the asset financed pursuant to such Debt, (d) any prohibition or limitation that exists pursuant to applicable requirements of a Governmental Authority, (e) customary restrictions in leases (other than Leases), subleases, licenses, asset sale agreements, merger agreements and acquisition agreements otherwise permitted hereby (but only to the extent any such restriction relates to the Property subject to such agreement), (f) restrictions on cash or other deposits imposed by customers under contracts entered into in the ordinary course of business, (g) any prohibition or limitation that exists in any contract to which a Credit Party is a party (other than Leases or other material agreements listed on Schedule 4.24 ) that (i) exists on the Closing Date or (ii) are binding on a Credit Party at the time such Credit Party first becomes a Credit Party hereunder, so long as such prohibition or limitation was not entered into solely in contemplation of such Person becoming a Credit Party, in the case of (i) or (ii), so long as (A) such prohibition or limitation is generally applicable and does not specifically address any of the Debt or the Liens granted under the Credit Documents and (B) the noncompliance of such prohibition or limitation would not reasonably be expected to be adverse to the Administrative Agent or the Lenders, or (h) agreements governing Liens permitted pursuant to Section 6.2(e)) which in any way prohibits or restricts the granting, conveying, creation or imposition of any Lien on any of its Property, whether now owned or hereafter acquired, to secure the Secured Obligations or restricts any Subsidiary from paying Restricted Payments to the Borrower, or which requires the consent of or notice to other Persons in connection therewith.

Section 6.6 Use of Proceeds; Use of Letters of Credit . No Credit Party shall, nor shall it permit any of its Subsidiaries to: (a) use the proceeds of the Advances or the Letters of Credit for any purposes other than (i) working capital purposes of any Credit Party, (ii) capital expenditures of any Credit Party, or (iii) other general corporate purposes of any Credit Party. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, use any part of the proceeds of Advances or Letters of Credit for any purpose which violates, or is inconsistent with, Regulations T, U, or X.

Section 6.7 Corporate Actions; Accounting Changes .

(a) No Credit Party shall, nor shall it permit any of its Subsidiaries to, dissolve, merge or consolidate with or into any other Person, except that (i) the Borrower may merge with any of its wholly-owned Subsidiaries, (ii) any Credit Party may merge or be consolidated with or into any other Credit Party, and (iii) any Credit Party (other than the Borrower) or any of its Subsidiaries may dissolve so long as such Credit Party or Subsidiary does not own or hold any Oil and Gas Properties or other assets with any BB Value; provided, in any case above, that (x) in any merger involving the Borrower, the Borrower shall be the surviving entity, and (y) at the time of any such dissolution, merger or consolidation and immediately after giving effect thereto, no Default, Event of Default or Borrowing Base Deficiency shall

have occurred and the Administrative Agent shall continue to have an Acceptable Security Interest in the Collateral.

(b) No Credit Party shall, nor shall it permit any of its Subsidiaries to, (i) without 10 days’ (or such earlier date as may be accepted in writing by the Administrative Agent in its sole discretion from time to time) prior written notice to the Administrative Agent, change its name, change its state of incorporation, formation or organization, change its organizational identification number or reorganize in another jurisdiction, (ii) without prior written notice to, and prior consent of, the Administrative Agent, amend, supplement, modify or restate its articles or certificate of incorporation or formation, LLC Agreement, limited partnership agreement, bylaws, limited liability company agreements, or other equivalent organizational documents in a manner that is materially adverse to the interests of the Administrative Agent and the Lenders, or (iii) materially change its method of accounting employed in the preparation of the financial statements referred to in Section 4.4 or change the fiscal year end of the Borrower unless required to conform to GAAP or approved in writing by the Administrative Agent.

Section 6.8 Sale of Assets . No Credit Party shall, nor shall it permit any of its Subsidiaries to, sell, convey, or otherwise transfer any of its Property (including, without limitation, any working interest, overriding royalty interest, production payments, net profits interest, royalty interest, or mineral fee interest but excluding any Casualty Event) other than:

(a) the sale of Hydrocarbons (other than Oil and Gas Properties) or Liquid Investments in the ordinary course of business,

(b) Asset Sales of (i) equipment or other Property that is (A) obsolete, worn out or uneconomic and disposed of in the ordinary course of business, (B) no longer necessary for the business of such Person or (C) contemporaneously replaced by Property of at least comparable value and use, and (ii) fixtures or equipment to the extent that (1) such Property is exchanged for credit against the purchase price of similar replacement fixtures or equipment or (2) the cash proceeds of such Asset Sale are promptly applied to the purchase price of such replacement fixtures or equipment,

(c) Asset Sales of Property between or among Credit Parties; provided that, if such Property is Collateral and if requested by the Administrative Agent, the Credit Party receiving such Property will reaffirm the Lien in such Collateral in form and substance acceptable to the Administrative Agent;

(d) upon 10 days’ (or such shorter time period as may be accepted in writing by the Administrative Agent in its sole discretion) advance notice to the Administrative Agent, the Asset Sale of Oil and Gas Properties which are attributable to Proven Reserves; provided that, (i) at least 90% of the consideration received by the Credit Party in respect of such Asset Sale shall be cash or Liquid Investments or, in the case of any like-kind exchange, Oil and Gas Properties (or a combination of cash, Liquid Investments and Oil and Gas Properties) so long as, in the case of any like-kind exchange, (x) the Oil and Gas Properties received by the Credit Parties in connection with such like-kind exchange are located in the Permian Basin, (y) the Oil and Gas Properties received by the Credit Parties in connection with such like-kind exchange have an equivalent or greater fair market value (after taking into account the cash and Liquid Investments received in connection therewith) compared to the Oil and Gas Properties transferred by the Credit Parties and (z) the Oil and Gas Properties transferred by the Credit Parties in connection with such like-kind exchange shall not include any Proven Reserves categorized as “producing” under the definitions for oil and gas reserves promulgated by the Society of Petroleum Evaluation Engineers (or any generally recognized successor) as in effect at the time in question, (ii) the consideration received in respect of such Asset Sale shall be equal to or greater than the fair market value of such Oil and Gas Properties, interest therein or Subsidiary subject of such Asset Sale (as reasonably determined by the Borrower (and, solely to the extent required by the LLC Agreement, approved by the

board of directors or equivalent governing body of the Borrower) and, if requested by the Administrative Agent, the Borrower shall deliver a certificate of a Responsible Officer of the Borrower certifying to that effect), (iii) if any such Asset Sale is of a Subsidiary owning Oil and Gas Properties, such Asset Sale shall include all the Equity Interests of such Subsidiary; and (iv) the Borrowing Base shall be automatically adjusted in accordance with Section 2.2(g) to the extent required thereby;

(e) Hedge Events; provided that, (i) 100% of the consideration received in respect of such Hedge Event shall be cash or cash equivalents or other Hedging Arrangements, (ii) the consideration received in respect of such Hedge Event shall be equal to or greater than the fair market value of such Hedging Arrangements; and (iii) the Borrowing Base shall be automatically adjusted in accordance with Section 2.2(g) to the extent required thereby;

(f) so long as no Event of Default exists or would result therefrom Asset Sales of Oil and Gas Properties to which no Proven Reserves are attributable;

(g) sales, transfers and dispositions or the compromise or settlement of accounts receivable in connection with the compromise, settlement or collection thereof in the ordinary course of business (and not as part of a bulk sale or receivables financing);

(h) Restricted Payments permitted by Section 6.9 ;

(i) licenses, sublicenses, leases or subleases granted to third parties in the ordinary course of business not interfering with the business of the Credit Parties or any of their Subsidiaries and not affecting any Oil and Gas Properties;

(j) Asset Sales permitted under Section 6.7 ; and

(k) so long as no Borrowing Base Deficiency exists or would result therefrom, Asset Sales of other Property (other than Oil and Gas Properties or Hedging Arrangements) not to exceed $1,000,000 during any fiscal year.

Section 6.9 Restricted Payments . No Credit Party shall make, nor shall it permit any of its Subsidiaries to make, any Restricted Payments except that:

(a) (i) the Subsidiaries of the Borrower may make Restricted Payments to the Borrower or any other Credit Party that is a Subsidiary of the Borrower, (ii) so long as no Event of Default or Borrowing Base Deficiency exists or would result therefrom, the Borrower may make Permitted Tax Distributions, (iii) any Credit Party or Subsidiary may declare and pay dividends with respect to its Equity Interests payable solely in additional shares or units of its Equity Interests and (iv) so long as no Event of Default or Borrowing Base Deficiency exists or would result therefrom, any Credit Party and any Subsidiary may purchase redeem or otherwise acquire (A) Equity Interests issued by it to existing or former employees of such Credit Party or Subsidiary in connection with satisfying federal or state income tax obligations incurred in connection with the issuance or exercise of Equity Interests, (B) Equity Interests issued to any employee of such Credit Party that such Credit Party is obligated to repurchase upon such employee’s termination of employment prior to the date that is 180 days after the Maturity Date, (C) Repurchase Interest (as such term is defined the LLC Agreement) or (D) Management Incentive Interests or Management Incentive Units (as such terms are defined in the LLC Agreement) upon the termination of the employment of such employee.

(including, but not limited to, the purchase, sale, lease or exchange of Property, the making of any investment, the giving of any guaranty, the assumption of any obligation or the rendering of any service) with any of its Affiliates which are not Credit Parties unless such transaction or series of transactions is on terms no less favorable to the Borrower or any Subsidiary, as applicable, than those that could be obtained in a comparable arm’s length transaction with a Person that is not such an Affiliate except the restrictions in this Section 6.10 shall not apply to: (a) the Restricted Payments permitted under Section 6.9 and transactions permitted by Section 6.3(j) , if any, (b) Investments by a Credit Party in the form of Equity Interests of another Credit Party, (c) reasonable and customary director, officer and employee compensation (including bonuses), indemnification and other benefits (including retirement, health, stock option and other benefit plans) and (d) transactions among the Credit Parties.

Section 6.11 Line of Business . No Credit Party shall, and shall not permit any of its Subsidiaries to, engage in any business other than businesses of the type conducted by the Borrower and its Subsidiaries on the Closing Date.

Section 6.12 Hazardous Materials . No Credit Party (a) shall, nor shall it permit any of its Subsidiaries to, create, handle, transport, use, or dispose of any Hazardous Substance or Hazardous Waste, except in the ordinary course of its business and except in compliance with Environmental Law other than to the extent that such non-compliance could not, individually or in the aggregate, reasonably be expected to result liability of a Credit Party that could reasonably be expected to result in a Material Adverse Change or in any liability to the Lenders or the Administrative Agent, and (b) shall, nor shall it permit any of its Subsidiaries to, release any Hazardous Substance or Hazardous Waste into the environment and shall not permit any Credit Party’s or any Subsidiary’s Property to be subjected to any release of Hazardous Substance or Hazardous Waste, except in compliance with Environmental Law other than to the extent that such non-compliance could not, individually or in the aggregate, reasonably be expected to result in liability of a Credit Party that could reasonably be expected to result in a Material Adverse Change or in any liability on the Lenders or the Administrative Agent.

Section 6.13 Compliance with ERISA . Except for matters that individually or in the aggregate would not reasonably be expected to cause a Material Adverse Change, no Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly: (a) engage in any transaction in connection with which the Borrower or any Subsidiary could be subjected to either a civil penalty assessed pursuant to section 502(c), (i) or (l) of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code; (b) terminate, or permit any member of the Controlled Group to terminate, any Plan in a manner, or take any other action with respect to any Plan, which could result in any liability to the Borrower, any Subsidiary or any member of the Controlled Group to the PBGC; (c) fail to make, or permit any member of the Controlled Group to fail to make, full payment when due of all amounts which, under the provisions of any Plan, agreement relating thereto or applicable law, the Borrower, a Subsidiary or member of the Controlled Group is required to pay as contributions thereto; (d) permit to exist, or allow any Subsidiary or any member of the Controlled Group to permit to exist, any accumulated funding deficiency (or unpaid minimum required contribution for plan years after December 31, 2007) within the meaning of Section 302 of ERISA or section 412 of the Code, whether or not waived, with respect to any Plan; (e) permit, or allow any member of the Controlled Group to permit, the actuarial present value of the benefit liabilities (as “actuarial present value of the benefit liabilities” shall have the meaning specified in section 4041 of ERISA) under any Plan that is regulated under Title IV of ERISA to exceed the current value of the assets (computed on a plan termination basis in accordance with Title IV of ERISA) of such Plan allocable to such benefit liabilities; (f) contribute to or assume an obligation to contribute to, or permit any member of the Controlled Group to contribute to or assume an obligation to contribute to, any Multiemployer Plan; (g) acquire, or permit any member of the Controlled Group to acquire, an interest in any Person that causes such Person to become a member of the Controlled Group if such Person sponsors, maintains or contributes to, or at any time in the six-year period preceding such acquisition has sponsored, maintained,

or contributed to, (1) any Multiemployer Plan, or (2) any other Plan that is subject to Title IV of ERISA under which the actuarial present value of the benefit liabilities under such Plan exceeds the current value of the assets (computed on a plan termination basis in accordance with Title IV of ERISA) of such Plan allocable to such benefit liabilities; (h) incur, or permit any member of the Controlled Group to incur, a liability to or on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA; or (i) contribute to or assume an obligation to contribute to any employee welfare benefit plan, as defined in section 3(1) of ERISA, maintained to provide benefits to former employees of such entities, that may not be terminated by such entities in their sole discretion at any time without any liability.

Section 6.14 Sale and Leaseback Transactions . No Credit Party shall, nor shall it permit any of its Subsidiaries to, sell or transfer to a Person any Property, whether now owned or hereafter acquired, if at the time or thereafter the Borrower or a Subsidiary shall lease as lessee such Property or any part thereof or other Property which the Borrower or a Subsidiary intends to use for substantially the same purpose as the Property sold or transferred.

Section 6.15 Limitation on Hedging .

(a) No Credit Party shall, nor shall it permit any of its Subsidiaries to:

(i) purchase, assume, or hold a speculative position in any commodities market or futures market or enter into any Hedging Arrangement for speculative purposes; or

(ii) enter into any Hedging Arrangement which

(A) is entered into for reasons other than as a part of its normal business operations as a risk management strategy and/or hedge against changes resulting from market conditions related to the Borrower’s or its Subsidiaries’ operations, or

(B) covers (calculated separately for each type of Hydrocarbon):

(i.) for each full calendar month during the first twenty-four calendar months of the forthcoming sixty full calendar months following the time in question, notional volumes (in the aggregate, taking into account all other Hedging Arrangements to which any Credit Party is a party) in excess of the greater of (x) 85% of Proven Reserves (as described in the most recently delivered Engineering Report pursuant to Section 5.2(c) ) and (y) 75% of Forecasted Production (as described in the report required to be delivered pursuant to Section 5.2(e) ), in either case, of crude oil, natural gas and natural gas liquids (each measured separately), attributable to Oil and Gas Properties of the Borrower and its Subsidiaries; or

(ii.) for each full calendar month during the last thirty-six full calendar months of the forthcoming sixty full calendar months following the time in question, notional volumes (in the aggregate, taking into account all other Hedging Arrangements to which any Credit Party is a party) in excess of the greater of (x) 75% of Proven Reserves (as described in the most recently delivered Engineering Report pursuant to Section 5.2(c) ) and (y) 50% of Forecasted Production (as described in the report required to be delivered pursuant to Section 5.2(e) ), in either case, of crude oil, natural gas and natural gas liquids (each measured

separately) attributable to Oil and Gas Properties of the Borrower and its Subsidiaries;

provided, however, that the volume limitations shall not apply to put option contracts that are not related to corresponding calls, collars or swaps, or

(D) is secured (unless such Hedging Arrangement is with a Swap Counterparty and is secured by the Collateral pursuant to the Credit Documents) or obligates any Credit Party to any margin call requirements or otherwise requires the Borrower or any of its Subsidiaries to provide collateral; or

(E) unless such counterparty is a Lender, an Affiliate of a Lender or such other Person who has (or who has an affiliate that guarantees such Hedging Arrangement, and such affiliate has) at the time the Hedging Arrangement is made, credit ratings of A- or better from S&P or A3 or better from Moody’s; or

(iii) be party to, or enter into, any Hedging Arrangement which relates to interest rates if

(A) such Hedging Arrangement relates to payment obligations on Debt which is not permitted to be incurred under Section 6.1 above,

(B) the aggregate notional amount of all such Hedging Arrangements exceeds 75% of the anticipated outstanding principal balance of the Debt under this Agreement to be hedged by such Hedging Arrangements, or if the term of such Hedging Arrangements extends beyond the Maturity Date,

(C) such Hedging Arrangement is with a Lender, an Affiliate of a Lender or such other Person who has who, at the time the Hedging Arrangement is made, has credit ratings that are lower than A- by S & P or A3 by Moody’s (or such counterparty has a guarantor of its obligations who is rated lower than such levels),

(D) as to any such Hedging Arrangement covering the Debt incurred under this Agreement, such Hedging Arrangement is made by the Borrower or one of its Subsidiaries with a counterparty that is not a Lender or an Affiliate of a Lender (unless such Hedging Arrangement is unsecured), or

(E) the floating rate index of such Hedging Arrangement does not generally match the index used to determine the floating rates of interest on the corresponding Debt to be hedged by such Hedging Arrangement.

(b) In no event shall the aggregate notional volume of all Hedging Arrangements in respect of commodities for a particular month exceed 100% of the actual production for each of crude oil, natural gas and natural gas liquids, calculated separately, in the previous calendar month. After the end of any calendar month, if the aggregate notional volumes of all Hedging Arrangements in respect of commodities exceeded 100% of the actual production for any of crude oil, natural gas or natural gas liquids, calculated separately, in such calendar month, an Event of Default shall occur and the Borrower shall immediately notify the Administrative Agent of such Event of Default.

Section 6.16 Leverage Ratio . Borrower shall not permit the Leverage Ratio as of each fiscal quarter end, beginning with the fiscal quarter ending June 30, 2015, to be more than 4.00 to 1.00.

Section 6.17 Current Ratio . The Borrower shall not permit the ratio of, as of the last day of each fiscal quarter of the Borrower, beginning with the fiscal quarter ending June 30, 2016, the Borrower’s and its consolidated Subsidiaries’ (a) consolidated current assets to (b) consolidated current liabilities, to be less than 1.00 to 1.00. For purposes of this calculation (i) “current assets” shall include, as of the date of calculation, the Availability but shall exclude any asset representing a valuation account arising from the application of ASC 410 and 815, and (ii) “current liabilities” shall exclude, as of the date of calculation, the current portion of long—term Debt existing under this Agreement and any liabilities representing a valuation account arising from the application of ASC 410 and 815.

Section 6.18 Minimum Interest Coverage Ratio . The Borrower shall not permit the Minimum Interest Coverage Ratio as of the last day of each fiscal quarter of the Borrower, commencing with the fiscal quarter ending June 30, 2015 through and including the fiscal quarter ending March 31, 2016, to be less than 2.50 to 1.00.

Section 6.19 Prepayment of Certain Debt and Other Obligations . No Credit Party shall, nor shall it permit any of its Subsidiaries to, prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner, or make any payment in violation of any subordination terms of, any Debt, except (a) the prepayment of the Obligations in accordance with the terms of this Agreement, (b) regularly scheduled or required repayments or redemptions of Permitted Debt and refinancings and refundings of such Permitted Debt so long as such refinancings and refundings would otherwise comply with Section 6.1 , and (c) so long as no Event of Default or Borrowing Base Deficiency exists or would result therefrom, other prepayments of Permitted Debt not described in the immediately preceding clauses (a) and (b).

Section 6.20 Gas Imbalances, Take-or-Pay or Other Prepayments . The Borrower shall not, nor shall it permit any of its Subsidiaries to, allow (a) gas imbalances (other than those imbalances which (i) occur in the normal course of business and (ii) do not exceed 2% of the value of the Proven Reserves of the Credit Parties), or prepayments with respect to the Oil and Gas Properties of the Borrower or any Subsidiary which would require the Borrower or any Subsidiary to deliver their respective Hydrocarbons produced on a monthly basis from such Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor or (b) take-or-pay obligations in excess of $2,000,000 in the aggregate.

Section 6.21 Sale or Discount of Receivables . Except for receivables obtained by the Borrower or any Subsidiary out of the ordinary course of business or the settlement of joint interest billing accounts in the ordinary course of business or discounts granted to settle collection of accounts receivable or the sale of defaulted accounts arising in the ordinary course of business in connection with the compromise or collection thereof and not in connection with any financing transaction, neither the Borrower nor any Subsidiary will discount or sell (with or without recourse) to any other Person that is not the Borrower any of its notes receivable or accounts receivable.

Section 6.22 Sanctions . The Borrower shall not, and shall not permit any other Credit Party, to directly or, to the knowledge of the Borrower, indirectly, use the proceeds of any Borrowing, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other individual or entity, to fund any activities of or business with any individual or entity, or in any Designated Jurisdiction, that, at the time of such funding is the subject of Sanctions, or in any other manner that will result in a violation by any individual or entity (including any individual or entity

participating in the transaction, whether as Lender, Issuing Lender, Administrative Agent, or otherwise) of Sanctions.

Section 6.23 Marketing Activities . The Borrower will not, and will not permit any of its Subsidiaries to, engage in marketing activities for any Hydrocarbons or enter into any contracts related thereto other than (a) contracts for the sale of Hydrocarbons scheduled or reasonably estimated to be produced from their proved Oil and Gas Properties during the period of such contract, (b) contracts for the sale of Hydrocarbons scheduled or reasonably estimated to be produced from proved Oil and Gas Properties of third parties during the period of such contract associated with the Oil and Gas Properties of the Borrower and the Subsidiaries that the Borrower or any Subsidiary has the right to market pursuant to joint operating agreements, unitization agreements or other similar contracts that are usual and customary in the oil and gas business and (c) other contracts for the purchase and/or sale of Hydrocarbons of third parties (i) which have generally offsetting provisions ( i.e. , corresponding pricing mechanics, delivery dates and points and volumes) such that no “position” is taken and (ii) for which appropriate credit support has been taken to alleviate the material credit risks of the counterparty thereto.

ARTICLE 7
DEFAULT AND REMEDIES

Section 7.1 Events of Default . The occurrence of any of the following events shall constitute an “Event of Default” under this Agreement and any other Credit Document:

(a) Payment Failure . Any Credit Party (i) fails to pay any principal when due under this Agreement or (ii) fails to pay, within three Business Days of when due, any interest or other amount due under this Agreement or any other Credit Document, including payments of fees, reimbursements, and indemnifications;

(b) False Representation or Warranties . Any representation or warranty made or deemed to be made by any Credit Party or any Responsible Officer thereof in this Agreement, in any other Credit Document or in any certificate delivered in connection with this Agreement or any other Credit Document is incorrect, false or otherwise misleading in any material respect at the time it was made or deemed made (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof);

(c) Breach of Covenant . (i) Any breach by any Credit Party of any of the covenants in Section 5.1(a) , 5.2(h) , 5.3(a) , 5.6 , 5.9 , or 5.12 or Article 6 of this Agreement or the corresponding covenants in any Guaranty or (ii) any breach by any Credit Party of any other covenant contained in this Agreement or any other Credit Document (except as otherwise provided in Section 7.1(a) ) and such breach shall remain unremedied for a period of thirty days following the earlier of (A) the date on which Administrative Agent gave notice of such failure to Borrower and (B) the date any Responsible Officer of such Credit Party acquires knowledge of such failure;

(d) Guaranties . Any provisions in the Guaranties shall at any time (before its expiration according to its terms) and for any reason cease to be in full force and effect and valid and binding on the Guarantors party thereto or shall be contested by any party thereto; any Guarantor shall deny it has any liability or obligation under such Guaranties; or any Guarantor shall cease to exist other than as expressly permitted by the terms of this Agreement;

or any provisions thereof shall cease to be in full force and effect and valid and binding on the Credit Party that is a party thereto or any such Credit Party shall so state in writing (unless released or terminated pursuant to the terms of this Agreement or such Security Document or caused by the failure of the Administrative Agent to take any action within its control);

(f) Cross-Default . (i) The Borrower or any Guarantor shall fail to pay any principal of or premium or interest on its Debt which is outstanding in a principal amount of at least $2,000,000 individually or when aggregated with all such Debt of the Borrower and the Guarantors so in default (but excluding the Obligations) when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; (ii) any other event shall occur or condition (including, without limitation, any “event of default” or “termination event” in respect of any Hedging Arrangement) shall exist under any agreement or instrument relating to Debt which is outstanding in a principal amount of at least $2,000,000 individually or when aggregated with all such Debt of the Borrower and the Guarantors so in default (other than the Obligations), and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt prior to the stated maturity thereof; or (iii) any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment or customary mandatory repayment events that do not result from a default thereunder); provided that , for purposes of this paragraph (f), the “principal amount” of the obligations in respect of Hedging Arrangements at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that would be required to be paid if such Hedging Arrangements were terminated at such time;

(g) Bankruptcy and Insolvency . (i) Except as permitted by Section 6.7 above, any Credit Party shall terminate its existence or dissolve, or (ii) any Credit Party or any Subsidiary of the Borrower (A) admits in writing its inability to pay its debts generally as they become due; makes an assignment for the benefit of its creditors; consents to or acquiesces in the appointment of a receiver, liquidator, fiscal agent, or trustee of itself or any of its Property; files a petition under bankruptcy or other laws for the relief of debtors; or consents to any reorganization, arrangement, workout, liquidation, dissolution, or similar relief or (B) shall have had, without its consent: any court enter an order appointing a receiver, liquidator, fiscal agent, or trustee of itself or any of its Property; any petition filed against it seeking reorganization, arrangement, workout, liquidation, dissolution or similar relief under bankruptcy or other laws for the relief of debtors and such petition shall not be dismissed, stayed, or set aside for an aggregate of 60 days, whether or not consecutive;

(h) Settlements; Adverse Judgment . The Borrower or any of its Subsidiaries enters into a settlement of any claim against any of them when a suit has been filed or suffers final judgments against any of them since the date of this Agreement in an aggregate amount, less any insurance proceeds covering such settlements or judgments which are received or as to which the insurance carriers do not dispute coverage, greater than $2,000,000 and, in the case of final judgments, either (i) enforcement proceedings shall have been commenced by any creditor upon such judgments or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgments, by reason of a pending appeal or otherwise, shall not be in effect;

(i) Termination Events . Any Termination Event with respect to a Plan shall have occurred, and, 30 days after notice thereof shall have been given to the Borrower by the Administrative Agent, such Termination Event shall not have been corrected and shall have created and caused to be continuing a material risk of Plan termination or liability for withdrawal from the Plan as a “substantial employer” (as defined in Section 4001(a)(2) of ERISA), which termination or withdrawal would reasonably be expected to result in a liability greater than $2,000,000;

(j) Plan Withdrawals . The Borrower or any member of the Controlled Group as employer under a Multiemployer Plan shall have made a complete or partial withdrawal from such Multiemployer Plan and as a result thereof, the Borrower or any of its Subsidiaries shall have incurred an obligation to pay money that would reasonably be expected to exceed $2,000,000;

(k) Credit Documents . Except as otherwise provided in Section 7.1(d) and Section 7.1(e) hereof, any material provision of any Credit Document shall for any reason cease to be valid and binding on a Credit Party or any of their respective Subsidiaries or any such Person shall so state in writing; and

(l) Change in Control . The occurrence of a Change in Control.

Section 7.2 Optional Acceleration of Maturity . If any Event of Default (other than an Event of Default under Section 7.1(g) ) shall have occurred and be continuing, then, and in any such event:

(a) the Administrative Agent (i) shall at the request, or may with the consent, of the Majority Lenders, by notice to the Borrower, declare that the obligation of each Lender to make Advances and the obligation of the Issuing Lender to issue Letters of Credit shall be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Majority Lenders, by notice to the Borrower, declare the Obligations, the Notes, all interest thereon, and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Obligations, the Notes, all such interest, and all such amounts shall become and be forthwith due and payable in full, without presentment, demand, protest or further notice of any kind (including, without limitation, any notice of intent to accelerate or notice of acceleration), all of which are hereby expressly waived by each of the Credit Parties,

(b) the Borrower shall, on demand of the Administrative Agent at the request or with the consent of the Majority Lenders, deposit with the Administrative Agent into the Cash Collateral Account an amount of cash equal to the outstanding Letter of Credit Exposure as security for the Secured Obligations to the extent the Letter of Credit Obligations are not otherwise paid or Cash Collateralized at such time, and

(c) the Administrative Agent shall at the request of, or may with the consent of, the Majority Lenders proceed to enforce its rights and remedies under the Security Documents, the Guaranties, or any other Credit Document for the ratable benefit of the Secured Parties by appropriate proceedings.

Section 7.3 Automatic Acceleration of Maturity . If any Event of Default pursuant to Section 7.1(g) shall occur:

(a) the obligation of each Lender to make Advances and the obligation of the Issuing Lender to issue Letters of Credit shall immediately and automatically be terminated and the Obligations, the Notes, all interest on the Notes, and all other amounts payable under this Agreement shall immediately and automatically become and be due and payable in full, without presentment, demand, protest or any notice of any kind (including, without limitation, any notice of intent to accelerate or notice of acceleration), all of which are hereby expressly waived by each of the Credit Parties,

Section 7.4 Set-off . Upon (a) the occurrence and during the continuance of any Event of Default and (b) the making of the request or the granting of the consent, if any, specified by Section 7.2 to authorize the Administrative Agent to declare the Notes and any other amount payable hereunder due and payable pursuant to the provisions of Section 7.2 or the automatic acceleration of the Notes and all amounts payable under this Agreement pursuant to Section 7.3 , the Administrative Agent and each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Administrative Agent or such Lender to or for the credit or the account of any Credit Party against any and all of the obligations of the Borrower now or hereafter existing under this Agreement, the Notes held by the Administrative Agent or such Lender, and the other Credit Documents, irrespective of whether or not the Administrative Agent or such Lender shall have made any demand under this Agreement, such Note, or such other Credit Documents, and although such obligations may be unmatured. Each Lender agrees to promptly notify the Borrower and the Administrative Agent after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Administrative Agent and each Lender under this Section 7.4 are in addition to any other rights and remedies (including, without limitation, other rights of set-off) which the Administrative Agent or such Lender may have.

Section 7.5 Remedies Cumulative, No Waiver . No right, power, or remedy conferred to the Administrative Agent, the Issuing Lender and the Lenders in this Agreement or the Credit Documents, or now or hereafter existing at law, in equity, by statute, or otherwise shall be exclusive, and each such right, power, or remedy shall to the full extent permitted by law be cumulative and in addition to every other such right, power or remedy. No course of dealing and no delay in exercising any right, power, or remedy conferred to the Administrative Agent, the Issuing Lender and the Lenders in this Agreement and the Credit Documents or now or hereafter existing at law, in equity, by statute, or otherwise shall operate as a waiver of or otherwise prejudice any such right, power, or remedy. Any Lender may cure any Event of Default without waiving the Event of Default. No notice to or demand upon the Borrower or any other Credit Party shall entitle the Borrower or any other Credit Party to similar notices or demands in the future.

Section 7.6 Application of Payments . Prior to an Event of Default, all payments made hereunder shall be applied by the Administrative Agent as directed by the Borrower, but subject to the terms of this Agreement, including the application of prepayments according to Section 2.5 and Section 2.12 . During the existence of an Event of Default, all payments and collections received by the Administrative Agent (other than as a result of the exercise of remedies against Collateral or against the Borrower or any Subsidiary) shall be applied by the Administrative Agent in its discretion, but subject to the terms of this Agreement, including the application of prepayments according to Section 2.5 and Section 2.12 . During the existence of an Event of Default, all payments and collections received by the Administrative Agent as a result of the exercise of remedies against Collateral or against the Borrower or any Subsidiary shall be applied to the Secured Obligations in accordance with Section 2.12 and otherwise in the following order:

as secured party hereunder or under any other Credit Document on behalf of any Credit Party and any other costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Credit Document;

SECOND, to the payment of all accrued interest constituting part of the Secured Obligations (the amounts so applied to be distributed ratably among the Secured Parties in accordance with the amounts of the Secured Obligations described in this clause “SECOND” owed to them on the date of any such distribution);

THIRD, to the payment of any Secured Obligations not addressed in clauses “FIRST” or “SECOND” of this Section 7.6(c) (including, without limitation, any principal, fees or expenses, Letter of Credit Obligations, Obligations to make deposits into the Cash Collateral Account, Secured Obligations owing to Swap Counterparties in respect of Hedging Arrangements, and Banking Services Obligations) constituting part of the Secured Obligations (the amounts so applied to be distributed ratably among the Secured Parties in accordance with the amounts of the Secured Obligations described in this clause “THIRD” owed to them on the date of any such distribution); and

FOURTH, to the Credit Parties, their successors or assigns, or as a court of competent jurisdiction may otherwise direct.

Section 7.7 Equity Right to Cure .

(a) Notwithstanding anything to the contrary contained in Section 7.1 , in the event of any Event of Default under the covenant set forth in Section 6.16 , Section 6.17 or Section 6.18 and until the expiration of the tenth (10th) Business Day after the date on which financial statements are required to be delivered pursuant to Section 5.2(a) or (b) and the corresponding Compliance Certificate is required to be delivered pursuant to Section 5.2(f) with respect to the applicable fiscal quarter hereunder, the Borrower may sell or issue common Equity Interests of the Borrower to any of the Equity Interest holders (to the extent such transaction would not result in a Change in Control) and apply the proceeds of such issuance of Equity Interests to, as applicable, increase EBITDAX and increase consolidated current assets (such application, a “ Covenant Cure Payment” ); provided that (i) the proceeds of such issuance of Equity Interests is actually received by Borrower no later than ten (10) Business Days after the date on which financial statements are required to be delivered pursuant to Section 5.2(a) or (b) and the corresponding Compliance Certificate is required to be delivered pursuant to Section 5.2(f) with respect to such fiscal quarter hereunder and (ii) the amount of the Covenant Cure Payment shall not exceed the greatest of (A) the amount necessary to bring the Borrower into compliance with Section 6.16 , if any, (B) the amount necessary to bring the Borrower into compliance with Section 6.17 , if any, and (C) the amount necessary to bring the Borrower into compliance with Section 6.18 , if any (it being understood that such Covenant Cure Payment may be deemed to cure each financial covenant that is breached in the same quarter, even if multiple financial covenants are breach in such quarter, but the amount of such Covenant Cure Payment deemed to so apply to the applicable financial covenant shall not exceed the minimum amount necessary to cure such financial covenant breach and that, in demonstrating compliance with each financial covenant, only the minimum amount necessary to cure such financial covenant shall be included in the calculation for such financial covenant). For the avoidance of doubt, the Borrower may apply a Covenant Cure Payment to both increase EBITDAX and increase current assets in the same fiscal quarter, and the utilization of the Covenant Cure Payment to cure any or all of the covenants set forth in Section 6.16 , Section 6.17 , and Section 6.18 , as applicable, in the same fiscal quarter shall be considered one utilization of the equity cure provided for in this Section 7.7 . Subject to the terms set forth above and the terms in clause (b) and (c) below, upon (A) application of the proceeds of such issuance of Equity Interests as provided above within the ten (10) Business Day period described above in such amounts sufficient to

cure the Events of Default under the covenants set forth in Section 6.16 , Section 6.17 and Section 6.18 , as applicable, and (B) delivery of an updated Compliance Certificate executed by a Responsible Officer of the Borrower to the Administrative Agent reflecting compliance with the covenants set forth in Section 6.16 , Section 6.17 and Section 6.18 , as applicable, such Events of Default shall be deemed cured and no longer in existence.

(b) The parties hereby acknowledge and agree that this Section 7.7 may not be relied on for purposes of calculating any financial ratios or other conditions or compliances other than the financial covenants set forth in Section 6.16 , Section 6.17 , and Section 6.18 and shall not result in any adjustment to any amounts (including, for the avoidance of doubt, any decreases to Debt or decreases to current liabilities with the proceeds of such issuance of Equity Interests) other than the amount of EBITDAX referred to in Section 7.7(a) above for purposes of determining the Borrower’s compliance with Section 6.16 and Section 6.18 , as applicable, and the amount of current assets referred to in Section 7.7(a) above for purposes of determining the Borrower’s compliance with Section 6.17 . To the extent a Covenant Cure Payment is applied to increase EBITDAX, such Covenant Cure Payment shall only be taken into account in connection with the calculations of the covenant contained in Section 6.16 and Section 6.18 as of a particular fiscal quarter end and any subsequent calculations of such covenants which contain such particular fiscal quarter as part of its trailing twelve month period or trailing four quarter period.

(c) In each period of four consecutive fiscal quarters, there shall be at least two (2) fiscal quarters in which no cure set forth in this Section 7.7 is made. Furthermore, the Borrower may not utilize more than four cures provided in this Section 7.7 .

ARTICLE 8
THE ADMINISTRATIVE AGENT

Section 8.1 Appointment, Powers, and Immunities . (a) Each of the Lenders and the Issuing Lender hereby irrevocably appoints Wells Fargo Bank, National Association to act on its behalf as the Administrative Agent hereunder and under the other Credit Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Lender, and neither the Borrower nor any other Credit Party shall have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Credit Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

(b) Each Lender irrevocably appoints the Administrative Agent as its agent and bailee for the purpose of perfecting Liens (whether pursuant to Section 8-301(a)(2) of the UCC or otherwise), for the benefit of the Secured Parties, in assets in which, in accordance with the UCC or any other applicable Legal Requirement a security interest can be perfected by possession or control. Should any Lender (other than the Administrative Agent) obtain possession or control of any such Collateral, such Lender shall notify the Administrative Agent thereof, and, promptly following the Administrative Agent’s request therefor, shall deliver such Collateral to the Administrative Agent or otherwise deal with such Collateral in accordance with the Administrative Agent’s instructions.

Section 8.2 Rights as a Lender . Such Persons serving as the Administrative Agent hereunder shall each have the same rights and powers in its capacity as a Lender as any other Lender and may

exercise the same as though it were not the Administrative Agent, and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Persons serving as the Administrative Agent hereunder in its individual capacity. Such Persons and their Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for, and generally engage in any kind of business with, the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

Section 8.3 Exculpatory Provisions .

(a) The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Credit Documents, and their respective duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent:

(i) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(ii) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Credit Documents that the Administrative Agent is required to exercise as directed in writing by the Majority Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Credit Documents); provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Credit Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and

(iii) shall not, except as expressly set forth herein and in the other Credit Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of their Affiliates in any capacity.

(b) The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Majority Lenders or Required Lenders, as applicable, (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 9.3 and Section 7.2 ), or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent in writing by the Borrower, a Lender or the Issuing Lender.

(c) The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Credit Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Credit Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article 3 or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

Section 8.4 Reliance by Administrative Agent . The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of an Advance, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender or the Issuing Lender unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Lender prior to the making of such Advance or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

Section 8.5 Delegation of Duties . The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Credit Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facility evidenced by this Agreement as well as activities as the Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.

Section 8.6 Resignation of Administrative Agent .

(a) The Administrative Agent may at any time give notice of its resignation to the Lenders, the Issuing Lender and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right (with the consent of the Borrower so long as no Default or Event of Default shall exist, and which consent may not be unreasonably withheld) to appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “ Resignation Effective Date ”), then the retiring Administrative Agent may (but shall not be obligated to), on behalf of the Lenders and the Issuing Lender, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that in no event shall any such successor Administrative Agent be a Defaulting Lender. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.

(b) If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by applicable law, by notice in writing to the Borrower and such Person remove such Person as Administrative Agent and, in consultation with the Borrower, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “ Removal Effective Date ”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

(c) With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Credit Documents and (2) except for any indemnity payments owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and the Issuing Lender directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring or removed Administrative Agent (other than any rights to indemnity payments owed to the retiring or removed Administrative Agent), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Credit Documents. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Credit Documents, the provisions of this Article and Section 9.1 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent.

Section 8.7 Non-Reliance on Administrative Agent and Other Lenders . Each Lender and the Issuing Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the Issuing Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Credit Document or any related agreement or any document furnished hereunder or thereunder.

Section 8.8 No Other Duties, etc . Anything herein to the contrary notwithstanding, none of the Bookrunners, Lead Arranger or any other titles, if any, listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Credit Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or the Issuing Lender hereunder.

Section 8.9 Administrative Agent May File Proofs of Claim . In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Credit Party, the Administrative Agent (irrespective of whether the principal of any Advance or Letter of Credit Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Advances, Letter of Credit Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the Issuing Lender and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the Issuing Lender and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the Issuing Lender and the Administrative Agent under Sections 2.7 , 9.1 and 9.2 ) allowed in such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and the Issuing Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders and the Issuing Lender, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.7 , 9.1 , or 9.2 .

Section 8.10 Collateral and Guaranty Matters .

(a) The Secured Parties irrevocably authorize the Administrative Agent, at its option and in its discretion,

(i) to release any Lien on any property granted to or held by the Administrative Agent under any Credit Document (A) upon Payment in Full of Obligations, (B) that is sold or otherwise disposed of or to be sold or otherwise disposed of as part of or in connection with any sale or other disposition permitted under the Credit Documents, (C) constituting property in which no Credit Party owned an interest at the time the Lien was granted or at any time thereafter, or (D) constituting property leased to any Credit Party under a lease which has expired or has been terminated in a transaction permitted under this Agreement or is about to expire and which has not been, and is not intended by such Credit Party to be, renewed or extended, or (E) subject to Section 9.3 , if approved, authorized or ratified in writing by the Required Lenders;

(ii) to subordinate any Lien on any property granted to or held by the Administrative Agent under any Credit Document to the holder of any Lien on such property that is permitted by Section 6.1(d) ;

(iii) to release any Guarantor from its obligations under the Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted under the Credit Documents; and

(iv) to take any action in exigent circumstances as may be reasonably necessary to preserve any rights or privileges of the Secured Parties under the Credit Documents or applicable Legal Requirements.

Upon the Borrower’s reasonable request, the Administrative Agent shall execute documents as may be required to evidence any release or subordination described above and to authorize the filing of UCC-3 termination statements or other applicable filings. Upon request by the Administrative Agent at any time, the Secured Parties will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty pursuant to this Section 8.10 . By accepting the benefit of the Liens granted pursuant to the Security Documents, each Secured Party hereby agrees to the terms of this paragraph (a).

(b) The Administrative Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Administrative Agent’s Lien thereon, or any certificate prepared by any Credit Party in connection therewith, nor shall the Administrative Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.

(c) Notwithstanding anything contained in any of the Credit Documents to the contrary, the Credit Parties, the Administrative Agent, and each Secured Party hereby agree that no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce the Guaranties, it being understood and agreed that all powers, rights and remedies hereunder and under the Security Documents may be exercised solely by Administrative Agent on behalf of the Secured Parties in accordance with the terms hereof and the other Credit Documents. By accepting the benefit of the Liens granted pursuant to the Security Documents, each Secured Party not party hereto hereby agrees to the terms of this paragraph (c).

ARTICLE 9
MISCELLANEOUS

Section 9.1 Costs and Expenses . The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in connection with the syndication of the facilities, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Credit Documents, or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Lender in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, provided that, for purposes of the reimbursement obligations under clauses (i) and (ii) hereof for expenses incurred on or prior to the Closing Date only, such reimbursement obligations shall be limited to one primary counsel of the Administrative Agent and its Affiliates (taken as a whole), and if necessary, by a single firm or local counsel in each appropriate jurisdiction (unless such representation by a single counsel would be inappropriate due to the existence of an actual or reasonably perceived conflict of interest); and (iii) all out-of-pocket expenses incurred by the Administrative Agent, any Lender or the Issuing Lender (including the fees, charges, expenses, and disbursements of any counsel for the Administrative Agent and its Affiliates, any Lender or the Issuing Lender), in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Credit Documents, including its rights under this Section, or (B) in connection with the Advances made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Advances or Letters of Credit and (iv) all out-of-pocket expenses of the Lenders incurred in the case of documentary taxes. Notwithstanding the foregoing, the Borrower shall not be responsible for obligations incurred under clause (iii) hereof except for, attorney’s fees, expenses and charges for (w) one primary counsel of the Administrative Agent and its Affiliates (taken as a whole), (x) if necessary, a single firm of local counsel in each appropriate jurisdiction, (y) additional counsel if such representation by a single counsel would be inappropriate due to the existence of an actual or reasonably perceived conflict of interest, and (z) any other counsel as reasonably necessary; provided that any Lender who hires third party counsel will endeavor to provide the Borrower with prior written notice thereof before the incurrence of such fees, expenses, and charges, although failure to provide such notice shall not waive the Borrower’s reimbursement obligations under clause (z) hereof.

Section 9.2 Indemnification; Waiver of Damages .

ANY COUNSEL FOR ANY INDEMNITEE), INCURRED BY ANY INDEMNITEE OR ASSERTED AGAINST ANY INDEMNITEE BY ANY PERSON (INCLUDING THE BORROWER OR ANY OTHER CREDIT PARTY) OTHER THAN SUCH INDEMNITEE AND ITS RELATED PARTIES ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (I) THE EXECUTION OR DELIVERY OF THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, (II) ANY ADVANCE OR LETTER OF CREDIT OR THE USE OR PROPOSED USE OF THE PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY THE ISSUING LENDER TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT), (III) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR (IV) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY, WHETHER BROUGHT BY A THIRD PARTY OR BY THE BORROWER OR ANY OTHER CREDIT PARTY, AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE APPLICABLE INDEMNITEE ; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES (X) CONSTITUTE ATTORNEYS’ FEES, EXPENSES AND CHARGES FOR ANY COUNSEL OTHER THAN (A) ONE PRIMARY COUNSEL OF THE ADMINISTRATIVE AGENT AND ITS AFFILIATES (TAKEN AS A WHOLE), (B) IF NECESSARY, A SINGLE FIRM OF LOCAL COUNSEL IN EACH APPROPRIATE JURISDICTION, (C) OTHER COUNSEL IF SUCH REPRESENTATION BY A SINGLE COUNSEL WOULD BE INAPPROPRIATE DUE TO THE EXISTENCE OF AN ACTUAL OR REASONABLY PERCEIVED CONFLICT OF INTEREST, AND (D) ANY OTHER COUNSEL AS REASONABLY NECESSARY; PROVIDED THAT ANY INDEMNIFIED PARTY WHO HIRES THIRD PARTY COUNSEL PURSUANT TO THIS CLAUSE (D) WILL ENDEAVOR TO PROVIDE THE BORROWER WITH PRIOR WRITTEN NOTICE THEREOF BEFORE THE INCURRENCE OF SUCH FEES, EXPENSES, AND CHARGES, ALTHOUGH FAILURE TO PROVIDE SUCH NOTICE SHALL NOT WAIVE THE BORROWER’S REIMBURSEMENT OBLIGATIONS UNDER CLAUSE (D) HEREOF, (Y) ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR MATERIAL BREACH IN BAD FAITH OF SUCH INDEMNITEE’S OBLIGATIONS HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT, IF THE BORROWER OR SUCH CREDIT PARTY HAS OBTAINED A FINAL AND NONAPPEALABLE JUDGMENT IN ITS FAVOR ON SUCH CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION, OR (Z) SUCH LOSSES RELATE TO ANY PROCEEDING SOLELY BETWEEN OR AMONG INDEMNIFIED PARTIES OTHER THAN (A) CLAIMS AGAINST EITHER THE ADMINISTRATIVE AGENT OR THE LEAD ARRANGER OR THEIR RESPECTIVE AFFILIATES IN THEIR CAPACITY OR IN FULFILLING THEIR ROLE AS THE ADMINISTRATIVE AGENT OR LEAD ARRANGER OR ANY OTHER SIMILAR ROLE UNDER THE FACILITY DOCUMENTATION (EXCLUDING THE ROLE AS A LENDER) AND (B) CLAIMS ARISING OUT OF ANY ACT OR OMISSION ON THE PART OF THE BORROWER OR ANY OF THE BORROWER’S AFFILIATES. THIS SECTION 9.2(a) SHALL NOT

APPLY WITH RESPECT TO TAXES OTHER THAN ANY TAXES THAT REPRESENT LOSSES, DAMAGES, ETC. ARISING FROM ANY NON-TAX CLAIM.

(b) Reimbursement by Lenders . To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under Section 9.1 or paragraph (a) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), the Administrative Agent (or any sub-agent thereof), the Issuing Lender, or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the Administrative Agent (or any sub-agent thereof), the Issuing Lender, or such Related Party, as the case may be, such Lender’s Pro Rata Share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s share of the Commitments at such time, or, if the Commitments have been terminated, such Lender’s share of the aggregate outstanding amount of all Advances and plus the Letter of Credit Exposure at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender); provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent), the Administrative Agent (or any sub-agent thereof), the Issuing Lender in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent), the Administrative Agent (or any sub-agent thereof), or the Issuing Lender in connection with such capacity. The obligations of the Lenders under this paragraph (c) are subject to the provisions of Section 2.12(f) .

(c) Waiver of Consequential Damages, Etc . To the fullest extent permitted by applicable law, no Credit Party shall assert, agrees not to assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Credit Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Advance or Letter of Credit, or the use of the proceeds thereof. No Indemnitee referred to in paragraph (a) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby.

(d) Payments . All payments required to be made under this Section 9.2 shall be made within 10 days of demand therefor.

(e) Survival . Each party’s obligations under this Section shall survive the termination of the Credit Documents and payment of the obligations hereunder.

Section 9.3 Waivers and Amendments . No amendment or waiver of any provision of this Agreement, the Notes, or any other Credit Document (other than the Fee Letter), nor consent to any departure by the Borrower or any Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Majority Lenders and the Borrower, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that:

(a) no amendment, waiver, or consent shall, unless in writing and signed by all the Lenders and the Borrower, do any of the following: (i) reduce the principal of, or interest on, the Notes, (ii) postpone or extend any date fixed for any payment of principal of, or interest on, the Notes, including, without limitation, the Maturity Date, or (iii) change the number of Lenders which shall be required for the Lenders to take any action hereunder or under any other Credit Document;

(b) no amendment, waiver, or consent shall, unless in writing and signed by all the Lenders and the Borrower, do any of the following: (i) waive any of the conditions specified in Section 3.1 or Section 3.2 , (ii) reduce any fees or other amounts payable hereunder or under any other Credit Document, (iii) increase the aggregate Commitments, (iv) postpone or extend any date fixed for any payment of any fees or other amounts payable hereunder, (v) amend Section 2.2(d) , Section 2.12(e) , Section 7.6 , this Section 9.3 or any other provision in any Credit Document which expressly requires the consent of, or action or waiver by, all of the Lenders, (vii) release all or substantially all of the value of any Guaranty or, except as specifically provided in the Credit Documents and as a result of transactions permitted by the terms of this Agreement, release all or a material portion of the Collateral except as permitted under Section 8.10(a) ; (viii) amend the definitions of “Majority Lenders”, “Required Lenders”, “Super-Majority Lenders” or “Maximum Exposure Amount”, each as defined in this Agreement; or (ix) amend the definitions of “Obligations”, “Secured Obligations”, “Banking Service Obligations”, “Banking Services Provider” or “Swap Counterparties”;

(c) no Commitment of a Lender or any obligations of a Lender may be increased or extended without such Lender’s written consent;

(d) no amendment, waiver, or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement or any other Credit Document;

(e) no amendment, waiver or consent shall, unless in writing and signed by an Issuing Lender in addition to the Lenders required above to take such action, affect the rights or duties of such Issuing Lender under this Agreement or any other Credit Document;

(f) no amendment, waiver, or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement or any other Credit Document; and

(g) the consent of Required Lenders shall be required with respect to decreases or maintenance of the Borrowing Base.

Section 9.4 Severability . In case one or more provisions of this Agreement or the other Credit Documents shall be invalid, illegal or unenforceable in any respect under any applicable law, the validity, legality, and enforceability of the remaining provisions contained herein or therein shall not be affected or impaired thereby.

Section 9.5 Survival of Representations and Obligations . All representations and warranties contained in this Agreement or made in writing by or on behalf of the Credit Parties in connection herewith shall survive the execution and delivery of this Agreement and the other Credit Documents, the making of the Advances or the issuance of any Letters of Credit and any investigation made by or on behalf of the Lenders, none of which investigations shall diminish any Lender’s right to rely on such representations and warranties. All obligations of the Borrower or any other Credit Party provided for in Sections 2.10 , 2.11 , 2.13(c) , 9.1 and 9.2 and all of the obligations of the Lenders in Section 8.5 shall survive any termination of this Agreement and repayment in full of the Obligations.

Section 9.6 Binding Effect . This Agreement shall become effective as provided in Section 3.01 and thereafter shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent, the Issuing Lender and each Lender and their respective successors and assigns, except that neither the Borrower nor any other Credit Party shall have the right to assign its rights or delegate its duties under this Agreement or any interest in this Agreement without the prior written consent of each Lender.

Section 9.7 Successors and Assigns .

(a) Successors and Assigns Generally . The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither the Borrower nor any other Credit Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender, and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of paragraph (b) of this Section, (ii) by way of participation in accordance with the provisions of paragraph (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of paragraph (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in paragraph (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders . Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Advances at the time owing to it); provided that any such assignment shall be subject to the following conditions:

(i) Minimum Amounts .

(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and/or the Advances at the time owing to it or contemporaneous assignments to related Approved Funds that equal at least the amount specified in paragraph (b)(i)(B) of this Section in the aggregate or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

(B) in any case not described in paragraph (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Advances outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Advances of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “ Trade Date ” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $5,000,000, unless each of the Administrative Agent and, so long as no Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed).

(ii) Proportionate Amounts . Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Advance or the Commitment assigned, except that this clause (ii) shall not prohibit any Lender from assigning all or a portion of its rights and obligations among separate facilities on a non-pro rata basis.

(iii) Required Consents . No consent shall be required for any assignment except to the extent required by paragraph (b)(i)(B) of this Section and, in addition:

(A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) a Default has occurred and is continuing at the time of such assignment, or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within 5 Business Days after having received notice thereof;

(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments hereunder if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and

(iv) Assignment and Assumption . The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; provided that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment . The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

(v) No Assignment to Certain Persons . No such assignment shall be made to (A) the Borrower or any of the Borrower’s Affiliates or Subsidiaries or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B).

(vi) No Assignment to Natural Persons . No such assignment shall be made to a natural Person.

(vii) Certain Additional Payments . In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable Pro Rata Share of Advances previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, the Issuing Lender, and each other Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) its full Pro Rata Share of all Advances and participations in Letters of Credit in accordance with its Pro Rata Share. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

the obligation to provide the documentation required by Section 2.1 3(g) , and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.11 , 9.1 , 9.2 , and 9.3 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided , that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (d) of this Section.

(c) Register . The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at its address referred to in Section 9.9 a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Advances owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Credit Parties, the Administrative Agent, the Issuing Lender and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice. Notwithstanding anything to the contrary, any Assignment shall be effective only upon appropriate entries with respect thereto being made in the Register.

(d) Participations . Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural Person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “ Participant ”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Advances owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (iii) the Borrower, the Administrative Agent, the Issuing Lender and Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 9.2(d) with respect to any payments made by such Lender to its Participant(s).

request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 2.1 4(b) with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 7.4 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.1 2(e) as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Advances or other obligations under the Credit Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Credit Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

(e) Certain Pledges . Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

Section 9.8 Confidentiality . Each of the Administrative Agent, the Lenders and the Issuing Lender agree to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential); (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners); (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; (d) to any other party hereto; (e) in connection with the exercise of any remedies hereunder or under any other Credit Document or any action or proceeding relating to this Agreement or any other Credit Document or the enforcement of rights hereunder or thereunder; (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement, or (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement or payments hereunder; (g) on a confidential basis to (i) any rating agency in connection with rating the Borrower or its Subsidiaries or the facilities or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the facilities; (h) with the consent of the Borrower; or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section, or (y) becomes available to the Administrative Agent, any Lender, the Issuing Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower.

Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

Section 9.9 Notices, Etc .

(a) Subject to clause (b) below, all notices and other communications (other than Notices of Borrowing and Notices of Continuation or Conversion, which are governed by Article 2 of this Agreement) shall be in writing and hand delivered with written receipt, or sent by facsimile or electronic mail, sent by a nationally recognized overnight courier, or sent by certified mail, return receipt requested as follows: if to a Credit Party, as specified on Schedule I , if to the Administrative Agent or the Issuing Lender, at its credit contact specified under its name on Schedule I , and if to any Lender at is credit contact specified in its Administrative Questionnaire. Each party may change its notice address by written notification to the other parties. All such notices and communications shall be effective when delivered, except that notices and communications to any Lender or the Issuing Lender pursuant to Article 2 shall not be effective until received and, in the case of facsimile, such receipt is confirmed by such Lender or Issuing Lender, as applicable, verbally or in writing.

(b) Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent. The Administrative Agent or the Borrower may, in their discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

Section 9.10 Usury Not Intended . It is the intent of each Credit Party and each Lender in the execution and performance of this Agreement and the other Credit Documents to contract in strict compliance with applicable usury laws, including conflicts of law concepts, governing the Advances of each Lender including such applicable laws of the State of New York, if any, and the United States of America from time to time in effect. In furtherance thereof, the Lenders and the Credit Parties stipulate and agree that none of the terms and provisions contained in this Agreement or the other Credit Documents shall ever be construed to create a contract to pay, as consideration for the use, forbearance or detention of money, interest at a rate in excess of the Maximum Rate and that for purposes of this Agreement “interest” shall include the aggregate of all charges which constitute interest under such laws that are contracted for, charged or received under this Agreement; and in the event that, notwithstanding the foregoing, under any circumstances the aggregate amounts taken, reserved, charged, received or paid on the Advances, include amounts which by applicable law are deemed interest which would exceed the Maximum Rate, then such excess shall be deemed to be a mistake and each Lender receiving same shall credit the same on the principal of its Notes (or if such Notes shall have been paid in full, refund said excess to the Borrower). In the event that the maturity of the Notes are accelerated by reason of any election of the holder thereof resulting from any Event of Default under this Agreement or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest may never include more than the Maximum Rate, and excess interest, if any, provided for in this Agreement or otherwise shall be canceled automatically as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited on the applicable Notes (or, if the applicable Notes shall have been paid in full, refunded to the Borrower of such interest). In determining whether or not the interest paid or payable under any specific contingencies exceeds the Maximum Rate, the Credit Parties and the Lenders shall to the maximum extent permitted under applicable law amortize, prorate, allocate and spread in equal parts during the period of the full stated term of the Notes all amounts considered to be interest under applicable law at any time contracted for, charged, received or reserved in connection with the

Obligations. The provisions of this Section shall control over all other provisions of this Agreement or the other Credit Documents which may be in apparent conflict herewith.

Section 9.11 Usury Recapture . In the event the rate of interest chargeable under this Agreement at any time is greater than the Maximum Rate, the unpaid principal amount of the Advances shall bear interest at the Maximum Rate until the total amount of interest paid or accrued on the Advances equals the amount of interest which would have been paid or accrued on the Advances if the stated rates of interest set forth in this Agreement had at all times been in effect. In the event, upon payment in full of the Advances, the total amount of interest paid or accrued under the terms of this Agreement and the Advances is less than the total amount of interest which would have been paid or accrued if the rates of interest set forth in this Agreement had, at all times, been in effect, then the Borrower shall, to the extent permitted by applicable law, pay the Administrative Agent for the account of the Lenders an amount equal to the difference between (i) the lesser of (A) the amount of interest which would have been charged on its Advances if the Maximum Rate had, at all times, been in effect and (B) the amount of interest which would have accrued on its Advances if the rates of interest set forth in this Agreement had at all times been in effect and (ii) the amount of interest actually paid under this Agreement on its Advances. In the event the Lenders ever receive, collect or apply as interest any sum in excess of the Maximum Rate, such excess amount shall, to the extent permitted by law, be applied to the reduction of the principal balance of the Advances, and if no such principal is then outstanding, such excess or part thereof remaining shall be paid to the Borrower.

Section 9.12 Governing Law; Service of Process . This Agreement, the Notes and the other Credit Documents (unless otherwise expressly provided therein) shall be deemed a contract under, and shall be governed by, and construed and enforced in accordance with, the laws of the State of New York without regard to conflicts of laws principles (other than Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York). Each Letter of Credit shall be governed by either (i) the Uniform Customs and Practice for Documentary Credits (2007 Revision), International Chamber of Commerce Publication No. 600, or (ii) the International Standby Practices (ISP98), International Chamber of Commerce Publication No. 590, in either case, including any subsequent revisions thereof approved by a Congress of the International Chamber of Commerce and adhered to by the Issuing Lender. The Borrower hereby agrees that service of copies of the summons and complaint and any other process which may be served in any such action or proceeding may be made by mailing or delivering a copy of such process to the Borrower at the address set forth for the Borrower in this Agreement. Nothing in this Section shall affect the rights of any Lender to serve legal process in any other manner permitted by the law or affect the right of any Lender to bring any action or proceeding against the Borrower or its Property in the courts of any other jurisdiction.

Section 9.13 Submission to Jurisdiction . The parties hereto hereby agree that any suit or proceeding arising in respect of this Agreement or any other Credit Document, or any of the matters contemplated hereby or thereby will be tried exclusively in the U.S. District Court for the Southern District of New York or, if such court does not have subject matter jurisdiction, in any state court located in the City and County of New York, and the parties hereto hereby agree to submit to the exclusive jurisdiction of, and venue in, such court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable law. The parties hereto hereby agree that service of any process, summons, notice or document by registered mail addressed to the applicable parties will be effective service of process against such party for any action or proceeding relating to any such dispute. Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent permitted by applicable Legal Requirement, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in any court referred to in this Section. Each of the parties hereto irrevocably waives, to the fullest extent permitted by applicable Legal

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Requirement, the defense of any inconvenient forum to the maintenance of such action or proceeding in any such court.

Section 9.14 Execution in Counterparts; Effectiveness; Electronic Execution .

(a) This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Except as provided in Section 3.1 , this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement.

(b) Electronic Execution of Assignments . The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

Section 9.15 Waiver of Jury Trial . THE BORROWER, THE LENDERS, THE ISSUING LENDER AND THE ADMINISTRATIVE AGENT HEREBY ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED BY AND HAVE CONSULTED WITH COUNSEL OF THEIR CHOICE, AND HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

Section 9.16 USA Patriot Act . Each Lender that is subject to the Patriot Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies each Credit Party that pursuant to the requirements of the Patriot Act it is required to obtain, verify and record information that identifies such Credit Party, which information includes the name and address of such Credit Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify such Credit Party in accordance with the Patriot Act.

Section 9.17 Enduring Security . The parties hereto acknowledge and agree that:

(a) it is the parties’ intent that the Liens created or intended to be created under the Credit Documents secure, among other things, all obligations of the Credit Parties owing to any Swap Counterparty under any Hedging Arrangement even after such Swap Counterparty ceases to be a Lender or an Affiliate of a Lender hereunder; provided , however , as provided in the definition of “Swap Counterparty”, (i) when any Swap Counterparty assigns or otherwise transfers any interest held by it under any Hedging Arrangement to any other Person pursuant to the terms of such agreement, the obligations thereunder shall be secured by such Liens only if such assignee or transferee is also then a Lender or an Affiliate of a Lender and (ii) if a Swap Counterparty ceases to be a Lender hereunder or an Affiliate of a Lender hereunder, obligations owing to such Swap Counterparty shall be secured by such Liens only to the extent such obligations arise from transactions under such individual Hedging Arrangements (and not the Master Agreement between such parties) entered into prior to the Closing Date or at the time such Swap Counterparty was a Lender hereunder or an Affiliate of a Lender hereunder,

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without giving effect to any extension, increases, or modifications thereof which are made after such Swap Counterparty ceases to be a Lender hereunder or an Affiliate of a Lender hereunder; and

(b) the Borrower’s and its Subsidiaries’ ability to enter into, or otherwise be party to, Hedging Arrangements are limited by the terms under this Agreement, including the limitations in Section 6.15 above which restricts, among other things, the Borrower’s and its Subsidiaries’ ability to enter into, or otherwise be party to, secured Hedging Arrangements with counterparties that are not Swap Counterparties or Hedging Arrangements that have margin call requirements applicable to the Borrower or its Subsidiaries.

Section 9.18 Keepwell . Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Credit Party to honor all of its obligations under this Agreement in respect of Swap Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section 9.18 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 9.18 , or otherwise under this Agreement, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP Guarantor under this Section shall remain in full force and effect until the termination of all Commitments and payment in full of all Secured Obligations (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit (other than Letters of Credit as to which other arrangements satisfactory to the Administrative Agent and the Issuing Lender have been made). Each Qualified ECP Guarantor intends that this Section 9.18 constitute, and this Section 9.18 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Credit Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

Section 9.19 No Advisory or Fiduciary Responsibility . In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Credit Document), the Borrower acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent , the Lead Arranger and the Lenders are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent , the Lead Arranger and the Lenders, on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Credit Documents; (ii) (A) the Administrative Agent , the Lead Arranger and each Lender is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any other Person and (B) neither the Administrative Agent , the Lead Arranger nor any Lender has any obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Credit Documents; and (iii) the Administrative Agent , the Lead Arranger and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and neither the Administrative Agent , the Lead Arranger nor any Lender has any obligation to disclose any of such interests to the Borrower or its Affiliates. To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against the Administrative Agent , the Lead Arranger or any Lender with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

Section 9.20 Integration . THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS DEFINED IN THIS AGREEMENT, REPRESENT THE FINAL

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AGREEMENT AMONG THE PARTIES AND SUPERSEDE ALL PRIOR UNDERSTANDINGS AND AGREEMENTS, WHETHER WRITTEN OR ORAL, RELATING TO THE TRANSACTIONS PROVIDED FOR HEREIN AND THEREIN. ADDITIONALLY, THIS AGREEMENT AND THE CREDIT DOCUMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

IN EXECUTING THIS AGREEMENT, EACH CREDIT PARTY HERETO HEREBY WARRANTS AND REPRESENTS IT IS NOT RELYING ON ANY STATEMENT OR REPRESENTATION OTHER THAN THOSE IN THIS AGREEMENT AND IS RELYING UPON ITS OWN JUDGMENT AND ADVICE OF ITS ATTORNEYS.

[Remainder of this page intentionally left blank. Signature pages follow.]

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EXECUTED as of the date first above written.

	BORROWER :

	JAGGED PEAK ENERGY LLC


	By:	/s/ Laurie A. Bales
	Name:	Laurie A. Bales
	Title:	Chief Financial Officer and Secretary

[SIGNATURE PAGE TO CREDIT AGREEMENT – JAGGED PEAK ENERGY LLC]

	ADMINISTRATIVE AGENT/LENDERS:

	WELLS FARGO BANK, NATIONAL ASSOCIATION , as Administrative Agent, Issuing Lender, and a Lender


	By:	/s/ Suzanne F. Ridenhour
	Name:	Suzanne F. Ridenhour
	Title:	Director

[SIGNATURE PAGE TO CREDIT AGREEMENT – JAGGED PEAK ENERGY LLC]

SCHEDULE I
Commitments, Contact Information

ADMINISTRATIVE AGENT/ ISSUING LENDER

Wells Fargo Bank, National Association	Address :	1700 Lincoln St., 6th Floor
		Denver, CO 80203
	Attn :	Oleg Kogan
	Telephone :	303-863-4522
	Facsimile :	303-863-5196
	Email :	Oleg.Kogan@wellsfargo.com

CREDIT PARTIES

Borrower/Guarantors	Address :	1125 17th Street
		Suite 2400
		Denver, CO 80202
	Attn :	Laurie A. Bales
	Telephone :	720-215-3660
	Facsimile :	720-215-3690
	Email :	lbales@jaggedpeakenergy.com

Lender	Commitment
Wells Fargo Bank, National Association	$	500,000,000
Total:	$	500,000,000

SCHEDULE II
PRICING GRID

Applicable Margins

Utilization Level*	Base Rate Advances		Eurodollar Advances		Commitment Fee Rate
Level I	0.50	%	1.50	%	0.375	%
Level II	0.75	%	1.75	%	0.375	%
Level III	1.00	%	2.00	%	0.500	%
Level IV	1.25	%	2.25	%	0.500	%
Level V	1.50	%	2.50	%	0.500	%

* Utilization Levels are described below and are determined in accordance with the definition of “Utilization Level”.

1.               Level I : If the Utilization Level is less than 25%.
2.               Level II : If the Utilization Level is greater than or equal to 25% but less than 50%.
3.               Level II I: If the Utilization Level is greater than or equal to 50% but less than 75%.
4.               Level IV : If the Utilization Level is greater than or equal to 75% but less than 90%.
5.               Level V : If the Utilization Level is greater than or equal to 90%.

Schedule III

Additional Conditions and Requirements for New Subsidiaries

Within 30 days after the creation of a new Subsidiary or acquisition of a new Subsidiary by any Credit Party (or such longer time period as may be accepted by the Administrative Agent in its sole discretion), the Administrative Agent shall have received each of the following with respect to such Subsidiary:

(a) Guaranty . A joinder and supplement to the Guaranty executed by such Subsidiary;

(a) Security Agreement . A joinder and supplement to the Security Agreement executed by such Subsidiary, in any event, together with UCC-1 financing statements and any other documents, agreements, or instruments necessary to create and perfect an Acceptable Security Interest in the Collateral described in the Security Agreement, as so supplemented;

(b) Mortgages . If such Subsidiary owns any Oil and Gas Properties required to be pledged as Collateral, a fully executed Mortgage covering such Oil and Gas Properties, and such evidence of corporate authority to enter into such Guaranty, Security Agreement, and Mortgage as the Administrative Agent may reasonably request;

(c) Pledges . A pledge agreement (or supplement to an existing pledge agreement) executed by the equity holders of such Subsidiary pledging 100% of the Equity Interest owned by such equity holder of such Subsidiary and such evidence of corporate, limited liability company or partnership authority to enter into such pledge agreement or supplement, as applicable, as the Administrative Agent may reasonably request, along with share certificates pledged thereby and appropriately executed stock powers in blank, if applicable;

(d) Corporate Documents . A secretary’s certificate from such new Subsidiary certifying such Subsidiary’s (i) officers’ incumbency, (ii) authorizing resolutions, (iii) organizational documents, (iv) governmental approvals, if any, with respect to the Credit Documents to which such Person is a party and (v) certificate of good standing in such Subsidiary’s state of organization dated a date not earlier than 30 days prior to date of delivery or otherwise in effect on the date of delivery;

(e) Patriot Act . All documentation and other information that is required by regulatory authorities under applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the Patriot Act; and

(f) Opinion of Counsel . If reasonably requested by the Administrative Agent, an opinion of counsel in form and substance reasonably acceptable to the Administrative Agent related to such new Subsidiary and substantially similar to the legal opinion delivered at the Closing Date with respect to the other Subsidiaries in existence on the Closing Date.

Schedule IV

NEW WELLS

Prop Num	Lease	Reservoir	County	State	WI		NRI-Oil		NRI-Gas
Q3M1KFTVF	Pyote Flats 98-34 1H	Wolfcamp	Ward/Pecos/Reeves	Texas	93.0115		69.7657	%	69.7657	%
Q3AITM0K9E	UTL 28-17 1H	Wolfcamp	Ward/Pecos/Reeves	Texas	100	%	75	%	75	%
Q1JGFIMP39	State Neal LethCo 3405-142-1H	Wolfcamp	Ward/Pecos/Reeves	Texas	100	%	75	%	75	%

SCHEDULE 4.1

Organizational Information

Name of Credit Party	Type of Organization	Jurisdiction of Formation
Jagged Peak Energy LLC	Limited liability company	Delaware
Jagged Peak Energy Management Inc.	Corporation	Delaware
Jagged Peak Energy Management LLC	Limited liability company	Delaware

SCHEDULE 4.4

Debt

Debt pursuant to the Hedging Arrangements listed on Schedule 4.23 .

SCHEDULE 4.11

Subsidiaries

Name of Subsidiary	Percent Owned
Jagged Peak Energy Management Inc.	100.00	%
Jagged Peak Energy Management LLC	99.99	%

SCHEDULE 4.13

Taxes

Jagged Peak Energy Management Inc. is taxed as a corporation.

SCHEDULE 4.16

Material Real Property

Leasehold improvements: 1125 17th Street, Suite 2400, Denver, CO 80202

SCHEDULE 4.23

Hedging Agreements

1. Counterparty: Shell
Transaction No.: 8137035
Execution Date: 07/30/14
Period: 05/15-12/15
Financial Transaction: WTI Nymex Swap
Swap Price: $96.60

Month		Production Hedged (bbls)
05/15		9,300
06/15		9,000
07/15		9,300
08/15		9,300
09/15		9,000
10/15		9,300
11/15		9,000
12/15		9,300

2. Counterparty: Shell
Transaction No.: 8745345
Execution Date: 03/18/15
Period: 05/15-08/15
Financial Transaction: WTI Nymex Swap
Swap Price: $50.15

Month		Production Hedged (bbls)
05/15		6,200
06/15		6,000
07/15		6,200
08/15		6,200

3. Counterparty: Shell
Transaction No.: 8886593
Execution Date: 05/13/15
Period: 06/15-08/15
Financial Transaction: WTI Nymex Swap
Swap Price: $62.52

Month		Production Hedged (bbls)
06/15		6,000
07/15		6,200
8.15		6,200

4. Counterparty: Shell
Transaction No.: 8745527; 8745529
Execution Date: 03/18/15
Period: 09/15-12/15
Financial Transaction: Crude Oil Put/Call
Put Price: $48.00
Call Price: $59.30

Month		Production Hedged (bbls)
09/15		6,000
10/15		6,200
11/15		6,000
12/15		6,200

5. Counterparty: Shell
Transaction No.: 8886728; 8886731
Execution Date: 05/13/15
Period: 09/15-12/15
Financial Transaction: Crude Oil Put/Call
Put Price: $58.00
Call Price: $67.95

Month		Production Hedged (bbls)
09/15		6,000
10/15		6,200
11/15		6,000
12/15		6,200

6. Counterparty: Shell
Transaction No.: 8847433
Execution Date: 04/28/15
Period: 05/15-12/15
Financial Transaction: Mid/Cush Basis Swap
Swap Price: ($1.10)

Month		Production Hedged (bbls)
05/15		15,500
06/15		15,000
07/15		15,500
08/15		15,500
09/15		15,000
10/15		15,500
11/15		15,000
12/15		15,500

7. Counterparty: Shell
Transaction No.: 8886738
Execution Date: 05/13/15
Period: 06/15-12/15

Financial Transaction: Mid/Cush Basis Swap

Swap Price: ($1.00)

Month		Production Hedged (bbls)
06/15		6,000
07/15		6,200
08/15		6,200
09/15		6,000
10/15		6,200
11/15		6,000
12/15		6,200

SCHEDULE 4.24

Material Agreements

1. Development Agreement Number 2640, Cochise University lands, expires September 22, 2017

2. Gas Gathering Agreement between Regency Field Services LLC and Jagged Peak Energy LLC, as successor to Tidwell Production Company, dated December 1, 2008. Contract Number STD GATH-WAHA 090208.

3. Gas Purchase Contract between RGP Westex G&P I Ltd (f.k.a. Southern Union Gas Services, Ltd.) and Jagged Peak Energy LLC, as successor to Whiting Oil and Gas Corporation, dated January 1, 2012. Contract Number WSR-219.

4. Gas Purchase Contract between Jagged Peak Energy LLC, as successor to Whiting Oil and Gas Corporation, and Regency Field Services LLC (f.k.a. Regency Gas Services Waha LP), dated January 2, 2007, as amended by the First Amendment to Gas Purchase Contract, dated March 1, 2012, the Second Amendment to Gas Purchase Contract, dated May 1, 2013 and the Third Amendment to Gas Purchase Contract, dated June 1, 2014. Contract Number PUR0167WAH.

5. Gas Purchase Agreement between Jagged Peak Energy LLC and Targa Midstream Services LLC, dated June 1, 2014. Contract Number 025007 - Ref. No. 193.

SCHEDULE 6.1

Existing Debt

None.

SCHEDULE 6.2

Existing Liens

None.

SCHEDULE 6.3

Existing Investments

None.

EXHIBIT A
FORM OF ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the “ Assignment and Assumption “) is dated as of the Effective Date set forth below and is entered into by and between [the][each](1) Assignor identified in item 1 below ([the][each, an] “ Assignor ”) and [the][each](2) Assignee identified in item 2 below ([the][each, an] “ Assignee ”). [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees](3) hereunder are several and not joint.](4) Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, supplemented, restated or otherwise modified from time to time, the “ Credit Agreement ”), receipt of a copy of which is hereby acknowledged by [the][each] Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the respective facilities identified below (including without limitation any letters of credit and guarantees included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] “ Assigned Interest ”). Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any] Assignor.

1.	Assignor[s]:


	[Assignor [is] [is not] a Defaulting Lender]

(1) For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors, choose the second bracketed language.

(2) For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the second bracketed language.

(3) Select as appropriate.

(4) Include bracketed language if there are either multiple Assignors or multiple Assignees.

2.	Assignee[s]:


	[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]
	[Assignee [is] [is not] a Defaulting Lender]

3.	Borrower:	JAGGED PEAK ENERGY LLC

4.	Administrative Agent:	WELLS FARGO BANK, NATIONAL ASSOCIATION, as administrative agent under the Credit Agreement

5.	Credit Agreement:	Credit Agreement dated [ ], 2015 among Borrower, the Lenders party thereto from time to time, and Wells Fargo Bank, National Association, as Administrative Agent and as Issuing Lender.

6.	Assigned Interest[s]

Assignor[s]

Assignee[s]

Facility
Assigned

Aggregate Amount
of Commitments
/Advances for all
Lenders

Amount of
Commitment /
Advances
Assigned(5)

Percentage
Assigned of
Commitment /
Advances(6)

CUSIP
Number

7.	Trade Date: (7)

Effective Date: , 20 [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

(5) Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.

(6) Set forth, to at least 9 decimals, as a percentage of the Commitment / Advances of all Lenders thereunder.

(7) To be completed if the Assignor(s) and the Assignee(s) intend that the minimum assignment amount is to be determined as of the Trade Date.

The terms set forth in this Assignment and Assumption are hereby agreed to:

	ASSIGNOR[S](8)
	[NAME OF ASSIGNOR]


	By:
	Name:
	Title:



	ASSIGNEE[S]
	[NAME OF ASSIGNEE]


	By:
	Name:
	Title:

(8) Add additional signature blocks as needed.

[Consented to and](9) Accepted:

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent and as Issuing Lender


By:
Name:
Title:


[Consented to:](10)

JAGGED PEAK ENERGY LLC


By:
Name:
Title:

(9) To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

(10) To be added only if the consents of the Borrower is required by the terms of the Credit Agreement.

Annex 1

To Exhibit A — Assignment and Assumption

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties .

1.1 Assignor[s] . [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and (iv) it is not a Defaulting Lender; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Credit Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Credit Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Credit Document.

1.2. Assignee[s] . [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 9.7 of the Credit Agreement (subject to such consents, if any, as may be required under Section 9.7 of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 5.2 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vii) if it is a Foreign Lender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Credit Documents are required to be performed by it as a Lender.

2. Payments . From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignee whether such amounts have accrued prior to, on or after the Effective Date. The Assignor[s] and the Assignee[s] shall make all appropriate adjustments in payments by the Administrative Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves.

3. General Provisions . This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the laws of the State of New York.

EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE

FOR THE PERIOD FROM , 201 TO , 201

This certificate dated as of , is prepared pursuant to the Credit Agreement dated as of June 19, 2015 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among Jagged Peak Energy LLC (“ Borrower ”), the lenders party thereto from time to time (the “ Lenders ”), and Wells Fargo Bank, National Association, as administrative agent for such Lenders (in such capacity, the “ Administrative Agent ”) and as issuing lender. Unless otherwise defined in this certificate, capitalized terms that are defined in the Credit Agreement shall have the meanings assigned to them by the Credit Agreement.

The undersigned, on behalf of the Borrower, certifies that:

(a) all of the representations and warranties made by any Credit Party or any officer of any Credit Party contained in the Credit Documents (other than those representations and warranties made in connection with a delivery of an Engineering Report as certified in a Reserve Report Certificate) shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on this date, except that any representation and warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) only as of such specified date;

(b) attached hereto in Schedule I are detailed calculations reflecting the components of the covenant calculations, as of the date and for the periods covered by this certificate, of the Borrower’s (i) consolidated EBITDAX[,][and] (ii) Debt [and (iii) consolidated Interest Expense];

[(c) that no Default or Event of Default has occurred or is continuing as of the date hereof; and]

[(c) the following Default[s] or Event[s] of Default exist[s] as of the date hereof, if any, and the actions set forth below are being taken to remedy such circumstances:

; and]

[(e)] that as of the date hereof for the periods set forth below the following statements, amounts, and calculations included herein and in Schedule I , were true and correct in all material respects:

I. Section 6.16 Leverage Ratio .

(a)	The consolidated Debt of the
	Borrower and its Subsidiaries as of
	the last day of such fiscal quarter	$

(b)	Borrower’s and its Subsidiaries’
	consolidated EBITDAX	$

	Leverage Ratio = (a) divided by (b)	=

Maximum Leverage Ratio		4.00 to 1.00

	Compliance	[Ye s] [No]

II. Section 6.17 Current Ratio(1) .

(a)	Borrower’s and its consolidated Subsidiaries’
	total consolidated current assets

	(i) + (ii) =		$

	(i)	Borrower’s and its consolidated Subsidiaries’
		consolidated current assets
		(excluding current assets resulting from
		the exercise of a cure right)	$

	(ii)	Borrower’s and its consolidated Subsidiaries’
		consolidated current assets
		resulting from the exercise of a cure right(2)	$

(b)	Borrower’s and its consolidated Subsidiaries’
	total consolidated current liabilities		$

	Current Ratio

	(a) divided by (b)		=

Minimum Current Ratio			1.00 to 1.00

	Compliance		[Yes] [No]

(1) To be provided beginning with the fiscal quarter ending June 30, 2016. For purposes of this calculation (i) “current assets” shall include, as of the date of calculation, the Availability but shall exclude any asset representing a valuation account arising from the application of ASC 410 and 815, and (ii) “current liabilities” shall exclude, as of the date of calculation, the current portion of long—term Debt existing under the Credit Agreement and any liabilities representing a valuation account arising from the application of ASC 410 and 815.

(2) To be included only to the extent permitted in accordance with Section 7.7 of the Credit Agreement.

III. Section 6.18 Interest Coverage Ratio .

( a)	Borrower’s and its Subsidiaries’
	EBITDAX (Item I.(b) above)	$

(b)	Borrower’s and its Subsidiaries’
	Interest Expense(3)	$

	Interest Coverage Ratio

	(a) divided by (b)	=

Minimum Interest Coverage Ratio		2.50 to 1.00

	Compliance	[Yes] [No]

IV. Production and Hedging Reports .

(a)		Attached hereto as Schedule II is a true and complete list of the lease operating statements for the Wells for each month for the periods covered by this certificate (detailed on a monthly basis).

(b)		Attached hereto as Schedule III is a true and complete list of any changes to any producing reservoir, production equipment, or producing well for the periods covered by this certificate, which changes could reasonably be expected to cause a Material Adverse Change.

(c)		Attached hereto as Schedule IV is a true and complete list of any sales of the Borrower’s or any Subsidiaries’ Oil and Gas Properties to which Proven Reserves are attributable during each month for the periods covered by this certificate (detailed on a monthly basis for the periods covered by this certificate).

(d)		Attached hereto as Schedule V is a true and complete list of all Hedging Arrangements of the Borrower and its Subsidiaries and detailing the material terms thereof (including the type, effective date, and notional amounts or volumes on a monthly basis, for the periods covered by this certificate).

(e)		Attached hereto as Schedule VI is a true and complete list of all credit support agreements relating to the Hedging Arrangements of the Borrower and its Subsidiaries (including any margin required or supplied) and the counterparty to each such agreement; provided that, such required listing of any credit support agreements shall, in no event, be construed as permitting such credit supports which are not permitted under the terms of the Credit Agreement.

(f)		Attached hereto as Schedule VII are calculations showing that the Borrower [is] [is not] in compliance with the negative covenant provided in Section 6.15(b) of the Credit Agreement:

(3) In accordance with the Credit Agreement, (a)(i) for the fiscal quarter ending June 30, 2015, the Interest Expense of the Borrower and its Subsidiaries for such quarter times four, (ii) for the fiscal quarter ending September 30, 2015, the Interest Expense of the Borrower and its Subsidiaries for such two fiscal quarter period then ended times two, (iii) for the fiscal quarter ending December 31, 2015, the Interest Expense of the Borrower and its Subsidiaries for such three fiscal quarter period then ended times 4 and divided by three, and (iv) thereafter, the Interest Expense of the Borrower and its Subsidiaries for the four-fiscal quarter period then ended.

(i)	In no event has the aggregate notional volume of all Hedging Arrangements in respect of commodities for a particular month exceeded 100% of the actual production for each of crude oil, natural gas and natural gas liquids, calculated separately, in the previous calendar month.

	Compliance	[Yes] [No]

IN WITNESS THEREOF, I have hereto signed my name to this Compliance Certificate as of , .

	JAGGED PEAK ENERGY LLC


	By:
	Name:
	Title:

SCHEDULE I

Calculation of Debt for Leverage Ratio :

The consolidated Debt(1) of the
Borrower and its Subsidiaries as of
the last day of such fiscal quarter

(i) + (ii) + (iii) + (iv) + (v) + (vi) + (vii) + (viii) + (ix) + (x) =		$

(i)	debt for borrowed money	$

(ii)	letters of credit	$

(iii)	bonds, debentures, and notes	$

(iv)	obligations to pay the deferred purchase
	price of property or services incurred in
	the ordinary course of business (but
	excluding earn-out obligations
	and usual and customary purchase price
	adjustments)	$

(1) Excluding obligations under clauses (d), (e) (to the extent relating to earn-out obligations that are not liabilities on the balance sheet in accordance with GAAP and usual and customary purchase price adjustments), (g) and (k) (to the extent in respect of obligations under clauses (d), (e) (to the extent relating to earn-out obligations that are not liabilities on the balance sheet in accordance with GAAP and usual and customary purchase price adjustments) and (g)) of the definition of “Debt” in Section 1.1 of the Credit Agreement. “Debt” in Section 1.1 of the Credit Agreement means, for any Person, without duplication: (a) indebtedness of such Person for borrowed money, including the face amount of any letters of credit supporting the repayment of indebtedness for borrowed money issued for the account of such Person; (b) to the extent not covered under clause (a) above, obligations under letters of credit and agreements relating to the issuance of letters of credit or acceptance financing, including Letters of Credit; (c) obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, or upon which interest payments are customarily made (excluding surety bonds and utility bonds); (d) obligations of such Person under conditional sale or other title retention agreements relating to any Properties purchased by such Person (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business); (e) obligations of such Person to pay the deferred purchase price of property or services (including, without limitation, any contingent obligations or other similar obligations associated with such purchase, and including obligations that are non-recourse to the credit of such Person but are secured by the assets of such Person but excluding accounts payable to trade creditors for goods or services and current operating liabilities (other than for borrowed money) incurred in the ordinary course of business and which are not more than 90 days past due, unless such payables are being contested in good faith by appropriate proceedings and adequate reserves for such items have been made in accordance with GAAP); (f) obligations of such Person as lessee under Capital Leases and obligations of such Person in respect of synthetic leases; (g) obligations of such Person under any Hedging Arrangement; (h) all obligations of such Person to mandatorily purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person on a date certain or upon the occurrence of certain events or conditions other than (1) obligations, if any, to repurchase Equity Interests from employees upon their termination of employment prior to the date that is 180 days after the Maturity Date, valued at, in the case of redeemable preferred stock, the greater of the voluntary liquidation preference and the involuntary liquidation preference of such Stock plus accrued and unpaid dividends or (2) obligations, if any, to repurchase or redeem any Repurchase Interest (as that term is defined in the LLC Agreement); (i) the Debt of any partnership or unincorporated joint venture in which such Person is a general partner or a joint venturer, but only to the extent to which there is recourse to such Person for the payment of such Debt; (j) any obligations of such Person owing in connection with any volumetric or production prepayments; (k) obligations of such Person under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) of such Person to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (a) through (j) above; and (l) indebtedness or obligations of others of the kinds referred to in clauses (a) through (k) secured by any Lien on or in respect of any Property of such Person.

(v)	obligations as a lessee under capital
	leases and in respect of synthetic leases	$

(vi)	obligations to repurchase equity interests	$

(vii)	partnership debt and debt relating to joint
	ventures	$

(viii)	obligations in connection with volumetric
	or production prepayments	$

(ix)	obligations under direct or indirect
	guaranties (but excluding obligations under
	conditional sale or other title retention
	agreements, obligations to pay the deferred
	purchase price of property or services
	incurred in the ordinary course of business
	(to the extent relating to earn-out obligations
	and usual and customary purchase price
	adjustments), and obligations under any
	hedging arrangement)	$

(x)	indebtedness or obligations of others secured
	by liens on the property of Borrower and
	its Subsidiaries	$

Calculation of EBITDAX:

Borrower’s and its Subsidiaries’ consolidated EBITDAX(2)

(i) + (ii) + (iii) + (iv) + (v)(3) – (vi)(4) + (vii)		$

[For the fiscal quarter ending June 30, 2015		x 4]

[For the two fiscal quarter period ending September 30, 2015		x 2]

[For the three fiscal quarter period ending December 31, 2015		x 4 ÷ 3]

		[$ ]

(i)	consolidated Net Income	$

(ii)	Interest Expense	$

(iii)	Income Tax Expense	$

(iv)	depreciation, amortization, depletion and exploration expenses	$

(v)	non-cash charges(5)	$

(vi)	non-cash income(6)	$

(2) In accordance with the Credit Agreement, (a)(i) for the fiscal quarter ending June 30, 2015, the consolidated EBITDAX of the Borrower and its Subsidiaries for such fiscal quarter times four, (ii) for the fiscal quarter ending September 30, 2015, the consolidated EBITDAX of the Borrower and its Subsidiaries for such two fiscal quarter period then ended times two, (iii) for the fiscal quarter ending December 31, 2015, the consolidated EBITDAX of the Borrower and its Subsidiaries for such three fiscal quarter period then ended times 4 and divided by three, and (iv) thereafter, the consolidated EBITDAX of the Borrower and its Subsidiaries for the four-fiscal quarter period then ended and (b) EBITDAX shall be subject to pro forma adjustments for permitted acquisitions and non-ordinary course asset sales assuming that such transactions had occurred on the first day of the determination period, which adjustments shall be made in a manner, and subject to supporting documentation, set forth by the SEC in Regulation S-X or otherwise acceptable to the Administrative Agent. For the avoidance of doubt, EBITDAX shall include realized gains and losses with respect to Hedging Arrangements in connection with monthly settlements in the ordinary course of business, but shall not otherwise include realized gains and losses in connection with early hedge unwinds or terminations, and EBITDAX shall also not include unrealized marked-to-market gains and losses with respect to Hedging Arrangements.

(3) Items (ii) — (v) shall be included to the extent deducted in determining consolidated Net Income.

(4) Items (vi) shall be deducted to the extent included in determining consolidated Net Income.

(5) Non-cash charges shall only include non-cash charges resulting from extraordinary, non-recurring events or circumstances for such period (including any provision for the reduction in the carrying value of assets recorded in accordance with GAAP and including non-cash charges resulting from the requirements of ASC 410, 718 and 815).

(vii)

EBITDAX from exercise of cure right(7)

(6) Non-cash income shall include (a) non-cash income resulting from extraordinary, non-recurring events or circumstances for such period and (b) all other non-cash items of income which were included in determining consolidated Net Income (including non-cash income resulting from the requirements of ASC 410, 718 and 815).

(7) To be included only to the extent permitted in accordance with Section 7.7 of the Credit Agreement.

[Calculation of Interest Expense for Interest Coverage Ratio : (8)

Borrower’s and its Subsidiaries Interest Expense(9) =		$

[For the fiscal quarter ending June 30, 2015		x 4]

[For the two fiscal quarter period ending September 30, 2015		x 2]

[For the three fiscal quarter period ending December 31, 2015		x 4 ÷ 3]

		$ ]

(8) To be used only through the fiscal quarter period ending December 31, 2015.

(9) In accordance with the Credit Agreement, (a)(i) for the fiscal quarter ending June 30, 2015, the Interest Expense of the Borrower and its Subsidiaries for such quarter times four, (ii) for the fiscal quarter ending September 30, 2015, the Interest Expense of the Borrower and its Subsidiaries for such two fiscal quarter period then ended times two, (iii) for the fiscal quarter ending December 31, 2015, the Interest Expense of the Borrower and its Subsidiaries for such three fiscal quarter period then ended times 4 and divided by three, and (iv) thereafter, the Interest Expense of the Borrower and its Subsidiaries for the four-fiscal quarter period then ended.

SCHEDULE II
LEASE OPERATING STATEMENTS

SCHEDULE III
MATERIAL CHANGES TO PRODUCTION

SCHEDULE IV
SALES OF OIL AND GAS PROPERTIES
(to which Proven Reserves are attributable)

SCHEDULE V
HEDGING ARRANGEMENTS

SCHEDULE VI
CREDIT SUPPORT AGREEMENTS

SCHEDULE VII

See attached.

EXHIBIT C

FORM OF GUARANTY AGREEMENT

This Guaranty Agreement dated as of [ ], 2015 (as amended, supplemented, amended and restated or otherwise modified from time to time, this “ Guaranty ”) is executed by each of the undersigned (individually a “ Guarantor ” and collectively, the “ Guarantors ”), in favor of Wells Fargo Bank, National Association, as Administrative Agent (as defined below) for the benefit of the Secured Parties (as defined in the Credit Agreement referred to herein).

INTRODUCTION

A. This Guaranty is given in connection with that certain Credit Agreement dated as of June 19, 2015 (as amended, supplemented, amended and restated or otherwise modified from time to time, the “ Credit Agreement ”), by and among Jagged Peak Energy LLC, a Delaware limited liability company (the “ Borrower ”), the lenders party thereto from time to time (the “ Lenders ”) and Wells Fargo Bank, National Association, as the administrative agent (in such capacity, the “ Administrative Agent ”) for the Lenders and as the issuing lender (in such capacity, the “ Issuing Lender ”).

B. Each Guarantor is an affiliate of the Borrower and (i) the transactions contemplated by the Credit Agreement and the other Credit Documents, (ii) the Hedging Arrangements entered into by the Borrower or any Guarantor with a Swap Counterparty, and (iii) the Banking Services provided by any Lender or any Affiliate of a Lender to the Borrower or any Guarantor, each are (a) in furtherance of such affiliate’s limited liability company or corporate purposes, (b) necessary or convenient to the conduct, promotion or attainment of such affiliate’s business, and (c) for such affiliate’s direct or indirect benefit.

C. Each Guarantor is executing and delivering this Guaranty (i) to induce the Lenders to provide and to continue to provide Advances under the Credit Agreement, (ii) to induce the Issuing Lender to provide and to continue to provide Letters of Credit under the Credit Agreement, and (iii) intending it to be a legal, valid, binding, enforceable and continuing obligation of such Guarantor.

NOW, THEREFORE, in consideration of the premises, each Guarantor hereby agrees as follows:

Section 1. Definitions . All capitalized terms not otherwise defined in this Guaranty, including those in the preamble and recitals above, that are defined in the Credit Agreement shall have the meanings assigned to such terms by the Credit Agreement.

Section 2. Guaranty .

(a) Each Guarantor hereby absolutely, unconditionally and irrevocably guarantees the punctual payment and performance, when due, whether at stated maturity, by acceleration or otherwise, of all Secured Obligations (collectively, the “ Guaranteed Obligations ”); provided, however, that as used herein “Guaranteed Obligations” shall not include the Excluded Swap Obligations. Without limiting the generality of the foregoing, each Guarantor’s liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by the Borrower or any Credit Party to the Administrative Agent, the Issuing Lender or any Lender under the Credit Documents and by the Borrower or any Credit Party to the Swap Counterparty, Banking Services Provider, or any other Secured Party but for the fact that they are unenforceable or not allowable due to insolvency or the existence of a bankruptcy, reorganization or similar proceeding involving the Borrower or any Credit Party. Notwithstanding the foregoing, the Guaranteed Obligations of any Guarantor shall not include the Excluded Swap Obligations of such Guarantor.

(b) In order to provide for just and equitable contribution among the Guarantors, the Guarantors agree that in the event a payment shall be made on any date under this Guaranty by any Guarantor (the “ Funding Guarantor ”), each other Guarantor (each a “ Contributing Guarantor ”) shall indemnify the Funding Guarantor in an amount equal to the amount of such payment, in each case multiplied by a fraction the numerator of which shall be the net worth of the Contributing Guarantor as of such date and the denominator of which shall be the aggregate net worth of all the Contributing Guarantors together with the net worth of the Funding Guarantor as of such date. Any Contributing Guarantor making any payment to a Funding Guarantor pursuant to this Section 2(b) shall be subrogated to the rights of such Funding Guarantor to the extent of such payment.

(c) Anything contained in this Guaranty to the contrary notwithstanding, the obligations of each Guarantor under this Guaranty on any date shall be limited to a maximum aggregate amount equal to the largest amount that would not, on such date, render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of the Bankruptcy Code of the United States or any applicable provisions of comparable laws relating to bankruptcy, insolvency, or reorganization, or relief of debtors (collectively, the “ Fraudulent Transfer Laws ”), but only to the extent that any Fraudulent Transfer Law has been found in a final non-appealable judgment of a court of competent jurisdiction to be applicable to such obligations as of such date, in each case:

(i) after giving effect to all liabilities of such Guarantor, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws, but specifically excluding:

(A) any liabilities of such Guarantor in respect of intercompany indebtedness to the Borrower or other affiliates of the Borrower to the extent that such indebtedness would be discharged in an amount equal to the amount paid by such Guarantor hereunder; and

(B) any liabilities of such Guarantor under this Guaranty; and

(ii) after giving effect as assets to the value (as determined under the applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation, reimbursement, indemnification or contribution of such Guarantor pursuant to applicable law or pursuant to the terms of any agreement (including any such right of contribution under Section 2(b)).

Section 3. Guaranty Absolute . Each Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Credit Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Secured Party with respect thereto but subject to Section 2(c) above. The obligations of each Guarantor under this Guaranty are independent of the Guaranteed Obligations, and a separate action or actions may be brought and prosecuted against a Guarantor to enforce this Guaranty, irrespective of whether any action is brought against the Borrower, any other Guarantor or any other Person or whether the Borrower, any other Guarantor or any other Person is joined in any such action or actions. The liability of each Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives, to the extent not prohibited by applicable law, any defenses it may now or hereafter have (other than a defense of payment or performance) in any way relating to, any or all of the following:

(a) any lack of validity or enforceability of any Credit Document or any agreement or instrument relating thereto or any part of the Guaranteed Obligations being irrecoverable;

(b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other amendment or waiver of or any consent to departure

from any Credit Document or any agreement or instrument relating to Hedging Arrangements with a Swap Counterparty, or agreement relating to Banking Services with a Banking Services Provider, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to the Borrower or otherwise;

(c) any taking, exchange, release or non-perfection of any lien on any collateral, or any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations;

(d) any manner of application of collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any collateral for all or any of the Guaranteed Obligations or any other obligations of any other Person under the Credit Documents or any other assets of the Borrower or any Guarantor;

(e) any change, restructuring or termination of the corporate, limited liability company, or partnership structure or existence of the Borrower or any Guarantor;

(f) any failure of any Secured Party to disclose to the Borrower or any Guarantor any information relating to the business, condition (financial or otherwise), operations, properties or prospects of any Person now or in the future known to the Administrative Agent, the Issuing Lender, any Lender or any other Secured Party (and each Guarantor hereby irrevocably waives any duty on the part of any Secured Party to disclose such information);

(g) any signature of any officer of the Borrower or any Guarantor being mechanically reproduced in facsimile or otherwise; or

(h) any other circumstance or any existence of or reliance on any representation by any Secured Party that might otherwise constitute a defense available to, or a discharge of, the Borrower, any Guarantor or any other guarantor, surety or other Person.

Section 4. Continuation and Reinstatement, Etc . Each Guarantor agrees that, to the extent that payments of any of the Guaranteed Obligations are made, or any Secured Party receives any proceeds of collateral, and such payments or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, or otherwise required to be repaid, then to the extent of such repayment the Guaranteed Obligations shall be reinstated and continued in full force and effect as of the date such initial payment or collection of proceeds occurred. THE LIABILITIES OF EACH GUARANTOR AS SET FORTH IN THIS SECTION 4 SHALL SURVIVE THE TERMINATION OF THIS GUARANTY .

Section 5. Waivers and Acknowledgments .

(a) Each Guarantor, to the extent not prohibited by applicable law, hereby waives promptness, diligence, presentment, notice of acceptance and any other notice with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that any Secured Party protect, secure, perfect or insure any Lien or any property or exhaust any right or take any action against the Borrower or any other Person or any collateral.

(b) Each Guarantor, to the extent not prohibited by applicable law, hereby irrevocably waives any right to revoke this Guaranty, and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future.

(c) Each Guarantor acknowledges that it will receive substantial direct or indirect benefits from (i) the financing arrangements involving the Borrower or any Guarantor contemplated by the Credit Documents, (ii) the Hedging Arrangements with a Swap Counterparty, and (iii) the Banking Services provided to the Borrower or any Guarantor, and that the waivers set forth in this Guaranty are knowingly made in contemplation of such benefits.

Section 6. Subrogation and Subordination .

(a) No Guarantor will exercise any rights that it may now have or hereafter acquire against the Borrower or any other Person to the extent that such rights arise from the existence, payment, performance or enforcement of such Guarantor’s obligations under this Guaranty or any other Credit Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of any Secured Party against the Borrower or any other Person, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Borrower or any other Person, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until the Payment in Full of Obligations. If any amount shall be paid to a Guarantor in violation of the preceding sentence at any time prior to or on the Payment in Full of Obligations, such amount shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the Administrative Agent to be credited and applied to the Guaranteed Obligations and any and all other amounts payable by the Guarantors under this Guaranty, whether matured or unmatured, in accordance with the terms of the Credit Documents.

(b) Each Guarantor agrees that, until after the Payment in Full of Obligations, all Subordinated Guarantor Obligations (as hereinafter defined) are and shall be subordinate and inferior in rank, preference and priority (in liquidation, dissolution, bankruptcy, reorganization, or otherwise) to all obligations of such Guarantor in respect of the Guaranteed Obligations hereunder, and such Guarantor shall, if requested by the Administrative Agent, execute a subordination agreement reasonably satisfactory to the Administrative Agent to more fully set out the terms of such subordination. Each Guarantor agrees that none of the Subordinated Guarantor Obligations shall be secured by a lien or security interest on any assets of such Guarantor or any ownership interests in any Subsidiary of such Guarantor. “ Subordinated Guarantor Obligations ” means any and all obligations and liabilities of a Guarantor owing to the Borrower or any other Guarantor, direct or contingent, due or to become due, now existing or hereafter arising, including, without limitation, all future advances, with interest, attorneys’ fees, expenses of collection and costs.

Section 7. Representations and Warranties . Each Guarantor hereby represents and warrants as follows:

(a) There are no conditions precedent to the effectiveness of this Guaranty. Such Guarantor benefits from executing this Guaranty.

(b) Such Guarantor has, independently and without reliance upon the Administrative Agent, any Lender or any other Secured Party, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Guaranty, and such Guarantor has established adequate means of obtaining from the Borrower and each other relevant Person on a continuing basis information pertaining to, and is now and on a continuing basis will be completely familiar with, the business, condition (financial and otherwise), operations, properties and prospects of the Borrower and each other relevant Person.

(c) The obligations of such Guarantor under this Guaranty are the valid, binding and legally enforceable obligations of such Guarantor, (except as limited by (i) applicable bankruptcy,

insolvency, reorganization, moratorium, or similar laws at the time in effect affecting the rights of creditors generally and (ii) general principles of equity whether applied by a court of law or equity), and the execution and delivery of this Guaranty by such Guarantor has been duly and validly authorized in all respects by all requisite corporate, limited liability company or partnership actions, as applicable, on the part of such Guarantor, and the Person who is executing and delivering this Guaranty on behalf of such Guarantor has full power, authority and legal right to so do, and to observe and perform all of the terms and conditions of this Guaranty on such Guarantor’s part to be observed or performed.

Section 8. Right of Set-Off . Upon the occurrence and during the continuance of any Event of Default, any Lender or the Administrative Agent, the Issuing Lender and any other Secured Party is hereby authorized at any time, to the fullest extent permitted by law, to set-off and apply any deposits (general or special, time or demand, provisional or final) and other indebtedness owing by such Secured Party to the account of each Guarantor against any and all of the obligations of the Guarantors under this Guaranty, irrespective of whether or not such Secured Party shall have made any demand under this Guaranty and although such obligations may be contingent and unmatured or are owed to another branch or office of a Secured Party different from the branch or office holding such deposit or obligated on such indebtedness. Such Secured Party shall promptly notify the affected Guarantor after any such set-off and application is made, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Secured Parties under this Section 8 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which any Secured Party may have.

Section 9. Amendments, Etc . No amendment or waiver of any provision of this Guaranty and no consent to any departure by any Guarantor therefrom shall in any event be effective, except to the extent permitted by Section 9.3 of the Credit Agreement, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

Section 10. Notices, Etc . All notices and other communications provided for hereunder shall be sent in the manner provided for in Section 9.9 of the Credit Agreement.

Section 11. No Waiver: Remedies . No failure on the part of the Administrative Agent or any other Secured Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

Section 12. Continuing Guaranty: Assignments under the Credit Agreement . This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the Payment in Full of Obligations, (b) be binding upon each Guarantor and its successors and assigns, (c) inure to the benefit of and be enforceable by the Administrative Agent, each Lender and the Issuing Lender and their respective successors, and, in the case of transfers and assignments made in accordance with the Credit Agreement, transferees and assigns, and (d) inure to the benefit of and be enforceable by each Secured Party and each of its successors, transferees and assigns to the extent such successor, transferee or assign also falls within the definition of Secured Party. Without limiting the generality of the foregoing clause (c), subject to Section 9.7 of the Credit Agreement, any Lender may assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement (including, without limitation, all or any portion of its Commitment, the Advances owing to it and the Note or Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise, subject, however, in all respects to the provisions of the Credit Agreement. Each Guarantor acknowledges that upon any Person becoming a Lender, the Administrative Agent or the Issuing Lender in accordance with the Credit Agreement, such Person shall be entitled to the benefits hereof.

Section 13. Governing Law; Service of Process . This Guaranty shall be deemed a contract under, and shall be governed by, and construed and enforced in accordance with, the laws of the State of New York without regard to conflicts of laws principles (other than Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York). Each Guarantor hereby agrees that service of copies of the summons and complaint and any other process which may be served in any such action or proceeding may be made by mailing or delivering a copy of such process to such Guarantor at the address set forth for the Credit Parties in the Credit Agreement. Nothing in this Section shall affect the rights of any Lender to serve legal process in any other manner permitted by the law or affect the right of any Lender to bring any action or proceeding against any Guarantor or its Property in the courts of any other jurisdiction.

Section 14. Submission to Jurisdiction . The parties hereto hereby agree that any suit or proceeding arising in respect of this Guaranty, or any of the matters contemplated hereby will be tried exclusively in the U.S. District Court for the Southern District of New York or, if such court does not have subject matter jurisdiction, in any state court located in the City and County of New York, and the parties hereto hereby agree to submit to the exclusive jurisdiction of, and venue in, such court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable law. Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent permitted by applicable Legal Requirement, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in any court referred to in this Section 14 . Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable Legal Requirement, the defense of any inconvenient forum to the maintenance of such action or proceeding in any such court.

Section 15. Waiver of Jury . THE GUARANTORS HEREBY ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED BY AND HAVE CONSULTED WITH COUNSEL OF THEIR CHOICE, AND HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 16. INDEMNIFICATION . EACH GUARANTOR SHALL INDEMNIFY THE ADMINISTRATIVE AGENT (AND ANY SUB-AGENT THEREOF), EACH LENDER AND THE ISSUING LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN “ INDEMNITEE ”) AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES (INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE), INCURRED BY ANY INDEMNITEE OR ASSERTED AGAINST ANY INDEMNITEE BY ANY PERSON (INCLUDING THE BORROWER OR ANY OTHER CREDIT PARTY) OTHER THAN SUCH INDEMNITEE AND ITS RELATED PARTIES ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (I) THE EXECUTION OR DELIVERY OF THIS GUARANTY, ANY OTHER CREDIT DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, (II) ANY ADVANCE OR LETTER OF CREDIT OR THE USE OR PROPOSED USE OF THE PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY THE ISSUING LENDER TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT), (III) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF

HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR (IV) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY, WHETHER BROUGHT BY A THIRD PARTY OR BY THE BORROWER OR ANY OTHER CREDIT PARTY, AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE APPLICABLE INDEMNITEE; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES (X) CONSTITUTE ATTORNEYS’ FEES, EXPENSES AND CHARGES FOR ANY COUNSEL OTHER THAN (A) ONE PRIMARY COUNSEL OF THE ADMINISTRATIVE AGENT AND ITS AFFILIATES (TAKEN AS A WHOLE), (B) IF NECESSARY, A SINGLE FIRM OF LOCAL COUNSEL IN EACH APPROPRIATE JURISDICTION, (C) OTHER COUNSEL IF SUCH REPRESENTATION BY A SINGLE COUNSEL WOULD BE INAPPROPRIATE DUE TO THE EXISTENCE OF AN ACTUAL OR REASONABLY PERCEIVED CONFLICT OF INTEREST, AND (D) ANY OTHER COUNSEL AS REASONABLY NECESSARY; PROVIDED THAT ANY INDEMNIFIED PARTY WHO HIRES THIRD PARTY COUNSEL PURSUANT TO THIS CLAUSE (D) WILL ENDEAVOR TO PROVIDE THE BORROWER WITH PRIOR WRITTEN NOTICE THEREOF BEFORE THE INCURRENCE OF SUCH FEES, EXPENSES, AND CHARGES, ALTHOUGH FAILURE TO PROVIDE SUCH NOTICE SHALL NOT WAIVE THE BORROWER’S REIMBURSEMENT OBLIGATIONS UNDER CLAUSE (D) HEREOF, (Y) ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR MATERIAL BREACH IN BAD FAITH OF SUCH INDEMNITEE’S OBLIGATIONS HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT, IF THE BORROWER OR SUCH CREDIT PARTY HAS OBTAINED A FINAL AND NONAPPEALABLE JUDGMENT IN ITS FAVOR ON SUCH CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION, OR (Z) SUCH LOSSES RELATE TO ANY PROCEEDING SOLELY BETWEEN OR AMONG INDEMNIFIED PARTIES OTHER THAN (A) CLAIMS AGAINST EITHER THE ADMINISTRATIVE AGENT OR THE LEAD ARRANGER OR THEIR RESPECTIVE AFFILIATES IN THEIR CAPACITY OR IN FULFILLING THEIR ROLE AS THE ADMINISTRATIVE AGENT OR LEAD ARRANGER OR ANY OTHER SIMILAR ROLE UNDER THE FACILITY DOCUMENTATION (EXCLUDING THE ROLE AS A LENDER) AND (B) CLAIMS ARISING OUT OF ANY ACT OR OMISSION ON THE PART OF THE BORROWER OR ANY OF THE BORROWER’S AFFILIATES. THIS SECTION 16 SHALL NOT APPLY WITH RESPECT TO TAXES OTHER THAN ANY TAXES THAT REPRESENT LOSSES, DAMAGES, ETC. ARISING FROM ANY NON-TAX CLAIM. THE LIABILITIES OF EACH GUARANTOR AS SET FORTH IN THIS SECTION 16 SHALL SURVIVE THE TERMINATION OF THIS GUARANTY.

Section 17. Additional Guarantors . Pursuant to Section 5.6 or 5.7 of the Credit Agreement, as applicable, Subsidiaries of the Borrower that were not in existence on the date of the Credit Agreement are required to enter into this Guaranty as a Guarantor within the time period specified in the Credit Agreement. Upon execution and delivery after the date hereof by the Administrative Agent and such Subsidiary of an instrument in the form of Annex 1 , such Subsidiary shall become a Guarantor hereunder with the same force and effect as if originally named as a Guarantor herein. The execution and delivery of any instrument adding an additional Guarantor as a party to this Guaranty shall not require the consent of any other

Guarantor hereunder. The rights and obligations of each Guarantor hereunder shall remain in full force and effect notwithstanding the addition of any new Guarantor as a party to this Guaranty.

Section 18. USA Patriot Act . Each Secured Party that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any other Secured Party) hereby notifies each Guarantor that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))(the “ Act ”), it is required to obtain, verify and record information that identifies such Guarantor, which information includes the name and address of such Guarantor and other information that will allow such Secured Party or the Administrative Agent, as applicable, to identify such Guarantor in accordance with the Act. Following a request by any Secured Party, each Guarantor shall promptly furnish all documentation and other information that such Secured Party reasonably requests in order to comply with its ongoing obligations under the applicable “know your customer” and anti-money laundering rules and regulations, including the Act.

Section 19. Keepwell . Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Credit Party to honor all of its obligations under this Guaranty in respect of Swap Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section 19 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 19 , or otherwise under this Guaranty, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP Guarantor under this Section shall remain in full force and effect until the Payment in Full of Obligations. Each Qualified ECP Guarantor intends that this Section 19 constitute, and this Section 19 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Credit Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

THIS GUARANTY AND THE OTHER CREDIT DOCUMENTS, AS DEFINED IN THE CREDIT AGREEMENT REFERRED TO IN THIS GUARANTY, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.

[Remainder of this page intentionally left blank.]

Each Guarantor has caused this Guaranty to be duly executed as of the date first above written.

	GUARANTORS :

	JAGGED PEAK ENERGY MANAGEMENT INC.


	By:
	Name:	Laurie A. Bales
	Title:	Chief Financial Officer and Secretary


	JAGGED PEAK ENERGY MANAGEMENT LLC


	By:
	Name:	Laurie A. Bales
	Title:	Chief Financial Officer and Secretary

[SIGNATURE PAGE TO GUARANTY]

Annex 1 to the Guaranty Agreement

SUPPLEMENT NO. dated as of (the “ Supplement ”), to the Guaranty Agreement dated as of June 19, 2015 (as amended, supplemented or otherwise modified from time to time, the “ Guaranty Agreement ”), executed by [ ] and [ ], (the “ Guarantors ”) and Wells Fargo Bank, National Association, as Administrative Agent (in such capacity, the “ Administrative Agent ”) for the benefit of the Secured Parties (as defined in the Credit Agreement referred to herein).

A. Reference is made to the Credit Agreement dated as of June 19, 2015 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Jagged Peak Energy LC, a Delaware limited liability company (the “ Borrower ”), the lenders from time to time party thereto (the “ Lenders ”), the Administrative Agent, Wells Fargo Bank, National Association, as the issuing lender (the “ Issuing Lender ”).

B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Guaranty Agreement or the Credit Agreement, as applicable.

C. The Guarantors have entered into the Guaranty Agreement in order to induce the Lenders to make Advances and the Issuing Lender to issue Letters of Credit. Section 17 of the Guaranty Agreement provides that additional Subsidiaries of the Borrower may become Guarantors under the Guaranty Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary of the Borrower (the “ New Guarantor ”) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Guarantor under the Guaranty Agreement in order to induce the Lenders to make additional Advances and the Issuing Lender to issue additional Letters of Credit and as consideration for Advances previously made and Letters of Credit previously issued.

Accordingly, the Administrative Agent and the New Guarantor agree as follows:

SECTION 1. In accordance with Section 17 of the Guaranty Agreement, the New Guarantor by its signature below becomes a Guarantor under the Guaranty Agreement with the same force and effect as if originally named therein as a Guarantor and the New Guarantor hereby (a) agrees to all the terms and provisions of the Guaranty Agreement applicable to it as a Guarantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Guarantor thereunder are true and correct in all material respects on and as of the date hereof. Each reference to a “Guarantor” in the Guaranty Agreement shall be deemed to include the New Guarantor. The Guaranty Agreement is hereby incorporated herein by reference.

SECTION 2. The New Guarantor represents and warrants to the Administrative Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it by all requisite corporate, limited liability company or partnership action and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).

SECTION 3. This Supplement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Administrative Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Guarantor and the Administrative Agent. Delivery of an executed signature page to this Supplement by facsimile or other electronic transmission shall be as effective as delivery of a manually executed counterpart of this Supplement.

SECTION 4. Except as expressly supplemented hereby, the Guaranty Agreement shall remain in full force and effect.

SECTION 5. This Supplement shall be deemed a contract under, and shall be governed by, and construed and enforced in accordance with, the laws of the State of New York without regard to conflicts of laws principles (other than Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York). The New Guarantor hereby agrees that service of copies of the summons and complaint and any other process which may be served in any such action or proceeding may be made by mailing or delivering a copy of such process to the New Guarantor at the address set forth on the signature page to this Supplement. Nothing in this Section shall affect the rights of any Lender to serve legal process in any other manner permitted by the law or affect the right of any Lender to bring any action or proceeding against the New Guarantor or its Property in the courts of any other jurisdiction.

SECTION 6. The parties hereto hereby agree that any suit or proceeding arising in respect of this Supplement, or any of the matters contemplated hereby will be tried exclusively in the U.S. District Court for the Southern District of New York or, if such court does not have subject matter jurisdiction, in any state court located in the City and County of New York, and the parties hereto hereby agree to submit to the exclusive jurisdiction of, and venue in, such court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable law. Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent permitted by applicable Legal Requirement, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Supplement in any court referred to in this Section 6 . Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable Legal Requirement, the defense of any inconvenient forum to the maintenance of such action or proceeding in any such court.

SECTION 7. THE NEW GUARANTOR HEREBY ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED BY AND HAS CONSULTED WITH COUNSEL OF ITS CHOICE, AND HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS SUPPLEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

SECTION 8. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Guaranty Agreement shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision hereof in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 9. All communications and notices hereunder shall be in writing and given as provided in Section 10 of the Guaranty Agreement.

THIS SUPPLEMENT, THE GUARANTY AGREEMENT AND THE OTHER CREDIT DOCUMENTS, AS DEFINED IN THE CREDIT AGREEMENT REFERRED TO IN THIS SUPPLEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.

[Remainder of this page intentionally left blank.]

IN WITNESS WHEREOF, the New Guarantor and the Administrative Agent have duly executed this Supplement to the Guaranty Agreement as of the day and year first above written.

	[Name of New Guarantor]

	By:
	Name:
	Title:

	Address for New Guarantor :


	WELLS FARGO BANK,
	NATIONAL ASSOCIATION,
	as Administrative Agent

	By:
	Name:
	Title:

EXHIBIT D
FORM OF MORTGAGE

DEED OF TRUST, SECURITY AGREEMENT, FINANCING STATEMENT AND
ASSIGNMENT OF PRODUCTION AND FIXTURE FILING

A CARBON, PHOTOGRAPHIC, FACSIMILE, OR OTHER REPRODUCTION OF THIS INSTRUMENT IS SUFFICIENT AS A FINANCING STATEMENT.

THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY AND FUTURE ADVANCE PROVISIONS.

THIS INSTRUMENT COVERS THE INTEREST OF MORTGAGOR IN MINERALS OR THE LIKE (INCLUDING OIL AND GAS) BEFORE EXTRACTION AND THE SECURITY INTEREST CREATED BY THIS INSTRUMENT ATTACHES TO SUCH MINERALS AS EXTRACTED AND TO THE ACCOUNTS RESULTING FROM THE SALE THEREOF AT THE WELLHEAD. THIS INSTRUMENT COVERS THE INTEREST OF MORTGAGOR IN FIXTURES AND GOODS WHICH ARE OR ARE TO BECOME FIXTURES ON THE REAL/IMMOVABLE PROPERTY DESCRIBED HEREIN AND IT IS TO BE FILED FOR RECORD AS A FIXTURE FILING, AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS OR COMPARABLE RECORDS OF THE RECORDERS OF THE COUNTIES LISTED ON EXHIBIT A HERETO. PRODUCTS OF THE COLLATERAL ARE ALSO COVERED.

THIS INSTRUMENT IS, AMONG OTHER THINGS, A FINANCING STATEMENT UNDER THE UNIFORM COMMERCIAL CODE COVERING AS-EXTRACTED COLLATERAL.

THE MORTGAGOR HAS AN INTEREST OF RECORD IN THE REAL ESTATE WHICH INTEREST IS DESCRIBED IN SECTION 1.13 OF THIS INSTRUMENT

A POWER OF SALE HAS BEEN GRANTED IN THIS DEED OF TRUST. A POWER OF SALE
MAY ALLOW THE TRUSTEE OR MORTGAGEE TO TAKE THE COLLATERAL AND SELL
IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY
MORTGAGOR UNDER THIS DEED OF TRUST

FROM

JAGGED PEAK ENERGY LLC
(Mortgagor, Debtor and Grantor)

TO
SUZANNE F. RIDENHOUR, as Trustee for the benefit of

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Collateral Agent
(Mortgagee, Secured Party and Grantee)

June 19, 2015

For purposes of filing this Deed of Trust as a financing statement, the mailing address of Mortgagor is 1125 17th Street, Suite 2400, Denver, CO 80202, the state of its organization is Delaware, and its organizational number is 5312102; the mailing address of Mortgagee is Wells Fargo Bank, National Association, 1700 Lincoln St., Third floor — MAC C7300-033, Denver, Colorado 80203.

***********************************

This instrument, prepared by Jennifer N. Dill, Bracewell & Giuliani LLP, 711 Louisiana, South Tower Pennzoil Place, Suite 2300, Houston, Texas 77002, (713) 221-1144, contains after-acquired property provisions and covers future advances and proceeds to the fullest extent allowed by applicable law.

ATTENTION RECORDING OFFICER : This instrument is a mortgage of both real and personal property and is, among other things, a Security Agreement and Financing Statement under the Uniform Commercial Code. This instrument creates a lien on rights in or relating to lands of Mortgagor which are described in Exhibit A hereto or in documents described in such Exhibit A .

RECORDED DOCUMENT SHOULD BE RETURNED TO:

BRACEWELL & GIULIANI LLP
711 Louisiana, South Tower Pennzoil Place, Suite 2300
Houston, Texas 77002
Attn: Jennifer N. Dill

DEED OF TRUST, SECURITY AGREEMENT, FINANCING STATEMENT AND
ASSIGNMENT OF PRODUCTION AND FIXTURE FILING

THE STATE OF TEXAS	§
	§
COUNTIES OF REEVES, PECOS,	§
WARD AND WINKLER	§

This Deed of Trust, Security Agreement, Financing Statement and Assignment of Production and Fixture Filing (the “ Deed of Trust ”) is executed and made effective as of the 19th day of June, 2015 (“ Effective Date ”), and is executed and delivered by Jagged Peak Energy LLC (“ Mortgagor ”), to Suzanne F. Riddenhour, as Trustee (in such capacity, the “ Trustee ”) for the benefit of Wells Fargo Bank, National Association (the “ Mortgagee ”) in its capacity as the administrative agent under the Credit Agreement (as hereinafter defined) and on behalf of the Secured Parties (as defined in the Credit Agreement defined below). The addresses of Mortgagor, Mortgagee and the Trustee appear in Section 7.13 of this Deed of Trust.

RECITALS

A. This Deed of Trust is executed in connection with, and pursuant to the terms of, the Credit Agreement dated as of June 19, 2015 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Mortgagor, as borrower, the lenders party thereto from time to time (individually, a “ Lender ” and collectively, the “ Lenders ”), and Wells Fargo Bank, National Association, as administrative agent (in such capacity, “ Administrative Agent ”) and as issuing lender (in such capacity, “ Issuing Lender ”). All capitalized terms not otherwise defined in this Deed of Trust that are defined in the Credit Agreement shall have the meanings assigned to such terms by the Credit Agreement.

B. Mortgagor will derive substantial direct or indirect benefit from (i) the transactions contemplated by the Credit Agreement and the other Credit Documents (ii) the Hedging Arrangements entered into by any Credit Party with a Swap Counterparty, (iii) any Banking Services agreements entered into by any Credit Party with a Banking Services Provider, and (iv) any other incurrence of Secured Obligations by a Credit Party.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Mortgagor (a) wishes to make this Deed of Trust in favor of Trustee for the benefit of the Mortgagee to secure the Obligations (as defined herein), and (b) hereby agrees as follows:

ARTICLE I
Definitions

1.1 “ Collateral ” means the Realty Collateral, Personalty Collateral and Fixture Collateral.

1.2 “ Contracts ” means all contracts, agreements, operating agreements, farm-out or farm-in agreements, sharing agreements, mineral purchase agreements, contracts for the purchase, exchange, transportation, processing or sale of Hydrocarbons, rights-of-way, easements, surface leases, equipment leases, permits, franchises, licenses, pooling or unitization agreements, and unit or pooling designations and orders now or hereafter affecting any of the Oil and Gas Properties, Operating Equipment, Fixture Operating Equipment, or Hydrocarbons now or hereafter covered hereby, or which are useful or appropriate in drilling for, producing, treating, handling, storing, transporting or marketing oil, gas or other minerals

produced from any of the Oil and Gas Properties, and all as such contracts and agreements as they may be amended, restated, modified, substituted or supplemented from time-to-time.

1.3 “ Event of Default ” shall have the meaning set forth in Article V hereof.

1.4 “ Fixture Collateral ” means all of Mortgagor’s interest now owned or hereafter acquired in and to all Fixture Operating Equipment and all proceeds, products, renewals, increases, profits, substitutions, replacements, additions, amendments and accessions thereof, thereto or therefor; provided that “Fixture Collateral” shall not include any Excluded Property.

1.5 “ Fixture Operating Equipment ” means any of the items described in the first sentence of Section 1.10 which as a result of being incorporated into realty or structures or improvements located therein or thereon, with the intent that they remain there permanently, constitute fixtures under the laws of the state in which such equipment is located.

1.6 “ Hydrocarbons ” means oil, gas, coal seam gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, and all other liquid and gaseous hydrocarbons produced or to be produced in conjunction therewith from a well bore and all products, by-products, and other substances derived therefrom or the processing thereof, and all other minerals and substances produced in conjunction with such substances, including sulfur, geothermal steam, water, carbon dioxide, helium, and any and all minerals, ores, or substances of value and the products and proceeds therefrom.

1.7 “ Obligations ” means

(a) The “Secured Obligations”, as that term is defined in the Credit Agreement;

(b) All sums advanced or costs or expenses incurred by the Trustee on behalf of the Administrative Agent, which are made or incurred pursuant to, or allowed by, the terms of this Deed of Trust; and

(c) All future advances or other extensions of credit, of whatever class or for whatever purpose, at any time hereafter made or given by Mortgagee or any of the other Secured Parties to the Borrower, the Mortgagor or any Subsidiary of the Borrower or of the Mortgagor under or pursuant to any Credit Document, whether or not the advances or value are given pursuant to a commitment, and whether or not the Borrower or the Mortgagor is indebted to Mortgagee or any Lender at the time of such events.

Notwithstanding anything to the contrary contained herein, “Obligations” shall not include the Excluded Swap Obligations.

1.8 “ Oil and Gas Property ” or “ Oil and Gas Properties ” means (a) the oil and gas and/or oil, gas and mineral leases and leasehold interests, term assignments of Leases, non-participating royalty interests, fee mineral interests, term mineral interests, participation interests, back-in or carried working interests, rights of first refusal, options, subleases, farmouts, royalties, overriding royalties, net profits interests, production payments and similar interests or estates described in Exhibit A attached hereto and made a part hereof for all purposes and any reversionary or carried interests relating to any of the foregoing, (b) all production units, and drilling and spacing units (and the Properties covered thereby) which may affect all or any portion of such interests including those units which may be described or referred to in Exhibit A and any units created by agreement or designation or under orders, regulations, rules or other official acts of any Federal, state or other governmental body or agency having jurisdiction, (c) the surface leases described in Exhibit A attached hereto and made part hereof for all purposes, (d) any and all non-consent interests owned or held by, or otherwise benefiting, Mortgagor and arising out of, or pursuant to,

any of the Contracts, (e) any other interest in, to or relating to (i) all or any part of the land described in Exhibit A , the land relating to, or described in, the leases set forth in Exhibit A or in the documents described in Exhibit A , or (ii) any of the estates, property rights or other interests referred to above, (f) any instrument executed in amendment, correction, modification, confirmation, renewal or extension of the same, (g) any and all rights, titles and interests of Mortgagor (which are similar in nature to any of the rights, titles and interests described in (a) through (f) above) which are located on or under or which concern any Property or Properties located in counties referenced in Exhibit A hereto or counties in which a counterpart of this Deed of Trust is filed of record in the real property records of such county, and (h) all tenements, hereditaments and appurtenances now existing or hereafter obtained in connection with any of the aforesaid, including any rights arising under unitization agreements, orders or other arrangements, communitization agreements, orders or other arrangements or pooling orders, agreements or other arrangements.

1.9 “ Operating Equipment ” means all surface or subsurface machinery, equipment, facilities, supplies or other Property of whatsoever kind or nature now or hereafter located on any of the Property affected by the Oil and Gas Properties which are useful for the production, treatment, storage or transportation of Hydrocarbons, including all oil wells, gas wells, water wells, injection wells, salt water disposal wells, casing, tubing, rods, pumping units and engines, christmas trees, derricks, separators, gun barrels, flow lines, pipelines, tanks, gas systems (for gathering, treating and compression), water systems (for treating, disposal and injection), supplies, derricks, wells, power plants, poles, cables, wires, meters, processing plants, compressors, dehydration units, lines, transformers, starters and controllers, machine shops, tools, storage yards and equipment stored therein, buildings and camps, telegraph, telephone and other communication systems, roads, loading racks, shipping facilities and all additions, substitutes and replacements for, and accessories and attachments to, any of the foregoing. Operating Equipment shall not include (i) any items incorporated into realty or structures or improvements located therein or thereon in such a manner that they no longer remain personalty under the laws of the state in which such equipment is located, or (ii) drilling rigs, automotive equipment, rental equipment or other personal property which may be located on any of the Property affected by the Oil and Gas Properties for the purpose of drilling a well or for other similar temporary uses.

1.10 “ Personalty Collateral ” means all of Mortgagor’s interest now owned or hereafter acquired in and to (a) all Operating Equipment, (b) all Hydrocarbons severed and extracted from or attributable to the Oil and Gas Properties, including oil in tanks and all other “ as-extracted ” collateral from or attributable to the Oil and Gas Properties, (c) all accounts (including accounts resulting from the sale of Hydrocarbons at the wellhead), contract rights and general intangibles, including all accounts, contract rights and general intangibles now or hereafter arising regardless of whether any of the foregoing is in connection with the sale or other disposition of any Hydrocarbons or otherwise, including all Liens securing the same, (d) all accounts, contract rights and general intangibles now or hereafter arising regardless of whether any of the foregoing is in connection with or resulting from any of the Contracts, including all Liens securing the same, (e) all proceeds and products of the Realty Collateral and any other contracts or agreements, (f) all information concerning the Oil and Gas Properties and all wells located thereon, including abstracts of title, title opinions, geological and geophysical information and logs, lease files, well files, and other books and records (including computerized records and data), (g) any deposit or time accounts with Mortgagee, the Collateral Agent the Administrative Agent or any Lender, including Mortgagor’s operating bank account and all funds and investments therein, (h) any options or rights of first refusal to acquire any Realty Collateral, and (i) all proceeds, products, renewals, increases, profits, substitutions, replacements, additions, amendments and accessions of, to or for any of the foregoing; provided that “Personalty Collateral” shall not include any Excluded Property.

1.11 “ Property ” means any property of any kind, whether real, personal, or mixed and whether tangible or intangible.

1.12 “ Realty Collateral ” means all of Mortgagor’s interest now owned or hereafter acquired in and to the Oil and Gas Properties, including any access rights, water and water rights, and all unsevered and unextracted Hydrocarbons (even though Mortgagor’s interest therein may be incorrectly described in, or a description of a part or all of such interest may be omitted from, Exhibit A ); provided that “Realty Collateral” shall not include any Excluded Property.

1.14 All other capitalized terms defined in the Credit Agreement which are used in this Deed of Trust and which are not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. All meanings to defined terms, unless otherwise indicated, are to be equally applicable to both the singular and plural forms of the terms defined. Article, Section, Schedule, and Exhibit references are to Articles and Sections of and Schedules and Exhibits to this Deed of Trust, unless otherwise specified. All references to instruments, documents, contracts, and agreements are references to such instruments, documents, contracts, and agreements as the same may be amended, supplemented, and otherwise modified from time to time, unless otherwise specified. The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Deed of Trust shall refer to this Deed of Trust as a whole and not to any particular provision of this Deed of Trust. As used herein, the term “including” means “including, without limitation,”.

ARTICLE II
Creation of Security

2.1 Conveyance and Grant of Lien . In consideration of the advance or extension by the Secured Parties to the Mortgagor of the funds or credit constituting the Obligations (including the making of the Advances and the issuing of the Letters of Credit), and in further consideration of the mutual covenants contained herein, Mortgagor, by this Deed of Trust hereby GRANTS, CONVEYS, SELLS, TRANSFERS, ASSIGNS AND CONVEYS with a general warranty of title, subject to Permitted Liens, for the uses, purposes and conditions hereinafter set forth all of its right, title and interest in and to the Realty Collateral, the Personalty Collateral and the Fixture Collateral unto Trustee, and to his successor or successors or substitutes in trust, WITH POWER OF SALE , in trust to secure the payment and performance of the Obligations for the benefit of Mortgagee and the ratable benefit of the Secured Parties.

TO HAVE AND TO HOLD the Realty Collateral, the Personalty Collateral and Fixture Collateral unto the Trustee and his successors or substitutes in trust and to his and their successors and assigns forever for the benefit of the Secured Parties, together with all and singular the rights, hereditaments and appurtenances thereto in anywise appertaining or belonging, to secure payment of the Obligations and the performance of the covenants of Mortgagor contained in this Deed of Trust. Subject to Permitted Liens, Mortgagor does hereby bind itself, its successors and permitted assigns, to warrant and forever defend all and singular the Realty Collateral, the Personalty Collateral and the Fixture Collateral unto the Trustee and his successors or substitutes in trust, and their successors and assigns, against every Person whomsoever lawfully claiming or to claim the same, or any part thereof (subject to Permitted Liens).

Subject, however, to the condition that none of the Mortgagee or the other Secured Parties shall be liable in any respect for the performance of any covenant or obligation of the Mortgagor in respect of the Collateral. Any reference in Exhibit A to the name of a well shall not be construed to limit the Collateral to the well bore of such well or in the proration units. It is Mortgagor’s intention that this instrument covers Mortgagor’s entire interest in the lands, leases, units and other interests set forth in Exhibit A .

Notwithstanding any provision in this Mortgage to the contrary, in no event is any Building (as defined in the applicable Flood Insurance Regulation) or Manufactured (Mobile) Home (as defined in the applicable Flood Insurance Regulation) included in the definition of “ Realty Collateral ”, “ Personalty Collateral ” or “ Fixture Collateral ” and no Building or Manufactured (Mobile) Home is hereby encumbered

by this Mortgage. As used herein, “ Flood Insurance Regulations ” shall mean (a) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (b) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statue thereto, (c) the National Flood Insurance Reform Act of 1994 (amending 42 USC 4001, et seq.), as the same may be amended or recodified from time to time, and (d) the Flood Insurance Reform Act of 2004 and any regulations promulgated thereunder.

2.2 Security Interest . For the same consideration and to further secure the Obligations, Mortgagor hereby grants to Mortgagee for its benefit and the ratable benefit of the other Secured Parties a security interest in and to the Collateral.

2.3 Assignment of Liens and Security Interests . For the same consideration and to further secure the Obligations, Mortgagor hereby assigns and conveys to Mortgagee for its benefit and the benefit of the other Secured Parties the security interests held by Mortgagor arising under Section 9.343(a) of the Texas Business and Commerce Code and the Liens granted to Mortgagor pursuant to Section 9.343(d) attributable to the interest of Mortgagor in the Hydrocarbons.

ARTICLE III
Proceeds from Production

3.1 Assignment of Production .

(a) In order to further secure the Obligations, Mortgagor has assigned, transferred, conveyed and delivered and does hereby assign, transfer, convey and deliver unto Mortgagee, effective as of the Effective Date at 7:00 a.m. (Denver, Colorado time), U.S.A., all Hydrocarbons produced from, and which are attributable to, Mortgagor’s interest, now owned or hereafter acquired, in and to the Oil and Gas Properties, or are allocated thereto pursuant to pooling or unitization orders, agreements or designations, and all proceeds therefrom.

(b) Subject to the provisions of subsection (f) below, all parties producing, purchasing, taking, possessing, processing or receiving any production from the Oil and Gas Properties, or having in their possession any such production, or the proceeds therefrom, for which they or others are accountable to Mortgagee by virtue of the provisions of this Section 3.1, are authorized and directed by Mortgagor to treat and regard Mortgagee as the assignee and transferee of Mortgagor and entitled in its place and stead to receive such Hydrocarbons and the proceeds therefrom.

(c) Subject to the provisions of subsection (f) below, Mortgagor directs and instructs each of such parties to pay to Mortgagee, for its benefit and the ratable benefit of the other Secured Parties, all of the proceeds of such Hydrocarbons until such time as such party has been furnished evidence that all of the Obligations have been paid and that the Lien evidenced hereby has been released; provided, however, that until Mortgagee shall have exercised the rights herein to instruct such parties to deliver such Hydrocarbons and all proceeds therefrom directly to Mortgagee, such parties shall be entitled to deliver such Hydrocarbons and all proceeds therefrom to Mortgagor for Mortgagor’s use and enjoyment, and Mortgagor shall be entitled to execute division orders, transfer orders and other instruments as may be required to direct all proceeds to Mortgagor without the necessity of joinder by Mortgagee in such division orders, transfer orders or other instruments. Mortgagor agrees to perform all such acts, and to execute all such further assignments, transfers and division orders, and other instruments as may be reasonably required by Mortgagee or any party in order to have said revenues and proceeds so paid to Mortgagee. None of such parties shall have any responsibility for the application of any such proceeds received by Mortgagee. Subject to the provisions of subsection (f) below, Mortgagor authorizes Mortgagee to receive and collect all proceeds of such Hydrocarbons.

(d) Subject to the provisions of subsection (f) below, Mortgagor will execute and deliver to Mortgagee any instruments Mortgagee may from time to time reasonably request for the purpose of effectuating this assignment and the payment to Mortgagee of the proceeds assigned.

(e) Neither the foregoing assignment nor the exercise by Mortgagee of any of its rights herein shall be deemed to make Mortgagee a “mortgagee-in-possession” or otherwise responsible or liable in any manner with respect to the Oil and Gas Properties or the use, occupancy, enjoyment or operation of all or any portion thereof, unless and until Mortgagee, in person or by agent, assumes actual possession thereof, nor shall appointment of a receiver for the Oil and Gas Properties by any court at the request of Mortgagee or by agreement with Mortgagor or the entering into possession of the Oil and Gas Properties or any part thereof by such receiver be deemed to make Mortgagee a “mortgagee-in-possession” or otherwise responsible or liable in any manner with respect to the Oil and Gas Properties or the use, occupancy, enjoyment or operation of all or any portion thereof.

(f) Notwithstanding anything to the contrary contained herein, so long as no Event of Default shall have occurred and is continuing and no written notice to the contrary has been delivered by Mortgagee to Mortgagor, Mortgagor shall have the right to collect all revenues and proceeds attributable to the Hydrocarbons that accrue to the Oil and Gas Properties or the products obtained or processed therefrom, as well as any Liens and security interests securing any sales of said Hydrocarbons and to retain, use and enjoy same.

(g) Upon the occurrence and during the continuation of an Event of Default, Mortgagee may endorse and cash any and all checks and drafts payable to the order of Mortgagor or Mortgagee for the account of Mortgagor, received from or in connection with the proceeds of the Hydrocarbons affected hereby, and the same may be applied as provided herein. Upon the occurrence and during the continuation of an Event of Default, Mortgagee may execute any transfer or division orders in the name of Mortgagor or otherwise, with warranties and indemnities binding on Mortgagor; provided that Mortgagee shall not be held liable to Mortgagor for, nor be required to verify the accuracy of, Mortgagor’s interests as represented therein.

(h) Subject to the provisions of subsection (f) above, upon the occurrence and during the continuance of an Event of Default, Mortgagee shall have the right at Mortgagee’s election and in the name of Mortgagor, or otherwise, to prosecute and defend any and all actions or legal proceedings deemed advisable by Mortgagee in order to collect such proceeds and to protect the interests of Mortgagee or Mortgagor, with all costs, expenses and attorneys’ fees incurred in connection therewith being paid by Mortgagor, and Mortgagee shall endeavor to give written notice to Mortgagor of such election (although failure to provide such notice shall not waive Mortgagee’s rights under this paragraph (h)). In addition, should any purchaser taking production from the Oil and Gas Properties fail to pay promptly to Mortgagee in accordance with this Article III, Mortgagee shall have the right, subject to any conditions set forth in the applicable purchase agreement, to demand a change of connection and to designate another purchaser with whom a new connection may be made without any liability on the part of Mortgagee in making such election, so long as ordinary care is used in the making thereof, and upon failure of Mortgagor to consent to such change of connection, the entire amount of all the Obligations may, at the option of Mortgagee, be immediately declared to be due and payable and subject to foreclosure hereunder.

(i) Without in any way limiting the effectiveness of the foregoing provisions, if Mortgagor receives any proceeds which under Section 3.1(c) are payable to Mortgagee, Mortgagor shall hold the same in trust and remit such proceeds, or cause them to be remitted, promptly, to Mortgagee.

3.2 Application of Proceeds . All payments received by Mortgagee pursuant to this Article III attributable to the interest of Mortgagor in and to the Hydrocarbons shall be applied by the Mortgagee as set forth in Section 7.06 of the Credit Agreement.

3.3 Mortgagor’s Payment Duties . Except as provided in Section 7.18 hereof, nothing contained herein will limit Mortgagor’s absolute duty to make payment of the Obligations regardless of whether the proceeds assigned by this Article III are sufficient to pay the same, and subject to the provisions of Section 3.2 above, the receipt by Mortgagee of proceeds from Hydrocarbons under this Deed of Trust will be in addition to all other security now or hereafter existing to secure payment of the Obligations.

3.4 Liability of Mortgagee . Mortgagee is hereby absolved from all liability for failure to enforce collection of any of such proceeds, and from all other responsibility in connection therewith except the responsibility to account to Mortgagor for proceeds actually received by Mortgagee.

3.5 Actions to Effect Assignment . Subject to the provisions of Section 3.1(f), Mortgagor covenants to, if requested by Mortgagee in writing, cause all operators, pipeline companies, production purchasers and other remitters of said proceeds to pay promptly to Mortgagee the proceeds from such Hydrocarbons in accordance with the terms of this Deed of Trust, and to execute, acknowledge and deliver to said remitters such division orders, transfer orders, certificates and other documents as may be necessary, requested or proper to effect the intent of this assignment; and Mortgagee shall not be required at any time, as a condition to its right to obtain the proceeds of such Hydrocarbons, to warrant its title thereto or to make any guaranty whatsoever. In addition, Mortgagor covenants to, if requested by Mortgagee in writing, provide to Mortgagee the name and address of every such remitter of proceeds from such Hydrocarbons, together with a copy of the applicable division orders, transfer orders, sales contracts and governing instruments. All out-of-pocket expenses incurred by the Trustee or Mortgagee in the collection of said proceeds shall be repaid promptly by Mortgagor; and prior to such repayment, such expenses shall be a part of the Obligations secured hereby. If under any existing Contracts for the sale of Hydrocarbons, other than division orders or transfer orders, any proceeds of Hydrocarbons are required to be paid by the remitter direct to Mortgagor so that under such existing agreements payment cannot be made of such proceeds to Mortgagee in the absence of foreclosure, Mortgagor’s interest in all proceeds of Hydrocarbons under such existing Contracts shall, when received by Mortgagor, constitute trust funds in Mortgagor’s hands for the benefit of the Mortgagee and shall be immediately paid over to Mortgagee.

3.6 Power of Attorney . Without limitation upon any of the foregoing but subject to the provisions of Section 3.1(f), Mortgagor hereby designates and appoints Mortgagee as true and lawful agent and attorney-in-fact (with full power of substitution, either generally or for such periods or purposes as Mortgagee may from time to time prescribe), with full power and authority, for and on behalf of and in the name of Mortgagor, to execute, acknowledge and deliver all such division orders, transfer orders, certificates and other documents of every nature, with such provisions as may from time to time, in the opinion of Mortgagee, be necessary or proper to effect the intent and purpose of the assignment contained in this Article III; and Mortgagor shall be bound thereby as fully and effectively as if Mortgagor had personally executed, acknowledged and delivered any of the foregoing orders, certificates or documents; provided that (i) Mortgagee shall not exercise any powers and authorities conferred by this Section 3.6 unless an Event of Default shall have occurred and be continuing and (ii) Mortgagee shall endeavor to provide Mortgagor with notice prior to exercising such powers and authorities, although failure to provide such notice shall not waive Mortgagee’s rights under this Section 3.6. Upon the occurrence and during the continuance of an Event of Default, the powers and authorities herein conferred on Mortgagee may be exercised by Mortgagee through any person who, at the time of exercise, is the president, a senior vice president or a vice president of Mortgagee. The power of attorney conferred by this Section 3.6 is granted for valuable consideration and coupled with an interest and is irrevocable so long as

Payment in Full of Obligations has not occurred. Any Persons dealing with Mortgagee, or any substitute, shall be fully protected in treating the powers and authorities conferred by this Section 3.6 as continuing in full force and effect until advised by Mortgagee that Payment in Full of Obligations has occurred.

3.7 INDEMNIFICATION . MORTGAGOR AGREES TO INDEMNIFY MORTGAGEE, THE TRUSTEE AND THE OTHER SECURED PARTIES, AND EACH OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS (COLLECTIVELY, THE “INDEMNIFIED PARTIES”) (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”) AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES (INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE), INCURRED BY ANY INDEMNITEE OR ASSERTED AGAINST ANY INDEMNITEE BY ANY PERSON (INCLUDING THE MORTGAGOR OR ANY OTHER CREDIT PARTY) OTHER THAN SUCH INDEMNITEE AND ITS RELATED PARTIES ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (I) THE EXECUTION OR DELIVERY OF THIS DEED OF TRUST, ANY OTHER CREDIT DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, (II) ANY ADVANCE OR LETTER OF CREDIT OR THE USE OR PROPOSED USE OF THE PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY THE ISSUING LENDER TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT), (III) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE MORTGAGOR OR ANY OF ITS SUBSIDIARIES, OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE MORTGAGOR OR ANY OF ITS SUBSIDIARIES, OR (IV) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY, WHETHER BROUGHT BY A THIRD PARTY OR BY THE MORTGAGOR OR ANY OTHER CREDIT PARTY, AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE APPLICABLE INDEMNITEE; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES (X) CONSTITUTE ATTORNEYS’ FEES, EXPENSES AND CHARGES FOR ANY COUNSEL OTHER THAN (A) ONE PRIMARY COUNSEL OF THE ADMINISTRATIVE AGENT AND ITS AFFILIATES (TAKEN AS A WHOLE), (B) IF NECESSARY, A SINGLE FIRM OF LOCAL COUNSEL IN EACH APPROPRIATE JURISDICTION, (C) OTHER COUNSEL IF SUCH REPRESENTATION BY A SINGLE COUNSEL WOULD BE INAPPROPRIATE DUE TO THE EXISTENCE OF AN ACTUAL OR REASONABLY PERCEIVED CONFLICT OF INTEREST, AND (D) ANY OTHER COUNSEL AS REASONABLY NECESSARY; PROVIDED THAT ANY INDEMNIFIED PARTY WHO HIRES THIRD PARTY COUNSEL PURSUANT TO THIS CLAUSE (D) WILL ENDEAVOR TO PROVIDE THE MORTGAGOR WITH PRIOR WRITTEN NOTICE THEREOF BEFORE THE INCURRENCE OF SUCH FEES, EXPENSES, AND CHARGES, ALTHOUGH FAILURE TO PROVIDE SUCH NOTICE SHALL NOT WAIVE THE MORTGAGOR’S REIMBURSEMENT OBLIGATIONS UNDER CLAUSE (D) HEREOF, (Y) ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR MATERIAL

BREACH IN BAD FAITH OF SUCH INDEMNITEE’S OBLIGATIONS HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT, IF THE MORTGAGOR OR SUCH CREDIT PARTY HAS OBTAINED A FINAL AND NONAPPEALABLE JUDGMENT IN ITS FAVOR ON SUCH CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION, OR (Z) SUCH LOSSES RELATE TO ANY PROCEEDING SOLELY BETWEEN OR AMONG INDEMNIFIED PARTIES OTHER THAN (A) CLAIMS AGAINST EITHER THE ADMINISTRATIVE AGENT OR THE LEAD ARRANGER OR THEIR RESPECTIVE AFFILIATES IN THEIR CAPACITY OR IN FULFILLING THEIR ROLE AS THE ADMINISTRATIVE AGENT OR LEAD ARRANGER OR ANY OTHER SIMILAR ROLE UNDER THE FACILITY DOCUMENTATION (EXCLUDING THE ROLE AS A LENDER) AND (B) CLAIMS ARISING OUT OF ANY ACT OR OMISSION ON THE PART OF THE MORTGAGOR OR ANY OF THE MORTGAGOR’S AFFILIATES. THIS SECTION 3.7 SHALL NOT APPLY WITH RESPECT TO TAXES OTHER THAN ANY TAXES THAT REPRESENT LOSSES, DAMAGES, ETC. ARISING FROM ANY NON-TAX CLAIM.

ARTICLE IV
Mortgagor’s Warranties and Covenants

4.1 Payment of Obligations . Mortgagor covenants that Mortgagor shall timely pay and perform the Obligations secured by this Deed of Trust.

4.2 Representations and Warranties . Mortgagor represents and warrants as follows:

(a) Incorporation of Representations and Warranties from Credit Agreement . The representations and warranties contained in Article IV of the Credit Agreement applicable to the Mortgagor or its Properties are hereby confirmed and restated, each such representation and warranty, together with all related definitions and ancillary provisions, being hereby incorporated into this Deed of Trust by reference as though specifically set forth in this Section.

(b) Title to Collateral . Mortgagor has good and marketable title, in all material respects, to the Collateral free from all Liens, claims, security interests or other encumbrances except for Permitted Liens.(1) Until the Payment in Full of Obligations or until this Mortgage is otherwise released in whole or in part pursuant to Section 7.4 , (i) this Mortgage is and will remain a valid and enforceable lien on the Collateral subject only to Permitted Liens and (ii) Mortgagor will preserve its interest in and title to the Collateral and will forever warrant and defend the same to Mortgagee and will forever warrant and defend the validity and priority of the lien hereof against the claims of all persons and parties whomsoever other than holders of Permitted Liens with respect to such Permitted Liens.

(d) [Reserved] .

(e) [Reserved] .

(f) [Reserved] .

(g) [Reserved] .

(h) [Reserved] .

(i) Maintenance of Properties . None of the wells comprising a part of the Oil and Gas Properties (or Properties unitized therewith) of the Mortgagor is deviated from the vertical more than the maximum permitted by Legal Requirements.

(j) [Reserved] .

(k) [Reserved] .

(l) Refund Obligations . Mortgagor has not collected any proceeds from the sale of Hydrocarbons produced from the Oil and Gas Properties which are subject to any material refund obligation.(2)

(m) Proceeds Suspense . Except for Mortgagor’s interests in certain Oil and Gas Properties, which Mortgagor represents do not constitute a material portion (with 5% or more being deemed material) of the present value of the Collateral and all other Properties of Mortgagor securing the Obligations, all proceeds from the sale of Mortgagor’s interest in the Hydrocarbons from the Oil and Gas Properties are being received by Mortgagor in a timely manner and are not held in suspense for any reason.

(n) Mortgagor’s Address . The address of Mortgagor’s place of business, residence, chief executive office and office where Mortgagor keeps its records concerning accounts, contract rights and general intangibles is as set forth in Section 7.13, as such address may be changed in accordance with the Credit Agreement, and there has been no change in the location of Mortgagor’s place of business, residence, chief executive office and office where it keeps such records and no change of Mortgagor’s name during the four months immediately preceding the date of this Deed of Trust. Mortgagor hereby represents and warrants that, as of the date hereof, its organizational number, the state of formation and the correct spelling of Mortgagor is as set forth on its signature page below.

4.3 Further Assurances .

(a) Except as permitted under the Credit Agreement, Mortgagor covenants that Mortgagor shall, so long as Payment in Full of Obligations has not occurred, execute and deliver such other and further instruments, and shall do such other and further acts requested by Mortgagee that are necessary to carry out more effectively the purposes of this Deed of Trust to the extent required by Section 5.12 of the Credit Agreement, including without limiting the generality of the foregoing, (i) prompt correction of any defect (other than Permitted Liens) in the execution or acknowledgment of this Deed of Trust, any written instrument comprising part or all of the Obligations, or any other document used in connection herewith; (ii) prompt correction of any defect (other than Permitted Liens) which may hereafter be discovered in the title to the Collateral; (iii) prompt execution and delivery of all division or transfer orders or other instruments which in Mortgagee’s opinion are required to transfer to Mortgagee, for its benefit and the ratable benefit of the other Secured Parties, the assigned proceeds from the sale of Hydrocarbons from the Oil and Gas Properties; and (iv) prompt payment when due and owing of all taxes, assessments and governmental charges imposed on this Deed of Trust, or upon the interest of Mortgagee or the Trustee.

(b) Except as permitted under the Credit Agreement, Mortgagor covenants that Mortgagor shall maintain and preserve the Lien and security interest herein created as an Acceptable Security Interest so long as Payment in Full of Obligations has not occurred.

4.4 [Reserved] .

4.5 Recording . Mortgagor shall promptly (at Mortgagor’s own expense) take all actions necessary to permit Mortgagee to record, register, deposit and file this Deed of Trust and every other instrument in addition or supplement hereto, including applicable financing statements, in such offices and places within the state where the Collateral is located and in the state where the Mortgagor is registered and at such times and as often as may be necessary to preserve, protect and renew the Lien and security interest herein created as an Acceptable Security Interest on real or personal property as the case may be, and otherwise shall do and perform all matters or things necessary or expedient to be done or observed by reason of any Legal Requirement for the purpose of effectively creating, perfecting, maintaining and preserving the Lien and security interest created hereby in and on the Collateral.

4.6 [Reserved] .

4.7 [Reserved] .

ARTICLE V
Default

5.1 Events of Default . Any Event of Default under the terms of the Credit Agreement shall constitute an “Event of Default” under this Deed of Trust.

5.2 [Reserved] .

ARTICLE VI
Mortgagee’s Rights

6.1 Rights to Realty Collateral Upon Default .

(a) Operation of Property by Mortgagee . Upon the occurrence and during the continuance of an Event of Default, and in addition to all other rights of Mortgagee, Mortgagee shall have the following rights and powers (but no obligation):

(i) To enter upon and take possession of any of the Realty Collateral and exclude Mortgagor therefrom;

(ii) To hold, use, administer, manage and operate the Realty Collateral to the extent that Mortgagor could do so, and without any liability to Mortgagor in connection with such operations; and

(iii) To the extent that Mortgagor could do so, to collect, receive and receipt for all Hydrocarbons produced and sold from the Realty Collateral, to make repairs, to purchase machinery and equipment, to conduct workover operations, to drill additional wells, and to exercise every power, right and privilege of Mortgagor with respect to the Realty Collateral.

Mortgagee may designate any Person to act on its behalf in exercising the foregoing rights and powers. When and if the expenses of such operation and development (including costs of unsuccessful workover operations or additional wells) have been paid, and no Event of Default is continuing, the Realty Collateral shall be returned to Mortgagor (providing there has been no foreclosure sale).

(b) Judicial Proceedings . Upon the occurrence and during the continuance of an Event of Default, the Trustee and/or Mortgagee, in lieu of or in addition to exercising the power of sale granted herein, may proceed by a suit or suits, in equity or at law (i) for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, (ii) for the appointment of a receiver whether there is then pending any foreclosure hereunder or the sale of the Realty Collateral, or (iii) for the enforcement of any other appropriate legal or equitable remedy; and further, in lieu of the non-judicial power of sale hereafter given for Collateral located in the State of Texas, the Trustee may proceed by suit for a sale of the Realty Collateral.

(c) Foreclosure by Private Power of Sale of Collateral . Upon the occurrence and during the continuance of an Event of Default, the Trustee shall have the right and power to sell, as the Trustee may elect, all or a portion of the Collateral at one or more sales as an entirety or in parcels, in accordance with Section 51.002 of the Texas Property Code, as amended from time to time (or any successor provisions of Texas governing real property foreclosure sales) or with any applicable state law. Mortgagor hereby designates as Mortgagor’s address for the purpose of notice the address set out in Section 7.13; provided that Mortgagor may by written notice to Mortgagee designate a different address for notice purposes. Any purchaser or purchasers will be provided with a special warranty conveyance binding Mortgagor and Mortgagor’s successors and assigns. Sale of a part of the Realty Collateral will not exhaust the power of sale, and sales may be made from time to time in accordance with this Section 6.1 until all of the Realty Collateral is sold or Payment in Full of Obligations has occurred.

(d) Certain Aspects of Sale . Mortgagee will have the right to become the purchaser at any foreclosure sale and to credit the then outstanding balance of the Obligations against the amount payable by Mortgagee as purchaser at such sale. Statements of fact or other recitals contained in any conveyance to any purchaser or purchasers at any sale made hereunder will constitute prima facie evidence of the occurrence of an Event of Default, any acceleration of the maturity of the Obligations, the advertisement and conduct of such sale in the manner provided herein, the appointment of any successor-Trustee hereunder and the truth and accuracy of all other matters stated therein. Mortgagor does hereby ratify and confirm all legal acts that the Trustee may do in carrying out the Trustee’s duties and obligations under this Deed of Trust, and Mortgagor hereby irrevocably appoints Mortgagee to be the attorney-in-fact of Mortgagor and in the name and on behalf of Mortgagor, after the occurrence and during the continuance of an Event of Default, to execute and deliver any deeds, transfers, conveyances, assignments, assurances and notices which Mortgagor ought to execute and deliver and do and perform any and all such acts and things which Mortgagor ought to do and perform under the covenants herein contained and generally to use the name of Mortgagor in the exercise of all or any of the powers hereby conferred on Trustee. Upon any sale, whether under the power of sale hereby given or by virtue of judicial proceedings, it shall not be necessary for Trustee or any public officer acting under execution or by order of court, to have physically present or constructively in his possession any of the Collateral, and Mortgagor hereby agrees to deliver to the purchaser or purchasers at such sale on the date of sale the Collateral purchased by such purchasers at such sale and if it should be impossible or impracticable to make actual delivery of such Collateral, then the title and right of possession to such Collateral shall pass to the purchaser or purchasers at such sale as completely as if the same had been actually present and delivered.

(e) Receipt to Purchaser . Upon any sale made under the power of sale herein granted, the receipt of the Trustee will be sufficient discharge to the purchaser or purchasers at any sale for its purchase money, and such purchaser or purchasers, will not, after paying such purchase money and receiving such receipt of the Trustee, be obligated to see to the application of such purchase money or be responsible for any loss, misapplication or non-application thereof.

(f) Effect of Sale . Any sale or sales of the Realty Collateral in accordance with this Section 6.1 will operate to divest all right, title, interest, claim and demand whatsoever, either at law or in

equity, of Mortgagor in and to the premises and the Realty Collateral sold, and will be a perpetual bar, both at law and in equity, against Mortgagor, Mortgagor’s successors or assigns, and against any and all Persons claiming or who shall thereafter claim all or any of the Realty Collateral sold by, through or under Mortgagor, or Mortgagor’s successors or assigns. Nevertheless, if requested by the Trustee so to do, Mortgagor shall join in the execution and delivery of all proper conveyances, assignments and transfers of the Property so sold. The purchaser or purchasers at the foreclosure sale will receive as incident to his, her, its or their own ownership, immediate possession of the Realty Collateral purchased and Mortgagor agrees that if Mortgagor retains possession of the Realty Collateral or any part thereof subsequent to such sale, Mortgagor will be considered a tenant at sufferance of the purchaser or purchasers and will be subject to eviction and removal by any lawful means, with or without judicial intervention, and all damages by reason thereof are hereby expressly waived by Mortgagor.

(g) Application of Proceeds . The proceeds of any sale of the Realty Collateral or any part thereof in accordance with this Section 6.1, whether under the power of sale herein granted and conferred or by virtue of judicial proceedings, shall either be, at the option of Mortgagee, applied at the time of receipt, or held by Mortgagee in the Cash Collateral Account as additional Collateral, and in either case, applied by the Mortgagee as set forth in Section 7.6 of the Credit Agreement.

(h) Mortgagor’s Waiver of Appraisement and Marshalling . Mortgagor agrees, to the full extent that Mortgagor may lawfully so agree, that Mortgagor will not at any time insist upon or plead or in any manner whatever claim the benefit of any appraisement, valuation, stay, extension or redemption law, now or hereafter in force, in order to prevent or hinder the enforcement or foreclosure of this Deed of Trust, the absolute sale of the Collateral, including the Realty Collateral, or the possession thereof by any purchaser at any sale made pursuant to this Deed of Trust or pursuant to the decree of any court of competent jurisdiction; and Mortgagor, for Mortgagor and all who may claim through or under Mortgagor, hereby waives the benefit of all such laws and, to the extent that Mortgagor may lawfully do so under any applicable law, any and all rights to have the Collateral, including the Realty Collateral, marshaled upon any foreclosure of the Lien hereof or sold in inverse order of alienation. Mortgagor agrees that the Trustee may sell the Collateral, including the Realty Collateral, in part, in parcels or as an entirety as directed by Mortgagee.

6.2 Rights to Personalty Collateral Upon Default . Upon the occurrence and during the continuance of an Event of Default, Mortgagee or the Trustee may proceed against the Personalty Collateral in accordance with the rights and remedies granted herein with respect to the Realty Collateral, or will have all rights and remedies granted by the Uniform Commercial Code as in effect in Texas and this Deed of Trust. Upon the occurrence and during the continuance of an Event of Default, Mortgagee shall have the right to take possession of the Personalty Collateral, and for this purpose Mortgagee may enter upon any premises on which any or all of the Personalty Collateral is situated and, to the extent that Mortgagor could do so, take possession of and operate the Personalty Collateral or remove it therefrom. Mortgagee may require Mortgagor to assemble the Personalty Collateral and make it available to Mortgagee at a place to be designated by Mortgagee which is reasonably convenient to both parties. Unless the Personalty Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Mortgagee will send Mortgagor reasonable notice of the time and place of any public sale or of the time after which any private sale or other disposition of the Personalty Collateral is to be made. This requirement of sending reasonable notice will be met if such notice is mailed, postage prepaid, to Mortgagor at the address designated in Section 7.13 hereof (or such other address as has been designated as provided herein) at least ten days before the time of the sale or disposition. In addition to the expenses of retaking, holding, preparing for sale, selling and the like, Mortgagee will be entitled to recover attorney’s fees and legal expenses as provided for in this Deed of Trust and in the writings evidencing the Obligations before applying the balance of the proceeds from the sale or other disposition toward satisfaction of the Obligations. Mortgagor will remain liable for any deficiency remaining after the sale or other disposition.

Mortgagor hereby consents and agrees that any disposition of all or a part of the Collateral may be made without warranty of any kind whether expressed or implied.

6.3 Rights to Fixture Collateral Upon Default . Upon the occurrence and during the continuance of an Event of Default, Mortgagee may elect to treat the Fixture Collateral as either Realty Collateral or as Personalty Collateral (but not both) and proceed to exercise such rights as apply to the type of Collateral selected.

6.4 Account Debtors . Mortgagee may, in its discretion, after the occurrence and during the continuance of an Event of Default, so long as Mortgagee endeavors to give prior written notice thereof to Mortgagor (although failure to provide such notice shall not waive the Mortgagee’s rights under this Section), (a) notify any account debtor on any accounts constituting Collateral to make payments directly to Mortgagee, (b) instruct any party described in Section 3.1(b) to deliver all Hydrocarbons assigned to Mortgagee as described in Section 3.1(a) and all proceeds therefrom directly to Mortgagee, and (c) contact such account debtors and other parties directly to verify information furnished by Mortgagor with respect to such account debtors and such accounts. Mortgagee shall not have any obligation to preserve any rights against prior parties.

6.5 Costs and Expenses . All sums advanced or costs or expenses incurred by Mortgagee (either by it directly or on its behalf by the Trustee or any receiver appointed hereunder) in protecting and enforcing its rights hereunder shall constitute a demand obligation owing by Mortgagor to Mortgagee as part of the Obligations to the extent such sums, costs or expenses are required to be reimbursed pursuant to Section 9.1 of the Credit Agreement.

6.6 Set-Off . Upon the occurrence and during the continuance of any Event of Default, Mortgagee shall have the right to set-off any funds of Mortgagor in the possession of Mortgagee against any amounts then due by Mortgagor to Mortgagee pursuant to this Deed of Trust.

ARTICLE VII

Miscellaneous

7.1 Successor Trustees . The Trustee may resign in writing addressed to Mortgagee or be removed at any time with or without cause by an instrument in writing duly executed by Mortgagee. In case of the death, resignation or removal of the Trustee, a successor Trustee may be appointed by Mortgagee by instrument of substitution complying with any applicable requirements of law, and in the absence of any requirement, without other formality other than an appointment and designation in writing. The appointment and designation will vest in the named successor Trustee all the estate and title of the Trustee in all of the Collateral and all of the rights, powers, privileges, immunities and duties hereby conferred upon the Trustee. All references herein to the Trustee will be deemed to refer to any successor Trustee from time to time acting hereunder.

7.2 Advances by Mortgagee or the Trustee . Mortgagee and Trustee may from time-to-time perform any act which Mortgagor has agreed hereunder to perform and which Mortgagor shall fail to perform within the time periods required herein after giving effect to any applicable time periods and cure periods in the Credit Documents after receiving five (5) days prior written notice of the request to perform (it being understood that no such request need be given (a) after the occurrence and during the continuance of any Event of Default and after notice thereof by the Mortgagee or Trustee to Mortgagor or (b) if such failure to perform would have an adverse effect on the perfection of any security interest granted under this Deed of Trust or would have a material adverse effect on the value of the applicable Collateral) and the Mortgagee and Trustee may from time-to-time take any other action which the Mortgagee and Trustee deems necessary for the maintenance, preservation or protection of any of the Collateral or of its security

interest therein, and the expenses of the Mortgagee and Trustee incurred in connection therewith shall be part of the Secured Obligations and shall be secured hereby.

7.3 Defense of Claims . Mortgagor agrees that (i) upon the occurrence and during the continuance of an Event of Default, any action or proceeding to enforce this Deed of Trust may be taken by Mortgagee or the Trustee either in Mortgagor’s name or in Mortgagee’s or Trustee’s name, as applicable, as Mortgagee or the Trustee may deem necessary, and (ii) Mortgagor will, until the Payment in Full of Obligations, warrant and defend its title to the Collateral and the interests of Mortgagee and Trustee in the Collateral against any claim or demand of any Persons (other than Permitted Liens) which could reasonably be expected to materially adversely affect Mortgagor’s title to, or Mortgagee’s or the Trustee’s right or interest in, such Collateral.

7.4 Termination .

(a) If Payment in Full of Obligations has occurred then all of the Collateral then subject to this Deed of Trust will revert to Mortgagor and the entire estate, right, title and interest of the Trustee and Mortgagee hereunder will thereupon cease; and Mortgagee in such case shall, upon the reasonable request of Mortgagor and the payment by Mortgagor of all reasonable out-of-pocket attorneys’ fees and other expenses related thereto, deliver to Mortgagor proper instruments acknowledging satisfaction and full release of this Deed of Trust. Mortgagor shall be responsible for any recording fees.

(b) Upon the sale or other transfer of any Collateral pursuant to a transaction permitted by the Credit Agreement, then any such Collateral then subject to this Deed of Trust will revert to Mortgagor and the entire estate, right, title and interest of the Trustee and Mortgagee in such Collateral will thereupon cease; and Mortgagee in such case shall, upon the reasonable request of Mortgagor and the payment by Mortgagor of all reasonable out-of-pocket attorneys’ fees and other expenses related thereto, deliver to Mortgagor proper instruments acknowledging satisfaction and release of this Deed of Trust with respect to such Collateral. Mortgagor shall be responsible for any recording fees.

7.5 Renewals, Amendments and Other Security . In the event that the Mortgagor is not the borrower under the Credit Agreement, without notice or consent of Mortgagor, renewals and extensions of the written instruments constituting part or all of the Obligations may be given at any time and amendments may be made to agreements relating to any part of such written instruments or the Collateral. In the event that the Mortgagor is not the borrower under the Credit Agreement, Mortgagee may take or hold other security for the Obligations without notice to or consent of Mortgagor. The acceptance of this Deed of Trust by Mortgagee shall not waive or impair any other security Mortgagee may have or hereafter acquire to secure the payment of the Obligations nor shall the taking of any such additional security waive or impair the Lien and security interests herein granted. The Trustee or Mortgagee may resort first to such other security or any part thereof, or first to the security herein given or any part thereof, or from time to time to either or both, even to the partial or complete abandonment of either security, and such action will not be a waiver of any rights conferred by this Deed of Trust. This Deed of Trust may not be amended, waived or modified except in accordance with Section 9.3 of the Credit Agreement.

7.6 Security Agreement, Financing Statement and Fixture Filing . This Deed of Trust will be deemed to be and may be enforced from time to time as an assignment, chattel mortgage, contract, deed of trust, financing statement, real estate mortgage, or security agreement, and from time to time as any one or more thereof if appropriate under applicable state law. As a financing statement, this Deed of Trust is intended to cover all Personalty Collateral including Mortgagor’s interest in all Hydrocarbons as and after they are extracted and all accounts arising from the sale thereof at the wellhead. THIS DEED OF TRUST SHALL BE EFFECTIVE AS A FINANCING STATEMENT FILED AS A FIXTURE FILING WITH RESPECT TO FIXTURE COLLATERAL INCLUDED WITHIN THE COLLATERAL . This

Deed of Trust shall be filed in the real estate records or other appropriate records of the county or counties in the state in which any part of the Realty Collateral and Fixture Collateral is located as well as the Uniform Commercial Code records of the Secretary of State or other appropriate office of the state where the Mortgagor is registered. At Mortgagee’s request Mortgagor shall execute financing statements covering the Personalty Collateral, including all Hydrocarbons sold at the wellhead, and Fixture Collateral, which financing statements may be filed in the Uniform Commercial Code records of the Secretary of State or other appropriate office of the state in which any of the Collateral is located or where Mortgagor is registered. Furthermore, Mortgagor hereby irrevocably authorizes Mortgagee and any affiliate, employee or agent thereof, at any time and from time to time, to file in any Uniform Commercial Code jurisdiction any financing statement or document and amendments thereto, without the signature of Mortgagor where permitted by law, in order to perfect or maintain the perfection of any security interest granted under this Deed of Trust. A photographic or other reproduction of this Deed of Trust shall be sufficient as a financing statement.

7.7 Unenforceable or Inapplicable Provisions . If any term, covenant, condition or provision hereof is invalid, illegal or unenforceable in any respect, the other provisions hereof will remain in full force and effect and will be liberally construed in favor of the Trustee and Mortgagee in order to carry out the provisions hereof.

7.8 Rights Cumulative . Each and every right, power and remedy herein given to the Trustee or Mortgagee will be cumulative and not exclusive, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Trustee, or Mortgagee, as the case may be, and the exercise, or the beginning of the exercise, of any such right, power or remedy will not be deemed a waiver of the right to exercise, at the same time or thereafter, any other right, power or remedy. No delay or omission by the Trustee or by Mortgagee in the exercise of any right, power or remedy will impair any such right, power or remedy or operate as a waiver thereof or of any other right, power or remedy then or thereafter existing.

7.9 Waiver by Mortgagee . Any and all covenants in this Deed of Trust may from time to time by instrument in writing by Mortgagee, be waived to such extent and in such manner as the Trustee or Mortgagee may desire, but no such waiver will ever affect or impair either the Trustee’s or Mortgagee’s rights hereunder, except to the extent specifically stated in such written instrument.

7.10 Terms . The term “Mortgagor” as used in this Deed of Trust will be construed as singular or plural to correspond with the number of persons executing this Deed of Trust as Mortgagor. If more than one person executes this Deed of Trust as Mortgagor, his, her, its, or their duties and liabilities under this Deed of Trust will be joint and several. The terms “Mortgagee”, “Mortgagor”, and “Trustee” as used in this Deed of Trust include the heirs, executors or administrators, successors, representatives, receiver, trustees and assigns of those parties. Unless the context otherwise requires, terms used in this Deed of Trust which are defined in the Uniform Commercial Code of Texas are used with the meanings therein defined.

7.11 Counterparts . This Deed of Trust may be executed in any number of counterparts, each of which will for all purposes be deemed to be an original, and all of which are identical except that, to facilitate recordation, in any particular counties counterpart portions of Exhibit A hereto which describe Properties situated in counties other than the counties in which such counterpart is to be recorded may have been omitted.

7.12 Governing Law . THE PROVISIONS OF THIS DEED OF TRUST REGARDING THE CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS HEREIN GRANTED SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE IN WHICH THE COLLATERAL IS LOCATED. ALL OTHER

PROVISIONS OF THIS DEED OF TRUST AND ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS DEED OF TRUST AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

7.13 Notice . All notices required or permitted to be given by Mortgagor, Mortgagee or the Trustee shall be made in the manner set forth in the Credit Agreement and shall be addressed as follows:

Mortgagor: Any notices to Mortgagor shall be delivered
to the address as set forth on the signature
page hereto.

Mortgagee: Wells Fargo Bank, National Association
1700 Lincoln St., Third floor — MAC C7300-33
Denver, Colorado 80203
Attention: Oleg Kogan
Facsimile: (303) 910-2712

Trustee: Any notices to be given to the
Trustee shall be delivered to Mortgagee.

7.14 Duties of Trustee . It shall be no part of the duty of the Trustee to see to any recording, filing or registration of this Deed of Trust or any other instrument in addition or supplemental hereto, or to see to the payment of or be under any duty with respect to any tax or assessment or other governmental charge which may be levied or assessed on the Collateral, any part thereof, or against Mortgagor, or to see to the performance or observance by Mortgagor of any of the covenants and agreements contained herein. Trustee shall not be responsible for the execution, acknowledgment or validity of this Deed of Trust or of any instrument in addition or supplemental hereto or for the sufficiency of the security purported to be created hereby, and makes no representation in respect thereof or in respect of the rights of Mortgagee. Trustee shall have the right to seek the advice of counsel upon any matters arising hereunder and shall be fully protected in relying as to legal matters on the advice of counsel. Trustee shall not incur any personal liability hereunder except for his own gross negligence, willful misconduct, or material breach in bad faith of his obligations hereunder; and the Trustee shall have the right to rely on any instrument, document or signature authorizing or supporting any action taken or proposed to be taken by him hereunder, believed by him in good faith to be genuine.

7.15 Condemnation . Upon the occurrence and during the continuance of an Event of Default, if requested by Mortgagee in writing delivered to Mortgagor, (a) all awards and payments heretofore and hereafter made for the taking of or injury to the Collateral or any portion thereof whether such taking or injury be done under the power of eminent domain or otherwise, are hereby assigned, and shall be paid to Mortgagee, (b) Mortgagee is hereby authorized to collect and receive the proceeds of such awards and payments and to give proper receipts and acquittances therefor and (c) Mortgagor hereby agrees to make, execute and deliver any and all assignments and other instruments sufficient for the purpose of confirming this assignment of such awards and payments to Mortgagee free and clear of any encumbrances of any kind or nature whatsoever (other than Permitted Liens). Any such award or payment procured after the occurrence and during the continuance of an Event of Default may, at the option of Mortgagee, be retained and applied by Mortgagee toward payment of all or a portion of the Obligations, whether or not the Obligations are then due and payable, or be paid over wholly or in part to Mortgagor for the purpose of altering, restoring or rebuilding any part of the Collateral which may have been altered, damaged or destroyed as a result of any such taking, or other injury to the Collateral.

7.16 Successors and Assigns .

(a) This Deed of Trust is binding upon Mortgagor, Mortgagor’s successors and assigns, and shall inure to the benefit of each Secured Party (other than Swap Counterparties and Banking Service Providers) and each of its successors, transferees, and assigns, and to the benefit of and be binding upon, the Swap Counterparties and the Banking Service Providers and each of their successors, transferees, and assigns only to the extent such successor, transferee, and assign is also a Secured Party, and the provisions hereof shall likewise be covenants running with the land. Without limiting the generality of the foregoing clause, when any Lender assigns or otherwise transfers any interest held by it under the Credit Agreement or other Credit Document to any other Person pursuant to the terms of the Credit Agreement or such other Credit Document, that other Person shall thereupon become vested with all the benefits held by such Lender under this Deed of Trust. Furthermore, when any Swap Counterparty or Banking Services Provider assigns or otherwise transfers any interest held by it under a Hedging Arrangement or any agreement in respect of Banking Services, as applicable, to any other Person pursuant to the terms of such agreement, that other Person shall thereupon become vested with the benefits held by such Secured Party under this Deed of Trust only if such Person independently qualifies as a Secured Party.

(b) Subject to clause (c) below, this Deed of Trust shall be transferable and negotiable, with the same force and effect and to the same extent as the Obligations may be transferable, it being understood that, upon the legal transfer or assignment by the Secured Parties (or any of them) of any of the Obligations, the legal holder of such Obligations shall have all of the rights granted to the Mortgagee for the benefit of the Secured Parties under this Deed of Trust. The Mortgagor specifically agrees that upon any transfer of all or any portion of the Obligations, this Deed of Trust shall secure with retroactive rank the existing Obligations of the Mortgagor to the transferee and any and all Obligations to such transferee thereafter arising.

(c) The Mortgagor hereby recognizes and agrees that the Secured Parties (or any of them) may, from time to time, one or more times, transfer all or any portion of the Obligations to one or more third parties. Such transfers may include, but are not limited to, sales of participation interests in such Obligations in favor of one or more third parties. Upon any transfer of all or any portion of the Obligations in accordance with the Credit Agreement and subject to clause (a) above, the Mortgagee may transfer and deliver any and/or all of the Collateral to the transferee of such Obligations and such Collateral shall secure any and all of the Obligations in favor of such transferee then existing and thereafter arising, and after any such transfer has taken place and is accepted by the transferee, the Mortgagee shall be fully discharged from any and all future liability and responsibility to the Mortgagor with respect to such Collateral, and transferee thereafter shall be vested with all the powers, rights and duties with respect such Collateral.

7.17 Article and Section Headings . The article and section headings in this Deed of Trust are inserted for convenience of reference and shall not be considered a part of this Deed of Trust or used in its interpretation.

7.18 Usury Not Intended . It is the intent of Mortgagor and Mortgagee in the execution and performance of this Deed of Trust, the Credit Agreement and the other Credit Documents to contract in strict compliance with applicable usury laws governing the Obligations including such applicable usury laws of the State of Texas and the United States of America as are from time-to-time in effect. In furtherance thereof, Mortgagee and Mortgagor stipulate and agree that none of the terms and provisions contained in this Deed of Trust, the Credit Agreement or the other Credit Documents shall ever be construed to create a contract to pay, as consideration for the use, forbearance or detention of money, interest at a rate in excess of the maximum non-usurious rate permitted by applicable law and that for purposes hereof “interest” shall include the aggregate of all charges which constitute interest under such laws that are contracted for, charged or received under this Deed of Trust, the Credit Agreement and the

other Credit Documents; and in the event that, notwithstanding the foregoing, under any circumstances the aggregate amounts taken, reserved, charged, received or paid on the Obligations, include amounts which by applicable law are deemed interest which would exceed the maximum non-usurious rate permitted by applicable law, then such excess shall be deemed to be a mistake and Mortgagee shall credit the same on the principal of the Obligations (or if the Obligations shall have been paid in full, refund said excess to Mortgagor). In the event that the maturity of the Obligations is accelerated by reason of any election of Mortgagee resulting from any Event of Default, or in the event of any required or permitted prepayment, then such consideration that constitutes interest may never include more than the maximum non-usurious rate permitted by applicable law and excess interest, if any, provided for in this Deed of Trust, the Credit Agreement or other Credit Documents shall be canceled automatically as of the date of such acceleration and prepayment and, if theretofore paid, shall be credited on the Obligations or, if the Obligations shall have been paid in full, refunded to Mortgagor. In determining whether or not the interest paid or payable under any specific contingencies exceeds the maximum non-usurious rate permitted by applicable law, Mortgagor and Mortgagee shall to the maximum extent permitted under applicable law amortize, prorate, allocate and spread in equal part during the period of the full stated term of the Obligations, all amounts considered to be interest under applicable law of any kind contracted for, charged, received or reserved in connection with the Obligation.

7.19 [Reserved] .

7.20 [Reserved] .

7.21 Bankruptcy Limitation . Notwithstanding anything contained herein to the contrary, it is the intention of the Mortgagor, the Mortgagee and the other Secured Parties that the amount of the Obligation secured by the Mortgagor’s interests in any of its Property shall be in, but not in excess of, the maximum amount permitted by fraudulent conveyance, fraudulent transfer and other similar law, rule or regulation of any Governmental Authority applicable to the Mortgagor. Accordingly, notwithstanding anything to the contrary contained in this Deed of Trust or in any other agreement or instrument executed in connection with the payment of any of the Obligations, the amount of the Obligations secured by the Mortgagor’s interests in any of its Property pursuant to this Deed of Trust shall be limited to an aggregate amount equal to the largest amount that would not render the Mortgagor’s obligations hereunder or the Liens and security interest granted to the Mortgagee hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provision of any other applicable law.

THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

[Remainder of this page intentionally left blank.]

EXECUTED AND DELIVERED as of the dated set forth in the notary below and EFFECTIVE for all purposes as of the Effective Date.

	MORTGAGOR :

	, a


	By:
		Name:
		Title

	Federal Tax Identification Number : 90-0955249

	State Organizational Number : 5312102

	Address of Mortgagor :

	1125 17th Street, Suite 2400
	Denver, CO 80202

THE STATE OF	§
	§
COUNTY OF	§

This instrument was acknowledged before me on this day of , 2015, by , as of , a on behalf of said company.


		Notary Public in and for the State of [ ]

[SEAL]

EXHIBIT A
TO
DEED OF TRUST, SECURITY AGREEMENT, FINANCING STATEMENT AND
ASSIGNMENT OF PRODUCTION AND FIXTURE FILING

Any reference in this Exhibit to wells or units is for warranty of interest, administrative convenience, and identification and shall not limit or restrict the right, title, interest, or properties covered by this Deed of Trust. All right, title, and interest of Mortgagor in the properties described herein are and shall be subject to this Deed of Trust, regardless of the presence of any units or wells not described herein.

Unless otherwise expressly provided, all recording references in this Exhibit are references to the official public records of real property in the county or counties (or parish or parishes) in which the Collateral is located and in which record documents relating to the Collateral are recorded, whether Conveyance Records, Deed Records, Mortgage Records, Oil and Gas Records, Oil and Gas Lease Records, or other records.

EXHIBIT E
FORM OF NOTE

For value received, the undersigned JAGGED PEAK ENERGY LLC , a Delaware limited liability company (“ Borrower ”), hereby promises to pay to or its registered assigns (“ Payee ”) the principal amount of No/100 Dollars ($ ) or, if less, the aggregate outstanding principal amount of the Advances (as defined in the Credit Agreement referred to below) made by the Payee (or predecessor in interest) to the Borrower, together with interest on the unpaid principal amount of the Advances from the date of such Advances until such principal amount is paid in full, at such interest rates, and at such times, as are specified in the Credit Agreement (as hereunder defined). The Borrower may make prepayments on this Note in accordance with the terms of the Credit Agreement.

This Note is one of the Notes referred to in, and is entitled to the benefits of, and is subject to the terms of, the Credit Agreement dated as of June 19, 2015 (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among the Borrower, the lenders party thereto (the “ Lenders ”), and Wells Fargo Bank, National Association, as administrative agent (the “ Administrative Agent ”) for the Lenders and as issuing lender. Capitalized terms used in this Note that are defined in the Credit Agreement and not otherwise defined in this Note have the meanings assigned to such terms in the Credit Agreement. The Credit Agreement, among other things, (a) provides for the making of the Advances by the Payee to the Borrower in an aggregate amount not to exceed at any time outstanding the Dollar amount first above mentioned, the indebtedness of the Borrower resulting from each such Advance being evidenced by this Note, and (b) contains provisions for acceleration of the maturity of this Note upon the happening of certain events stated in the Credit Agreement and for optional and mandatory prepayments of principal prior to the maturity of this Note upon the terms and conditions specified in the Credit Agreement.

Both principal and interest are payable in lawful money of the United States of America to the Administrative Agent at the location or address specified by the Administrative Agent to the Borrower in same day funds. The Payee shall record payments of principal made under this Note, but no failure of the Payee to make such recordings shall affect the Borrower’s repayment obligations under this Note.

This Note is secured by the Security Documents and guaranteed pursuant to the terms of the Guaranty.

This Note is made expressly subject to the terms of Section 9.10 and Section 9.11 of the Credit Agreement.

Except as specifically provided in the Credit Agreement and the other Credit Documents, the Borrower hereby waives presentment, demand, protest, notice of intent to accelerate, notice of acceleration, and any other notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder of this Note shall operate as a waiver of such rights.

THIS NOTE SHALL BE DEEMED A CONTRACT UNDER, AND SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

THIS NOTE AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND SUPERSEDE ALL PRIOR UNDERSTANDINGS

AND AGREEMENTS, WHETHER WRITTEN OR ORAL, RELATING TO THE TRANSACTIONS PROVIDED FOR HEREIN AND THEREIN. ADDITIONALLY, THIS NOTE AND THE CREDIT DOCUMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

	JAGGED PEAK ENERGY LLC


	By:
	Name:
	Title:

EXHIBIT F
FORM OF NOTICE OF BORROWING

[Date]

Wells Fargo Bank, National Association, as Administrative Agent

1700 Lincoln St., 6th Floor

Denver, CO 80203

Attn: Oleg Kogan

303-863-4522

Ladies and Gentlemen:

The undersigned, Jagged Peak Energy LLC, a Delaware limited liability company (“ Borrower ”), refers to the Credit Agreement dated as of [ ], 2015 (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ,” the defined terms of which are used in this Notice of Borrowing as defined therein unless otherwise defined in this Notice of Borrowing) among the Borrower, the lenders party thereto (the “ Lenders ”), and Wells Fargo Bank, National Association, as administrative agent and as issuing lender, and hereby gives you irrevocable notice pursuant to Section 2.4(a) of the Credit Agreement that the undersigned hereby requests a Borrowing (the “ Proposed Borrowing ”), and in connection with that request sets forth below the information relating to such Proposed Borrowing as required by the Credit Agreement:

(a) The Business Day of the Proposed Borrowing is , .

(b) The Proposed Borrowing will be composed of [Base Rate Advances] [Eurodollar Advances].

(d) [The Interest Period for each Eurodollar Advance made as part of the Proposed Borrowing is [one][two][three][six]month(s)].

The Borrower hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing:

(i) the representations and warranties made by any Credit Party or any Responsible Officer of any Credit Party contained in the Credit Documents are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof), on and as of the date of the Proposed Borrowing, before and after giving effect to such Proposed Borrowing and to the application of the proceeds therefrom, as though made on the date of the Proposed Borrowing, except for those representations and warranties that by their terms are made as of a specified date, which shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) only as of such specified date; and

(ii) no Default or Event of Default has occurred and is continuing, or would result from such Proposed Borrowing or from the application of the proceeds therefrom.

	Very truly yours,

	JAGGED PEAK ENERGY LLC


	By:
	Name:
	Title:

EXHIBIT G
FORM OF NOTICE OF CONTINUATION OR CONVERSION

[Date]

Wells Fargo Bank, National Association, as Administrative Agent

1700 Lincoln St., 6th Floor

Denver, CO 80203

Attn: Oleg Kogan

303-863-4522

Ladies and Gentlemen:

The undersigned, Jagged Peak Energy LLC, a Delaware limited liability company (“ Borrower ”), refers to the Credit Agreement dated as of June 19, 2015 (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ,” the defined terms of which are used in this Notice of Continuation or Conversion as defined therein unless otherwise defined in this Notice of Continuation or Conversion) among the Borrower, the lenders party thereto (the “ Lenders ”), and Wells Fargo Bank, National Association, as administrative agent and as issuing lender, and hereby gives you irrevocable notice pursuant to Section 2.4(b) of the Credit Agreement that the undersigned hereby requests a [Conversion][continuation] of outstanding Advances, and in connection with that request sets forth below the information relating to such [Conversion][continuation] (the “ Requested [Conversion][Continuation] ”) as required by Section 2.4(b) of the Credit Agreement:

1. The Business Day of the Requested [Conversion][Continuation] is , .

2. The aggregate amount of the existing Advances to be [Converted][continued] is $ and is comprised of [Base Rate Advances][Eurodollar Advances] (“ Existing Advances ”).

3. The Requested [Conversion][Continuation]consists of [a Conversion of the Existing Advances to [Base Rate Advances] [Eurodollar Advances]] [a continuation of the Existing Advances].

[(4.) The Interest Period for the Requested [Conversion][Continuation] is [[one][two][three][six] month[s]].

	Very truly yours,

	JAGGED PEAK ENERGY LLC


	By:
	Name:
	Title:

EXHIBIT H
FORM OF PLEDGE AGREEMENT

THIS PLEDGE AGREEMENT dated as of June 19, 2015 (this “ Pledge Agreement ”) is by and among each of the undersigned (individually, a “ Pledgor ” and collectively the “ Pledgors ”) and Wells Fargo Bank, National Association, as administrative agent (in such capacity the “ Administrative Agent ”) under the Credit Agreement (as hereinafter defined), for the benefit of the Secured Parties (as defined in the Credit Agreement described below).

RECITALS

A. This Pledge Agreement is entered into in connection with that certain Credit Agreement dated as of June 19, 2015 (as it may be amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Jagged Peak Energy LLC, a Delaware limited liability company (“ Borrower ”), the lenders party thereto from time to time (the “ Lenders ”), Wells Fargo Bank, National Association, as issuing lender (in such capacity, the “ Issuing Lender ”) and as Administrative Agent for such Lenders. All capitalized terms not otherwise defined in this Pledge Agreement that are defined in the Credit Agreement shall have the meanings assigned to such terms by the Credit Agreement.

B. In connection with the Credit Agreement, each Pledgor desires to execute and deliver the Pledge Agreement.

C. Each Pledgor (other than the Borrower) is an Affiliate of the Borrower and will derive substantial direct or indirect benefit from (i) the transactions contemplated by the Credit Agreement and the other Credit Documents (ii) the Hedging Arrangements entered into by any Credit Party with a Swap Counterparty, (iii) any Banking Services agreements entered into by any Credit Party with a Banking Services Provider, and (iv) any other incurrence of Secured Obligations by a Credit Party.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged and confessed, each Pledgor hereby agrees with the Administrative Agent for the benefit of the Secured Parties as follows:

Section 1. Definitions . Any terms used in this Pledge Agreement that are defined in the Uniform Commercial Code in effect in the State of New York from time to time (the “ UCC ”) and not otherwise defined herein or in the Credit Agreement, shall have the meanings assigned to those terms by the UCC. All meanings to defined terms, unless otherwise indicated, are to be equally applicable to both the singular and plural forms of the terms defined. Article, Section, Schedule, and Exhibit references are to Articles and Sections of and Schedules and Exhibits to this Pledge Agreement, unless otherwise specified. All references to instruments, documents, contracts, and agreements are references to such instruments, documents, contracts, and agreements as the same may be amended, supplemented, and otherwise modified from time to time, unless otherwise specified. The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Pledge Agreement shall refer to this Pledge Agreement as a whole and not to any particular provision of this Pledge Agreement. As used herein, the term “including” means “including, without limitation,”. Paragraph headings have been inserted in this Pledge Agreement as a matter of convenience for reference only and it is agreed that such paragraph headings are not a part of this Pledge Agreement and shall not be used in the interpretation of any provision of this Pledge Agreement.

Section 2. Pledge .

2.01. Grant of Pledge .

(a) Each Pledgor hereby pledges to the Administrative Agent, and grants to the Administrative Agent, for the benefit of the Secured Parties, a continuing security interest in, the Pledged Collateral, as defined in Section 2.02 below. This Pledge Agreement shall secure the Secured Obligations.

(b) Notwithstanding anything contained herein to the contrary, it is the intention of each Pledgor, the Administrative Agent and the other Secured Parties that the amount of the Secured Obligations secured by each Pledgor’s interests in any of its Property (whether real or personal, or mixed, tangible or intangible) shall be in, but not in excess of, the maximum amount permitted by fraudulent conveyance, fraudulent transfer and other similar law, rule or regulation of any Governmental Authority applicable to such Pledgor. Accordingly, notwithstanding anything to the contrary contained in this Pledge Agreement or in any other agreement or instrument executed in connection with the payment of any of the Secured Obligations, the amount of the Secured Obligations secured by each Pledgor’s interests in any of its Property pursuant to this Pledge Agreement shall be limited to an aggregate amount equal to the largest amount that would not render such Pledgor’s obligations hereunder or the liens and security interest granted to the Administrative Agent hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provision of any other applicable law.

2.02. Pledged Collateral . “ Pledged Collateral ” shall mean all of each Pledgor’s right, title, and interest in the following, whether now owned or hereafter acquired:

(a) (i) all of the membership interests of any issuer held by such Pledgor, including those membership interests listed in the attached Schedule 2.02(a) issued to such Pledgor and any such additional membership interests of any issuer of such interests hereafter acquired by such Pledgor, other than any Excluded Property (the “ Membership Interests ”), (ii) the certificates representing the Membership Interests, if any, and (iii) all rights to money or Property which such Pledgor now has or hereafter acquires in respect of the Membership Interests, including, without limitation, (A) any proceeds from a sale by or on behalf of such Pledgor of any of the Membership Interests, and (B) any distributions, dividends, cash, instruments and other property from time-to-time received or otherwise distributed in respect of the Membership Interests, whether regular, special or made in connection with the partial or total liquidation of the issuer and whether attributable to profits, the return of any contribution or investment or otherwise attributable to the Membership Interests or the ownership thereof (collectively, the “ Membership Interests Distributions ”);

(b) (i) all of the general and limited partnership interests of any issuer held by such Pledgor, including those general and limited partnership interests listed in the attached Schedule 2.02(b) issued to such Pledgor and all such additional limited or general partnership interests of any issuer of such interests hereafter acquired by such Pledgor, other than any Excluded Property (the “ Partnership Interests ”), and (ii) all rights to money or Property which such Pledgor now has or hereafter acquires in respect of the Partnership Interests, including, without limitation, (A) any proceeds from a sale by or on behalf of such Pledgor of any of the Partnership Interests, and (B) any distributions, dividends, cash, instruments and other property from time-to-time received or otherwise distributed in respect of the Partnership Interests, whether regular, special or made in connection with the partial or total liquidation of the issuer and whether attributable to profits, the return of any contribution or investment or otherwise attributable to the Partnership Interests or the ownership thereof (collectively, the “ Partnership Interests Distributions ”);

(c) (i) all of the shares of stock of any issuer held by such Pledgor, including those shares of stock listed in the attached Schedule 2.02(c) issued to such Pledgor and all such additional shares of stock of any issuer of such shares of stock hereafter issued to such Pledgor, other than any Excluded Property (the “ Pledged Shares ”), (ii) the certificates representing the Pledged Shares, if any, and (iii) all rights to money or Property which such Pledgor now has or hereafter acquires in respect of the Pledged Shares, including, without limitation, (A) any proceeds from a sale by or on behalf of such Pledgor of any of the Pledged Shares, and (B) any distributions, dividends, cash, instruments and other property from time-to-time received or otherwise distributed in respect of the Pledged Shares, whether regular, special or made in connection with the partial or total liquidation of the issuer and whether attributable to profits, the return of any contribution or investment or otherwise attributable to the Pledged Shares or the ownership thereof (collectively, the “ Pledged Shares Distributions ”; together with the Membership Interests Distributions and the Partnership Interest Distributions, the “ Distributions ”); and

(d) all proceeds from the Pledged Collateral described in paragraphs (a), (b) and (c) of this Section 2.02 .

2.03. Delivery of Pledged Collateral . All certificates or instruments, if any, representing the Pledged Collateral shall be delivered to the Administrative Agent and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to the Administrative Agent. After the occurrence and during the continuance of an Event of Default, the Administrative Agent shall have the right, upon prior written notice to the applicable Pledgor, to transfer to or to register in the name of the Administrative Agent or any of its nominees any of the Pledged Collateral, subject to the rights specified in Section 2.04. In addition, after the occurrence and during the continuance of an Event of Default, the Administrative Agent shall have the right at any time to exchange the certificates or instruments representing the Pledged Collateral for certificates or instruments of smaller or larger denominations.

2.04. Rights Retained by Pledgor . Notwithstanding the pledge in Section 2.01 ,

(a) so long as no Event of Default shall have occurred and be continuing and no written notice to the contrary has been delivered by the Administrative Agent to the Pledgors, (i) each Pledgor shall be entitled to receive and retain any dividends and other Distributions paid on or in respect of the Pledged Collateral and the proceeds of any sale of the Pledged Collateral; and (ii) each Pledgor shall be entitled to exercise any voting and other consensual rights pertaining to its Pledged Collateral for any purpose not inconsistent with the terms of this Pledge Agreement or the Credit Agreement; provided , however , that no Pledgor shall exercise nor shall it refrain from exercising any such right if such action or inaction, as applicable, would have a materially adverse effect on the value of the Pledged Collateral, taken as a whole; and

(b) if an Event of Default shall have occurred and be continuing,

(i) until such time thereafter as the Administrative Agent gives written notice of its election to exercise such voting and other consensual rights pursuant to Section 5 hereof, each Pledgor shall be entitled to exercise any voting and other consensual rights pertaining to its Pledged Collateral for any purpose not inconsistent with the terms of this Pledge Agreement or the Credit Agreement; provided, however, that no Pledgor shall exercise nor shall it refrain from exercising any such right if such action or inaction, as applicable, would have a materially adverse effect on the value of the Pledged Collateral, taken as a whole; and

(ii) at and after such time as the Administrative Agent gives written notice of its election to exercise such voting and other consensual rights pursuant to Section 5.02 hereof, each Pledgor shall execute and deliver (or cause to be executed and delivered) to the Administrative Agent all proxies and other instruments as the Administrative Agent may reasonably request to enable the Administrative Agent to (A) exercise the voting and other rights which such Pledgor is entitled to exercise pursuant to paragraph (a) or paragraph (b)(i) of this Section 2.04 , and (B) receive any Distributions and proceeds of sale of the Pledged Collateral which such Pledgor is authorized to receive and retain pursuant to paragraph (a)(i) of this Section 2.04 .

Section 3. Pledgor’s Representations and Warranties . Each Pledgor represents and warrants to the Administrative Agent and the other Secured Parties as follows:

(a) The Pledged Collateral applicable to such Pledgor listed on the attached Schedules 2.02(a), 2.02(b) and 2.02(c) have been duly authorized and validly issued to such Pledgor and are fully paid and nonassessable.

(b) Such Pledgor is the legal and beneficial owner of the Pledged Collateral free and clear of any Lien or option, except for Liens permitted under clauses (a), (b), (c), (j) or (p) of Section 6.2 of the Credit Agreement.

(d) [Reserved].

(e) (i) the Membership Interests listed on the attached Schedule 2.02(a) constitute the percentage of the issued and outstanding membership interests of the respective issuer thereof set forth on Schedule 2.02(a) (after giving effect to any supplements thereto but subject to the time periods specified in Section 5.6 or 5.7 of the Credit Agreement, as applicable, for the delivery of any such supplements) and all of the Equity Interest in such issuer in which the Pledgor has any ownership interest, and, except as set forth on Schedule 2.02(a), such Membership Interests are not represented by any certificate or instrument and are not “ securities ” governed by Article 8 of the UCC and (ii) except as set forth on Schedule 2.02(a), no Membership Interest (A) is dealt in or traded on securities exchanges or in securities markets, (B) is held in a securities account, or (C) expressly provides that such Membership Interest is a security governed by Article 8 of the UCC.

(f) The Partnership Interests listed on the attached Schedule 2.02(b) (after giving effect to any supplements thereto but subject to the time periods specified in Section 5.6 or 5.7 of the Credit Agreement, as applicable, for the delivery of any such supplements) constitute the percentage of the issued and outstanding general and limited partnership interests of the respective issuer thereof set forth on Schedule 2.02(b) and all of the Equity Interest in such issuer in which the Pledgor has any ownership interest, and, except as set forth on Schedule 2.02(b), such Partnership Interests are not represented by any certificate or instrument and are not “ securities ” governed by Article 8 of the UCC. Except as set forth on Schedule 2.02(a), no Partnership Interest (i) is dealt in or traded on securities exchanges or in securities markets, (ii) is held in a securities account, or (iii) expressly provides that such Partnership Interest is a security governed by Article 8 of the UCC.

(g) The Pledged Shares listed on the attached Schedule 2.02(c) (after giving effect to any supplements thereto but subject to the time periods specified in Section 5.6 or 5.7 of the Credit Agreement, as applicable, for the delivery of any such supplements) constitute the percentage of the

issued and outstanding shares of capital stock of the respective issuer thereof set forth on Schedule 2.02(c) and all of the Equity Interest in such issuer in which the Pledgor has any ownership interest.

(h) As of the Closing Date, Schedule 3 sets forth its sole jurisdiction of formation, type of organization, federal tax identification number, the organizational number, and all names used by it during the last five years prior to the date of this Pledge Agreement.

Section 4. Pledgor’s Covenants . During the term of this Pledge Agreement and until Payment in Full of Obligations, each Pledgor covenants and agrees with the Administrative Agent that:

4.01. Protect Collateral; Further Assurances . Each Pledgor will warrant and defend the rights and title herein granted unto the Administrative Agent in and to the Pledged Collateral (and all right, title, and interest represented by the Pledged Collateral) against the claims and demands of all Persons whomsoever except for Liens permitted under clauses (a), (b), (c), (j) or (p) of Section 6.2 of the Credit Agreement. Each Pledgor hereby authorizes the Administrative Agent to file any financing statements, amendments or continuations without the signature of such Pledgor to the extent permitted by applicable law in order to perfect or maintain the perfection of any security interest granted under this Pledge Agreement, including, with respect to each Pledgor, financing statements containing an “ all assets ” or “ all personal property ” collateral description. Each Pledgor at its expense will, and will cause each of its Subsidiaries to, promptly execute and deliver to the Administrative Agent upon request all such other documents, agreements and instruments to comply with or accomplish the covenants and agreements of such Pledgor in the Security Documents, or to further evidence and more fully describe the collateral intended as security for the Obligations, or to correct any omissions in the Security Documents, or to state more fully the security obligations set out herein or in any of the other Security Documents, or to perfect, protect or preserve any Liens created pursuant to any of the Security Documents, or to make any recordings, to file any notices or obtain any consents, all as may be necessary or appropriate in connection therewith or to enable the Administrative Agent to exercise and enforce its rights and remedies with respect to any Pledged Collateral.

4.02. Transfer, Other Liens, and Additional Shares . Each Pledgor agrees that it will not (a) except as otherwise permitted by the Credit Agreement, sell or otherwise dispose of, or grant any option with respect to, any of the Pledged Collateral or (b) create or permit to exist any Lien upon or with respect to any of the Pledged Collateral, except for Liens permitted under clauses (a), (b), (c), (j) or (p) of Section 6.2 of the Credit Agreement. Each Pledgor agrees that it will pledge hereunder, within 30 days of the acquisition (directly or indirectly) thereof (or such longer time period as may be accepted by the Administrative Agent in its sole discretion), any additional Equity Interests of an issuer acquired by such Pledgor, other than any Excluded Property.

4.03. [Reserved]

4.04. As to Investment Property .

(a) Equity Interests of Subsidiaries . Other than with respect to Excluded Property, no Pledgor shall allow or permit any of its Subsidiaries (i) that is a corporation, business trust, joint stock company or similar Person, to issue uncertificated securities (as defined in the UCC), unless such Person promptly takes the actions set forth in Section 4.04(b)(ii) with respect to any such uncertificated securities, (ii) that is a partnership or limited liability company, to (A) issue Equity Interests that are to be dealt in or traded on securities exchanges or in securities markets, (B) amend its organizational documents to expressly provide that its Equity Interests are securities governed by Article 8 of the UCC, or (C) place such Subsidiary’s Equity Interests in a securities account, unless such Person promptly takes the actions set forth in Section 4.04(b)(ii) with respect to any such Equity Interests, (iii) to cause any Equity Interest of such Subsidiary to become represented by

any certificate without ten Business Days’ notice to the Administrative Agent (or such shorter time period as the Administrative Agent may agree in its sole discretion); provided, that in the case of the formation or acquisition of a new Subsidiary, such notice period will be extended to 30 days after such formation or acquisition, or (iv) to issue Equity Interests in addition to or in substitution for the Pledged Collateral or any other Equity Interests pledged hereunder, except for Equity Interests issued pursuant to any transaction permitted under Section 6.7 of the Credit Agreement and additional Equity Interests issued to such Pledgor or any other Pledgor; provided that (A) such Equity Interests or certificate(s), as applicable, are pledged and delivered to the Administrative Agent within 10 Business Days, and (B) such Pledgor delivers a supplement to Schedule 2.02(a), 2.02(b) or 2.02(c), as applicable, to the Administrative Agent identifying such new Equity Interests or certificate(s) as Pledged Collateral, in each case pursuant to the terms of this Pledge Agreement. No Pledgor shall permit any of its Subsidiaries to issue any warrants, options, contracts or other commitments or other securities that are convertible to any of the foregoing (except as to Equity Interests issued by Subsidiaries that are not wholly-owned) or that entitle any Person to purchase any of the foregoing, and except for this Pledge Agreement or any other Credit Document, shall not, and shall not permit any of its Subsidiaries to, enter into any agreement creating any restriction or condition upon the transfer, voting or control of any Pledged Collateral except as permitted by Section 6.5 of the Credit Agreement.

(b) Investment Property (other than Certificated Securities) .

(i) With respect to any deposit accounts, securities accounts, commodity accounts, commodity contracts or security entitlements constituting investment property (as defined in the UCC) owned or held by any Pledgor, such Pledgor will, during the continuance of an Event of Default, following the request of the Administrative Agent, either (1) cause the intermediary maintaining such investment property to execute a control agreement relating to such investment property pursuant to which such intermediary agrees to comply with the Administrative Agent’s instructions with respect to such investment property without further consent by such Pledgor, or (2) transfer such investment property to intermediaries that have or will agree to execute such control agreements.

(ii) With respect to any uncertificated securities or security entitlements (other than uncertificated securities or security entitlements credited to a securities account) owned or held by any Pledgor, such Pledgor will (y) cause the issuer of such securities to either (A) register the Administrative Agent (for the benefit of the Secured Parties) as the registered owner thereof on the books and records of the issuer, or (B) execute a control agreement relating to such investment property pursuant to which the issuer agrees to comply with the Administrative Agent’s instructions with respect to such uncertificated securities without further consent by such Pledgor following the occurrence and during the continuance of an Event of Default, and (z) take and cause the appropriate Person (including any issuer, entitlement holder or securities intermediary thereof) to take all other actions necessary to grant “control” (as defined in 8-106 of the UCC) to the Administrative Agent (for the benefit of the Secured Parties) over such Pledged Collateral.

(iii) Each issuer of uncertificated securities or security entitlements (other than uncertificated securities or security entitlements credited to a securities account) that is a Pledgor agrees to (i) comply with the Administrative Agent’s instructions with respect to such uncertificated securities without further consent by such Pledgor following the occurrence and during the continuance of an Event of Default, and (ii) take all other actions necessary to grant “control” (as defined in 8-106 of the UCC) to the Administrative Agent (for the benefit of the Secured Parties) over such Pledged Collateral.

Section 5. Remedies upon Default . If any Event of Default shall have occurred and be continuing:

5.01. UCC Remedies . To the extent permitted by law, the Administrative Agent may exercise in respect of the Pledged Collateral, in addition to other rights and remedies provided for in this Pledge Agreement or otherwise available to it, all the rights and remedies of a secured party under the UCC (whether or not the UCC applies to the affected Pledged Collateral).

5.02. Dividends and Other Rights .

(a) All rights of the Pledgors to exercise the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to Section 2.04(a) may be exercised by the Administrative Agent if the Administrative Agent so elects and gives written notice of such election to the affected Pledgor and upon the delivery of written notice by the Administrative Agent to any Pledgor, all rights of such Pledgor to receive any Distributions on or in respect of the Pledged Collateral and the proceeds of sale of the Pledged Collateral which it would otherwise be authorized to receive and retain pursuant to Section 2.04(b) shall cease.

(b) All distributions on or in respect of the Pledged Collateral and the proceeds of sale of the Pledged Collateral which are received by any Pledgor shall be received in trust for the benefit of the Administrative Agent and, after written notice has been delivered by the Administrative Agent to the Pledgors, shall be segregated from other funds of such Pledgor, and shall be promptly paid over to the Administrative Agent as Pledged Collateral in the same form as so received (with any necessary indorsement).

5.03. Sale of Pledged Collateral . The Administrative Agent may sell all or part of the Pledged Collateral at public or private sale, at any of the Administrative Agent’s offices or elsewhere, for cash, on credit, or for future delivery, and upon such other terms as the Administrative Agent may deem commercially reasonable in accordance with applicable laws. If advance notice is required by law, each Pledgor hereby deems 10 days’ advance notice of the time and place of any public sale or the time after which any private sale is to be made reasonable notification, recognizing that if the Pledged Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market shorter notice may be reasonable. The Administrative Agent shall not be obligated to make any sale of the Pledged Collateral regardless of notice of sale having been given. The Administrative Agent may adjourn any public or private sale from time-to-time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Each Pledgor shall fully cooperate with the Administrative Agent in selling or realizing upon all or any part of the Pledged Collateral. In addition, each Pledgor shall fully comply with the securities laws of the United States, the State of New York, and other states and take such actions as may be necessary to permit Administrative Agent to sell or otherwise dispose of any securities representing the Pledged Collateral in compliance with such laws.

5.04. Exempt Sale . If, in the opinion of the Administrative Agent, there is any question that a public or semipublic sale or distribution of any Pledged Collateral will violate any state or federal securities law, the Administrative Agent in its reasonable discretion (a) may offer and sell securities privately to purchasers who will agree to take them for investment purposes and not with a view to distribution and who will agree to imposition of restrictive legends on the certificates representing the security, or (b) may sell such securities in an intrastate offering under Section 3(a)(11) of the Securities Act of 1933, as amended, and no sale so made in good faith by the Administrative Agent shall be deemed to be not “commercially reasonable” solely because so made. Each Pledgor shall cooperate fully with the Administrative Agent in selling or realizing upon all or any part of the Pledged Collateral.

5.05. Application of Collateral . The proceeds of any sale, or other realization (other than that received from a sale or other realization permitted by the Credit Agreement) upon all or any part of the Pledged Collateral pledged by the Pledgors shall be applied by the Administrative Agent as set forth in Section 7.6 of the Credit Agreement.

5.06. Cumulative Remedies . Each right, power and remedy herein specifically granted to the Administrative Agent or otherwise available to it shall be cumulative, and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity, or otherwise, and each such right, power and remedy, whether specifically granted herein or otherwise existing, may be exercised at any time and from time-to-time as often and in such order as may be deemed expedient by the Administrative Agent in its sole discretion. No failure on the part of the Administrative Agent to exercise, and no delay in exercising, and no course of dealing with respect to, any such right, power or remedy, shall operate as a waiver thereof, nor shall any single or partial exercise of any such rights, power or remedy preclude any other or further exercise thereof or the exercise of any other right.

Section 6. Administrative Agent as Attorney-in-Fact for Pledgor .

6.01. Administrative Agent Appointed Attorney-in-Fact . Each Pledgor hereby constitutes and irrevocably appoints the Administrative Agent, acting for and on behalf of itself and the Secured Parties and each successor or assign of the Administrative Agent and the other Secured Parties, the true and lawful attorney-in-fact of such Pledgor, with full power and authority in the place and stead of such Pledgor and in the name of such Pledgor, the Administrative Agent or otherwise to take any action and execute any instrument at the request or with the consent of the Majority Lenders and enforce all rights, interests and remedies of such Pledgor with respect to the Pledged Collateral, including the right to receive, indorse, and collect all instruments made payable to such Pledgor representing any dividend, or the proceeds of the sale of the Pledged Collateral, or other distribution in respect of the Pledged Collateral and to give full discharge for the same; provided , however , that (i) the Administrative Agent shall not exercise any such rights unless an Event of Default shall have occurred and be continuing and (ii) the Administrative Agent shall endeavor to provide the Pledgors with notice prior to exercising any such rights, although failure to provide such notice shall not waive the Administrative Agent’s rights under this Section 6.01. This power of attorney is a power coupled with an interest and shall be irrevocable until the Payment in Full of Obligations .

6.02. Administrative Agent May Perform . The Administrative Agent may from time-to-time perform any act which any Pledgor has agreed hereunder to perform and which such Pledgor shall fail to perform within the time periods required herein after giving effect to any applicable time periods and cure periods in the Credit Documents after receiving five (5) days prior written notice of the request to perform (it being understood that no such request need be given (a) after the occurrence and during the continuance of any Event of Default and after notice thereof by the Administrative Agent to any Pledgor or (b) if such failure to perform would have an adverse effect on the perfection of any security interest granted under this Pledge Agreement or would have a material adverse effect on the value of the applicable Collateral) and the Administrative Agent may from time-to-time take any other action which the Administrative Agent deems necessary for the maintenance, preservation or protection of any of the Pledged Collateral or of its security interest therein, and the expenses of the Administrative Agent incurred in connection therewith shall be part of the Secured Obligations and shall be secured hereby.

6.03. Administrative Agent Has No Duty . The powers conferred on the Administrative Agent hereunder are solely to protect its interest in the Pledged Collateral and shall not impose any duty on it to exercise any such powers. Except for reasonable care of any Pledged Collateral in its possession and the accounting for moneys actually received by it hereunder, the Administrative Agent shall have no duty as to any Pledged Collateral or responsibility for taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Pledged Collateral.

6.04. Reasonable Care . The Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in its possession if the Pledged Collateral is accorded treatment substantially equal to that which the Administrative Agent accords its own property, it being understood that the Administrative Agent shall have no responsibility for (a) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders, or other matters relative to any Pledged Collateral, whether or not the Administrative Agent has or is deemed to have knowledge of such matters, or (b) taking any necessary steps to preserve rights against any parties with respect to any Pledged Collateral.

Section 7. Miscellaneous .

7.01. Expenses . Section 9.1 of the Credit Agreement is incorporated herein, mutatis mutandis, as if a part hereof.

7.02. Amendments, Etc . No amendment or waiver of any provision of this Pledge Agreement nor consent to any departure by any Pledgor herefrom shall be effective unless made in writing and executed by the affected Pledgor and the Administrative Agent, and such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Schedule 2.02 to this Pledge Agreement may be updated from time to time to reflect the correct Pledged Collateral after giving effect to an acquisition, disposition, or redemption of equity interests, in each case, conducted in accordance with the Credit Agreement, or other change in circumstance, by delivery by the Borrower to the Administrative Agent of an updated Schedule 2.02 in form and substance reasonably satisfactory to the Administrative Agent.

7.03. Addresses for Notices . All notices and other communications provided for hereunder shall be in the manner and to the addresses set forth in the Credit Agreement or on the signature page hereof.

7.04. Continuing Security Interest; Transfer of Interest .

(a) This Pledge Agreement shall create a continuing security interest in the Pledged Collateral and, unless expressly released by the Administrative Agent or the Payment in Full of Obligations occurs, shall (i) remain in full force and effect, (ii) be binding upon each Pledgor and its successors, transferees and assigns, and (iii) inure, together with the rights and remedies of the Administrative Agent hereunder, to the benefit of and be binding upon, each Secured Party (other than the Swap Counterparties and the Banking Service Providers) and each of its successors, transferees, and assigns, and to the benefit of and be binding upon, the Swap Counterparties and the Banking Service Providers and each of their successors, transferees and assigns only to the extent such successor, transferee, and assign is a Secured Party. Without limiting the generality of the foregoing clause, when any Lender assigns or otherwise transfers any interest held by it under the Credit Agreement or other Credit Document to any other Person pursuant to the terms of the Credit Agreement or such other Credit Document, that other Person shall thereupon become vested with all the benefits held by such Lender under this Pledge Agreement. Furthermore, when any Swap Counterparty or Banking Services Provider assigns or otherwise transfers any interest held by it under a Hedging Arrangement or any agreement in respect of Banking Services, as applicable, to any other Person pursuant to the terms of such agreement, that other Person shall thereupon become vested with the benefits held by such Secured Party under this Pledge Agreement only if such Person independently qualifies as a Secured Party.

(b) Upon the Payment in Full of Obligations, the security interest granted hereby shall terminate and all rights to the Pledged Collateral shall revert to the applicable Pledgor to the extent such Pledged Collateral shall not have been sold or otherwise applied pursuant to the terms hereof. Upon any such termination, the Administrative Agent will, at the Pledgors’ expense, deliver all

Pledged Collateral to the applicable Pledgor, execute and deliver to the applicable Pledgor such documents as such Pledgor shall reasonably request and take any other actions reasonably requested to evidence or effect such termination.

(c) Upon the sale or other transfer of any Pledged Collateral pursuant to a transaction permitted by the Credit Agreement, the security interest in such Pledged Collateral granted hereby shall terminate. Upon any such termination, the Administrative Agent will, at the Pledgors’ expense, deliver all such Pledged Collateral to the applicable Pledgor, execute and deliver to the applicable Pledgor such documents as such Pledgor shall reasonably request and take any other actions reasonably requested to evidence or effect such termination.

7.05. Waivers . Each Pledgor hereby waives:

(a) promptness, diligence, notice of acceptance, and any other notice with respect to any of the Secured Obligations and this Pledge Agreement, except to the extent expressly provided in this Pledge Agreement;

(b) any requirement that the Administrative Agent or any other Secured Party protect, secure, perfect, or insure any Lien or any Property subject thereto or exhaust any right or take any action against any Pledgor, any Guarantor, or any other Person or any collateral, except to the extent expressly provided in this Pledge Agreement; and

(c) any duty on the part of the Administrative Agent to disclose to any Pledgor any matter, fact, or thing relating to the business, operation, or condition of any Pledgor, any Guarantor, or any other Person and their respective assets now known or hereafter known by such Person.

7.06. Severability . Wherever possible each provision of this Pledge Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Pledge Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Pledge Agreement.

7.07. Choice of Law . This Pledge Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York without regard to conflicts of laws principles (other than Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York), except to the extent that the validity or perfection of the security interests hereunder, or remedies hereunder, in respect of any particular Pledged Collateral are governed by the laws of a jurisdiction other than the State of New York.

7.08. Counterparts . The parties may execute this Pledge Agreement in counterparts, each of which constitutes an original, and all of which, collectively, constitute only one agreement. Delivery of an executed counterpart signature page by facsimile or other electronic transmission is as effective as executing and delivering this Pledge Agreement in the presence of the other parties to this Pledge Agreement. In proving this Pledge Agreement, a party must produce or account only for the executed counterpart of the party to be charged.

7.09. Headings . Paragraph headings have been inserted in this Pledge Agreement as a matter of convenience for reference only and it is agreed that such paragraph headings are not a part of this Pledge Agreement and shall not be used in the interpretation of any provision of this Pledge Agreement.

7.10. Reinstatement . If, at any time after payment in full of all Secured Obligations and termination of the Administrative Agent’s security interest, any payments on the Secured Obligations

previously made must be disgorged by any Secured Party for any reason whatsoever, including, without limitation, the insolvency, bankruptcy or reorganization of any Pledgor or any other Person, this Pledge Agreement and the Administrative Agent’s security interests herein shall be reinstated as to all disgorged payments as though such payments had not been made, and each Pledgor shall sign and deliver to the Administrative Agent all documents, and shall do such other acts and things, as may be necessary to reinstate and perfect the Administrative Agent’s security interest. Section 9.2(a) of the Credit Agreement is incorporated herein, mutatis mutandis , as if a part hereof. THE LIABILITIES OF EACH PLEDGOR AS SET FORTH IN THIS SECTION 7.10 SHALL SURVIVE THE TERMINATION OF THIS PLEDGE AGREEMENT .

7.11. Additional Pledgors . Pursuant to Section 5.6 or 5.7 of the Credit Agreement, as applicable, each Credit Party that holds an Equity Interest in a Subsidiary of the Borrower that was not in existence on the date of the Credit Agreement is required to enter into this Pledge Agreement as a Pledgor within the time period set forth in the Credit Agreement. Upon execution and delivery after the date hereof by the Secured Party and such Credit Party of an instrument in the form of Annex 1, such Credit Party shall become a Pledgor hereunder with the same force and effect as if originally named as a Pledgor herein. The execution and delivery of any instrument adding an additional Pledgor as a party to this Pledge Agreement shall not require the consent of any other Pledgor hereunder. The rights and obligations of each Pledgor hereunder shall remain in full force and effect notwithstanding the addition of any new Pledgor as a party to this Pledge Agreement.

7.12. Entire Agreement . THIS PLEDGE AGREEMENT, THE CREDIT AGREEMENT, AND THE OTHER CREDIT DOCUMENTS, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.

[SIGNATURE PAGES FOLLOW]

The parties hereto have caused this Pledge Agreement to be duly executed as of the date first above written.

	PLEDGORS :

	JAGGED PEAK ENERGY LLC


	By:
	Name:
	Title:


	JAGGED PEAK ENERGY MANAGEMENT INC.


	By:
	Name:
	Title:

	ADMINISTRATIVE AGENT :

	WELLS FARGO BANK, NATIONAL ASSOCIATION , as Administrative Agent for the benefit of the Secured Parties


	By:
	Name:
	Title:

SCHEDULE 2.02(a)
Membership Interests

Pledgor	Issuer	Type of Membership Interest	% of Membership Interest Owned		Uncertificated Security?
Jagged Peak Energy LLC	Jagged Peak Energy Management LLC	Membership Interest	99.99	%	No
Jagged Peak Energy Management Inc.	Jagged Peak Energy Management LLC	Membership Interest	0.01	%	No

SCHEDULE 2.02(b)
Partnership Interests

None.

SCHEDULE 2.02(c)
Pledged Shares

Pledgor

Issuer

Type of
Shares

Number of
Shares

% of Shares

Owned

Certificate
No.

Jagged Peak Energy LLC

Jagged Peak Energy Management Inc.

Common Stock

100

SCHEDULE 3

PLEDGOR INFORMATION

Pledgor:	Jagged Peak Energy LLC

Sole Jurisdiction of Formation / Filing:	Delaware

Type of Organization:	Limited liability company

Organizational Number:	5312102

Federal Tax Identification Number:	90-0955249

Prior Names:	None.

Pledgor:	Jagged Peak Energy Management Inc.

Sole Jurisdiction of Formation / Filing:	Delaware

Type of Organization:	Corporation

Organizational Number:	5312246

Federal Tax Identification Number:	38-3902898

Prior Names:	None.

Annex 1 to the
Pledge Agreement

SUPPLEMENT NO. [ ] dated as of [ ] (the “ Supplement ”), to the Pledge Agreement dated as of June 19, 2015 (as amended, supplemented or otherwise modified from time to time, the “ Pledge Agreement ”) by and among [ ] (the “ Pledgors ” and individually, each a “ Pledgor ”) and Wells Fargo Bank, National Association as administrative agent (in such capacity, the “ Administrative Agent ”) under the Credit Agreement (as hereinafter defined) for the benefit of the Secured Parties (as defined in the Credit Agreement described below).

RECITALS

A. Reference is made to the Credit Agreement dated as of June 19, 2015 (as it may be amended, restated or otherwise modified from time to time, the “ Credit Agreement ”) by and among Jagged Peak Energy LLC, a Delaware limited liability company, the lenders party thereto from time to time (the “ Lenders ”), and Wells Fargo Bank, National Association, as Administrative Agent and issuing lender for such Lenders.

B. The Pledgors entered into the Pledge Agreement in order to induce the Lenders to make Advances and the Issuing Lender to issue, extend and renew Letters of Credit under the Credit Agreement. Pursuant to Section 5.6 or 5.7 of the Credit Agreement, as applicable, each Credit Party that holds an Equity Interest in a Subsidiary of the Borrower that was not in existence on the date of the Credit Agreement is required to enter into the Pledge Agreement as a Pledgor after such Subsidiary becomes a Subsidiary of a Borrower. Section 7.11 of the Pledge Agreement provides that such Credit Parties may become Pledgors under the Pledge Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Credit Party (the “ New Pledgor ”) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Pledgor under the Pledge Agreement in order to induce the Administrative Agent, the Issuing Lender, or any of the Lenders to make additional Advances and for the Issuing Lender to make, extend, and renew Letters of Credit under the Credit Agreement.

C. Each New Pledgor is an affiliate of the Borrower and will derive substantial direct and indirect benefit from (i) the transactions contemplated by the Credit Agreement and the other Credit Documents (as defined in the Credit Agreement), (ii) the Hedging Arrangements entered into by any Credit Party with a Swap Counterparty, (iii) any Banking Services agreements entered into by any Credit Party with a Banking Services Provider, and (iv) any other incurrence of Secured Obligations by a Credit Party.

D. [Furthermore, pursuant to Section 5.6 or 5.7 of the Credit Agreement, as applicable, any Credit Party that is the equity holder of a Subsidiary that was not in existence on the date of the Credit Agreement is required to enter into the Pledge Agreement as a Pledgor, or supplement its Pledged Collateral, to pledge the equity of such new Subsidiary. Each of [ ] (the “ Existing Pledgor ”; and together with the New Pledgor, the “ Specific Pledgors ”), and the New Pledgor is executing this Supplement in accordance with the requirements of the Credit Agreement to supplement its Pledged Collateral under the Pledge Agreement.]

E. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Pledge Agreement or the Credit Agreement, as applicable.

Accordingly, the Administrative Agent and the [New Pledgor][Specific Pledgors] agree as follows:

SECTION 1. In accordance with Section 7.11 of the Pledge Agreement, the New Pledgor by its signature below becomes a Pledgor under the Pledge Agreement with the same force and effect as if

originally named therein as a Pledgor and the New Pledgor hereby agrees (a) to all the terms and provisions of the Pledge Agreement applicable to it as a Pledgor thereunder and (b) represents and warrants that the representations and warranties made by it as a Pledgor thereunder are true and correct on and as of the date hereof in all material respects. In furtherance of the foregoing, the New Pledgor, as security for the payment and performance in full of the Secured Obligations, does hereby create and grant to the Administrative Agent, its successors and assigns, for the benefit of the Secured Parties, their successors and assigns, a continuing security interest in and lien on all of the New Pledgor’s right, title and interest in and to the Pledged Collateral of the New Pledgor. Each reference to a “ Pledgor ” in the Pledge Agreement shall be deemed to include the New Pledgor. The Pledge Agreement is hereby incorporated herein by reference.

SECTION 2. [Existing Pledgor, by its signature below, (i) reaffirms all the terms and provisions of the Pledge Agreement applicable to it as a Pledgor thereunder and (ii) after giving effect to this Supplement, represents and warrants that the representations and warranties made by it as a Pledgor thereunder are true and correct on and as of the date hereof in all material respects.]

SECTION 3. [The New Pledgor][Each Specific Pledgor] represents and warrants to the Administrative Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws at the time in effect affecting the rights of creditors generally and by general principles of equity whether applied by a court of law or equity.

SECTION 4. This Supplement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Administrative Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the [New Pledgor][Specific Pledgors] and the Administrative Agent. Delivery of an executed signature page to this Supplement by facsimile or other electronic transmission shall be as effective as delivery of a manually signed counterpart of this Supplement.

SECTION 5. [The New Pledgor][Each Specific Pledgor] hereby represents and warrants that as of the date of this Supplement, (a) set forth on Schedules 2.02(a) , 2.02(b) , and 2.02(c) attached hereto are true and correct schedules of all its Membership Interests, Partnership Interests and Pledged Shares, as each term is defined in the Pledge Agreement[, and (b)][. The New Pledgor represents and warrants that, as of the date of this Supplement] set forth on Schedule 3 attached hereto are its sole jurisdiction of formation, type of organization, its federal tax identification number and the organizational number, and all names used by it during the last five years prior to the date of this Supplement.

SECTION 6. Except as expressly supplemented hereby, the Pledge Agreement shall remain in full force and effect.

SECTION 7. This Pledge Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York without regard to conflicts of laws principles (other than Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York), except to the extent that the validity or perfection of the security interests hereunder, or remedies hereunder, in respect of any particular Pledged Collateral are governed by the laws of a jurisdiction other than the State of New York.

SECTION 8. Wherever possible each provision of this Supplement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Supplement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Supplement.

SECTION 9. All communications and notices hereunder shall be in writing and given as provided in the Pledge Agreement. All communications and notices hereunder to the New Pledgor shall be given to it at the address for the Credit Parties set forth in the Credit Agreement.

SECTION 10. This Supplement is a Credit Document under the Credit Agreement.

THIS SUPPLEMENT, THE PLEDGE AGREEMENT, THE CREDIT AGREEMENT, THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.

[SIGNATURES PAGES FOLLOW]

IN WITNESS WHEREOF, the New Pledgor and the Administrative Agent have duly executed this Supplement to the Pledge Agreement as of the day and year first above written.

	NEW PLEDGOR:

	[ ]


	By:
	Name:
	Title:


	Address :

	[ ]

	[ EXISTING PLEDGOR: ]

	[ ]


	By:
	Name:
	Title:

	ADMINISTRATIVE AGENT:

	WELLS FARGO BANK, NATIONAL
	ASSOCIATION


	By:
	Name:
	Title:

Schedules
Supplement No.
to the Pledge Agreement

SCHEDULE 2.02(a)
Membership Interests

Pledgor	Issuer	Type of Membership Interest	% of Membership Interest Owned	Uncertificated Security?

SCHEDULE 2.02(b)
Partnership Interests

Pledgor	Issuer	Type of Partnership Interest	% of Partnership Interest Owned	Uncertificated Security?

SCHEDULE 2.02(c)
Pledged Shares

Pledgor	Issuer	Type of Shares	Number of Shares	% of Shares Owned	Certificate No.

SCHEDULE 3

New Pledgor:

Sole Jurisdiction of Formation / Filing:

Type of Organization:

Organizational Number:

Federal Tax Identification Number:

Prior Names:

EXHIBIT I
FORM OF SECURITY AGREEMENT

THIS SECURITY AGREEMENT dated as of June 19, 2015 (this “ Security Agreement ”) is by and among JAGGED PEAK ENERGY LLC, a Delaware limited liability company (“ Borrower ”), each Subsidiary (as defined in the Credit Agreement described below) of Borrower signatory hereto (together with Borrower, the “ Grantors ” and individually, each a “ Grantor ”) and the Administrative Agent (as defined below), for its benefit and the benefit of the Secured Parties (as defined in the Credit Agreement described below).

RECITALS

A. This Security Agreement is entered into in connection with that certain Credit Agreement dated as of June 19, 2015 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Borrower, the lenders party thereto from time to time (each individually, a “ Lender ” and collectively, the “ Lenders ”), and Wells Fargo Bank, National Association, as administrative agent (in such capacity the “ Administrative Agent ”) and issuing lender (in such capacity, the “ Issuing Lender ”). All capitalized terms not otherwise defined in this Security Agreement that are defined in the Credit Agreement shall have the meanings assigned to such terms by the Credit Agreement.

B. In connection with the Credit Agreement, each Grantor desires to execute and deliver this Security Agreement.

C. Each Grantor (other than Borrower) is a Subsidiary of Borrower and will derive substantial direct or indirect benefit from (i) the transactions contemplated by the Credit Agreement and the other Credit Documents (ii) the Hedging Arrangements entered into by any Credit Party with a Swap Counterparty, (iii) any Banking Services agreements entered into by any Credit Party with a Banking Services Provider, and (iv) any other incurrence of Secured Obligations by a Credit Party.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged and confessed, each Grantor hereby agrees with the Administrative Agent for its benefit and the benefit of the Secured Parties as follows:

Section 1. Definitions; Interpretation . (a) Any terms used in this Security Agreement that are defined in the UCC (as defined below) and not otherwise defined herein or in the Credit Agreement, shall have the meanings assigned to those terms by the UCC. All meanings to defined terms, unless otherwise indicated, are to be equally applicable to both the singular and plural forms of the terms defined. The following terms shall have the meanings specified below:

“ Accounts ” means an “account” as defined in the UCC, including, without limitation, all of any Grantor’s rights to payment for goods sold or leased, services performed, or otherwise, whether now in existence or arising from time to time hereafter, including, without limitation, rights arising under any of the Contracts or evidenced by an account, note, contract, security agreement, Chattel Paper (including, without limitation, tangible Chattel Paper and electronic Chattel Paper), or other evidence of indebtedness or security, together with all of the right, title and interest of any Grantor in and to (i) all security pledged, assigned, hypothecated or granted to or held by any Grantor to secure the foregoing, (ii) all of any Grantor’s right, title and interest in and to any goods or services, the sale of which gave rise thereto, (iii) all guarantees, endorsements and indemnifications on, or of, any of

the foregoing, (iv) all powers of attorney granted to any Grantor for the execution of any evidence of indebtedness or security or other writing in connection therewith, (v) all books, correspondence, credit files, records, ledger cards, invoices, and other papers relating thereto, including without limitation all similar information stored on a magnetic medium or other similar storage device and other papers and documents in the possession or under the control of any Grantor or any computer bureau from time to time acting for any Grantor, (vi) all evidences of the filing of financing statements and other statements granted to any Grantor and the registration of other instruments in connection therewith and amendments thereto, notices to other creditors or secured parties, and certificates from filing or other registration officers, (vii) all credit information, reports and memoranda relating thereto, and (viii) all other writings related in any way to the foregoing.

“ Cash Collateral ” means all amounts from time to time held in any checking, savings, deposit or other account of such Grantor, all monies, proceeds or sums due or to become due therefrom or thereon and all documents (including, but not limited to passbooks, certificates and receipts) evidencing all funds and investments held in such accounts.

“ Chattel Paper ” has the meaning set forth in the UCC.

“ Collateral ” has the meaning set forth in Section 2 of this Security Agreement.

“ Contract Documents ” means all Instruments, Chattel Paper, letters of credit, bonds, guarantees or similar documents evidencing, representing, arising from or existing in respect of, relating to, securing or otherwise supporting the payment of, the Contract Rights.

“ Contract Rights ” means (i) all (A) of any Grantor’s rights to payment under any Contract or Contract Document and (B) payments due and to become due to any Grantor under any Contract or Contract Document, in each case whether as contractual obligations, damages or otherwise; (ii) all of any Grantor’s claims, rights, powers, or privileges and remedies under any Contract or Contract Document; and (iii) all of any Grantor’s rights under any Contract or Contract Document to make determinations, to exercise any election (including, but not limited to, election of remedies) or option or to give or receive any notice, consent, waiver or approval together with full power and authority with respect to any Contract or Contract Document to demand, receive, enforce or collect any of the foregoing rights or any property which is the subject of any Contract or Contract Document, to enforce or execute any checks, or other instruments or orders, to file any claims and to take any action which, in the opinion of the Administrative Agent, may be necessary or advisable in connection with any of the foregoing.

“ Contracts ” means all contracts to which any Grantor now is, or hereafter will be bound, or to which such Grantor is or hereafter will be a party, beneficiary or assignee, all Insurance Contracts, and all exhibits, schedules and other attachments to such contracts, as the same may be amended, supplemented or otherwise modified or replaced from time to time.

“ Document ” means a bill of lading, dock warrant, dock receipt, warehouse receipt or order for the delivery of goods, and also any other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold and dispose of the document and the goods it covers.

“ Equipment ” means any equipment now or hereafter owned or leased by any Grantor, or in which any Grantor holds or acquires any other right, title or interest, constituting “ equipment ” under the UCC, including, without limitation, all surface or subsurface machinery, equipment, facilities, supplies, or other tangible personal property, including tubing, rods, pumps, pumping units and engines, pipe, pipelines, meters, apparatus, boilers, compressors, liquid extractors, connectors, valves, fittings, power plants, poles, lines, cables, wires, transformers, starters and controllers, machine shops, tools, machinery and parts, storage yards and equipment stored therein, buildings and camps, telegraph, telephone, and other communication systems, loading docks, loading racks, and shipping facilities, and any manuals, instructions, blueprints, computer software (including software that is imbedded in and part of the equipment), and similar items which relate to the above, and any and all additions, substitutions and replacements of any of the foregoing, wherever located together with all improvements thereon and all attachments, components, parts, equipment and accessories installed thereon or affixed thereto.

“ Excluded Contracts ” means any General Intangibles, Contract, Contract Document or other document (and any Contract Rights arising thereunder) to which any of the Grantors is a party to the extent (but only to the extent) that a Grantor is prohibited from granting a security interest in, pledge of, or charge, mortgage or lien upon any such Property by reason of (a) an existing and enforceable negative pledge or anti-assignment provision or (b) applicable law or regulation to which such Grantor is subject; provided that (i) any Excluded Contract shall automatically cease to be excluded from this definition (and shall automatically be subject to the lien and security interest granted hereby and to the terms and provisions of this Security Agreement as “Collateral”), to the extent that (A) either of the prohibitions discussed in clause (a) and (b) above is ineffective or subsequently rendered ineffective under Sections 9.406, 9.407, 9.408 or 9.409 of the UCC or under any other Legal Requirement or is otherwise no longer in effect, or (B) the applicable Grantor has obtained the consent of the other parties to such Excluded Contract to the creation of a lien and security interest in, such Excluded Contract (which consent, upon the reasonable request of the Administrative Agent, such Grantor will use its commercial reasonable efforts to obtain), and (ii) any proceeds received by any Grantor from the sale, transfer or other disposition of Excluded Contracts shall constitute Collateral unless any assets or property constituting such proceeds are themselves Excluded Property.

“ Fixtures ” means any fixtures now or hereafter owned or leased by any Grantor, or in which any Grantor holds or acquires any other right, title or interest, constituting “fixtures” under the UCC, including without limitation any and all additions, substitutions and replacements of any of the foregoing, wherever located together with all improvements thereon and all attachments, components, parts, equipment and accessories installed thereon or affixed thereto.

“ General Intangibles ” means all general intangibles now or hereafter owned by any Grantor, or in which any Grantor holds or acquires any other right, title or interest, constituting “general intangibles” or “payment intangibles” under the UCC, including, but not limited to, all trademarks, trademark applications, trademark registrations, tradenames, fictitious business names, business names, company names, business identifiers, prints, labels, trade styles and service marks (whether or not registered), trade dress, including logos and/or designs, copyrights, patents, patent applications, goodwill of any Grantor’s business symbolized by any of the foregoing, trade secrets, license rights, license agreements, permits, franchises, and any rights to tax refunds to which any Grantor is now or hereafter may be entitled.

“ Governmental Approval ” has the meaning set forth in Section 2(a)(x).

“ Instrument ” means an “instrument” as defined in the UCC, including, without limitation, any Negotiable Instrument, or any other writing which evidences a right to the payment of money and is not itself a security agreement or lease and is of a type which is in the ordinary course of business transferred by delivery with any necessary endorsement or assignment (other than Instruments constituting Chattel Paper).

“ Insurance Contracts ” means all contracts and policies of insurance and re-insurance maintained or required to be maintained by or on behalf of any Grantor under the Credit Documents.

“ Inventory ” means all of the inventory of any Grantor, or in which any Grantor holds or acquires any right, title or interest, of every type or description, now owned or hereafter acquired and wherever located, whether raw, in process or finished (including oil, gas, or other hydrocarbons and all products and substances derived therefrom), and all materials usable in processing the same and all documents of title covering any inventory, including, without limitation, work in process, materials used or consumed in any Grantor’s business, now owned or hereafter acquired or manufactured by any Grantor and held for sale in the ordinary course of its business, all present and future substitutions therefor, parts and accessories thereof and all additions thereto, all Proceeds thereof and products of such inventory in any form whatsoever, and any other item constituting “inventory” under the UCC.

“ Investment Property ” means “investment property” as defined in the UCC, including, without limitation, all securities (whether certificated or uncertificated), security entitlements, securities accounts, commodity contracts, and commodity accounts.

“ Negotiable Instrument ” means a “negotiable instrument” as defined in the UCC.

“ Proceeds ” means all proceeds (as defined in the UCC) of any or all of the Collateral, including without limitation (i) any and all proceeds of, all claims for, and all rights of any Grantor to receive the return of any premiums for, any insurance, indemnity, warranty or guaranty payable from time to time with respect to any of the Collateral, (ii) any and all payments (in any form whatsoever) received by any Grantor or due and payable to any Grantor from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any Governmental Authority (or any Person acting under color of any Governmental Authority), (iii) all proceeds received or receivable when any or all of the Collateral is sold, exchanged or otherwise disposed, whether voluntarily, involuntarily, in foreclosure or otherwise, (iv) all claims of any Grantor for damages arising out of, or for breach of or default under, any Collateral, (v) all rights of any Grantor to terminate, amend, supplement, modify or waive performance under any Contracts, to perform thereunder and to compel performance and otherwise exercise all remedies thereunder, and (vi) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral.

“ UCC ” shall mean the Uniform Commercial Code as the same may, from time to time, be in effect in the State of New York; provided, however, in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform

Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions.

(b) All meanings to defined terms, unless otherwise indicated, are to be equally applicable to both the singular and plural forms of the terms defined. Article, Section, Schedule, and Exhibit references are to Articles and Sections of and Schedules and Exhibits to this Security Agreement, unless otherwise specified. All references to instruments, documents, contracts, and agreements are references to such instruments, documents, contracts, and agreements as the same may be amended, supplemented, and otherwise modified from time to time, unless otherwise specified. The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Security Agreement shall refer to this Security Agreement as a whole and not to any particular provision of this Security Agreement. As used herein, the term “including” means “including, without limitation,”. Paragraph headings have been inserted in this Security Agreement as a matter of convenience for reference only and it is agreed that such paragraph headings are not a part of this Security Agreement and shall not be used in the interpretation of any provision of this Security Agreement.

Section 2. Assignment, Pledge and Grant of Security Interest .

(a) As collateral security for the prompt and complete payment and performance when due of all Secured Obligations, each Grantor hereby assigns, pledges, and grants to the Administrative Agent for the benefit of the Secured Parties a lien on and continuing security interest in all of such Grantor’s right, title and interest in, to and under, all items described in this Section 2 , whether now owned or hereafter acquired by such Grantor and wherever located and whether now owned or hereafter existing or arising (collectively, the “ Collateral ”):

(i) all Contracts, all Contract Rights, Contract Documents and Accounts associated with such Contracts and each and every document granting security to such Grantor under any such Contract;

(ii) all Accounts;

(iii) all Inventory;

(iv) all Equipment;

(v) all General Intangibles;

(vi) all Investment Property;

(vii) all Fixtures;

(viii) all checking, savings, deposit or other account of such Grantor and all other accounts held in the name of such Grantor;

(ix) all Cash Collateral;

(x) any governmental approvals, permits, licenses, authorizations, consents, rulings, tariffs, rates, certifications, waivers, exemptions, filings, claims, orders, judgments and decrees and other Legal Requirements (each a “ Governmental Approval ”);

(xi) any right to receive a payment under any Hedging Arrangement in connection with a termination thereof;

(xii) (A) all policies of insurance and Insurance Contracts, now or hereafter held by or on behalf of such Grantor, including casualty and liability, business interruption, control of well, and any title insurance, (B) all Proceeds of insurance, and (C) all rights, now or hereafter held by such Grantor to any warranties of any manufacturer or contractor of any other Person;

(xiii) any and all liens and security interests (together with the documents evidencing such security interests) granted to such Grantor by an obligor to secure such obligor’s obligations owing under any Instrument, Chattel Paper, or Contract which is pledged hereunder or with respect to which a security interest in such Grantor’s rights in such Instrument, Chattel Paper, or Contract is granted hereunder;

(xiv) any and all guaranties given by any Person for the benefit of such Grantor which guarantees the obligations of an obligor under any Instrument, Chattel Paper or Contract, which are pledged hereunder;

(xv) without limiting the generality of the foregoing, all other personal property, goods, Accounts, Certificated Securities, Chattel Paper, Commercial Tort Claims, Commodity Accounts, Commodity Contracts, Deposit Accounts, Documents, Equipment, Fixtures, General Intangibles, Goods, Instruments, Inventory, Investment Property, Letter of Credit Rights, Letters of Credit, Money, Payment Intangibles, Proceeds, Securities, Securities Account, Security Entitlements, Supporting Obligations, Uncertificated Securities, credits, claims, demands and assets of such Grantor whether now existing or hereafter acquired from time to time; and

(xvi) any and all additions, accessions and improvements to, all substitutions and replacements for and all products and Proceeds of or derived from all of the items described above in this Section 2;

(b) Notwithstanding any other provision set forth in this Section 2 or elsewhere in this Agreement, all Excluded Property shall be excluded from the lien and security interest granted hereunder and shall not constitute “Collateral”; provided , however , that the exclusion from the lien and security interest granted by such Grantor hereunder of any Contract Rights of any of the Grantors under one or more of the Excluded Contracts shall not limit, restrict or impair the grant by such Grantor of the lien and security interest in any Accounts or receivables arising under any such Excluded Contract or any payments due or to become due thereunder.

(c) Notwithstanding anything contained herein to the contrary, it is the intention of each Grantor, the Administrative Agent, and the other Secured Parties that the amount of the Secured Obligation secured by each Grantor’s interests in any of its Property shall be in, but not in excess of, the maximum amount permitted by fraudulent conveyance, fraudulent transfer and other similar law, rule or regulation of any Governmental Authority applicable to such Grantor. Accordingly, notwithstanding anything to the contrary contained in this Security Agreement or in any other agreement or instrument executed in connection with the payment of any of the Secured Obligations, the amount of the Secured Obligations secured by each Grantor’s interests in any of its Property pursuant to this Security Agreement shall be limited to an aggregate amount equal to the largest amount that would not render such Grantor’s obligations hereunder or the liens and security interest granted to the Administrative Agent hereunder subject to

avoidance under Section 548 of the United States Bankruptcy Code or any comparable provision of any other applicable law.

Section 3. Representations and Warranties . Each Grantor hereby represents and warrants the following to the Administrative Agent and the other Secured Parties:

(a) Records . As of the date hereof, such Grantor’s sole jurisdiction of formation and type of organization are as set forth in Schedule 1 attached hereto. All records concerning the Accounts, General Intangibles, or any other Collateral applicable to such Grantor are located at the address for such Grantor on such Schedule 1 or at such other location specified by any Grantor to the Administrative Agent in writing. Except as set forth on Schedule 2 attached hereto, none of the Accounts with a principal amount in excess of $500,000 individually or $1,000,000 in the aggregate, is evidenced by a promissory note or other instrument as of the date hereof.

(b) Other Liens . Such Grantor is, and will be the legal and beneficial owner of all of the Collateral pledged by such Grantor free and clear of any Lien, except for the Permitted Liens. No effective financing statement or other instrument similar in effect covering all or any part of the Collateral is, or will be, on file in any recording office, except such as may be filed in connection with this Security Agreement or in connection with other Permitted Liens or for which satisfactory releases have been received by the Administrative Agent.

(i) Subject only to Permitted Liens, this Security Agreement creates valid and continuing Acceptable Security Interest in the Collateral, securing the payment and performance of all the Secured Obligations. Upon the filing of financing statements with the jurisdictions listed in Schedule 1, the Administrative Agent will have a valid and perfected Acceptable Security Interest in all Collateral that is capable of being perfected by filing financing statements, subject only to Permitted Liens.

(ii) [Reserved].

(d) Tax Identification Number and Organizational Number . As of the date hereof, the federal tax identification number of such Grantor and the organizational number of such Grantor are as set forth in Schedule 1 .

(e) Tradenames; Prior Names . As of the date hereof and except as set forth on Schedule 1 , such Grantor has not conducted business under any name other than its current name during the last five years prior to the date of this Security Agreement.

Section 4. Covenants .

(a) Further Assurances .

(i) Each Grantor agrees that from time to time, at its expense, such Grantor shall promptly execute and deliver all instruments and documents, and take all action, that may be reasonably necessary or desirable, or that the Administrative Agent may reasonably request, in order to perfect and protect any pledge, assignment, or security interest granted or intended to be granted hereby or to enable the Administrative Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, each Grantor (A) at the request of the Administrative Agent, shall execute such instruments, endorsements or notices, as may be reasonably necessary or desirable or as the Administrative Agent may reasonably request, in order to perfect and

preserve the assignments and security interests granted or purported to be granted hereby, (B) shall, at the reasonable request of the Administrative Agent, mark conspicuously each material document included in the Collateral, each Chattel Paper included in the Accounts, and each of its records pertaining to the Collateral with a legend, in form and substance satisfactory to the Administrative Agent, including that such document, Chattel Paper, or record is subject to the pledge, assignment, and security interest granted hereby, and (C) authorizes the Administrative Agent to file any financing statements, amendments or continuations without the signature of such Grantor to the extent permitted by applicable law in order to perfect or maintain the perfection of any security interest granted under this Security Agreement (including, without limitation, financing statements using an “all assets” or “all personal property” collateral description).

(ii) [Reserved].

(iii) Until the Payment in Full of Obligations, each Grantor shall promptly provide to the Administrative Agent all information and evidence the Administrative Agent may reasonably request concerning the Collateral to enable the Administrative Agent to enforce the provisions of this Security Agreement.

(b) Change of Name; State of Formation . Until the Payment in Full of Obligations, each Grantor shall give the Administrative Agent at least 10 days’ (or such shorter period as may be accepted by the Administrative Agent in its sole discretion) prior written notice before it (i) in the case of any Grantor that is not a “ registered organization ” (as such term is defined in Section 9-102 of the UCC), changes the location of its principal place of business and chief executive office, (ii) changes the location of original copies of any Chattel Paper evidencing Accounts, or (iii) uses a trade name other than its current name used on the date hereof or, in the case of any Subsidiary of the Borrower that becomes a Grantor pursuant to a supplement to this Security Agreement delivered in accordance with Section 18(i) , on the date of such supplement.

(c) Right of Inspection . Until the Payment in Full of Obligations, each Grantor shall hold and preserve, at its own cost and expense satisfactory and complete records of the Collateral in accordance with Section 5.9 of the Credit Agreement, and will permit representatives of the Administrative Agent, upon reasonable advance notice, at any time during normal business hours to inspect and copy them; provided, however, that so long as no Event of Default shall have occurred and be continuing, the Grantors shall not be responsible for the costs of more than one inspection visit per calendar year (including any inspection visit made pursuant to Section 5.9 of the Credit Agreement).

(d) Liability Under Contracts and Accounts . Notwithstanding anything in this Security Agreement to the contrary, (i) the execution of this Security Agreement shall not release any Grantor from its obligations and duties under any of the Contract Documents, or any other contract or instrument which are part of the Collateral and Accounts included in the Collateral, (ii) the exercise by the Administrative Agent of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under any Contract Documents, or any other Contract or Instrument which are part of the Collateral and Accounts included in the Collateral, and (iii) the Administrative Agent shall not have any obligation or liability under any Contract Documents, or any other contract or instrument which are part of the Collateral and Accounts included in the Collateral by reason of the execution and delivery of this Security Agreement, nor shall the Administrative Agent be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

(e) Transfer of Certain Collateral; Release of Certain Security Interest . Each Grantor agrees that until the Payment in Full of Obligations, it shall not sell, assign, or otherwise dispose of any Collateral, except as otherwise permitted under the Credit Agreement. The Administrative Agent shall promptly, at the

Grantors’ expense, execute and deliver all further instruments and documents, and take all further action that a Grantor may reasonably request in order to release its security interest in any Collateral which is disposed of in accordance with the terms of the Credit Agreement.

(f) [Reserved] .

(g) Negotiable Instrument . Until the Payment in Full of Obligations, if any Grantor shall at any time hold or acquire any Negotiable Instruments, including promissory notes, with a principal amount in excess of $500,000 individually or $1,000,000 in the aggregate, such Grantor shall forthwith deliver the same to the Administrative Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Administrative Agent may from time to time reasonably request.

(h) Other Covenants of Grantor . Each Grantor agrees that (i) upon the occurrence and during the continuance of an Event of Default, any action or proceeding to enforce this Security Agreement may be taken by the Administrative Agent either in such Grantor’s name or in the Administrative Agent’s name, as the Administrative Agent may deem necessary, and (ii) such Grantor will, until the Payment in Full of Obligations, warrant and defend its title to the Collateral and the interest of the Administrative Agent in the Collateral against any claim or demand of any Persons (other than Permitted Liens) which could reasonably be expected to materially adversely affect such Grantor’s title to, or the Administrative Agent’s right or interest in, such Collateral.

Section 5. Termination of Security Interest .

(a) Upon the Payment in Full of Obligations, the security interest granted hereby shall terminate and all rights to the Collateral shall revert to the applicable Grantor to the extent such Collateral shall not have been sold or otherwise applied pursuant to the terms hereof. Upon any such termination, the Administrative Agent will, at the Grantors’ expense, execute and deliver to the applicable Grantor such documents (including, without limitation, UCC-3 termination statements) as such Grantor shall reasonably request to evidence such termination.

(b) Upon the sale or other transfer of any Collateral pursuant to a transaction permitted by the Credit Agreement, the security interest in such Collateral granted hereby shall terminate. Upon any such termination, the Administrative Agent will, at the Grantors’ expense, execute and deliver to the applicable Grantor such documents (including, without limitation, UCC-3 amendment statements) as such Grantor shall reasonably request to evidence such termination.

Section 6. Reinstatement . If, at any time after payment in full of all Secured Obligations and termination of the Administrative Agent’s security interest, any payments on the Secured Obligations previously made must be disgorged by any Secured Party for any reason whatsoever, including, without limitation, the insolvency, bankruptcy or reorganization of any Grantor or any other Person, this Security Agreement and the Administrative Agent’s security interests herein shall be reinstated as to all disgorged payments as though such payments had not been made, and each Grantor shall sign and deliver to the Administrative Agent all documents, and shall do such other acts and things, as may be necessary to reinstate and perfect the Administrative Agent’s security interest. Section 9.2(a) of the Credit Agreement is incorporated herein, mutatis mutandis , as if a part hereof. THE LIABILITIES OF EACH GRANTOR AS SET FORTH IN THIS SECTION 6 SHALL SURVIVE THE TERMINATION OF THIS SECURITY AGREEMENT .

Section 7. Remedies upon Event of Default .

(a) If any Event of Default has occurred and is continuing, the Administrative Agent may (and shall at the written request of the Majority Lenders given in accordance with the Credit Agreement), (i) proceed to protect and enforce the rights vested in it by this Security Agreement or otherwise available to it, including but not limited to, the right to cause all revenues and other moneys pledged hereby as Collateral to be paid directly to it, and to enforce its rights hereunder to such payments and all other rights hereunder by such appropriate judicial proceedings as it shall deem most effective to protect and enforce any of such rights, either at law or in equity or otherwise, whether for specific enforcement of any covenant or agreement contained in any of the Contract Documents, or in aid of the exercise of any power therein or herein granted, or for any foreclosure hereunder and sale under a judgment or decree in any judicial proceeding, or to enforce any other legal or equitable right vested in it by this Security Agreement or by law; (ii) cause any action at law or suit in equity or other proceeding to be instituted and prosecuted and enforce any rights hereunder or included in the Collateral, subject to the provisions and requirements thereof; (iii) sell or otherwise dispose of any or all of the Collateral or cause the Collateral to be sold or otherwise disposed of in one or more sales or transactions, at such prices and in such manner as may be commercially reasonable, and for cash or on credit or for future delivery, without assumption of any credit risk, at public or private sale, without demand of performance or notice of intention to sell or of time or place of sale (except such notice as is required by applicable statute and cannot be waived), it being agreed that the Administrative Agent may be a purchaser on behalf of the Secured Parties or on its own behalf at any such sale and that the Administrative Agent, any other Secured Party, or any other Person who may be a bona fide purchaser for value and without notice of any claims of any or all of the Collateral so sold shall thereafter hold the same absolutely free from any claim or right of whatsoever kind, including any equity of redemption of any Grantor, any such demand, notice or right and equity being hereby expressly waived and released to the extent permitted by law; (iv) incur expenses, including attorneys’ fees, consultants’ fees, and other costs appropriate to the exercise of any right or power under this Security Agreement; (v) perform any obligation of any Grantor hereunder and make payments, purchase, contest or compromise any encumbrance, charge or lien, and pay taxes and expenses, without, however, any obligation to do so; (vi) in connection with any acceleration and foreclosure, take possession of the Collateral and render it usable and repair and renovate the same, without, however, any obligation to do so, and enter upon any location where the Collateral may be located for that purpose, control, manage, operate, rent and lease the Collateral, collect all rents and income from the Collateral and apply the same to reimburse the Secured Parties for any cost or expenses incurred hereunder or under any of the Credit Documents or under any Hedging Arrangement with Swap Counterparties or in connection with any Banking Services with any Banking Service Provider and to the payment or performance of any Grantor’s obligations hereunder or under any of the Credit Documents or any Hedging Arrangement with a Swap Counterparty or in connection with any Banking Services with any Banking Service Provider, and apply the balance to the other Secured Obligations and any remaining excess balance to whomsoever is legally entitled thereto; (vii) secure the appointment of a receiver for the Collateral or any part thereof; (viii) require any Grantor to, and each Grantor hereby agrees that it will at its expense and upon request of the Administrative Agent forthwith, assemble all or part of the Collateral as directed by the Administrative Agent and make it available to the Administrative Agent at a place to be designated by the Administrative Agent which is reasonably convenient to both parties; (ix) exercise any other or additional rights or remedies granted to a secured party under the UCC; or (x) occupy any premises owned or leased by any Grantor where the Collateral or any part thereof is assembled for a reasonable period in order to effectuate its rights and remedies hereunder or under law, without obligation to any Grantor in respect of such occupation. If, pursuant to applicable law, prior notice of sale of the Collateral under this Section is required to be given to any Grantor, each Grantor hereby acknowledges that the minimum time required by such applicable law, or if no minimum time is specified, 10 days, shall be deemed a reasonable notice period. The Administrative Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Administrative Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

(b) All costs and expenses (including attorneys’ fees and expenses) incurred by the Administrative Agent in connection with any suit or proceeding in connection with the performance by the Administrative Agent of any of the agreements contained in any of the Contract Documents, or in connection with any exercise of its rights or remedies hereunder, pursuant to the terms of this Security Agreement, to the extent the Grantors are obligated to reimburse such expenses pursuant to the Credit Documents, shall constitute additional indebtedness secured by this Security Agreement and shall be paid on demand by the Grantors to the Administrative Agent on behalf of the Secured Parties.

Section 8. Remedies Cumulative; Delay Not Waiver .

(a) No right, power or remedy herein conferred upon or reserved to the Administrative Agent is intended to be exclusive of any other right, power or remedy and every such right, power and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right, power and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder or otherwise shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Resort to any or all security now or hereafter held by the Administrative Agent may be taken concurrently or successively and in one or several consolidated or independent judicial actions or lawfully taken nonjudicial proceedings, or both.

(b) No delay or omission of the Administrative Agent to exercise any right or power accruing upon the occurrence and during the continuance of any Event of Default as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein; and every power and remedy given by this Security Agreement may be exercised from time to time, and as often as shall be deemed expedient, by the Administrative Agent.

Section 9. Contract Rights . Upon the occurrence and during the continuance of any Event of Default, so long as the Administrative Agent endeavors to give written notice thereof to the Grantors (although failure to provide such notice shall not waive the Administrative Agent’s rights under this Section), the Administrative Agent may exercise any of the Contract Rights and remedies of any Grantor under or in connection with the Instruments, Chattel Paper, or Contracts which represent Accounts, the General Intangibles (in each case, other than in connection with any Excluded Property), or which otherwise relate to the Collateral, including, without limitation, any rights of any Grantor to demand or otherwise require payment of any amount under, or performance of any provisions of, the Instruments, Chattel Paper, or Contracts which represent Accounts, or the General Intangibles (in each case, other than Excluded Property).

Section 10. Accounts .

(a) Upon the occurrence and during the continuance of any Event of Default, so long as the Administrative Agent endeavors to give written notice thereof to the Grantors (although failure to provide such notice shall not waive the Administrative Agent’s rights under this Section), the Administrative Agent may, or may direct any Grantor to, take any action the Administrative Agent deems necessary or advisable to enforce collection of the Accounts, including, without limitation, notifying the account debtors or obligors under any Accounts of the assignment of such Accounts to the Administrative Agent and directing such account debtors or obligors to make payment of all amounts due or to become due directly to the Administrative Agent. Upon such notification and direction, and at the expense of the Grantors, the Administrative Agent may, during the continuance of such Event of Default, enforce collection of any such Accounts, and adjust, settle, or compromise the amount or payment thereof in the same manner and to the same extent as any Grantor might have done.

(b) After receipt by any Grantor of the notice referred to in Section 10(a) above that an Event of Default has occurred and is continuing, so long as such Event of Default is continuing, (i) all amounts and Proceeds (including instruments) received by such Grantor in respect of the Accounts shall be received in trust for the benefit of the Administrative Agent hereunder, shall be segregated from other funds of such Grantor, and shall promptly be paid over to the Administrative Agent in the same form as so received (with any necessary indorsement) to be held as Collateral and (ii) no Grantor shall adjust, settle, or compromise the amount or payment of any Account, nor release wholly or partly any account debtor or obligor thereof, nor allow any credit or discount thereon other than in the ordinary course of business.

Section 11. Application of Collateral . The proceeds of any sale, or other realization (other than that received from a sale or other realization permitted by the Credit Agreement) upon all or any part of the Collateral pledged by any Grantor shall be applied by the Administrative Agent as set forth in Section 7.6 of the Credit Agreement.

Section 12. Rights Retained by Grantors . So long as no Event of Default shall have occurred and be continuing and no written notice to the contrary has been delivered by the Administrative Agent to the Grantors, the Grantors shall be entitled (a) to receive and retain all revenues and other moneys pledged hereby as Collateral and the proceeds of any disposition of any of their respective Properties constituting Collateral provided that such disposition is permitted under the Credit Agreement, and (b) protect, enforce and exercise its rights under any of the Contract Documents; provided, however, that no Grantor shall exercise nor shall it refrain from exercising any such right if such action or inaction, as applicable, would have a materially adverse effect on the value of the applicable Collateral.

Section 13. Administrative Agent as Attorney-in-Fact for Grantor . Each Grantor hereby constitutes and irrevocably appoints the Administrative Agent, acting for and on behalf of itself and the Secured Parties and each successor or assign of the Administrative Agent and the other Secured Parties, the true and lawful attorney-in-fact of such Grantor, with full power and authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, to take any action and execute any instrument at the request or with the consent of the Majority Lenders and enforce all rights, interests and remedies of such Grantor with respect to the Collateral, including the right:

(a) to ask, require, demand, receive and give acquittance for any and all moneys and claims for moneys due and to become due under or arising out of any of the other Collateral, including without limitation, any Insurance Contracts;

(b) to elect remedies thereunder and to endorse any checks or other instruments or orders in connection therewith;

(c) to file any claims or take any action or institute any proceedings in connection therewith which the Administrative Agent may deem to be necessary or advisable;

(d) to pay, settle or compromise all bills and claims which may be or become liens or security interests against any or all of the Collateral, or any part thereof, unless a bond or other security satisfactory to the Administrative Agent has been provided; and

(e) upon foreclosure, to do any and every act which any Grantor may do on its behalf with respect to the Collateral or any part thereof and to exercise any or all of such Grantor’s rights and remedies under any or all of the Collateral;

provided , however , that (i) the Administrative Agent shall not exercise any such rights unless an Event of Default shall have occurred and be continuing and (ii) the Administrative Agent shall endeavor to provide

the Grantors with notice prior to exercising such rights (it being understood that no notice need be given in connection with the exercise of rights under clause (e) hereof), although failure to provide such notice shall not waive the Administrative Agent’s rights under this Section 13. This power of attorney is a power coupled with an interest and shall be irrevocable until the Payment in Full of Obligations .

Section 14. Administrative Agent May Perform . The Administrative Agent may from time-to-time perform any act which any Grantor has agreed hereunder to perform and which such Grantor shall fail to perform within the time periods required herein after giving effect to any applicable time periods and cure periods in the Credit Documents after receiving five (5) days prior written notice of the request to perform (it being understood that no such request need be given (a) after the occurrence and during the continuance of any Event of Default and after notice thereof by the Administrative Agent to any Grantor or (b) if such failure to perform would have an adverse effect on the perfection of any security interest granted under this Security Agreement or would have a material adverse effect on the value of the applicable Collateral) and the Administrative Agent may from time-to-time take any other action which the Administrative Agent deems necessary for the maintenance, preservation or protection of any of the Collateral or of its security interest therein, and the expenses of the Administrative Agent incurred in connection therewith shall be part of the Secured Obligations and shall be secured hereby.

Section 15. Administrative Agent Has No Duty . The powers conferred on the Administrative Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty on it to exercise any such powers. Except for reasonable care of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Administrative Agent shall have no duty as to any Collateral or responsibility for taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.

Section 16. Reasonable Care . The Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Administrative Agent accords its own Property.

Section 17. Payments Held in Trust . During the continuance of an Event of Default, all payments received by any Grantor under or in connection with any Collateral shall be received in trust for the benefit of the Administrative Agent, and if instructed by the Administrative Agent in writing, shall be segregated from other funds of such Grantor and shall be forthwith paid over to the Administrative Agent in the same form as received (with any necessary endorsement).

Section 18. Miscellaneous .

(a) Expenses . Section 9.1 of the Credit Agreement is incorporated herein, mutatis mutandis, as if a part hereof.

(b) Amendments; Etc . No amendment or waiver of any provision of this Security Agreement nor consent to any departure by any Grantor herefrom shall be effective unless the same shall be in writing and executed by the affected Grantor and the Administrative Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

(c) Addresses for Notices . All notices and other communications provided for hereunder shall be made in accordance with Section 9.9 of the Credit Agreement.

(d) Continuing Security Interest; Transfer of Interest . This Security Agreement shall create a continuing security interest in the Collateral (other than as to any Collateral released pursuant to Section 5(b) hereof) and, unless expressly released by the Administrative Agent or released pursuant to Section 5(a)

hereof , shall (i) remain in full force and effect, (ii) be binding upon each Grantor and its successors, transferees and assigns, and (iii) inure, together with the rights and remedies of the Administrative Agent hereunder, to the benefit of and be binding upon, each Secured Party (other than the Swap Counterparties and the Banking Service Providers) and each of its successors, transferees, and assigns, and to the benefit of and be binding upon, the Swap Counterparties and the Banking Service Providers and each of their successors, transferees, and assigns only to the extent such successor, transferee, and assign is also a Secured Party. Without limiting the generality of the foregoing clause, when any Lender assigns or otherwise transfers any interest held by it under the Credit Agreement or other Credit Document to any other Person pursuant to the terms of the Credit Agreement or such other Credit Document, that other Person shall thereupon become vested with all the benefits held by such Lender under this Security Agreement. Furthermore, when any Swap Counterparty or Banking Services Provider assigns or otherwise transfers any interest held by it under a Hedging Arrangement or any agreement in respect of Banking Services, as applicable, to any other Person pursuant to the terms of such agreement, that other Person shall thereupon become vested with the benefits held by such Secured Party under this Security Agreement only if such Person independently qualifies as a Secured Party.

(e) Severability . Wherever possible each provision of this Security Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Security Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Security Agreement.

(f) Choice of Law . This Security Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York without regard to conflicts of laws principles (other than Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York), except to the extent that the validity or perfection of the security interests hereunder, or remedies hereunder, in respect of any particular Collateral are governed by the laws of a jurisdiction other than the state of New York.

(g) Counterparts . The parties may execute this Security Agreement in counterparts, each of which constitutes an original, and all of which, collectively, constitute only one agreement. Delivery of an executed counterpart signature page by facsimile or other electronic transmission is as effective as executing and delivering this Security Agreement in the presence of the other parties to this Security Agreement. In proving this Security Agreement, a party must produce or account only for the executed counterpart of the party to be charged.

(h) Headings . Paragraph headings have been inserted in this Security Agreement as a matter of convenience for reference only and it is agreed that such paragraph headings are not a part of this Security Agreement and shall not be used in the interpretation of any provision of this Security Agreement.

(i) Additional Grantors . Pursuant to Section 5.6 or 5.7 of the Credit Agreement, as applicable, each Subsidiary of Borrower that was not in existence on the date of the Credit Agreement is required to enter into this Security Agreement as a Grantor within the time period set forth in the Credit Agreement. Upon execution and delivery after the date hereof by the Administrative Agent and such Subsidiary of an instrument in the form of Annex 1 , such Subsidiary shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor herein. The execution and delivery of any instrument adding an additional Grantor as a party to this Security Agreement shall not require the consent of any other Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Security Agreement.

(j) Entire Agreement . THIS SECURITY AGREEMENT, THE CREDIT AGREEMENT, AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG

THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.

[SIGNATURE PAGES FOLLOW]

The parties hereto have caused this Security Agreement to be duly executed as of the date first above written.

	GRANTORS:

	JAGGED PEAK ENERGY LLC


	By:
	Name:
	Title:


	JAGGED PEAK ENERGY MANAGEMENT INC.


	By:
	Name:
	Title:


	JAGGED PEAK ENERGY MANAGEMENT LLC


	By:
	Name:
	Title:

Signature Page to Security Agreement

	ADMINISTRATIVE AGENT:

	WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent

	By:
	Name:
	Title:

Signature Page to Security Agreement

SCHEDULE 1
to Security Agreement

GRANTOR INFORMATION

Grantor:		Jagged Peak Energy LLC

Sole Jurisdiction of Formation / Filing:		Delaware

Type of Organization:		Limited liability company

Address where records for Collateral are kept:		1125 17th Street, Suite 2400
		Denver, CO 80202

Organizational Number:		5312102

Federal Tax Identification Number:		90-0955249

Prior Names:		None.

Grantor:		Jagged Peak Energy Management Inc.

Sole Jurisdiction of Formation / Filing:		Delaware

Type of Organization:		Corporation

Address where records for Collateral are kept:		1125 17th Street, Suite 2400
		Denver, CO 80202

Organizational Number:		5312246

Federal Tax Identification Number:		38-3902898

Prior Names:		None.

Grantor:		Jagged Peak Energy Management LLC

Sole Jurisdiction of Formation / Filing:		Delaware

Type of Organization:		Limited liability company

Address where records for Collateral are kept:		1125 17th Street, Suite 2400
		Denver, CO 80202

Organizational Number:		5312280

Federal Tax Identification Number:		80-0910812

Prior Names:		None.

SCHEDULE 2
to Security Agreement

INSTRUMENTS

None.

Annex 1 to the
Security Agreement

SUPPLEMENT NO. [ ] dated as of [ ] (the “ Supplement ”), to the Security Agreement dated as of [ ] (as amended, supplemented or otherwise modified from time to time, the “ Security Agreement ”), by and among JAGGED PEAK ENERGY LLC, a Delaware limited liability company (“ Borrower ”), each subsidiary of Borrower signatory thereto (together with Borrower, the “ Grantors ” and individually, a “ Grantor ”) and Wells Fargo Bank, National Association as Administrative Agent under the Credit Agreement (as hereinafter defined) for the benefit of itself and the Secured Parties (as defined in the Credit Agreement).

A. Reference is made to the Credit Agreement dated as of June 19, 2015 (as it may be amended, restated or otherwise modified from time to time, the “ Credit Agreement ”) by and among Borrower, the lenders party thereto from time to time (the “ Lenders ”), and Wells Fargo Bank, National Association, as administrative agent for such Lenders (in such capacity, the “ Administrative Agent ”) and as issuing lender (in such capacity, the “ Issuing Lender ”).

B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement and the Credit Agreement.

C. The Grantors have entered into the Security Agreement in order to induce the Lenders to make Advances and the Issuing Lender to issue, extend, and renew Letters of Credit under the Credit Agreement. Pursuant to Section 5.6 or 5.7 of the Credit Agreement, as applicable, each Subsidiary of Borrower that was not in existence on the date of the Credit Agreement is required to enter into the Security Agreement as a Grantor after becoming a Subsidiary. Section 18(i) of the Security Agreement provides that additional Subsidiaries of Borrower may become Grantors under the Security Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary of Borrower (the “ New Grantor ”) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Grantor under the Security Agreement in order to induce the Lenders to make additional Advances and the Issuing Lender to issue, extend and renew additional Letters of Credit and as consideration for Advances previously made and Letters of Credit previously issued.

Accordingly, the Administrative Agent and the New Grantor agree as follows:

SECTION 1. In accordance with Section 18(i) of the Security Agreement, the New Grantor by its signature below becomes a Grantor under the Security Agreement with the same force and effect as if originally named therein as a Grantor and the New Grantor hereby (a) agrees to all the terms and provisions of the Security Agreement applicable to it as a Grantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Grantor thereunder are true and correct on and as of the date hereof in all material respects. In furtherance of the foregoing, the New Grantor, as security for the payment and performance in full of the Secured Obligations (as defined in the Security Agreement), does hereby create and grant to the Administrative Agent, its successors and assigns, for the benefit of the Secured Parties, their successors and assigns, a continuing security interest in and lien on all of the New Grantor’s right, title and interest in and to the Collateral (as defined in the Security Agreement) of the New Grantor. Each reference to a “ Grantor ” in the Security Agreement shall be deemed to include the New Grantor. The Security Agreement is hereby incorporated herein by reference.

SECTION 2. The New Grantor represents and warrants to the Administrative Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting

creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).

SECTION 3. This Supplement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Administrative Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Grantor and the Administrative Agent. Delivery of an executed signature page to this Supplement by facsimile or other electronic transmission shall be as effective as delivery of a manually signed counterpart of this Supplement.

SECTION 4. The New Grantor hereby represents and warrants that, as of the date hereof, set forth on Schedule 1 attached hereto are (a) its sole jurisdiction of formation and type of organization, (b) the location of all records concerning its Accounts, General Intangibles, or any other Collateral, (c) its federal tax identification number and the organizational number, and (d) all names used by it during the last five years prior to the date of this Supplement.

SECTION 5. [The information listed on Schedule 2 hereto is hereby added to the information set forth on Schedule 2 to the Security Agreement.]

SECTION 6. Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect.

SECTION 7. THIS SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.

SECTION 9. All communications and notices hereunder shall be in writing and given as provided in the Security Agreement. All communications and notices hereunder to the New Grantor shall be given to it at the address for the Credit Parties set forth in the Credit Agreement.

SECTION 10. This Supplement is a Credit Document under the Credit Agreement.

THIS SUPPLEMENT, THE SECURITY AGREEMENT, THE CREDIT AGREEMENT, THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.

IN WITNESS WHEREOF, the New Grantor and the Administrative Agent have duly executed this Supplement to the Security Agreement as of the day and year first above written.

	[Name of New Grantor],
	By:
	Name:
	Title:


	[ADMINISTRATIVE AGENT]
	By:
	Name:
	Title:

Schedule 1
Supplement No.
to the Security Agreement

New Grantor:		[GRANTOR]

Sole Jurisdiction of Formation / Filing:		[STATE]

Type of Organization:		[ENTITY TYPE]

Address where records for Collateral are kept:		[ADDRESS]
		[CITY, STATE ZIP]

Organizational Number:

Federal Tax Identification Number:

Prior Names:

[Schedule 2
Supplement No.
to the Security Agreement

INSTRUMENTS]

EXHIBIT J
FORM OF TRANSFER LETTER

, 20

Re: Agreement dated , by and between , as Seller, and , as Buyer (the “ Contract ”).

Ladies and Gentlemen:

Jagged Peak Energy LLC, a Delaware limited liability company (“ Mortgagor ”), has executed a mortgage or deed of trust dated effective as of June 19, 2015 (“ Mortgage ”) for the benefit of Wells Fargo Bank, National Association, as Administrative Agent (in such capacity, the “ Administrative Agent ”) for the benefit of itself, the Lenders (as defined in the Mortgage) and certain other secured parties as described in the Mortgage, which Mortgage has been recorded in the Real Property Records of the Counties or Parishes, as applicable, listed on the attached Exhibit A . A copy of the Mortgage is enclosed. The properties covered by the Mortgage include all of the oil, gas and other hydrocarbons and/or other minerals attributable to the above-referenced Contract to which we understand you are currently a party and includes the well or wells listed on the attached Exhibit A with respect to which you are remitting proceeds of production to the Mortgagor. Your division order or lease numbers for such well or wells are set forth on the attached Exhibit A .

Pursuant to Article III of the Mortgage, the Administrative Agent is entitled to receive all of Mortgagor’s interest in all Hydrocarbons (as defined in the Mortgage), which are covered by the above-referenced Contract, all products obtained or processed therefrom, and the revenues and proceeds attributable thereto. The assignment of the Hydrocarbons, products and proceeds was effective on June 19, 2015 (“ Effective Date ”). The Lenders, however, as provided in Article III of the Mortgage, have permitted Mortgagor to collect the Hydrocarbons and the revenues and proceeds attributable thereto until the Administrative Agent or the Mortgagor shall have instructed the seller or purchaser of production to deliver such Hydrocarbons and all proceeds therefrom directly to the Administrative Agent. The purpose of this letter is to notify you that, commencing immediately upon the receipt hereof, and in accordance with the terms and conditions of the Mortgage, and until further notice, you are authorized and directed by Mortgagor to deliver all proceeds attributable to the sale of such Hydrocarbons pursuant to the above-referenced Contract directly to the Administrative Agent at its office at Wells Fargo Bank, National Association, 1700 Lincoln St., Third floor — MAC C7300-033, Denver, Colorado 80203, Attention: Oleg Kogan, Facsimile: (303) 910-2712, or to such other address of which we may subsequently notify you in writing. If you require the execution of transfer or division orders, please forward the transfer or division orders to the Administrative Agent at its address as indicated above, Attention: Oleg Kogan.

Should you have any questions in connection with any of the foregoing, please do not hesitate to contact us.

[Signature page follows]

	Very truly yours,

	WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent


	By:
	Name:
	Title:


	JAGGED PEAK ENERGY LLC, a Delaware limited liability company


	By:
	Name:
	Title:

EXHIBIT A

Name and Location of Well		Division Order or Lease No.

EXHIBIT K-1

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement dated as of June 19, 2015 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Jagged Peak Energy LLC, a Delaware limited liability company (the “ Borrower ”), Wells Fargo Bank, National Association, as administrative agent (the “ Administrative Agent ”) and as issuing lender, and each lender from time to time party thereto.

Pursuant to the provisions of Section 2.13 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the loan(s) (as well as any Note(s) evidencing such loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN or W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.


[NAME OF LENDER]


By:
	Name:
	Title:

Date:	, 20[ ]

EXHIBIT K-2

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement dated as of June 19, 2015 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among the Jagged Peak Energy LLC, a Delaware limited liability company (the “ Borrower ”), Wells Fargo Bank, National Association, as administrative agent (the “ Administrative Agent ”) and as issuing lender, and each lender from time to time party thereto.

Pursuant to the provisions of Section 2.13 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN or W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.


[NAME OF PARTICIPANT]


By:
	Name:
	Title:

Date:	, 20[ ]

EXHIBIT K-3

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Pursuant to the provisions of Section 2.13 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.


[NAME OF PARTICIPANT]


By:
	Name:
	Title:

Date:	, 20[ ]

EXHIBIT K-4

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Pursuant to the provisions of Section 2.13 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the loan(s) (as well as any Note(s) evidencing such loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such loan(s) (as well as any Note(s) evidencing such loan(s)), (iii) with respect to the extension of credit pursuant to this Credit Agreement or any other Credit Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF LENDER]


By:
	Name:
	Title:

Date: , 20[ ]

EXHIBIT L
FORM OF RESERVE REPORT CERTIFICATE

[ Insert date. ]

The undersigned officer executing this certificate on behalf of Jagged Peak Energy LLC, a Delaware limited liability company (the “ Borrower ”), certifies that [s]he is a Responsible Officer of the Borrower, and that as such [s]he is authorized to execute this certificate. Reference is made to that certain Credit Agreement dated as of June [ ], 2015 (together with all amendments, restatements, amendments and restatements, supplements or other modifications thereto being the “ Credit Agreement ”) among the Borrower, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent and issuing lender. Unless otherwise indicated, terms used but not defined herein shall have the meanings given them in the Credit Agreement. This certificate is being delivered pursuant to Section 5.2(c)(iv) of the Credit Agreement.

The undersigned, acting in [her][his] capacity as a Responsible Officer of the Borrower and not in [her][his] individual capacity, does hereby certify on behalf of the Borrower that:

(a) to the best of [her][his] knowledge and in all material respects the information contained in the Engineering Report delivered herewith and any other information delivered in connection therewith is true and correct;

(b) [except with regard to the Properties set forth on Exhibit hereto, ] the Credit Parties own the Oil and Gas Properties specified in such Engineering Report free and clear of any Liens (except Permitted Liens);

(c) [except with regard to the Properties set forth on Exhibit hereto, ] on and as of the date of such Engineering Report each Oil and Gas Property identified as PDP Reserves therein was developed for oil and gas, and the wells pertaining to such Oil and Gas Properties that are described therein as producing wells, were each producing oil and/or gas in paying quantities, except for Wells that were utilized as water or gas injection wells, carbon dioxide wells or as water disposal wells (each as noted in such Engineering Report);

(d) [except with regard to the Properties set forth on Exhibit hereto, ] the descriptions of quantum and nature of the record title interests of the Credit Parties, set forth in such Engineering Report include the entire record title interests of the Credit Parties in such Oil and Gas Properties, are complete and accurate in all respects, and take into account all Permitted Liens;

(e) there are no “back-in”, “reversionary” or “carried” interests held by third parties which could reduce the interests of the Credit Parties in such Oil and Gas Properties except as set forth in, or otherwise accounted for in, the Engineering Report;

(f) [except with regard to the agreements set forth on Exhibit hereto, ] no operating or other agreement to which any Credit Party is a party or by which any Credit Party is bound affecting any part of such Oil and Gas Properties requires any Credit Party to bear any of the costs relating to such Oil and Gas Properties greater than the record title interest of any Credit Party in such portion of such Oil and Gas Properties as set forth in such Engineering Report, except in the event any Credit Party is obligated under an operating agreement to assume a portion of a defaulting party’s share of costs; and

(g) [except with regard to the Properties set forth in Exhibit hereto, ] the Credit Parties’ ownership of the Hydrocarbons and the undivided interests in the Oil and Gas Properties as specified in such Engineering Report (i) will, after giving full effect to all Permitted Liens, afford the Credit Parties not less than those net interests (expressed as a fraction, percentage or decimal) in the production from or which is allocated to such Hydrocarbons specified as net revenue interest in such Engineering Report and (ii) will cause the Credit Parties to bear not more than that portion (expressed as a fraction, percentage or decimal), specified as working interest in such Engineering Report, of the costs of drilling, developing and operating the wells identified in such Engineering Report or identified in the exhibits to the Mortgages encumbering such Oil and Gas Properties (except for any increases in working interest with a corresponding increase in the net revenue interest in such Oil and Gas Property).

[ Signature follows .]

EXECUTED AND DELIVERED as of the date first set forth above.

	JAGGED PEAK ENERGY LLC

	By:
	Name:
	Title:

[SIGNATURE PAGE TO RESERVE REPORT CERTIFICATE]

EXHIBIT [ ]

Exhibit 10.2

Execution Version

AMENDMENT NO. 1 AND AGREEMENT

This Amendment No. 1 and Agreement (this “ Agreement ”) dated as of April 26, 2016 (the “ Effective Date ”), is among Jagged Peak Energy LLC, a Delaware limited liability company (the “ Borrower ”), the guarantors party hereto (the “ Guarantors ”), Wells Fargo Bank, National Association, as administrative agent (in such capacity, the “ Administrative Agent ”) and as issuing lender (in such capacity, the “ Issuing Lender ”), and the Lenders (as defined below).

RECITALS

A. Reference is made to that certain Credit Agreement (as amended, restated, supplemented or modified from time to time, the “ Credit Agreement ”) dated as of June 19, 2015 among the Borrower, the Administrative Agent, the Issuing Lender and the financial institutions party thereto as lenders from time to time (the “ Lenders ”). Each term defined in the Credit Agreement and used herein without definition shall have the meaning assigned to such term in the Credit Agreement, unless expressly provided to the contrary.

B. Certain financial institutions not previously party to the Credit Agreement (each a “ New Lender ”) have agreed to become a party to the Credit Agreement as Lenders pursuant to the terms hereof.

C. The Lender party to the Credit Agreement prior to the effectiveness of this Agreement (the “ Existing Lender ”) wishes to reallocate the Commitments pursuant to the terms hereof in order to, among other things, allow the New Lenders to acquire an interest in the Commitments and in order to effect such reallocation, the Existing Lender has agreed to assign certain percentages of its rights and obligations under the Credit Agreement as Lender to the New Lenders pursuant to the terms hereof.

D. The Borrower has requested and, subject to the terms and conditions set forth herein, the Lenders have agreed, to make certain amendments to the Credit Agreement, each as set forth below.

THEREFORE, the parties hereto hereby agree as follows:

Section 1. Defined Terms; Other Definitional Provisions . As used in this Agreement, each of the terms defined in the opening paragraph and the Recitals above shall have the meanings assigned to such terms therein. Article, Section, Schedule, and Exhibit references are to Articles and Sections of and Schedules and Exhibits to this Agreement, unless otherwise specified. The words “hereof”, “herein”, and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The term “including” means “including, without limitation,”. Paragraph headings have been inserted in this Agreement as a matter of convenience for reference only and it is agreed that such paragraph headings are not a part of this Agreement and shall not be used in the interpretation of any provision of this Agreement.

Section 2. Amendment to Credit Agreement .

(a) The Credit Agreement (other than the Schedules and Exhibits attached thereto) is amended to read in its entirety as set forth on Annex A.

(b) The Credit Agreement is amended by deleting Schedule I in its entirety and replacing it with the new Schedule I attached hereto.

(c) The Credit Agreement is amended by deleting Schedule II in its entirety and replacing it with the new Schedule II attached hereto.

(d) The Credit Agreement is amended by deleting Schedule IV in its entirety.

(e) The Credit Agreement is amended by deleting Schedule 4.23 in its entirety and replacing it with the new Schedule 4.23 attached hereto.

(f) The Credit Agreement is amended by deleting Exhibit F in its entirety and replacing it with the new Exhibit F attached hereto.

(g) The Credit Agreement is amended by deleting Exhibit L in its entirety and replacing it with the new Exhibit L attached hereto.

Section 3. New Lenders and Reallocation of Commitments . The Lenders have agreed among themselves to reallocate the Commitments and to, among other things, allow the New Lenders to become parties to the Credit Agreement as Lenders by acquiring an interest in the Commitments. Each of the Administrative Agent and the Borrower hereby consents to (a) the reallocation of the Commitments and (b) each New Lender’s acquisition of an interest in the Commitments. The assignments by the Existing Lender necessary to effect the reallocation of the Commitments and the assumptions by the New Lenders necessary for such New Lenders to acquire such interests are hereby consummated pursuant to the terms and provisions of this Section 3 of this Agreement and Section 9.7 of the Credit Agreement, and the Borrower, the Administrative Agent and each Lender, including each New Lender, hereby consummates such assignment and assumption pursuant to the terms, provisions and representations of the Assignment and Assumption attached as Exhibit A to the Credit Agreement as if each of them had executed and delivered an Assignment and Assumption (with the Effective Date, as defined therein, being the Effective Date hereof); provided that (i) any New Lender that is a Foreign Lender shall have delivered to the Borrower (with a copy to the Administrative Agent) the documentation required pursuant to, and otherwise complied with all provisions of, Section 2.13(g) of the Credit Agreement. On the Effective Date and after giving effect to such assignments and assumptions, the Commitments of each Lender shall be as set forth on Schedule I of the Credit Agreement, as amended by this Agreement. Each Lender hereby consents and agrees to the Commitments as set forth opposite such Lender’s name on Schedule I to the Credit Agreement, as amended by this Agreement. With respect to the foregoing assignments and assumptions, in the event of any conflict between this Section 3 of this Agreement and Section 9.7 of the Credit Agreement, this Section 3 of this Agreement shall control.

Section 4. Borrowing Base Increase . Effective as of the Effective Date, the Borrowing Base is hereby increased to $65,000,000. Once effective, the new Borrowing Base amount shall remain in effect at that level until the Borrowing Base is redetermined or adjusted in accordance with the Credit Agreement. For the avoidance of doubt, the increase in the Borrowing Base pursuant to this Section 4 is the scheduled April 2016 redetermination pursuant to Section 2.2(b)(ii) of the Credit Agreement.

Section 5. Representations and Warranties . Each Credit Party represents and warrants that, as of the date hereof: (a) the representations and warranties of such Credit Party contained in the Credit Agreement, and the representations and warranties of such Credit Party contained in the other Credit Documents are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the Effective Date as if made on and as of such date except that any representation and warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) only as of such specified date; (b) no Default has occurred and is continuing; (c) the execution, delivery and performance of this Agreement are within such Credit Party’s powers and have been duly authorized by all necessary corporate, limited liability company or partnership action; (d) this Agreement constitutes the legal, valid, and binding obligation of such Credit Party enforceable against such Credit Party in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the rights of creditors generally and general principles of equity whether applied by a court of law or equity; (e) the execution, delivery and performance of this Agreement by such Credit Party do not require any authorization or approval or other action by, or any notice or filing with, any Governmental Authority other than those that have been obtained or provided and other than filings delivered hereunder to perfect Liens created under the Security Documents; and (f) the Liens under the Security Documents are valid and subsisting and secure the obligations under the Credit Documents.

Section 6. Conditions to Effectiveness . This Agreement shall become effective on the Effective Date and enforceable against the parties hereto upon the occurrence of the following conditions precedent:

(a) The Administrative Agent shall have received multiple original counterparts, as requested by the Administrative Agent, of this Agreement, duly and validly executed and delivered by duly authorized officers of the Borrower, the Guarantors, the Administrative Agent, the Issuing Lender and all of the Lenders.

(b) The Administrative Agent shall have received a Note payable to each Lender requesting a Note in the amount of its Commitments after giving effect to this Agreement, duly and validly executed and delivered by duly authorized officers of the Borrower.

(c) The Borrower shall have paid (a) all reasonable out-of-pocket costs and expenses that have been invoiced and are payable pursuant to Section 9.1 of the Credit Agreement, and

(b) all fees owing pursuant to that certain Engagement Letter dated as of April 26, 2016 among Wells Fargo Bank, N.A., Wells Fargo Securities, LLC and Jagged Peak Energy LLC.

(d) The Administrative Agent shall have received duly executed Mortgages, or supplements to existing Mortgages, in form and substance reasonably satisfactory to the Administrative Agent encumbering not less than 90% (by PV10) of the Credit Parties’ Proven Reserves and 90% (by PV10) of the Credit Parties’ PDP Reserves, in each case, as described in the most recently delivered Engineering Report.

(e) The Administrative Agent shall have received satisfactory title information and be satisfied in its sole discretion with the title to the Oil and Gas Properties included in the Borrowing Base, and that such Oil and Gas Properties constitute (i) at least 80% of the PV10 of the Proven Reserves of the Borrower and its Subsidiaries evaluated in the most recently delivered Independent Engineering Report, and (ii) that the Borrower has good and marketable title to its Oil and Gas Properties, subject to no other liens (other than Permitted Liens).

(f) The Administrative Agent shall have received one or more Account Control Agreements duly executed and delivered by the applicable Credit Parties, Wells Fargo Bank, N.A., as the depository bank and the Administrative Agent.

(g) The Administrative Agent shall have received a legal opinion of Latham & Watkins LLP as outside counsel to the Credit Parties in form and substance reasonably acceptable to the Administrative Agent.

(h) The Administrative Agent shall have received an officer’s certificate from each Credit Party certifying such Person’s (A) officers’ incumbency, (B) authorizing resolutions, (C) organizational documents, and (D) governmental approvals, if any, with respect to this Agreement.

(i) The Administrative Agent shall have received (A) evidence reasonably satisfactory to it that the Borrower has entered into commodity Hedging Arrangements in accordance with Section 5.15 of the Credit Agreement, as amended by this Agreement, and (B) an updated Schedule 4.23 setting forth the information required by Section 4.23 of the Credit Agreement, as amended by this Agreement, as of the Effective Date.

(j) The Administrative Agent shall have received such other documents, governmental certificates, agreements, and lien searches as the Administrative Agent or any Lender may reasonably request.

Section 7. Acknowledgments and Agreements .

(a) Each Credit Party acknowledges that on the date hereof all outstanding Secured Obligations are payable in accordance with their terms and each Credit Party waives any defense, offset, counterclaim or recoupment, in each case existing on the date hereof, with respect to such Secured Obligations. The Borrower, Guarantors, Administrative Agent, Issuing Lender and each other party hereto do hereby adopt, ratify, and confirm the Credit Agreement, and acknowledge and agree that the Credit Agreement is and remains in full force and effect, and

each Credit Party acknowledges and agrees that its respective liabilities and obligations under the Credit Agreement and the other Credit Documents are not impaired in any respect by this Agreement.

(b) The Administrative Agent and the Lenders hereby expressly reserve all of their rights, remedies, and claims under the Credit Documents. Nothing in this Agreement shall constitute a waiver or relinquishment of (i) any Default or Event of Default under any of the Credit Documents, (ii) any of the agreements, terms or conditions contained in any of the Credit Documents, (iii) any rights or remedies of the Administrative Agent or any Lender with respect to the Credit Documents, or (iv) the rights of the Administrative Agent or any Lender to collect the full amounts owing to them under the Credit Documents.

(c) This Agreement is a Credit Document for the purposes of the provisions of the other Credit Documents. Without limiting the foregoing, any breach of representations, warranties, and covenants under this Agreement shall be a Default or Event of Default, as applicable, under the Credit Agreement.

Section 8. Reaffirmation of the Guaranty . Each Guarantor hereby ratifies, confirms, acknowledges and agrees that its obligations under the Guaranty are in full force and effect and that such Guarantor continues to unconditionally and irrevocably guarantee the full and punctual payment, when due, whether at stated maturity or earlier by acceleration or otherwise, all of the Guaranteed Obligations (as defined in the Guaranty), and its execution and delivery of this Agreement does not indicate or establish an approval or consent requirement by such Guarantor under the Guaranty, in connection with the execution and delivery of amendments, consents or waivers to the Credit Agreement or any of the other Credit Documents.

Section 9. Counterparts . This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic (i.e., “ pdf ” or “ tif ”) format shall be effective as delivery of a manually executed counterpart of this Agreement.

Section 10. Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted pursuant to the Credit Agreement.

Section 11. Severability . In case one or more of the provisions of this Agreement shall for any reason be invalid, illegal or unenforceable in any respect under any applicable law, the validity, legality and enforceability of the remaining provisions contained herein or in the other Credit Documents shall not be affected or impaired thereby.

Section 12. Governing Law . This Agreement shall be deemed to be a contract made under and shall be governed by and construed in accordance with the laws of the State of New York without regard to conflicts of laws principles (other than Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York).

Section 13. Entire Agreement . THIS AGREEMENT , THE CREDIT AGREEMENT , THE NOTES , AND THE OTHER CREDIT DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS , WRITTEN OR ORAL , WITH RESPECT THERETO.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

[The remainder of this page has been left blank intentionally.]

EXECUTED to be effective as of the date first above written.

BORROWER :

	JAGGED PEAK ENERGY LLC


	By:	/s/ Robert W. Howard
	Name:	Robert W. Howard
	Title:	Chief Financial Officer


GUARANTORS :

	JAGGED PEAK ENERGY MANAGEMENT INC.


	By:	/s/ Joseph N. Jaggers III
	Name:	Joseph N. Jaggers III
	Title:	Chief Executive Officer and President


	JAGGED PEAK ENERGY MANAGEMENT LLC


	By:	/s/ Joseph N. Jaggers III
	Name:	Joseph N. Jaggers III
	Title:	Chief Executive Officer and President

Signature Page to

Amendment No. 1

	ADMINISTRATIVE AGENT/LENDERS :

	WELLS FARGO BANK ,
	NATIONAL ASSOCIATION
	as Administrative Agent, Issuing Lender, and a Lender


	By:	/s/ Suzanne F. Ridenhour
	Name:	Suzanne F. Ridenhour
	Title:	Director

Signature Page to

Amendment No. 1

LENDERS :

	FIFTH THIRD BANK , as a Lender


	By:	/s/ Jonathan H. Lee
	Name:	Jonathan H. Lee
	Title:	Director

Signature Page to

Amendment No. 1

	ABN AMRO CAPITAL USA LLC , as a Lender


	By:	/s/ Darrell Holley
	Name:	Darrell Holley
	Title:	Managing Director


	By:	/s/ David Montgomery
	Name:	David Montgomery
	Title:	Executive Director

Signature Page to

Amendment No. 1

	KEYBANK NATIONAL ASSOCIATION , as a Lender


	By:	/s/ George E. McKean
	Name:	George E. McKean
	Title:	Senior Vice President

Signature Page to

Amendment No. 1

	FIRST TENNESSEE BANK NATIONAL ASSOCIATION , as a Lender


	By:	/s/ Kevin Dunlap
	Name:	Kevin Dunlap
	Title:	Vice President

Signature Page to

Amendment No. 1

SCHEDULE I
Commitments , Contact Information

ADMINISTRATIVE AGENT/ ISSUING LENDER

Wells Fargo Bank , National Association	Address :	1700 Lincoln St., 6th Floor
		Denver, CO 80203
	Attn :	Oleg Kogan
	Telephone :	303-863-4522
	Facsimile :	303-863-5196
	Email :	Oleg.Kogan@wellsfargo.com

CREDIT PARTIES

Borrower/Guarantors	Address :	1125 17th Street
		Suite 2400
		Denver, CO 80202
	Attn :	Bob Howard
	Telephone :	720-215-3660
	Facsimile :	720-215-3690
	Email :	bhoward@jaggedpeakenergy.com

Lender	Commitment
Wells Fargo Bank, National Association	$	269,230,769.23
Fifth Third Bank	$	61,538,461.54
ABN AMRO Capital USA LLC	$	61,538,461.54
KeyBank National Association	$	61,538,461.54
First Tennessee Bank National Association	$	46,153,846.15
Total:	$	500 , 000 , 000

SCHEDULE II
PRICING GRID

Applicable Margins

Utilization Level*	Base Rate Advances		Eurodollar Advances		Commitment Fee Rate
Level I	1.50	%	2.50	%	0.500	%
Level II	1.75	%	2.75	%	0.500	%
Level III	2.00	%	3.00	%	0.500	%
Level IV	2.25	%	3.25	%	0.500	%
Level V	2.50	%	3.50	%	0.500	%

* Utilization Levels are described below and are determined in accordance with the definition of “ Utilization Level ”.

1. Level I : If the Utilization Level is less than 25%.

2. Level II : If the Utilization Level is greater than or equal to 25% but less than 50%.

3. Level III : If the Utilization Level is greater than or equal to 50% but less than 75%.

4. Level IV : If the Utilization Level is greater than or equal to 75% but less than 90%.

5. Level V : If the Utilization Level is greater than or equal to 90%.

SCHEDULE 4.23
HEDGING AGREEMENTS

1.	Counterparty: Wells Fargo
	Transaction No.: N5860536
	Execution Date: 03/11/16
	Period: 04/16-12/16
	Financial Transaction: WTI Nymex Swap
	Swap Price: $41.95

Month		Production Hedged (bbls)
04/16		21,000
05/16		21,700
06/16		21,000
07/16		21,700
08/16		21,700
09/16		21,000
10/16		21,700
11/16		21,000
12/16		21,700

2.	Counterparty: Wells Fargo
	Transaction No.: N5867749
	Execution Date: 03/15/16
	Period: 04/16-12/17
	Financial Transaction: WTI Nymex Swap
	Swap Price: $41.80

Month		Production Hedged (bbls)
04/16		48,000
05/16		40,300
06/16		36,000
07/16		34,100
08/16		31,000
09/16		30,000
10/16		24,800
11/16		24,000
12/16		21,700
01/17		43,400
02/17		42,000
03/17		40,300
04/17		39,000
05/17		37,200
06/17		36,000
07/17		34,100
08/17		34,100
09/17		33,000
10/17		34,100
11/17		33,000
12/17		31,000

3.	Counterparty: Shell
	Transaction No.: 9858241
	Execution Date: 04/11/2016
	Period: 05/16-12/16
	Financial Transaction: WTI Nymex Swap
	Swap Price: $43.35

Month		Production Hedged (bbls)
05/16		7,750
06/16		7,500
07/16		7,750
08/16		7,750
09/16		7,500
10/16		7,750
11/16		7,500
12/16		7,750

4.	Counterparty: Wells Fargo
	Transaction No.: N5923119
	Execution Date: 04/12/16
	Period: 01/17-12/17
	Financial Transaction: WTI Nymex Swap
	Swap Price: $46.00

Month		Production Hedged (bbls)
01/17		10,850
02/17		9,800
03/17		9,300
04/17		9,000
05/17		9,300
06/17		9,000
07/17		10,850
08/17		9,300
09/17		9,000
10/17		7,750
11/17		7,500
12/17		7,750

5.	Counterparty: Wells Fargo
	Transaction No.: N5924115
	Execution Date: 04/12/16
	Period: 06/16-12/16
	Financial Transaction: WTI Nymex Swap
	Swap Price: $44.00

Month		Production Hedged (bbls)
06/16		10,500
07/16		7,750
08/16		6,200
09/16		4,500
10/16		6,200
11/16		6,000
12/16		4,650

6.	Counterparty: Wells Fargo
	Transaction No.: N5924171
	Execution Date: 04/12/16
	Period: 01/18-03/18
	Financial Transaction: WTI Nymex Swap
	Swap Price: $47.00

Month		Production Hedged (bbls)
01/18		29,450
02/18		29,400
03/18		27,900

7.	Counterparty: Wells Fargo
	Transaction No.: N5924372
	Execution Date: 04/12/16
	Period: 04/18-06/18
	Financial Transaction: WTI Nymex Swap
	Swap Price: $47.50

Month		Production Hedged (bbls)
04/18		28,500
05/18		27,900
06/18		27,000

8.	Counterparty: Shell
	Transaction No.: 9860885
	Execution Date: 04/12/16
	Period: 05/16
	Financial Transaction: WTI Nymex Swap
	Swap Price: $43.20

Month		Production Hedged (bbls)
05/16		10,850

EXHIBIT F

NOTICE OF BORROWING

[See Attached]

EXHIBIT F
FORM OF NOTICE OF BORROWING

[Date]

Wells Fargo Bank, National Association, as Administrative Agent

1700 Lincoln St., 6th Floor

Denver, CO 80203

Attn: Oleg Kogan

303-863-4522

Ladies and Gentlemen:

(a) The Business Day of the Proposed Borrowing is , .

(b) The Proposed Borrowing will be composed of [Base Rate Advances] [Eurodollar Advances].

(d) [The Interest Period for each Eurodollar Advance made as part of the Proposed Borrowing is [one][two][three][six]month(s)].

The Borrower hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing:

representations and warranties that already are qualified or modified by materiality in the text thereof) only as of such specified date; and

(ii) no Default or Event of Default has occurred and is continuing, or would result from such Proposed Borrowing or from the application of the proceeds therefrom.

(iii) [As of the end of the Business Day in which the Proposed Borrowing will be funded, all cash and Liquid Investments (other than cash collateral) of the Borrower and its Subsidiaries (after giving pro forma effect to the Proposed Borrowing and the use of the proceeds of the Proposed Borrowing to the extent such proceeds are used as of the end of the Business Day on which the Proposed Borrowing will be funded) is less than or equal to the Excess Cash Threshold, and therefore Excess Cash is $0.] [or] [As of the end of the Business Day in which the Proposed Borrowing will be funded, all cash and Liquid Investments (other than cash collateral) of the Borrower and its Subsidiaries (after giving pro forma effect to the Proposed Borrowing and the use of the proceeds of the Proposed Borrowing to the extent such proceeds are used as of the end of the Business Day on which the Proposed Borrowing will be funded) is greater than the Excess Cash Threshold in an amount equal to $ , and after giving effect to the exclusions from Excess Cash provided for in the definition of Excess Cash and itemized on Schedule I attached hereto, Excess Cash is $0.]

(iv) As of the end of the Business Day in which the Proposed Borrowing will be funded, Excluded Proceeds is $0.

	Very truly yours,

	JAGGED PEAK ENERGY LLC


	By:
	Name:
	Title:

SCHEDULE 1

(a) All cash and Liquid Investments set aside to pay in the ordinary course of business amounts of the Borrower or any Subsidiary then due and owing to third parties and for which the Borrower or such Subsidiary has issued checks or has initiated wires or ACH transfers in order to pay (or will issue checks or initiate wires or ACH transfers within one Business Day):

(b) All cash and Liquid Investments of the Borrower or any Subsidiary constituting purchase price deposits held in escrow by a third party pursuant to a binding and enforceable purchase and sale agreement with a third party containing customary provisions regarding the payment and refunding of such deposits:

(d) All cash proceeds of any asset sale of the Borrower or any Subsidiary which the Borrower or such Subsidiary holds in a 1031 exchange account:

EXHIBIT L

RESERVE REPORT CERTIFICATE

[See Attached]

EXHIBIT L
FORM OF RESERVE REPORT CERTIFICATE

[ Insert date .]

The undersigned, acting in [her][his] capacity as a Responsible Officer of the Borrower and not in [her][his] individual capacity, does hereby certify on behalf of the Borrower that:

any of the costs relating to such Oil and Gas Properties greater than the record title interest of any Credit Party in such portion of such Oil and Gas Properties as set forth in such Engineering Report, except in the event any Credit Party is obligated under an operating agreement to assume a portion of a defaulting party’s share of costs;

(h) the Borrower is in compliance with Section 5.15 of the Credit Agreement.

[ Signature follows .]

EXECUTED AND DELIVERED as of the date first set forth above.

	JAGGED PEAK ENERGY LLC

	By:
	Name:
	Title:

[SIGNATURE PAGE TO RESERVE REPORT CERTIFICATE]

EXHIBIT [ ]

ANNEX A

Credit Agreement

[See Attached]

Published CUSIP Number: 47008PAA5
Published CUSIP Number: 47008PAB3

CREDIT AGREEMENT

dated as of June 19 , 2015

Among

JAGGED PEAK ENERGY LLC

as Borrower ,

WELLS FARGO BANK , NATIONAL ASSOCIATION
as Administrative Agent and Issuing Lender ,

and

THE LENDERS NAMED HEREIN

as Lenders

$500 , 000 , 000

WELLS FARGO SECURITIES , LLC
AS LEAD ARRANGER AND SOLE BOOKRUNNER

TABLE OF CONTENTS

			Page

ARTICLE 1	DEFINITIONS AND ACCOUNTING TERMS		1

Section 1.1		Certain Defined Terms	1

Section 1.2		Computation of Time Periods	27

Section 1.3		Accounting Terms; Changes in GAAP	27

Section 1.4		Types of Advances	28

Section 1.5		Miscellaneous	28

ARTICLE 2	CREDIT FACILITIES		29

Section 2.1		Commitment for Advances	29

Section 2.2		Borrowing Base	29

Section 2.3		Letters of Credit	36

Section 2.4		Advances	42

Section 2.5		Prepayments	44

Section 2.6		Repayment	48

Section 2.7		Fees	48

Section 2.8		Interest	49

Section 2.9		[Reserved]	49

Section 2.10		Breakage Costs	49

Section 2.11		Increased Costs	50

Section 2.12		Payments and Computations	51

Section 2.13		Taxes	53

Section 2.14		Mitigation Obligations; Replacement of Lenders	57

Section 2.15		Cash Collateral	58

Section 2.16		Defaulting Lenders	59

ARTICLE 3	CONDITIONS OF LENDING		61

Section 3.1		Conditions Precedent to Initial Borrowing	61

Section 3.2		Conditions Precedent to Each Borrowing and to Each Issuance, Extension or Renewal of a Letter of Credit	65

Section 3.3		Determinations Under Sections 3	66

ARTICLE 4	REPRESENTATIONS AND WARRANTIES		66

Section 4.1		Organization	66

Section 4.2		Authorization	66

TABLE OF CONTENTS
(continued)

			Page

Section 4.3		Enforceability	67

Section 4.4		Financial Condition	67

Section 4.5		Title; Ownership and Liens; Real Property	67

Section 4.6		True and Complete Disclosure	68

Section 4.7		Litigation; Compliance with Laws	68

Section 4.8		Compliance with Agreements	68

Section 4.9		Pension Plans	69

Section 4.10		Environmental Condition	69

Section 4.11		Subsidiaries	70

Section 4.12		Investment Company Act	70

Section 4.13		Taxes	70

Section 4.14		Permits, Licenses, etc.	70

Section 4.15		Use of Proceeds	71

Section 4.16		Condition of Property; Casualties	71

Section 4.17		Insurance	71

Section 4.18		Security Interest	71

Section 4.19		Anti-Corruption Laws and Sanctions	71

Section 4.20		Solvency	72

Section 4.21		Gas Contracts	72

Section 4.22		Liens, Leases, Etc.	72

Section 4.23		Hedging Agreements	72

Section 4.24		Material Agreements	72

Section 4.25		EEA Financial Institutions	73

Section 4.26		Excess Cash	73

ARTICLE 5	AFFIRMATIVE COVENANTS		73

Section 5.1		Organization	73

Section 5.2		Reporting	73

Section 5.3		Insurance	78

Section 5.4		Compliance with Laws	79

Section 5.5		Taxes	79

Section 5.6		New Subsidiaries	79

Section 5.7		Agreement to Pledge; Security	79

Section 5.8		Deposit Accounts	80

TABLE OF CONTENTS
(continued)

			Page

Section 5.9		Records; Inspection	80

Section 5.10		Maintenance of Property	80

Section 5.11		Title Evidence and Opinions	80

Section 5.12		Further Assurances; Cure of Title Defects	81

Section 5.13		Leases; Development and Maintenance	82

Section 5.14		Subordination	82

Section 5.15		Hedging Maintenance	82

ARTICLE 6	NEGATIVE COVENANTS		83

Section 6.1		Debt	83

Section 6.2		Liens	84

Section 6.3		Investments	86

Section 6.4		[Reserved]	87

Section 6.5		Agreements Restricting Liens	87

Section 6.6		Use of Proceeds; Use of Letters of Credit	88

Section 6.7		Corporate Actions; Accounting Changes	88

Section 6.8		Sale of Assets	88

Section 6.9		Restricted Payments	90

Section 6.10		Affiliate Transactions	90

Section 6.11		Line of Business	91

Section 6.12		Hazardous Materials	91

Section 6.13		Compliance with ERISA	91

Section 6.14		Sale and Leaseback Transactions	92

Section 6.15		Limitation on Hedging	92

Section 6.16		Leverage Ratio	94

Section 6.17		Current Ratio	94

Section 6.18		Minimum Interest Coverage Ratio	94

Section 6.19		Prepayment of Certain Debt and Other Obligations	94

Section 6.20		Gas Imbalances, Take-or-Pay or Other Prepayments	94

Section 6.21		Sale or Discount of Receivables	95

Section 6.22		Sanctions	95

Section 6.23		Marketing Activities	95

Section 6.24		Excluded Account	95

ARTICLE 7	DEFAULT AND REMEDIES		96

iii

TABLE OF CONTENTS
(continued)

			Page

Section 7.1		Events of Default	96

Section 7.2		Optional Acceleration of Maturity	98

Section 7.3		Automatic Acceleration of Maturity	98

Section 7.4		Set-off	99

Section 7.5		Remedies Cumulative, No Waiver	99

Section 7.6		Application of Payments	100

Section 7.7		Equity Right to Cure	100

ARTICLE 8	THE ADMINISTRATIVE AGENT		102

Section 8.1		Appointment, Powers, and Immunities	102

Section 8.2		Rights as a Lender	102

Section 8.3		Exculpatory Provisions	102

Section 8.4		Reliance by Administrative Agent	103

Section 8.5		Delegation of Duties	104

Section 8.6		Resignation of Administrative Agent	104

Section 8.7		Non-Reliance on Administrative Agent and Other Lenders	105

Section 8.8		No Other Duties, etc.	105

Section 8.9		Administrative Agent May File Proofs of Claim	105

Section 8.10		Collateral and Guaranty Matters	106

ARTICLE 9	MISCELLANEOUS		107

Section 9.1		Costs and Expenses	107

Section 9.2		Indemnification; Waiver of Damages	108

Section 9.3		Waivers and Amendments	110

Section 9.4		Severability	111

Section 9.5		Survival of Representations and Obligations	111

Section 9.6		Binding Effect	112

Section 9.7		Successors and Assigns	112

Section 9.8		Confidentiality	116

Section 9.9		Notices, Etc.	117

Section 9.10		Usury Not Intended	117

Section 9.11		Usury Recapture	118

Section 9.12		Governing Law; Service of Process	118

Section 9.13		Submission to Jurisdiction	118

Section 9.14		Execution in Counterparts; Effectiveness; Electronic Execution	119

TABLE OF CONTENTS
(continued)

		Page

Section 9.15	Waiver of Jury Trial	119

Section 9.16	USA Patriot Act	119

Section 9.17	Enduring Security	120

Section 9.18	Keepwell	120

Section 9.19	No Advisory or Fiduciary Responsibility	121

Section 9.20	Acknowledgement and Consent to Bail-In of EEA Financial Institutions	121

Section 9.21	Integration	122

TABLE OF CONTENTS
(continued)

		Page

SCHEDULES:

Schedule I	— Commitments, Contact Information
Schedule II	— Pricing Grid
Schedule III	— Additional Conditions and Requirements for New Subsidiaries
Schedule 4.1	— Organizational Information
Schedule 4.4	— Debt
Schedule 4.11	— Subsidiaries
Schedule 4.13	— Taxes
Schedule 4.16	— Material Real Property
Schedule 4.23	— Hedging Agreements
Schedule 4.24	— Material Agreements
Schedule 6.1	— Existing Debt
Schedule 6.2	— Existing Liens
Schedule 6.3	— Existing Investments

EXHIBITS:

Exhibit A	— Form of Assignment and Assumption
Exhibit B	— Form of Compliance Certificate
Exhibit C	— Form of Guaranty Agreement
Exhibit D	— Form of Mortgage
Exhibit E	— Form of Note
Exhibit F	— Form of Notice of Borrowing
Exhibit G	— Form of Notice of Continuation or Conversion
Exhibit H	— Form of Pledge Agreement
Exhibit I	— Form of Security Agreement
Exhibit J	— Form of Transfer Letter
Exhibit K-1	— Form of U.S Tax Certificate
	(Foreign Lenders; Not Partnerships)
Exhibit K-2	— Form of Tax Certificate
	(Foreign Participants; Not Partnerships)
Exhibit K-3	— Form of Tax Certificate
	(Foreign Lenders; Partnerships)
Exhibit K-4	— Form of Tax Certificate
	(Foreign Participants; Not Partnerships)
Exhibit L	— Form of Reserve Report Certificate

CREDIT AGREEMENT

In consideration of the mutual covenants and agreements herein contained, the parties hereto hereby agree as follows:

ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS

“ Acceptable Letter of Credit Maturity Date ” has the meaning assigned to it in Section 2.3(a)(ii) of this Agreement.

“ Administrative Agent ” means Wells Fargo in its capacity as agent for the Lenders pursuant to Article 8 and any successor agent pursuant to Section 8.6 .

“ Administrative Questionnaire ” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

“ Advance ” means any advance by a Lender to the Borrower as a part of a Borrowing.

“ Agreement ” means this Credit Agreement among the Borrower, the Lenders, the Issuing Lender and the Administrative Agent.

“ Anti-Corruption Laws ” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any of its Affiliates from time to time concerning or relating to bribery or corruption.

“ Approved Fund ” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“ Availability Period ” means the period from the Closing Date until the Maturity Date.

“ Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“ Bail-In Legislation ” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

“ Banking Services Provider ” means any Lender or Affiliate of a Lender that provides Banking Services to any Credit Party.

“ Base Rate Advance ” means an Advance which bears interest based upon the Adjusted Base Rate.

“ BB Threshold Amount ” has the meaning set forth in Section 2.2(g) .

“ BB Value ” means, (a) as to any Oil and Gas Property, the value, if any, attributed to such Oil and Gas Property under the then effective Borrowing Base, as determined by the Administrative Agent (after, in the case of an Asset Sale involving a like-kind exchange permitted by Section 6.8(d) , taking into account the value attributable to the Oil and Gas Properties received by the Credit Parties as consideration, as determined by the Administrative Agent in its sole discretion; provided that an Acceptable Security Interest is granted on such new Oil and Gas Properties to the extent necessary to comply with the mortgage requirement set forth in Section 5.7 (after giving effect to such Asset Sale)), and (b) as to Hedging Arrangements, the net effect of any Hedge Event on the amount of the Borrowing Base, after taking into account the economic effect of any Replacement Hedging Contracts, as determined by the Administrative Agent.

“ Borrower ” means Jagged Peak Energy LLC, a Delaware limited liability company.

“ Cash ” means Dollar denominated currency in immediately available funds.

“ Cash Collateral Account ” means a deposit account subject to an Account Control Agreement pledged to the Administrative Agent containing cash deposited pursuant to the terms hereof to be maintained with the Administrative Agent in accordance with Section 2.3(h) .

“ Cash Collateralize ” means, to deposit in a Cash Collateral Account or to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Issuing Lender or Lenders, as collateral for Letter of Credit Obligations or obligations of Lenders to fund participations in respect of Letter of Credit Obligations, cash or deposit account balances or, if the Administrative Agent and the Issuing Lender shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and the Issuing Lender. “ Cash Collateral ” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

“ Change in Control ” means the occurrence of any of the following events:

(a) the Borrower ceases to directly or indirectly own 100% of the Equity Interest in any Subsidiary other than as a result of a transaction permitted under Section 6.7 ; or

(b) the Quantum Group collectively cease to directly or indirectly own at least 50.1% of the Equity Interest in the Borrower.

“ Change in Law ” means the occurrence, after the date of this Agreement (or with respect to any Lender, if later, the date on which such Lender becomes a Lender), of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “ Change in Law ”, regardless of the date enacted, adopted or issued.

“ Closing Date ” means June 19, 2015.

“ Code ” means the Internal Revenue Code of 1986, as amended, and the regulations and published interpretations thereof.

“ Commitment ” means, for each Lender, the obligation of each Lender to advance to Borrower and to participate in Letters of Credit in an aggregate amount set opposite such Lender’s name on Schedule I as its Commitment, or if such Lender has entered into any Assignment and Assumption, set forth for such Lender as its Commitment in the Register, as such amount may be reduced pursuant to Section 2.1(c) ; provided that, after the Maturity Date, the Commitment for each Lender shall be zero. The initial aggregate Commitment on the date hereof is $500,000,000.

“ Commitment Fees ” means the fees required under Section 2.7(a) .

“ Commodity Exchange Act ” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

“ Connection Income Taxes ” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

“ Convert ,” “ Conversion ,” and “ Converted ” each refers to a conversion of Advances of one Type into Advances of another Type pursuant to Section 2.4(b) .

“ Covenant Cure Payment ” has the meaning set forth in Section 7.7 hereof.

“ Credit Parties ” means the Borrower and the Guarantors.

“ Daily One-Month LIBOR ” means, for any day, the rate of interest equal to the Eurodollar Rate then in effect for delivery for a one month period.

“ Debt ” means, for any Person, without duplication: (a) indebtedness of such Person for borrowed money, including the face amount of any letters of credit supporting the repayment of indebtedness for borrowed money issued for the account of such Person; (b) to the extent not covered under clause (a) above, obligations under letters of credit and agreements relating to the issuance of letters of credit or acceptance financing, including Letters of Credit; (c) obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, or upon which interest payments are customarily made (excluding surety bonds and utility bonds); (d) obligations of such Person under conditional sale or other title retention agreements relating to any Properties purchased by such Person (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business); (e) obligations of such Person to pay the deferred purchase price of property or services (including, without limitation, any contingent obligations or other similar obligations associated with such purchase, and including obligations that are non-recourse to the credit of such Person but are secured by the assets of such Person but excluding accounts payable to trade creditors for goods or services and current operating liabilities (other than for borrowed money) incurred in the ordinary course of business and which are not more than 90 days past due, unless such payables are being contested in good faith by appropriate proceedings and adequate reserves for such items have been made in accordance with GAAP); (f) obligations of such Person as lessee under Capital Leases and obligations of such Person in respect of synthetic leases; (g) obligations of such Person under any Hedging Arrangement; (h) all obligations of such Person to mandatorily purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person on a date certain or upon the occurrence of certain events or conditions other than (i) obligations, if any, to repurchase Equity Interests from employees upon their termination of employment prior to the date that is 180 days after the Maturity Date, valued at, in the case of redeemable preferred stock, the greater of the voluntary liquidation preference and the involuntary liquidation preference of such stock plus accrued and unpaid dividends or (ii) obligations, if any, to repurchase or redeem any Repurchase Interest (as that term is defined in the LLC Agreement); (i) the Debt of any partnership or unincorporated

joint venture in which such Person is a general partner or a joint venturer, but only to the extent to which there is recourse to such Person for the payment of such Debt; (j) any obligations of such Person owing in connection with any volumetric or production prepayments; (k) obligations of such Person under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) of such Person to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (a) through (j) above; and (l) indebtedness or obligations of others of the kinds referred to in clauses (a) through (k) secured by any Lien on or in respect of any Property of such Person.

“ Default ” means (a) an Event of Default or (b) any event or condition which with notice or lapse of time or both would, unless cured or waived, become an Event of Default.

“ Defaulting Lender ” means, subject to Section 2.16(b) , any Lender that (a) has failed to (i) fund all or any portion of its Advances within two Business Days of the date such Advances were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, the Issuing Lender, or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit) within two Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent or the Issuing Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund an Advance hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit

Insurance Corporation or any other state or federal regulatory authority acting in such a capacity or (iii) become the subject of a Bail-in Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.16(b) ) upon delivery of written notice of such determination to the Borrower, the Issuing Lender and each Lender.

“ Designated Jurisdiction ” means any country or territory to the extent that such country or territory itself is the subject of any Sanction.

“ Dollars ” and “ $ ” means lawful money of the United States of America.

“ EEA Financial Institution ” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“ EEA Member Country ” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“ EEA Resolution Authority ” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“ Engineering Report ” means either an Independent Engineering Report or an Internal Engineering Report.

“ Environment ” or “ Environmental ” shall have the meanings set forth in 42 U.S.C. 9601(8) (1988).

“ Environmental Permit ” means any permit, license, order, approval, registration or other authorization under Environmental Law.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

“ Eurocurrency Liabilities ” has the meaning assigned to that term in Regulation D of the Federal Reserve Board as in effect from time to time.

“ Eurodollar Advance ” means an Advance that bears interest based upon the Eurodollar Rate.

“ Eurodollar Base Rate ” means the rate per annum (rounded upward to the nearest whole multiple of 100th of 1%) equal to the ICEBA LIBOR as designated by Reuters, for deposits in Dollars at 11:00 a.m. (London, England time) two Business Days before the first day of the applicable Interest Period and for a period equal to such Interest Period; provided that if such rate that appears on such screen or page shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement; and provided further that, if such quotation is not available for any reason, then Eurodollar Base Rate shall then be the rate determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in immediately available funds in the approximate amount of the Advances being made, continued or Converted by the Lenders and with a term equivalent to such Interest Period would be offered by the Administrative Agent’s London branch (or other branch or Affiliate of the Administrative Agent, or in the event that the Administrative Agent does not have a London branch, the London branch of a Lender chosen by the Administrative Agent) to major banks in the London or other offshore inter-bank market for Dollars at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period).

“ Eurodollar Rate ” means a rate per annum determined by the Administrative Agent pursuant to the following formula:

Eurodollar Rate =		Eurodollar Base Rate
Eurodollar Rate =		1.00 – Eurodollar Reserve Percentage

Where,

“ Event of Default ” has the meaning specified in Section 7.1 .

“ Excess Cash ” means any cash or Liquid Investments (other than cash collateral) in excess of the Excess Cash Threshold in the aggregate at any time (other than (i) any cash or Liquid Investments set aside to pay in the ordinary course of business amounts of the Borrower or any Subsidiary then due and owing to third parties and for which the Borrower or such Subsidiary has issued checks or has initiated wires or ACH transfers in order to pay (or will issue checks or initiate wires or ACH transfers within one Business Day), (ii) any cash or Liquid

Investments of the Borrower or any Subsidiary constituting purchase price deposits held in escrow by a third party pursuant to a binding and enforceable purchase and sale agreement with a third party containing customary provisions regarding the payment and refunding of such deposits, (iii) any cash or Liquid Investments of the Borrower or any Subsidiary in the Excluded Account, (iv) any cash proceeds of any asset sale of the Borrower or any Subsidiary which the Borrower or such Subsidiary holds in a 1031 exchange account, and (v) any cash or Liquid Investments held by the Borrower or any Subsidiary at the time of the First Amendment Effective Date so long as, on or before the First Amendment Effective Date, such cash and Liquid Investments are transferred to the Excluded Account).

“ Excess Cash Test Day ” has the meaning assigned to it in Section 2.5(g) of this Agreement.

“ Excess Cash Threshold ” means the lesser of (a) $25,000,000 and (b) an amount equal to (i) $15,000,000 plus (ii) an amount equal to (x) .10 times (y) the amount by which the Borrowing Base then in effect exceeds $65,000,000; provided that, in the event that the Utilization is equal to or exceeds 90%, the Excess Cash Threshold shall be $25,000,000; provided , further , that if, other than due to the application of clause (a) above, the Excess Cash Threshold would have been in excess of $25,000,000, the Administrative Agent and the Lenders shall, promptly upon the request of Borrower, consider in good faith an adjustment to the Excess Cash Threshold but shall not be required to make any such adjustments or amendments hereto without the consent of the Required Lenders.

“ Excluded Account ” has the meaning specified in Section 5.8 .

“ Excluded Proceeds ” has the meaning specified in Section 5.8 .

“ Excluded Property ” means, collectively, (a) any Excluded Contracts (as defined in the Security Agreement), (b) any “intent to use” applications for trademark or service mark registrations filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. §1051, unless and until an “Amendment to Allege Use” or a “Statement of Use” under Section 1(c) or Section 1(d) of Lanham Act has been filed, solely to the extent that such a grant of a security interest therein prior to such filing would impair the validity or enforceability of any registration that issues from such “intent to use” application, (c) any real property (other than Oil and Gas Properties and other material real property that is integral to the use of any Oil and Gas Properties), (d) vehicles, (e) any Property owned by any Credit Party on the date hereof or hereafter acquired that is subject to a Lien that secures Purchase Money Debt or Capital Leases permitted to be incurred pursuant to the provisions of this Agreement if the contract or other agreement in which such Lien is granted (or the documentation providing for such Capital Lease), and (f) assets to which the granting or perfecting a security interest would violate any applicable law.

any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guarantee of such Credit Party or the grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such guarantee or security interest is or becomes illegal.

“ Excluded Taxes ” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Recipient, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Recipient with respect to an applicable interest in an Advance or Commitment pursuant to a law in effect on the date on which (i) such Recipient acquires such interest in the Advance or Commitment (other than pursuant to an assignment request by the Borrower under Section 2.14 ) or (ii) such Recipient changes its lending office, except in each case to the extent that, pursuant to Section 2.13 , amounts with respect to such Taxes were payable either to such Recipient’s assignor immediately before such Recipient became a party hereto or to such Recipient immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.13(g) and (d) any Taxes imposed under FATCA.

onerous to comply with, and any fiscal or regulatory legislation, rules or practices adopted pursuant to such intergovernmental agreement.

“ Federal Reserve Board ” means the Board of Governors of the Federal Reserve System or any of its successors.

“ Fee Letter ” means any of (a) that certain Engagement Letter dated as of June 19, 2015 among the Borrower, Administrative Agent and the Lead Arranger and (b) that certain Engagement Letter dated as of April 26, 2016 among the Borrower, Administrative Agent and the Lead Arranger, and “ Fee Letters ” shall mean such term collectively.

“ First Amendment Effective Date ” means April 26, 2016.

“ Foreign Lender ” means a Lender that is not a U.S. Person.

“ GAAP ” means United States of America generally accepted accounting principles as in effect from time to time, applied on a basis consistent with the requirements of Section 1.3 .

bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) having jurisdiction over such Person.

“ Guarantors ” means (a) the Subsidiaries of the Borrower listed on Schedule 4.11 , (b) each other Subsidiary of the Borrower from time to time, and (c) any other Person that becomes a guarantor of all or a portion of the Obligations and which has entered into either a joinder agreement substantially in the form attached to the Guaranty or a new Guaranty.

“ Guaranty ” means the Guaranty Agreement executed in substantially the same form as Exhibit C .

“ Hedging Arrangement ” means a hedge, call, put, swap, collar, floor, cap, option, swaption, forward sale or purchase or other similar contract or similar arrangement (including any obligations to purchase or sell any commodity or security at a future date for a specific price) which is entered into to reduce or eliminate or otherwise protect against the risk of fluctuations in prices or rates, including interest rates, foreign exchange rates, commodity prices and securities prices.

“ Hydrocarbon Hedge Agreement ” means a Hedging Arrangement related to the price of Hydrocarbons.

“ Income Tax Expense ” means for Borrower and its Subsidiaries, on a consolidated basis for any period, all state and federal franchise or income taxes paid or due to be paid during such period.

“ Independent Engineer ” means Ryder Scott Company, L.P., or any other engineering firm acceptable to the Administrative Agent.

the period selected by the Borrower pursuant to the provisions below and Section 2.4 . The duration of each such Interest Period shall be one, two, three, or six months, in each case as the Borrower may select, provided that:

(a) Interest Periods commencing on the same date for Advances comprising part of the same Borrowing shall be of the same duration;

(d) the Borrower may not select any Interest Period for any Advance which ends after the Maturity Date.

“ IRS ” means the United States Internal Revenue Service.

“ Issuing Lender ” means Wells Fargo in its capacity as a Lender that issues Letters of Credit for the account of any Credit Party pursuant to the terms of this Agreement.

“ Lead Arranger ” Wells Fargo Securities, LLC.

“ Legal Requirement ” means any law, statute, ordinance, decree, requirement, order, judgment, rule, regulation (or official interpretation of any of the foregoing) of, and the terms of

any license or permit issued by, any Governmental Authority, including, but not limited to, Regulations T, U and X.

“ Letter of Credit Fees ” means fees payable pursuant to Section 2.7(b)(i) .

“ Letter of Credit Maximum Amount ” means $5,000,000; provided that, on and after the Maturity Date, the Letter of Credit Maximum Amount shall be zero.

“ Letter of Credit Obligations ” means any obligations of the Borrower under this Agreement in connection with the Letters of Credit.

“ Leverage Ratio ” means, as of the end of each fiscal quarter, the ratio of (a) the consolidated Debt of the Borrower and its Subsidiaries (other than obligations under clauses (d), (e) (to the extent relating to earn-out obligations that are not liabilities on the balance sheet in accordance with GAAP and usual and customary purchase price adjustments), (g) and (k) (to the extent in respect of obligations under clauses (d), (e) (to the extent relating to earn-out obligations that are not liabilities on the balance sheet in accordance with GAAP and usual and customary purchase price adjustments) and (g)) of the definition of “ Debt ”) as of the last day of such fiscal quarter to (b) (i) for the fiscal quarter ending June 30, 2015, EBITDAX for such fiscal quarter times four, (ii) for the fiscal quarter ending September 30, 2015, EBITDAX for the two fiscal quarter period then ended times two, (iii) for the fiscal quarter ending December 31, 2015,

EBITDAX for the three fiscal quarter period then ended times 4/3, and (iv) thereafter, EBITDAX for the four-fiscal quarter period then ended.

“ Lien ” means any mortgage, lien, pledge, charge, deed of trust, security interest, or encumbrance to secure or provide for the payment of any obligation of any Person, whether arising by contract, operation of law, or otherwise (including the interest of a vendor or lessor under any conditional sale agreement, Capital Lease, or other title retention agreement).

“ LLC Agreement ” means the Limited Liability Company Agreement of the Borrower dated as of April 3, 2013, as amended or otherwise modified in accordance with the Credit Documents.

“ Majority Lenders ” means (a) at any time when there are three or more Lenders, two or more Lenders holding at least 51% of the aggregate Maximum Exposure Amount, (b) at any time when there are two or fewer Lenders, 100% of the Lenders, and (c) at any time when there is only one Lender, such Lender; provided that, if there are two or more Lenders, the Commitment of, and the portion of the Advances and Letter of Credit Exposure held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Majority Lenders unless all Lenders are Defaulting Lenders.

any right or remedy of any Secured Party under any Credit Document; or (d) on the validity or enforceability of this Agreement or any of the other Credit Documents.

“ Maturity Date ” means the earlier of (a) June 19, 2020 and (b) the earlier termination in whole of the Commitments pursuant to Section 2.1(c) or Article 7 .

“ Maximum Rate ” means the maximum nonusurious interest rate under applicable law.

“ Moody’s ” means Moody’s Investors Service, Inc. and any successor thereto which is a nationally recognized statistical rating organization.

disposition of capital assets (such term to include all fixed assets and all securities) other than in the ordinary course of business, and (ii) any write-up or write-down of assets and (b) the cumulative effect of any change in GAAP.

“ Non-Defaulting Lender ” means, at any time, each Lender that is not a Defaulting Lender at such time.

“ Notice of Borrowing ” means a Notice of Borrowing signed by the Borrower in substantially the same form as Exhibit F .

“ Notice of Continuation or Conversion ” means a notice of continuation or conversion signed by the Borrower in substantially the same form as Exhibit G .

interest under, or otherwise with respect to, any Credit Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.14(b) ).

“ Participant ” has the meaning set forth in Section 9.7(d) .

“ Participant Register ” has the meaning set forth in Section 9.7(d) .

“ Patriot Act ” means the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).

“ Payment in Full of Obligations ” means: (a) the termination of this Agreement, (b) the payment in full of the Obligations (other than contingent indemnification and expense reimbursement obligations that are, in each case, not then due and owing), (c) the termination and return of all Letters of Credit (other than Letters of Credit that are Cash Collateralized or as to which arrangements satisfactory to the Issuing Lender in its sole discretion have been made), (d) the termination or novation of all Hedging Arrangements with a Swap Counterparty and payment in full of all amounts owing thereunder (other than Hedging Arrangements as to which arrangements satisfactory to the Swap Counterparty in its sole discretion have been made), (e) the termination in full of the Commitments, and (f) the termination and payment in full of all Banking Services Obligations (other than with respect to Banking Services as to which arrangements satisfactory to the Banking Services Provider in its sole discretion have been made).

“ PBGC ” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

“ Permitted Debt ” has the meaning set forth in Section 6.1 .

“ Permitted Investments ” has the meaning set forth in Section 6.3 .

“ Permitted Liens ” has the meaning set forth in Section 6.2 .

“ Pledge Agreement ” means a Pledge Agreement substantially in the form of Exhibit H .

“ Pricing Grid ” means the pricing information set forth in Schedule II .

“ Purchase Money Debt ” means Debt, the proceeds of which are used to finance (or refinance) the acquisition, construction, or improvement of inventory, equipment or other Property in the ordinary course of business; provided , however , that such Debt is incurred no later than 120 days after such acquisition or the completion of such construction or improvement.

contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

“ Quantum Group ” means Q-Jagged Peak Energy Investment Partners, LLC and its Affiliates.

“ Quarterly Redetermination ” has the meaning assigned to such term in Section 2.2(c) .

“ Recipient ” means (a) the Administrative Agent, (b) any Lender, and (c) the Issuing Lender, as applicable.

“ Register ” has the meaning set forth in Section 9.7(c) .

“ Release ” shall have the meaning set forth in CERCLA or under any other Environmental Law.

“ Replacement Hedging Contract ” means any Hedging Arrangement entered into by the end of the Business Day immediately succeeding the day on which a Hedge Event occurs.

“ Required Lenders ” means (a) at any time when there are three or more Lenders, Lenders holding at least 66 2/3% of the aggregate Maximum Exposure Amount, (b) at any time when there are two or fewer Lenders, 100% of the Lenders and (c) at any time when there is only one Lender, such Lender; provided that, if there are two or more Lenders, the Commitment of, and the portion of the Advances and Letter of Credit Exposure held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders unless all Lenders are Defaulting Lenders.

“ Reserve Report Certificate ” has the meaning set forth in Section 5.2(c)(iii) .

“ Response ” shall have the meaning set forth in CERCLA or under any other Environmental Law.

has officers, then such Person’s Chief Executive Officer, President, Chief Financial Officer, Chief Operating Officer or Vice President, and if such Person is managed by members, then a Responsible Officer of such Person’s managing member, and if such Person is managed by managers, then a manager (if such manager is an individual) or a Responsible Officer of such manager (if such manager is an entity), and (c) with respect to any Person that is a general partnership, limited partnership or a limited liability partnership, a Responsible Officer of such Person’s general partner or partners. Unless expressly provided otherwise, all references herein and in any other Credit Documents to any “Responsible Officer” means a Responsible Officer of the Borrower.

“ S&P ” means Standard & Poor’s Rating Agency Group, a division of McGraw-Hill Companies, Inc., or any successor thereof which is a national credit rating organization.

“ Sanction(s) ” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered the Office of Foreign Assets Control of the United States Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, any European Union member state or Her Majesty’s Treasury of the United Kingdom.

“ Sanctioned Country ” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (as of the First Amendment Effective Date, Crimea, Cuba, Iran, North Korea, Sudan and Syria).

“ Sanctioned Person ” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons described in the foregoing subsections (a) or (b).

“ SEC ” means the Securities and Exchange Commission.

“ Secured Obligations ” means (a) the Obligations, (b) the Banking Services Obligations, and (c) all obligations of any of the Credit Parties owing to Swap Counterparties under any

Hedging Arrangements; provided, however that “ Secured Obligations ” shall not include the Excluded Swap Obligations.

“ Secured Parties ” means the Administrative Agent, the Issuing Lender, the Lenders, the Swap Counterparties and Banking Service Providers.

“ Security Agreement ” means the Security Agreement among the Credit Parties and the Administrative Agent in substantially the same form as Exhibit I .

“ Semi-Annual Redetermination ” has the meaning assigned to such term in Section 2.2(b) .

“ Scheduled Redetermination ” has the meaning assigned to such term in Section 2.2(e) .

“ Subject Date ” has the meaning set forth in Section 5.15 .

Lender, such Lender; provided that, if there are two or more Lenders, the Commitment of, and the portion of the Advances and Letter of Credit Exposure held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Super-Majority Lenders unless all Lenders are Defaulting Lenders.

“ Swap Counterparty ” a Person who (a) is a Lender or Affiliate of a Lender on the Closing Date and is a counterparty to a Hedging Arrangement with a Credit Party, which Hedging Arrangement was in effect on the Closing Date, or (b) was a Lender or an Affiliate of a Lender at the time it entered into a Hedging Arrangement with a Credit Party as permitted by the terms of this Agreement; provided that (i) when any Swap Counterparty assigns or otherwise transfers any interest held by it under any Hedging Arrangement to any other Person pursuant to the terms of such agreement, the obligations thereunder shall be secured by Liens under the Credit Documents only if such assignee or transferee is also then a Lender or an Affiliate of a Lender and (ii) if a Swap Counterparty ceases to be a Lender hereunder or an Affiliate of a Lender hereunder, obligations owing to such Swap Counterparty shall be secured by Liens under the Credit Documents only to the extent such obligations arise from transactions under such individual Hedging Arrangements (and not the Master Agreement between such parties) entered into prior to the Closing Date or at the time such Swap Counterparty was a Lender hereunder or an Affiliate of a Lender hereunder, without giving effect to any extension, increases, or modifications thereof which are made after such Swap Counterparty ceases to be a Lender hereunder or an Affiliate of a Lender hereunder.

“ Type ” has the meaning set forth in Section 1.4 .

“ U.S. Person ” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.

“ U.S. Tax Compliance Certificate ” has the meaning assigned to such term in Section 2.13(g)(ii)(B)(iii) .

“ Utilization ” means the percentage obtained by dividing (a) the outstanding principal amount of the Advances and the Letter of Credit Exposure at such time by (b) the lesser of the Commitments and the Borrowing Base at such time.

“ Wells Fargo ” means Wells Fargo Bank, National Association. “ Withholding Agent ” means any Credit Party and the Administrative Agent.

“ Write-Down and Conversion Powers ” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

Section 1.3 Accounting Terms; Changes in GAAP .

(a) All accounting terms not specifically defined in this Agreement shall be construed in accordance with GAAP applied on a consistent basis with those applied in the preparation of

the financial statements of the Borrower delivered to the Administrative Agent for the fiscal year ended December 31, 2014 other than such changes that have been disclosed to the Administrative Agent on the next date on which financial statements are required to be delivered to the Administrative Agent under Section 5.2 .

ARTICLE 2

CREDIT FACILITIES

Section 2.1 Commitment for Advances .

(b) Notes . The indebtedness of the Borrower to each Lender resulting from Advances owing to such Lender shall be evidenced by a Note payable to such Lender or its registered assigns.

Section 2.2 Borrowing Base .

(a) Borrowing Base . The Borrowing Base in effect as of the First Amendment Effective Date has been set by the Administrative Agent and the Lenders and acknowledged by the Borrower as $65,000,000. Such initial Borrowing Base shall remain in effect until the next redetermination or reduction made pursuant to this Section 2.2 . The Borrowing Base shall be determined in accordance with the standards set forth in Section 2.2(f) and is subject to periodic redetermination pursuant to Sections 2.2(b) , 2.2(c) and 2.2(e) and reductions pursuant to Section 2.2(g) .

(b) Semi-Annual Redeterminations .

(i) The Borrower shall deliver to the Administrative Agent, on or before each September 1, beginning September 1, 2015, an Internal Engineering Report dated

effective as of the immediately preceding July 1 (or dated effective as of such later date reasonably acceptable to the Administrative Agent), prepared in accordance with the procedures in the Independent Engineering Report effective as of the immediately preceding January 1 (or dated effective as of such later date agreed to by the Administrative Agent pursuant to Section 2.2(b)(ii) ) and such other information as may be reasonably requested by the Administrative Agent or any Lender with respect to the Oil and Gas Properties included or to be included in the Borrowing Base. The Administrative Agent shall promptly, and in any event within 15 days after the Administrative Agent and the Lenders’ receipt of such Internal Engineering Report and other information, deliver to each Lender the Administrative Agent’s recommendation for the redetermined Borrowing Base (for purposes of this subsection, the “ Proposed Borrowing Base ”). After having received notice of such proposal, the Lenders shall have 15 days to agree or disagree in writing with the Proposed Borrowing Base. If at the end of the 15 days, any Lender has not communicated its approval or disapproval to the Administrative Agent, such silence shall be deemed to be a disapproval of the Proposed Borrowing Base. If at the end of such 15 days, the Required Lenders (or all of the Lenders if the Borrowing Base is to be increased) have approved the Proposed Borrowing Base, then the Proposed Borrowing Base shall become the redetermined Borrowing Base, effective on or about October 1 of each year. To the extent that within such 15 day period the Administrative Agent has not received the requisite number of approvals from the Lenders, the Administrative Agent shall poll the Lenders to ascertain the highest Borrowing Base then acceptable to all of the Lenders, in the case of an increase in the Borrowing Base, or the Required Lenders, in the case of a decrease or maintenance of the Borrowing Base, and such amount shall become the new Borrowing Base, effective on or about October 1 of each year. After a redetermined Borrowing Base is approved by the Required Lenders or all of the Lenders, as applicable, the Administrative Agent shall notify the Borrower of the amount of the redetermined Borrowing Base.

(ii) The Borrower shall deliver to the Administrative Agent, on or before each March 1, beginning March 1, 2016, an Independent Engineering Report dated effective as of the immediately preceding January 1 (or dated effective as of such later date reasonably acceptable to the Administrative Agent) and such other information as may be reasonably requested by the Administrative Agent or any Lender with respect to the Oil and Gas Properties included or to be included in the Borrowing Base. The Administrative Agent shall promptly, and in any event within 15 days after the Administrative Agent and the Lenders’ receipt of such Independent Engineering Report and other information, deliver to each Lender the Administrative Agent’s recommendation for the redetermined Borrowing Base (for purposes of this subsection, the “ Proposed Borrowing Base ”). After having received notice of such proposal, the Lenders shall have 15 days to agree or disagree in writing with the Proposed Borrowing Base. If at the end of the 15 days, any Lender has not communicated its approval or disapproval to the Administrative Agent, such silence shall be deemed to be a disapproval of the Proposed Borrowing Base. If at the end of such 15 days, the Required Lenders (or all of the Lenders if the Borrowing Base is to be increased) have approved the Proposed Borrowing Base, then the Proposed Borrowing Base shall become the redetermined Borrowing Base, effective on or about April 1 of each year. To the extent that within such 15 day period the Administrative Agent has not received the requisite number of approvals from the Lenders, the

Administrative Agent shall poll the Lenders to ascertain the highest Borrowing Base then acceptable to all of the Lenders, in the case of an increase in the Borrowing Base, or the Required Lenders, in the case of a decrease or maintenance of the Borrowing Base, and such amount shall become the new Borrowing Base, effective on or about April 1 of each year. After a redetermined Borrowing Base is approved by the Required Lenders or all of the Lenders, as applicable, the Administrative Agent shall notify the Borrower of the amount of the redetermined Borrowing Base.

net revenue interest in such Engineering Report and (ii) will cause the Credit Parties to bear not more than that portion (expressed as a fraction, percentage or decimal), specified as working interest in such Engineering Report, of the costs of drilling, developing and operating the wells identified in such Engineering Report or identified in the exhibits to the Mortgages encumbering such Oil and Gas Properties (except for any increases in working interest with a corresponding increase in the net revenue interest in such Oil and Gas Property).

(i) In addition to the Semi-Annual Redeterminations, the Borrower may elect to cause the Borrowing Base to be redetermined between Semi-Annual Redeterminations (a “ Quarterly Redetermination ”) in accordance with this Section 2.2(c) , provided , that the Borrower shall request such Quarterly Redetermination by notifying the Administrative Agent and the Lenders concurrent with the delivery of the applicable Engineering Report in connection with the Semi-Annual Redetermination immediately preceding the applicable Quarterly Redetermination that it requests a Quarterly Redetermination be conducted prior to the next Semi-Annual Redetermination. Each such Quarterly Redetermination and Semi-Annual Redetermination shall be referred to herein as a (“ Scheduled Redetermination).

(ii) Each requested January 1 Quarterly Redetermination shall be effectuated as follows. The Borrower shall deliver to the Administrative Agent on or before the applicable December 1, an Internal Engineering Report effective as of a date that is no later than October 1 (or dated effective as of such later date reasonably acceptable to the Administrative Agent), prepared in accordance with the procedures in the Independent Engineering Report effective as of the immediately preceding January 1 and such other information as may be reasonably requested by the Administrative Agent or any Lender with respect to the Oil and Gas Properties included or to be included in the Borrowing Base. The Administrative Agent shall promptly, and in any event within 15 days after the Administrative Agent and the Lenders’ receipt of such Internal Engineering Report and other information, deliver to each Lender the Administrative Agent’s recommendation for the redetermined Borrowing Base (for purposes of this subsection, the “ Proposed Borrowing Base ”). After having received notice of such proposal, the Lenders shall have 15 days to agree or disagree in writing with the Proposed Borrowing Base. If at the end of the 15 days, any Lender has not communicated its approval or disapproval to the Administrative Agent, such silence shall be deemed to be a disapproval of the Proposed Borrowing Base. If at the end of such 15 days, the Required Lenders (or all of the Lenders if the Borrowing Base is to be increased) have approved the Proposed Borrowing Base, then the Proposed Borrowing Base shall become the redetermined Borrowing Base, effective on or about January 1. To the extent that within such 15 day period the Administrative Agent has not received the requisite number of approvals from the Lenders, the Administrative Agent shall poll the Lenders to ascertain the highest Borrowing Base then acceptable to all of the Lenders, in the case of an increase in the Borrowing Base, or the Required Lenders, in the case of a decrease or maintenance of the Borrowing Base, and such amount shall become the new Borrowing Base, effective on or about January 1. After a redetermined Borrowing Base is approved by the Required

Lenders or all of the Lenders, as applicable, the Administrative Agent shall notify the Borrower of the amount of the redetermined Borrowing Base.

(iii) Each requested July 1 Quarterly Redetermination shall be effectuated as follows. The Borrower shall deliver to the Administrative Agent on or before the applicable June 1, an Internal Engineering Report effective as of a date that is no later than April 1 (or dated effective as of such later date reasonably acceptable to the Administrative Agent), prepared in accordance with the procedures in the Independent Engineering Report effective as of the immediately preceding January 1 (or dated effective as of such later date agreed to by the Administrative Agent pursuant to Section 2.2(b)(ii) ) and such other information as may be reasonably requested by the Administrative Agent or any Lender with respect to the Oil and Gas Properties included or to be included in the Borrowing Base. The Administrative Agent shall promptly, and in any event within 15 days after the Administrative Agent and the Lenders’ receipt of such Internal Engineering Report and other information, deliver to each Lender the Administrative Agent’s recommendation for the redetermined Borrowing Base (for purposes of this subsection, the “ Proposed Borrowing Base ”). After having received notice of such proposal, the Lenders shall have 15 days to agree or disagree in writing with the Proposed Borrowing Base. If at the end of the 15 days, any Lender has not communicated its approval or disapproval to the Administrative Agent, such silence shall be deemed to be a disapproval of the Proposed Borrowing Base. If at the end of such 15 days, the Required Lenders (or all of the Lenders if the Borrowing Base is to be increased) have approved the Proposed Borrowing Base, then the Proposed Borrowing Base shall become the redetermined Borrowing Base, effective on or about July 1. To the extent that within such 15 day period the Administrative Agent has not received the requisite number of approvals from the Lenders, the Administrative Agent shall poll the Lenders to ascertain the highest Borrowing Base then acceptable to all of the Lenders, in the case of an increase in the Borrowing Base, or the Required Lenders, in the case of a decrease or maintenance of the Borrowing Base, and such amount shall become the new Borrowing Base, effective on or about July 1. After a redetermined Borrowing Base is approved by the Required Lenders or all of the Lenders, as applicable, the Administrative Agent shall notify the Borrower of the amount of the redetermined Borrowing Base.

Engineering Report, (A) the Credit Parties, own the Oil and Gas Properties specified therein free and clear of any Liens (except Permitted Liens), (B) on and as of the date of such Engineering Report each Oil and Gas Property identified as PDP Reserves therein was developed for oil and gas, and the wells pertaining to such Oil and Gas Properties that are described therein as producing wells, were each producing oil and/or gas in paying quantities, except for Wells that were utilized as water or gas injection wells, carbon dioxide wells or as water disposal wells (each as noted in such Engineering Report), (C) the descriptions of quantum and nature of the record title interests of the Credit Parties, set forth in such Engineering Report include the entire record title interests of the Credit Parties in such Oil and Gas Properties, are complete and accurate in all respects, and take into account all Permitted Liens, (D) there are no “ back-in ”, “ reversionary ” or “ carried ” interests held by third parties which could reduce the interests of the Credit Parties in such Oil and Gas Properties except as set forth in, or otherwise accounted for in, the Engineering Report, (E) no operating or other agreement to which any Credit Party is a party or by which any Credit Party is bound affecting any part of such Oil and Gas Properties requires any Credit Party to bear any of the costs relating to such Oil and Gas Properties greater than the record title interest of any Credit Party in such portion of such Oil and Gas Properties as set forth in such Engineering Report, except in the event any Credit Party is obligated under an operating agreement to assume a portion of a defaulting party’s share of costs, and (F) the Credit Parties’ ownership of the Hydrocarbons and the undivided interests in the Oil and Gas Properties as specified in such Engineering Report (i) will, after giving full effect to all Permitted Liens, afford the Credit Parties not less than those net interests (expressed as a fraction, percentage or decimal) in the production from or which is allocated to such Hydrocarbons specified as net revenue interest in such Engineering Report and (ii) will cause the Credit Parties to bear not more than that portion (expressed as a fraction, percentage or decimal), specified as working interest in such Engineering Report, of the costs of drilling, developing and operating the wells identified in such Engineering Report or identified in the exhibits to the Mortgages encumbering such Oil and Gas Properties (except for any increases in working interest with a corresponding increase in the net revenue interest in such Oil and Gas Property).

(d) [Reserved] .

provided that, no such prior written notice shall be required for any redetermination made by the Lenders during the existence of an Event of Default. In connection with any redetermination of the Borrowing Base under this Section 2.2(e) , the Borrower shall provide the Administrative Agent and the Lenders with an Internal Engineering Report prepared in accordance with the procedures used in the immediately preceding Independent Engineering Report or an Independent Engineering Report dated effective as of a date no more than 30 days prior to the redetermination, and such other information as may be reasonably requested by the Administrative Agent or any Lender with respect to the Oil and Gas Properties included or to be included in the Borrowing Base. The Administrative Agent shall promptly notify the Borrower in writing of each redetermination of the Borrowing Base pursuant to this Section 2.2(e) and the amount of the Borrowing Base as so redetermined.

(f) Standards for Redetermination . Each redetermination of the Borrowing Base by the Administrative Agent and the Lenders pursuant to this Section 2.2 shall be made (i) in the sole discretion of the Administrative Agent and the Lenders (but in accordance with the other provisions of this Section 2.2(f) , (ii) in accordance with the Administrative Agent’s and the Lenders’ customary internal standards and practices for valuing and redetermining the value of Oil and Gas Properties in connection with reserve based oil and gas loan transactions, (iii) in conjunction with the most recent Independent Engineering Report or Internal Engineering Report, as applicable, or other information received by the Administrative Agent and the Lenders relating to the Proven Reserves of the Credit Parties, and (iv) based upon the estimated value of the Proven Reserves owned by the Credit Parties as determined by the Administrative Agent and the Lenders. In valuing and redetermining the Borrowing Base, the Administrative Agent and the Lenders may also consider the business, financial condition, and Debt obligations of the Credit Parties and such other factors as the Administrative Agent and the Lenders customarily deem appropriate, including without limitation, commodity price assumptions, projections of production, operating expenses, general and administrative expenses, capital costs, working capital requirements, liquidity evaluations, dividend payments, environmental costs, and legal costs. In that regard, the Borrower acknowledges that the determination of the Borrowing Base contains an equity cushion (market value in excess of loan value), which is essential for the adequate protection of the Administrative Agent and the Lenders. No Proven Reserves shall be included in the Borrowing Base unless the Administrative Agent shall have received (or the Administrative Agent shall have otherwise agreed on the timing of the delivery of), at the Borrower’s expense, (A) evidence of title reasonably satisfactory in form and substance to the Administrative Agent covering at least 80% (by PV10) of the Proven Reserves as evaluated in the most recently delivered Engineering Report, and (B) Mortgages and such other Security Documents requested by the Administrative Agent to the extent necessary to cause the Administrative Agent to have an Acceptable Security Interest in at least 90% (by PV10) of the Proven Reserves as evaluated in the most recently delivered Engineering Report and in at least 90% (by PV10) of the PDP Reserves as evaluated in the most recently delivered Engineering Report. At all times after the Administrative Agent has given the Borrower notification of a redetermination of the Borrowing Base under this Section 2.2 , the Borrowing Base shall be equal to the redetermined amount or such lesser amount designated by the Borrower and disclosed in writing to the Administrative Agent and the Lenders until the Borrowing Base is subsequently redetermined or reduced in accordance with this Section 2.2 ; provided that the Borrower shall not request that the Borrowing Base be reduced to a level that would result in a Borrowing Base Deficiency. Notwithstanding anything herein to the contrary, (x) to the extent the redetermined

Borrowing Base is less than or equal to the Borrowing Base in effect prior to such redetermination, such redetermined Borrowing Base must be approved by the Administrative Agent and the Required Lenders, and (y) to the extent the redetermined Borrowing Base is greater than the Borrowing Base in effect prior to such redetermination (such redetermined Borrowing Base must be approved by the Administrative Agent and all of the Lenders. If, however, the Administrative Agent and the Lenders or the Required Lenders, as applicable, have not approved the Borrowing Base in accordance with the preceding sentence, then the Administrative Agent shall poll the Lenders to ascertain the highest Borrowing Base then acceptable to the number of Lenders sufficient to constitute the Required Lenders for purposes of this Section 2.2 and, so long as such amount does not increase the Borrowing Base then in effect, such amount shall become the new Borrowing Base.

(g) Reductions to Borrowing Base . If the sum of (i) the aggregate BB Value of Oil and Gas Properties as determined by the Administrative Agent subject to Asset Sales consummated since the immediately preceding redetermination of the Borrowing Base plus (ii) the aggregate BB Value of Hedging Arrangements which have been the subject of a Hedge Event since the immediately preceding redetermination of the Borrowing Base (the sum of clauses (i) and (ii) being the “ BB Threshold Amount ”) exceeds 5% of the most recently redetermined Borrowing Base, then, upon the consummation of any such Asset Sale or such Hedge Event, after which the BB Threshold Amount exceeds 5% of the most recently redetermined Borrowing Base, the Borrowing Base shall be reduced, effective immediately upon such disposition or Hedge Event by an amount equal to the BB Value of the Oil and Gas Properties subject of such Asset Sale or the BB Value of the Hedging Arrangements subject to of such Hedge Event, as applicable.

Section 2.3 Letters of Credit .

in an amount equal to 103% of the Letter of Credit Exposure, and (2) any such Letter of Credit with a one-year tenor may expressly provide for an automatic extension of one additional year so long as such Letter of Credit expressly allows the Issuing Lender, at its sole discretion, to elect not to provide such extension; provided that, in any event, such automatic extension may not result in an expiration date that occurs after the fifth Business Day prior to the Maturity Date;

(iii) unless such Letter of Credit (A) is a standby letter of credit and (B) does not support the repayment of indebtedness for borrowed money of any Person;

(iv) unless such Letter of Credit is in form and substance acceptable to the Issuing Lender in its sole discretion;

(viii) if the issuance, increase or extension of such Letter of Credit would violate one or more policies of the Issuing Lender applicable to letters of credit generally;

(ix) if Letter of Credit is to be denominated in a currency other than Dollars;

giving effect to Section 2.16(a)(iv) ) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other Letter of Credit Obligations as to which the Issuing Lender has actual or potential Fronting Exposure, as it may elect in its sole discretion; or

(i) any lack of validity or enforceability of any Letter of Credit Documents;

(ii) any amendment or waiver of or any consent to departure from any Letter of Credit Documents;

(v) payment by the Issuing Lender under such Letter of Credit against presentation of a draft or certificate which does not comply with the terms of such Letter of Credit; or

(vi) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

(i) the use which may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith;

(iv) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit ( INCLUDING THE ISSUING LENDER’S OWN NEGLIGENCE ),

(h) Cash Collateral Account .

(i) If the Borrower is required to deposit funds in the Cash Collateral Account pursuant to Sections 2.5(c) , 2.5(g) , 2.16 , 7.2(b) or 7.3(b) or any other provision under this Agreement, then the Borrower and the Administrative Agent shall establish the Cash Collateral Account and the Borrower shall execute any documents and agreements, including the Administrative Agent’s standard form assignment of deposit accounts, that the Administrative Agent requests in connection therewith to establish the Cash Collateral Account and grant the Administrative Agent an Acceptable Security Interest in such account and the funds therein. The Borrower hereby pledges to the Administrative Agent and grants the Administrative Agent a security interest in the Cash Collateral Account, whenever established, all funds held in the Cash Collateral Account from time to time, and all proceeds thereof as security for the payment of the Secured Obligations.

Section 2.4 Advances .

(a) Notice . Each Borrowing, shall be made pursuant to the applicable Notice of Borrowing given by Borrower to Administrative Agent not later than (i) 10:00 a.m. (Denver, Colorado time) on the third Business Day before the date of the proposed Borrowing, in the case of a Eurodollar Advance or (ii) 10:00 a.m. (Denver, Colorado time) on the Business Day of the proposed Borrowing in the case of a Base Rate Advance. The Administrative Agent shall give to each Lender prompt notice of such proposed Borrowing, by facsimile, telex or electronic mail. Each Notice of Borrowing shall be by facsimile or telex or electronic mail, confirmed promptly by the Borrower with a hard copy (other than with respect to notice sent by facsimile or electronic mail), specifying (i) the requested date of such Borrowing (which shall be a Business Day), (ii) the requested Type of Advances comprising such Borrowing, (iii) the aggregate amount of such Borrowing, and (iv) if such Borrowing is to be comprised of Eurodollar Advances, the requested Interest Period for each such Advance; provided that, and all Borrowings to be made on the Closing Date shall consist of either (A) only Base Rate Advances which may, subject to the terms of this Agreement, be thereafter Converted into Eurodollar Advances or (B) Eurodollar Advances so long as the Borrower executes a letter concurrently with making the request for such Eurodollar Advance in form and substance satisfactory to the Administrative Agent indemnifying the Administrative Agent and the Lenders for any loss, cost or expense incurred due to the Borrower’s failure to borrow such Eurodollar Advance on the date or in the amount notified by the Borrower and other losses, costs and expenses comparable to those addressed in Section 2.10 . In the case of a proposed Borrowing comprised of Eurodollar Advances, the Administrative Agent shall promptly notify each Lender of the applicable interest rate under Section 2.8(b) . Each Lender shall, before 11:00 a.m. (Denver, Colorado time) on the date of such Borrowing, make available for the account of its applicable Lending Office to the Administrative Agent at its address referred to in Section 9.9 , or such other location as the Administrative Agent may specify by notice to the Lenders, in same day funds, such Lender’s Pro Rata Share of such Borrowing. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article 3 , the Administrative Agent will make such funds available to the Borrower at its account with the Administrative Agent or as otherwise directed by the Borrower with written notice to the Administrative Agent.

(b) Conversions and Continuations . In order to elect to Convert or continue an Advance under this paragraph, the Borrower shall deliver an irrevocable Notice of Continuation or Conversion to the Administrative Agent at the Administrative Agent’s office no later than 10:00 a.m. (Denver, Colorado time) (i) at least one Business Day in advance of the proposed conversion date in the case of a Conversion to a Base Rate Advance and (ii) at least three Business Days in advance of the proposed Conversion or continuation date in the case of a

Conversion to, or a continuation of, a Eurodollar Advance. Each such Notice of Conversion or Continuation shall be in writing or by telex, electronic mail or facsimile confirmed promptly by the Borrower with a hard copy (other than with respect to notice sent by facsimile or electronic mail), specifying (i) the requested Conversion or continuation date (which shall be a Business Day), (ii) the amount and Type of the Advance to be Converted or continued, (iii) whether a Conversion or continuation is requested and, if a Conversion, into what Type of Advance, and (iv) in the case of a Conversion to, or a continuation of, a Eurodollar Advance, the requested Interest Period. Promptly after receipt of a Notice of Continuation or Conversion under this paragraph, the Administrative Agent shall provide each Lender with a copy thereof and, in the case of a Conversion to or a Continuation of a Eurodollar Advance, notify each Lender of the applicable interest rate under Section 2.8(b) . The portion of Advances comprising part of the same Borrowing that are Converted to Advances of another Type shall constitute a new Borrowing.

(i) at no time shall there be more than twenty (20) Interest Periods applicable to outstanding Eurodollar Advances;

(ii) if the Majority Lenders require, the Borrower may not select Eurodollar Advances for any Borrowing at any time when an Event of Default has occurred and is continuing;

(v) if the Majority Lenders shall, at least one Business Day before the date of any requested Borrowing, notify the Administrative Agent that the Eurodollar Rate for Eurodollar Advances comprising such Borrowing will not adequately reflect the cost to such Lenders of making or funding their respective Eurodollar Advances, as the case may be, for such Borrowing, the right of the Borrower to select Eurodollar Advances for such Borrowing or for any subsequent Borrowing shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist, and each Advance comprising such Borrowing shall be a Base Rate Advance; and

(e) Administrative Agent Reliance . Unless the Administrative Agent shall have received notice from a Lender before the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s applicable Pro Rata Share of any Borrowing, the Administrative Agent may assume that such Lender has made its applicable Pro Rata Share of such Borrowing available to the Administrative Agent on the date of such Borrowing in accordance with Section 2.4(a) , and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made its applicable Pro Rata Share of such Borrowing available to the Administrative Agent, such Lender and the Borrower severally agree to immediately repay to the Administrative Agent on demand such corresponding amount, together with interest on such amount, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable on such day to Advances comprising such Borrowing and (ii) in the case of such Lender, the lesser of (A) the Federal Funds Rate for such day and (B) the Maximum Rate. If such Lender shall repay to the Administrative Agent such corresponding amount and interest as provided above, such corresponding amount so repaid shall constitute such Lender’s Advance as part of such Borrowing for purposes of this Agreement even though not made on the same day as the other Advances comprising such Borrowing.

Section 2.5 Prepayments .

remain obligated to pay amounts, if any, owing pursuant to Section 2.10 notwithstanding such permitted revocation) and binding upon the Borrower. Each payment of any Advance pursuant to this Section 2.5 shall be made in a manner such that all Advances comprising part of the same Borrowing are paid in whole or ratably in part other than Advances owing to a Defaulting Lender as provided in Section 2.16 .

(b) Optional . The Borrower may elect to prepay any of the Advances without penalty or premium except as set forth in Section 2.10 and after giving by 10:00 a.m. (Denver, Colorado time) (i) in the case of Eurodollar Advances, at least three Business Days’ or (ii) in case of Base Rate Advances, one Business Day’s prior written notice to the Administrative Agent stating the proposed date and aggregate principal amount of such prepayment. If any such notice is given, the Borrower shall prepay Advances comprising part of the same Borrowing in whole or ratably in part in an aggregate principal amount equal to the amount specified in such notice, together with accrued interest to the date of such prepayment on the principal amount prepaid and amounts, if any, required to be paid pursuant to Section 2.10 as a result of such prepayment being made on such date; provided that (A) each optional partial prepayment of Eurodollar Advances shall be in a minimum amount not less than $1,000,000 and in multiple integrals of $100,000 in excess thereof and (B) each optional partial prepayment of Base Rate Advances shall be in a minimum amount not less than $1,000,000 and in multiple integrals of $100,000 in excess thereof.

(g) Excess Cash Prepayments . On either (a) the last Business Day of each calendar week or if a Default, Event of Default or Borrowing Base Deficiency has occurred and is continuing, on any Business Day (such day, whether pursuant to clause (a) or (b), the “ Excess Cash Test Day ”), if Excess Cash at the end of such Excess Cash Test Day, is greater than $1,000,000, the Borrower shall make a mandatory prepayment in respect of the outstanding amount of the Advances as soon as reasonably practicable but no later than the third Business Day following such Excess Cash Test Day (for the avoidance of doubt, and by way of example, in the event that Excess Cash at the end of the Excess Cash Test Day is $1,000,001, the full $1,000,001 shall be prepaid). Each prepayment under this Section 2.5(g) shall be accompanied, on the date of such prepayment, by a notice from the Borrower to the Administrative Agent specifying (i) the amount of such prepayment, (ii) the Eurodollar Advance(s), if any) that are being prepaid by such prepayment, and (iii) the date of such prepayment, which notice may be

delivered electronically. Each prepayment under this Section 2.5(g) shall be applied to the Advances as determined by the Borrower.

Section 2.6 Repayment . The Borrower shall pay to the Administrative Agent for the ratable benefit of each Lender the aggregate outstanding principal amount of the Advances on the Maturity Date.

Section 2.7 Fees .

(b) Fees for Letters of Credit . The Borrower agrees to pay the following:

(c) Borrowing Base Upfront Fee . The Borrower agrees to pay the fees as agreed to between the Borrower and the Administrative Agent in connection with any increase in the Borrowing Base.

(d) Administrative Agent Fee . The Borrower agrees to pay the fees to the Administrative Agent as set forth in the Fee Letter.

Section 2.8 Interest .

Section 2.9 [Reserved]

(a) any continuation, conversion, payment or prepayment (including any deemed payment or repayment and any reallocated repayment to Non-Defaulting Lenders provided for in Section 2.12(a) , Section 2.14(b) , or Section 2.16 ) of any Advance other than a Base Rate Advance on a day other than the last day of the Interest Period for such Advance (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); provided that no compensation shall be required hereunder in connection with any prepayment required by Section 2.5(g) ;

(d) any assignment of an Eurodollar Advance on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 2.14 ;

including any foreign exchange losses and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Advance, from fees payable to terminate the deposits from which such funds were obtained or from the performance of any foreign exchange contract. The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing. For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 2.10 , the requesting Lender shall be deemed to have funded the Eurodollar Advances made by it at the Eurodollar Base Rate used in determining the Eurodollar Rate for such Advance by a matching deposit or other borrowing in the offshore interbank market for Dollars for a comparable amount and for a comparable period, whether or not such Eurodollar Advance was in fact so funded.

Section 2.11 Increased Costs .

(a) Eurodollar Advances . If any Change in Law shall:

(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of “ Excluded Taxes ” and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

(iii) impose on any Lender or the Issuing Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Advances made by such Lender or any Letter of Credit or participation therein; and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any Advance or of maintaining its obligation to make any such Advance, or to increase the cost to such Lender, Issuing Lender or such other Recipient of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender, Issuing Lender or other Recipient hereunder (whether of principal, interest or any other amount) then, upon request of such Lender, the Issuing Lender or other Recipient, the Borrower will pay to such Lender, Issuing Lender or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, Issuing Lender or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.

Lender’s or the Issuing Lender’s capital or on the capital of such Lender’s or the Issuing Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Advances made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Lender, to a level below that which such Lender or the Issuing Lender or such Lender’s or the Issuing Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Lender’s policies and the policies of such Lender’s or the Issuing Lender’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the Issuing Lender, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Lender or such Lender’s or the Issuing Lender’s holding company for any such reduction suffered.

Section 2.12 Payments and Computations .

but after taking into account payments effected pursuant to Section 9.1 ) in accordance with each Lender’s applicable Pro Rata Share to the Lenders for the account of their respective applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon receipt of other amounts due solely to the Administrative Agent, the Issuing Lender or a specific Lender, the Administrative Agent shall distribute such amounts to the appropriate party to be applied in accordance with the terms of this Agreement.

(e) Sharing of Payments , Etc . If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Advances or other obligations hereunder resulting in such Lender receiving payment of a proportion of the aggregate amount of its Advances and accrued interest thereon or other such obligations greater than its Pro Rata Share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Advances and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Advances and other amounts owing them; provided that:

Section 2.13 Taxes .

(a) Defined Terms . For purposes of this Section 2.13 , the term “Lender” includes any the Issuing Lender and the term “applicable law” includes FATCA.

(g) Status of Lenders .

(i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Credit Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.13(g)(ii)(A) , (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(ii) Without limiting the generality of the foregoing,

the reasonable request of the Borrower or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Recipient is exempt from U.S. federal backup withholding tax;

(ii.) executed originals of IRS Form W-8ECI;

(iv.) to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN (or W-8BEN-E, as applicable), a U.S. Tax Compliance Certificate substantially in the form of Exhibit K-2 or Exhibit K-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit K-4 on behalf of each such direct and indirect partner;.

(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of

copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and

(h) If the Administrative Agent (including any successor Administrative Agent) is not a U.S. Person, it shall deliver two duly completed copies of the applicable IRS Form W-8.

(i) Treatment of Certain Refunds . If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.13 (including by the payment of additional amounts pursuant to this Section 2.13 ), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (h), in no event will the indemnified party be required to pay any amount to an

indemnifying party pursuant to this paragraph (h) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

Section 2.14 Mitigation Obligations; Replacement of Lenders .

(b) Replacement of Lenders . If any Lender requests compensation under Section 2.11 , or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.13 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 2.14(a) , or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 9.7 ), all of its interests, rights (other than its existing rights to payments pursuant to Section 2.11 or Section 2.13 ) and obligations under this Agreement and the related Credit Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:

(i) the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 9.7 ;

assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);

(iv) such assignment does not conflict with applicable Legal Requirements; and

(v) in the case of any assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. Solely for purposes of effecting any assignment involving a Defaulting Lender under this Section 2.14 and to the extent permitted under applicable Legal Requirements, each Lender hereby designates and appoints the Administrative Agent as true and lawful agent and attorney-in-fact , with full power and authority , for and on behalf of and in the name of such Lender to execute , acknowledge and deliver the Assignment and Assumption required hereunder if such Lender is a Defaulting Lender and such Lender shall be bound thereby as fully and effectively as if such Lender had personally executed , acknowledged and delivered the same .

(b) Application . Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under this Section 2.15 or Section 2.16 in respect of Letters

of Credit shall be applied to the satisfaction of the Defaulting Lender’s obligation to fund participations in respect of Letter of Credit Obligations (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.

Section 2.16 Defaulting Lenders .

Lenders, or the Issuing Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, or the Issuing Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh , so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth , to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Advances or Letter of Credit Exposure in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Advances were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 3.2 were satisfied or waived, such payment shall be applied solely to pay the Advances of, and Letter of Credit Exposure owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Advances of, or Letter of Credit Exposure owed to, such Defaulting Lender until such time as all Advances and funded and unfunded participations in Letter of Credit Obligations are held by the Lenders pro rata in accordance with the Commitments without giving effect to Section 2.16(a)(iv) . Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.16(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(iii) Certain Fees .

(C) With respect to any Letter of Credit Fee not required to be paid to any Defaulting Lender pursuant to clause (A) or (B) above, the Borrower shall (x) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in Letter of Credit Obligations that has been reallocated to such Non-Defaulting Lender pursuant to clause below, (y) pay to the Issuing Lender the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to the Issuing Lender’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.

(iv) Reallocation of Participations to Reduce Fronting Exposure . All or any part of such Defaulting Lender’s participation in Letter of Credit Obligations shall be

reallocated among the Non-Defaulting Lenders in accordance with their respective Pro Rata Shares (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that (x) the conditions set forth in Section 3.2 are satisfied at the time of such reallocation (and, unless the Borrower shall have otherwise notified the Administrative Agent at such time, the Borrower shall be deemed to have represented and warranted that such conditions are satisfied at such time), and (y) such reallocation does not cause the aggregate outstanding amount of all Advances of any Non-Defaulting Lender plus the Letter of Credit Exposure of such Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Commitment. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

(b) Defaulting Lender Cure . If the Borrower, the Administrative Agent and the Issuing Lender agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Advances of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Advances and funded and unfunded participations in Letters of Credit to be held pro rata by the Lenders in accordance with the Commitments (without giving effect to Section 2.16(a)(iv) , whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided , further , that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

ARTICLE 3

CONDITIONS OF LENDING